State of Wisconsin
BUDGET 101: REVIEW,
APPROVAL AND
MONITORING
CACFP NPA CONFERENCE – FFY2012
APRIL 10-13, 2012
AUSTIN,TEXAS
1
AGENDA
Background
 Budget Form
 Budget Review
 Budget Approval
 Budget Monitoring
 Box of Tools and Resources
 Bewildered?

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BEFORE WE BEGIN…

Child and Adult Care Food Program (CACFP): Federally funded program through
USDA that provides reimbursement for eligible meals served to enrolled
participants. Sometimes referred to as the “Food Program”.

WI Department of Public Instruction (WDPI): State Agency (SA) that administers
the CACFP in the State of Wisconsin.

Sponsoring Organization (SO): Business that contracts with WDPI to administer
the CACFP to more than one home provider or center.

Family Day Care Home Sponsor (FDCH): Non-profit organizations that administer
the CACFP to eligible family day care homes. Also referred to as “Home Sponsor” or
“Sponsoring Organization (SO)”.

Child Care Facilities:Approved family day care homes (Home Providers) or centers
(Sites) under a Sponsorship.

Independent Centers: Single site, child or adult care center, that contracts directly
with the State Agency. Also referred to as “Centers”.

Agency: Any entity that has a contract with WDPI to participate in the CACFP.

Bubbler: A drinking fountain.
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BACKGROUND

State of Wisconsin
Annual Contract Period
◦ 1 Base, 2 renewals
◦ FFY2012: 529 approved agencies





95 Sponsors of Affiliated
6 FDCH Sponsors
1 Sponsor of Unaffiliated
427 Independent Centers
Format
◦ Online Program Application – only
includes budget summary (not detail)
◦ Detailed budgets – Excel format
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BACKGROUND
State of Wisconsin
 2 agencies Sponsor homes and
affiliated centers. Considered two
separate contracts/budgets.
 Sponsor of Unaffiliated does
admin. and operational duties
◦ Retains 100% CACFP funds

Interest in FDCH Sponsors also
sponsoring unaffiliated centers.
◦ None approved.

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All budgets for Sponsors are
reviewed, approved and monitored
by CACFP Auditor.
BACKGROUND

State of Wisconsin
An approved budget is only one
measure of financial viability.
◦ Required by Regulations for
application.

Stronger emphasis is on the
reporting of actual food program
costs and the financial review
process.
◦ Completing a budget is easy – it’s
showing that the federal funds were
actually spent on the food program
which is hard.
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budg·et (buhj-it) n.: an itemized
summary of estimated or intended
expenditures for a given period of
time along with proposals for financing
them. (American Heritage dictionary)
CACFP translation – the actual amounts of money earned
and expenditures are unknown as they are dependent on
the level and amount of participation. So all items are
projected and amounts and items can be amended.
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All Food Program Costs or Cost Items
Paid with CACFP Reimbursement must have
received PRIOR WDPI approval
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BUDGET FORM
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Budget Form
Set-up like a Profit and Loss Report
 Budget Requirements

◦ SO Homes = Detailed budget every year
◦ SO Unaffiliated Centers = Detailed budget
every year.
◦ SO Affiliated Centers = Every 3 years
 Budget Summary during interim
◦ Independent = Budget summary only

All figures are projections
◦ Based on upcoming program year.
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Budget Form

Administrative (Homes & Centers) vs.
Operational (Centers Only)
◦ Admin: Monitoring/Claim/Recordkeeping
◦ Operational: Kitchen/Meals/Food

Costs not approved are unallowable
◦ Cannot be funded with CACFP funds
◦ Work with agency on unallowable costs
 Result: Agency revises budget or costs are
disallowed.
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Budget Form
Spring = Revisions to Budget Form/Procedures
Summer = E-mailed to all participating Sponsors and
available online after Training.
Fall: Due September. Application not approved without
approved budget.
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Budget Form
Key Elements on Budget Form

Common cost categories
◦ Include a “Misc.” cost section

Specifics spelled out
◦ Don’t be a mind reader

Require support documentation at the time of
budget process.
◦ “When in doubt leave it out.”

Plenty of room to report revenue
◦ How is this program going to be funded?
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Budget Form
Key Elements on Budget Form

Automatic notification if out of compliance
◦ i.e. Exceed 15% admin. costs (center sponsors);
More than 10% carryover (FDCH); Not enough
income reported (ALL).
◦ Saves WDPI time on reviewing a non-compliant
budget.

Highlight key Regulations on form
◦ i.e. Less than Arms length; Contracted services; out
of state travel; Membership dues
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Budget Form
Review WDPI CACFP Budget Forms
◦ Attachment E: FDCH Sponsors
◦ Attachment G
 Sponsors of Affiliated
 Sponsors of Unaffiliated
◦ Independent Centers
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BUDGET REVIEW
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Budget Review
Every agency is different but they all
have the same goal.
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Budget Review
Factors:
 Who
completed the Budget?
◦ Expertise level
 Cook, Center Director, Accountant
 Any
financial issues?
◦ Reports: Licensing, CACFP, Audits
◦ Be sure to address prior to approval.
 Review Accounting
system first
◦ Application question
◦ Budget should match accounting system.
 Detailed = Detailed; Simple = Simple
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Budget Review
CACFP Costs

Allowable
◦ FNS 796-2 (rev 3)

Approvable
◦ Realistic
◦ Reasonable

Actual Costs
◦ Support documentation
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Budget Review

Project Food Program Costs & Revenue
◦ Costs: Regardless if paid with CACFP reimbursement
 “How much will it cost your agency to administer the food program in
the upcoming program year (October 1 – September 30)”
◦ Revenue: List all sources and amounts available to fund food
program expenses.
 Not covered (unfunded)
 Unallowable
 Pay Overclaims

Costs not approved are unallowable
◦ Cannot be funded with CACFP funds
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Budget Review
Keys for a smooth Budget Process

Reasonable projections
◦ Project # of homes claiming; Number of
meals to be served for upcoming year
◦ Comply
◦ Achieve goals (ex. expansion, training)


Provide explanations/procedures for
non-routine costs.
When in doubt submit attachments
◦ Use electronic technology

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Don’t assume
Budget Review
Keys for a smooth Budget Process

Include Additional Income
◦ Source AND Amounts available (projection)
◦ CACFP AND Non-CACFP funding
 The more the better!
◦ Total income SHOULD exceed total
projected expenditures.
 Question if amount comes out exactly to zero.
◦ Consideration taken into “internal” approval
of budget.
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Budget Review
How much is too much?
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Budget Review
Administrative & Operational Costs


Administrative
Monitoring
Claim
◦ Compiling
◦ Submitting
◦ Reconciling

Accounting / Bookkeeping

Operational
Kitchen
◦ Meals
 Preparation
 Delivery
◦ Menus
◦ Purchasing / Vended
Meals
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Budget Review
Typical Allowable Costs - Homes

Salaries and Benefits
◦ CACFP Staff
Accounting
 Advertising
 Audit Services
 Telephone or other
communication costs
 Conference/Training
◦ CACFP Related
 Indirect Costs
◦ Approved CAP
 Purchase of Equip.

Rent Expense
 Employee Travel
 Printing & Copying
 Insurance
 Training of Staff and
Providers
 Standard Bank Fees
 Minimal Value Incentive
Payments
◦ For work performed
◦ Specific Written
Approval

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Budget Review
Frequent Allowable CACFP Costs Centers
Allowable




(list is not all inclusive)
Food (consumable)
Kitchen Supplies/Nonfood
Contract / Vended Meals
Food Program Personnel
◦ Admin & Operational

Employee CACFP Travel
◦ e.g. Grocery shopping, WDPI
training


Equipment Purchase/Rental
Audit Services
◦ CACFP Portion
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Budget Review
Food Costs
Costs in purchasing ingredients for menu items
(Food Supplies) AND/OR the cost of
purchasing itemized CACFP meals from an
outside vendor (Contracted Service) that are
served to the participants
 WI recommends at least 50% of budget

◦ Will still approve if less but agency must explain.
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Budget Review
Administrative Costs - Centers


Sponsors: No more than 15% of CACFP meal
reimbursement can be spent on administrative
costs without State Agency waiver.
Independent Centers: Not an issue because
CACFP meal reimbursement is usually spent
on operational costs, any leftover should be
less than 15%.
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Budget Review
Administrative Costs - Centers

CACFP (direct) Administrative Costs should
never be higher then CACFP Operational
Costs.
◦ It should cost an agency more to prepare and
serve the meals then doing the paperwork
and monitoring of the program.
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Budget Review
Unfunded CACFP Costs

Allowable CACFP costs that are not funded
directly with earned CACFP reimbursement.
◦ Not enough CACFP reimb. earned to cover costs.
◦ Costs must be reported on budget and financial report.

Plan must be in place prior to approval on how
these costs will be funded
◦ Funds must be actual

WDPI does not consider these costs when
calculating 15% admin. for SO.
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Budget Review
CACFP Reimbursement is not designed to
cover 100% of the Food Program expenses.
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Budget Review
How is the agency going to pay for
this program?
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Budget Review
Remember!
The CACFP funds are replacing funds
the agency is now spending
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Budget Review
Other Source of Income


CACFP is part of the overall organization.
Funds received to run organization must also
be available to fund CACFP costs not covered
by reimbursement.
◦ Examples: Headstart, Tuition, W-2 (TANF),
Fundraising, Private Donations


Projected Source and Amount reported on
Budget; Actual reported on financial reports.
Food Stamps is not another source of income
for the center.
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Budget Review
Best use of CACFP Reimbursement
Plan, budget, and
organize the funds
available will help
maximize CACFP
reimbursement.
No planning, using funds
on non-program needs,
no accountability of
funds spent will result in
loss of funding and/or
participation
35
Budget Review
Common Errors
Not enough income reported.
 Budget for costs that are not FP related
 Budget for unallowable costs

◦ i.e. gas for personal vehicle; rent for owned building.
Do not budget for food costs or for minimal food
costs. (Centers)
 Budget for costs with no method of tracking

◦ i.e. Travel = no mileage log or travel policy
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Budget Review
Common Errors

Over 15% Admin. (Centers)
◦ Admin. not funded directly with CACFP funds is
acceptable.
Carryover not reported. (Homes)
 Indirect costs reported without an approved
plan.
 Not identifying direct CACFP expenses.

 Not all Food Program costs will be funded with CACFP
reimbursement earned.
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BUDGET APPROVAL
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Budget Approval

Three levels of approval:
◦ Generally Allowable
◦ Prior Approval
◦ Specific Prior Written Approval
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Budget Approval

Prior approval or Specific Prior
Written approval

◦ Routine CACFP costs
◦ No specifics required
◦ Must be detailed/broken out
◦ More info the better
◦ Requires addl’ documentation prior to
approval
◦ Examples (not all inclusive):










New position
Related party transactions
Purchasing vehicle, real estate
Purchased/Contracted Services
Membership dues
Effect employee policies
Out of State travel
Conference Attendance
Indirect Cost Plans
Must receive WDPI (sometimes
USDA) approval PRIOR to incurring.
Generally allowable costs
 Addl. Doc.
 Note line item $ amount.
◦ Consistent with tracking
 Be sure not to duplicate
◦ Examples (not all inclusive):





Printing
Office Supplies
Postage
Phone Services
Can incur prior to notifying SA of
changes in budget/mgmt. plan but
should keep CACFP budget
current.
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Budget Approval
Amending Budgets
Notification:

Prior to incurring
◦ Prior Approval items

Immediately
◦ Change(s) that result in a
significant increase or decrease
in original budget amount.

Anytime
◦ Generally Allowable Cost items
 To keep budget accurate.
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Budget Approval
Amending Budgets

Send e-mail or leave voicemail
explaining change.
◦ Include specific cost item, dollar
amount, and any additional support
documentation.
◦ Indicate source of funding for
increases (ex. decreasing a line item
amount or increasing projected
reimbursement, or other nonCACFP funding).
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Budget Approval

Approved once receive
verbal or written
communication from WDPI.
◦ WDPI will update original
budget/most current budget and
submit to agency which will
replace the “old” budget.
◦ Effective date defaults to date
budget request was received.
◦ 15% Admin. Waiver Approval
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BUDGET MONITORING
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Budget Monitoring
 Review of Nonprofit Food Service
(NPFS) Financial Reports
 On-Site Financial Reviews
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Budget Monitoring
Nonprofit Food Service Financial Report (NPFS)
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
Required for all agencies (for-profit,
non-profit, public).

Report of all ACTUAL CACFP
expenditures during the reporting
period.

Costs reported should equal
expenditures charged to food service
program plus any additional expenses
covered with non-CACFP funds.

Amounts must be supported by actual
documentation – NO ESTIMATES

Submission required as part of
Permanent Agreement.
Budget Monitoring
Nonprofit Food Service Financial Report (NPFS)
All Food Program Costs:
Actual Expenditures
◦ Not Estimates
 Support Documentation
 Only report CACFP %



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◦ Shared costs
Amount net credits
Allowable and Approved
◦ FNS 796-2 (rev.3)
◦ CACFP Budget
Budget Monitoring
Nonprofit Food Service Financial Report (NPFS)



CACFP revenue should be
reported using the accrual
method (as earned, not
received).
Additional program income must
be reported (e.g. interest
income, rebates, CACFP
carryover).
Additional non-program income
must be reported
◦ Total Costs less Program income =
non-program income
◦ Must be actual and available.
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Budget Monitoring
CACFP Financial Reviews
WDPI Reviews
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Budget Monitoring
CACFP Financial Reviews

WDPI Financial Review
◦ Announced or Unannounced
◦ Usually occur during a program review
 More frequent for “problem” agencies (red flag issues).
◦ Items must have available:
 Support documentation for NPFS for current and last FFY
 ALL support documentation for food program costs
 Invoices, receipts, purchase orders, etc.
 Bank statements/cancelled checks for food program funds
 General Ledger, allocation plan, P/L reports
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Budget Monitoring
CACFP Financial Reviews

WDPI Financial Review (continued)
◦ Should be able to describe accounting system.
 How do you pay your bills?
 Where did CACFP funds go?
◦ MUST BE ORGANIZED
 Be able to show and explain their organizational system
◦ Any non-food program/unallowable cost found to be paid with
CACFP funds will be disallowed.
 May result in repayment to WDPI.
 CACFP funds exceed CACFP costs = repayment to WDPI
 Appeal-able Action
51
Budget Monitoring
Red Flags:
Low/No food costs reported.
 Actual figures reported are all whole
numbers (i.e. 100; 1,000; 1,200)
 Travel costs are high
 Rent costs reported on owned property.
 High admin. costs (centers)

52
Budget Monitoring
Red Flags:

High contracted services costs
◦ No procurement procedures
◦ Related party transactions

Large “Miscellaneous” amount
◦ Could be sign of “hidden” costs; or no
accounting system.
53
Budget Monitoring
Carryover:

FDCH Home Sponsors
◦ Monitored on quarterly financial reports
 4th Quarter report exceed 10% = payback WDPI
◦ Carryover balance must be reported on 1st
quarter financial report.
◦ Still considered CACFP Admin. not “separate
set of funds”.
54
Budget Monitoring
Carryover:

Centers & Center Sponsors
◦ Monitored on financial reports
(annual/quarterly)
◦ WDPI policy = no more than 3 mos.
reimbursement carried over to next fiscal year.
 Excessive (2-3 mos.) must have a plan to spend down.
 At-Risk Suppers resulted in large carryovers
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TOOLS
and
RESOURCES
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Tools

FNS Instruction 796-2 (rev. 3) – Abbreviated version
◦ Created by WDPI
◦ Available on website: http://dpi.wi.gov/fns/centermemos.html . Under
Guidance Memo #11.

General Ledger Template
◦ Created by WDPI
◦ Available on website: http://dpi.wi.gov/fns/centermemos.html . Under
Guidance Memo #11.

Budget Form
◦ Created by WDPI
◦ Available on website http://dpi.wi.gov/fns/cacfpapps.html.
◦ Updated and posted after July 1.
57
Resources

Federal Regulations
◦ 7 CFR 226, 2 CFR 230 (formerly OMB A-122)
Website: http://www.whitehouse.gov/omb/circulars

◦ IRS


Website: http://www.irs.gov/businesses/small/article/0,,id=206004,00.html#foodexpense
FNS Instruction 796-2 (rev. 3)
 Federal version - available as pdf
 Abbreviated version (Attachment 3) created by WDPI
 User friendly – search function
 Available on WDPI website: http://dpi.wi.gov/fns/centermemos.html (under
Guidance memo 11)

State Agency Policy – Guidance Memorandums
◦ State agency FM policy
◦ Website: http://dpi.wi.gov/fns/guidememos.html

Cari Ann Muggenburg
◦ E-mail:cari.muggenburg@dpi.wi.gov
58
QUESTIONS
59
State of Wisconsin
BUDGET 101: REVIEW,
APPROVAL AND
MONITORING
CACFP NPA CONFERENCE – FFY2012
APRIL 10-13, 2012
AUSTIN,TEXAS
60