Financial Requirements
Child Nutrition Programs
Oregon Department of Education
First…..some definitions
• Net Cash Resources
• Nonprofit school food service
• Revenue
Net Cash Resources
• All money that has been received or
accrued to a SFA’s nonprofit food service
at any given time, less cash payable.
• These can include:
– Cash on hand
– Cash Received
– Earnings on Investments (interest earned on
food service fund)
– Cash on deposit and the value of stocks
– Bonds or other negotiable securities
Ref. 7 CFR 210.2/220.2
Nonprofit School Food Service
• All food service operations conducted by
the SFA principally for the benefit of
school children, all of the revenue from
which is used solely for the operation or
improvement of such food services.
Ref. 7 CFR 210.2/220.2
Revenue
• Means all money received by or accruing
to the nonprofit school food service,
including but not limited to:
–
–
–
–
–
Children’s payments
Earning on investments
Other local revenues
State revenues
Federal cash reimbursements
Ref. 7 CFR 210.2/220.2
When you signed agreement with
State Agency (ODE), you agreed to:
• Maintain a nonprofit school food service and
observe limitations on the use of school food
service revenues set forth in 210.14 and
limitations on any competitive school food
service set forth in 210.11
• Limit net cash resources to an amount that does
not exceed 3 months average expenditures for
its nonprofit school food service (210.19)
• Maintain a financial management system as
prescribed in 210.14 (c)
• Comply with the requirements of the
Department’s regulations regarding financial
management (7 CFR 3016 public schools, 7
CFR 3019 private non-profits)
Allowable costs
• 7 CFR 3016/3019 state that food service
funds may be used only for allowable
costs.
• Organizations in the Federal government
have principles for determining allowable
costs. Those that affect child nutrition
programs are Office of Management and
Budget (OMB) circular A-87 for public
schools and A-122 for private non-profits.
Allowable Costs from OMB Circulars
87 and 122 :
• Food purchases and costs directly related to the
storage, handling, processing and transportation
of food.
• Labor, which includes payments for labor and
other costs directly related to operating the child
nutrition programs. This includes employer’s
share of retirement, Social Security, insurance
payments and fringe benefits.
• Other supplies and expendable equipment used
directly in the operation of the school food
service. This includes items that must be
replaced from time to time, such as pot and
pans, serving trays, dishes, glassware,
silverware, linen, mops, brooms, cleaning
supplies, etc.
Allowable Costs from OMB Circulars
87 and 122 :
• Replacement of non-expendable items generally
classified as movable property and used directly
in preparing, storing or serving meals. This
includes ranges, steam equipment, refrigerators,
freezers, steam tables, mixers, storage cabinets,
garbage containers, table, chairs, hot water
heaters, portable fans, and other equipment.
This category may include such item as charges
for installing equipment and connecting to
utilities in the building in which the program is
operated as well as service for maintenance and
repair of equipment.
• Travel on food service business such as
workshops, conferences and training programs.
• District training for food service employees.
Allowable Costs from OMB Circulars
87 and 122 :
• Memberships, subscriptions, books and
audiovisual equipment used to benefit food
services
• Rental of non-publicly owned food storage
facilities or equipment as required for program
needs.
• Cash register, calculators, computers, computer
software, communication equipment or other
office equipment used exclusively for the food
service operation.
• Printing or reproduction equipment or services.
• Employee information publications.
• Automotive equipment used exclusively in
transporting food.
Allowable Costs from OMB Circulars
87 and 122 :
• Services, such as pest control, trash removal,
security and janitorial.
• Utilities, when accounted for separately (actual
costs) or prorated to charge only the portion
used by food service. The best proration
method is using separate meters; the next best
is survey by utility company; otherwise, use a
reasonable method (square foot percent,
gas/electric bill months when school is not
heated, etc.)
• Advertising for the recruitment of personnel, for
the solicitation of bids, for the procurement of
good and services required and for the disposal
of scrap or surplus materials.
• Promotional materials, exhibits relating
specifically to the program and advisory councils
related to parental and student involvement.
Non-allowable Expenditures
from OMB Circulars 87 and 122:
• No income accruing to the food service program
may be used to purchase land, acquire or construct
buildings or make alterations to existing buildings
that materially increase the value of capital assets,
However, paint and decorator items would not be
considered capital expenditures. Only those
improvements that materially increase the value or
life of the building would be considered capital
expenditures.
• Contributions or donations.
• Entertainment, amusements, social activities,
gratuities and related activities.
• Interest on borrowing.
• Rent or usage fees for program sponsor owned
facilities.
• Cafeteria monitors. School food service funds may
not be used to pay salaries of monitoring.
Indirect Costs
• In theory, all costs should be charged as direct costs.
But when practical limitations and considerations of
efficiency are taken into account, an indirect cost rate is
an acceptable alternative.
• Indirect cost rate is simply a device for determining the
proportion of indirect costs a program should bear.
• Indirect costs are those costs that are not easily
identified but are incurred for the joint benefit of all
activities of the sponsor. Accounting, auditing, payroll,
personnel, budgeting, purchasing, and maintenance
are examples.
• If sponsor is charging the food service fund an indirect
cost rate approved by ODE, the sponsor cannot then
charge the food service fund again for anything that
was included in the rate as a direct cost.
• The sponsor cannot charge the food service fund a
higher indirect cost rate than approved by ODE.
Why is there so much financial
regulation? Shouldn’t we be able to
use the money how we see fit?
• These regulations are intended to
ensure taxpayer funds are used
solely for the benefit of child nutrition
programs.