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Texas Department of Human Services

POLICY ALERT

Date: May 10, 2002           Reference #: CACFP-CCC 2002-06
To: Child and Adult Care Food Program-Child Care Centers (CACFP-CCC) Contractors
Subject: Limitation on Administrative Reimbursement for Sponsoring Organizations
Effective: May 1, 2002


This Policy Alert applies to sponsoring organizations participating in the Child and Adult Care Food Program for Child Care Centers.

The Agricultural Risk Protection Act of 2000 imposed a restriction on the dollar amount that a sponsoring organization participating in the Child and Adult Care Food Program (CACFP) can withhold from each claim month's CACFP reimbursement for its own use. According to the Act, a sponsoring organization may only keep up to 15% of each month's CACFP reimbursement amount. The sponsoring organization is permitted to use this portion of the CACFP reimbursement to pay its actual allowable administrative costs incurred in supporting the operation of the nonprofit food service in its sponsored facilities.

A sponsoring organization is defined as any contractor participating in the CACFP that has more than one site participating in the program. There are two types of sponsoring organizations:

  • Affiliated - An affiliated sponsor is an organization whose sponsored facilities are a part of the same legal entity as the sponsor. For profit organizations may only sponsor affiliated facilities.
  • Unaffiliated - An unaffiliated sponsor is an organization whose sponsored facilities are not a part of the same legal entity as the sponsor. Only non-profit organizations may sponsor unaffiliated facilities. A non-profit organization may sponsor both affiliated and unaffiliated facilities simultaneously.

As noted in Policy Alert CACFP-CCC 2002-3, related to financial management, you must now provide comprehensive budget information. One of the items that you must report in your budget is your projected annual CACFP reimbursement (see Section 2, Item 2, of the CACFP-CCC Supplemental Budget Form). A sponsoring organization may keep up to 15% of this amount as a source of income for paying its actual allowable administrative costs incurred in supporting the operation of the nonprofit food service in its sponsored facilities (see Section 1, Column A, Total).

Each claim month, sponsored child care facilities submit their food service participation information to the sponsoring organization who then consolidates the information and prepares a Form 1532, Special Nutrition Programs Claim for Reimbursement, for submittal. Upon receiving the reimbursement for a claim month, the sponsor must determine each facility's portion of the reimbursement and deduct from each facility's portion the amount the sponsor withholds for administrative costs. Sponsors must use the attached Sponsoring Organization Disbursement Record (Child Care Centers) to prepare this information and to document their compliance with this requirement.

Affiliated Sponsors

A sponsor of affiliated centers is part of the same legal entity as its facilities. Even so, the sponsor is still only permitted to use up to 15% of each month's total CACFP reimbursement to pay for its actual allowable administrative costs incurred in supporting the operation of the nonprofit food service in its sponsored facilities. The sponsor must use the remaining amount of each month's CACFP reimbursement to enhance the quality of the food service operation in each of its sponsored facilities.

The sponsor must indicate on the Sponsoring Organization Disbursement Record the total amount of the CACFP reimbursement it received for the corresponding claim month and the amount the sponsor withheld to apply to its actual allowable administrative costs. A sponsor of affiliated facilities does not have to complete Section 3, Items 1 - 6, of the Sponsoring Organization Disbursement Record.

Unaffiliated Sponsors

A sponsor of unaffiliated centers is only permitted to use up to 15% of each month's total CACFP reimbursement. The sponsor may only use this money to pay for its actual allowable administrative costs incurred in supporting the operation of the nonprofit food service in each of its sponsored facilities. The sponsor must

  • determine each facility's portion of the claim month's CACFP reimbursement,
  • deduct the amount from each facility's portion that the sponsor withholds for administrative costs, and
  • disburse to each facility its appropriate payment within 5 days of the sponsor having received its payment for that month's claim

When to Complete

A sponsoring organization must complete the attached Sponsoring Organization Disbursement Record (Child Care Centers) for any financial transaction in which the sponsor receives CACFP funds from the Texas Department of Human Services, including reimbursements related to advance payments, initial claim payments and amended claim payments.

Implementation

This requirement is effective May 1, 2002. Current CACFP contractors who are sponsoring organizations may use the remainder of Program Year (PY) 2002 to adjust their operating budget in order to be in compliance with the new requirement prior to submitting their CACFP PY 2003 application. However, new contractors who are sponsoring organizations and who submit an application to participate in the CACFP after May 1, 2002, must comply with this requirement effective for the remainder of Program Year 2002. Beginning with PY 2003, any noncompliance with this requirement discovered during the course of an administrative review or technical assistance visit will require corrective action.

Sponsors must complete the attached Sponsoring Organization Disbursement Record (Child Care Centers) to document their compliance with this requirement. Current CACFP contractors who are sponsoring organizations will begin using this form effective with the October 2002 claim month (CACFP PY 2003). New sponsoring organizations who submit an application to participate in the CACFP after May 1, 2002, must use this form immediately upon approval to participate in the CACFP.

Exception

If a sponsoring organization feels that in order to operate the CACFP effectively it needs to withhold more than 15% of its CACFP reimbursement to cover its allowable administrative costs, the sponsoring organization must submit its justification for such in writing to its Area Program Office for consideration.

Attachment 1      Attachment 2

     

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   Updated: July 30, 2002