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Texas Department of Human Services


Date: May 6, 2002           Reference #: NSLP/SBP 2002-04
To: National School Lunch/School Breakfast Program (NSLP/SBP) Contractors
Subject: Alternatives to Standard Application and Meal Counting Procedures - Provisions 1, 2 and 3
Effective: October 22, 2001

This Policy Alert updates information in your NSLP/SBP Handbook, Section 2, Free and Reduced Price Policy Statement - Provisions 1, 2 and 3.

We recently received guidance from USDA on Provision 1, 2 and 3 as follows:

  • Before a school can be approved to participate under Provision 2 or Provision 3, the school must be in compliance with the applicable provisions of the NSLP/SBP.
  • The base year must begin at the start of the school year.
  • For any Provision 2 school, you have the option to establish and use an annualized claiming percentage instead of a monthly claiming percentage for non-base years. To calculate the annualized claiming percentage, add the actual number of all reimbursable meals served by type (free, reduced price and paid) during the base year and convert each number to an annual percentage for each meal type. For example, derive the free lunch percentage by dividing the annual total number of reimbursable free lunches served by the annual total number of reimbursable lunches served for all meal types (free, reduced price and paid). You would calculate the percentages for the reduced price and paid lunches using the same method as the above examples for free lunches. These three percentages, calculated at the end of the base year, are multiplied by the total monthly lunch count of all reimbursable lunches served in each month of the second, third and fourth consecutive school years, and applicable extensions, in order to calculate reimbursement claims for free, reduced price and paid lunches each month. The free, reduced price and paid percentages for breakfasts and, as applicable, snacks, are calculated, using the same method for each type of meal service.
  • All alternatives to standard application and meal counting procedures, which include Provisions 1, 2 and 3, must be implemented on a school by school basis. You are not allowed to use "comprehensive" SFA wide claiming percentages.
  • You are required to review the lunch count data for each Provision 2 or 3 school during the base year. During non-base years, you must conduct a simplified edit check in which the Provision 2 or 3 school's total daily meal counts are compared to the school's total enrollment, adjusted by an attendance factor. You must promptly follow-up when the claims review process suggests the likelihood of lunch count problems. Document the steps taken to correct any identified problems.
  • In non-base years, verification is not required only when all the school's programs (NSLP and SBP) are participating in Provision 2 or 3.
  • You must continue to use and submit data from the same socioeconomic indicator in the base year and when applying to extend your Provision 2 or 3 status beyond the initial four year period. You may be approved for an extension if there is only negligible improvement in the socioeconomic indicator, now defined as 5 percent or less improvement.
  • If you are not approved for an extension of Provision 2 or 3, you may:
    • Return to standard meal counting and claiming procedures,
    • Establish a new base year by taking new free and reduced price applications, making new free and reduced price eligibility determinations, and taking point of service counts of free, reduced price and paid meals for the first year of the new cycle, or
    • If you were on Provision 2, you can establish a Provision 3 base year. If you were on Provision 3, you can establish a Provision 2 base year.
  • In Provision 3 schools, you must complete total daily meal counts (not by type) of reimbursable meals at the point of service in non-base years. These meal counts will not be used to determine financial assistance under Provision 3, but will be used to determine whether participation is declining significantly. You must establish a system of oversight using the daily meal counts to ensure that participation has not declined significantly since the base year. If participation declines significantly, you must provide the school with technical assistance, adjust the level of financial assistance claimed or return the school to standard eligibility determination and meal counting procedures, as appropriate.
  • For the Provisions, you must retain records related to the implementation of the provision. If you do not maintain proper records, you may be required to return to standard eligibility determination and meal counting procedures and may be subject to fiscal action.

The following definition is added:

Operating day - a day that reimbursable meals are offered to eligible students under the National School Lunch Program or School Breakfast Program.

Contact your Area Program Office if you have any questions.

Texas Department of Human Services · 701 W. 51st Street · Austin, Texas 78751
P.O. Box 149030 · Austin, Texas 78714-9030
(888) 834-7406
· (888) 425-6889 (TDD)

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   Updated: August 30, 2002