CACFP The Child and Adult Care Food Program

CACFP The Child and Adult Care Food Program “Building the Future” CACFP FY 21 Renewal Process - Budget August 2020

CHILD NUTRITION PROGRAMS USDA REGIONAL USDA RIDE CACFP NSLP SMP Training Agenda Topics: • Changes to FY 21 budget • Budgeting Overview • Allowable vs Unallowable Costs • CACFP Income • Operating vs Admin Costs • Budget Template SFSP SBP

FY 21 Changes to Budget Process RIDE has implemented a new budget template for new and renewing sponsors starting in FY 21. The use of the new budget will be phased in over the next few years. Who is required to submit a new budget: • Sponsors who are on the review cycle for FY 21 • Sponsors with more than one site participating in the CACFP • Independent Sponsors who anticipate a significant change in operation

Why do we budget? State agencies are required to ensure the fiscal viability and accountability and compliance with Program requirements for all CACFP Sponsors. The budgeting process will help Sponsors learn about the reimbursement process and how much it will cost them to operate the Program, establish Program revenue, and identify non-Program revenue sources to pay for unfunded CACFP costs. Budgets must include sufficient detail for the State agency to determine whether all listed expenditures are reasonable, necessary and allowable. Budget details also allow the state agency to assess whether a Sponsor is fiscally viable, has adequate financial resources to withstand temporary interruptions of CACFP payments, and can continue to operate when fiscal claims are assessed against the institution.

Budget Overview A budget is a financial plan for operating a business or business unit. It includes planned expenditures and anticipated resources for the upcoming fiscal year. A budget is a management tool that helps support your vision by planning out your spending in an organized and controlled manner. The CACFP budget should only reflect revenues and expenses that will be directly related to your operation of the CACFP. At a minimum should include costs that would not exist if you did not participate in the CACFP (food costs and some types of operational labor, ex chef).

CACFP Budget Requirements • All costs require PRIOR approval before they can be incurred • Some costs require additional levels of approval – Specific Prior Written Approval • Reimbursement is based on meals served not specific line items • Must retain documentation for ALL budgeted costs and make available to RIDE upon review • All costs must be necessary, reasonable, and allocable

Allowable Costs All costs charged to the Program must be considered: • Reasonable • Necessary • Allocable Example: If your center has a contract with a vendor to provide all Program meals, it would not be reasonable to include 8 hours for a chef to prepare meals in your budget. Example: It is necessary for someone in your organization to compile the monthly claim for reimbursement but the portion of that person’s salary that is charged to the Program must represent a reasonable hourly rate for the tasks performed and must represent only the portion of time that is allocable to the program.

Allocating Costs to the CACFP Costs not 100% charged to CACFP must be allocated and you must provide the rationale used to determine the allocation percentage. Examples include: • Rent/Lease and Utilities • Square footage used and number of hours used by the program – there is a template for this directly in the budgeting tool • Salaries/Employee Benefits/Taxes • Hours worked for CACFP vs Total Hours • Non Food Supplies • Based on benefit to the program – ex: purchase 4 packs of paper towels/week – 3 are used during food service, 1 for bathroom/common areas – 75% to CACFP

Unallowable Costs UNALLOWABLE COSTS Examples of unallowable costs: Gifts, social events, luncheons, dinners, banquets Cost of meetings, etc. , related to non CACFP activities Interest expense on a line of credit Severance pay when terminated for Program misconduct Overtime, comp time, etc. , resulting from failure to maintain a sufficient # of staff to administer the program • Less-than-arms-length transactions that are not properly disclosed and approved • • •

Components of the CACFP Budget 1) Income – project income available to the program 1) Includes estimated annual CACFP reimbursement and non-Program funds will be used to meet CACFP program requirements 2) Operating Costs 1) Costs associated with serving meals 3) Administrative Costs 1) costs incurred by a Sponsor related to planning, organizing, and managing a food service under the Program 4) Supporting Documentation Note: The same cost cannot be both Operating and Administrative

CACFP Income You are required to project income available to fund the program The CACFP is designed to be a supplementary program – your reimbursement may not cover all of the expenses and you must have other sources of funding to cover projected deficits Program Funds - CACFP reimbursement and CACFP Cash in Lieu of Commodity Reimbursements Non-Program Funds Used to Meet CACFP requirements • Required if CACFP expenses exceed reimbursements • Must be able to demonstrate how the organization will fund a CACFP deficit • Examples • Tuition and parent fees • DHS funds • Cash donations • Unrestricted earnings

Projecting Reimbursement If your operation does not have significant changes in enrollment or meal service, the “Remittance Listing” report in CNP connect is a good place to start for projecting reimbursements for the next fiscal year

Remember, your projected reimbursements must be reasonable when compared to the site level data entered into the site menu in CNP connect Page 3 of the site menu includes information on the type of meals and estimated number of each meal that will be claimed for reimbursement Page 4 of the site menu includes enrollment information including your eligibility breakdown This information should drive your reimbursement projections. If there was no significant change to this information, the remittance listing report can be used. If you are expecting significant changes or would like a more accurate projection using current reimbursement rates, you can use the RIDE reimbursement calculator found here: https: //www. ride. ri. gov/CNP/Nutrition. Programs/Childand. Adult. Care. Food. Program. aspx#2144998 reimbursements-rates-and-processing-claims

Operating Costs Operating cost means expenses incurred by a Sponsor in serving meals to participants under the Program Includes all costs associated with preparing, delivering and serving of CACFP meals to eligible participants Examples: • Food • Time spent preparing/plating/serving meals and time spent shopping for food • Equipment • Contracted Services • Mileage related to purchasing food • Facility and Utility Costs

Administrative Costs Administrative costs are costs incurred in planning, organizing and managing the CACFP program. Sponsoring organizations’ administrative costs charged to the Program cannot exceed lesser of 15% of projected annual CACFP reimbursement or total CACFP administrative expense Examples: • Time spent planning, organizing and managing CACFP • Conference Travel/Training costs • Mileage for monitoring

• All budgets submitted must use the Annual CACFP Sponsor Budget Form Template Refer to the Instructions tab for guidance on completing the budget template REQUIRED TABS • A – Income • B – Operating • C – Administrative • D- Summary • E – Summary of Supporting Docs TABS TO COMPLETE IF APPLICABLE • F – Documentation, refer to H - Costs Req Specific Approval • G- Less than Arms Length Rental

Completing the Budget Tabs ü Complete cells highlighted in blue, cells in white are auto calculated by formula ü Add explanations in the Sponsor Explanation cell ü There may be additional supporting documentation required for each line item – this will be listed in red in each section. There is a summary of all documents required to be submitted with budget on tab E – Summary of Supporting Docs ü Do not cut and paste, this will create errors in the formula ü Do not enter SAME cost in both operating and administrative sections

D – Summary Tab • The line items from Income, Operating, and Administrative tabs automatically flow to the D – Summary Tab • Review this tab for accuracy once you have completed tabs A-C • Must indicate if these line items will be paid for with CACFP funds

Finalizing Your Budget Once you’ve entered all your income and expenses and reviewed them on the D- Summary Tab: 1. Certify for completeness and accuracy 2. Complete the section regarding how you will fund overclaims and other unallowable costs

Summary of Supporting Documentation Many of the budget line items require additional supporting documentation that MUST be submitted with the budget. Complete Tab E – Summary of Supporting Docs tab to indicate which documents have been submitted with budget. • If a cost is allocated to CACFP a rationale for how the cost was allocated is required Note – BUDGET WILL BE CONSIDERED INCOMPLETE IF THIS IS TAB IS NOT COMPLETED

Budget Approval All budget line items must be approved by the State Agency. Some budget line items require "Prior Approval" or "Specific Prior Written Approval“ from the State Agency/FNS. It is the sponsor’s responsibility to disclose to the State Agency if a line item requires specific prior written approval. Must complete F-Documentation tab for items that require specific prior written approval. See tab H – Costs Req Specific Approval Prior Approval is received by the institution when RIDE approves the budget in the online application packet.

Specific Prior Written Approval Examples (See FNS Instruction For Full List) • Cell phones owned or leased by institution • Maintenance & service repair contracts on Program equipment; and all other purchased service costs needed for Program operation (note purchased security, and janitorial contracts require prior approval) • Allocated share of travel & registration fees when CACFP is only a portion of a larger child & adult care related agenda • All less-than-arms length transactions

Less-Than-Arms-Length Transactions Requires Specific Prior Written Approval Less than Arms Length/Related Party Transactions A transaction under which one party to the transaction is able to control or substantially influence the actions of the other(s). • Transactions between family members • Transactions between an Institution and its officers or employees • Transactions where one party has significant control over the other party Examples: • Facility/equipment rental • Employing a related party • Contracts

Budgeting Resources 1. RIDE Annual CACFP Budget Guidance • Overview of Budgeting for CACFP 2. RIDE Procedures for Annual CACFP Sponsor Budget Form • Includes line by line instructions on completing the budget 3. USDA Guidance for Management Plans and Budgets 4. FNS Instruction 796 -2 Rev-4: Financial Management 0 f Child and Adult Food Care Program

Submitting Your Budget Completed budgets should be uploaded to the “Misc Questions” section of the application to Question 8. All budgets must be submitted in an excel (. xls) file format – PDF budgets and/or faxed budget pages will not be accepted

Contact Us: Website - www. ride. ri. gov/cnp Email - childnutritionprograms@ride. ri. gov