Processor Inventory Reconciliation Modification

This management bulletin (MB) provides information and guidance on a temporary change to the October Processor Inventory Reconciliation (aka Sweeps) Policy (MB NSD-FDP-05-2011) due to supply chain disruptions, staffing shortages, and the remaining effects of the COVID-19 pandemic changing the availability and usage of U.S. Department of Agriculture (USDA) Foods throughout California. The change implemented for school year (SY) 2020–21 identified in MB FDP-01-2021 is extending for an additional year. Rather than moving all remaining carryover processor pounds to the California Excess Account (CAE) on October 31, 2022, as identified in MB NSD-FDP-05-2011, this change will leave Recipient Agencies (RA) with pounds equal to their usage between July and October. The Food Distribution Program recognizes the continuing challenges schools faced in school year 2021‒22. The intent of this revised policy is to provide flexibility as schools begin the 2022‒23 school year, to maximize the use of USDA Foods, and to return unused USDA Foods back into circulation so that they may be made available to other recipient agencies in need throughout the state.

Background

As part of the Sweeps process, each processor submits a list of USDA Foods remaining in each RA’s account on June 30 at the end of the school year. These pounds are called carryover inventory. In California, each RA has from July 1 through October 31 to use their carryover pounds. Any unused carryover pounds remaining after October 31 are transferred into the CAE at the processor and are made available to all RAs on a first come-first serve basis.

Change

For the reconciliation of SY 2021–22 inventory, the Food Distribution Program (FDP) is changing the Sweeps process to leave each RA with a balance of carryover pounds equal to their usage between July 1, 2022, through October 31, 2022. Any remaining carryover pounds will be transferred to the CAE.

Carryover pounds on June 30 – Pounds used from July 1 to October 31 =
Unused Carryover

Unused Carryover – Number of Pounds used July 1 to October 31 =

Pounds to Sweep

Example:

Blue Hills Unified School District (USD) has 10,000 pounds of mozzarella at ABC Processor as of June 30. Between July 1 and October 31, they use 3,000 pounds of the mozzarella, leaving them with a balance of 7,000 carryover pounds. The FDP takes the 7,000 remaining pounds and deducts 3,000 pounds (amount used July 1 through October 31), to determine that 4,000 pounds would be swept into the CAE. Blue Hills USD would retain 3,000 carryover pounds for use.

10,000 – 3,000 = 7,000 carryover
7,000 – 3,000 (usage) = 4,000 (to sweep)
3,000 (remains in RA account)

Once the pounds are transferred to the CAE, the entitlement value and administration fee from the prior SY are not recoverable.

If an RA wishes to request pounds from the CAE, a transfer request must be submitted and may require a justification such as a completed processor commodity calculator or identified plan of usage.

Agencies may not transfer carryover pounds to another agency or processor. All transfers of USDA Foods will come out of the current year’s allocated inventory.

Contact Information

If you have any questions regarding this subject, please contact the Food Distribution Program by email at FoodDistribution@cde.ca.gov.