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Dollar Threshold for Payment of Underpayments

Nutrition Services Division Management Bulletin

Purpose: Policy

To: School Nutrition Program Agencies, Child and Adult Care Food Program Agencies, Summer Food Service Program Agencies

Number: USDA-CNP-05-2008

Attention: Food Service and Program Directors, Business Officials, Owners

Date: September 2008

Subject: Dollar Threshold For Payment of Underpayments from Reviews and Audits Performed for School Nutrition Programs, the Child and Adult Care Food Program, and the Summer Food Service Program

Reference: United States Department of Agriculture 2005 Management Evaluation Recommendation; Improper Payments Information Act of 2002, Public Law 107-300; Title 7 Code of Federal Regulation sections 210.8(b)(1), 210.9(d), 220.11(b), 226.6(e), 226.10(c) and (e), 225.9(d)(6), 225.10(c)

This Management Bulletin (MB) establishes the threshold for underpayments generated by findings discovered during reviews and audits of the School Nutrition Programs (SNP), the Child and Adult Care Food Program (CACFP) and the Summer Food Service Program (SFSP) for the prior fiscal year.

The Improper Payments Information Act of 2002 (Public Law 107-300), that was implemented in Fiscal Year 2004, requires the United States Department of Agriculture (USDA) to identify and reduce erroneous payments in various programs, including the SNP, the CACFP, and the SFSP. By definition, an improper payment can be either an overpayment or an underpayment.

The USDA reviewed the California Department of Education’s (CDE) operations and determined that the CDE must establish a dollar threshold for paying underpayments identified through review and audit findings, consistent with Title 7, Code of Federal Regulation (7 CFR) sections 210.19(e), 225.18(f), and 226.25(b). In determining its underpayment threshold, the CDE has taken into consideration the cost to process the underpayment and any conflicts with 7 CFR parts 210, 225 and 226.

Please be advised that effective immediately, the CDE will no longer pay:

  • Any SNP or CACFP agency’s prior fiscal year underpayments of $600 or less
  • Any SFSP agency’s prior fiscal year underpayments of $100 or less.

If you have any questions regarding this MB, please contact Michele Vasquez, Manager, Program Integrity Unit at 916-445-7368, or by e-mail at You may also contact your local Nutrition Services Division, Field Services Child Nutrition Consultant at 800-952-5609.

Questions:   Nutrition Services Division | 800-952-5609
Last Reviewed: Monday, July 7, 2014

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