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Paid Lunch Equity Requirement--S.Y. 2013-14 Update


Nutrition Services Division Management Bulletin
Purpose: Policy, Action Required, Beneficial Information
To: School Nutrition Program Sponsors Number: USDA-SNP-18-2013
Attention: Food Service Director, Business Official Date: October 2013
Subject: Paid Lunch Equity Requirement—Updated Guidance for School Year 2013–14
Reference: U.S. Department of Agriculture Interim Rule: School Food Service Account Revenue Amendments Related to the Healthy, Hunger‑Free Kids Act of 2010 (June 17, 2011); Policy Memos SP 39‑2011—Revised (October 24, 2011); SP 15‑2012 (February 15, 2012); SP 18‑2012 (February 24, 2012); SP 22‑2012 (March 19, 2012); SP 28‑2012 (April 20, 2012); SP 19‑2013 (January 2, 2013); SP 25‑2013 (February 21, 2013); SP 34‑2013 (April 17, 2013); and SP 58‑2013 (September 10, 2013)
SP 34-2013 Web Link: http://www.fns.usda.gov/sites/default/files/SP34-2013os.pdf

This Management Bulletin (MB) provides School Food Authorities (SFA) (Local Educational Agencies participating in the School Nutrition Programs [SNP]) with updated policy information from U.S. Department of Agriculture (USDA) Policy Memo SP 34‑2013 regarding new flexibilities for Paid Lunch Equity (PLE) in Section 205 of the Healthy, Hunger‑Free Kids Act of 2010 (HHFKA).

Background

Since the USDA published the Interim Rule pertaining to PLE requirements in June 2011, the California Department of Education (CDE), Nutrition Services Division (NSD), has communicated PLE requirements and updates to SFAs through e‑mails, Cafeteria Fund MBs, training seminars, and statewide conferences. For further background information, please refer to MB USDA‑SNP‑16‑2012, located on the CDE PLE Requirements Web page at http://www.cde.ca.gov/ls/nu/sn/mbusdasnp162012.asp.

Due to the complexity of the PLE requirements, the CDE strongly encourages SFAs to also read the USDA’s PLE policy memos and utilize the USDA’s meal pricing calculation tools in order to comply with the paid lunch pricing requirements. These documents are available on the USDA School Meals Policy Memos Web page at http://www.fns.usda.gov/school-meals/policy. Please search for the term “Paid Lunch Equity.”

Interim Paid Lunch Equity Requirement Changes for School Year 2013–14

During school year (SY) 2012–13, financially healthy SFAs expressed concerns to the USDA Food and Nutrition Service (FNS) that the PLE requirements would result in their nonprofit school food service account’s net cash resources (NCR) exceeding the federal three‑month operating balance limitation. In response to these concerns, the FNS provided two methods for SFAs to satisfy the PLE requirement for SY 2013–14. Specifically, the FNS:

  1. Expanded the definition of a non‑federal revenue source to include any paid meal
  2. Allows SFAs in a strong financial position to be exempt from the PLE paid lunch pricing requirements if they meet specific requirements (defined below in the School Food Authorities in Strong Financial Position section)
Non‑federal Revenue Source

Section 205 of the HHFKA requires SFAs whose average paid lunch price is less than the difference between the federal reimbursement for a free and a paid lunch (for SY 2013–14 the difference is $2.59) to either gradually increase their average paid lunch price to meet the

SY 2013­–14 rate of $2.59 or provide non‑federal funds to their cafeteria fund to cover the difference that raising the meal price would have provided the SFA. In accordance with Title 7, Code of Federal Regulations (7 CFR) Section 210.24, if an SFA fails to increase their average paid lunch price, or does not provide non‑federal funds to its cafeteria fund to cover the difference, then the state agency shall withhold program payments until the SFA takes the required corrective action.

Under the Interim Rule, the USDA temporarily broadened the definition of a non‑federal revenue source to include (per 7 CFR Section 210.14[e][5][iii]):

  • Per meal non‑federal reimbursement for any paid meal (breakfast, lunch, etc.)
  • Any funds provided by (external or student) organizations to support any paid meal
  • Any proportion attributable to paid meals from direct payments made from school district funds to support the lunch service

Essentially, this change to the definition of non‑federal funds temporarily allows SFAs to use funds from paid breakfasts during SY 2013–14 to count toward satisfying their PLE requirements. The PLE Interim Rule is available on the USDA HHFKA Web page at http://www.fns.usda.gov/school-meals/healthy-hunger-free-kids-act.

School Food Authorities in a Strong Financial Position

Sections 210.9(b)(2), 210.14(b), and 210.19(a)(1) of 7 CFR prohibit the NCR of a nonprofit school food service account from exceeding a three‑month operating balance. The goal of this federal limitation is to ensure that SFAs:

  1. Spend these funds only on school meal operations
  2. Do not profit from the receipt of federal funds

As stated earlier, SFAs in a strong financial position reported to the FNS that requiring SFAs to raise their average paid lunch price would result in an NCR violation. Since the intention of the PLE requirements is to financially strengthen SFAs, the FNS recognized that there are occasions where the PLE requirements create unintended regulatory consequences.

Therefore, the FNS has provided an exemption from the PLE requirements for SFAs that meet the following conditions:

  1. The SFA must have received approval from the CDE as meeting the new meal pattern requirements.
  2. The SFA must demonstrate that the required increase to the average paid lunch price or revenue contribution(s) would cause the SFA to exceed their three‑month operating balance limit.
  3. The SFA must explain how the additional revenue would not be better spent improving their school meal program.

The FNS recommends that SFAs review their program operations before requesting an exemption to see if the funds can be spent addressing program deficiencies or goals. All SFAs, regardless of whether or not they are seeking an exemption, must annually complete the USDA PLE Calculation Tool (Excel Spreadsheet), which is available as an attachment to USDA Policy Memo SP 25‑2013 on the USDA School Meals Policy Memos Web page at http://www.fns.usda.gov/school-meals/policy.

Process for School Food Authorities Requesting a Paid Lunch Equity Exemption

If an SFA believes that raising the average price for a paid lunch will result in an NCR violation and that the additional revenue would not be better spent improving the school meal program, then the SFA must submit a request to waive the PLE requirements to the CDE.

SFAs must submit their request by e‑mail to SNPCAFEFUNDQUESTIONS@cde.ca.gov. The e‑mail subject line must state the following: “PLE Exemption Request – (enter SFA name here).”

The SFA must attach the following documents to the e‑mail request:

  • A copy of the CDE certification letter confirming the SFA has met the new meal pattern requirements
  • Balance sheets demonstrating the SFA’s NCR before and after the price increase
  • The SFA’s responses to the attached Paid Lunch Equity Exemption Request: Factors for Consideration

After the CDE receives the SFA’s complete PLE exemption request, the CDE will review and advise the SFA of its determination.

Contact Information

If you have any questions regarding this MB, please contact the Nutrition Services Division by e‑mail at SNPCAFEFUNDQUESTIONS@cde.ca.gov, or contact your county SNP Specialist by downloading the SNP contact list (Form Caseload SNP) available in the Child Nutrition Information and Payment System Download Forms section.

Attachment

Paid Lunch Equity Exemption Request: Factors for Consideration at http://www.cde.ca.gov/ls/nu/sn/documents/mbusdasnp182013att.doc

Questions:   Nutrition Services Division | 800-952-5609
Last Reviewed: Thursday, January 14, 2016

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