Mandatory Review of Provision 2 Base Year

This management bulletin (MB) provides guidance on the mandated review of school food authorities (SFA) participating in Provision 2 (P2). This MB supersedes SNP-25-2019, released in October 2019. The California Department of Education (CDE) provides additional information regarding parameters for participation in P2 on the CDE Provisions: Claiming Alternatives web page at http://www.cde.ca.gov/ls/nu/sn/provisions.asp.

Background

The U.S. Department of Agriculture (USDA) issued Policy Memo 59-2013 and 46-2015, which requires the CDE to conduct a review of certification and benefit issuance documentation during the base year for any SFA requesting approval to participate in the National School Lunch or School Breakfast Programs using P2. Certification is the process of assigning an eligibility category to free, reduced-price, and paid students. Documentation of certification includes copies of student meal applications, direct certification (DC) lists of CalFresh, California Work Opportunity and Responsibility to Kids, Medi-Cal, and Food Distribution Program on Indian Reservations recipients, and certified lists of homeless, migrant, runaway, foster, and Head Start participants.

You can review the USDA policy memos on the USDA School Meals web page at http://www.fns.usda.gov/schoolmeals. As a reminder, SFAs requesting participation in P2, or SFAs requesting an extension of their P2 cycle, must be in compliance with general School Nutrition Program (SNP) requirements and P2 requirements, as directed by the CDE.

P2 Base-year Reviews

The USDA requires the CDE to review the base-year certification and benefit issuance documentation for schools:

• Requesting to apply for P2
• Adding new sites to P2
• Establishing a new base year

The USDA requires the CDE to conduct the base-year review during the first year of the P2 cycle either through a desk audit or through the SNP administrative review (AR). Please refer to the descriptions below for more information on these two methods.

Desk Audit

The CDE may perform a desk audit for SFAs establishing a new P2 base year. The CDE desk audit review is conducted at the SFA location (on-site) or at the CDE (off-site). The USDA has given the CDE two options to review SFA documentation when completing a desk audit:

• Review 100 percent of the certifications
• Review a statistically valid sample of certifications

The CDE will review a statistically valid sample of certifications, from all sites that have or will establish a base year, if the total number of students certified for free or reduced-price benefits exceeds 100.

Administrative Review

Similar to a desk audit, the CDE will review either 100 percent or a statistically valid sample of certifications for a base-year review during an SNP AR. The CDE must follow the procedures in the USDA Administrative Review Manual when completing a base-year certification during an SNP AR. The Administrative Review Manual is available in the Child Nutrition Information and Payment System (CNIPS) Download Forms section.

P2 Base-year Review Submission Procedures

When the CDE notifies the SFA that the base-year review will be conducted as an off-site desk audit or as an off-site SNP AR activity, the SFA must complete the following steps:

1. Create a Benefit Issuance Document (BID) generated from the point-of-service system. The CDE will provide specific instructions for submitting the BID through the CNIPS at the time of the review.
   
   
2. Review of the BID is completed by the CDE within five business days of receipt. The CDE will randomly select student names and notify the SFA of student names selected. The SFA will then assemble all certification documentation for identified students (e.g., student meal application; state and local DC lists).
   
   
3. Scan, save, and upload the certification documentation to the CDE through the CNIPS.

When the CDE conducts a P2 base-year review as part of an on-site desk audit or on-site SNP AR activity, the SFA follows steps one through three above and makes the certification documentation available on site the day of the review.

Results of the Base-year Review

The CDE will use the Base-year Adjustment Calculation specified in the Administrative Review Manual to determine the correct funding percentages or levels for the base-year certifications. When claiming errors are identified during a base-year review, the SFA must correct the errors and the CDE will assess fiscal action from the beginning of the school year in which the review was performed.

As required by 7 CFR, Section 245.12(h), the CDE shall take action to ensure the proper implementation of P2. If the CDE determines that an SFA has not correctly implemented P2, the CDE may return the SFA to standard eligibility determination and meal counting procedures. Improper implementation of P2 may include, but is not limited to: incorrect processing of student meal applications which result in an error rate of five percent or greater, processing alternative income forms or universal benefits applications in place of student meal applications, and incorrect counting and claiming of meals. When determining if the denial of P2 is warranted, the CDE will also take into consideration past AR findings that reflect an inability to operate a standard meal counting and claiming year in accordance with Program regulations.

A P2 base-year review may result in fiscal action. California Education Code Section 49501.5 provides public school districts, county offices of education, and charter schools with additional state meal reimbursement under the California Universal Meals Program. If the P2 base-year review shows that the SFA has failed to meet state and federal requirements and guidance, the CDE may disallow state and/or federal meal reimbursement.

Recordkeeping

As required by 7 CFR, Section 245.9(h)(1), SFAs must retain records and base-year data during the period that P2 is in effect, including all extensions. In addition, such records must be retained for three fiscal years following the submission of the last claim for reimbursement of the final fiscal year which employed base-year data. Base-year records include, but are not limited to, the following:

• All approved and denied student meal applications
• DC data
• Changes in eligibility status as a result of verification or other reasons
• Daily meal counts, by type
• Calculation of claiming percentages
• Attendance areas of each school participating in P2
• Socioeconomic base-year data for use in requesting an extension
• Any extension authorizations from the CDE
• Edit check and on-site review documentation
• Verification records
• Claims for reimbursement

Contact Information

If you have questions regarding this MB, please contact your assigned SNP County Specialist. A list of SNP county specialists is located on the CDE SNP Specialist Directory web page at https://www.cde.ca.gov/ls/nu/sn/snpcontacts.asp. You can also email SNPInfo@cde.ca.gov to be directed to your SNP County Specialist.