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Updates to the Serious Deficiency Process-DCH


Important Notice: CACFP Program Moved to CDSS

The Early Childhood Development Act of 2020 (Senate Bill (SB) 98, Chapter 24, Statutes of 2020) authorized the transfer of child care and development programs administered by the California Department of Education to the California Department of Social Services (CDSS) effective July 1, 2021. The content on this page may not be current and involves the Child and Adult Care Food Program (CACFP) that has moved to CDSS. Visit the CDSS CACFP web page External link opens in new window or tab. or call 1-833-559-2420 for more information.

Nutrition Services Division Management Bulletin

Purpose: Policy

To: Day Care Home Sponsors

Attention: Food Program Director

Number: CACFP-05-2015

Date: April 2015

Reference: Title 7, Code of Federal Regulations, sections 226.6(l) and 226.16(l); Management Bulletin USDA-CACFP-06-2010; U.S. Department of Agriculture Policy Memo CACFP 14-2012
http://www.fns.usda.gov/cnd/Care/Regs-Policy/PolicyMemoranda.htm [Note: the preceding hyperlink is no longer valid]

Supersedes: Management Bulletin USDA-CACFP-21-2012

Subject: Updates to the Serious Deficiency Process—Day Care Home Providers


This Management Bulletin (MB) supersedes MB USDA-CACFP-21-2012 and provides updates to MB USDA-CACFP-06-2010, Serious Deficiency Process—Day Care Home Providers, and provides guidance and instruction on the implementation of the serious deficiency (SD) process for day care home (DCH) providers operating the Child and Adult Care Food Program (CACFP). In accordance with Title 7, Code of Federal Regulations (7 CFR), Section 226.6(c)(3)(ii)(R), failure by a sponsoring organization to properly implement and administer the DCH termination and administrative review provisions set forth at paragraph (l) of this section and Section 226.16(l), is an SD, and could jeopardize the sponsoring organization’s participation in the CACFP.

Corrective Action

U.S. Department of Agriculture (USDA) Policy Memo CACFP 14-2012 (p. 5) Sample Corrective Action Plan (CAP) for a Provider, states that at a minimum the following information must be included in the provider’s corrective action:

  • The provider’s full name, address, and date of birth

  • Each SD and the procedures that the provider will implement to correct the issue

  • The timeframe for implementation of the procedures to correct the issue

  • The location where records associated with correcting the issues will be stored (Per the USDA, the location of the provider’s CAP does not have to be specific. The provider can indicate that the CAP is maintained at their home address and ensure the CAP is available to their sponsoring organization, the California Department of Education, or the USDA, upon request)

  • Supporting documentation as described in the CAP Guidance section
A Failure to Have a Valid Operating License Is Not a Serious Deficiency

Federal regulations provide DCH providers flexibility to demonstrate compliance with applicable state or local child care standards, or CACFP child care standards if the licensing option is not available. DCHs may participate in the CACFP if they are licensed, demonstrate compliance with applicable state or local child care standards, or demonstrate compliance with CACFP child care standards to the state agency or to federal, state, or local authorities if licensing is not available.

The California Department of Education’s (CDE) agreement between a sponsoring organization and a DCH provider includes language similar to:

The provider agrees to adhere to one or more of the following: the California Department of Social Services licensing regulations, the Trustline Registry established requirements, military license regulations, or tribal authority policies.

However, if a new DCH provider does not comply with the language in the agreement, or an existing DCH provider fails to renew a license, it becomes an issue of eligibility and not a serious deficiency. Therefore, the DCH is not eligible to participate in the CACFP.

If the DCH can demonstrate compliance with applicable state or local child care standards, CACFP child care standards, or state or local established health and safety standards, then the DCH provider may be considered for participation in the CACFP and approved for participation provided that all CACFP requirements are met. Unless exempt under California Health and Safety Code, Section 1596.792, all family DCHs must obtain a license to operate in accordance with California Health and Safety Code Chapter 3.5, Section 1597.54.

Proposed Termination and Proposed Disqualification

If a DCH sponsor (Sponsor) proposes termination of a provider’s CACFP agreement and proposes to disqualify the provider from future CACFP participation, the provider may appeal this in accordance with 7 CFR, Section 226.6(l)(2). If the provider submits documentation to the Sponsor prior to or with a request for appeal, the Sponsor may consider the documentation. If the Sponsor determines that the documentation permanently corrects the SD findings, the Sponsor may withdraw the proposed termination and proposed disqualification actions and temporarily defer the SD determination.

If the request for appeal has been forwarded to the Sponsor’s hearing officer, and the provider submits documentation to the hearing officer that (s)he identifies as acceptable, the hearing officer may refer the documentation back to the Sponsor for their review and approval. If the Sponsor accepts the provider’s documentation, (s)he must notify the hearing officer in writing that they accept the provider’s documentation. The hearing officer will then issue a letter to the Sponsor and provider that dismisses the appeal.

If the hearing officer determines that the Sponsor’s findings are unsubstantiated or, without input from the Sponsor, determines that the provider’s documentation permanently corrects the SD, (s)he may make a determination to overturn the Sponsor’s proposed actions. If the hearing officer determines that the Sponsor has properly implemented the SD process and the provider has not provided adequate proof to overturn the proposed actions, the hearing officer must uphold the proposed actions.

In accordance with 7 CFR, Section 226.6(k)(5)(vii), the hearing officer “must be independent and impartial,” and although (s)he “may be an employee of the State agency or an employee or board member of the sponsoring organization, (s)he must not have been involved in the action that is the subject of the administrative review, or have a direct personal or financial interest in the outcome of the administrative review.” Further, pursuant to 7 CFR, Section 226.6(k)(5)(viii), the hearing officer’s decision must be based on “the information provided by the State agency, the institution, and the responsible principals and individuals (RPI), and Federal and State laws, regulations, policies, and procedures governing the CACFP.”

However, the authority of the hearing officer does not include interpreting the intent or expanding the meaning of federal regulations. If questions or concerns are raised regarding the intent or interpretation of the federal regulations during an administrative review hearing, (s)he should consult with the USDA Food and Nutrition Service’s (FNS) legal counsel to ensure an interpretation of federal regulation is appropriately applied to the case.

Per 7 CFR, sections 226.6 (k)(5)(x) and (l)(5)(vii), the determination made by the hearing officer “is the final administrative determination to be afforded the institution, [responsible principal or individual] RPIs, or providers.”

Terminating the Providers in the CNIPS

The sponsor must access the Child Nutrition Information and Payment System (CNIPS) and terminate the provider on the date the Sponsor: (1) determines a provider is terminated; or (2) receives the hearing officer’s decision to uphold the Sponsor’s proposed termination action.

Sponsors must complete the following steps in the CNIPS to ensure that the provider is immediately identified as terminated and disqualified, which prevents the provider from joining another sponsor during any lapse of time before the Sponsor notifies the California Department of Education (CDE) of the termination:

  1. Access the CNIPS

    1. Select Applications
    2. Select Application Packet—DCH Sponsor
    3. Select Provider Application(s)
  1. Select Provider

    1. Select Details
    2. Drop Provider
      1. In the empty box, enter cancellation date (this date is either the day after the appeal deadline or in the case of an appeal, the date the hearing officer issues the decision)
      2. Enter cancellation code (select Provider Terminated)
      3. Enter cancellation reason (SD)
    3. Select Save
Removal from the National Disqualified List

In accordance with 7 CFR, Section 226.6(c)(7)(vi), once the provider is included on the National Disqualified List (NDL), the provider (responsible principal or individual) remains on the list until such time as the state agency, in consultation with the USDA FNS, determines that the SD that led to their placement on the list has been corrected, or until seven years have lapsed since they were disqualified from participation. However, if the provider has failed to repay debts owed under the program, they will remain on the list until they have paid their debts. Per guidance from the USDA, if a DCH provider has been on the NDL for seven years and has no debt associated with that disqualification, the DCH provider can submit an application to a sponsor along with a statement confirming that the seven years on the NDL has expired and there is no debt owed to the CACFP. Upon confirmation by the Sponsor that the seven years has expired, the Sponsor may process the application. In addition, the Sponsor should notify the CDE that the automatic removal has not occurred so that the CDE can inform the USDA.

Identified below is the process for requesting a provider’s removal from the NDL prior to seven years.

  1. Terminating sponsor requesting NDL removal for a provider that they were responsible for terminating and disqualifying:

    1. The disqualified provider must submit a written request to be removed from the NDL to the Sponsor that terminated and disqualified the provider. The request must include a CAP detailing how and by when the provider will ensure compliance with federal regulations and program guidance.

      Note: If the Sponsor does not accept the provider’s written request, the Sponsor must respond to the provider in writing detailing why they denied the request.

    2. If the Sponsor agrees that the submitted documentation permanently corrects the SD, the Sponsor must forward a written request to the CDE asking the provider be removed from the NDL. The request must include a copy of the provider’s written request and CAP.

    3. If the CDE or the USDA does not accept the Sponsor’s written request, the CDE will notify the Sponsor in writing detailing why the request is denied.

    4. If the CDE and the USDA agree to remove the provider from the NDL, the provider will be removed from the NDL. The CDE will notify the Sponsor in writing, and the Sponsor must notify the provider in writing.

    5. Once the provider has been removed from the NDL, the provider may apply for participation in the CACFP.
  1. New potential sponsor requesting NDL removal for a provider that they were not responsible for terminating and disqualifying:

    1. The new potential Sponsor wishing to add a provider that has been terminated and disqualified by another sponsoring organization must contact the CDE. The CDE will provide the new potential Sponsor with documentation from the terminating Sponsor related to the provider’s serious deficiencies.

    2. If, after review of the SD documentation, the new potential Sponsor is interested in adding the terminated provider to their program, the potential Sponsor must require that the provider submit a CAP.

      Note: If the CAP submitted by the provider is not considered acceptable by the new potential Sponsor, they must notify the provider in writing.

    3. If the new potential Sponsor accepts the provider’s CAP, they will forward a written request to the CDE asking that the provider be removed from the NDL. The request must include a copy of the provider’s CAP.

    4. If the CDE or the USDA does not accept the Sponsor’s written request, the CDE will notify the potential sponsor in writing detailing why the request is denied.

    5. If the CDE and the USDA agree to remove the provider from the NDL, the provider will be removed from the NDL. The CDE will notify the Sponsor in writing, and the Sponsor must notify the provider in writing.

    6. Once the provider has been removed from the NDL, the provider may apply for participation in the CACFP.
  1. Provider currently living in California was terminated and disqualified by a sponsor in another state and wants to be removed from the NDL to join a new sponsoring organization:

    1. The new potential Sponsor wishing to add a provider that has been terminated and disqualified by a sponsor in another state must contact the CDE. The CDE will contact the USDA’s Western Regional Office to request information on the serious deficiencies that led to the provider’s termination and disqualification in another state.

    2. The CDE will forward the information provided by the USDA to the new potential Sponsor. If, after review of the SD documentation, the new potential Sponsor is interested in adding the terminated provider to their program, the new potential Sponsor must require that the provider submit a CAP.

      Note: If the CAP submitted by the provider is not considered acceptable by the new potential Sponsor, the Sponsor must notify the provider in writing.

    3. If the new potential Sponsor accepts the provider’s CAP, the Sponsor will forward a written request to the CDE asking the provider be removed from the NDL. The request must include a copy of the provider’s CAP.

    4. If the CDE or the USDA does not accept the Sponsor’s written request, the CDE will notify the Sponsor in writing detailing why the request is denied.

    5. If the CDE and the USDA agree to remove the provider from the NDL, the provider will be removed from the NDL. The CDE will notify the Sponsor in writing, and the Sponsor must notify the provider in writing.

    6. Once the provider has been removed from the NDL, the provider may apply for participation in the CACFP.

Please note: a sponsoring organization is not required to seek removal of a terminated and disqualified provider from the NDL prior to seven years. Sponsors may evaluate a request on a case-by-case basis or implement a policy that is communicated to enrolled providers that states that their agency will not consider their early removal from the NDL.

A provider who wishes to be removed from the NDL but does not have either the terminating sponsor or a potential new sponsor’s support will not have the opportunity to be removed from the NDL prior to seven years. The CDE will not take requests for removal from the NDL directly from the provider.

Please share this information with your agency’s management, monitors, hearing officials, and other business personnel, as appropriate.

Contact Information

If you have any questions regarding this MB, please contact your Program Integrity Unit specialist, Turtle Warchild, by phone at 916-319-0458 or by e-mail at twarchild@cde.ca.gov.

Questions:   Nutrition Services Division | 800-952-5609
Last Reviewed: Wednesday, June 16, 2021
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