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Determining Severe Need and 2 Cent Differential


On June 15, 2022, the U.S. Department of Agriculture (USDA) issued Policy Memorandum SP 11–2022: Determining Eligibility for Severe Need Reimbursement for the School Breakfast Program and the Two Cent Differential Reimbursement for the National School Lunch Program in School Year (SY) 2022–2023 and 2023–2024. You can view this policy memo on the USDA School Meals Policy web page External link opens in new window or tab..

The policy memo provides guidance to school food authorities (SFA) as they begin planning their return to more normal operations and information on how severe need reimbursement rates for the School Breakfast Program (SBP) and the two-cent differential reimbursement for the National School Lunch Program (NSLP) will be determined in SYs 2022–2023 and 2023–2024.

Severe Need and 2-cent Differential Eligibility

SFAs are eligible for severe need breakfast reimbursement rates if 40 percent or more of the NSLP lunches served to students at school during the second preceding school year were at the free or reduced-price rate. The “second preceding school year” is defined as the two years prior to the current school year. Currently, SFAs that qualify for severe need breakfast reimbursement receive $0.38 per breakfast meal served on top of the basic breakfast reimbursement rate. This rate is calculated at the site level. SFAs are eligible for the two-cent differential if 60 percent or more of the NSLP lunches served in the second preceding school year were at the free or reduced-price rate. SFAs that qualify for the two-cent differential receive $0.02 per lunch meal served on top of the NSLP reimbursement rate. This rate is calculated at the district/agency level.

The Child Nutrition Information and Payment System (CNIPS) automatically calculates severe need reimbursement eligibility in item #13 of the School Nutrition Programs (SNP) site application and in item #22 of the Seamless Summer Option (SSO) site application. CNIPS automatically calculates two-cent differential eligibility in the sponsor application. The USDA recognizes SFAs that used nationwide waivers to operate the Summer Food Service Program (SFSP) and/or SSO during SY 2020–2021 and/or SY 2021–2022 may not have the data needed to determine eligibility for severe need reimbursement rates for breakfast meals served through the SBP. SFAs might also not have data to determine the two-cent differential reimbursement for NSLP lunches served in SYs 2022–2023 and/or 2023–2024. As a result of SFAs operating under the USDA waivers during the COVID-19 pandemic, schools might not have complete data needed to determine eligibility for severe need breakfast reimbursement rates and the two-cent differential for lunch.

The USDA has provided information on how eligibility rates for SYs 2022–2023 and 2023–2024 for severe need and the two-cent differential reimbursements can be determined.

How Eligibility Will Be Determined

The method of determining eligibility for severe need and two-cent differential reimbursement rates will depend on how SFAs have been serving meals during the COVID-19 pandemic.

  • SFAs that did not operate NSLP during SYs 2020–2021 and 2021–2022 may use one of the following options to determine eligibility for SY 2022–2023:
    1. SFAs may use the percentage of lunches served free or at the reduced-price rate during SY 2019–2020. Note: The California Department of Education (CDE) is working to make this change occur automatically in CNIPS. No action is required on the part of the SFA.
    2. SFAs may also use the percentage of lunches served free or at the reduced-price rate during the first three months of SY 2022–2023. Note: The CDE will reach out to SFAs with sites that are not eligible under option #1 to help determine if they are eligible under option #2. No action is required on the part of the SFA at this time.
  • SFAs that operated NSLP during SY 2021–2022 must use the percentage of lunches served free or at the reduced-price during SY 2021–2022 to determine eligibility for severe need and two-cent differential reimbursement for SYs 2022–2023 and 2023–2024. Note: The CDE is working to make this change occur automatically in CNIPS. No action is required on the part of the SFA.
  • SFAs that operated NSLP during SYs 2020–2021 and 2021–2022 have second prior year data available to determine eligibility for severe need and two-cent differential reimbursement. Therefore, these schools have the data needed to determine both additional reimbursements. No action is required on the part of the SFA.

New Sites and SFAs

New sites without a two-year lunch history may qualify for severe need reimbursement. SFAs with new sites must use the CNIPS Form SNP-08 located in the Download Forms section of the CNIPS to demonstrate that the new site served at least 40 percent of their lunches for free or at a reduced-price in the first three reimbursement claiming periods of the current school year. For more information on how to qualify new sites for severe need reimbursement, please see Severe Need Breakfast in the SBP.

Additionally, new SFAs without a two-year lunch history may qualify for the two-cent differential. New SFAs must use the CNIPS Form SNP-20 located in the Download Forms section of the CNIPS to demonstrate that the new SFA served at least 60 percent of their lunches for free or at a reduced price in the first three reimbursement claiming periods of the current school year. For more information on how new SFAs can qualify for the two-cent differential, please see Two-cent Differential Reimbursement for New SFAs.

Resources and Contact Information

If you have any questions or need assistance regarding applying for the NSLP or SBP, please contact your SNP Specialist. A current list of SNP Specialists is available on the SNP Specialist Directory web page. You may also contact an SNP Office Technician by phone at 916-322-3005, or call 800-952-5609, Option 2, to be directed to your SNP Specialist.

For CNIPS technical questions, please contact the CNIPS Help Desk by phone at 800-952-5609, Option 6, or by email at cnips@cde.ca.gov.

Questions:   Nutrition Services Division | 800-952-5609
Last Reviewed: Wednesday, June 29, 2022
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