Net Cash Resources and Allowable Costs Reminder

Title 7, Code of Federal Regulations (7 CFR), Section 210.19 (a)(1), requires the California Department of Education (CDE) to monitor program operator compliance with the net cash resources (NCR) limitation for the nonprofit school food service account, known as the cafeteria fund. In addition, 7 CFR, Section 210.14 (a), states that school food service revenues are to be used only for the operation and improvement of school food service.

Program operators that have NCR of six months or more average operating expenses are required to have budget agreement with the CDE, which is a plan to spend down excess cafeteria funds over a specified time period. Therefore, the Nutrition Services Division is requesting that all program operators at risk for excess NCR at the end of School Year 2022–23 to complete Form SNP-57, Net Cash Resources Calculator, which can be found in the Download Forms section of the Child Nutrition Information and Payment System .

No further action is required for program operators if no excess is indicated after completing the calculator. However, if an excess is indicated, program operators need to send a copy of Form SNP-57 to the Resource Management Unit (RMU) as well as a copy of the financial report (i.e., Unaudited Actuals) used to complete the form by email to SNPBA@cde.ca.gov to evaluate whether a budget agreement is necessary. The due date for program operators to respond is November 1, 2023.

If you were previously approved for a budget agreement, the RMU will contact you individually. As a reminder, the NCR limitation was changed from three months to six months in July of 2022. Information on budget agreements and excess NCR can be found on the Cafeteria Fund Guidance web page, tab NCR.

In addition, program operators are reminded that cafeteria funds are to be used for the operation and improvement of school food service, and certain expenditures are not allowed. Prohibited expenditures include purchases of land, buildings, construction of buildings, and building infrastructure improvements. Building infrastructure improvements include, but are not limited to, heating and air conditioning, electrical, water, sanitation (sewer), and telecommunications systems. Expenditures that do not align with federal regulations or are specifically prohibited will be disallowed by CDE and program operators required to repay the cafeteria fund using nonfederal funds. Program operators are encouraged to use other grant funds, such as Kitchen Infrastructure Funds, to make infrastructure improvements.

For questions regarding NCR and budget agreements, please contact the RMU by email at SNPBA@cde.ca.gov.

For questions about allowable use of cafeteria funds, please reach out to SNPcafefundquestions@cde.ca.gov.