Two-cent Differential Reimbursement for New SFAs
Nutrition Services Division Management Bulletin
Purpose: Policy and Beneficial Information
Date: January 2017
To: School Nutrition Program Sponsors
Attention: Food Service Directors
Reference: U.S. Department of Agriculture Policy Memoranda SP 30-2014: Determining Eligibility for Two-cent Differential Reimbursement and SP 23-2005: Eligibility for Severe Need Rates for the School Breakfast Program
Supersedes: Management Bulletin SNP-03-2015
Subject: Determining Eligibility for Two-cent Differential Reimbursement for New School Food Authorities
This Management Bulletin (MB) provides updated guidance on determining eligibility for the federal “Two-cent Differential” reimbursement for new school food authorities (SFA).
This updated guidance is similar to what the California Department of Education (CDE) Nutrition Services Division (NSD) provided in June 2016 (via MB SNP-03-2016), titled “Clarification of Severe Need Breakfast Reimbursement Eligibility in the School Breakfast Program.” That MB described a new NSD process for SFAs applying for severe need breakfast reimbursement. This MB provides new, qualifying SFAs with a comparable process for requesting additional two-cent differential reimbursement, or when they do not have the required two-year history of serving lunches to qualify.
Section 4 of the Richard B. Russell National School Lunch Act (NSLA) provides general cash assistance to aid schools in the purchasing of food. The NSLA provides two different Section 4 payment levels for lunches served under the National School Lunch Program (NSLP):
- The base payment applies to lunches served by SFAs when less than 60 percent of the lunches were served during the second preceding school year at a free or reduced-price (F/RP) rate.
- A higher payment of two additional cents per lunch is available to SFAs that served 60 percent or more of the lunches at an F/RP rate in the second preceding school year. This higher payment rate is referred to as the “two-cent differential.”
The “second preceding school year” mentioned above is defined as the two years prior to the current school year. For example, to apply for the two-cent differential reimbursement rate in School Year (SY) 2016–17, SFAs will use data for the lunches they served at an F/RP rate during SY 2014–15.
On September 22, 2005, the U.S. Department of Agriculture (USDA) issued Policy Memorandum SP 23-2005: Eligibility for Severe Need Rates for the School Breakfast Program, which provided guidance regarding eligibility determinations for severe need reimbursement in new schools.
School Food Authority Eligibility
The following section defines when SFAs without a two-year lunch history may qualify for the two-cent differential.
- SFAs currently eligible for the two-cent differential that change their name or move to a new location with no change in student population are automatically eligible for the two-cent differential reimbursement rate. Contact your School Nutrition Programs (SNP) county specialist for assistance.
- New SFAs without a two-year lunch history may qualify for the two-cent differential if 60 percent or more of the lunches they served for the first three claiming periods of the current SY were to students eligible for F/RP meals. Contact your SNP county specialist for assistance and complete Form SNP-20 as identified below.
Two-cent Differential Reimbursement Rate Request and Claiming Timelines
The following section describes the required steps and timeline for the SFA to submit a request to the CDE for approval of the two-cent differential.
If an SFA does not have a two-year history of serving lunches and believes they are qualified to earn the two-cent differential, they must submit to the CDE the Two Cent Differential Reimbursement Request – Alternate Eligibility request (Form SNP-20) located in the Download Forms section of the Child Nutrition Information and Payment System (CNIPS). This is to demonstrate that the new SFA served at least 60 percent of their lunches at an F/RP rate in the first three reimbursement claiming periods of the current SY. If SFAs submit Form SNP-20 during the fourth claiming period of the SY, the CDE may retroactively approve a two-cent differential to encompass the first three lunch claiming periods that were used to establish the SFA’s two-cent differential eligibility.
As first described above, SFAs must submit the CNIPS Form SNP-20 for CDE approval during the fourth claiming period of the SY in order to be approved retroactively for the first three claiming periods. For example, if August, September, and October are the first three claiming periods of the SY, the SFA must submit the request for the two-cent differential during the month of November (the fourth claiming period). However, if SFAs operate 10 or fewer days in August and choose to combine their August and September reimbursement claims, they must submit Form SNP-20 during the month of December, which, in this instance, is the fourth claiming period.
If the CDE approves a new SFA to participate midyear in the NSLP, the new SFA would submit Form SNP-20 during their fourth claiming period of the year. For example, if a new SFA is approved to participate in the NSLP in December, they would submit Form SNP-20 in March (the fourth claiming period).
If an existing SFA submits the form after the fourth claiming period, they must still use the first three claiming periods of the SFA’s school year to qualify for the two-cent differential. For example, if an existing SFA that annually operates from September through June submits Form SNP-20 in April, the SFA must still use its first three claiming periods (September–November) to qualify for the two-cent differential. The CDE will only approve the two-cent differential reimbursement rate with an effective date of the month in which the SFA submits an approvable request to the CDE. In this example, the effective date of the two-cent differential reimbursement rate would be April 1.
The CDE will not review or approve two-cent differential reimbursement requests that SFAs submit before the fourth claiming period of the SY. School days during July designated by the SFA as summer school for the prior SY are not counted toward the first three claiming periods.
Email completed SNP-20 forms to your SNP County Specialist.
Once the CDE approves an SFA’s Form SNP-20, the SNP county specialist will adjust the SFA’s CNIPS Sponsor Application under the heading Lunch—Reimbursement Determination. This will activate the two-cent differential. The SNP county specialist then approves the SFA’s CNIPS application and contacts the SFA’s assigned fiscal analyst in the CDE Child Nutrition Fiscal Services (CNFS) Unit. The CNFS analyst will contact the SFA’s claims preparer, as identified on the SFA’s current CNIPS application, to provide instructions for submitting reimbursement claims.
Two-cent Differential Process for SFAs Without a Two-year History
SFAs must annually qualify for the Two-cent Differential. SFAs without a two-year lunch history must annually submit Form SNP-20 through the process defined in this MB, until the SFA establishes the required two-year lunch history. In subsequent years, SFAs may not need to submit Form SNP-20 as long as the SFA served 60 percent or more lunches to children eligible for F/RP meals, and they continue to have a two year lunch history. This is because the SFA will continue to qualify for the two-cent differential, based on the second preceding year’s lunch history, in which the CNIPS will automatically calculate and populate into the appropriate data fields.
If you have any questions regarding this subject, please contact your School Nutrition Programs (SNP) County Specialist. The SNP County Specialist list is available in the Download Forms section of the Child Nutrition Information and Payment System, Form ID Caseload. You can also contact the SNP Office Technician (OT), by phone at 916-322-3005 to be directed to your SNP County Specialist.
If you have any questions about meal reimbursement claims, please contact your agency’s assigned nutrition fiscal analyst. A directory of these analysts can be found on the CDE Nutrition Services Web page at http://www.cde.ca.gov/fg/aa/nt/.