Excess Net Cash Resources
Nutrition Services Division Management Bulletin
Purpose: Policy, Beneficial Information
To: All School Nutrition Program Sponsors
Attention: Food Service Directors, School Business Officials
Date: January 2020
Reference: Title 7, Code of Federal Regulations, sections 210.2, 210.9(1), 210.14(b), and 210.19(a)(1)
Supersedes: NSD-SNP-07-2013; NSD-SNP-05-2012
Subject: Excess Net Cash Resources
School food authorities (SFA) participating in federal School Nutrition Programs (SNP) must observe both state and federal limitations on the use of nonprofit school food service account funds. This management bulletin (MB) supersedes MB NSD-SNP-07-2013 on Cafeteria Fund Allowable Uses. This MB provides updated information regarding net cash resources (NCR) for the nonprofit school food service account (cafeteria fund).
Limits on Net Cash Resources
Federal regulations require that SFAs limit their NCR to an amount that does not exceed three months of average operating expenditures for its cafeteria fund. NCR are defined as all monies that are available; or have accrued to, an SFA’s cafeteria fund, less cash payable. Monies may include, but are not limited to, cash on hand, cash receivable, earnings on investments, cash on deposit; and the value of stock, bonds, or other negotiable securities.
SFAs should closely monitor and calculate their NCR throughout the school year to avoid an excess balance. The California Department of Education (CDE) created Form SNP-57 NCR Calculator and instructions which are available in the Download Forms section of the Child Nutrition Information and Payment System to assist with the calculation. If SFAs have an excess balance, they should contact the Resource Management Unit (RMU) by email at firstname.lastname@example.org to create an approved budget agreement to spend down the excess funds.
Federal regulations require the CDE to ensure SFAs are in compliance with the requirements to limit NCR. The RMU annually reviews data from SFA’s prior year Unaudited Actuals submitted to the CDE School Fiscal Services Division. If excess NCR are identified, the RMU will contact these SFAs to initiate a budget agreement. The RMU will continue to monitor all active budget agreements annually until compliance with NCR is met.
If SFAs fail to comply with NCR requirements, the CDE may require SFAs to reduce meal prices, improve food quality, or make other improvements to the food program. In addition, the CDE may make adjustments in the Child Nutrition Programs rate of reimbursement if the SFA continues to be out of compliance with NCR.
Cafeteria Equipment Reserve
Cafeteria fund reserves, also known as cafeteria equipment reserves or deferred maintenance are not allowed. California Education Code (EC) Section 38102 allowed this in the past, however, Senate Bill 81 repealed this section of EC in the 2013–14 regular session.
Additional Cafeteria Fund Guidance and Resources
Due to the complexity of cafeteria fund oversight, the CDE Nutrition Services Division (NSD) has issued a series of MBs about the laws and regulations governing revenues accruing to and expenditures made from cafeteria funds and accounts. Additional MBs regarding allowable and unallowable expenditures from the school food services cafeteria funds and accounts can be found on the CDE Cafeteria Fund Guidance web page at https://www.cde.ca.gov/ls/nu/sn/cafefundguide.asp.
If you have any questions regarding this subject, please contact the CDE NSD RMU by email at SNPBA@cde.ca.gov.