Revenue from the Sale of Nonprogram Foods

This Management Bulletin (MB) provides school food authorities (SFA) participating in the School Nutrition Programs additional guidance from the U.S. Department of Agriculture concerning revenue from the sale of nonprogram foods.

Section 206 of the Healthy, Hunger-Free Kids Act of 2010 requires that SFAs accrue all revenue from the sale of nonprogram foods to the nonprofit school food service account. This requirement is also codified in Title 7, Code of Federal Regulations (7 CFR), Section 210.14(f). Further, revenue sharing between the school food service and student or parent organizations (e.g., school clubs, athletic programs, associated student organizations, etc.) is not allowable.

Per 7 CFR Section 210.14(a), revenues received by the nonprofit school food service are to be used only for the operation or improvement of the school food service.

Guidance on Nonprogram Foods

Nonprogram foods are nonreimbursable foods and beverages sold outside of the meal program and purchased by SFAs with funds from the nonprofit school food service account.

Examples of nonprogram foods can include, but are not limited to:

• Individually sold items (à la carte)
• Meals served to district employees
• Individual items sold in vending machines
• Catered meals

Difference Between Nonprogram Foods and Competitive Foods

Nonprogram foods are any items purchased with funds from the nonprofit school food service account and sold to students as a nonreimbursable meal. All revenue from the sale of nonprogram foods and beverages must accrue to the nonprofit school food service account.

Competitive foods and beverages are sold at school outside of and in competition with the federally reimbursable meal program. The revenue from the sale of these items can accrue to the organization that purchased these goods. Types of organizations can include:

• School food service
• Parent–Teacher Association (PTA)  
• Associated Student Body
• School clubs

All nonprogram food items purchased and sold by the school food service are also considered competitive foods. The revenue from the sale of these items must accrue to the nonprofit school food service account. SFAs must comply with all federal and state guidelines pertaining to nonprogram and competitive foods. 

School Food Authorities Working with Organizations

While revenue sharing is no longer allowed, SFAs can partner with school programs (e.g., school clubs, parent organization, district office, etc.) and offer their services with the implementation of an agreement set forth between both parties. The agreement must disclose all cost(s), including labor to purchase and prepare any food items. In addition, all agreement terms must be satisfied before any revenue can accrue to the organization. 

The California Department of Education (CDE) advises SFAs to be cautious when entering into special types of agreements as estimating costs may be difficult. Agreement terms must specify all details including labor cost and potential revenue loss. The organization must take full responsibility and repay the nonprofit school food service account for any revenue loss. Maintaining compliance with all federal, state, and local regulations and laws, and determining whether a cost is allowable and charged appropriately, is the SFA’s responsibility.

If the PTA wishes to hold a food-related fundraiser, all food items sold are considered competitive foods. The PTA must follow all guidelines that govern competitive foods and beverages. All revenue from the fundraiser can accrue to the PTA.

If an organization buys food or beverage products from the school food service for a competitive food sale, the entity must repay the school food service in full for the items purchased and all other costs (including labor) associated with the procurement. Once the terms have been satisfied, any remaining revenue can accrue to the organization.

For example, if the junior class wants to host a fundraiser, it must submit an inquiry to the school food service regarding the procedures for purchasing food items. An agreement between both parties must specify the total cost to purchase the food items and any labor incurred with ordering and processing the food. The school food service must be repaid for their services before any revenue can accrue to the junior class.

Contact Information

If you have any questions regarding this MB, please contact the CDE’s Nutrition Services Division Cafeteria Fund Team by email at SNPCAFEFUNDQUESTIONS@cde.ca.gov.

For more information or clarification on competitive foods, please contact Mike Danzik, Nutrition Education Specialist, by phone at 916-445-7346 or by email at mdanzik@cde.ca.gov.