USDA Capital Expenditure List and Equip. Purchases
Nutrition Services Division Management Bulletin
Purpose: Policy, Beneficial Information
To: School Nutrition Program Sponsors
Attention: Food Service Directors
Date: December 2014
Reference: U.S. Department of Agriculture, Food and Nutrition Service, Policy Memorandum SP 31-2014: State Agency Prior Approval Process for School Food Authority Equipment Purchases
Subject: U.S. Department of Agriculture Capital Expenditure List and the Prior Approval Process for School Food Authority Equipment Purchases
This Management Bulletin (MB) authorizes school food authorities (SFA) to purchase equipment from the U.S Department of Agriculture (USDA) Capital Expenditure Approved List on or after July 21, 2014, without the need to submit a request to the California Department of Education (CDE) for prior approval; and provides instructions for submitting a request for equipment not on the Capital Expenditure Approved List.
Federal requirements (found in the Office of Management and Budget [OMB] guidance cited at Title 2, Code of Federal Regulations [2 CFR], Part 225 [Cost Principles for State, Local, and Indian Tribal Governments], Appendix B, Item 15 [Equipment and other Capital Expenditures]) require a grantee or subgrantee to obtain prior written approval from its awarding agency before incurring the cost of a capital expenditure. Both the OMB guidance and generally accepted accounting principles identify equipment as a capital expenditure.
For purposes of this federal prior approval requirement, OMB guidance and USDA regulations define “equipment” as any item of nonexpendable personal property with a useful life of more than one year and an acquisition cost that equals or exceeds the federal per-unit capitalization threshold of $5,000, or a lower threshold set by state or local-level regulations.
U.S. Department of Agriculture Capital Expenditure Approved List
On March 28, 2014, the USDA issued Policy Memorandum SP 31-2014: State Agency Prior Approval Process for School Food Authority Equipment Purchases. This policy memo allows state agencies to develop an approved list and criteria for capital expenditure purchases that are routinely purchased by the SFA.
The USDA approved the CDE capital expenditure list on July 21, 2014. The CDE does not require SFAs purchasing equipment included on the USDA-approved list on or after July 21, 2014, to submit a request to the CDE for prior approval. However, SFAs must continue following all applicable federal, state, and local procurement procedures. In addition, if an SFA chooses to select equipment that is not included on the USDA-approved list, the SFA must submit a request to the CDE for approval prior to purchasing the item as required by 2 CFR, Part 225, Appendix B, Item 15.
As mentioned on page two of Policy Memo SP 31-2014, during an SFA’s administrative review (Title 7, Code of Federal Regulations [7 CFR], Section 210.18) and audit (7 CFR, Section 3052), the CDE will ensure that an SFA’s equipment purchases were made with approval from the USDA-approved capital expenditure list or the CDE prior approval process. If any equipment purchases are identified as unallowable, the CDE will disallow these purchase(s) and, per California Education Code Section 38101(f), require the district to repay the cafeteria fund from general fund for the disallowed cost(s).
Submitting a Capital Expenditure Request for Other Equipment
For any capital expenditure requests not included on the USDA-approved list with a unit cost of $5,000 or greater, SFAs must send an e-mail to email@example.com with the following information:
- The subject line should read, "Capital Expenditure Request—[Indicate if it is an emergency request here, e.g., cafeteria cannot function without immediately replacing the equipment]”
- The body of the e-mail message should:
- Describe the equipment, including what it is and how it will support the operation or maintenance of the nonprofit school food service
- Provide estimated cost and whether you have sought bids for the equipment
- Explain how the old equipment that still has value will be disposed of and that you acknowledge that any proceeds from the disposition of the equipment will be used to offset the cost of the replacement equipment
- Acknowledge that any equipment purchased with cafeteria funds must be used exclusively (100 percent) by the nonprofit school food service—i.e., not to be shared with other Local Educational Agency programs
- Include your Child Nutrition Information and Payment System (CNIPS) identification number, agency name, and contact information.
Resources and Information
For further details on this issue, Policy Memo SP 31-2014 is available on the USDA School Meals Policy Web page at http://www.fns.usda.gov/school-meals/policy.
The USDA Capital Expenditure Approved List is available on the CDE Cafeteria Fund Guidance Web page at http://www.cde.ca.gov/ls/nu/sn/cafefundguide.asp.
If you have any questions regarding this MB, please contact the Resource Management Unit by e-mail at firstname.lastname@example.org.