Mandatory Review of Provision 2 or 3 Base Year

This Management Bulletin (MB) provides guidance regarding the mandated review of school food authorities (SFA) participating in Provision 2 or 3. This MB supersedes SNP-16-2016, released in October 2016. The California Department of Education (CDE) provides additional information regarding parameters for participation in Provision 2 or 3 on the CDE Provisions: Claiming Alternatives web page at http://www.cde.ca.gov/ls/nu/sn/provisions.asp.

Background

The U.S. Department of Agriculture (USDA) issued Policy Memo 59-2013 and 46-2015, which, beginning in School Year (SY) 2013−14, requires the CDE to conduct a review of certification and benefit issuance documentation during the base year for any SFA requesting approval to participate in the National School Lunch or School Breakfast Programs using Provision 2 or 3.

Certification is the process of assigning an eligibility category to free, reduced-price (F/RP), and paid students. Documentation of certification includes copies of student meal applications, direct certification (DC) lists of CalFresh (federally known as the Supplemental Nutrition Assistance Program), California Work Opportunity and Responsibility to Kids (federally known as the Temporary Assistance for Needy Families), Medi-Cal (federally known as Medicaid), and Food Distribution Program on Indian Reservations recipients, and certified lists of homeless, migrant, runaway, foster, and Head Start participants.

You can review the USDA policy memos on the USDA School Meals Policy web page at http://www.fns.usda.gov/school-meals/policy. As a reminder, SFAs requesting participation in Provision 2 or 3, or SFAs requesting an extension of their provision cycle, must be in compliance with general School Nutrition Programs (SNP) requirements and Provision 2 or 3 requirements, as directed by the CDE.

Provision 2 or 3 Base-year Reviews

The USDA requires the CDE to review the base-year certification and benefit issuance documentation for schools:

• Requesting to apply for Provision 2 or 3
• Adding new sites to Provision 2 or 3
• Establishing a new base year
• Operating nonbase year Provision 2 or 3 sites that have not received a base-year review

Beginning with SY 2013‒14 (July 1, 2013), an SFA’s Provision 2 or 3 base-year review must occur at some point during the base year. The exception to this rule is for base years established prior to SY 2013‒14; for these SFAs, the CDE must conduct the review prior to the end of the current provision cycle for each SFA site operating Provision 2 or 3. The USDA requires the CDE to conduct the base-year review either through a desk audit or through the SNP administrative review (AR). Please refer to the descriptions below for more information on these two methods.

Desk Audit

The CDE may perform a desk audit for SFAs establishing a new base year for Provision 2 or 3 when the SFA is not scheduled for an SNP AR. The CDE may conduct desk audit reviews at the SFA location (on site) or at the CDE (off site).

The USDA has given the CDE two options to review SFA documentation when completing a desk audit:

• Review 100 percent of the certifications
• Review a statistically valid sample of certifications

The CDE will review a statistically valid sample of certifications, from all sites that have or will establish a base year, if the total number of students certified for F/RP benefits exceeds 100.

Administrative Review

Similar to a desk audit, the CDE will review either 100 percent or a statistically valid sample of certifications for a base-year review during an SNP AR. The CDE must follow the procedures in the USDA Administrative Review Manual when completing a base-year certification during an SNP AR. The Administrative Review Manual is available in the Child Nutrition Information and Payment System (CNIPS) Download Forms section.

Provision 2 or 3 Base-year Review Submission Procedures

If the CDE notifies the SFA that the base-year review will be conducted as an off-site desk audit or as an off-site SNP AR activity, the SFA must complete the following steps:

1. Create a Benefit Issuance Document (BID) generated from the point-of-service system. Please review the BID instruction document and a sample of a correct BID format located in the CNIPS Download Forms section, titled BID Instructions (Form ID SNP 53) and BID Sample (Form ID SNP 54), respectively.
2. Save the BID electronically using the last four numbers of the CNIPS identification number (ID) in the file name. For example, if the CNIPS ID is 01234, save the electronic file as 1234_bid.doc. The CDE will provide specific instructions for submitting the BID through the CNIPS at the time of the review.
3. Review of the BID is completed by the CDE within five business days of receipt. The CDE will randomly select student names and notify the SFA of student names selected. The SFA will then assemble all certification documentation for identified students (e.g., student meal application; state and local DC lists).
4. Scan, save, and upload the certification documentation to the CDE through the CNIPS.

If the CDE conducts a Provision 2 or 3 base-year review as part of an on-site desk audit or on-site SNP AR activity, the SFA follows steps one through three above and makes the certification documentation available on site the day of the review.

Results of the Base-year Review

The CDE will use the Base-year Adjustment Calculation specified in the Administrative Review Manual to determine the correct funding percentages or levels for the base-year certifications. When claiming errors are identified during a base-year review, the SFA must correct the errors and the CDE will assess fiscal action from the beginning of the school year in which the review was performed.

As required by Title 7, Code of Federal Regulations (7 CFR), Section 245.12, the CDE shall take action to ensure the proper implementation of Provision 2 or 3. If the CDE determines that an SFA has not correctly implemented Provision 2 or 3, the CDE may return the SFA to standard eligibility determination and meal counting procedures. Improper implementation of Provision 2 or 3 may include, but are not limited to: incorrect processing of meal applications which result in an error rate of five percent or greater, and incorrect counting and claiming of meals. When determining if the denial of Provision 2 or 3 is warranted, the CDE will also take into consideration past AR findings that reflect an inability to operate a standard meal counting and claiming year in accordance with Program regulations.

Recordkeeping

As required by 7 CFR, Section 210.15 and MB SNP-00-103, Provision 2 and 3 Record Retention Requirements, SFAs must retain records and base-year data during the period that Provision 2 or 3 is in effect, including all extensions. In addition, such records must be retained for three fiscal years following the submission of the last Claim for Reimbursement of the final fiscal year which employed base-year data. Base-year records include, but are not limited to, the following:

• All approved and denied F/RP meal applications
• DC data
• Changes in eligibility status as a result of verification or other reasons
• Daily meal counts, by type
• Calculation of claiming percentages
• Attendance areas of each school participating in Provision 2
• Socioeconomic base-year data for use in requesting an extension
• Any extension authorizations from the CDE
• Edit check and on-site review documentation
• Verification records
• Claims for reimbursement

Contact Information

If you have questions regarding this MB, or Provision 2 or 3 eligibility, please contact your assigned SNP County Specialist. You can locate contact information for your SNP County Specialist in the CNIPS Download Forms section, Form ID Caseload.