Transfer of Agency Ownership

This Management Bulletin provides information on the transfer of ownership of private (non-public) agencies participating in the Child Nutrition Programs administered by the California Department of Social Services (CDSS). Agencies must immediately notify the CDSS' CACFP Branch prior to a change of ownership to avoid loss of meal reimbursement.

When a change in ownership occurs, the agency no longer has a valid food program agreement with the CDSS. Therefore, an overpayment, retroactive to the effective date of the change in ownership, will be assessed if the agency continues to claim reimbursement for meals under the prior owner’s agreement without notifying the CDSS. Both the prior owner and the new owner will be held liable for the overpayment.

There is no need to notify CDSS if a private corporation changes major stockholders (with no change in the Federal Employer Identification Number). The CDSS does not consider this to be a change in ownership because the major stockholders assume the liabilities as well as the assets of the corporation. However, the CDSS requests that the new chairman of the board sign the agreement to participate and provide the CDSS with the updated listing of board officers.

In order for a new owner (either a sole proprietorship, partnership, or corporation) to claim meal reimbursement:

• The previous owner must cancel the current food program agreement, and the new owner must complete and submit an application to participate in the program.
• The application must be processed and approved before reimbursement for meals can be claimed under the new agreement.
• All outstanding accounts receivable under the prior ownership must be paid in full. The CDSS will not approve the new owner’s application for program participation if an outstanding accounts receivable exists under the prior ownership.
• And, if applicable, a license in the new owner’s name (or documentation that the licensing agency has been notified of the ownership change and will transfer the license) must be submitted with the new application to participate.

To avoid an overpayment or loss of reimbursement, the CDSS recommends that the previous owner notify the CDSS at least 60 days in advance of the sale of the agency and that the new owner submit an application to participate at least 45 days prior to the anticipated date of the assumption of ownership.

Please share this information with appropriate management and business personnel including the facility owner(s) and board members.

If your agency is contemplating a change in ownership, please contact your CACFP specialist. A list of CACFP specialists can be found on the Child and Adult Food Care Program Contact List or on the Download Forms section of the Child Nutrition Information and Payments System (CNIPS) as Form ID CACFP 01. You may also contact the CACFP Office Technician by email at CACFPinfo@dss.ca.gov to be directed to your specialist.

This institution is an equal opportunity provider.
Esta institución es un proveedor que ofrece igualdad de oportunidades.