CACFP Administrative Manual Section 4.1

Child and Adult Care Food Program Administrative Manual Section 4.1: Steps for Determining Tiering Rate.

Table of Contents
Terms, Definitions, and Acronyms

Section 4: Day Care Home Reimbursement Determination

4.1 Determining Tiering Rate

Day Care Home (DCH) providers are reimbursed for meals based on their qualified tiering rate. The reimbursement structure allows higher reimbursement to DCH providers located in low-income areas, and also to DCH providers and children from low-income households.

• Tier I is equal to the higher per meal reimbursement rate
 
• Tier II is equal to the lower per meal reimbursement rate

Tier II homes can be further classified into the below three categories:

• Tier II High: All children are eligible for free or reduced-price meals (FRPM); all eligible meals are reimbursed at the higher Tier I rate
 
• Tier II Low: No children are eligible for FRPM; all eligible meals are reimbursed at the Tier II rate
 
• Tier II Mixed: Some, but not all children, are eligible for free or FRPM; all eligible meals are reimbursed at a combination of the higher Tier I rate and the Tier II rate

For a DCH sponsor to determine the level of reimbursement tier for a new DCH, they must follow the determination process below:

Step 1: Determine if the home is located in an eligible geographical area by using either school or census data.

• If the DCH is in an eligible area, the home is determined to be a Tier I home.
 
• If the home does not qualify for Tier I by area eligibility, the home is determined to be a Tier II home. A DCH sponsor can continue to Step 2 below to qualify the DCH provider for Tier I reimbursement.

Step 2: If the home is not area eligible, the DCH sponsor can request the DCH provider to complete the Meal Benefit Form (MBF) for Parents With Instructions (Form ID DCH 06) in order to determine if the DCH provider is either income or categorically eligible, which would qualify the home as eligible for Tier I reimbursement.

• If the DCH provider’s household is eligible for Tier I categorically or by income, the provider can be categorized as Tier I – refer to CACFP Administrative Manual Section 4.3 for more information.
 
• If the DCH provider’s household is not eligible for Tier I categorically or by income, the provider can be categorized as Tier II or qualify all or some of the enrolled children as Tier II High.

Step 3: If the DCH provider is not area, categorically, or income eligible for the Tier I reimbursement, a DCH sponsor or DCH provider can distribute the MBF for Parents With Instructions to the families of the enrolled children to qualify the DCH provider as Tier II High.

• If all of the children are eligible for FRPM, all eligible meals are reimbursed at the higher Tier I rate, and classified as Tier II High
 
• If none of the children are eligible for FRPM, all eligible meals are reimbursed at the Tier II rate, and classified as Tier II Low
 
• If some of the children are eligible for FRPM, all eligible meals are reimbursed at a combination of the higher Tier I rate and the Tier II rate and the home is classified as Tier II Mixed

Tier II DCH providers may assist in collecting applications from households and transmitting the application to the DCH sponsor. However, a Tier II DCH provider may not review the collected applications. The DCH sponsor may prohibit a Tier II provider from assisting in collection and transmittal of applications if the DCH provider does not comply with the process, as described in Title 7, Code of Federal Regulations, Section 226.23(e)(2)(viii).

If a Tier II DCH provider elects to assist in collecting and transmitting the applications to the DCH sponsor, it is the responsibility of the DCH sponsor to establish procedures (such as households submitting the form in a sealed envelope) to ensure the DCH provider does not review or alter the application. The household consent form must explain that:

• The household is not required to complete the income eligibility form in order for their children to participate in CACFP
 
• The household may return the application to either the DCH sponsor or the DCH provider
 
• By signing the letter and giving it to the DCH provider, the household has given the DCH provider written consent to collect and transmit the household's application to the DCH sponsor; and
 
• The application will not be reviewed by the DCH provider.

All documentation to determine the tiering rate must be filed and stored for three program years plus the current program year. The program year begins October 1 and ends the following September 30.

To summarize, the DCH sponsor should first attempt to qualify the home for Tier I reimbursement based on area eligibility. If the home is not located in an eligible area, the DCH sponsor can attempt to qualify the home as Tier I by determining if the provider is income or categorically eligible. If the provider cannot be Tier I, the home qualifies for Tier II reimbursement, and the enrolled children’s household can attempt to qualify for the higher Tier I reimbursement.

References: 7 CFR, section 226.2, 226.6(b)(1)(iv)(E), 226.15(e)(3), 226.15(f), 226.23(e)(1)(i), 226.23(e)(2)(viii), 226.18(b)(13).

Questions: A list of program specialists that can assist is found on the CACFP Contact List.