Child Nutrition: Program Integrity Final Rule
On August 23, 2023, the U.S. Department of Agriculture (USDA) Food and Nutrition Service (FNS) published the Child Nutrition Program Integrity (PI) Final Rule. This Final Rule was created to help the FNS and the California Department of Social Services (CDSS) reduce program errors of all types, resulting in more efficient operations and improved compliance with Child and Adult Care Food Program (CACFP) requirements.
CDSS will provide program operators with information, timelines, resources, and guidance over the coming months to ensure implementation of all regulatory requirements codified in the Final Rule.
Many of the requirements have already been implemented within the program as a response to the Healthy, Hunger-Free Kids Act of 2010. CDSS will provide program operators additional information and resources on existing requirements to ensure compliance for these previously implemented regulations.
For federal regulatory requirements that have not yet been implemented, the CDSS will provide further information and support activities to assist program operators with implementation. Activities will include informational webinars, technical assistance phone calls, informational websites, and communications via CACFP Bulletin and Listserv. CDSS will work in partnership with FNS to ensure implementation is in alignment with USDA published policies and clarifications on these new requirements.
For more information on this topic, please see the USDA FNS web page Child Nutrition: Program Integrity Final Rule.
Program Integrity Final Rule Provision Changes
| Category
|
Audience
|
Status
|
Compliance Date
|
Current Guidance
|
| CACFP Audit Funding
|
State Agency Only
|
Implemented
|
Sept. 22, 2023
|
N/A (internal state process)
|
| Elimination of the Annual Application for Institutions
|
All CACFP Program Operators
|
Implemented
|
Sept. 22, 2023
|
Link to Guidance
|
| Timing of Unannounced Reviews
|
DCH Sponsoring Organizations and Sponsors of Affiliated or Unaffiliated Centers
|
Implemented
|
Sept. 22, 2023
|
Link to Guidance
|
| Collection and Transmission of Household Income Information
|
Tier II DCH Providers and Sponsoring Organizations
|
Implemented
|
Sept. 22, 2023
|
Link to Guidance
|
| Calculation of Administrative Funding for Sponsoring Organizations of Day Care Homes
|
DCH Sponsoring Organizations
|
Implemented
|
Sept. 22, 2023
|
Link to Guidance
|
| Carryover of Administrative Funding for Sponsoring Organizations of Day Care Homes
|
DCH Sponsoring Organizations
|
Implemented
|
Sept. 22, 2023
|
Link to Guidance
|
| Informal Purchase Methods for CACFP
|
All CACFP Program Operators
|
Implemented
|
Aug. 23, 2024
|
Link to Guidance
|
| State Administrative Expense (SAE) Funds
|
State Agency Only
|
Implemented
|
Sept. 22, 2023
|
N/A (internal state process)
|
| Standard Agreements Between Sponsoring Organizations and Sponsored Child Care Centers
|
DCH Sponsoring Organizations and Sponsors of Unaffiliated Centers
|
Implemented
|
Sept. 22, 2023
|
Link to Guidance
|
| Fines For Violating Program Requirements
|
CACFP Sponsoring Agencies
|
In Progress
|
Aug. 23, 2024
|
Coming soon
|
| State Agency Review Requirements in CACFP
|
All CACFP Program Operators
|
In Progress
|
Aug. 23, 2024
|
Coming soon
|
| State Liability for Payments to Aggrieved Child Care Institutions
|
All CACFP Program Operators
|
In Progress
|
Aug. 23, 2024
|
Coming soon
|
| Financial Review of Sponsoring Organizations in CACFP
|
Sponsors of Unaffiliated Centers
|
In Progress
|
Aug. 23, 2024
|
Coming soon
|
CACFP Audit Funding
Audience:
State Agency Only
Summary:
Codifies previously implemented statutory authority that allows FNS to increase the amount of State audit funds if a state agency demonstrates that it can effectively use the funds to improve program management. FNS may now consider requests to increase audit funding from 1.5 percent to a cumulative maximum of 2 percent of CACFP funds used by the State agency during the second preceding fiscal year for the purpose of conducting program audits. The additional funds must be used to meet program oversight and audit requirements under 7 CFR 226.6(m) and 226.8, respectively, or to improve program management under criteria established by the Secretary.
Implementation:
Completed
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Elimination of Annual Application for Institutions
Audience:
All CACFP Program Operators
Summary:
Institutions must submit a certification that all information on the application is true and correct, along with the name, mailing address, and date of birth of the institution's executive director and board of directors’ chair or, in the case of a for-profit center, the owner of the for-profit center. They must also provide FEIN or UEI.
Implementation:
Completed.
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Timing of Unannounced Reviews
Audience:
Day Care Home (DCH) Sponsoring Organizations and Sponsors of Affiliated or Unaffiliated Centers
Summary:
Requires sponsoring organizations to vary the timing of unannounced reviews and vary the type of meal service subject to review. Requires the State agency to assess the timing of each sponsoring organization's reviews of day care homes and sponsored centers. Requires sponsoring organizations to ensure that:
- At least two of the three annual reviews are unannounced
- At least one unannounced review includes observation of a meal service
- At least one review is made during each new facility's first 4 weeks of program operations
- No more than 6 months elapse between reviews
- The timing of unannounced reviews is varied so that they are unpredictable to the facility
- All types of meal service are reviewed; and
- The types of meal service reviewed are varied
Implementation:
Completed.
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Collection and Transmission of Household Income Information
Audience:
Tier II DCH Providers and Sponsoring Organizations
Summary:
Allows Tier II Day Care Homes to assist in the collection and transmission of household applications to the sponsoring organizations and prohibits the provider from reviewing applications from households. Final rule adds a new paragraph to address household consent and actions to protect the privacy of a household's income information.
Implementation:
Completed
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Calculation of Administrative Funding for Sponsoring Organizations of Day Care Homes
Audience:
DCH Sponsoring Organizations
Summary:
Simplifies the calculation of monthly administrative reimbursement that sponsoring organizations of day care homes are eligible to receive. To determine the amount of payment, the State agency must multiply the appropriate administrative reimbursement rate, which is announced annually in the Federal Register, by the number of day care homes submitting claims for reimbursement during the month.
Implementation:
Completed
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Carryover of Administrative Funding for Sponsoring Organizations of Day Care Homes
Audience:
DCH Sponsoring Organizations
Summary:
Allows carryover of administrative funds with State agency approval. Requires the State agency to establish procedures to recover administrative funds from sponsoring organizations of day care homes that are not properly payable, are in excess of the 10 percent maximum carryover amount, or any carryover amounts not expended or obligated by the end of the fiscal year following the fiscal year in which they were earned.
Implementation:
Completed.
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Audience:
All CACFP Program Operators
Summary:
Removes outdated language so that the values of the Federal micro-purchase threshold and Federal simplified acquisition threshold are linked to 2 CFR part 200. This final rule also makes technical changes to remove outdated and duplicative provisions of 7 CFR 226.22 and affirm that procurements by public or private non-profit institutions comply with the appropriate requirements under 2 CFR part 200.
Implementation:
Completed.
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State Administrative Expense (SAE) Funds
Audience:
State Agency Only
Summary:
Requires State agencies to return any unobligated SAE funds to FNS.
Implementation:
Completed
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Standard Agreements Between Sponsoring Organizations and Sponsored Child Care Centers
Audience:
DCH Sponsoring Organizations and Sponsors of Unaffiliated Centers
Summary:
Requires sponsoring organizations to enter into permanent agreements with their unaffiliated centers. Agreements must include:
- Allow visits by sponsoring organizations or State agencies to review meal service and records;
- Promptly inform the sponsoring organization about any change in its licensing or approval status;
- Meet any State agency approved time limit for submission of meal records; and
- Distribute to parents a copy of the sponsoring organization's notice to parents if directed to do so by the sponsoring organization.
New definitions of "Facility" and "Sponsored center" are added as well.
Implementation:
Completed
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Fines for Violating Program Requirements
Audience:
CACFP Sponsoring Agencies
Summary:
Allows the assessment of fines for State agencies and SFAs. Circumstances could include failure to correct severe program mismanagement, disregard of a program requirement of which the State Agency or SFA has been informed, or failure to correct repeated violations of program requirements.
Implementation:
Will update once more information is received.
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State Agency Review Requirements in CACFP
Audience:
All CACFP Program Operators
Summary:
Maintains all current review requirements and amends 7 CFR 226.6(m)(6) to add the following additional criteria for the State agency to use in scheduling reviews at least once every 2 years:
- Sponsor more than 100 facilities as currently required
- Institutions that engage in activities other than CACFP
- Institutions that have had serious management problems in previous reviews or are at risk of having serious management problems
- Are at risk of having serious management problems
The rule characterizes serious management problems as the types of administrative weaknesses that affect an institution’s ability to meet CACFP performance standards—financial viability, administrative capability, and accountability.
Implementation:
Will update once more information is received.
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State Liability for Payments to Aggrieved Child Care Institutions
Audience:
All CACFP Program Operators
Summary:
Establishes State liability for payments to aggrieved childcare institutions through the serious deficiency process. Specifically, a State agency must pay all valid claims with non-Federal funds if the State agency fails to meet the required 60-day timeframes for providing a fair hearing and a prompt determination, unless FNS grants an exception.
Implementation:
Will update once more information is received.
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Financial Review of Sponsoring Organization for Institutions
Audience:
Sponsors of Unaffiliated Centers
Summary:
Current regulations require State agencies to review and approve budgets for sponsoring organizations of centers to ensure that CACFP funds are used only for allowable expenses. The portion of the administrative costs to be charged to CACFP must not exceed 15 percent of the meal reimbursements estimated to be earned during the budget year unless a waiver is granted. Final rule amends 226.7(b) and now requires the State agency to have procedures in place for annually reviewing at least 1 month of the sponsoring organization’s bank account activity against other associated records to verify that the financial transactions meet program requirements. The State agency must also have procedures for annually reviewing a sponsoring organization’s actual expenditures of CACFP funds and the amount of meal reimbursement funds retained from unaffiliated centers to support the sponsoring organization’s administrative costs. The State agency must reconcile reported expenditures with program payments to ensure that funds are accounted for fully. Makes a corresponding change to 7 CFR 226.10(c) to require sponsoring organizations of unaffiliated centers to annually make available to the State agency the amount of program expenditures of program funds and the amount of meal reimbursement funds retained from their centers for administrative costs.
Implementation:
Will update once more information is received.
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This institution is an equal opportunity provider.
Esta institución es un proveedor que ofrece igualdad de oportunidades.