In this section we will discuss program financial requirements and grant fund management.
The money that is received as reimbursement on the food program is federal grant money. Because of this, it’s important that money be spent on what it is intended for. 100% of your monthly reimbursement must be expended in the administration and operation of the Child Nutrition programs. SFSP funds can be rolled over to help support other Child Nutrition programs such as the Child and Adult Care Program/At-risk Meals, or the School Meals Programs. You can also hold that money and use it for next summer. At any given time you cannot have a positive non-profit food service account with more than 3 months operating expense. You wouldn’t ever be earning a profit from the reimbursement you receive. Costs that you can include as food program costs would be the food you purchase, the paper goods that you use in the meal service, the cost of your employees time when they’re purchasing, preparing, and serving the food, as well as the cost of your time when you’re taking care of the paperwork involved with the food program. There’s no set rule about how much of your reimbursement is spent on food and how much goes toward staff time, but remember that the purpose of the food program is to help participants have access to nourishing food. If you find yourself with excess funds we suggest you first try to improve the quality of the food you offer. Try to serve as much fresh, healthy food as you can. One common mistake sponsors make is that programs funds cannot be used to by non-reimbursable food items such as ice-cream, candy, soda etc.
When our office comes out to do a review, we will need to verify that you’re operating a non-profit food service. Keep all of the receipts from any food and non-food items (such as paper goods used in meal service) that you purchase. If that amount adds up to your reimbursement amount we do not need to dig much deeper. If you still have extra reimbursement that didn’t go toward food and non-food items, you would need to show payroll documentation indicating the wages that paid for program labor. When you’re doing your purchasing, you’ll need to separate out your food program purchases from other purchases. For example, let’s say you’re at the store and you’re picking up the groceries for the week, paper plates and cups, and you also want to pick up some personal items. You would purchase the food and paper plates and cups in the same transaction, but you would purchase the personal items in a separate transaction. If for some reason an item that is not related to the food program is purchased with food program items, simply cross off that item off the receipt. We would not use that item’s cost in determining your non-profit food service. If we notice that you are regularly purchasing food program items along with items that are not allowable as food program costs, it could be a finding. If you have questions about what would be an allowable cost on for food program money, contact our office.
In addition to keeping receipts of food purchases to show a non-profit food service, you’ll also need to keep receipts to show that you purchased a sufficient amount of food to meet the meal pattern. Keep track of your receipts! Think of them as cash. If we come out on a review and find that you didn’t purchase enough food to meet the meal pattern, whether you really didn’t purchase enough food or you just lost a receipt, we would need to take money back. It’s also easiest for review purposes if you separate your receipts by month. You’re welcome to make copies of the receipts for record keeping, but make sure that you copy the ENTIRE receipt. We have to be able to see the date and time and all of the items that were purchased on the receipt.
Included in the USDA Admin manual are several worksheets that you can use to track program expenses. These include a monthly food ledger, as well as worksheets to record Administrative and Operational labor expenditures and mileage worksheets. While these worksheets are optional documenting your costs is not. You may come up with your own tracking system.
Procurement is basically a fancy term for the process you go through to buy something. There is an overarching code of federal regulations governing procurement standards. The standards deal with competition, methods of procurement to be used, contract cost and price, and more. CFR 220 covers from very small organizations to very large organizations. SFSP regulations also have specific sections governing procurement. You can either google the SFSP regulations or find the link to them on the USDA SFSP website.
Procurement standards include having documented procurement procedures that conform to federal, state and local laws and regulations, maintaining oversight to ensure that contractors perform in accordance with the terms and conditions of their contracts or purchase orders, and maintaining written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the procurement process. *Procurement rules for Child Nutrition Programs are a new focus for the USDA and therefore a priority as well for our office.
One of the required documents that you must maintain permanently is the written code of conduct for employees engaged in procurement. We often refer to this as the code of conduct. This policy spells out the ethics concerning purchasing. We have a sample code of conduct that you’re welcome to adopt, or you might have your own already. If you already have one of your own, you wouldn’t need to adopt our code of conduct as long as yours is at least as restrictive as our sample code of conduct. The code of conduct prohibits real or apparent conflicts of interest. An example of a conflict of interest would be if you were purchasing your groceries exclusively from a store owned by your spouse. You need to allow free and open competition among the vendors in your area.
Also, the individual doing the purchasing of the food can’t accept gratuities, favors, or anything of monetary value in return for their business. This means that if a company is trying to get you to have them deliver all of your groceries, you couldn’t accept a trip to Hawaii that they offer you to try to get your business. You are able to accept nominal gifts (not in the form of money) with a value up to $10, with a maximum of $50 annually. Reward cards or gas discounts that many stores offer would NOT fall into this category. Whoever is involved with purchasing your food and anything else with food program reimbursement money needs to be aware of the code of conduct.
A second policy that you must keep permanently is the procurement policy. If you’re a large organization (for example, you’re associated with a university) you might already have a procurement policy. As with the code of conduct, we developed a procurement policy that you’re welcome to adopt. You can use ours or yours, but you need to submit it to our office to be approved if you haven’t already. The procurement policy outlines that you will spend the reimbursement money in compliance with applicable state, federal, and local laws. It needs to outline that you’ll make sure that expenses are reasonable and necessary as well as define purchase thresholds and outline purchase procedures.
If you’re utilizing the procurement policy that our office created, you’ll notice that there is a decision tree, where it goes through what to do if your purchases are under or over a certain amount. This is a graphical representation of this. These numbers that we’re going over are what is required if you are utilizing our procurement policy. If you have different procurement thresholds, it’s fine as long as they are at least as restrictive as these thresholds.
Micro purchasing is the method that requires the least documentation. In fact, it doesn’t require any documentation at all apart from the receipts from your purchases. You would be able to use the micro-purchasing process if your purchase is under $3500 at a time, and you’re not spending more than $150,000 over the course of a year at a single vendor or store. You would also need to equally distribute your shopping among all of the qualified suppliers in your area. Because of lack of more clear instructions, our office is allowing “all qualified suppliers” to translate to at least 3 stores in the immediate area. You must be equitably making purchases at each store in order to satisfy the micro-purchasing rule. This does not necessarily apply to the cost, but to items. Buy bread at one store this week or month, and a different store the next week or month, etc.
Often times, even though a sponsor might fit in the micro purchasing threshold (no purchases over $3500, less than $150,000 in a year at one store), they have a favorite store that they go to and don’t want to have to shop around like you have to with micro purchasing. You are able to continue to do the majority of your shopping at one store, but you’ll need to show that you’re getting the best bang for your buck at that store. You’ll be getting quotes from at least three stores and showing that you’re choosing the least expensive one. You would also go through this process if you’ll be spending over $3500 in one purchase at a store, but less than $150,000 over the course of the year at that same store. you can’t artificially separate purchases to get them under a certain amount.
As of right now, if you’re wanting to choose a prime vendor, you’ll need to get at least three quotes for the main food items that you purchase and will need to go through this process at least annually. You don’t need to wander around the different stores to get the current prices, you could look on-line, through their advertisements, call them, etc. However you get their prices is just fine. When you’re putting together information to get quotes, you need to be specific in the information that you’re looking for. Our office has developed a spread sheet to help you compile and accurately compare prices.
If you have any questions or would like information on where to find additional training on any of the topics discussed in this section please contact our office.
Use the drop down below to translate the above course content into the language of your preference. You may want to refresh your browser after translating.
Warning: Google Translate is an automatic translation service utilized by USBE Child Nutrition Programs to provide training content that is accessible to our users. USBE is not responsible for the accuracy of the Google translations. This course was created in English and all audio was recorded in English. Utilize the closed captioning for translation of the English audio.