New Administrative Review

1. New Administrative Review Georgia Department of Education School Nutrition Program Finance & Budget Unit Edward Dung

2. Federal Authorization • 7 CFR Part 210 • (Resource Management) • 2 CFR Part 225 & 230 • (Federal Cost Principles)

3. Old Review Structure • The previous review was: • Titled “Coordinated Review Effort” (CRE). • Designed by each State Agency. • Inconsistent among states. • Based on a five (5) year cycle.

4. New Review Structure • The new review is: • Titled Administrative Review (AR). • Designed by FNS to cover certain minimum areas. • Uniform across all states. • Based on a three (3) year cycle.

5. Review Procedure • Involves three steps: • Step 1 – Risk Assessment. • Step 2 – Comprehensive Review or Technical Assistance. • Step 3 – Issue a review report.

6. Risk Assessment • Risk in School Food Authorities (SFAs) is assessed based on seven (7) major areas: • Student enrollment • Previous audit or review finding and exceptions. • Maintenance of Non-Profit School Food Service Account. • Compliance with Section 205 and 206 of Healthy Hunger Free Kids Act (HHFKA) of 2010. • Compliance with indirect cost application. • Procedures concerning USDA foods.

7. Review Approach • Comprehensive ReviewApproach - is required for SFAs where 3 (out of 7) or more risk flags are identified. • Technical Assistance/Corrective Action Approach – is ONLY required for SFAs where 2 or less risk flags are identified.

8. Technical Assistance • This is only required in the area where risk is identified. • NOTE: That the State Agency has the discretion to conduct a comprehensive review for an SFA even though 2 or less risk flags are identified.

9. Comprehensive Review • A Comprehensive Review is required if 3 or more risk flags are identified in an SFA. • FNS requires five (5) major areas to be covered (see next slide). • State agencies may, at their discretion, review more areas.

10. Comprehensive Review (Minimum Areas for Review) • Maintenance of Non-Profit SFS Account • Paid Lunch Equity (PLE) • Revenue From Non-Program Foods • Indirect Cost • USDA Foods

11. Maintenance of Non-Profit SFA Account • 3 Components • Nonprofit school food service account – Observe regulatory limitations on the use of nonprofit school food service revenue. • Net Cash Resources – Should not exceed 3 months average operating expenses • Allowable costs – Must be reasonable, necessary and allocable to the NSLP.

12. Paid Lunch Equity (PLE) • Addressed in Section 205 of HHFKA 2010 • See also Title 7 CFR Part 210 • Requires SFAs to review meal prices if the weighted average meal price is below the difference between free lunch reimbursement rate and paid reimbursement lunch rate. • The objective is to ensure equitable allocation of federal reimbursement for student meal claims. • PLE Flexibilities – SP 34-2013

13. Non-Program Foods • Addressed in Section 206 of HHFKA 2010 • See also Title 7 CFR Part 210 • Requires SFA to ensure that the proportion of revenues generated from the sale of non-program foods to be equal to or greater than the proportion of food cost for producing such non-program foods. • The objective is to avoid subsidizing adult and other non-program meals (a la carte) using federal reimbursements.

14. Indirect Cost • Addressed in Title 2 CFR Part 225 - Appendix E. • Ensures that indirect cost, where applicable, is billed to the SNP using the approved rate or a consistent methodology. • Objective is to ensure fair and reasonable allocation of indirect cost charged to Child Nutrition Program (CNP).

15. USDA Foods • Required by Title 7 CFR Part 210 • Objective is to ensure that SFAs receive the full credits for USDA products diverted to third parties for processing or from Food Service Management Companies (FSMC) that contract with SFAs.