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Budget 101: Review, Approval and Monitoring

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  1. State of Wisconsin Budget 101: Review, Approval and Monitoring Cacfp NPA Conference – FFY2012 April 10-13, 2012 Austin, Texas

  2. AGENDA • Background • Budget Form • Budget Review • Budget Approval • Budget Monitoring • Box of Tools and Resources • Bewildered?

  3. BEFORE WE BEGIN… • Child and Adult Care Food Program (CACFP): Federally funded program through USDA that provides reimbursement for eligible meals served to enrolled participants. Sometimes referred to as the “Food Program”. • WI Department of Public Instruction (WDPI): State Agency (SA) that administers the CACFP in the State of Wisconsin. • Sponsoring Organization (SO): Business that contracts with WDPI to administer the CACFP to more than one home provider or center. • Family Day Care Home Sponsor (FDCH): Non-profit organizations that administer the CACFP to eligible family day care homes. Also referred to as “Home Sponsor” or “Sponsoring Organization (SO)”. • Child Care Facilities: Approved family day care homes (Home Providers) or centers (Sites) under a Sponsorship. • Independent Centers:Single site, child or adult care center, that contracts directly with the State Agency. Also referred to as “Centers”. • Agency: Any entity that has a contract with WDPI to participate in the CACFP. • Bubbler: A drinking fountain.

  4. BACKGROUND State of Wisconsin • Annual Contract Period • 1 Base, 2 renewals • FFY2012: 529 approved agencies • 95 Sponsors of Affiliated • 6 FDCH Sponsors • 1 Sponsor of Unaffiliated • 427 Independent Centers • Format • Online Program Application – only includes budget summary (not detail) • Detailed budgets – Excel format

  5. BACKGROUND State of Wisconsin • 2 agencies Sponsor homes and affiliated centers. Considered two separate contracts/budgets. • Sponsor of Unaffiliated does admin. and operational duties • Retains 100% CACFP funds • Interest in FDCH Sponsors also sponsoring unaffiliated centers. • None approved. • All budgets for Sponsors are reviewed, approved and monitored by CACFP Auditor.

  6. BACKGROUND State of Wisconsin • An approved budget is only one measure of financial viability. • Required by Regulations for application. • Stronger emphasis is on the reporting of actual food program costs and the financial review process. • Completing a budget is easy – it’s showing that the federal funds were actually spent on the food program which is hard.

  7. budg·et (buhj-it) n.: an itemized summary of estimated or intended expenditures for a given period of time along with proposals for financing them. (American Heritage dictionary) CACFP translation – the actual amounts of money earned and expenditures are unknown as they are dependent on the level and amount of participation. So all items are projected and amounts and items can be amended.

  8. All Food Program Costs or Cost ItemsPaid with CACFP Reimbursement must have received PRIOR WDPI approval

  9. BUDGET FORM

  10. Budget Form • Set-up like a Profit and Loss Report • Budget Requirements • SO Homes = Detailed budget every year • SO Unaffiliated Centers = Detailed budget every year. • SO Affiliated Centers = Every 3 years • Budget Summary during interim • Independent = Budget summary only • All figures are projections • Based on upcoming program year.

  11. Budget Form • Administrative (Homes & Centers) vs. Operational (Centers Only) • Admin: Monitoring/Claim/Recordkeeping • Operational: Kitchen/Meals/Food • Costs not approved are unallowable • Cannot be funded with CACFP funds • Work with agency on unallowable costs • Result: Agency revises budget or costs are disallowed.

  12. Budget Form

  13. Budget Form Key Elements on Budget Form • Common cost categories • Include a “Misc.” cost section • Specifics spelled out • Don’t be a mind reader • Require support documentation at the time of budget process. • “When in doubt leave it out.” • Plenty of room to report revenue • How is this program going to be funded?

  14. Budget Form Key Elements on Budget Form • Automatic notification if out of compliance • i.e. Exceed 15% admin. costs (center sponsors); More than 10% carryover (FDCH); Not enough income reported (ALL). • Saves WDPI time on reviewing a non-compliant budget. • Highlight key Regulations on form • i.e. Less than Arms length; Contracted services; out of state travel; Membership dues

  15. Budget Form Review WDPI CACFP Budget Forms • Attachment E: FDCH Sponsors • Attachment G • Sponsors of Affiliated • Sponsors of Unaffiliated • Independent Centers

  16. BUDGET REVIEW

  17. Budget Review Every agency is different but they all have the same goal.

  18. Budget Review Factors: • Who completed the Budget? • Expertise level • Cook, Center Director, Accountant • Any financial issues? • Reports: Licensing, CACFP, Audits • Be sure to address prior to approval. • Review Accounting system first • Application question • Budget should match accounting system. • Detailed = Detailed; Simple = Simple

  19. Budget Review CACFP Costs • Allowable • FNS 796-2 (rev 3) • Approvable • Realistic • Reasonable • Actual Costs • Support documentation

  20. Budget Review • Project Food Program Costs & Revenue • Costs: Regardless if paid with CACFP reimbursement • “How much will it cost your agency to administer the food program in the upcoming program year (October 1 – September 30)” • Revenue: List all sources and amounts available to fund food program expenses. • Not covered (unfunded) • Unallowable • Pay Overclaims • Costs not approved are unallowable • Cannot be funded with CACFP funds

  21. Budget Review Keys for a smooth Budget Process • Reasonable projections • Project # of homes claiming; Number of meals to be served for upcoming year • Comply • Achieve goals (ex. expansion, training) • Provide explanations/procedures for non-routine costs. • When in doubt submit attachments • Use electronic technology • Don’t assume

  22. Budget Review Keys for a smooth Budget Process • Include Additional Income • Source AND Amounts available (projection) • CACFP AND Non-CACFP funding • The more the better! • Total income SHOULD exceed total projected expenditures. • Question if amount comes out exactly to zero. • Consideration taken into “internal” approval of budget.

  23. How much is too much? Budget Review

  24. Administrative Monitoring Claim Compiling Submitting Reconciling Accounting / Bookkeeping Operational Kitchen Meals Preparation Delivery Menus Purchasing / Vended Meals Administrative & Operational Costs Budget Review

  25. Salaries and Benefits CACFP Staff Accounting Advertising Audit Services Telephone or other communication costs Conference/Training CACFP Related Indirect Costs Approved CAP Purchase of Equip. Rent Expense Employee Travel Printing & Copying Insurance Training of Staff and Providers Standard Bank Fees Minimal Value Incentive Payments For work performed Specific Written Approval Typical Allowable Costs - Homes Budget Review

  26. Budget Review Frequent Allowable CACFP Costs - Centers(list is not all inclusive) Allowable • Food (consumable) • Kitchen Supplies/Nonfood • Contract / Vended Meals • Food Program Personnel • Admin & Operational • Employee CACFP Travel • e.g. Grocery shopping, WDPI training • Equipment Purchase/Rental • Audit Services • CACFP Portion

  27. Food Costs Budget Review • Costs in purchasing ingredients for menu items (Food Supplies) AND/OR the cost of purchasing itemized CACFP meals from an outside vendor (Contracted Service) that are served to the participants • WI recommends at least 50% of budget • Will still approve if less but agency must explain.

  28. Administrative Costs - Centers Budget Review • Sponsors: No more than 15% of CACFP meal reimbursement can be spent on administrative costs without State Agency waiver. • Independent Centers: Not an issue because CACFP meal reimbursement is usually spent on operational costs, any leftover should be less than 15%.

  29. Budget Review Administrative Costs - Centers • CACFP (direct) Administrative Costs should never be higher then CACFP Operational Costs. • It should cost an agency more to prepare and serve the meals then doing the paperwork and monitoring of the program.

  30. Budget Review Unfunded CACFP Costs • Allowable CACFP costs that are not funded directly with earned CACFP reimbursement. • Not enough CACFP reimb. earned to cover costs. • Costs must be reported on budget and financial report. • Plan must be in place prior to approval on how these costs will be funded • Funds must be actual • WDPI does not consider these costs when calculating 15% admin. for SO.

  31. Budget Review CACFP Reimbursement is not designed to cover 100% of the Food Program expenses.

  32. How is the agency going to pay for this program? Budget Review

  33. Remember! Budget Review The CACFP funds are replacing funds the agency is now spending

  34. Other Source of Income Budget Review • CACFP is part of the overall organization. • Funds received to run organization must also be available to fund CACFP costs not covered by reimbursement. • Examples: Headstart, Tuition, W-2 (TANF), Fundraising, Private Donations • Projected Source and Amount reported on Budget; Actual reported on financial reports. • Food Stamps is not another source of income for the center.

  35. Best use of CACFP Reimbursement Budget Review Plan, budget, and organize the funds available will help maximize CACFP reimbursement. No planning, using funds on non-program needs, no accountability of funds spent will result in loss of funding and/or participation

  36. Budget Review Common Errors • Not enough income reported. • Budget for costs that are not FP related • Budget for unallowable costs • i.e. gas for personal vehicle; rent for owned building. • Do not budget for food costs or for minimal food costs. (Centers) • Budget for costs with no method of tracking • i.e. Travel = no mileage log or travel policy

  37. Budget Review Common Errors • Over 15% Admin. (Centers) • Admin. not funded directly with CACFP funds is acceptable. • Carryover not reported. (Homes) • Indirect costs reported without an approved plan. • Not identifying direct CACFP expenses. • Not all Food Program costs will be funded with CACFP reimbursement earned.

  38. BUDGET APPROVAL

  39. Budget Approval • Three levels of approval: • Generally Allowable • Prior Approval • Specific Prior Written Approval

  40. Prior approval or Specific Prior Written approval Must be detailed/broken out More info the better Requires addl’ documentation prior to approval Examples (not all inclusive): New position Related party transactions Purchasing vehicle, real estate Purchased/Contracted Services Membership dues Effect employee policies Out of State travel Conference Attendance Indirect Cost Plans Must receive WDPI (sometimes USDA) approval PRIOR to incurring. Generally allowable costs RoutineCACFP costs No specifics required Addl. Doc. Note line item $ amount. Consistent with tracking Be sure not to duplicate Examples (not all inclusive): Printing Office Supplies Postage Phone Services Can incur prior to notifying SA of changes in budget/mgmt. plan but should keep CACFP budget current. Budget Approval

  41. Budget Approval Amending Budgets Notification: • Prior to incurring • Prior Approval items • Immediately • Change(s) that result in a significant increase or decrease in original budget amount. • Anytime • Generally Allowable Cost items • To keep budget accurate.

  42. Budget Approval Amending Budgets • Send e-mail or leave voicemail explaining change. • Include specific cost item, dollar amount, and any additional support documentation. • Indicate source of funding for increases (ex. decreasing a line item amount or increasing projected reimbursement, or other non-CACFP funding).

  43. Budget Approval • Approved once receive verbal or written communication from WDPI. • WDPI will update original budget/most current budget and submit to agency which will replace the “old” budget. • Effective date defaults to date budget request was received. • 15% Admin. Waiver Approval

  44. BUDGET MONITORING

  45. Budget Monitoring • Review of Nonprofit Food Service (NPFS) Financial Reports • On-Site Financial Reviews

  46. Budget Monitoring Nonprofit Food Service Financial Report (NPFS) • Required for all agencies (for-profit, non-profit, public). • Report of all ACTUAL CACFPexpenditures during the reporting period. • Costs reported should equal expenditures charged to food service program plus any additional expenses covered with non-CACFP funds. • Amounts must be supported by actual documentation – NO ESTIMATES • Submission required as part of Permanent Agreement.

  47. Budget Monitoring Nonprofit Food Service Financial Report (NPFS) All Food Program Costs: • Actual Expenditures • Not Estimates • Support Documentation • Only report CACFP % • Shared costs • Amount net credits • Allowable and Approved • FNS 796-2 (rev.3) • CACFP Budget

  48. Budget Monitoring Nonprofit Food Service Financial Report (NPFS) • CACFP revenue should be reported using the accrual method (as earned, not received). • Additional program income must be reported (e.g. interest income, rebates, CACFP carryover). • Additional non-program income must be reported • Total Costs less Program income = non-program income • Must be actual and available.

  49. Budget Monitoring CACFP Financial ReviewsWDPI Reviews

  50. Budget Monitoring CACFP Financial Reviews • WDPI Financial Review • Announced or Unannounced • Usually occur during a program review • More frequent for “problem” agencies (red flag issues). • Items must have available: • Support documentation for NPFS for current and last FFY • ALL support documentation for food program costs • Invoices, receipts, purchase orders, etc. • Bank statements/cancelled checks for food program funds • General Ledger, allocation plan, P/L reports