Child Nutrition Program Integrity Rule

My Food Program Child Nutrition Program Integrity Rule Blog
On August 23, 2023, USDA’s Food and Nutrition Service published a final rule on program integrity to ensure that the Child and Adult Care Food Program is properly operated and managed. There were several provisions that were already in place that were made “official” with this publication, including
  • CACFP Audit Funding
  • Informal Purchase Methods for CACFP
  • Elimination of the Annual Application for Institutions
  • Timing of Unannounced Reviews
  • Collection and Transmission of Household Income Information
  • Calculation of Administrative Funding for Sponsoring Organizations of Day Care Homes
  • Carryover of Administrative Funding for Sponsoring Organizations of Day Care Homes
In addition, there were a number of new provisions:

New Provision 1: State Agency Review Requirements

“This final rule establishes additional priorities and criteria for State agencies to use in selecting institutions for review. As required by statute, it requires State agencies to conduct at least one review every 2 years of institutions that:

  • Sponsor more than 100 facilities, as currently required;
  • Engage in any activities other than those related to CACFP;
  • Have received findings from a recent review that detected serious management problems; or
  • Are at risk of having serious management problems.”

New Provision 2: State Liability for Payments to Aggrieved Child Care Institutions

“This final rule requires State agencies to provide fair and timely hearings through the serious deficiency process. It also requires a State agency to pay all valid claims for reimbursement, from non-Federal sources, if the 60-day timeframe for the fair hearing is not met. Historically, some CACFP operators have come under scrutiny for a lack of program integrity in affording due process and ensuring payment accuracy, resulting in the need for the current regulatory framework featuring tighter regulations and deadlines. In order to minimize the exposure of program funds to waste or abuse, State agencies must be able to resolve problems quickly and train hearing officials to meet the FNS deadline to promptly complete the appeals process.”

New Provision 3: Financial Review of Sponsoring Organizations in CACFP

This provision, “requires State agencies to annually verify bank account activity and actual expenditures by sponsoring organizations in CACFP. The State agency must select and compare 1 month of a sponsoring organization’s CACFP bank account activity with other documents that are adequate to support that the financial transactions meet program requirements. This rulemaking also requires State agencies to annually review CACFP expenditures reported by sponsoring organizations of unaffiliated centers. Sponsoring organizations must annually report the amount of program expenditures of program funds and the amount of meal reimbursement funds retained from their unaffiliated centers for administrative costs.”

New Provision 4: Standard Agreements Between Sponsoring Organizations and Sponsored Child Care Centers

This final rule adopts the proposed terms of a standard agreement between a sponsoring organization and a child care center at 7 CFR 226.17, an at-risk afterschool care center at 7 CFR 226.17a, an outside-school-hours care center at 226.19, and an adult day care center at 226.19a.

The standard agreement, described at 7 CFR 226.6(p), requires the center to:

  • 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.

The standard agreement also establishes the right of centers to receive timely reimbursement from the sponsoring organizations for meals served. Consistent with the requirement under 7 CFR 226.16(h)(2), sponsoring organizations must pay program funds to child care centers, adult day care centers, emergency shelters, at-risk afterschool care centers, or outside school-hours care centers within 5 working days of receipt from the State agency.