Last updated on April 19th, 2024 at 10:10 pm
Title 7—Agriculture–Volume 4
Subtitle B—Regulations of the Department of Agriculture (Continued)
CHAPTER II—FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
SUBCHAPTER A—CHILD NUTRITION PROGRAMS
PART 210—NATIONAL SCHOOL LUNCH PROGRAM
Subpart A—General
§ 210.1 General purpose and scope.
(a) Purpose of the program. Section 2 of the National School Lunch Act (42 U.S.C. 1751), states: “It is declared to be the policy of Congress, as a measure of national security, to safeguard the health and well-being of the Nation’s children and to encourage the domestic consumption of nutritious agricultural commodities and other food, by assisting the States, through grants-in-aid and other means, in providing an adequate supply of food and other facilities for the establishment, maintenance, operation, and expansion of nonprofit school lunch programs.” Pursuant to this act, the Department provides States with general and special cash assistance and donations of foods acquired by the Department to be used to assist schools in serving nutritious lunches to children each school day. In furtherance of Program objectives, participating schools shall serve lunches that are nutritionally adequate, as set forth in these regulations, and shall to the extent practicable, ensure that participating children gain a full understanding of the relationship between proper eating and good health.
(b) Scope of the regulations. This part sets forth the requirements for participation in the National School Lunch and Commodity School Programs. It specifies Program responsibilities of State and local officials in the areas of program administration, preparation and service of nutritious lunches, the sale of competitive foods, payment of funds, use of program funds, program monitoring, and reporting and recordkeeping requirements.
§ 210.2 Definitions.
For the purpose of this part:
2 CFR part 200, means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by OMB. The part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F). (NOTE: Pre-Federal Award Requirements and Contents of Federal Awards (subpart C) does not apply to the National School Lunch Program).
Act means the National School Lunch Act, as amended.
Afterschool care program means a program providing organized child care services to enrolled school-age children afterschool hours for the purpose of care and supervision of children. Those programs shall be distinct from any extracurricular programs organized primarily for scholastic, cultural or athletic purposes.
Applicable credits shall have the meaning established in 2 CFR part 200 and USDA implementing regulations 2 CFR part 400 and part 415.
Attendance factor means a percentage developed no less than once each school year which accounts for the difference between enrollment and attendance. The attendance factor may be developed by the school food authority, subject to State agency approval, or may be developed by the State agency. In the absence of a local or State attendance factor, the school food authority shall use an attendance factor developed by FNS. When taking the attendance factor into consideration, school food authorities shall assume that all children eligible for free and reduced price lunches attend school at the same rate as the general school population.
Average Daily Participation means the average number of children, by eligibility category, participating in the Program each operating day. These numbers are obtained by dividing (a) the total number of free lunches claimed during a reporting period by the number of operating days in the same period; (b) the total number of reduced price lunches claimed during a reporting period by the number of operating days in the same period; and (c) the total number of paid lunches claimed during a reporting period by the number of operating days in the same period.
Child means—(a) a student of high school grade or under as determined by the State educational agency, who is enrolled in an educational unit of high school grade or under as described in paragraphs (a) and (b) of the definition of “School,” including students who are mentally or physically disabled as defined by the State and who are participating in a school program established for the mentally or physically disabled; or (b) a person under 21 chronological years of age who is enrolled in an institution or center as described in paragraph (c) of the definition of “School;” or (c) For purposes of reimbursement for meal supplements served in afterschool care programs, an individual enrolled in an afterschool care program operated by an eligible school who is 12 years of age or under, or in the case of children of migrant workers and children with disabilities, not more than 15 years of age.
CND means the Child Nutrition Division of the Food and Nutrition Service of the Department.
Commodity School Program means the Program under which participating schools operate a nonprofit lunch program in accordance with this part and receive donated food assistance in lieu of general cash assistance. Schools participating in the Commodity School Program shall also receive special cash and donated food assistance in accordance with § 210.4(c).
Contractor means a commercial enterprise, public or nonprofit private organization or individual that enters into a contract with a school food authority.
Cost reimbursable contract means a contract that provides for payment of incurred costs to the extent prescribed in the contract, with or without a fixed fee.
Days means calendar days unless otherwise specified.
Department means the United States Department of Agriculture.
Distributing agency means a State agency which enters into an agreement with the Department for the distribution to schools of donated foods pursuant to part 250 of this chapter.
Donated foods means food commodities donated by the Department for use in nonprofit lunch programs.
Fiscal year means a period of 12 calendar months beginning October 1 of any year and ending with September 30 of the following year.
Fixed fee means an agreed upon amount that is fixed at the inception of the contract. In a cost reimbursable contract, the fixed fee includes the contractor’s direct and indirect administrative costs and profit allocable to the contract.
Fixed-price contract means a contract that charges a fixed cost per meal, or a fixed cost for a certain time period. Fixed-price contracts may include an economic price adjustment tied to a standard index.
FNS means the Food and Nutrition Service, United States Department of Agriculture.
FNSRO means the appropriate Regional Office of the Food and Nutrition Service of the Department.
Food component means one of the food groups which comprise reimbursable meals. The food components are: Meats/meat alternates, grains, vegetables, fruits, and fluid milk. Meals offered to preschoolers must consist of: Meats/meat alternates, grains, vegetables/fruits, and fluid milk.
Food item means a specific food offered within a food component.
Food service management company means a commercial enterprise or a nonprofit organization which is or may be contracted with by the school food authority to manage any aspect of the school food service.
Free lunch means a lunch served under the Program to a child from a household eligible for such benefits under 7 CFR part 245 and for which neither the child nor any member of the household pays or is required to work.
Local educational agency means a public board of education or other public or private nonprofit authority legally constituted within a State for either administrative control or direction of, or to perform a service function for, public or private nonprofit elementary schools or secondary schools in a city, county, township, school district, or other political subdivision of a State, or for a combination of school districts or counties that is recognized in a State as an administrative agency for its public or private nonprofit elementary schools or secondary schools. The term also includes any other public or private nonprofit institution or agency having administrative control and direction of a public or private nonprofit elementary school or secondary school, including residential child care institutions, Bureau of Indian Affairs schools, and educational service agencies and consortia of those agencies, as well as the State educational agency in a State or territory in which the State educational agency is the sole educational agency for all public or private nonprofit schools.
Lunch means a meal service that meets the meal requirements in § 210.10 for lunches.
National School Lunch Program means the Program under which participating schools operate a nonprofit lunch program in accordance with this part. General and special cash assistance and donated food assistance are made available to schools in accordance with this part.
Net cash resources means all monies, as determined in accordance with the State agency’s established accounting system, that are available to or have accrued to a school food authority’s nonprofit school food service at any given time, less cash payable. Such monies may include, but are not limited to, cash on hand, cash receivable, earnings on investments, cash on deposit and the value of stocks, bonds or other negotiable securities.
Nonprofit means, when applied to schools or institutions eligible for the Program, exempt from income tax under section 501(c)(3) of the Internal Revenue Code of 1986.
Nonprofit school food service means all food service operations conducted by the school food authority principally for the benefit of schoolchildren, all of the revenue from which is used solely for the operation or improvement of such food services.
Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service. This account shall include, as appropriate, non-Federal funds used to support paid lunches as provided in § 210.14(e), and proceeds from nonprogram foods as provided in § 210.14(f).
OIG means the Office of the Inspector General of the Department.
Paid lunch means a lunch served to children who are either not certified for or elect not to receive the free or reduced price benefits offered under part 245 of this chapter. The Department subsidizes each paid lunch with both general cash assistance and donated foods. The prices for paid lunches in a school food authority shall be determined in accordance with § 210.14(e).
Point of Service means that point in the food service operation where a determination can accurately be made that a reimbursable free, reduced price or paid lunch has been served to an eligible child.
Program means the National School Lunch Program and the Commodity School Program.
Reduced price lunch means a lunch served under the Program: (a) to a child from a household eligible for such benefits under 7 CFR part 245; (b) for which the price is less than the school food authority designated full price of the lunch and which does not exceed the maximum allowable reduced price specified under 7 CFR part 245; and (c) for which neither the child nor any member of the household is required to work.
Reimbursement means Federal cash assistance including advances paid or payable to participating schools for lunches meeting the requirements of § 210.10 and served to eligible children.
Revenue, when applied to nonprofit school food service, means all monies received by or accruing to the nonprofit school food service in accordance with the State agency’s established accounting system including, but not limited to, children’s payments, earnings on investments, other local revenues, State revenues, and Federal cash reimbursements.
School means: (a) An educational unit of high school grade or under, recognized as part of the educational system in the State and operating under public or nonprofit private ownership in a single building or complex of buildings; (b) any public or nonprofit private classes of preprimary grade when they are conducted in the aforementioned schools; or (c) any public or nonprofit private residential child care institution, or distinct part of such institution, which operates principally for the care of children, and, if private, is licensed to provide residential child care services under the appropriate licensing code by the State or a subordinate level of government, except for residential summer camps which participate in the Summer Food Service Program for Children, Job Corps centers funded by the Department of Labor, and private foster homes. The term “residential child care institutions” includes, but is not limited to: homes for the mentally, emotionally or physically impaired, and unmarried mothers and their infants; group homes; halfway houses; orphanages; temporary shelters for abused children and for runaway children; long-term care facilities for chronically ill children; and juvenile detention centers. A long-term care facility is a hospital, skilled nursing facility, intermediate care facility, or distinct part thereof, which is intended for the care of children confined for 30 days or more.
School food authority means the governing body which is responsible for the administration of one or more schools; and has the legal authority to operate the Program therein or be otherwise approved by FNS to operate the Program.
School nutrition program directors are those individuals directly responsible for the management of the day-to-day operations of school food service for all participating schools under the jurisdiction of the school food authority.
School nutrition program managers are those individuals directly responsible for the management of the day-to-day operations of school food service for a participating school(s).
School nutrition program staff are those individuals, without managerial responsibilities, involved in day-to-day operations of school food service for a participating school(s).
School week means the period of time used to determine compliance with the meal requirements in § 210.10. The period shall be a normal school week of five consecutive days; however, to accommodate shortened weeks resulting from holidays and other scheduling needs, the period shall be a minimum of three consecutive days and a maximum of seven consecutive days. Weeks in which school lunches are offered less than three times shall be combined with either the previous or the coming week.
School year means a period of 12 calendar months beginning July 1 of any year and ending June 30 of the following year.
Seamless Summer Option means the meal service alternative authorized by section 13(a)(8) of the Richard B. Russell National School Lunch Act, 42 U.S.C. 1761(a)(8), under which public or nonprofit school food authorities participating in the National School Lunch Program or School Breakfast Program offer meals at no cost to children during the traditional summer vacation periods and, for year-round schools, vacation periods longer than 10 school days.
Secretary means the Secretary of Agriculture.
State means any of the 50 States, District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as applicable, American Samoa and the Commonwealth of the Northern Marianas.
State agency means (a) the State educational agency; (b) any other agency of the State which has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer the Program in schools, as specified in § 210.3(b); or (c) the FNSRO, where the FNSRO administers the Program as specified in § 210.3(c).
State educational agency means, as the State legislature may determine, (a) the chief State school officer (such as the State Superintendent of Public Instruction, Commissioner of Education, or similar officer), or (b) a board of education controlling the State department of education.
Student with disabilities means any child who has a physical or mental impairment as defined in § 15b.3 of the Department’s nondiscrimination regulations (7 CFR part 15b).
Tofu means a soybean-derived food, made by a process in which soybeans are soaked, ground, mixed with water, heated, filtered, coagulated, and formed into cakes. Basic ingredients are whole soybeans, one or more food-grade coagulants (typically a salt or an acid), and water. Tofu products must conform to FNS guidance to count toward the meats/meat alternates component.
USDA implementing regulations include the following: 2 CFR part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; 2 CFR part 415, General Program Administrative Regulations; 2 CFR part 416, General Program Administrative Regulations for Grants and Cooperative Agreements to State and Local Governments; and 2 CFR part 418, New Restrictions on Lobbying.
Whole grains means grains that consist of the intact, ground, cracked, or flaked grain seed whose principal anatomical components—the starchy endosperm, germ and bran—are present in the same relative proportions as they exist in the intact grain seed. Whole grain-rich products must conform to FNS guidance to count toward the grains component.
Yogurt means commercially prepared coagulated milk products obtained by the fermentation of specific bacteria, that meet milk fat or milk solid requirements and to which flavoring foods or ingredients may be added. These products are covered by the Food and Drug Administration’s Definition and Standard of Identity for yogurt, lowfat yogurt, and nonfat yogurt, 21 CFR 131.200, 21 CFR 131.203, and 21 CFR 131.206, respectively.
§ 210.3 Administration.
(a) FNS. FNS will act on behalf of the Department in the administration of the Program. Within FNS, the CND will be responsible for Program administration.
(b) States. Within the States, the responsibility for the administration of the Program in schools, as defined in § 210.2, shall be in the State educational agency. If the State educational agency is unable to administer the Program in public or private nonprofit residential child care institutions or nonprofit private schools, then Program administration for such schools may be assumed by FNSRO as provided in paragraph (c) of this section, or such other agency of the State as has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer such schools. Each State agency desiring to administer the Program shall enter into a written agreement with the Department for the administration of the Program in accordance with the applicable requirements of this part; parts 235 and 245 of this chapter; parts 15, 15a, and 15b of this title, and 2 CFR part 200; USDA implementing regulations 2 CFR part 400 and part 415; and FNS instructions.
(c) FNSRO. The FNSRO will administer the Program in nonprofit private schools or public or nonprofit private residential child care institutions if the State agency is prohibited by law from disbursing Federal funds paid to such schools. In addition, the FNSRO will continue to administer the Program in those States in which nonprofit private schools or public or nonprofit private residential child care institutions have been under continuous FNS administration since October 1, 1980, unless the administration of the Program in such schools is assumed by the State. The FNSRO will, in each State in which it administers the Program, assume all responsibilities of a State agency as set forth in this part and part 245 of this chapter as appropriate. References in this part to “State agency” include FNSRO, as applicable, when it is the agency administering the Program.
(d) School food authorities. The school food authority shall be responsible for the administration of the Program in schools. State agencies shall ensure that school food authorities administer the Program in accordance with the applicable requirements of this part; part 245 of this chapter; parts 15, 15a, and 15b, and 3016 or 3019, as applicable, of this title and 2 CFR part 200; USDA implementing regulations 2 CFR part 400 and part 415 and FNS instructions.
(e) Authority to waive statute and regulations. (1) As authorized under section 12(l) of the Richard B. Russell National School Lunch Act, FNS may waive provisions of such Act or the Child Nutrition Act of 1966, as amended, and the provisions of this part with respect to a State agency or eligible service provider. The provisions of this part required by other statutes may not be waived under this authority. FNS may only approve requests for a waiver that are submitted by a State agency and comply with the requirements at section 12(l)(1) and the limitations at section 12(l)(4), including that FNS may not grant a waiver that increases Federal costs.
(2)(i) A State agency may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l)(2) and the provisions of this part.
(ii) A State agency may submit a request to waive specific statutory or regulatory requirements on behalf of eligible service providers that operate in the State. Any waiver where the State concurs must be submitted to the appropriate FNSRO.
(3)(i) An eligible service provider may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l) and the provisions of this part. Any waiver request submitted by an eligible service provider must be submitted to the State agency for review. A State agency must act promptly on such a waiver request and must deny or concur with a request submitted by an eligible service provider.
(ii) If a State agency concurs with a request from an eligible service provider, the State agency must promptly forward to the appropriate FNSRO the request and a rationale, consistent with section 12(l)(2), supporting the request. By forwarding the request to the FNSRO, the State agency affirms:
(A) The request meets all requirements for waiver submissions; and,
(B) The State agency will conduct all monitoring requirements related to regular Program operations and the implementation of the waiver.
(iii) If the State agency denies the request, the State agency must notify the requesting eligible service provider and state the reason for denying the request in writing within 30 calendar days of the State agency’s receipt of the request. The State agency response is final and may not be appealed to FNS.
Subpart B—Reimbursement Process for States and School Food Authorities
§ 210.4 Cash and donated food assistance to States.
(a) General. To the extent funds are available, FNS will make cash assistance available in accordance with the provisions of this section to each State agency for lunches and meal supplements served to children under the National School Lunch and Commodity School Programs. To the extent donated foods are available, FNS will provide donated food assistance to distributing agencies for each lunch served in accordance with the provisions of this part and part 250 of this chapter.
(b) Assistance for the National School Lunch Program. The Secretary will make cash and/or donated food assistance available to each State agency and distributing agency, as appropriate, administering the National School Lunch Program, as follows:
(1) Cash assistance will be made available to each State agency administering the National School Lunch Program as follows:
(i) General: Cash assistance payments are composed of a general cash assistance payment and a performance-based cash assistance payment, authorized under section 4 of the Act, and a special cash assistance payment, authorized under section 11 of the Act. General cash assistance is provided to each State agency for all lunches served to children in accordance with the provisions of the National School Lunch Program. Performance-based cash assistance is provided to each State agency for lunches served in accordance with § 210.7(d). Special cash assistance is provided to each State agency for lunches served under the National School Lunch Program to children determined eligible for free or reduced price lunches in accordance with part 245 of this chapter.
(ii) Cash assistance for lunches. The total general cash assistance paid to each State for any fiscal year shall not exceed the lesser of amounts reported to FNS as reimbursed to school food authorities in accordance with § 210.5(d)(3) or the total calculated by multiplying the number of lunches reported in accordance with § 210.5(d)(1) for each month of service during the fiscal year, by the applicable national average payment rate prescribed by FNS. The total performance-based cash assistance paid to each State for any fiscal year shall not exceed the lesser of amounts reported to FNS as reimbursed to school food authorities in accordance with § 210.5(d)(3) or the total calculated by multiplying the number of lunches reported in accordance with § 210.5(d)(1) for each month of service during the fiscal year, by 6 cents for school year 2012-2013, adjusted annually thereafter as specified in paragraph (b)(1)(iii) of this section. The total special assistance paid to each State for any fiscal year shall not exceed the lesser of amounts reported to FNS as reimbursed to school food authorities in accordance with § 210.5(d)(3) or the total calculated by multiplying the number of free and reduced price lunches reported in accordance with § 210.5(d)(1) for each month of service during the fiscal year by the applicable national average payment rate prescribed by FNS.
(iii) Annual adjustments. In accordance with section 11 of the Act, FNS will prescribe annual adjustments to the per meal national average payment rate (general cash assistance), the performance-based cash assistance rate (performance-based cash assistance), and the special assistance national average payment rates (special cash assistance) which are effective on July 1 of each year. These adjustments, which reflect changes in the food away from home series of the Consumer Price Index for all Urban Consumers, are annually announced by Notice in July of each year in the
(iv) Maximum per meal rates. FNS will also establish maximum per meal rates of reimbursement within which a State may vary reimbursement rates to school food authorities. These maximum rates of reimbursement are established at the same time and announced in the same Notice as the national average payment rates.
(2) Donated food assistance. For each school year, FNS will provide distributing agencies with donated foods for lunches served under the National School Lunch Program as provided under part 250 of this chapter. The per lunch value of donated food assistance is adjusted by the Secretary annually to reflect changes as required under section 6 of the Act. These adjustments, which reflect changes in the Price Index for Foods Used in Schools and Institutions, are effective on July 1 of each year and are announced by Notice in the
(3) Cash assistance for meal supplements. For those eligible schools (as defined in § 210.10(n)(1)) operating afterschool care programs and electing to serve meal supplements to enrolled children, funds shall be made available to each State agency, each school year in an amount no less than the sum of the products obtained by multiplying:
(i) The number of meal supplements served in the afterschool care program within the State to children from families that do not satisfy the income standards for free and reduced price school meals by 2.75 cents;
(ii) The number of meal supplements served in the afterschool care program within the State to children from families that satisfy the income standard for free school meals by 30 cents;
(iii) The number of meal supplements served in the afterschool care program within the State to children from families that satisfy the income standard for reduced price school meals by 15 cents.
(4) The rates in paragraph (b)(3) are the base rates established in August 1981 for the CACFP. FNS shall prescribe annual adjustments to these rates in the same Notice as the National Average Payment Rates for lunches. These adjustments shall ensure that the reimbursement rates for meal supplements served under this part are the same as those implemented for meal supplements in the CACFP.
(c) Assistance for the Commodity School Program. FNS will make special cash assistance available to each State agency for lunches served in commodity schools in the same manner as special cash assistance is provided in the National School Lunch Program. Payment of such amounts to State agencies is subject to the reporting requirements contained in § 210.5(d). FNS will provide donated food assistance in accordance with part 250 of this chapter. Of the total value of donated food assistance to which it is entitled, the school food authority may elect to receive cash payments of up to 5 cents per lunch served in its commodity school(s) for donated foods processing and handling expenses. Such expenses include any expenses incurred by or on behalf of a commodity school for processing or other aspects of the preparation, delivery, and storage of donated foods. The school food authority may have all or part of these cash payments retained by the State agency for use on its behalf for processing and handling expenses by the State agency or it may authorize the State agency to transfer to the distributing agency all or any part of these payments for use on its behalf for these expenses. Payment of such amounts to State agencies is subject to the reporting requirements contained in § 210.5(d). The total value of donated food assistance is calculated on a school year basis by adding:
(1) The applicable national average payment rate (general cash assistance) prescribed by the Secretary for the period of July 1 through June 30 multiplied by the total number of lunches served during the school year under the Commodity School Program; and
(2) The national per lunch average value of donated foods prescribed by the Secretary for the period of July 1 through June 30 multiplied by the total number of lunches served during the school year under the Commodity School Program.
§ 210.5 Payment process to States.
(a) Grant award. FNS will specify the terms and conditions of the State agency’s grant in a grant award document and will generally make payments available by means of a Letter of Credit issued in favor of the State agency. The State agency shall obtain funds for reimbursement to participating school food authorities through procedures established by FNS in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415. State agencies shall limit requests for funds to such times and amounts as will permit prompt payment of claims or authorized advances. The State agency shall disburse funds received from such requests without delay for the purpose for which drawn. FNS may, at its option, reimburse a State agency by Treasury Check. FNS will pay by Treasury Check with funds available in settlement of a valid claim if payment for that claim cannot be made within the grant closeout period specified in paragraph (d) of this section.
(b) Cash-in-lieu of donated foods. All Federal funds to be paid to any State in place of donated foods will be made available as provided in part 240 of this chapter.
(c) Recovery of funds. FNS will recover any Federal funds made available to the State agency under this part which are in excess of obligations reported at the end of each fiscal year in accordance with the reconciliation procedures specified in paragraph (d) of this section. Such recoveries shall be reflected by a related adjustment in the State agency’s Letter of Credit.
(d) Substantiation and reconciliation process. Each State agency shall maintain Program records as necessary to support the reimbursement payments made to school food authorities under §§ 210.7 and 210.8 and the reports submitted to FNS under this paragraph. The State agency shall ensure such records are retained for a period of 3 years or as otherwise specified in § 210.23(c).
(1) Monthly report. Each State agency shall submit a final Report of School Program Operations (FNS-10) to FNS for each month. The final reports shall be limited to claims submitted in accordance with § 210.8 of this part. For the month of October, the final report shall include the total number of children approved for free lunches, the total number of children approved for reduced price lunches, and the total number of children enrolled in participating public schools, private schools, and residential child care institutions, respectively, as of the last day of operation in October. The final reports shall be postmarked and/or submitted no later than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not submitted within this time limit unless FNS grants an exception. Upward adjustments to a State’s report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments to a State’s report shall always be made regardless of when it is determined that such adjustments are necessary. FNS authorization is not required for downward adjustments. Any adjustments to a State’s report shall be reported to FNS in accordance with procedures established by FNS.
(2) Quarterly report. Each State agency administering the National School Lunch Program must submit to FNS a quarterly Financial Status Report (FNS-777) on the use of Program funds. Such reports must be postmarked and/or submitted no later than 30 days after the end of each fiscal year quarter.
(3) End of year reports. (i) Each State agency must submit an annual report detailing the disbursement of performance-based cash assistance described in § 210.4(b)(1). The report must be submitted no later than 30 days after the end of each fiscal year. The report must include the total number of school food authorities in the State and the names of certified school food authorities. If all school food authorities in the State have been certified, the State agency is no longer required to submit the report.
(ii) Each State agency must submit a final Financial Status Report (FNS-777) for each fiscal year. This final fiscal year grant closeout report must be postmarked or submitted to FNS within 120 days after the end of each fiscal year or part thereof that the State agency administered the Program. Obligations must be reported only for the fiscal year in which they occur. FNS will not be responsible for reimbursing Program obligations reported later than 120 days after the close of the fiscal year in which they were incurred. Grant closeout procedures are to be carried out in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
§ 210.6 Use of Federal funds.
General. State agencies shall use Federal funds made available under the Program to reimburse or make advance payments to school food authorities in connection with lunches and meal supplements served in accordance with the provisions of this part; except that, with the approval of FNS, any State agency may reserve an amount up to one percent of the funds earned in any fiscal year under this part for use in carrying out special developmental projects. Advance payments to school food authorities may be made at such times and in such amounts as are necessary to meet the current fiscal obligations. All Federal funds paid to any State in place of donated foods shall be used as provided in part 240 of this chapter.
(a) General. Reimbursement payments to finance nonprofit school food service operations shall be made only to school food authorities operating under a written agreement with the State agency. Subject to the provisions of § 210.8(c), such payments may be made for lunches and meal supplements served in accordance with provisions of this part and part 245 in the calendar month preceding the calendar month in which the agreement is executed. These reimbursement payments include general cash assistance for all lunches served to children under the National School Lunch Program and special cash assistance payments for free or reduced price lunches served to children determined eligible for such benefits under the National School Lunch and Commodity School Programs. Reimbursement payments shall also be made for meal supplements served to eligible children in afterschool care programs in accordance with the rates established in § 210.4(b)(3). Approval shall be in accordance with part 245 of this chapter.
(b) Assignment of rates. At the beginning of each school year, State agencies shall establish the per meal rates of reimbursement for school food authorities participating in the Program. These rates of reimbursement may be assigned at levels based on financial need; except that, the rates are not to exceed the maximum rates of reimbursement established by the Secretary under § 210.4(b) and are to permit reimbursement for the total number of lunches in the State from funds available under § 210.4. Within each school food authority, the State agency shall assign the same rate of reimbursement from general cash assistance funds for all lunches served to children under the Program. Assigned rates of reimbursement may be changed at any time by the State agency, provided that notice of any change is given to the school food authority. The total general and special cash assistance reimbursement paid to any school food authority for lunches served to children during the school year are not to exceed the sum of the products obtained by multiplying the total reported number of lunches, by type, served to eligible children during the school year by the applicable maximum per lunch reimbursements prescribed for the school year for each type of lunch.
(c) Reimbursement limitations. To be entitled to reimbursement under this part, each school food authority shall ensure that Claims for Reimbursement are limited to the number of free, reduced price and paid lunches and meal supplements that are served to children eligible for free, reduced price and paid lunches and meal supplements, respectively, for each day of operation.
(1) Lunch count system. To ensure that the Claim for Reimbursement accurately reflects the number of lunches and meal supplements served to eligible children, the school food authority shall, at a minimum:
(i) Correctly approve each child’s eligibility for free and reduced price lunches and meal supplements based on the requirements prescribed under 7 CFR part 245;
(ii) Maintain a system to issue benefits and to update the eligibility of children approved for free or reduced price lunches and meal supplements. The system shall:
(A) Accurately reflect eligibility status as well as changes in eligibility made after the initial approval process due to verification findings, transfers, reported changes in income or household size, etc.; and
(B) Make the appropriate changes in eligibility after the initial approval process on a timely basis so that the mechanism the school food authority uses to identify currently eligible children provides a current and accurate representation of eligible children. Changes in eligibility which result in increased benefit levels shall be made as soon as possible but no later than 3 operating days of the date the school food authority makes the final decision on a child’s eligibility status. Changes in eligibility which result in decreased benefit levels shall be made as soon as possible but no later than 10 operating days of the date the school food authority makes the final decision on the child’s eligibility status.
(iii) Base Claims for Reimbursement on lunch counts, taken daily at the point of service, which correctly identify the number of free, reduced price and paid lunches served to eligible children;
(iv) Correctly record, consolidate and report those lunch and supplement counts on the Claim for Reimbursement; and
(v) Ensure that Claims for Reimbursement do not request payment for any excess lunches produced, as prohibited in § 210.10(a)(2), or non-Program lunches (i.e., a la carte or adult lunches) or for more than one meal supplement per child per day.
(2) Point of service alternatives. (i) State agencies may authorize alternatives to the point of service lunch counts provided that such alternatives result in accurate, reliable counts of the number of free, reduced price and paid lunches served, respectively, for each serving day. State agencies are encouraged to issue guidance which clearly identifies acceptable point of service alternatives and instructions for proper implementation. School food authorities may select one of the State agency approved alternatives without prior approval.
(ii) In addition, on a case-by-case basis, State agencies may authorize school food authorities to use other alternatives to the point of service lunch count; provided that such alternatives result in an accurate and reliable lunch count system. Any request to use an alternative lunch counting method which has not been previously authorized under paragraph (2)(i) is to be submitted in writing to the State agency for approval. Such request shall provide detail sufficient for the State agency to assess whether the proposed alternative would provide an accurate and reliable count of the number of lunches, by type, served each day to eligible children. The details of each approved alternative shall be maintained on file at the State agency for review by FNS.
(d) Performance-based cash assistance. The State agency must provide performance-based cash assistance as authorized under § 210.4(b)(1) for lunches served in school food authorities certified by the State agency to be in compliance with meal pattern and nutrition requirements set forth in § 210.10 and, if the school food authority participates in the School Breakfast Program (7 CFR part 220), § 220.8 or § 220.23 of this chapter, as applicable. State agencies must establish procedures to certify school food authorities for performance-based cash assistance in accordance with guidance established by FNS. Such procedures must ensure State agencies:
(1) Make certification procedures readily available to school food authorities and provide guidance necessary to facilitate the certification process.
(2) Require school food authorities to submit documentation to demonstrate compliance with meal pattern requirements set forth in § 210.10 and § 220.8 of this chapter, as applicable. Such documentation must reflect meal service at or about the time of certification.
(3) State agencies must review certification documentation submitted by the school food authority to ensure compliance with meal pattern requirements set forth in § 210.10, or § 220.8 of this chapter, as applicable. For certification purposes, State agencies should consider any school food authority compliant:
(i) If when evaluating daily and weekly range requirements for grains and meat/meat alternates, the certification documentation shows compliance with the daily and weekly minimums for these two components, regardless of whether the school food authority has exceeded the maximums for the same components.
(ii) If when evaluating the service of frozen fruit, the school food authority serves products that contain added sugar.
(4) Certification procedures must ensure that no performance-based cash assistance is provided to school food authorities for meals served prior to October 1, 2012.
(5) Within 60 calendar days of a certification submission or as otherwise authorized by FNS, review submitted materials and notify school food authorities of the certification determination, the date that performance-based cash assistance is effective, and consequences for non-compliance,
(6) Disburse performance-based cash assistance for all lunches served beginning with the start of certification provided that documentation reflects meal service in the calendar month the certification materials are submitted or, in the month preceding the calendar month of submission.
(e) The State agency shall reimburse the school food authority for meal supplements served in eligible schools (as defined in § 210.10(n)(1)) operating afterschool care programs under the NSLP in accordance with the rates established in § 210.4(b).
§ 210.8 Claims for reimbursement.
(a) Internal controls. The school food authority shall establish internal controls which ensure the accuracy of meal counts prior to the submission of the monthly Claim for Reimbursement. At a minimum, these internal controls shall include: an on-site review of the meal counting and claiming system employed by each school within the jurisdiction of the school food authority; comparisons of daily free, reduced price and paid meal counts against data which will assist in the identification of meal counts in excess of the number of free, reduced price and paid meals served each day to children eligible for such meals; and a system for following up on those meal counts which suggest the likelihood of meal counting problems.
(1) On-site reviews. Every school year, each school food authority with more than one school shall perform no less than one on-site review of the counting and claiming system and the readily observable general areas of review cited under § 210.18(h), as prescribed by FNS for each school under its jurisdiction. The on-site review shall take place prior to February 1 of each school year. Further, if the review discloses problems with a school’s meal counting or claiming procedures or general review areas, the school food authority shall: ensure that the school implements corrective action; and, within 45 days of the review, conducts a follow-up on-site review to determine that the corrective action resolved the problems. Each on-site review shall ensure that the school’s claim is based on the counting system authorized by the State agency under § 210.7(c) of this part and that the counting system, as implemented, yields the actual number of reimbursable free, reduced price and paid meals, respectively, served for each day of operation.
(2) School food authority claims review process. Prior to the submission of a monthly Claim for Reimbursement, each school food authority shall review the lunch count data for each school under its jurisdiction to ensure the accuracy of the monthly Claim for Reimbursement. The objective of this review is to ensure that monthly claims include only the number of free, reduced price and paid lunches served on any day of operation to children currently eligible for such lunches.
(i) Any school food authority that was found by its most recent administrative review conducted in accordance with § 210.18, to have no meal counting and claiming violations may:
(A) Develop internal control procedures that ensure accurate meal counts. The school food authority shall submit any internal controls developed in accordance with this paragraph to the State agency for approval and, in the absence of specific disapproval from the State agency, shall implement such internal controls. The State agency shall establish procedures to promptly notify school food authorities of any modifications needed to their proposed internal controls or of denial of unacceptable submissions. If the State agency disapproves the proposed internal controls of any school food authority, it reserves the right to require the school food authority to comply with the provisions of paragraph (a)(3) of this section; or
(B) Comply with the requirements of paragraph (a)(3) of this section.
(ii) Any school food authority that was identified in the most recent administrative review conducted in accordance with § 210.18, or in any other oversight activity, as having meal counting and claiming violations shall comply with the requirements in paragraph (a)(3) of this section.
(3) Edit checks. (i) The following procedure shall be followed for school food authorities identified in paragraph (a)(2)(ii) of this section, by other school food authorities at State agency option, or, at their own option, by school food authorities identified in paragraph (a)(2)(i) of this section: the school food authority shall compare each school’s daily counts of free, reduced price and paid lunches against the product of the number of children in that school currently eligible for free, reduced price and paid lunches, respectively, times an attendance factor.
(ii) School food authorities that are identified in administrative reviews conducted in accordance with § 210.18 as not having meal counting and claiming violations and that are correctly complying with the procedures in paragraph (a)(3)(i) of this section have the option of developing internal controls in accordance with paragraph (a)(2)(i) of this section.
(4) Follow-up activity. The school food authority shall promptly follow-up through phone contact, on-site visits or other means when the internal controls used by schools in accordance with paragraph (a)(2)(i) of this section or the claims review process used by schools in accordance with paragraphs (a)(2)(ii) and (a)(3) of this section suggest the likelihood of lunch count problems. When problems or errors are identified, the lunch counts shall be corrected prior to submission of the monthly Claim for Reimbursement. Improvements to the lunch count system shall also be made to ensure that the lunch counting system consistently results in lunch counts of the actual number of reimbursable free, reduced price and paid lunches served for each day of operation.
(5) Recordkeeping. School food authorities shall maintain on file, each month’s Claim for Reimbursement and all data used in the claims review process, by school. Records shall be retained as specified in § 210.23(c) of this part. School food authorities shall make this information available to the Department and the State agency upon request.
(b) Monthly claims. To be entitled to reimbursement under this part, each school food authority shall submit to the State agency, a monthly Claim for Reimbursement, as described in paragraph (c) of this section.
(1) Submission timeframes. A final Claim for Reimbursement shall be postmarked or submitted to the State agency not later than 60 days following the last day of the full month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not postmarked and/or submitted within 60 days shall not be paid with Program funds unless otherwise authorized by FNS.
(2) State agency claims review process. The State agency shall review each school food authority’s Claim for Reimbursement, on a monthly basis, in an effort to ensure that monthly claims are limited to the number of free and reduced price lunches served, by type, to eligible children.
(i) The State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the school food authority for the month of October times the days of operation times the attendance factor employed by the school food authority in accordance with paragraph (a)(3) of this section or the internal controls used by schools in accordance with paragraph (a)(2)(i) of this section. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s) as collected pursuant to paragraph (c)(2) of this section.
(ii) In lieu of conducting the claims review specified in paragraph (b)(2)(i) of this section, the State agency may conduct alternative analyses for those Claims for Reimbursement submitted by residential child care institutions. Such alternatives analyses shall meet the objective of ensuring that the monthly Claims for Reimbursement are limited to the numbers of free and reduced price lunches served, by type, to eligible children.
(3) Follow-up activity. The State agency shall promptly follow-up through phone contact, on-site visits, or other means when the claims review process suggests the likelihood of lunch count problems.
(4) Corrective action. The State agency shall promptly take corrective action with respect to any Claim for Reimbursement which includes more than the number of lunches served, by type, to eligible children. In taking corrective action, State agencies may make adjustments on claims filed within the 60-day deadline if such adjustments are completed within 90 days of the last day of the claim month and are reflected in the final Report of School Program Operations (FNS-10) for the claim month required under § 210.5(d) of this part. Upward adjustments in Program funds claimed which are not reflected in the final FNS-10 for the claim month shall not be made unless authorized by FNS. Except that, upward adjustments for the current and prior fiscal years resulting from any review or audit may be made, at the discretion of the State agency. Downward adjustments in amounts claimed shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary.
(c) Content of claim. The Claim for Reimbursement shall include data in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Report of School Program Operations required under § 210.5(d) of this part. Such data shall include, at a minimum, the number of free, reduced price and paid lunches and meal supplements served to eligible children. The claim shall be signed by a school food authority official.
(1) Consolidated claim. The State agency may authorize a school food authority to submit a consolidated Claim for Reimbursement for all schools under its jurisdiction, provided that, the data on each school’s operations required in this section are maintained on file at the local office of the school food authority and the claim separates consolidated data for commodity schools from data for other schools. Unless otherwise approved by FNS, the Claim for Reimbursement for any month shall include only lunches and meal supplements served in that month except if the first or last month of Program operations for any school year contains 10 operating days or less, such month may be combined with the Claim for Reimbursement for the appropriate adjacent month. However, Claims for Reimbursement may not combine operations occurring in two fiscal years. If a single State agency administers any combination of the Child Nutrition Programs, a school food authority shall be able to use a common claim form with respect to claims for reimbursement for meals served under those programs.
(2) October data. For the month of October, the State agency shall also obtain, either through the Claim for Reimbursement or other means, the total number of children approved for free lunches and meal supplements, the total number of children approved for reduced price lunches and meal supplements, and the total number of children enrolled in the school food authority as of the last day of operation in October. The school food authority shall submit this data to the State agency no later than December 31 of each year. State agencies may establish shorter deadlines at their discretion. In addition, the State agency may require school food authorities to provide this data for a more current month if for use in the State agency claims review process under paragraph (c)(2) of this section.
(d) Advance funds. The State agency may advance funds available for the Program to a school food authority in an amount equal to the amount of reimbursement estimated to be needed for one month’s operation. Following the receipt of claims, the State agency shall make adjustments, as necessary, to ensure that the total amount of payments received by the school food authority for the fiscal year does not exceed an amount equal to the number of lunches and meal supplements by reimbursement type served to children times the respective payment rates assigned by the State in accordance with § 210.7(b). The State agency shall recover advances of funds to any school food authority failing to comply with the 60-day claim submission requirements in paragraph (b) of this section.
Subpart C—Requirements for School Food Authority Participation
§ 210.9 Agreement with State agency.
(a) Application. An official of a school food authority shall make written application to the State agency for any school in which it desires to operate the Program. Applications shall provide the State agency with sufficient information to determine eligibility. The school food authority shall also submit for approval a Free and Reduced Price Policy Statement in accordance with part 245 of this chapter.
(b) Agreement. Each school food authority approved to participate in the program shall enter into a written agreement with the State agency that may be amended as necessary. Nothing in the preceding sentence shall be construed to limit the ability of the State agency to suspend or terminate the agreement in accordance with § 210.25. If a single State agency administers any combination of the Child Nutrition Programs, that State agency shall provide each school food authority with a single agreement with respect to the operation of those programs. The agreement shall contain a statement to the effect that the “School Food Authority and participating schools under its jurisdiction, shall comply with all provisions of 7 CFR parts 210 and 245.” This agreement shall provide that each school food authority shall, with respect to participating schools under its jurisdiction:
(1) Maintain a nonprofit school food service and observe the requirements for and limitations on the use of nonprofit school food service revenues set forth in § 210.14 and the limitations on any competitive school food service as set forth in § 210.11;
(2) Limit its net cash resources to an amount that does not exceed 3 months average expenditures for its nonprofit school food service or such other amount as may be approved in accordance with § 210.19(a);
(3) Maintain a financial management system as prescribed under § 210.14(c);
(4) Comply with the requirements of the Department’s regulations regarding financial management (2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415);
(5) Serve lunches, during the lunch period, which meet the minimum requirements prescribed in § 210.10;
(6) Price the lunch as a unit;
(7) Serve lunches free or at a reduced price to all children who are determined by the local educational agency to be eligible for such meals under 7 CFR part 245;
(8) Claim reimbursement at the assigned rates only for reimbursable free, reduced price and paid lunches served to eligible children in accordance with 7 CFR part 210. Agree that the school food authority official signing the claim shall be responsible for reviewing and analyzing meal counts to ensure accuracy as specified in § 210.8 governing claims for reimbursement. Acknowledge that failure to submit accurate claims will result in the recovery of an overclaim and may result in the withholding of payments, suspension or termination of the program as specified in § 210.25. Acknowledge that if failure to submit accurate claims reflects embezzlement, willful misapplication of funds, theft, or fraudulent activity, the penalties specified in § 210.26 shall apply;
(9) Count the number of free, reduced price and paid reimbursable meals served to eligible children at the point of service, or through another counting system if approved by the State agency;
(10) Submit Claims for Reimbursement in accordance with § 210.8;
(11) Comply with the requirements of the Department’s regulations regarding nondiscrimination (7 CFR parts 15, 15a, 15b);
(12) Make no discrimination against any child because of his or her eligibility for free or reduced price meals in accordance with the approved Free and Reduced Price Policy Statement;
(13) Enter into an agreement to receive donated foods as required by 7 CFR part 250;
(14) Maintain, in the storage, preparation and service of food, proper sanitation and health standards in conformance with all applicable State and local laws and regulations, and comply with the food safety requirements of § 210.13;
(15) Accept and use, in as large quantities as may be efficiently utilized in its nonprofit school food service, such foods as may be offered as a donation by the Department;
(16) Maintain necessary facilities for storing, preparing and serving food;
(17) Upon request, make all accounts and records pertaining to its school food service available to the State agency and to FNS, for audit or review, at a reasonable time and place. Such records shall be retained for a period of 3 years after the date of the final Claim for Reimbursement for the fiscal year to which they pertain, except that if audit findings have not been resolved, the records shall be retained beyond the 3 year period as long as required for resolution of the issues raised by the audit;
(18) Maintain files of currently approved and denied free and reduced price certification documentation.
(19) Maintain direct certification documentation obtained directly from the appropriate State or local agency, or other appropriate individual, as specified by FNS, indicating that:
(i) A child in the Family, as defined in § 245.2 of this chapter, is receiving benefits from SNAP, FDPIR or TANF, as defined in § 245.2 of this chapter; if one child is receiving such benefits, all children in that family are considered to be directly certified;
(ii) The child is a homeless child as defined in § 245.2 of this chapter;
(iii) The child is a runaway child as defined in § 245.2 of this chapter;
(iv) The child is a migrant child as defined in § 245.2 of this chapter;
(v) The child is a Head Start child as defined in § 245.2 of this chapter; or
(vi) The child is a foster child as defined in § 245.2 of this chapter.
(20) Retain eligibility documentation submitted by families for a period of 3 years after the end of the fiscal year to which they pertain or as otherwise specified under paragraph (b)(17) of this section.
(21) No later than March 1, 1997, and no later than December 31 of each year thereafter, provide the State agency with a list of all schools under its jurisdiction in which 50 percent or more of enrolled children have been determined eligible for free or reduced price meals as of the last operating day the preceding October. The State agency may designate a month other than October for the collection of this information, in which case the list must be provided to the State agency within 60 calendar days following the end of the month designated by the State agency. In addition, each school food authority shall provide, when available for the schools under its jurisdiction, and upon the request of a sponsoring organization of day care homes of the Child and Adult Care Food Program, information on the boundaries of the attendance areas for the schools identified as having 50 percent or more of enrolled children certified eligible for free or reduced price meals.
(c) Afterschool care requirements. Those school food authorities with eligible schools (as defined in § 210.10(n)(1)) that elect to serve meal supplements during afterschool care programs, shall agree to:
(1) Serve meal supplements which meet the minimum requirements prescribed in § 210.10;
(2) Price the meal supplement as a unit;
(3) Serve meal supplements free or at a reduced price to all children who are determined by the school food authority to be eligible for free or reduced price school meals under 7 CFR part 245;
(4) If charging for meals, the charge for a reduced price meal supplement shall not exceed 15 cents;
(5) Claim reimbursement at the assigned rates only for meal supplements served in accordance with the agreement;
(6) Claim reimbursement for no more than one meal supplement per child per day;
(7) Review each afterschool care program two times a year; the first review shall be made during the first four weeks that the school is in operation each school year, except that an afterschool care program operating year round shall be reviewed during the first four weeks of its initial year of operation, once more during its first year of operation, and twice each school year thereafter; and
(8) Comply with all requirements of this part, except that, claims for reimbursement need not be based on “point of service” meal supplement counts (as required by § 210.9(b)(9)).
§ 210.10 Meal requirements for lunches and requirements for afterschool snacks.
(a) General requirements—(1) General nutrition requirements. Schools must offer nutritious, well-balanced, and age-appropriate meals to all the children they serve to improve their diets and safeguard their health.
(i) Requirements for lunch. School lunches offered to children age 5 or older must meet, at a minimum, the meal requirements in paragraph (b) of this section. Schools must follow a food-based menu planning approach and produce enough food to offer each child the quantities specified in the meal pattern established in paragraph (c) of this section for each age/grade group served in the school. In addition, school lunches must meet the dietary specifications in paragraph (f) of this section. Schools offering lunches to children ages 1 through 4 and infants must meet the meal pattern requirements in paragraphs (p) and (q), as applicable, of this section. Schools must make potable water available and accessible without restriction to children at no charge in the place(s) where lunches are served during the meal service.
(ii) Requirements for afterschool snacks. Schools offering afterschool snacks in afterschool care programs must meet the meal pattern requirements in paragraph (o) of this section. Schools must plan and produce enough food to offer each child the minimum quantities under the meal pattern in paragraph (o) of this section.
(2) Unit pricing. Schools must price each meal as a unit. Schools need to consider participation trends in an effort to provide one reimbursable lunch and, if applicable, one reimbursable afterschool snack for each child every school day. If there are leftover meals, schools may offer them to the students but cannot get Federal reimbursement for them. Schools must identify, near or at the beginning of the serving line(s), the food items that constitute the unit-priced reimbursable school meal(s). The price of a reimbursable lunch does not change if the student does not take a food item or requests smaller portions.
(3) Production and menu records. Schools or school food authorities, as applicable, must keep production and menu records for the meals they produce. These records must show how the meals offered contribute to the required food components and food quantities for each age/grade group every day. Labels or manufacturer specifications for food products and ingredients used to prepare school meals must indicate zero grams of trans fat per serving (less than 0.5 grams). Schools or school food authorities must maintain records of the latest nutritional analysis of the school menus conducted by the State agency. Production and menu records must be maintained in accordance with FNS guidance.
(b) Meal requirements for school lunches. School lunches for children ages 5 and older must reflect food and nutrition requirements specified by the Secretary. Compliance with these requirements is measured as follows:
(1) On a daily basis:
(i) Meals offered to each age/grade group must include the food components and food quantities specified in the meal pattern in paragraph (c) of this section;
(ii) Food products or ingredients used to prepare meals must contain zero grams of trans fat per serving or a minimal amount of naturally occurring trans fat; and
(iii) The meal selected by each student must have the number of food components required for a reimbursable meal and include at least one fruit or vegetable.
(2) Over a 5-day school week:
(i) Average calorie content of meals offered to each age/grade group must be within the minimum and maximum calorie levels specified in paragraph (f) of this section;
(ii) Average saturated fat content of the meals offered to each age/grade group must be less than 10 percent of total calories; and
(iii) Average sodium content of the meals offered to each age/grade group must not exceed the maximum level specified in paragraph (f) of this section.
(c) Meal pattern for school lunches. Schools must offer the food components and quantities required in the lunch meal pattern established in the following table:
Table 1 to Paragraph (
| Lunch meal pattern | |||
|---|---|---|---|
| Grades K-5 | Grades 6-8 | Grades 9-12 | |
| Food components | Amount of Food a per Week | ||
| (minimum per day) | |||
| Fruits (cups) b | 2 | 2 | 5 (1) |
| Vegetables (cups) b | 3 | 3 | 5 (1) |
| Dark green c | |||
| Red/Orange c | 1 | ||
| Beans and peas (legumes) c | |||
| Starchy c | |||
| Other c d | |||
| Additional Vegetables to Reach Total e | 1 | 1 | 1 |
| Grains (oz eq) f | 8-9 (1) | 8-10 (1) | 10-12 (2) |
| Meats/Meat Alternates (oz eq) | 8-10 (1) | 9-10 (1) | 10-12 (2) |
| Fluid milk (cups) g | 5 (1) | 5 (1) | 5 (1) |
| Min-max calories (kcal) h | 550-650 | 600-700 | 750-850 |
| Saturated fat (% of total calories) h | |||
| Sodium Interim Target 1 (mg) h | ≤1,230 | ≤1,360 | ≤1,420 |
| Sodium Interim Target 1A (mg) h i | ≤1,110 | ≤1,225 | ≤1,280 |
h | Nutrition label or manufacturer specifications must indicate zero grams of | ||
a Food items included in each group and subgroup and amount equivalents. Minimum creditable serving is
b One quarter-cup of dried fruit counts as
c Larger amounts of these vegetables may be served.
d This category consists of “Other vegetables” as defined in paragraph (c)(2)(iii)(E) of this section. For the purposes of the NSLP, the “Other vegetables” requirement may be met with any additional amounts from the dark green, red/orange, and beans/peas (legumes) vegetable subgroups as defined in paragraph (c)(2)(iii) of this section.
e Any vegetable subgroup may be offered to meet the total weekly vegetable requirement.
f At least 80 percent of grains offered weekly (by ounce equivalents) must meet the whole grain-rich criteria specified in FNS guidance, and the remaining grain items offered must be enriched.
g All fluid milk must be fat-free (skim) or low-fat (1 percent fat or less). Milk may be unflavored or flavored, provided that unflavored milk is offered at each meal service.
h Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within the specifications for calories, saturated fat,
i Sodium Interim Target 1A must be met no later than July 1, 2023 (SY 2023-2024).
(1) Age/grade groups. Schools must plan menus for students using the following age/grade groups: Grades K-5 (ages 5-10), grades 6-8 (ages 11-13), and grades 9-12 (ages 14-18). If an unusual grade configuration in a school prevents the use of these established age/grade groups, students in grades K-5 and grades 6-8 may be offered the same food quantities at lunch provided that the calorie and sodium standards for each age/grade group are met. No customization of the established age/grade groups is allowed.
(2) Food components. Schools must offer students in each age/grade group the food components specified in paragraph (c) of this section.
(i) Meats/meat alternates component. Schools must offer meats/meat alternates daily as part of the lunch meal pattern. The quantity of meats/meat alternates must be the edible portion as served. This component must be served in a main dish or in a main dish and only one other food item. Schools without daily choices in this component should not serve any one meat alternate or form of meat (for example, ground, diced, pieces) more than three times in the same week. If a portion size of this component does not meet the daily requirement for a particular age/grade group, schools may supplement it with another meats/meat alternates to meet the full requirement. Schools may adjust the daily quantities of this component provided that a minimum of one ounce is offered daily to students in grades K-8 and a minimum of two ounces is offered daily to students in grades 9-12, and the total weekly requirement is met over a five-day period.
(A) Enriched macaroni. Enriched macaroni with fortified protein as defined in appendix A to this part may be used to meet part of the meats/meat alternates requirement when used as specified in appendix A to this part. An enriched macaroni product with fortified protein as defined in appendix A to this part may be used to meet part of the meats/meat alternates component or the grains component but may not meet both food components in the same lunch.
(B) Nuts and seeds. Nuts and seeds and their butters are allowed as meat alternates in accordance with FNS guidance. Acorns, chestnuts, and coconuts may not be used because of their low protein and iron content. Nut and seed meals or flours may be used only if they meet the requirements for Alternate Protein Products established in appendix A to this part. Nuts or seeds may be used to meet no more than one-half (50 percent) of the meats/meat alternates component with another meats/meat alternates to meet the full requirement.
(C) Yogurt. Yogurt may be used to meet all or part of the meats/meat alternates component. Yogurt may be plain or flavored, unsweetened or sweetened. Noncommercial and/or non-standardized yogurt products, such as frozen yogurt, drinkable yogurt products, homemade yogurt, yogurt flavored products, yogurt bars, yogurt covered fruits and/or nuts or similar products are not creditable. Four ounces (weight) or
(D) Tofu and soy products. Commercial tofu and soy products may be used to meet all or part of the meats/meat alternates component in accordance with FNS guidance. Noncommercial and/or non-standardized tofu and soy products are not creditable.
(E) Beans and Peas (legumes). Cooked dry beans and peas (legumes) may be used to meet all or part of the meats/meat alternates component. Beans and peas (legumes) are identified in this section and include foods such as black beans, garbanzo beans, lentils, kidney beans, mature lima beans, navy beans, pinto beans, and split peas.
(F) Other Meat Alternates. Other meat alternates, such as cheese and eggs, may be used to meet all or part of the meats/meat alternates component in accordance with FNS guidance.
(ii) Fruits component. Schools must offer fruits daily as part of the lunch menu. Fruits that are fresh; frozen without added sugar; canned in light syrup, water or fruit juice; or dried may be offered to meet the requirements of this paragraph. All fruits are credited based on their volume as served, except that
(iii) Vegetables component. Schools must offer vegetables daily as part of the lunch menu. Fresh, frozen, or canned vegetables and dry beans and peas (legumes) may be offered to meet this requirement. All vegetables are credited based on their volume as served, except that 1 cup of leafy greens counts as
(A) Dark green vegetables. This subgroup includes vegetables such as bok choy, broccoli, collard greens, dark green leafy lettuce, kale, mesclun, mustard greens, romaine lettuce, spinach, turnip greens, and watercress;
(B) Red-orange vegetables. This subgroup includes vegetables such as acorn squash, butternut squash, carrots, pumpkin, tomatoes, tomato juice, and sweet potatoes;
(C) Beans and peas (legumes). This subgroup includes vegetables such as black beans, black-eyed peas (mature, dry), garbanzo beans (chickpeas), kidney beans, lentils, navy beans pinto beans, soy beans, split peas, and white beans;
(D) Starchy vegetables. This subgroup includes vegetables such as black-eyed peas (not dry), corn, cassava, green bananas, green peas, green lima beans, plantains, taro, water chestnuts, and white potatoes; and
(E) Other vegetables. This subgroup includes all other fresh, frozen, and canned vegetables, cooked or raw, such as artichokes, asparagus, avocado, bean sprouts, beets, Brussels sprouts, cabbage, cauliflower, celery, cucumbers, eggplant, green beans, green peppers, iceberg lettuce, mushrooms, okra, onions, parsnips, turnips, wax beans, and zucchini.
(iv) Grains component— (A) Enriched and whole grains. All grains must be made with enriched and whole grain meal or flour, in accordance with the most recent grains FNS guidance. Whole grain-rich products must contain at least 50 percent whole grains and the remaining grains in the product must be enriched. The whole grain-rich criteria included in FNS guidance may be updated to reflect additional information provided by industry on the food label or a whole grains definition by the Food and Drug Administration.
(B) Daily and weekly servings. The grains component is based on minimum daily servings plus total servings over a 5-day school week. Schools serving lunch 6 or 7 days per week must increase the weekly grains quantity by approximately 20 percent (
(C) Desserts. Schools may count up to two grain-based desserts per week towards meeting the grains requirement as specified in FNS guidance.
(v) Fluid milk component. Fluid milk must be offered daily in accordance with paragraph (d) of this section.
(3) Food components in outlying areas. Schools in American Samoa, Puerto Rico and the Virgin Islands may serve vegetables such as yams, plantains, or sweet potatoes to meet the grains component.
(4) Adjustments to the school menus. Schools must adjust future menu cycles to reflect production and how often the food items are offered. Schools may need to change the foods offerings given students’ selections and may need to modify recipes and other specifications to make sure that meal requirements are met.
(5) Standardized recipes. All schools must develop and follow standardized recipes. A standardized recipe is a recipe that was tested to provide an established yield and quantity using the same ingredients for both measurement and preparation methods. Standardized recipes developed by USDA/FNS are in the Child Nutrition Database. If a school has its own recipes, they may seek assistance from the State agency or school food authority to standardize the recipes. Schools must add any local recipes to their local database as outlined in FNS guidance.
(6) Processed foods. The Child Nutrition Database includes a number of processed foods. Schools may use purchased processed foods that are not in the Child Nutrition Database. Schools or the State agency must add any locally purchased processed foods to their local database as outlined in FNS guidance. The State agencies must obtain the levels of calories, saturated fat, and sodium in the processed foods.
(7) Menu substitutions. Schools should always try to substitute nutritionally similar foods.
(d) Fluid milk requirement—(1) Types of fluid milk. (i) Schools must offer students a variety (at least two different options) of fluid milk. All milk must be fat-free (skim) or low-fat (1 percent fat or less). Milk with higher fat content is not allowed. Low-fat or fat-free lactose-free and reduced-lactose fluid milk may also be offered. Milk may be unflavored or flavored, provided that unflavored milk is offered at each meal service.
(ii) All fluid milk served in the Program must be pasteurized fluid milk which meets State and local standards for such milk. All fluid milk must have vitamins A and D at levels specified by the Food and Drug Administration and must be consistent with State and local standards for such milk.
(2) Inadequate fluid milk supply. If a school cannot get a supply of fluid milk, it can still participate in the Program under the following conditions:
(i) If emergency conditions temporarily prevent a school that normally has a supply of fluid milk from obtaining delivery of such milk, the State agency may allow the school to serve meals during the emergency period with an alternate form of fluid milk or without fluid milk.
(ii) If a school is unable to obtain a supply of any type of fluid milk on a continuing basis, the State agency may approve the service of meals without fluid milk if the school uses an equivalent amount of canned milk or dry milk in the preparation of the meals. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, and the Virgin Islands, if a sufficient supply of fluid milk cannot be obtained, “fluid milk” includes reconstituted or recombined fluid milk, or as otherwise allowed by FNS through a written exception.
(3) Fluid milk substitutes. If a school chooses to offer one or more substitutes for fluid milk for non-disabled students with medical or special dietary needs, the nondairy beverage(s) must provide the nutrients listed in the following table. Fluid milk substitutes must be fortified in accordance with fortification guidelines issued by the Food and Drug Administration. A school need only offer the nondairy beverage(s) that it has identified as allowable fluid milk substitutes according to the following chart.
| Nutrient | Per cup (8 fl oz) |
|---|---|
| Calcium | 276 mg. |
| Protein | 8 g. |
| Vitamin A | 500 IU. |
| Vitamin D | 100 IU. |
| Magnesium | 24 mg. |
| Phosphorus | 222 mg. |
| Potassium | 349 mg. |
| Riboflavin | 0.44 mg. |
| Vitamin B-12 | 1.1 mcg. |
(4) Restrictions on the sale of fluid milk. A school participating in the Program, or a person approved by a school participating in the Program, must not directly or indirectly restrict the sale or marketing of fluid milk (as identified in paragraph (d)(1) of this section) at any time or in any place on school premises or at any school-sponsored event.
(e) Offer versus serve for grades K through 12. School lunches must offer daily the five food components specified in the meal pattern in paragraph (c) of this section. Under offer versus serve, students must be allowed to decline two components at lunch, except that the students must select at least
(f) Dietary specifications—(1) Calories. School lunches offered to each age/grade group must meet, on average over the school week, the minimum and maximum calorie levels specified in the following table:
| Calorie ranges for lunch | |||
|---|---|---|---|
| Grades K-5 | Grades 6-8 | Grades 9-12 | |
| Min-max calories (kcal) ab | 550-650 | 600-700 | 750-850 |
a The average daily amount for a 5-day school week must fall within the minimum and maximum levels.
b Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within the specifications for calories, saturated fat,
(2) Saturated fat. School lunches offered to all age/grade groups must, on average over the school week, provide less than 10 percent of total calories from saturated fat.
(3) Sodium. School lunches offered to each age/grade group must meet, on average over the school week, the levels of sodium specified in the following table within the established deadlines:
Table 4 to Paragraph (
| Age/grade group | Target 1: effective July 1, 2022 (mg) | Interim target 1A: effective July 1, 2023 (mg) |
|---|---|---|
| K-5 | ≤1,230 | ≤1,110 |
| 6-8 | ≤1,360 | ≤1,225 |
| 9-12 | ≤1,420 | ≤1,280 |
(4) Trans fat. Food products and ingredients used to prepare school meals must contain zero grams of trans fat (less than 0.5 grams) per serving. Schools must add the trans fat specification and request the required documentation (nutrition label or manufacturer specifications) in their procurement contracts. Documentation for food products and food ingredients must indicate zero grams of trans fat per serving. Meats that contain a minimal amount of naturally-occurring trans fats are allowed in the school meal programs.
(g) Compliance assistance. The State agency and school food authority must provide technical assistance and training to assist schools in planning lunches that meet the meal pattern in paragraph (c) of this section; the calorie, saturated fat, sodium, and trans fat specifications established in paragraph (f) of this section; and the meal pattern requirements in paragraphs (o), (p), and (q) of this section as applicable. Compliance assistance may be offered during trainings, onsite visits, and/or administrative reviews.
(h) Monitoring dietary specifications.—(1) Calories, saturated fat and sodium. When required by the administrative review process set forth in § 210.18, the State agency must conduct a weighted nutrient analysis to evaluate the average levels of calories, saturated fat, and sodium of the lunches offered to students in grades K and above during one week of the review period. The nutrient analysis must be conducted in accordance with the procedures established in paragraph (i)(3) of this section. If the results of the nutrient analysis indicate that the school lunches are not meeting the specifications for calories, saturated fat, and sodium specified in paragraph (f) of this section, the State agency or school food authority must provide technical assistance and require the reviewed school to take corrective action to meet the requirements.
(2) Trans fat. State agencies must review product labels or manufacturer specifications to verify that the food products or ingredients used by the reviewed school(s) contain zero grams of trans fat (less than 0.5 grams) per serving.
(i) Nutrient analyses of school meals—(1) Conducting the nutrient analysis. Any nutrient analysis, whether conducted by the State agency under § 210.18 or by the school food authority, must be performed in accordance with the procedures established in paragraph (i)(3) of this section. The purpose of the nutrient analysis is to determine the average levels of calories, saturated fat, and sodium in the meals offered to each age grade group over a school week. The weighted nutrient analysis must be performed as required by FNS guidance.
(2) Software elements—(i) The Child Nutrition Database. The nutrient analysis is based on the USDA Child Nutrition Database. This database is part of the software used to do a nutrient analysis. Software companies or others developing systems for schools may contact FNS for more information about the database.
(ii) Software evaluation. FNS or an FNS designee evaluates any nutrient analysis software before it may be used in schools. FNS or its designee determines if the software, as submitted, meets the minimum requirements. The approval of software does not mean that FNS or USDA endorses it. The software must be able to perform a weighted average analysis after the basic data is entered. The combined analysis of the lunch and breakfast programs is not allowed.
(3) Nutrient analysis procedures—(i) Weighted averages. The nutrient analysis must include all foods offered as part of the reimbursable meals during one week within the review period. Foods items are included based on the portion sizes and serving amounts. They are also weighted based on their proportionate contribution to the meals offered. This means that food items offered more frequently are weighted more heavily than those not offered as frequently. The weighted nutrient analysis must be performed as required by FNS guidance.
(ii) Analyzed nutrients. The analysis determines the average levels of calories, saturated fat, and sodium in the meals offered over a school week. It includes all food items offered by the reviewed school over a one-week period.
(4) Comparing the results of the nutrient analysis. Once the procedures in paragraph (i)(3) of this section are completed, State agencies must compare the results of the analysis to the calorie, saturated fat, and sodium levels established in § 210.10 or § 220.8, as appropriate, for each age/grade group to evaluate the school’s compliance with the dietary specifications.
(j) Responsibility for monitoring meal requirements. Compliance with the meal requirements in paragraph (b) of this section, including dietary specifications for calories, saturated fat, sodium and trans fat, and paragraphs (o), (p), and (q) of this section, as applicable, will be monitored by the State agency through administrative reviews authorized in § 210.18.
(k) Menu choices at lunch—(1) Availability of choices. Schools may offer children a selection of nutritious foods within a reimbursable lunch to encourage the consumption of a variety of foods. Children who are eligible for free or reduced price lunches must be allowed to take any reimbursable lunch or any choices offered as part of a reimbursable lunch. Schools may establish different unit prices for each reimbursable lunch offered provided that the benefits made available to children eligible for free or reduced price lunches are not affected.
(2) Opportunity to select. Schools that choose to offer a variety of reimbursable lunches, or provide multiple serving lines, must make all required food components available to all students, on every lunch line, in at least the minimum required amounts.
(l) Requirements for lunch periods—(1) Timing. Schools must offer lunches meeting the requirements of this section during the period the school has designated as the lunch period. Schools must offer lunches between 10 a.m. and 2 p.m. Schools may request an exemption from these times from the State agency. With State agency approval, schools may serve lunches to children under age 5 over two service periods. Schools may divide quantities and food items offered each time any way they wish.
(2) Adequate lunch periods. FNS encourages schools to provide sufficient lunch periods that are long enough to give all students adequate time to be served and to eat their lunches.
(m) Exceptions and variations allowed in reimbursable meals—(1) Exceptions for disability reasons. Schools must make substitutions in lunches and afterschool snacks for students who are considered to have a disability under 7 CFR 15b.3 and whose disability restricts their diet. Substitutions must be made on a case by case basis only when supported by a written statement of the need for substitution(s) that includes recommended alternate foods, unless otherwise exempted by FNS. Such statement must be signed by a licensed physician.
(2) Exceptions for non-disability reasons. Schools may make substitutions for students without disabilities who cannot consume the regular lunch or afterschool snack because of medical or other special dietary needs. Substitutions must be made on a case by case basis only when supported by a written statement of the need for substitutions that includes recommended alternate foods, unless otherwise exempted by FNS. Except with respect to substitutions for fluid milk, such a statement must be signed by a recognized medical authority.
(i) Fluid milk substitutions for non-disability reasons. Schools may make substitutions for fluid milk for non-disabled students who cannot consume fluid milk due to medical or special dietary needs. A school that selects this option may offer the nondairy beverage(s) of its choice, provided the beverage(s) meets the nutritional standards established under paragraph (d) of this section. Expenses incurred when providing substitutions for fluid milk that exceed program reimbursements must be paid by the school food authority.
(ii) Requisites for fluid milk substitutions. (A) A school food authority must inform the State agency if any of its schools choose to offer fluid milk substitutes other than for students with disabilities; and
(B) A medical authority or the student’s parent or legal guardian must submit a written request for a fluid milk substitute identifying the medical or other special dietary need that restricts the student’s diet.
(iii) Substitution approval. The approval for fluid milk substitution must remain in effect until the medical authority or the student’s parent or legal guardian revokes such request in writing, or until such time as the school changes its substitution policy for non-disabled students.
(3) Variations for ethnic, religious, or economic reasons. Schools should consider ethnic and religious preferences when planning and preparing meals. Variations on an experimental or continuing basis in the food components for the meal pattern in paragraph (c) of this section may be allowed by FNS. Any variations must be consistent with the food and nutrition requirements specified under this section and needed to meet ethnic, religious, or economic needs.
(4) Exceptions for natural disasters. If there is a natural disaster or other catastrophe, FNS may temporarily allow schools to serve meals for reimbursement that do not meet the requirements in this section.
(n) Nutrition disclosure. To the extent that school food authorities identify foods in a menu, or on the serving line or through other communications with program participants, school food authorities must identify products or dishes containing more than 30 parts fully hydrated alternate protein products (as specified in appendix A of this part) to less than 70 parts beef, pork, poultry or seafood on an uncooked basis, in a manner which does not characterize the product or dish solely as beef, pork, poultry or seafood. Additionally, FNS encourages schools to inform the students, parents, and the public about efforts they are making to meet the meal requirements for school lunches.
(o) Afterschool snacks. Eligible schools operating afterschool care programs may be reimbursed for one afterschool snack served to a child (as defined in § 210.2) per day.
(1) “Eligible schools” means schools that:
(i) Operate school lunch programs under the Richard B. Russell National School Lunch Act; and
(ii) Sponsor afterschool care programs as defined in § 210.2.
(2) Afterschool snack requirements for grades K through 12. Afterschool snacks must contain two different components from the following four:
(i) A serving of fluid milk as a beverage, or on cereal, or used in part for each purpose.
(ii) A serving of meat or meat alternate, including nuts and seeds and their butters listed in FNS guidance that are nutritionally comparable to meat or other meat alternates based on available nutritional data.
(A) Nut and seed meals or flours may be used only if they meet the requirements for alternate protein products established in appendix A of this part.
(B) Acorns, chestnuts, and coconuts cannot be used as meat alternates due to their low protein and iron content.
(iii) A serving of vegetable or fruit, or full-strength vegetable or fruit juice, or an equivalent quantity of any combination of these foods. Juice must not be served when fluid milk is served as the only other component.
(iv) A serving of whole-grain or enriched bread; or an equivalent serving of a bread product, such as cornbread, biscuits, rolls, or muffins made with whole-grain or enriched meal or flour; or a serving of cooked whole-grain or enriched pasta or noodle products such as macaroni, or cereal grains such as enriched rice, bulgur, or enriched corn grits; or an equivalent quantity of any combination of these foods.
(3) Afterschool snack requirements for preschoolers—(i) Snacks served to preschoolers. Schools serving afterschool snack to children ages 1 through 4 must serve the food components and quantities required in the snack meal pattern established for the Child and Adult Care Food Program, under § 226.20(a), (c)(3), and (d) of this chapter. In addition, schools serving afterschool snacks to this age group must comply with the requirements set forth in paragraphs (a), (c)(3), (4), and (7), (d)(2) through (4), (g), and (m) of this section.
(ii) Preschooler snack meal pattern table. The minimum amounts of food components to be served at snack are as follows:
Table 5 to Paragraph
| Food components and food items | Minimum quantities | |
|---|---|---|
| Ages 1-2 | Ages 3-5 | |
| Fluid Milk 2 | 4 fluid ounces | 4 fluid ounces. |
| Meat/meat alternates (edible portion as served): | ||
| Lean meat, poultry, or fish | ||
| Tofu, soy products, or alternate protein products 3 | ||
| Cheese | ||
| Large egg | ||
| Cooked dry beans or peas | ||
| Peanut butter or soy nut butter or other nut or seed butters | 1 Tbsp | 1 Tbsp. |
| Yogurt, plain or flavored unsweetened or sweetened 4 | 2 ounces or | 2 ounces or |
| Peanuts, soy nuts, tree nuts, or seeds | ||
| Vegetables 5 | ||
| Fruits 5 | ||
| Grains (oz eq) | ||
1 Select two of the five components for a reimbursable snack. Only one of the two components may be a beverage.
2 Must be unflavored whole milk for children age one. Must be unflavored low-fat (1 percent) or unflavored fat-free (skim) milk for children two through five years old.
3 Alternate protein products must meet the requirements in Appendix A to Part 226 of this chapter.
4 Yogurt must contain no more than 23 grams of total sugars per 6 ounces.
5 Pasteurized full-strength juice may only be used to meet the vegetable or fruit requirement at one meal, including snack, per day.
6 At least one serving per day, across all eating occasions, must be whole grain-rich. Grain-based desserts do not count towards meeting the grains requirement.
7 Breakfast cereals must contain no more than 6 grams of sugar per dry ounce (no more than 21.2 grams sucrose and other sugars per 100 grams of dry cereal).
8 Refer to FNS guidance for additional information on crediting different types of grains.
(4) Afterschool snack requirements for infants—(i) Snacks served to infants. Schools serving afterschool snacks to infants ages birth through 11 months must serve the food components and quantities required in the snack meal pattern established for the Child and Adult Care Food Program, under § 226.20(a), (b), and (d) of this chapter. In addition, schools serving afterschool snacks to infants must comply with the requirements set forth in paragraphs (a), (c)(3), (4), and (7), (g), and (m) of this section.
(ii) Infant snack meal pattern table. The minimum amounts of food components to be served at snack are as follows:
Table 6 to Paragraph
| Birth through 5 months | 6 through 11 months |
|---|---|
| 4-6 fluid ounces breastmilk 1 or formula 2 | 2-4 fluid ounces breastmilk 1 or formula; 2 and |
| 0- 3 4 or | |
| 0- 3 4 or | |
| 0- 2 4 or | |
| 0- 3 4 5 6 and | |
| 0-2 tablespoons vegetable or fruit, or a combination of both. 6 7 |
1 Breastmilk or formula, or portions of both, must be served; however, it is recommended that breastmilk be served in place of formula from birth through 11 months. For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered, with additional breastmilk offered at a later time if the infant will consume more.
2 Infant formula and dry infant cereal must be iron-fortified.
3 A serving of grains must be whole grain-rich, enriched meal, or enriched flour.
4 Refer to FNS guidance for additional information on crediting different types of grains.
5 Breakfast cereals must contain no more than 6 grams of sugar per dry ounce (no more than 21.2 grams sucrose and other sugars per 100 grams of dry cereal).
6 A serving of this component is required when the infant is developmentally ready to accept it.
7 Fruit and vegetable juices must not be served.
(5) Monitoring afterschool snacks. Compliance with the requirements of this paragraph is monitored by the State agency as part of the administrative review conducted under § 210.18. If the snacks offered do not meet the requirements of this paragraph, the State agency or school food authority must provide technical assistance and require corrective action. In addition, the State agency must take fiscal action, as authorized in §§ 210.18(l) and 210.19(c).
(p) Lunch requirements for preschoolers—(1) Lunches served to preschoolers. Schools serving lunches to children ages 1 through 4 under the National School Lunch Program must serve the food components and quantities required in the lunch meal pattern established for the Child and Adult Care Food Program, under § 226.20(a), (c)(2), and (d) of this chapter. In addition, schools serving lunches to this age group must comply with the requirements set forth in paragraphs (a), (c)(3), (4), and (7), (d)(2) through (4), (g), (k), (l), and (m) of this section.
(2) Preschooler lunch meal pattern table. The minimum amounts of food components to be served at lunch are as follows:
Table 7 to Paragraph
| Food components and food items | Minimum quantities | |
|---|---|---|
| Ages 1-2 | Ages 3-5 | |
| Fluid Milk 2 | 4 fluid ounces | 6 fluid ounces. |
| Meat/meat alternates (edible portion as served): | ||
| Lean meat, poultry, or fish | 1 ounce | 1 |
| Tofu, soy products, or alternate protein products 3 | 1 ounce | 1 |
| Cheese | 1 ounce | 1 |
| Large egg | ||
| Cooked dry beans or peas | ||
| Peanut butter or soy nut butter or other nut or seed butters | 2 Tbsp | 3 Tbsp. |
| Yogurt, plain or flavored unsweetened or sweetened 4 | 4 ounces or | 6 ounces or |
| The following may be used to meet no more than 50% of the requirement: Peanuts, soy nuts, tree nuts, or seeds, as listed in program guidance, or an equivalent quantity of any combination of the above meat/meat alternates (1 ounce of nuts/seeds = 1 ounce of cooked lean meat, poultry, or fish) | ||
| Vegetables | ||
| Fruits | ||
| Grains (oz eq) | ||
1 Must serve all five components for a reimbursable meal.
2 Must be unflavored whole milk for children age one. Must be unflavored low-fat (1 percent) or unflavored fat-free (skim) milk for children two through five years old.
3 Alternate protein products must meet the requirements in Appendix A to Part 226 of this chapter.
4 Yogurt must contain no more than 23 grams of total sugars per 6 ounces.
5 Pasteurized full-strength juice may only be used to meet the vegetable or fruit requirement at one meal, including snack, per day.
6 A vegetable may be used to meet the entire fruit requirement. When two vegetables are served at lunch or supper, two different kinds of vegetables must be served.
7 At least one serving per day, across all eating occasions, must be whole grain-rich. Grain-based desserts do not count towards the grains requirement.
8 Refer to FNS guidance for additional information on crediting different types of grains.
9 Breakfast cereals must contain no more than 6 grams of sugar per dry ounce (no more than 21.2 grams sucrose and other sugars per 100 grams of dry cereal).
(q) Lunch requirements for infants—(1) Lunches served to infants. Schools serving lunches to infants ages birth through 11 months under the National School Lunch Program must serve the food components and quantities required in the lunch meal pattern established for the Child and Adult Care Food Program, under § 226.20(a), (b), and (d) of this chapter. In addition, schools serving lunches to infants must comply with the requirements set forth in paragraphs (a), (c)(3), (4), and (7), (g), (l), and (m) of this section.
(2) Infant lunch meal pattern table. The minimum amounts of food components to be served at lunch are as follows:
Table 8 to Paragraph
| Birth through 5 months | 6 through 11 months |
|---|---|
| 4-6 fluid ounces breastmilk 1 or formula 2 | 6-8 fluid ounces breastmilk 1 or formula; 2 and |
| 0- | |
| 0-4 tablespoons meat, fish, poultry, whole egg, cooked dry beans, or cooked dry peas; or | |
| 0-2 ounces of cheese; or | |
| 0-4 ounces (volume) of cottage cheese; or | |
| 0-4 ounces or 4 or a combination of the above; 5 and | |
| 0-2 tablespoons vegetable or fruit, or a combination of both. |
1 Breastmilk or formula, or portions of both, must be served; however, it is recommended that breastmilk be served in place of formula from birth through 11 months. For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered, with additional breastmilk offered at a later time if the infant will consume more.
2 Infant formula and dry infant cereal must be iron-fortified.
3 Refer to FNS guidance for additional information on crediting different types of grains.
4 Yogurt must contain no more than 23 grams of total sugars per 6 ounces.
5 A serving of this component is required when the infant is developmentally ready to accept it.
6 Fruit and vegetable juices must not be served.
§ 210.11 Competitive food service and standards.
(a) Definitions. For the purpose of this section:
(1) Combination foods means products that contain two or more components representing two or more of the recommended food groups: fruit, vegetable, dairy, protein or grains.
(2) Competitive food means all food and beverages other than meals reimbursed under programs authorized by the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966 available for sale to students on the School campus during the School day.
(3) Entrée item means an item that is intended as the main dish and is either:
(i) A combination food of meat or meat alternate and whole grain rich food; or
(ii) A combination food of vegetable or fruit and meat or meat alternate; or
(iii) A meat or meat alternate alone with the exception of yogurt, low-fat or reduced fat cheese, nuts, seeds and nut or seed butters, and meat snacks (such as dried beef jerky); or
(iv) A grain only, whole-grain rich entrée that is served as the main dish of the School Breakfast Program reimbursable meal.
(4) School campus means, for the purpose of competitive food standards implementation, all areas of the property under the jurisdiction of the school that are accessible to students during the school day.
(5) School day means, for the purpose of competitive food standards implementation, the period from the midnight before, to 30 minutes after the end of the official school day.
(6) Paired exempt foods mean food items that have been designated as exempt from one or more of the nutrient requirements individually which are packaged together without any additional ingredients. Such “paired exempt foods” retain their individually designated exemption for total fat, saturated fat, and/or sugar when packaged together and sold but are required to meet the designated calorie and sodium standards specified in §§ 210.11(i) and (j) at all times.
(b) General requirements for competitive food. (1) State and local educational agency policies. State agencies and/or local educational agencies must establish such policies and procedures as are necessary to ensure compliance with this section. State agencies and/or local educational agencies may impose additional restrictions on competitive foods, provided that they are not inconsistent with the requirements of this part.
(2) Recordkeeping. The local educational agency is responsible for the maintenance of records that document compliance with the nutrition standards for all competitive food available for sale to students in areas under its jurisdiction that are outside of the control of the school food authority responsible for the service of reimbursable school meals. In addition, the local educational agency is responsible for ensuring that organizations designated as responsible for food service at the various venues in the schools maintain records in order to ensure and document compliance with the nutrition requirements for the foods and beverages sold to students at these venues during the school day as required by this section. The school food authority is responsible for maintaining records documenting compliance with these for foods sold under the auspices of the nonprofit school food service. At a minimum, records must include receipts, nutrition labels and/or product specifications for the competitive food available for sale to students.
(3) Applicability. The nutrition standards for the sale of competitive food outlined in this section apply to competitive food for all programs authorized by the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966 operating on the school campus during the school day.
(4) Fundraiser restrictions. Competitive food and beverage items sold during the school day must meet the nutrition standards for competitive food as required in this section. A special exemption is allowed for the sale of food and/or beverages that do not meet the competitive food standards as required in this section for the purpose of conducting an infrequent school-sponsored fundraiser. Such specially exempted fundraisers must not take place more than the frequency specified by the State agency during such periods that schools are in session. No specially exempted fundraiser foods or beverages may be sold in competition with school meals in the food service area during the meal service.
(c) General nutrition standards for competitive food. (1) General requirement. At a minimum, all competitive food sold to students on the school campus during the school day must meet the nutrition standards specified in this section. These standards apply to items as packaged and served to students.
(2) General nutrition standards. To be allowable, a competitive food item must:
(i) Meet all of the competitive food nutrient standards as outlined in this section; and
(ii) Be a grain product that contains 50 percent or more whole grains by weight or have as the first ingredient a whole grain; or
(iii) Have as the first ingredient one of the non-grain major food groups: fruits, vegetables, dairy or protein foods (meat, beans, poultry, seafood, eggs, nuts, seeds, etc.); or
(iv) Be a combination food that contains
(v) If water is the first ingredient, the second ingredient must be one of the food items in paragraphs (c)(2)(ii), (iii) or (iv) of this section.
(3) Exemptions. (i) Entrée items offered as part of the lunch or breakfast program. Any entrée item offered as part of the lunch program or the breakfast program under 7 CFR Part 220 is exempt from all competitive food standards if it is offered as a competitive food on the day of, or the school day after, it is offered in the lunch or breakfast program. Exempt entrée items offered as a competitive food must be offered in the same or smaller portion sizes as in the lunch or breakfast program. Side dishes offered as part of the lunch or breakfast program and served à la carte must meet the nutrition standards in this section.
(ii) Sugar-free chewing gum. Sugar-free chewing gum is exempt from all of the competitive food standards in this section and may be sold to students on the school campus during the school day, at the discretion of the local educational agency.
(d) Fruits and vegetables. (1) Fresh, frozen and canned fruits with no added ingredients except water or packed in 100 percent fruit juice or light syrup or extra light syrup are exempt from the nutrient standards included in this section.
(2) Fresh and frozen vegetables with no added ingredients except water and canned vegetables that are low sodium or no salt added that contain no added fat are exempt from the nutrient standards included in this section.
(e) Grain products. Grain products acceptable as a competitive food must include 50 percent or more whole grains by weight or have whole grain as the first ingredient. Grain products must meet all of the other nutrient standards included in this section.
(f) Total fat and saturated fat. (1) General requirements. (i) The total fat content of a competitive food must be not more than 35 percent of total calories from fat per item as packaged or served, except as specified in paragraphs (f)(2) and (3) of this section.
(ii) The saturated fat content of a competitive food must be less than 10 percent of total calories per item as packaged or served, except as specified in paragraph (f)(3) of this section.
(2) Exemptions to the total fat requirement. Seafood with no added fat is exempt from the total fat requirement, but subject to the saturated fat, trans fat, sugar, calorie and sodium standards.
(3) Exemptions to the total fat and saturated fat requirements. (i) Reduced fat cheese and part skim mozzarella cheese are exempt from the total fat and saturated fat standards, but subject to the trans fat, sugar, calorie and sodium standards. This exemption does not apply to combination foods.
(ii) Nuts and Seeds and Nut/Seed Butters are exempt from the total fat and saturated fat standards, but subject to the trans fat, sugar, calorie and sodium standards. This exemption does not apply to combination products that contain nuts, nut butters or seeds or seed butters with other ingredients such as peanut butter and crackers, trail mix, chocolate covered peanuts, etc.
(iii) Products that consist of only dried fruit with nuts and/or seeds with no added nutritive sweeteners or fat are exempt from the total fat, saturated fat and sugar standards, but subject to the trans fat, calorie and sodium standards.
(iv) Whole eggs with no added fat are exempt from the total fat and saturated fat standards but are subject to the trans fat, calorie and sodium standards.
(g) Trans fat. The trans fat content of a competitive food must be zero grams trans fat per portion as packaged or served (not more than 0.5 grams per portion).
(h) Total sugars. (1) General requirement. The total sugar content of a competitive food must be not more than 35 percent of weight per item as packaged or served, except as specified in paragraph (h)(2) of this section.
(2) Exemptions to the total sugar requirement. (i) Dried whole fruits or vegetables; dried whole fruit or vegetable pieces; and dehydrated fruits or vegetables with no added nutritive sweeteners are exempt from the sugar standard, but subject to the total fat, saturated fat,, trans fat, calorie and sodium standards. There is also an exemption from the sugar standard for dried fruits with nutritive sweeteners that are required for processing and/or palatability purposes;
(ii) Products that consist of only dried fruit with nuts and/or seeds with no added nutritive sweeteners or fat are exempt from the total fat, saturated fat, and sugar standards, but subject to the calorie, trans fat, and sodium standards; and
(i) Calorie and sodium content for snack items and side dishes sold as competitive foods. Snack items and side dishes sold as competitive foods must have not more than 200 calories and 200 mg of sodium per item as packaged or served, including the calories and sodium contained in any added accompaniments such as butter, cream cheese, salad dressing, etc., and must meet all of the other nutrient standards in this section. Effective July 1, 2016, these snack items and side dishes must have not more than 200 calories and 200 mg of sodium per item as packaged or served.
(j) Calorie and sodium content for entrée items sold as competitive foods. Entrée items sold as competitive foods, other than those exempt from the competitive food nutrition standards in paragraph (c)(3)(i) of this section, must have not more than 350 calories and 480 mg of sodium per item as packaged or served, including the calories and sodium contained in any added accompaniments such as butter, cream cheese, salad dressing, etc., and must meet all of the other nutrient standards in this section.
(k) Caffeine. Foods and beverages available to elementary and middle school-aged students must be caffeine-free, with the exception of trace amounts of naturally occurring caffeine substances. Foods and beverages available to high school-aged students may contain caffeine.
(l) Accompaniments. The use of accompaniments is limited when competitive food is sold to students in school. The accompaniments to a competitive food item must be included in the nutrient profile as a part of the food item served in determining if an item meets all of the nutrition standards for competitive food as required in this section. The contribution of the accompaniments may be based on the average amount of the accompaniment used per item at the site.
(m) Beverages—(1) Elementary schools. Allowable beverages for elementary school-aged students are limited to:
(i) Plain water or plain carbonated water (no size limit);
(ii) Low fat milk, flavored or unflavored (no more than 8 fluid ounces);
(iii) Non fat milk, flavored or unflavored (no more than 8 fluid ounces);
(iv) Nutritionally equivalent milk alternatives as permitted in § 210.10 and § 220.8 of this chapter (no more than 8 fluid ounces); and
(v) 100 percent fruit/vegetable juice, and 100 percent fruit and/or vegetable juice diluted with water (with or without carbonation and with no added sweeteners) (no more than 8 fluid ounces).
(2) Middle schools. Allowable beverages for middle school-aged students are limited to:
(i) Plain water or plain carbonated water (no size limit);
(ii) Low fat milk, flavored or unflavored (no more than 12 fluid ounces);
(iii) Non fat milk, flavored or unflavored (no more than 12 fluid ounces);
(iv) Nutritionally equivalent milk alternatives as permitted in § 210.10 and § 220.8 of this chapter (no more than 12 fluid ounces); and
(v) 100 percent fruit/vegetable juice, and 100 percent fruit and/or vegetable juice diluted with water (with or without carbonation and with no added sweeteners) (no more than 12 fluid ounces).
(3) High schools. Allowable beverages for high school-aged students are limited to:
(i) Plain water or plain carbonated water (no size limit);
(ii) Low fat milk, flavored or unflavored (no more than 12 fluid ounces);
(iii) Non fat milk, flavored or unflavored (no more than 12 fluid ounces);
(iv) Nutritionally equivalent milk alternatives as permitted in § 210.10 and § 220.8 of this chapter (no more than 12 fluid ounces);
(v) 100 percent fruit/vegetable juice, and 100 percent fruit and/or vegetable juice diluted with water (with or without carbonation and with no added sweeteners) (no more than 12 fluid ounces);
(vi) Calorie-free, flavored water, with or without carbonation (no more than 20 fluid ounces);
(vii) Other beverages that are labeled to contain less than 5 calories per 8 fluid ounces, or less than or equal to 10 calories per 20 fluid ounces (no more than 20 fluid ounces); and
(viii) Other beverages that are labeled to contain no more than 40 calories per 8 fluid ounces or 60 calories per 12 fluid ounces (no more than 12 fluid ounces).
(n) Implementation date. This section is to be implemented beginning on July 1, 2014.
§ 210.12 Student, parent, and community involvement.
(a) General. School food authorities shall promote activities to involve students and parents in the Program. Such activities may include menu planning, enhancement of the eating environment, Program promotion, and related student-community support activities. School food authorities are encouraged to use the school food service program to teach students about good nutrition practices and to involve the school faculty and the general community in activities to enhance the Program.
(b) Food service management companies. School food authorities contracting with a food service management company shall comply with the provisions of § 210.16(a) regarding the establishment of an advisory board of parents, teachers and students.
(c) Residential child care institutions. Residential child care institutions shall comply with the provisions of this section, to the extent possible.
(d) Outreach activities. (1) To the maximum extent practicable, school food authorities must inform families about the availability breakfasts for students. Information about the School Breakfast Program must be distributed just prior to or at the beginning of the school year. In addition, schools are encouraged to send reminders regarding the availability of the School Breakfast Program multiple times throughout the school year.
(2) School food authorities must cooperate with Summer Food Service Program sponsors to distribute materials to inform families of the availability and location of free Summer Food Service Program meals for students when school is not in session.
(e) Local school wellness policies. Local educational agencies must comply with the provisions of § 210.30(d) regarding student, parent, and community involvement in the development, implementation, and periodic review and update of the local school wellness policy.
§ 210.13 Facilities management.
(a) Health standards. The school food authority shall ensure that food storage, preparation and service is in accordance with the sanitation and health standards established under State and local law and regulations.
(b) Food safety inspections. Schools shall obtain a minimum of two food safety inspections during each school year conducted by a State or local governmental agency responsible for food safety inspections. They shall post in a publicly visible location a report of the most recent inspection conducted, and provide a copy of the inspection report to a member of the public upon request. Sites participating in more than one child nutrition program shall only be required to obtain two food safety inspections per school year if the nutrition programs offered use the same facilities for the production and service of meals.
(c) Food safety program. The school food authority must develop a written food safety program that covers any facility or part of a facility where food is stored, prepared, or served. The food safety program must meet the requirements in paragraph (c)(1) or paragraph (c)(2) of this section, and the requirements in § 210.15(b)(5).
(1) A school food authority with a food safety program based on traditional hazard analysis and critical control point (HACCP) principles must:
(i) Perform a hazard analysis;
(ii) Decide on critical control points;
(iii) Determine the critical limits;
(iv) Establish procedures to monitor critical control points;
(v) Establish corrective actions;
(vi) Establish verification procedures; and
(vii) Establish a recordkeeping system.
(2) A school food authority with a food safety program based on the process approach to HACCP must ensure that its program includes:
(i) Standard operating procedures to provide a food safety foundation;
(ii) Menu items grouped according to process categories;
(iii) Critical control points and critical limits;
(iv) Monitoring procedures;
(v) Corrective action procedures;
(vi) Recordkeeping procedures; and
(vii) Periodic program review and revision.
(d) Storage. The school food authority shall ensure that the necessary facilities for storage, preparation and service of food are maintained. Facilities for the handling, storage, and distribution of purchased and donated foods shall be such as to properly safeguard against theft, spoilage and other loss.
§ 210.14 Resource management.
(a) Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. Expenditures of nonprofit school food service revenues shall be in accordance with the financial management system established by the State agency under § 210.19(a) of this part. School food authorities may use facilities, equipment, and personnel supported with nonprofit school food revenues to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.).
(b) Net cash resources. The school food authority shall limit its net cash resources to an amount that does not exceed 3 months average expenditures for its nonprofit school food service or such other amount as may be approved by the State agency in accordance with § 210.19(a).
(c) Financial assurances. The school food authority shall meet the requirements of the State agency for compliance with § 210.19(a) including any separation of records of nonprofit school food service from records of any other food service which may be operated by the school food authority as provided in paragraph (a) of this section.
(d) Use of donated foods. The school food authority shall enter into an agreement with the distributing agency to receive donated foods as required by part 250 of this chapter. In addition, the school food authority shall accept and use, in as large quantities as may be efficiently utilized in its nonprofit school food service, such foods as may be offered as a donation by the Department. The school food authority’s policies, procedures, and records must account for the receipt, full value, proper storage and use of donated foods.
(e) Pricing paid lunches. For each school year beginning July 1, 2011, school food authorities shall establish prices for paid lunches in accordance with this paragraph.
(1) Calculation procedures. Each school food authority shall:
(i) Determine the average price of paid lunches. The average shall be determined based on the total number of paid lunches claimed for the month of October in the previous school year, at each different price charged by the school food authority.
(ii) Calculate the difference between the per meal Federal reimbursement for paid and free lunches received by the school food authority in the previous school year (i.e., the reimbursement difference);
(iii) Compare the average price of a paid lunch under paragraph (e)(1)(i) of this section to the difference between reimbursement rates under paragraph (e)(1)(ii) of this section.
(2) Average paid lunch price is equal to/greater than the reimbursement difference. When the average paid lunch price from the prior school year is equal to or greater than the difference in reimbursement rates as determined in paragraph (e)(1)(iii) of this section, the school food authority shall establish an average paid lunch price for the current school year that is not less than the difference identified in (e)(1)(iii) of this section; except that, the school food authority may use the procedure in paragraph (e)(4)(ii) of this section when establishing prices of paid lunches.
(3) Average lunch price is lower than the reimbursement difference. When the average price from the prior school year is lower than the difference in reimbursement rates as determined in paragraph (e)(1)(iii) of this section, the school food authority shall establish an average price for the current school year that is not less than the average price charged in the previous school year as adjusted by a percentage equal to the sum obtained by adding:
(i) 2 percent; and
(ii) The percentage change in the Consumers Price Index for All Urban Consumers used to increase the Federal reimbursement rate under section 11 of the Act for the most recent school year for which data are available. The percentage to be used is found in the annual notice published in the
(4) Price Adjustments. (i) Maximum required price increase. The maximum annual average price increase required under this paragraph shall not exceed ten cents.
(ii) Rounding of paid lunch prices. Any school food authority may round the adjusted price of the paid lunches down to the nearest five cents.
(iii) Optional price increases. A school food authority may increase the average price by more than ten cents.
(5) Reduction in average price for paid lunches. (i) Any school food authority may reduce the average price of paid lunches as established under this paragraph if the State agency ensures that funds are added to the nonprofit school food service account in accordance with this paragraph.
The minimum that must be added is the product of:
(A) The number of paid lunches claimed by the school food authority in the previous school year multiplied by
(B) The amount required under paragraph (e)(3) of this section, as adjusted under paragraph (e)(4) of this section, minus the average price charged.
(ii) Prohibitions. The following shall not be used to reduce the average price charged for paid lunches:
(A) Federal sources of revenue;
(B) Revenue from foods sold in competition with lunches or with breakfasts offered under the School Breakfast Program authorized in 7 CFR part 220. Requirements concerning foods sold in competition with lunches or breakfasts are found in § 210.11 and § 220.12 of this chapter, respectively;
(C) In-kind contributions;
(D) Any in-kind contributions converted to direct cash expenditures after July 1, 2011; and
(E) Per-meal reimbursements (non-Federal) specifically provided for support of programs other than the school lunch program.
(iii) Allowable non-Federal revenue sources. Any contribution that is for the direct support of paid lunches that is not prohibited under paragraph (e)(5)(ii) of this section may be used as revenue for this purpose. Such contributions include, but are not limited to:
(A) Per-lunch reimbursements for paid lunches provided by State or local governments;
(B) Funds provided by organizations, such as school-related or community groups, to support paid lunches;
(C) Any portion of State revenue matching funds that exceeds the minimum requirement, as provided in § 210.17, and is provided for paid lunches; and
(D) A proportion attributable to paid lunches from direct payments made from school district funds to support the lunch service.
(6) Additional considerations. (i) In any given year, if a school food authority with an average price lower than the reimbursement difference is not required by paragraph (e)(4)(ii) of this section to increase its average price for paid lunches, the school food authority shall use the unrounded average price as the basis for calculations to meet paragraph (e)(3) of this section for the next school year.
(ii) If a school food authority has an average price lower than the reimbursement difference and chooses to increase its average price for paid lunches in any school year more than is required by this section, the amount attributable to the additional voluntary increase may be carried forward to the next school year(s) to meet the requirements of this section.
(iii) For the school year beginning July 1, 2011 only, the limitations for non-Federal contributions in paragraph (e)(5)(iii) of this section do not apply.
(7) Reporting lunch prices. In accordance with guidelines provided by FNS:
(i) School food authorities shall report prices charged for paid lunches to the State agency; and
(ii) State agencies shall report these prices to FNS.
(f) Revenue from nonprogram foods. Beginning July 1, 2011, school food authorities shall ensure that the revenue generated from the sale of nonprogram foods complies with the requirements in this paragraph.
(1) Definition of nonprogram foods. For the purposes of this paragraph, nonprogram foods are those foods and beverages:
(i) Sold in a participating school other than reimbursable meals and meal supplements; and
(ii) Purchased using funds from the nonprofit school food service account.
(2) Revenue from nonprogram foods. The proportion of total revenue from the sale of nonprogram foods to total revenue of the school food service account shall be equal to or greater than:
(i) The proportion of total food costs associated with obtaining nonprogram foods to
(ii) The total costs associated with obtaining program and nonprogram foods from the account.
(3) All revenue from the sale of nonprogram foods shall accrue to the nonprofit school food service account of a participating school food authority.
(g) Indirect costs. School food authorities must follow fair and consistent methodologies to identify and allocate allowable indirect costs to the nonprofit school food service account, in accordance with 2 CFR part 200 as implemented by 2 CFR part 400.
§ 210.15 Reporting and recordkeeping.
(a) Reporting summary. Participating school food authorities are required to submit forms and reports to the State agency or the distributing agency, as appropriate, to demonstrate compliance with Program requirements. These reports include, but are not limited to:
(1) A Claim for Reimbursement and, for the month of October and as otherwise specified by the State agency, supporting data as specified in accordance with § 210.8 of this part;
(2) An application and agreement for Program operations between the school food authority and the State agency, and a Free and Reduced Price Policy Statement as required under § 210.9;
(3) A written response to reviews pertaining to corrective action taken for Program deficiencies;
(4) A commodity school’s preference whether to receive part of its donated food allocation in cash for processing and handling of donated foods as required under § 210.19(b);
(5) A written response to audit findings pertaining to the school food authority’s operation as required under § 210.22;
(6) Information on civil rights complaints, if any, and their resolution as required under § 210.23;
(7) The number of food safety inspections obtained per school year by each school under its jurisdiction;
(8) The prices of paid lunches charged by the school food authority; and
(9) For any local educational agency required to conduct a second review of free and reduced price applications as required under § 245.11 of this chapter, the number of free and reduced price applications subject to a second review, the number and percentage of reviewed applications for which the eligibility determination was changed, and a summary of the types of changes made.
(b) Recordkeeping summary. In order to participate in the Program, a school food authority or a school, as applicable, must maintain records to demonstrate compliance with Program requirements. These records include but are not limited to:
(1) Documentation of participation data by school in support of the Claim for Reimbursement and data used in the claims review process, as required under § 210.8(a), (b), and (c) of this part;
(2) Production and menu records as required under § 210.10 and documentation to support performance-based cash assistance, as required under § 210.7(d)(2).
(3) Participation records to demonstrate positive action toward providing one lunch per child per day as required under § 210.10(a)(2), whichever is applicable;
(4) Currently approved and denied certification documentation for free and reduced price lunches and a description of the verification activities, including verified applications, and any accompanying source documentation in accordance with 7 CFR 245.6a of this Title; and
(5) Records from the food safety program for a period of six months following a month’s temperature records to demonstrate compliance with § 210.13(c), and records from the most recent food safety inspection to demonstrate compliance with § 210.13(b);
(6) Records to document compliance with the requirements in § 210.14(e);
(7) Records to document compliance with the requirements in § 210.14(f); and
(8) Records for a three year period to demonstrate the school food authority’s compliance with the professional standards for school nutrition program directors, managers and personnel established in § 210.30.
(9) Records to document compliance with the local school wellness policy requirements as set forth in § 210.30(f).
§ 210.16 Food service management companies.
(a) General. Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable lunches to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall:
(1) Adhere to the procurement standards specified in § 210.21 when contracting with the food service management company;
(2) Ensure that the food service operation is in conformance with the school food authority’s agreement under the Program;
(3) Monitor the food service operation through periodic on-site visits;
(4) Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;
(5) Retain signature authority on the State agency-school food authority agreement, free and reduced price policy statement and claims;
(6) Ensure that all federally donated foods received by the school food authority and made available to the food service management company accrue only to the benefit of the school food authority’s nonprofit school food service and are fully utilized therein;
(7) Maintain applicable health certification and assure that all State and local regulations are being met by a food service management company preparing or serving meals at a school food authority facility;
(8) Establish an advisory board composed of parents, teachers, and students to assist in menu planning;
(9) Obtain written approval of invitations for bids and requests for proposals before their issuance when required by the State agency. The school food authority must incorporate all State agency required changes to its solicitation documents before issuing those documents; and
(10) Ensure that the State agency has reviewed and approved the contract terms and that the school food authority has incorporated all State agency required changes into the contract or amendment before any contract or amendment to an existing food service management company contract is executed. Any changes made by the school food authority or a food service management company to a State agency pre-approved prototype contract or State agency approved contract term must be approved in writing by the State agency before the contract is executed. When requested, the school food authority must submit all procurement documents, including responses submitted by potential contractors, to the State agency, by the due date established by the State agency.
(b) Invitation to bid. In addition to adhering to the procurement standards under § 210.21, school food authorities contracting with food service management companies shall ensure that:
(1) The invitation to bid or request for proposal contains a 21-day cycle menu developed in accordance with the provisions of § 210.10, to be used as a standard for the purpose of basing bids or estimating average cost per meal. A school food authority with no capability to prepare a cycle menu may, with State agency approval, require that each food service management company include a 21-day cycle menu, developed in accordance with the provisions of § 210.10, with its bid or proposal. The food service management company must adhere to the cycle for the first 21 days of meal service. Changes thereafter may be made with the approval of the school food authority.
(2) Any invitation to bid or request for proposal indicate that nonperformance subjects the food service management company to specified sanctions in instances where the food service management company violates or breaches contract terms. The school food authority shall indicate these sanctions in accordance with the procurement provisions stated in § 210.21.
(c) Contracts. Contracts that permit all income and expenses to accrue to the food service management company and “cost-plus-a-percentage-of-cost” and “cost-plus-a-percentage-of-income” contracts are prohibited. Contracts that provide for fixed fees such as those that provide for management fees established on a per meal basis are allowed. Contractual agreements with food service management companies shall include provisions which ensure that the requirements of this section are met. Such agreements shall also include the following:
(1) The food service management company shall maintain such records as the school food authority will need to support its Claim for Reimbursement under this part, and shall, at a minimum, report claim information to the school food authority promptly at the end of each month. Such records shall be made available to the school food authority, upon request, and shall be retained in accordance with § 210.23(c).
(2) The food service management company shall have State or local health certification for any facility outside the school in which it proposes to prepare meals and the food service management company shall maintain this health certification for the duration of the contract.
(3) No payment is to be made for meals that are spoiled or unwholesome at time of delivery, do not meet detailed specifications as developed by the school food authority for each food component specified in § 210.10, or do not otherwise meet the requirements of the contract. Specifications shall cover items such a grade, purchase units, style, condition, weight, ingredients, formulations, and delivery time.
(4) Provisions in part 250, subpart D of this chapter must be included to ensure the value of donated foods, i.e., USDA Foods, are fully used in the nonprofit food service and credited to the nonprofit school food service account.
(d) Duration of contract. The contract between a school food authority and food service management company shall be of a duration of no longer than 1 year; and options for the yearly renewal of a contract signed after February 16, 1988, may not exceed 4 additional years. All contracts shall include a termination clause whereby either party may cancel for cause with 60-day notification.
Subpart D—Requirements for State Agency Participation
§ 210.17 Matching Federal funds.
(a) State revenue matching. For each school year, the amount of State revenues appropriated or used specifically by the State for program purposes shall not be less than 30 percent of the funds received by such State under section 4 of the National School Lunch Act during the school year beginning July 1, 1980; provided that, the State revenues derived from the operation of such programs and State revenues expended for salaries and administrative expenses of such programs at the State level are not considered in this computation. However, if the per capita income of any State is less than the per capita income of the United States, the matching requirements so computed shall be decreased by the percentage by which the State per capita income is below the per capita income of the United States.
(b) Private school exemption. No State in which the State agency is prohibited by law from disbursing State appropriated funds to nonpublic schools shall be required to match general cash assistance funds expended for meals served in such schools, or to disburse to such schools any of the State revenues required to meet the requirements of paragraph (a) of this section. Furthermore, the requirements of this section do not apply to schools in which the Program is administered by a FNSRO.
(c) Territorial waiver. American Samoa and the Commonwealth of the Northern Mariana Islands shall be exempted from the matching requirements of paragraph (a) of this section if their respective matching requirements are under $100,000.
(d) Applicable revenues. The following State revenues, appropriated or used specifically for program purposes which are expended for any school year shall be eligible for meeting the applicable percentage of the matching requirements prescribed in paragraph (a) of this section for that school year:
(1) State revenues disbursed by the State agency to school food authorities for program purposes, including revenue disbursed to nonprofit private schools where the State administers the program in such schools;
(2) State revenues made available to school food authorities and transferred by the school food authorities to the nonprofit school food service accounts or otherwise expended by the school food authorities in connection with the nonprofit school food service program; and
(3) State revenues used to finance the costs (other than State salaries or other State level administrative costs) of the nonprofit school food service program, i.e.:
(i) Local program supervision;
(ii) Operating the program in participating schools; and
(iii) The intrastate distribution of foods donated under part 250 of this chapter to schools participating in the program.
(e) Distribution of matching revenues. All State revenues made available under paragraph (a) of this section are to be disbursed to school food authorities participating in the Program, except as provided for under paragraph (b) of this section. Distribution of matching revenues may be made with respect to a class of school food authorities as well as with respect to individual school food authorities.
(f) Failure to match. If, in any school year, a State fails to meet the State revenue matching requirement, as prescribed in paragraph (a) of this section, the general cash assistance funds utilized by the State during that school year shall be subject to recall by and repayment to FNS.
(g) Reports. Within 120 days after the end of each school year, each State agency shall submit an Annual Report of Revenues (FNS-13) to FNS. This report identifies the State revenues to be counted toward the State revenue matching requirements specified in paragraph (a) of this section.
(h) Accounting system. The State agency shall establish or cause to be established a system whereby all expended State revenues counted in meeting the matching requirements prescribed in paragraph (a) of this section are properly documented and accounted for.
§ 210.18 Administrative reviews.
(a) Programs covered and methodology. Each State agency must follow the requirements of this section to conduct administrative reviews of school food authorities participating in the National School Lunch Program and the School Breakfast Program (part 220 of this chapter). These procedures must also be followed, as applicable, to conduct administrative reviews of the National School Lunch Program’s Afterschool Snacks and Seamless Summer Option, the Special Milk Program (part 215 of this chapter), and the Fresh Fruit and Vegetable Program. To conduct a program review, the State agency must gather and assess information off-site and/or on-site, observe the school food service operation, and use a risk-based approach to evaluate compliance with specific program requirements.
(b) Definitions. The following definitions are provided in alphabetical order in order to clarify State agency administrative review requirements:
Administrative reviews means the comprehensive evaluation of all school food authorities participating in the programs specified in paragraph (a) of this section. It includes a review of both critical and general areas in accordance with paragraphs (g) and (h) of this section, as applicable for each reviewed program. With FNS approval, the administrative review may include other areas of program operations determined by the State agency.
Critical areas means the following two performance standards described in detail in paragraph (g) of this section:
General areas means the areas of review specified in paragraph (h) of this section. These areas include free and reduced-price process, civil rights, school food authority on-site monitoring, reporting and recordkeeping, food safety, competitive food services, water, program outreach, resource management, Buy American, and other areas identified by FNS.
(i) Performance Standard 1—All free, reduced price and paid school meals claimed for reimbursement are served only to children eligible for free, reduced price and paid school meals, respectively; and are counted, recorded, consolidated and reported through a system which consistently yields correct claims.
(ii) Performance Standard 2—Reimbursable lunches meet the meal requirements in § 210.10, as applicable to the age/grade group reviewed. Reimbursable breakfasts meet the meal requirements in § 220.8 of this chapter, as applicable to the age/grade group reviewed.
Day of Review means the day(s) on which the on-site review of the individual sites selected for review occurs.
Documented corrective action means written notification required of the school food authority to certify that the corrective action required for each violation has been completed and to notify the State agency of the dates of completion. Documented corrective action may be provided at the time of the review or may be submitted to the State agency within specified timeframes.
General areas means the areas of review specified in paragraph (h) of this section. These areas include free and reduced price process, civil rights, school food authority on-site monitoring, reporting and recordkeeping, food safety, competitive food services, water, program outreach, resource management, and other areas identified by FNS.
Participation factor means the percentages of children approved by the school for free meals, reduced price meals, and paid meals, respectively, who are participating in the Program. The free participation factor is derived by dividing the number of free lunches claimed for any given period by the product of the number of children approved for free lunches for the same period times the operating days in that period. A similar computation is used to determine the reduced price and paid participation factors. The number of children approved for paid meals is derived by subtracting the number of children approved for free and reduced price meals for any given period from the total number of children enrolled in the reviewed school for the same period of time, if available. If such enrollment figures are not available, the most recent total number of children enrolled must be used. If school food authority participation factors are unavailable or unreliable, State-wide data must be employed.
Review period means the most recent month for which a Claim for Reimbursement was submitted, provided that it covers at least ten (10) operating days.
(c) Review cycle. State agencies must conduct administrative reviews of all school food authorities participating in the National School Lunch Program (including Afterschool Snacks and the Seamless Summer Option) and the School Breakfast Program at least once during a 5-year review cycle, provided that each school food authority is reviewed at least once every 6 years, depending on review cycle observed. At a minimum, the on-site portion of the administrative review must be completed during the school year in which the review began.
(1) Targeted follow-up reviews. A State agency that reviews school food authorities on a cycle longer than 3 years must identify school food authorities that are high-risk to receive a targeted follow-up review. A State agency must develop and receive FNS approval of a plan to identify school food authorities that meet the high-risk criteria.
(2) High-risk criteria for targeted follow-up reviews. At a minimum, a State plan should identify as high-risk those school food authorities that during the most recent administrative review conducted in accordance with this § 210.18 had one or more of the following risk factors as determined by the State Agency: a 10 percent or greater certification and benefit issuance error rate; incomplete verification for the review year; or one or more significant or systemic errors in Performance Standard 1 as defined at (g)(1) of this section, Performance Standard 2 as defined at paragraph (g)(2) of this section, or allowable costs.
(3) Timing and scope of targeted follow-up reviews. Within two years of the review, high-risk school food authorities must receive a targeted follow-up review. Targeted follow-up reviews must include the areas of significant or systemic error identified in the previous review, and may include other areas at the discretion of the State agency. The State agency may conduct targeted follow-up reviews in the same school year as the administrative review, and may conduct any additional reviews at its discretion.
(d) Scheduling school food authorities. The State agency must use its own criteria to schedule school food authorities for administrative reviews; provided that the requirements of paragraph (c) of this section are met. State agencies may take into consideration the findings of the claims review process required under § 210.8(b)(2) in the selection of school food authorities.
(1) Schedule of reviews. To ensure no unintended overlap occurs, the State agency must inform FNS of the anticipated schedule of school food authority reviews upon request.
(2) Exceptions. In any school year in which FNS or the Office of the Inspector General (OIG) conducts a review or investigation of a school food authority in accordance with § 210.19(a)(4), the State agency must, unless otherwise authorized by FNS, delay conduct of a scheduled administrative review until the following school year. The State agency must document any exception authorized under this paragraph.
(e) Number of schools to review. At a minimum, the State agency must review the number of schools specified in paragraph (e)(1) of this section and must select the schools to be reviewed on the basis of the school selection criteria specified in paragraph (e)(2) of this section. The State agency may review all schools meeting the school selection criteria specified in paragraph (e)(2) of this section.
(1) Minimum number of schools. State agencies must review at least one school from each local education agency. Except for residential child care institutions, the State agency must review all schools with a free average daily participation of 100 or more and a free participation factor of 100 percent or more. In no event must the State agency review less than the minimum number of schools illustrated in Table A for the National School Lunch Program.
Table A
| Number of schools in the school food authority | Minimum number of schools to review |
|---|---|
| 1 to 5 | 1 |
| 6 to 10 | 2 |
| 11 to 20 | 3 |
| 21 to 40 | 4 |
| 41 to 60 | 6 |
| 61 to 80 | 8 |
| 81 to 100 | 10 |
| 101 or more | *12 |
* Twelve plus 5 percent of the number of schools over 100. Fractions must be rounded up (>0.5) or down (
(2) School selection criteria. (i) Selection of additional schools to meet the minimum number of schools required under paragraph (e)(1) of this section, must be based on the following criteria:
(A) Elementary schools with a free average daily participation of 100 or more and a free participation factor of 97 percent or more;
(B) Secondary schools with a free average daily participation of 100 or more and a free participation factor of 77 percent or more; and
(C) Combination schools with a free average daily participation of 100 or more and a free participation factor of 87 percent or more. A combination school means a school with a mixture of elementary and secondary grades.
(ii) When the number of schools selected on the basis of the criteria established in paragraph (e)(2)(i) of this section is not sufficient to meet the minimum number of schools required under paragraph (e)(1) of this section, the additional schools selected for review must be identified using State agency criteria which may include low participation schools; recommendations from a food service director based on findings from the on-site visits or the claims review process required under § 210.8(a); or any school in which the daily meal counts appear questionable (e.g., identical or very similar claiming patterns, or large changes in free meal counts).
(iii) In selecting schools for an administrative review of the School Breakfast Program, State agencies must follow the selection criteria set forth in this paragraph and FNS’ Administrative Review Manual. At a minimum:
(A) In school food authorities operating only the breakfast program, State agencies must review the number of schools set forth in Table A in paragraph (e)(1) of this section.
(B) In school food authorities operating both the lunch and breakfast programs, State agencies must review the breakfast program in 50 percent of the schools selected for an administrative review under paragraph (e)(1) of this section that operate the breakfast program.
(C) If none of the schools selected for an administrative review under paragraph (e)(1) of this section operates the breakfast program, but the school food authority operates the program elsewhere, the State agency must follow procedures in the FNS Administrative Review Manual to select at least one other site for a school breakfast review.
(3) Site selection for other federal program reviews—(i) National School Lunch Program’s Afterschool Snacks. If a school selected for an administrative review under this section operates Afterschool Snacks, the State agency must review snack documentation for compliance with program requirements, according to the FNS Administrative Review Manual. Otherwise, the State agency is not required to review the Afterschool Snacks.
(ii) National School Lunch Program’s Seamless Summer Option. The State agency must review Seamless Summer Option at a minimum of one site if the school food authority selected for review under this section operates the Seamless Summer Option and only operates congregate meal service. If the school food authority operates congregate and non-congregate meal service, a minimum of two sites must be reviewed, one congregate site and one non-congregate site. If the school food authority has one site that operates both congregate and non-congregate meal services, the State agency may review a minimum of one site and must observe both a congregate and non-congregate meal service at that one site. This review can take place at any site within the reviewed school food authority the summer before or after the school year in which the administrative review is scheduled. The State agency must review the Seamless Summer Option for compliance with program requirements, according to the FNS Administrative Review Manual.
(iii) Fresh Fruit and Vegetable Program. The State agency must review the Fresh Fruit and Vegetable Program at one or more of the schools selected for an administrative review, as specified in Table B. If none of the schools selected for the administrative review operates the Fresh Fruit and Vegetable Program but the school food authority operates the Program elsewhere, the State agency must follow procedures in the FNS Administrative Review Manual to select one or more sites for the program review.
Table B
| Number of schools selected for an NSLP administrative review that operate the FFVP | Minimum number of FFVP schools to be reviewed |
|---|---|
| 0 to 5 | 1 |
| 6 to 10 | 2 |
| 11 to 20 | 3 |
| 21 to 40 | 4 |
| 41 to 60 | 6 |
| 61 to 80 | 8 |
| 81 to 100 | 10 |
| 101 or more | 12* |
* Twelve plus 5 percent of the number of schools over 100. Fractions must be rounded up (>0.5) or down (
(iv) Special Milk Program. If a school selected for review under this section operates the Special Milk Program, the State agency must review the school’s program documentation off-site or on-site, as prescribed in the FNS Administrative Review Manual. On-site review is only required if the State agency has identified documentation problems or if the State agency has identified meal counting or claiming errors in the reviews conducted under the National School Lunch Program or School Breakfast Program.
(4) Pervasive problems. If the State agency review finds pervasive problems in a school food authority, FNS may authorize the State agency to cease review activities prior to reviewing the required number of schools under paragraphs (e)(1) and (e)(3) of this section. Where FNS authorizes the State agency to cease review activity, FNS may either conduct the review activity itself or refer the school food authority to OIG.
(5) Noncompliance with meal pattern requirements. If the State agency determines there is significant noncompliance with the meal pattern and nutrition requirements set forth in § 210.10 and § 220.8 of this chapter, as applicable, the State agency must select the school food authority for administrative review earlier in the review cycle.
(f) Scope of review. During the course of an administrative review for the National School Lunch Program and the School Breakfast Program, the State agency must monitor compliance with the critical and general areas in paragraphs (g) and (h) of this section, respectively. Selected critical and general areas must be monitored when reviewing the National School Lunch Program’s Afterschool Snacks and the Seamless Summer Option, the Special Milk Program, and the Fresh Fruit and Vegetable Program, as applicable and as specified in the FNS Administrative Review Manual. State agencies may add additional review areas with FNS approval.
(1) Review forms. State agencies must use the administrative review forms, tools and workbooks prescribed by FNS.
(2) Timeframes covered by the review. (i) The timeframes covered by the administrative review include the review period and the day of review, as defined in paragraph (b) of this section.
(ii) Subject to FNS approval, the State agency may conduct a review early in the school year, prior to the submission of a Claim for Reimbursement. In such cases, the review period must be the prior month of operation in the current school year, provided that such month includes at least 10 operating days.
(3) Audit results. The State agency may use any recent and currently applicable results from Federal, State, or local audit activity to meet FNS monitoring requirements. Such results may be used only when they pertain to the reviewed school(s) or the overall operation of the school food authority, when they are relevant to the review period, and when they adhere to audit standards contained in 2 CFR part 200, subpart F. The State agency must document the source and the date of the audit. The content of local level audits activity requires the approval of FNS to ensure that these audits align with Federal audit standards.
(4) Completion of review requirements outside the administrative review. State agencies may, with FNS approval, omit specific, redundant areas of the administrative review, when sufficient oversight is conducted outside of the administrative review.
(5) Error reduction strategies. State agencies may omit designated areas of review, in part or entirely, where a school food authority or State agency has implemented FNS-approved error reduction strategies or utilized FNS-approved monitoring efficiencies.
(g) Critical areas of review. The performance standards listed in this paragraph are directly linked to meal access and reimbursement, and to the meal pattern and nutritional quality of the reimbursable meals offered. These critical areas must be monitored by the State agency when conducting administrative reviews of the National School Lunch Program and the School Breakfast Program. Selected aspects of these critical areas must also be monitored, as applicable, when conducting administrative reviews of the National School Lunch Program’s Afterschool Snacks and the Seamless Summer Option, and of the Special Milk Program. State agencies may omit designated critical areas of review, in part or entirely, where school food authority or State agency has implemented FNS-specified error reduction strategies or utilized FNS-specified monitoring efficiencies.
(1) Performance Standard 1 (All free, reduced price and paid school meals claimed for reimbursement are served only to children eligible for free, reduced price and paid school meals, respectively; and are counted, recorded, consolidated and reported through a system which consistently yields correct claims.) The State agency must follow review procedures stated in this section and as specified in the FNS Administrative Review Manual to ensure that the school food authority’s certification and benefit issuance processes for school meals offered under the National School Lunch Program, and School Breakfast Program are conducted as required in part 245 of this chapter, as applicable. In addition, the State agency must ensure that benefit counting, consolidation, recording and claiming are conducted as required in this part and part 220 of this chapter for the National School Lunch Program and the School Breakfast Program, respectively. The State agency must also follow procedures consistent with this section, and as specified in the FNS Administrative Review Manual, to review applicable areas of Performance Standard 1 in the National School Lunch Program’s Afterschool Snacks and Seamless Summer Option, and in the Special Milk Program.
(i) Certification and benefit issuance. The State agency must gather information and monitor the school food authority’s compliance with program requirements regarding benefit application, direct certification, and categorical eligibility, as well as the transfer of benefits to the point-of-service benefit issuance document. To review this area, the State agency must obtain the benefit issuance document for each participating school under the jurisdiction of the school food authority for the day of review or a day in the review period, review all or a statistically valid sample of student certifications, and validate that the eligibility certification for free and reduced price meals was properly transferred to the benefit issuance document and reflects changes due to verification findings, transfers, or a household’s decision to decline benefits. If the State agency chooses to review a statistically valid sample of student certifications, the State agency must use a sample size with a 99 percent confidence level of accuracy. However, a sample size with a 95 percent confidence level of accuracy may be used if a school food authority uses an electronic benefit issuance and certification system with no manual data entry and the State agency has not identified any potential systemic noncompliance. Any sample size must be large enough so that there is a 99 or 95 percent, as applicable, chance that the actual accuracy rate for all certifications is not less than 2 percentage points less than the accuracy rate found in the sample (i.e., the lower bound of the one-sided 99/95 percent confidence interval is no more than 2 percentage points less than the point estimate).
(ii) Meal counting and claiming. The State agency must gather information and conduct an on-site visit to ensure that the processes used by the school food authority and reviewed school(s) to count, record, consolidate, and report the number of reimbursable meals/snacks served to eligible students by category (i.e., free, reduced price or paid meal) are in compliance with program requirements and yield correct claims. The State agency must determine whether:
(A) The daily meal counts, by type, for the review period are more than the product of the number of children determined by the school/school food authority to be eligible for free, reduced price, and paid meals for the review period times an attendance factor. If the meal count, for any type, appears questionable or significantly exceeds the product of the number of eligibles, for that type, times an attendance factor, documentation showing good cause must be available for review by the State agency.
(B) For each school selected for review, each type of food service line provides accurate point of service meal counts, by type, and those meal counts are correctly counted and recorded. If an alternative counting system is employed (in accordance with § 210.7(c)(2)), the State agency shall ensure that it provides accurate counts of reimbursable meals, by type, and is correctly implemented as approved by the State agency.
(C) For each school selected for review, all meals are correctly counted, recorded, consolidated and reported for the day they are served.
(2) Performance Standard 2 (Lunches claimed for reimbursement by the school food authority meet the meal requirements in § 210.10, as applicable to the age/grade group reviewed. Breakfasts claimed for reimbursement by the school food authority meet the meal requirements in § 220.8 of this chapter, as applicable to the age/grade group reviewed.) The State agency must follow review procedures, as stated in this section and detailed in the FNS Administrative Review Manual, to ensure that meals offered by the school food authority meet the food component and quantity requirements and the dietary specifications for each program, as applicable. Review of these critical areas may occur off-site or on-site. The State agency must also follow procedures consistent with this section, as specified in the FNS Administrative Review Manual, to review applicable areas of Performance Standard 2 in the National School Lunch Program’s Afterschool Snacks and Seamless Summer Option, and in the Special Milk Program.
(i) Food components and quantities. For each school selected for review, the State agency must complete a USDA-approved menu tool, review documentation, and observe the meal service to ensure that meals offered by the reviewed schools meet the meal patterns for each program. To review this area, the State agency must:
(A) Review menu and production records for the reviewed schools for a minimum of one school week (i.e., a minimum number of three consecutive school days and a maximum of seven consecutive school days) from the review period. Documentation, including food crediting documentation, such as food labels, product formulation statements, CN labels and bid documentation, must be reviewed to ensure compliance with the lunch and breakfast meal patterns. If the documentation review reveals problems with food components or quantities, the State agency must expand the review to, at a minimum, the entire review period. The State agency should consider a school food authority compliant with the school meal pattern if:
(1) When evaluating the daily and weekly range requirements for grains and meat/meat alternates, the documentation shows compliance with the daily and weekly minimums for these components, regardless of whether the school food authority has exceeded the recommended weekly maximums for the same components.
(2) When evaluating the service of frozen fruit, the State agency determines that the school food authority serves frozen fruit with or without added sugar.
(B) On the day of review, the State agency must:
(1) Observe a significant number of program meals, as described in the FNS Administrative Review Manual, at each serving line and review the corresponding documentation to determine whether all reimbursable meal service lines offer all of the required food components/items and quantities for the age/grade groups being served, as required under § 210.10, as applicable, and § 220.8 of this chapter, as applicable. Observe meals at the beginning, middle and end of the meal service line, and confirm that signage or other methods are used to assist students in identifying the reimbursable meal. If the State agency identifies missing components or inadequate quantities prior to the beginning of the meal service, it must inform the school food authority and provide an opportunity to make corrections. Additionally, if visual observation suggests that quantities offered are insufficient or excessive, the State agency must require the reviewed schools to provide documentation demonstrating that the required amounts of each component were available for service for each day of the review period.
(2) Observe a significant number of the program meals counted at the point of service for each type of serving line to determine whether the meals selected by the students contain the food components and food quantities required for a reimbursable meal under § 210.10, as applicable, and § 220.8 of this chapter, as applicable.
(3) If Offer versus Serve is in place, observe whether students select at least three food components at lunch and at least three food items at breakfasts, and that the lunches and breakfasts include at least
(ii) Dietary specifications. The State agency must conduct a meal compliance risk assessment for each school selected for review to determine which school is at highest risk for nutrition-related violations. The State agency must conduct a targeted menu review for the school at highest risk for noncompliance using one of the options specified in the FNS Administrative Review Manual. Under the targeted menu review options, the State agency may conduct or validate an SFA-conducted nutrient analysis for both lunch and breakfast, or further evaluate risk for noncompliance and, at a minimum, conduct a nutrient analysis if further examination shows the school is at high risk for noncompliance with the dietary specifications in § 210.10 and § 220.8 of this chapter. The State agency is not required to assess compliance with the dietary specifications when reviewing meals for preschoolers, and the National School Lunch Program’s Afterschool Snacks and the Seamless Summer Option.
(iii) Performance-based cash assistance. If the school food authority is receiving performance-based cash assistance under § 210.7(d), the State agency must assess the school food authority’s meal service and documentation of lunches served and determine its continued eligibility for the performance-based cash assistance.
(h) General areas of review. The general areas listed in this paragraph reflect requirements that must be monitored by the State agency when conducting administrative reviews of the National School Lunch Program and the School Breakfast Program. Selected aspects of these general areas must also be monitored, as applicable and as specified in the FNS Administrative Review Manual, when conducting administrative reviews of the National School Lunch Program’s Afterschool Snacks and Seamless Summer Option, the Fresh Fruit and Vegetable Program, and the Special Milk Program. State agencies may omit designated general areas of review, in part or entirely, where the school food authority or State agency has implemented FNS-specified error reduction strategies or utilized FNS-specified monitoring efficiencies. State agencies may omit designated general areas of review, in part or entirely, where the school food authority or State agency has implemented FNS-specified error reduction strategies or utilized FNS-specified monitoring efficiencies. The general areas of review must include, but are not limited to, the following:
(1) Resource management. The State agency must conduct an assessment of the school food authority’s nonprofit school food service account to evaluate the risk of noncompliance with resource management requirements. If risk indicators show that the school food authority is at high risk for noncompliance with resource management requirements, the State agency must conduct a comprehensive review including, but not limited to, the following areas using procedures specified in the FNS Administrative Review Manual.
(i) Maintenance of the nonprofit school food service account. The State agency must confirm the school food authority’s resource management is consistent with the maintenance of the nonprofit school food service account requirements in §§ 210.2, 210.14, 210.19(a), and 210.21.
(ii) Paid lunch equity. The State agency must review compliance with the requirements for pricing paid lunches in § 210.14(e).
(iii) Revenue from nonprogram foods. The State agency must ensure that all non-reimbursable foods sold by the school food service, including, but not limited to, a la carte food items, adult meals, and vended meals, generate at least the same proportion of school food authority revenues as they contribute to school food authority food costs, as required in § 210.14(f).
(iv) Indirect costs. The State agency must ensure that the school food authority follows fair and consistent methodologies to identify and allocate allowable indirect costs to school food service accounts, as required in 2 CFR part 200 and § 210.14(g).
(2) General Program Compliance—(i) Free and reduced price process. In the course of the review of each school food authority, the State agency must:
(A) Confirm the free and reduced price policy statement, as required in § 245.10 of this chapter, is implemented as approved.
(B) Ensure that the process used to verify children’s eligibility for free and reduced price meals in a sample of household applications is consistent with the verification requirements, procedures, and deadlines established in § 245.6a of this chapter.
(C) Determine that, for each reviewed school, the meal count system does not overtly identify children eligible for free and reduced price meals, as required under § 245.8 of this chapter.
(D) Review at least 10 denied applications to evaluate whether the determining official correctly denied applicants for free and reduced price meals, and whether denied households were provided notification in accordance with § 245.6(c)(7)of this chapter.
(E) Confirm that a second review of applications has been conducted and that information has been correctly reported to the State agency as required in § 245.11, if applicable.
(ii) Civil rights. The State agency must examine the school food authority’s compliance with the civil rights provisions specified in § 210.23(b) to ensure that no child is denied benefits or otherwise discriminated against in any of the programs reviewed under this section because of race, color, national origin, age, sex, or disability.
(iii) School food authority on-site monitoring. The State agency must ensure that the school food authority conducts on-site reviews of each school under its jurisdiction, as required by §§ 210.8(a)(1) and 220.11(d) of this chapter, and monitors claims and readily observable general areas of review in accordance with §§ 210.8(a)(2) and (a)(3), and 220.11(d) of this chapter.
(iv) Competitive food standards. The State agency must ensure that the local educational agency and school food authority comply with the nutrition standards for competitive foods in §§ 210.11 and 220.12 of this chapter, and retain documentation demonstrating compliance with the competitive food service and standards.
(v) Water. The State agency must ensure that water is available and accessible to children at no charge as specified in §§ 210.10(a)(1)(i) and 220.8(a)(1) of this chapter.
(vi) Food safety. The State agency must examine records to confirm that each school food authority under its jurisdiction meets the food safety requirements of § 210.13.
(vii) Reporting and recordkeeping. The State agency must determine that the school food authority submits reports and maintains records in accordance with program requirements in this part, and parts 220 and 245 of this chapter, and as specified in the FNS Administrative Review Manual.
(viii) Program outreach. The State agency must ensure the school food authority is conducting outreach activities to increase participation in the School Breakfast Program and the Summer Food Service Program, as required in § 210.12(d). If the State agency administering the Summer Food Service Program is not the same State agency that administers the National School Lunch Program, then the two State agencies must work together to implement outreach measures.
(ix) Professional standards. The State agency shall ensure the local educational agency and school food authority complies with the professional standards for school nutrition program directors, managers, and personnel established in § 210.30.
(x) Local school wellness. The State agency shall ensure the local educational agency complies with the local school wellness requirements set forth in § 210.30.
(xi) Buy American. The State agency must ensure that the school food authority complies with the Buy American requirements set forth in § 210.21(d) and 7 CFR 220.16(d), as specified in the FNS Administrative Review Manual.
(i) Entrance and exit conferences and notification—(1) Entrance conference. The State agency may hold an entrance conference with the appropriate school food authority staff at the beginning of the on-site administrative review to discuss the results of any off-site assessments, the scope of the on-site review, and the number of schools to be reviewed.
(2) Exit conference. The State agency must hold an exit conference at the close of the administrative review and of any subsequent follow-up review to discuss the violations observed, the extent of the violations and a preliminary assessment of the actions needed to correct the violations. The State agency must discuss an appropriate deadline(s) for completion of corrective action, provided that the deadline(s) results in the completion of corrective action on a timely basis.
(3) Notification. The State agency must provide written notification of the review findings to the school food authority’s Superintendent (or equivalent in a non-public school food authority) or authorized representative, preferably no later than 30 days after the exit conference for each review. The written notification must include the date(s) of review, date of the exit conference, review findings, the needed corrective actions, the deadlines for completion of the corrective action, and the potential fiscal action. As a part of the denial of all or a part of a Claim for Reimbursement or withholding payment in accordance with the provisions of this section, the State agency must provide the school food authority a written notice which details the grounds on which the denial of all or a part of the Claim for Reimbursement or withholding payment is based. This notice, must be provided by certified mail, or its equivalent, or sent electronically by email or facsimile. This notice shall also include a statement indicating that the school food authority may appeal the denial of all or a part of a Claim for Reimbursement or withholding payment and the entity (i.e., FNS or State agency) to which the appeal should be directed. The notice is considered to be received by the school food authority when it is delivered by certified mail, return receipt (or the equivalent private delivery service), by facsimile, or by email. If the notice is undeliverable, it is considered to be received by the school food authority five days after being sent to the addressee’s last known mailing address, facsimile number, or email address. The State agency shall notify the school food authority, in writing, of the appeal procedures as specified in paragraph (p) of this section for appeals of State agency findings, and for appeals of FNS findings, provide a copy of § 210.29(d)(3).
(j) Corrective action. Corrective action is required for any violation under either the critical or general areas of the review. Corrective action must be applied to all schools in the school food authority, as appropriate, to ensure that deficient practices and procedures are revised system-wide. Corrective actions may include training, technical assistance, recalculation of data to ensure the accuracy of any claim that the school food authority is preparing at the time of the review, or other actions. Fiscal action must be taken in accordance with paragraph (l) of this section.
(1) Extensions of the timeframes. If the State agency determines that extraordinary circumstances make a school food authority unable to complete the required corrective action within the timeframes specified by the State agency, the State agency may extend the timeframes upon written request of the school food authority.
(2) Documented corrective action. Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review. Documented corrective action may be provided at the time of the review; however, it must be postmarked or submitted to the State agency electronically by email or facsimile, no later than 30 days from the deadline for completion of each required corrective action, as specified under paragraph (i)(2) of this section or as otherwise extended by the State agency under paragraph (j)(1) of this section. The State agency must maintain any documented corrective action on file for review by FNS.
(k) Withholding payment. At a minimum, the State agency must withhold all program payments to a school food authority as follows:
(1) Cause for withholding. (i) The State agency must withhold all Program payments to a school food authority if documented corrective action for critical area violations is not provided with the deadlines specified in paragraph (j)(2) of this section;
(ii) The State agency must withhold all Program payments to a school food authority if the State agency finds that corrective action for critical area violation was not completed;
(iii) The State agency may withhold Program payments to a school food authority at its discretion, if the State agency found a critical area violation on a previous review and the school food authority continues to have the same error for the same cause; and
(iv) For general area violations, the State agency may withhold Program payments to a school food authority at its discretion, if the State agency finds that documented corrective action is not provided within the deadlines specified in paragraph (j)(2) of this section, corrective action is not complete, or corrective action was not taken as specified in the documented corrective action.
(2) Duration of withholding. In all cases, Program payments must be withheld until such time as corrective action is completed, documented corrective action is received and deemed acceptable by the State agency, or the State agency completes a follow-up review and confirms that the problem has been corrected. Subsequent to the State agency’s acceptance of the corrective actions, payments will be released for all meals served in accordance with the provisions of this part during the period the payments were withheld. In very serious cases, the State agency will evaluate whether the degree of non-compliance warrants termination in accordance with § 210.25.
(3) Exceptions. The State agency may, at its discretion, reduce the amount required to be withheld from a school food authority pursuant to paragraph (k)(1)(i) through (iii) of this section by as much as 60 percent of the total Program payments when it is determined to be in the best interest of the Program. FNS may authorize a State agency to limit withholding of funds to an amount less than 40 percent of the total Program payments, if FNS determines such action to be in the best interest of the Program.
(4) Failure to withhold payments. FNS may suspend or withhold Program payments, in whole or in part, to those State agencies failing to withhold Program payments in accordance with paragraph (k)(1) of this section and may withhold administrative funds in accordance with § 235.11(b) of this chapter. The withholding of Program payments will remain in effect until such time as the State agency documents compliance with paragraph (k)(1) of this section to FNS. Subsequent to the documentation of compliance, any withheld administrative funds will be released and payment will be released for any meals served in accordance with the provisions of this part during the period the payments were withheld.
(l) Fiscal action. The State agency must take fiscal action for all Performance Standard 1 violations and specific Performance Standard 2 violations identified during an administrative review, including targeted follow-up review or other reviews, as specified in this section. Fiscal action must be taken in accordance with the principles in § 210.19(c) and the procedures established in the FNS Administrative Review Manual. The State agency must follow the fiscal action formula prescribed by FNS to calculate the correct entitlement for a school food authority or a school. While there is no fiscal action required for general area violations, the State agency has the ability to withhold funds for repeat or egregious violations occurring in the majority of the general areas as described in paragraph (k)(1)(iv) of this section.
(1) Performance Standard 1 violations. A State agency is required to take fiscal action for Performance Standard 1 violations, in accordance with this paragraph and paragraph (l)(3).
(i) For certification and benefit issuance errors cited under paragraph (g)(1)(i) of this section, the total number of free and reduced price meals claimed must be adjusted to according to procedures established by FNS.
(ii) For meal counting and claiming errors cited under paragraph (g)(1)(ii) of this section, the State agency must apply fiscal action to the incorrect meal counts at the school food authority level, or only to the reviewed schools where violations were identified, as applicable.
(2) Performance Standard 2 violations. Fiscal action for Performance Standard 2 violations applies as follows:
(i) For missing food components or missing production records cited under paragraph (g)(2) of this section, the State agency must apply fiscal action.
(ii) For repeated violations involving food quantities, whole grain-rich foods, milk type, and vegetable subgroups cited under paragraph (g)(2) of this section, the State agency has discretion to apply fiscal action as follows:
(A) If the meals contain insufficient quantities of the required food components, the deficient meals may be disallowed and reclaimed.
(B) If no whole grain-rich foods are offered during the week of review, meals for up to the entire week of review may be disallowed and reclaimed.
(C) If insufficient whole grain-rich foods are offered during the week of review, meals for up to the entire week of review may be disallowed and/or reclaimed.
(D) If an unallowable milk type is offered, or no milk variety is offered, the deficient meals may be disallowed and reclaimed.
(E) If one vegetable subgroup is not offered over the course of the week of review, meals for up to the entire week of review may be disallowed and reclaimed.
(F) If a weekly vegetable subgroup is offered in insufficient quantity to meet the weekly vegetable subgroup requirement, meals for one day of the week of review may be disallowed and reclaimed.
(G) If the amount of juice offered exceeds the weekly limitation, meals for up to the entire week of review may be disallowed and/or reclaimed.
(iii) For repeated violations of calorie, saturated fat, sodium, and trans fat dietary specifications cited under paragraph (g)(2)(ii) of this section, the State agency has discretion to apply fiscal action to the reviewed school as follows:
(A) If the average meal offered over the course of the week of review does not meet one of the dietary specifications, meals for the entire week of review may be disallowed and reclaimed; and
(B) Fiscal action is limited to the school selected for the targeted menu review and must be supported by a nutrient analysis of the meals at issue using USDA-approved software.
(iv) The following conditions must be met prior to applying fiscal action as described in paragraphs (l)(2)(ii) and (iii) of this section:
(A) Technical assistance has been given by the State agency;
(B) Corrective action has been previously required and monitored by the State agency; and
(C) The school food authority remains noncompliant with the meal requirements established in part 210 and part 220 of this chapter.
(3) Duration of fiscal action. Fiscal action must be extended back to the beginning of the school year or that point in time during the current school year when the infraction first occurred for all violations of Performance Standard 1 and specific violations of Performance Standard 2. Based on the severity and longevity of the problem, the State agency may extend fiscal action back to previous school years. If corrective action occurs, the State agency may limit the duration of fiscal action for Performance Standard 1 and Performance Standard 2 violations as follows:
(i) Performance Standard 1 certification and benefit issuance violations. The total number of free and reduced price meals claimed for the review period and the month of the on-site review must be adjusted to reflect the State calculated certification and benefit issuance adjustment factors.
(ii) Other Performance Standard 1 and Performance Standard 2 violations. With the exception of violations described in paragraph (l)(3)(i) of this section, a State agency may limit fiscal action from the point corrective action occurs back through the beginning of the review period for errors.
(A) If corrective action occurs during the on-site review month or after, the State agency would be required to apply fiscal action from the point corrective action occurs back through the beginning of the on-site review month, and for the review period;
(B) If corrective action occurs during the review period, the State agency would be required to apply fiscal action from the point corrective action occurs back through the beginning of the review period;
(C) If corrective action occurs prior to the review period, no fiscal action would be required; and
(D) If corrective action occurs in a claim month between the review period and the on-site review month, the State agency would apply fiscal action only to the review period.
(4) Performance-based cash assistance. In addition to fiscal action described in paragraphs (l)(2)(i) through (v) of this section, school food authorities found to be out of compliance with the meal patterns or nutrition standards set forth in § 210.10 may not earn performance-based cash assistance authorized under § 210.4(b)(1) unless immediate corrective action occurs. School food authorities will not be eligible for the performance-based reimbursement beginning the month immediately following the administrative review and, at State discretion, for the month of review. Performance-based cash assistance may resume beginning in the first full month the school food authority demonstrates to the satisfaction of the State agency that corrective action has taken place.
(m) Transparency requirement. The most recent administrative review final results must be easily available to the public.
(1) The State agency must post a summary of the most recent results for each school food authority on the State agency’s public Web site, and make a copy of the final administrative review report available to the public upon request. A State agency may also strongly encourage each school food authority to post a summary of the most recent results on its public Web site, and make a copy of the final administrative review report available to the public upon request.
(2) The summary must cover meal access and reimbursement, meal patterns and nutritional quality of school meals, school nutrition environment (including food safety, local school wellness policy, and competitive foods), civil rights, and program participation.
(3) The summary must be posted no later than 30 days after the State agency provides the results of administrative review to the school food authority.
(n) Reporting requirement. Each State agency must report to FNS the results of the administrative reviews by March 1 of each school year on a form designated by FNS. In such annual reports, the State agency must include the results of all administrative reviews conducted in the preceding school year.
(o) Recordkeeping. Each State agency must keep records which document the details of all reviews and demonstrate the degree of compliance with the critical and general areas of review. Records must be retained as specified in § 210.23(c) and include documented corrective action, and documentation of withholding of payments and fiscal action, including recoveries made. Additionally, the State agency must have on file:
(1) Criteria for selecting schools for administrative reviews in accordance with paragraphs (e)(2)(ii) and (i)(2)(ii) of this section.
(2) Documentation demonstrating compliance with the statistical sampling requirements in accordance with paragraph (g)(1)(i) of this section, if applicable.
(p) School food authority appeal of State agency findings. Except for FNS-conducted reviews authorized under § 210.29(d)(2), each State agency must establish an appeal procedure to be followed by a school food authority requesting a review of a denial of all or a part of the Claim for Reimbursement, withholding payment arising from administrative or follow-up review activity conducted by the State agency under this § 210.18, or fines established under § 210.26, or § 215.15 or § 220.18 of this chapter. State agencies may use their own appeal procedures provided the same procedures are applied to all appellants in the State and the procedures meet the following requirements: Appellants are assured of a fair and impartial hearing before an independent official at which they may be represented by legal counsel; decisions are rendered in a timely manner not to exceed 120 days from the date of the receipt of the request for review; appellants are afforded the right to either a review of the record with the right to file written information, or a hearing which they may attend in person; and adequate notice is given of the time, date, place and procedures of the hearing. If the State agency has not established its own appeal procedures or the procedures do not meet the above listed criteria, the State agency shall observe the following procedures at a minimum:
(1) The written request for a review must be postmarked within 15 calendar days of the date the appellant received the notice of the denial of all or a part of the Claim for Reimbursement, withholding of payment, or fines established under § 210.26, or § 215.15 or § 220.18 of this chapter, and the State agency must acknowledge the receipt of the request for appeal within 10 calendar days;
(2) The appellant may refute the action specified in the notice in person and by written documentation to the review official. In order to be considered, written documentation must be filed with the review official not later than 30 calendar days after the appellant received the notice. The appellant may retain legal counsel, or may be represented by another person. A hearing shall be held by the review official in addition to, or in lieu of, a review of written information submitted by the appellant only if the appellant so specifies in the letter of request for review. Failure of the appellant school food authority’s representative to appear at a scheduled hearing shall constitute the appellant school food authority’s waiver of the right to a personal appearance before the review official, unless the review official agrees to reschedule the hearing. A representative of the State agency shall be allowed to attend the hearing to respond to the appellant’s testimony and to answer questions posed by the review official;
(3) If the appellant has requested a hearing, the appellant and the State agency shall be provided with at least 10 calendar days advance written notice, sent by certified mail, or its equivalent, or sent electronically by email or facsimile, of the time, date and place of the hearing;
(4) Any information on which the State agency’s action was based shall be available to the appellant for inspection from the date of receipt of the request for review;
(5) The review official shall be an independent and impartial official other than, and not accountable to, any person authorized to make decisions that are subject to appeal under the provisions of this section;
(6) The review official shall make a determination based on information provided by the State agency and the appellant, and on program regulations;
(7) Within 60 calendar days of the State agency’s receipt of the request for review, by written notice, sent by certified mail, or its equivalent, or electronically by email or facsimile, the review official shall inform the State agency and the appellant of the determination of the review official. The final determination shall take effect upon receipt of the written notice of the final decision by the school food authority;
(8) The State agency’s action shall remain in effect during the appeal process; and
(9) The determination by the State review official is the final administrative determination to be afforded to the appellant.
(q) FNS review activity. The term “State agency” and all the provisions specified in paragraphs (a) through (h) of this section refer to FNS when FNS conducts administrative reviews in accordance with § 210.29(d)(2). FNS will notify the State agency of the review findings and the need for corrective action and fiscal action. The State agency shall pursue any needed follow-up activity.
§ 210.19 Additional responsibilities.
(a) General Program management. Each State agency shall provide an adequate number of consultative, technical and managerial personnel to administer programs and monitor performance in complying with all Program requirements.
(1) Assurance of compliance for finances. Each State agency shall ensure that school food authorities comply with the requirements to account for all revenues and expenditures of their nonprofit school food service. School food authorities shall meet the requirements for the allowability of nonprofit school food service expenditures in accordance with this part and, 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable. All costs resulting from contracts that do not meet the requirements of this part are unallowable nonprofit school food service account expenses. When the school food authority fails to incorporate State agency required changes to solicitation or contract documents, all costs resulting from the subsequent contract award are unallowable charges to the nonprofit school food service account. The State agency shall ensure compliance with the requirements to limit net cash resources and shall provide for approval of net cash resources in excess of three months’ average expenditures. Each State agency shall monitor, through review or audit or by other means, the net cash resources of the nonprofit school food service in each school food authority participating in the Program. In the event that net cash resources exceed 3 months’ average expenditures for the school food authority’s nonprofit school food service or such other amount as may be approved in accordance with this paragraph, the State agency may require the school food authority to reduce the price children are charged for lunches, in a manner that is consistent with the paid lunch equity provision in § 210.14(e) and corresponding FNS guidance, improve food quality or take other action designed to improve the nonprofit school food service. In the absence of any such action, the State agency shall make adjustments in the rate of reimbursement under the Program. Each State agency shall ensure that school food authorities comply with the requirements for pricing paid lunches and nonprogram foods as required in § 210.14(e) and § 210.14(f).
(2) Improved management practices. The State agency must work with the school food authority toward improving the school food authority’s management practices where the State agency has found poor food service management practices leading to decreasing or low child participation, menu acceptance, or program efficiency. The State agency should provide training and technical assistance to the school food authority or direct the school food authority to places to obtain such resources, such as the Institute of Child Nutrition.
(3) Program compliance. Each State agency shall require that school food authorities comply with the applicable provisions of this part. The State agency shall ensure compliance through audits, administrative reviews, technical assistance, training guidance materials or by other means.
(4) Investigations. Each State agency shall promptly investigate complaints received or irregularities noted in connection with the operation of the Program, and shall take appropriate action to correct any irregularities. State agencies shall maintain on file, evidence of such investigations and actions. FNS and OIG may make reviews or investigations at the request of the State agency or where FNS or OIG determines reviews or investigations are appropriate.
(5) Food service management companies. (i) The State agency must annually review and approve each contract and contract amendment, including all supporting documentation, between any school food authority and food service management company before implementation of the contract by either party to ensure compliance with all the provisions and standards set forth in this part.
(A) When the State agency develops a prototype contract for use by the school food authority that meets the provisions and standards set forth in this part, this annual review may be limited to changes made to that contract.
(B) The State agency may establish due dates for submission of the contract or contract amendment documents.
(ii) The State agency must perform a review of each school food authority that contracts with a food service management company, at least once during each 5-year period. The reviews must examine the school food authority’s compliance with § 210.16 of this part.
(iii) The State agency may require all food service management companies to register with the State agency prior to contracting for food service with any school food authority in the State.
(iv) State agencies must provide assistance to school food authorities upon request to assure compliance with the requirements for contracting with a food service management company.
(b) Donated food distribution information. Information on schools eligible to receive donated foods available under section 6 of the National School Lunch Act (42 U.S.C. 1755) shall be prepared each year by the State agency with accompanying information on the average daily number of lunches to be served in such schools. This information shall be prepared as early as practicable each school year and forwarded no later than September 1 to the Distributing agency. The State agency shall be responsible for promptly revising the information to reflect additions or deletions of eligible schools, and for providing such adjustments in participation as are determined necessary by the State agency. Schools shall be consulted by the Distributing agency with respect to the needs of such schools relating to the manner of selection and distribution of commodity assistance.
(c) Fiscal action. State agencies are responsible for ensuring Program integrity at the school food authority level. State agencies must take fiscal action against school food authorities for Claims for Reimbursement that are not properly payable, including, if warranted, the disallowance of funds for failure to take corrective action to comply with requirements in parts 210, 215, and 220 of this chapter. In taking fiscal action, State agencies must use their own procedures within the constraints of this part and must maintain all records pertaining to action taken under this section. The State agency may refer to FNS for assistance in making a claim determination under this part.
(1) Definition. Fiscal action includes, but is not limited to, the recovery of overpayment through direct assessment or offset of future claims, disallowance of overclaims as reflected in unpaid Claims for Reimbursement, submission of a revised Claim for Reimbursement, and correction of records to ensure that unfiled Claims for Reimbursement are corrected when filed. Fiscal action also includes disallowance of funds for failure to take corrective action to meet the meal requirements in parts 210, 215, and 220 of this chapter, including the disallowance of performance-based cash assistance described in § 210.4(b)(1).
(2) General principles. When taking fiscal action, State agencies shall consider the following:
(i) The State agency shall identify the school food authority’s correct entitlement and take fiscal action when any school food authority claims or receives more Federal funds than earned under § 210.7 of this part. In order to take fiscal action, the State agency shall identify accurate counts of reimbursable meals through available data, if possible. In the absence of reliable data, the State agency shall reconstruct the meal accounts in accordance with procedures established by FNS.
(ii) Unless otherwise specified under § 210.18(l) of this part, fiscal action shall be extended back to the beginning of the school year or that point in time during the current school year when the infraction first occurred, as applicable. Based on the severity and longevity of the problem, the State agency may extend fiscal action back to previous school years, as applicable. The State agency shall ensure that any Claim for Reimbursement, filed subsequent to the reviews conducted under § 210.18 and prior to the implementation of corrective action, is limited to meals eligible for reimbursement under this part.
(iii) In taking fiscal action, State agencies shall assume that children determined by the reviewer to be incorrectly approved for free and reduced price meals participated at the same rate as correctly approved children in the corresponding meal category.
(3) Failure to collect. If a State agency fails to disallow a claim or recover an overpayment from a school food authority, as described in this section, FNS will notify the State agency that a claim may be assessed against the State agency. In all such cases, the State agency shall have full opportunity to submit evidence concerning overpayment. If after considering all available information, FNS determines that a claim is warranted, FNS will assess a claim in the amount of such overpayment against the State agency. If the State agency fails to pay any such demand for funds promptly, FNS will reduce the State agency’s Letter of Credit by the sum due in accordance with FNS’ existing offset procedures for Letter of Credit. In such event, the State agency shall provide the funds necessary to maintain Program operations at the level of earnings from a source other than the Program.
(4) Interest charge. If an agreement cannot be reached with the State agency for payment of its debts or for offset of debts on its current Letter of Credit, interest will be charged against the State agency from the date the demand leter was sent, at the rate established by the Secretary of Treasury.
(5) Use of recovered payment. The amounts recovered by the State agency from school food authorities may be utilized during the fiscal year for which the funds were initially available, first, to make payments to school food authorities for the purposes of the Program; and second, to repay any State funds expended in the reimbursement of claims under the Program and not otherwise repaid. Any amounts recovered which are not so utilized shall be returned to FNS in accordance with the requirements of this part.
(6) Exceptions. The State agency need not disallow payment or collect an overpayment when any review or audit reveals that a school food authority is approving applications which indicate that the households’ incomes are within the Income Eligibility Guidelines issued by the Department or the applications contain Supplemental Nutrition Assistance Program or TANF case numbers or FDPIR case numbers or other FDPIR identifiers but the applications are missing the information specified in paragraph (1)(ii) of the definition of Documentation in § 245.2 of this chapter.
(7) Claims adjustment. FNS will have the authority to determine the amount of, to settle, and to adjust any claim arising under the Program, and to compromise or deny such claim or any part thereof. FNS will also have the authority to waive such claims if FNS determines that to do so would serve the purposes of the Program. This provision shall not diminish the authority of the Attorney General of the United States under section 516 of title 28, U.S. Code, to conduct litigation on behalf of the United States.
(d) Management evaluations. Each State agency shall provide FNS with full opportunity to conduct management evaluations of all State agency Program operations and shall provide OIG with full opportunity to conduct audits of all State agency Program operations. Each State agency shall make available its records, including records of the receipt and disbursement of funds under the Program and records of any claim compromised in accordance with this paragraph, upon a reasonable request by FNS, OIG, or the Comptroller General of the United States. FNS and OIG retain the right to visit schools and OIG also has the right to make audits of the records and operations of any school. In conducting management evaluations, reviews, or audits in a fiscal year, the State agency, FNS, or OIG may disregard an overpayment if the overpayment does not exceed $600. A State agency may establish, through State law, regulation or procedure, an alternate disregard threshold that does not exceed $600. This disregard may be made once per each management evaluation, review, or audit per Program within a fiscal year. However, no overpayment is to be disregarded where there is substantial evidence of violations of criminal law or civil fraud statutes.
(e) Additional requirements. Nothing contained in this part shall prevent a State agency from imposing additional requirements for participation in the Program which are not inconsistent with the provisions of this part.
(f) Cooperation with the Child and Adult Care Food Program. On an annual basis, the State agency shall provide the State agency which administers the Child and Adult Care Food Program with a list of all schools in the State participating in the National School Lunch Program in which 50 percent or more of enrolled children have been determined eligible for free or reduced price meals as of the last operating day of the previous October, or other month specified by the State agency. The first list shall be provided by March 15, 1997; subsequent lists shall be provided by February 1 of each year or, if data is based on a month other than October, within 90 calendar days following the end of the month designated by the State agency. The State agency may provide updated free and reduced price enrollment data on individual schools to the State agency which administers the Child and Adult Care Food Program only when unusual circumstances render the initial data obsolete. In addition, the State agency shall provide the current list, upon request, to sponsoring organizations of day care homes participating in the Child and Adult Care Food Program.
§ 210.20 Reporting and recordkeeping.
(a) Reporting summary. Participating State agencies shall submit forms and reports to FNS to demonstrate compliance with Program requirements. The reports include but are not limited to:
(1) Requests for cash to make reimbursement payments to school food authorities as required under § 210.5(a);
(2) Information on the amounts of Federal Program funds expended and obligated to date (FNS-777) as required under § 210.5(d);
(3) Statewide totals on Program participation (FNS-10) as required under § 210.5(d);
(4) Information on State funds provided by the State to meet the State matching requirements (FNS-13) specified under § 210.17(g);
(5) Results of reviews and audits;
(6) Results of the commodity preference survey and recommendations for commodity purchases as required under § 250.13(k) of this chapter;
(7) Results of the State agency’s review of schools’ compliance with the food safety inspection requirement in § 210.13(b) by November 15 following each of school years 2005-2006 through 2014-2015, beginning November 15, 2006. The report will be based on data supplied by the school food authorities in accordance with § 210.15(a)(7);
(8) The prices of paid lunches charged by each school food authority; and
(9) For each local educational agency required to conduct a second review of applications under § 245.11 of this chapter, the number of free and reduced price applications subject to a second review, the results of the reviews including the number and percentage of reviewed applications for which the eligibility determination was changed, and a summary of the types of changes made.
(b) Recordkeeping summary. Participating State agencies are required to maintain records to demonstrate compliance with Program requirements. The records include but are not limited to:
(1) Accounting records and source documents to control the receipt, custody and disbursement of Federal Program funds as required under § 210.5(a);
(2) Documentation supporting all school food authority claims paid by the State agency as required under § 210.5(d);
(3) Documentation to support the amount the State agency reported having used for State revenue matching as required under § 210.17(h);
(4) Records supporting the State agency’s review of net cash resources as required under § 210.19(a);
(5) Reports on the results of investigations of complaints received or irregularities noted in connection with Program operations as required under § 210.19(a)
(6) Records of all reviews and audits, including records of action taken to correct Program violations; and records of fiscal action taken, including documentation of recoveries made;
(7) Documentation of action taken to disallow improper claims submitted by school food authorities, as required by § 210.19(c) and as determined through claims processing, resulting from actions such as reviews, audits and USDA audits;
(8) Records of USDA audit findings, State agency’s and school food authorities’ responses to them and of corrective action taken as required by § 210.22(a);
(9) Records pertaining to civil rights responsibilities as defined under § 210.23(b);
(10) Records pertaining to the annual food preference survey of school food authorities as required by § 250.13(k) of this chapter;
(11) Records supplied by the school food authorities showing the number of food safety inspections obtained by schools for the current and three most recent school years.
(12) Records showing compliance with the requirements in § 210.14(e)(5) and records supplied annually by school food authorities showing paid meal prices charged as required by § 210.14(e)(6);
(13) Records to document compliance with the requirements in § 210.14(f); and
(14) Records for a three year period to demonstrate compliance with the professional standards for State directors of school nutrition programs established in § 235.11(h) of this chapter.
Subpart E—State Agency and School Food Authority Responsibilities
§ 210.21 Procurement.
(a) General. State agencies and school food authorities shall comply with the requirements of this part and 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable, which implement the applicable requirements, concerning the procurement of all goods and services with nonprofit school food service account funds.
(b) Contractual responsibilities. The standards contained in this part and 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable, do not relieve the State agency or school food authority of any contractual responsibilities under its contracts. The State agency or school food authority is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the Program. This includes, but is not limited to source evaluation, protests, disputes, claims, or other matters of a contractual nature. Matters concerning violation of law are to be referred to the local, State, or Federal authority that has proper jurisdiction.
(c) Procedures. The State agency may elect to follow either the State laws, policies and procedures as authorized by 2 CFR 200.317, or the procurement standards for other governmental grantees and all governmental subgrantees in accordance with 2 CFR 200.318 through 2 CFR 200.326. Regardless of the option selected, States must ensure that all contracts include any clauses required by Federal statutes and executive orders and that the requirements 2 CFR 200.236 and Appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Award are followed. A school food authority may use its own procurement procedures which reflect applicable State and local laws and regulations, provided that procurements made with nonprofit school food service account funds adhere to the standards set forth in this part and in 2 CFR part 200, subpart D, as applicable. School food authority procedures must include a written code of standards of conduct meeting the minimum standards of 2 CFR 200.318, as applicable.
(1) Pre-issuance review requirement. The State agency may impose a pre-issuance review requirement on a school food authority’s proposed procurement. The school food authority must make available, upon request by the State agency, its procurement documents, including but not limited to solicitation documents, specifications, evaluation criteria, procurement procedures, proposed contracts and contract terms. School food authorities shall comply with State agency requests for changes to procurement procedures and solicitation and contract documents to ensure that, to the State agency’s satisfaction, such procedures and documents reflect applicable procurement and contract requirements and the requirements of this part.
(2) Prototype solicitation documents and contracts. The school food authority must obtain the State agency’s prior written approval for any change made to prototype solicitation or contract documents before issuing the revised solicitation documents or execution of the revised contract.
(3) Prohibited expenditures. No expenditure may be made from the nonprofit school food service account for any cost resulting from a procurement failing to meet the requirements of this part.
(d) Buy American—(1) Definition of domestic commodity or product. In this paragraph (d), the term ‘domestic commodity or product’ means—
(i) An agricultural commodity that is produced in the United States; and
(ii) A food product that is processed in the United States substantially using agricultural commodities that are produced in the United States.
(2) Requirement. (i) In general. Subject to paragraph (d)(2)(ii) of this section, the Department shall require that a school food authority purchase, to the maximum extent practicable, domestic commodities or products.
(ii) Limitations. Paragraph (d)(2)(i) of this section shall apply only to—
(A) A school food authority located in the contiguous United States; and
(B) A purchase of domestic commodity or product for the school lunch program under this part.
(3) Applicability to Hawaii. Paragraph (d)(2)(i) of this section shall apply to a school food authority in Hawaii with respect to domestic commodities or products that are produced in Hawaii in sufficient quantities to meet the needs of meals provided under the school lunch program under this part.
(e) Restrictions on the sale of milk. A school food authority participating in the Program, or a person approved by a school participating in the Program, must not directly or indirectly restrict the sale or marketing of fluid milk (as described in § 210.10(d)(4) of this chapter) at any time or in any place on school premises or at any school-sponsored event.
(f) Cost reimbursable contracts—(1) Required provisions. The school food authority must include the following provisions in all cost reimbursable contracts, including contracts with cost reimbursable provisions, and in solicitation documents prepared to obtain offers for such contracts:
(i) Allowable costs will be paid from the nonprofit school food service account to the contractor net of all discounts, rebates and other applicable credits accruing to or received by the contractor or any assignee under the contract, to the extent those credits are allocable to the allowable portion of the costs billed to the school food authority;
(ii)(A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account); or
(B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in a manner suitable for contract cost determination and verification;
(iii) The contractor’s determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars;
(iv) The contractor must identify the amount of each discount, rebate and other applicable credit on bills and invoices presented to the school food authority for payment and individually identify the amount as a discount, rebate, or in the case of other applicable credits, the nature of the credit. If approved by the State agency, the school food authority may permit the contractor to report this information on a less frequent basis than monthly, but no less frequently than annually;
(v) The contractor must identify the method by which it will report discounts, rebates and other applicable credits allocable to the contract that are not reported prior to conclusion of the contract; and
(vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department.
(2) Prohibited expenditures. No expenditure may be made from the nonprofit school food service account for any cost resulting from a cost reimbursable contract that fails to include the requirements of this section, nor may any expenditure be made from the nonprofit school food service account that permits or results in the contractor receiving payments in excess of the contractor’s actual, net allowable costs.
(g) Geographic preference. (1) A school food authority participating in the Program, as well as State agencies making purchases on behalf of such school food authorities, may apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products. When utilizing the geographic preference to procure such products, the school food authority making the purchase or the State agency making purchases on behalf of such school food authorities have the discretion to determine the local area to which the geographic preference option will be applied;
(2) For the purpose of applying the optional geographic procurement preference in paragraph (g)(1) of this section, “unprocessed locally grown or locally raised agricultural products” means only those agricultural products that retain their inherent character. The effects of the following food handling and preservation techniques shall not be considered as changing an agricultural product into a product of a different kind or character: Cooling; refrigerating; freezing; size adjustment made by peeling, slicing, dicing, cutting, chopping, shucking, and grinding; forming ground products into patties without any additives or fillers; drying/dehydration; washing; packaging (such as placing eggs in cartons), vacuum packing and bagging (such as placing vegetables in bags or combining two or more types of vegetables or fruits in a single package); the addition of ascorbic acid or other preservatives to prevent oxidation of produce; butchering livestock and poultry; cleaning fish; and the pasteurization of milk.
(h) Procurement training. (1) State directors of school nutrition programs, State directors of distributing agencies, and school nutrition program directors, management, and staff tasked with National School Lunch Program procurement responsibilities must complete annual training on Federal procurement standards annually.
(2) Procurement training may count towards the professional standards training standards at § 210.30(g) of this part and § 235.11(h) of this chapter.
(3) State agencies and school food authorities must retain records to document compliance with the requirement in this section.
§ 210.22 Audits.
(a) General. Unless otherwise exempt, audits at the State and school food authority levels shall be conducted in accordance with 2 CFR part 200, subpart F and Appendix XI (Compliance Supplement) and USDA implementing regulations 2 CFR part 400 and part 415.
(b) Audit procedure. These requirements call for organization-wide financial and compliance audits to ascertain whether financial operations are conducted properly; financial statements are presented fairly; recipients and subrecipients comply with the laws and regulations that affect the expenditures of Federal funds; recipients and subrecipients have established procedures to meet the objectives of federally assisted programs; and recipients and subrecipients are providing accurate and reliable information concerning grant funds. States and school food authorities shall use their own procedures to arrange for and prescribe the scope of independent audits, provided that such audits comply with the requirements set forth in 2 CFR part 200, subpart F and Appendix XI, and USDA implementing regulations 2 CFR part 400 and part 415.
§ 210.23 Other responsibilities.
(a) Free and reduced price lunches and meal supplements. State agencies and school food authorities shall ensure that lunches and meal supplements are made available free or at a reduced price to all children who are determined by the school food authority to be eligible for such benefits. The determination of a child’s eligibility for free or reduced price lunches and meal supplements is to be made in accordance with 7 CFR part 245.
(b) Civil rights. In the operation of the Program, no child shall be denied benefits or be otherwise discriminated against because of race, color, national origin, age, sex, or disability. State agencies and school food authorities shall comply with the requirements of: Title VI of the Civil Rights Act of 1964; title IX of the Education Amendments of 1972; section 504 of the Rehabilitation Act of 1973; the Age Discrimination Act of 1975; Department of Agriculture regulations on nondiscrimination (7 CFR parts 15, 15a, and 15b); and FNS Instruction 113-1.
(c) Retention of records. State agencies and school food authorities may retain necessary records in their original form or on microfilm. State agency records shall be retained for a period of 3 years after the date of submission of the final Financial Status Report for the fiscal year. School food authority records shall be retained for a period of 3 years after submission of the final Claim for Reimbursement for the fiscal year. In either case, if audit findings have not been resolved, the records shall be retained beyond the 3-year period as long as required for the resolution of the issues raised by the audit.
(d) Program evaluations. States, State agencies, local educational agencies, school food authorities, schools and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department, related to programs authorized under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966.
Subpart F—Additional Provisions
§ 210.24 Withholding payments.
In accordance with Departmental regulations at 2 CFR 200.338 through 200.342, the State agency shall withhold Program payments, in whole or in part, to any school food authority which has failed to comply with the provisions of this part. Program payments shall be withheld until the school food authority takes corrective action satisfactory to the State agency, or gives evidence that such corrective action will be taken, or until the State agency terminates the grant in accordance with § 210.25 of this part. Subsequent to the State agency’s acceptance of the corrective actions, payments will be released for any lunches served in accordance with the provisions of this part during the period the payments were withheld.
§ 210.25 Suspension, termination and grant closeout procedures.
Whenever it is determined that a State agency has materially failed to comply with the provisions of this part, or with FNS guidelines and instructions, FNS may suspend or terminate the Program in whole, or in part, or take any other action as may be available and appropriate. A State agency may also terminate the Program by mutual agreement with FNS. FNS and the State agency shall comply with the provisions of 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 concerning grant suspension, termination and closeout procedures. Furthermore, the State agency shall apply these provisions, as applicable, to suspension or termination of the Program in school food authorities.
§ 210.26 Penalties and fines.
(a) Penalties. Whomever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property provided under this part whether received directly or indirectly from the Department will, if such funds, assets, or property are of a value of $100 or more, be fined no more than $25,000 or imprisoned not more than 5 years or both; or if such funds, assets, or property are of a value of less than $100, be fined not more than $1,000 or imprisoned not more than 1 year or both. Whomever receives, conceals, or retains for personal use or gain, funds, assets, or property provided under this part, whether received directly or indirectly from the Department, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud, will be subject to the same penalties.
(b) Fines. (1) The State agency may establish a fine against any school food authority when it has determined that the school food authority or a school under its agreement has:
(i) Failed to correct severe mismanagement of this Program or a Child Nutrition Program under parts 225 or 226 of this chapter;
(ii) Disregarded a Program requirement of which the school food authority or school had been informed; or
(iii) Failed to correct repeated violations of Program requirements under this part or under parts 225 or 226 of this chapter.
(2) FNS may direct the State agency to establish a fine against any school food authority when it has determined that the school food authority or school meets the criteria set forth under paragraph (b)(1) of this section.
(3) Funds used to pay fines established under this paragraph must be derived from non-Federal sources. The State agency must calculate the fine based on the amount of Program reimbursement earned by the school food authority or school for the most recent fiscal year for which full year data is available, provided that the fine does not exceed the equivalent of:
(i) For the first fine, 1 percent of the amount of meal reimbursement earned for the fiscal year;
(ii) For the second fine, 5 percent of the amount of meal reimbursement earned for the fiscal year; and
(iii) For the third or subsequent fine, 10 percent of the amount of meal reimbursement earned for the fiscal year.
(4) The State agency must inform FNS at least 30 days prior to establishing the fine under this paragraph. The State agency must send the school food authority written notification of the fine established under this paragraph and provide a copy of the notification to FNS. The notification must:
(i) Specify the violations or actions which constitute the basis for the fine and indicate the amount of the fine;
(ii) Inform the school food authority that it may appeal the fine and advise the school food authority of the appeal procedures established under § 210.18(p);
(iii) Indicate the effective date and payment procedures should the school food authority not exercise its right to appeal within the specified timeframe.
(5) Any school food authority subject to a fine under paragraph (b)(1) of this section may appeal the State agency’s determination. In appealing a fine, the school food authority must submit to the State agency any pertinent information, explanation, or evidence addressing the Program violations identified by the State agency. Any school food authority seeking to appeal the State agency determination must follow State agency appeal procedures.
(6) The decision of the State agency review official is final and not subject to further administrative or judicial review. Failure to pay a fine established under this paragraph may be grounds for suspension or termination.
(7) Money received by the State agency as a result of a fine established under this paragraph against a school food authority and any interest charged in the collection of these fines must be remitted to FNS, and then remitted to the United States Treasury.
§ 210.27 Educational prohibitions.
In carrying out the provisions of the Act, the Department shall not impose any requirements with respect to teaching personnel, curriculum, instructions, methods of instruction, or materials of instruction in any school as a condition for participation in the Program.
§ 210.28 Pilot project exemptions.
Those State agencies or school food authorities selected for the pilot projects mandated under section 18(d) of the Act may be exempted by the Department from some or all of the counting and free and reduced price application requirements of this part and 7 CFR part 245, as necessary, to conduct an approved pilot project. Additionally, those schools selected for pilot projects that also operate the School Breakfast Program (7 CFR part 220) and/or the Special Milk Program for Children (7 CFR part 215), may be exempted from the counting and free and reduced price application requirements mandated under these Programs. The Department shall notify the appropriate State agencies and school food authorities of its determination of which requirements are exempted after the Department’s selection of pilot projects.
§ 210.29 Management evaluations.
(a) Management evaluations. FNS will conduct a comprehensive management evaluation of each State agency’s administration of the National School Lunch Program.
(b) Basis for evaluations. FNS will evaluate all aspects of State agency management of the Program using tools such as State agency reviews as required under § 210.18 of this part; reviews conducted by FNS in accordance with § 210.18 of this part; FNS reviews of school food authorities and schools authorized under § 210.19(a)(4) of this part; follow-up actions taken by the State agency to correct violations found during reviews; FNS observations of State agency reviews; and audit reports.
(c) Scope of management evaluations. The management evaluation will determine whether the State agency has taken steps to ensure school food authority compliance with Program regulations, and whether the State agency is administering the Program in accordance with Program requirements and good management practices.
(1) Local compliance. FNS will evaluate whether the State agency has actively taken steps to ensure that school food authorities comply with the provisions of this part.
(2) State agency compliance. FNS will evaluate whether the State agency has fulfilled its State level responsibilities, including, but not limited to the following areas: use of Federal funds; reporting and recordkeeping; agreements with school food authorities; review of food service management company contracts; review of the claims payment process; implementation of the State agency’s monitoring responsibilities; initiation and completion of corrective action; recovery of overpayments; disallowance of claims that are not properly payable; withholding of Program payments; oversight of school food authority procurement activities; training and guidance activities; civil rights; and compliance with the State Administrative Expense Funds requirements as specified in 7 CFR part 235.
(d) School food authority reviews. FNS will examine State agency administration of the Program by reviewing local Program operations. When conducting these reviews under paragraph (d)(2) of this section, FNS will follow all the administrative review requirements specified in § 210.18(a)-(h) of this part. When FNS conducts reviews, the findings will be sent to the State agency to ensure all the needed follow-up activity occurs. The State agency will, in all cases, be invited to accompany FNS reviewers.
(1) Observation of State agency reviews. FNS may observe the State agency conduct of any review as required under this part. At State agency request, FNS may assist in the conduct of the review.
(2) Section 210.18 reviews. FNS will conduct administrative reviews in accordance with § 210.18(a)-(h) of this part which will count toward meeting the State agency responsibilities identified under § 210.18 of this part.
(3) School food authority appeal of FNS findings. When administrative or follow-up review activity conducted by FNS in accordance with the provisions of paragraph (d)(2) of this section results in the denial of all or part of a Claim for Reimbursement or withholding of payment, a school food authority may appeal the FNS findings by filing a written request with the Chief, Administrative Review Branch, U.S. Department of Agriculture, Food and Nutrition Service, 3101 Park Center Drive, Alexandria, Virginia, 22302, in accordance with the appeal procedures specified in this paragraph:
(i) The written request for a review of the record shall be postmarked within 15 calendar days of the date the appellant received the notice of the denial of all or a part of the Claim for Reimbursement or withholding payment and the envelope containing the request shall be prominently marked “REQUEST FOR REVIEW”. FNS will acknowledge the receipt of the request for appeal within 10 calendar days. The acknowledgement will include the name and address of the FNS Administrative Review Officer (ARO) reviewing the case. FNS will also notify the State agency of the request for appeal.
(ii) The appellant may refute the action specified in the notice in person and by written documentation to the ARO. In order to be considered, written documentation must be filed with the ARO not later than 30 calendar days after the appellant received the notice. The appellant may retain legal counsel, or may be represented by another person. A hearing shall be held by the ARO in addition to, or in lieu of, a review of written information submitted by the appellant only if the appellant so specifies in the letter of request for review. Failure of the appellant school food authority’s representative to appear at a scheduled hearing shall constitute the appellant school food authority’s waiver of the right to a personal appearance before the ARO, unless the ARO agrees to reschedule the hearing. A representative of FNS shall be allowed to attend the hearing to respond to the appellant’s testimony and to answer questions posed by the ARO;
(iii) If the appellant has requested a hearing, the appellant shall be provided with a least 10 calendar days advance written notice, sent by certified mail, return receipt requested, of the time, date, and place of the hearing;
(iv) Any information on which FNS’s action was based shall be available to the appellant for inspection from the date of receipt of the request for review;
(v) The ARO shall be an independent and impartial official other than, and not accountable to, any person authorized to make decisions that are subject to appeal under the provisions of this section;
(vi) The ARO shall make a determination based on information provided by FNS and the appellant, and on Program regulations;
(vii) Within 60 calendar days of the receipt of the request for review, by written notice, sent by certified mail, return receipt requested, the ARO shall inform FNS, the State agency and the appellant of the determination of the ARO. The final determination shall take effect upon receipt of the written notice of the final decision by the school food authority;
(viii) The action being appealed shall remain in effect during the appeal process;
(ix) The determination by the ARO is the final administrative determination to be afforded to the appellant.
(4) Coordination with State agency. FNS will coordinate school food authority selection with the State agency to ensure that no unintended overlap exists and to ensure reviews are conducted in a consistent manner.
(e) Management evaluation findings. FNS will consider the results of all its review activity within each State, including school food authority reviews, in performing management evaluations and issuing management evaluation reports. FNS will communicate the findings of the management evaluation to appropriate State agency personnel in an exit conference. Subsequent to the exit conference, the State agency will be notified in writing of the management evaluation findings and any needed corrective actions or fiscal sanctions in accordance with the provisions § 210.25 of this part and/or 7 CFR part 235.
§ 210.30 School nutrition program professional standards.
(a) General. School food authorities that operate the National School Lunch Program, or the School Breakfast Program (7 CFR part 220), must establish and implement professional standards for school nutrition program directors, managers, and staff, as defined in § 210.2.
(b) Minimum standards for all school nutrition program directors. Each school food authority must ensure that all newly hired school nutrition program directors meet minimum hiring standards and ensure that all new and existing directors have completed the minimum annual training/education requirements for school nutrition program directors, as set forth below:
(1) Hiring standards. All school nutrition program directors hired on or after July 1, 2015, must meet the following minimum educational requirements, as applicable:
(i) School nutrition program directors with local educational agency enrollment of 2,499 students or fewer. Directors must meet the requirements in paragraph (b)(1)(i)(A), (B), (C), or (D) of this section. However, a State agency may approve a school food authority to use the nonprofit school food service account to pay the salary of a school nutrition program director who does not meet the hiring standards herein so long as the school food authority is complying with a State agency-approved plan to ensure the director will meet the requirements.
(A) A bachelor’s degree, or equivalent educational experience, with an academic major or concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field;
(B) A bachelor’s degree, or equivalent educational experience, with any academic major or area of concentration, and either a State-recognized certificate for school nutrition directors, or at least one year of relevant food service experience. At the discretion of the State agency, and on an individual basis, documented relevant food service experience may be unpaid;
(C) An associate’s degree, or equivalent educational experience, with an academic major or area of concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field and at least one year of relevant food service experience. At the discretion of the State agency, and on an individual basis, documented relevant food service experience may be unpaid; or
(D) A high school diploma or equivalency (such as the general educational development diploma), and at least three years of relevant food service experience. At the discretion of the State agency, and on an individual basis, documented relevant food service experience may be unpaid. Directors hired under this criterion are strongly encouraged to work toward attaining an associate’s degree in an academic major in at least one of the fields listed in paragraph (b)(1)(i)(C).
(E) For a local educational agency with less than 500 students, the State agency may approve the hire of a director who meets one of the educational criteria in paragraphs (b)(1)(i)(B) through (D) but has less than the required years of relevant food service experience.
(ii) School nutrition program directors with local educational agency enrollment of 2,500 to 9,999 students. Directors must meet the requirements in either paragraph (b)(1)(ii)(A), (B), (C), or (D) of this section.
(A) A bachelor’s degree, or equivalent educational experience, with an academic major or concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field;
(B) A bachelor’s degree, or equivalent educational experience, with any academic major or area of concentration, and a State-recognized certificate for school nutrition directors;
(C) A bachelor’s degree in any academic major and at least two years of relevant experience in school nutrition programs; or
(D) An associate’s degree, or equivalent educational experience, with an academic major or area of concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field and at least two years of relevant school nutrition program experience. Directors hired with an associate’s degree are strongly encouraged to work toward attaining a bachelor’s degree in an academic major in the fields listed in this paragraph.
(iii) School nutrition program directors with local educational agency enrollment of 10,000 or more students. Directors must meet the requirements in either paragraph (b)(1)(iii)(A), (B), or (C) of this section.
(A) A bachelor’s degree, or equivalent educational experience, with an academic major or area of concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field;
(B) A bachelor’s degree, or equivalent educational experience, with any academic major or area of concentration, and a State-recognized certificate for school nutrition directors; or
(C) A bachelor’s degree in any major and at least five years experience in management of school nutrition programs.
(D) School food authorities are strongly encouraged to seek out individuals who possess a master’s degree or are willing to work toward a master’s degree in the fields listed in this paragraph. At least one year of management experience, preferably in school nutrition, is strongly recommended. It is also strongly recommended that directors have at least three credit hours at the university level in food service management and at least three credit hours in nutritional sciences at the time of hire.
(iv) At the discretion of the State agency, acting school nutrition program directors expected to serve for more than 30 business days must meet the hiring standards established in § 210.30(b)(1) of this chapter.
(v) School nutrition program directors for all local educational agency sizes. All school nutrition program directors, for all local educational agency sizes, must have completed at least eight hours of food safety training within five years prior to their starting date or complete eight hours of food safety training within 30 calendar days of their starting date. At the discretion of the State agency, all school nutrition program directors, regardless of their starting date, may be required to complete eight hours of food safety training every five years.
(2) Summary of school nutrition program director hiring/standards. The following chart summarizes the hiring standards established in this section:
| Minimum requirements for directors | Student enrollment 2,499 or less | Student enrollment 2,500-9,999 | Student enrollment 10,000 or more |
|---|---|---|---|
| Minimum Education Standards (required) | Bachelor’s degree, or equivalent educational experience, with academic major or concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field; | Bachelor’s degree, or equivalent educational experience, with academic major or concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field; | Bachelor’s degree, or equivalent educational experience, with academic major or concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field; |
| OR | OR | OR | |
| Bachelor’s degree, or equivalent educational experience, with any academic major or area of concentration, | Bachelor’s degree, or equivalent educational experience, with any academic major or area of concentration, | Bachelor’s degree, or equivalent educational experience, with any academic major or area of concentration, | |
| OR | OR | OR | |
| Associate’s degree, or equivalent educational experience, with academic major or concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field, OR High school diploma (or GED) | Bachelor’s degree in any academic major OR Associate’s degree, or equivalent educational experience, with academic major or concentration in food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field, | Bachelor’s degree in any major | |
| Minimum Education Standards (preferred) | Directors hired without an associate’s degree are strongly encouraged to work toward attaining an associate’s degree upon hiring | Directors hired without a bachelor’s degree are strongly encouraged to work toward attaining a bachelor’s degree upon hiring | Master’s degree, or willingness to work toward a master’s degree, preferred. |
| At least 1 year of management experience, preferably in school nutrition, is strongly recommended. At least 3 credit hours at the university level in food service management plus at least 3 credit hours in nutritional sciences at time of hiring is strongly preferred. | |||
| Minimum Prior Training Standards (required) | At least 8 hours of food safety training is required either not more than 5 years prior to their starting date or completed within 30 calendar days of employee’s starting date | ||
(3) Continuing education/training standards for all school nutrition program directors. Each school year, the school food authority must ensure that all school nutrition program directors, (including acting directors, at the discretion of the State agency) complete annual continuing education/training. For the school year beginning July 1, 2015, program directors must complete eight hours of annual training. Beginning July 1, 2016, twelve hours of annual training are required. The annual training must include, but is not limited to, administrative practices (including training in application, certification, verification, meal counting, and meal claiming procedures), as applicable, and any other specific topics identified by FNS, as needed, to address Program integrity or other critical issues. Continuing education/training required under this paragraph is in addition to the food safety training required in the first year of employment under paragraph (b)(1)(v) of this section.
(c) Continuing education/training standards for all school nutrition program managers. Each school year, the school food authority must ensure that all school nutrition program managers have completed annual continuing education/training. For the school year beginning July 1, 2015, program managers must complete six hours of annual training. Beginning July 1, 2016, ten hours of annual training are required. The annual training must include, but is not limited to, the following topics, as applicable:
(1) Administrative practices (including training in application, certification, verification, meal counting, and meal claiming procedures);
(2) The identification of reimbursable meals at the point of service;
(3) Nutrition;
(4) Health and safety standards; and
(5) Any specific topics identified by FNS, as needed, to address Program integrity or other critical issues.
(d) Continuing education/training standards for all staff with responsibility for school nutrition programs. Each school year, the school food authority must ensure that all staff with responsibility for school nutrition programs that work an average of at least 20 hours per week, other than school nutrition program directors and managers, completes annual training in areas applicable to their job. For the school year beginning July 1, 2015, staff must complete four hours of annual training. Beginning July 1, 2016, six hours of annual training are required. Part-time staff working an average of less than 20 hours per week must complete four hours of annual training beginning July 1, 2015. The annual training must include, but is not limited to, the following topics, as applicable to their position and responsibilities:
(1) Free and reduced price eligibility;
(2) Application, certification, and verification procedures;
(3) The identification of reimbursable meals at the point of service;
(4) Nutrition;
(5) Health and safety standards; and
(6) Any specific topics identified by FNS, as needed, to address Program integrity or other critical issues.
(e) Summary of required minimum continued education/training standards and flexibilities. The annual training requirements for school nutrition program managers, directors, and staff summarized in the following chart are effective beginning July 1, 2015. Program managers, directors, and staff hired on or after January 1 of each school year must complete half of their required annual training hours before the end of the school year. At the discretion of the State agency:
(1) Acting and temporary staff, substitutes, and volunteers must complete training in one or more of the topics listed in paragraph (d) of this section, as applicable, within 30 calendar days of their start date; and
(2) School nutrition program personnel may carry over excess annual training hours to an immediately previous or subsequent school year and demonstrate compliance with the training requirements over a period of two school years, provided that some training hours are completed each school year.
(f) Use of food service funds for training costs. Costs associated with annual continuing education/training required under paragraphs (b)(3), (c) and (d) of this section are allowed provided they are reasonable, allocable, and necessary in accordance with the cost principles set forth in 2 CFR part 225, Cost Principles for State, Local and Indian Tribal Governments (OMB Circular A-87). However, food service funds must not be used to pay for the cost of college credits incurred by an individual to meet the hiring requirements in paragraphs (b)(1)(i) through (iv) and in paragraph (b)(2) of this section.
(g) School food authority oversight. Each school year, the school food authority director must document compliance with the requirements of this section for all staff with responsibility for school nutrition programs, including directors, managers, and staff. Documentation must be adequate to establish, to the State’s satisfaction during administrative reviews, that employees are meeting the minimum professional standards. The school food authority must certify that:
(1) The school nutrition programs director meets the hiring standards and training requirements set forth in paragraph (b) of this section; and
(2) Each employee has completed the applicable training requirements in paragraphs (c) and (d) of this section no later than the end of each school year.
(3) Each employee tasked with Program procurement has completed annual procurement training, as required under § 210.21(h), by the end of each school year.
§ 210.31 Local school wellness policy.
(a) General. Each local educational agency must establish a local school wellness policy for all schools participating in the National School Lunch Program and/or School Breakfast Program under the jurisdiction of the local educational agency. The local school wellness policy is a written plan that includes methods to promote student wellness, prevent and reduce childhood obesity, and provide assurance that school meals and other food and beverages sold and otherwise made available on the school campus during the school day are consistent with applicable minimum Federal standards.
(b) Definitions. For the purposes of this section:
(1) School campus means the term as defined in § 210.11(a)(4).
(2) School day means the term as defined in § 210.11(a)(5).
(c) Content of the plan. At a minimum, local school wellness policies must contain:
(1) Specific goals for nutrition promotion and education, physical activity, and other school-based activities that promote student wellness. In developing these goals, local educational agencies must review and consider evidence-based strategies and techniques;
(2) Standards for all foods and beverages provided, but not sold, to students during the school day on each participating school campus under the jurisdiction of the local educational agency;
(3) Standards and nutrition guidelines for all foods and beverages sold to students during the school day on each participating school campus under the jurisdiction of the local educational agency that;
(i) Are consistent with applicable requirements set forth under §§ 210.10 and 220.8 of this chapter;
(ii) Are consistent with the nutrition standards set forth under § 210.11;
(iii) Permit marketing on the school campus during the school day of only those foods and beverages that meet the nutrition standards under § 210.11; and
(iv) Promote student health and reduce childhood obesity.
(4) Identification of the position of the LEA or school official(s) or school official(s) responsible for the implementation and oversight of the local school wellness policy to ensure each school’s compliance with the policy;
(5) A description of the manner in which parents, students, representatives of the school food authority, teachers of physical education, school health professionals, the school board, school administrators, and the general public are provided an opportunity to participate in the development, implementation, and periodic review and update of the local school wellness policy; and
(6) A description of the plan for measuring the implementation of the local school wellness policy, and for reporting local school wellness policy content and implementation issues to the public, as required in paragraphs (d) and (e) of this section.
(d) Public involvement and public notification. Each local educational agency must:
(1) Permit parents, students, representatives of the school food authority, teachers of physical education, school health professionals, the school board, school administrators, and the general public to participate in the development, implementation, and periodic review and update of the local school wellness policy;
(2) Inform the public about the content and implementation of the local school wellness policy, and make the policy and any updates to the policy available to the public on an annual basis;
(3) Inform the public about progress toward meeting the goals of the local school wellness policy and compliance with the local school wellness policy by making the triennial assessment, as required in paragraph (e)(2) of this section, available to the public in an accessible and easily understood manner.
(e) Implementation assessments and updates. Each local educational agency must:
(1) Designate one or more local educational agency officials or school officials to ensure that each participating school complies with the local school wellness policy;
(2) At least once every three years, assess schools’ compliance with the local school wellness policy, and make assessment results available to the public. The assessment must measure the implementation of the local school wellness policy, and include:
(i) The extent to which schools under the jurisdiction of the local educational agency are in compliance with the local school wellness policy;
(ii) The extent to which the local educational agency’s local school wellness policy compares to model local school wellness policies; and
(iii) A description of the progress made in attaining the goals of the local school wellness policy.
(3) Make appropriate updates or modifications to the local school wellness policy, based on the triennial assessment.
(f) Recordkeeping requirement. Each local educational agency must retain records to document compliance with the requirements of this section. These records include but are not limited to:
(1) The written local school wellness policy;
(2) Documentation demonstrating compliance with community involvement requirements, including requirements to make the local school wellness policy and triennial assessments available to the public as required in paragraph (e) of this section; and
(3) Documentation of the triennial assessment of the local school wellness policy for each school under its jurisdiction.
§ 210.32 Program information.
Persons seeking information about this Program should contact their State administering agency or the appropriate FNSRO. The FNS website has contact information for State agencies at https://www.fns.usda.gov/contacts and FNSROs at https://www.fns.usda.gov/fns-regional-offices.
§ 210.33 OMB control numbers.
The following control numbers have been assigned to the information collection requirements in 7 CFR part 210 by the Office of Management and Budget pursuant to the Paperwork Reduction Act of 1980, Public Law 96-511.
| 7 CFR section where requirements are described | Current OMB control No. |
|---|---|
| 210.3(b) | 0584-0067 |
| 210.4(b) | 0584-0002 |
| 210.5(d) | 0584-0006; 0584-0002; 0584-0067; 0584-0567 (to be merged with 0584-0006) |
| 210.7 | 0584-0567 (to be merged with 0584-0006) |
| 210.8 | 0584-0284; 0584-0006 |
| 210.9 | 0584-0006 |
| 210.10 | 0584-0006; 0584-0494 |
| 210.11 | 0584-0576 (to be merged with 0584-0006) |
| 210.13 | 0584-0006 |
| 210.14 | 0584-0006 |
| 210.15 | 0584-0006 |
| 210.17 | 0584-0075 |
| 210.18 | 0584-0006 |
| 210.19 | 0584-0006 |
| 210.20 | 0584-0006; 0584-0002; 0584-0067 |
| 210.23 | 0584-0006 |
§ 210.34 Seamless Summer Option non-congregate meal service.
A school food authority operating the Seamless Summer Option in a rural area may be approved to offer a non-congregate meal service consistent with that established in part 225 of this chapter. Such school food authorities must comply with the non-congregate meal service provisions set forth at § 225.16(b)(5)(i) and (iv) of this chapter and may use the non-congregate meal service options contained in § 225.16(i) of this chapter.
Appendix A to Part 210—Alternate Foods for Meals
1. Schools may utilize the enriched macaroni products with fortified protein defined in paragraph 3 as a food item in meeting the meal requirements of this part under the following terms and conditions:
(a) One ounce (28.35 grams) of a dry enriched macaroni product with fortified protein may be used to meet not more than one-half of the meat or meat alternate requirements specified in § 210.10, when served in combination with 1 or more ounces (28.35 grams) of cooked meat, poultry, fish, or cheese. The size of servings of the cooked combination may be adjusted for various age groups.
(b) Only enriched macaroni products with fortified protein that bear a label containing substantially the following legend shall be so utilized: “One ounce (28.35 grams) dry weight of this product meets one-half of the meat or meat alternate requirements of lunch or supper of the USDA child nutrition programs when served in combination with 1 or more ounces (28.35 grams) of cooked meat, poultry, fish, or cheese. In those States where State or local law prohibits the wording specified, a legend acceptable to both the State or local authorities and FNS shall be substituted.”
(c) Enriched macaroni product may not be used for infants under 1 year of age.
2. Only enriched macaroni products with fortified protein that have been accepted by FNS for use in the USDA Child Nutrition Programs may be labeled as provided in paragraph 1(b) of this appendix. Manufacturers seeking acceptance of their product shall furnish FNS a chemical analysis, the Protein Digestibility-Corrected Amino Acid Score (PDCAAS), and such other pertinent data as may be requested by FNS, except that prior to November 7, 1994, manufacturers may submit protein efficiency ratio analysis in lieu of the PDCAAS. This information is to be forwarded to: Director, Nutrition and Technical Services Division, Food and Nutrition Service, U.S. Department of Agriculture, 3101 Park Center Drive, room 607, Alexandria, VA 22302. All laboratory analyses are to be performed by independent or other laboratories acceptable to FNS. (FNS prefers an independent laboratory.) All laboratories shall retain the “raw” laboratory data for a period of 1 year. Such information shall be made available to FNS upon request. Manufacturers must notify FNS if there is a change in the protein portion of their product after the original testing. Manufacturers who report such a change in protein in a previously approved product must submit protein data in accordance with the method specified in this paragraph.
3. The product should not be designed in such a manner that would require it to be classified as a Dietary Supplement as described by the Food and Drug Administration (FDA) in 21 CFR part 105. To be accepted by FNS, enriched macaroni products with fortified protein must conform to the following requirements:
(a)(1) Each of these foods is produced by drying formed units of dough made with one or more of the milled wheat ingredients designated in 21 CFR 139.110(a) and 139.138(a), and other ingredients to enable the finished food to meet the protein requirements set out in paragraph 3.(a)(2)(i) under Enriched Macaroni Products with Fortified Protein in this appendix. Edible protein sources, including food grade flours or meals made from nonwheat cereals or from oilseeds, may be used. Vitamin and mineral enrichment nutrients are added to bring the food into conformity with the requirements of paragraph (b) under Enriched Macaroni Products with Fortified Protein in this appendix. Safe and suitable ingredients, as provided for in paragraph (c) under Enriched Macaroni Products with Fortified Protein in this appendix, may be added. The proportion of the milled wheat ingredient is larger than the proportion of any other ingredient used.
(2) Each such finished food, when tested by the methods described in the pertinent sections of “Official Methods of Analysis of the AOAC International,” (formerly the Association of Official Analytical Chemists), 15th Ed. (1990) meets the following specifications. This publication is incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from the AOAC International, 2200 Wilson Blvd., suite 400, Arlington, VA 22201-3301. This publication may be examined at the Food and Nutrition Service, Nutrition and Technical Services Division, 3101 Park Center Drive, room 607, Alexandria, Virginia 22302 or at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
(i) The protein content (N × 6.25) is not less than 20 percent by weight (on a 13 percent moisture basis) as determined by the appropriate method of analysis in the AOAC manual cited in (a)(2) under Enriched Macaroni Products with Fortified Protein in this appendix. The protein quality is not less than 95 percent that of casein as determined on a dry basis by the PDCAAS method as described below:
(A) The PDCAAS shall be determined by the methods given in sections 5.4.1, 7.2.1. and 8.0 as described in “Protein Quality Evaluation, Report of the Joint FAO/WHO Expert Consultation on Protein Quality Evaluation,” Rome, 1990, as published by the Food and Agriculture Organization (FAO) of the United Nations/World Health Organization (WHO). This report is incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of this report may be obtained from the Nutrition and Technical Services Division, Food and Nutrition Service, 3101 Park Center Drive, room 607, Alexandria, Virginia 22302. This report may also be inspected at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
(B) The standard used for assessing protein quality in the PDCAAS method is the amino acid scoring pattern established by FAO/WHO and United Nations University (UNU) in 1985 for preschool children 2 to 5 years of age which has been adopted by the National Academy of Sciences, Recommended Dietary Allowances (RDA), 1989.
(C) To calculate the PDCAAS for an individual food, the test food must be analyzed for proximate analysis and amino acid composition according to AOAC methods.
(D) The PDCAAS may be calculated using FDA’s limited data base of published true digestibility values (determined using humans and rats). The true digestibility values contained in the WHO/FAO report referenced in paragraph 3.(a)(2)(i)(A) under Enriched Macaroni Products with Fortified Protein in this appendix may also be used. If the digestibility of the protein is not available from these sources it must be determined by a laboratory according to methods in the FAO/WHO report (sections 7.2.1 and 8.0).
(E) The most limiting essential amino acid (that is, the amino acid that is present at the lowest level in the test food compared to the standard) is identified in the test food by comparing the levels of individual amino acids in the test food with the 1985 FAO/WHO/UNU pattern of essential amino acids established as a standard for children 2 to 5 years of age.
(F) The value of the most limiting amino acid (the ratio of the amino acid in the test food over the amino acid value from the pattern) is multiplied by the percent of digestibility of the protein. The resulting number is the PDCAAS.
(G) The PDCAAS of food mixtures must be calculated from data for the amino acid composition and digestibility of the individual components by means of a weighted average procedure. An example for calculating a PDCAAS for a food mixture of varying protein sources is shown in section 8.0 of the FAO/WHO report cited in paragraph 3.(a)(2)(i)(A) under Enriched Macaroni Products with Fortified Protein in this appendix.
(H) For the purpose of this regulation, each 100 grams of the product (on a 13 percent moisture basis) must contain protein in amounts which is equivalent to that provided by 20 grams of protein with a quality of not less than 95 percent casein. The equivalent grams of protein required per 100 grams of product (on a 13 percent moisture basis) would be determined by the following equation:
(ii) The total solids content is not less than 87 percent by weight as determined by the methods described in the “Official Methods of Analysis of the AOAC International” cited in paragraph (a)(2) under Enriched Macaroni Products with Fortified Protein in this appendix.
(b)(1) Each pound of food covered by this section shall contain 5 milligrams of thiamine, 2.2 milligrams of riboflavin, 34 milligrams of niacin or niacinamide, and 16.5 milligrams of iron.
(2) Each pound of such food may also contain 625 milligrams of calcium.
(3) Only harmless and assimilable forms of iron and calcium may be added. The enrichment nutrients may be added in a harmless carrier used only in a quantity necessary to effect a uniform distribution of the nutrients in the finished food. Reasonable overages, within the limits of good manufacturing practice, may be used to assure that the prescribed levels of the vitamins and mineral(s) in paragraphs (b)(1) and (2) under Enriched Macaroni Products with Fortified Protein in this appendix are maintained throughout the expected shelf life of the food under customary conditions of distribution.
(c) Ingredients that serve a useful purpose such as to fortify the protein or facilitate production of the food are the safe and suitable ingredients referred to in paragraph (a) under Enriched Macaroni Products with Fortified Protein in this appendix. This does not include color additives, artificial flavorings, artificial sweeteners, chemical preservatives, or starches. Ingredients deemed suitable for use by this paragraph are added in amounts that are not in excess of those reasonably required to achieve their intended purposes. Ingredients are deemed to be safe if they are not food additives within the meaning of section 201(s) of the Federal Food, Drug and Cosmetic Act, or in case they are food additives if they are used in conformity with regulations established pursuant to section 409 of the act.
(d)(1) The name of any food covered by this section is “Enriched Wheat ________ Macaroni Product with Fortified Protein”, the blank being filled in with appropriate word(s) such as “Soy” to show the source of any flours or meals used that were made from non-wheat cereals or from oilseeds. In lieu of the words “Macaroni Product” the words “Macaroni”, “Spaghetti”, or “Vermicelli” as appropriate, may be used if the units conform in shape and size to the requirements of 21 CFR 139.110 (b), (c), or (d).
(2) When any ingredient not designated in the part of the name prescribed in paragraph (d)(1) under Enriched Macaroni Products with Fortified Protein in this appendix, is added in such proportion as to contribute 10 percent or more of the quantity of protein contained in the finished food, the name shall include the statement “Made with ________”, the blank being filled in with the name of each such ingredient, e.g. “Made with nonfat milk”.
(3) When, in conformity with paragraph (d)(1) or (d)(2) under Enriched Macaroni Products with Fortified Protein in this appendix, two or more ingredients are listed in the name, their designations shall be arranged in descending order of predominance by weight.
(4) If a food is made to comply with a section of 21 CFR part 139, but also meets the compositional requirements of the Enriched Macaroni with Fortified Protein Appendix, it may alternatively bear the name set out in the other section.
(e) Each ingredient used shall declare its common name as required by the applicable section of 21 CFR part 101. In addition, the ingredients statement shall appear in letters not less than one half the size of that required by 21 CFR 101.105 for the declaration of net quantity of contents, and in no case less than one-sixteenth of an inch in height.
1. An alternate protein product used in meals planned under the food-based menu planning approaches in § 210.10(k), must meet all of the criteria in this section.
2. An alternate protein product whether used alone or in combination with meat or other meat alternates must meet the following criteria:
a. The alternate protein product must be processed so that some portion of the non-protein constituents of the food is removed. These alternate protein products must be safe and suitable edible products produced from plant or animal sources.
b. The biological quality of the protein in the alternate protein product must be at least 80 percent that of casein, determined by performing a Protein Digestibility Corrected Amino Acid Score (PDCAAS).
c. The alternate protein product must contain at least 18 percent protein by weight when fully hydrated or formulated. (“When hydrated or formulated” refers to a dry alternate protein product and the amount of water, fat, oil, colors, flavors or any other substances which have been added).
d. Manufacturers supplying an alternate protein product to participating schools or institutions must provide documentation that the product meets the criteria in paragraphs A2. a through c of this appendix.
e. Manufacturers should provide information on the percent protein contained in the dry alternate protein product and on an as prepared basis.
f. For an alternate protein product mix, manufacturers should provide information on:
(1) the amount by weight of dry alternate protein product in the package;
(2) hydration instructions; and
(3) instructions on how to combine the mix with meat or other meat alternates.
1. Schools, institutions, and service institutions may use alternate protein products to fulfill all or part of the meat/meat alternate component discussed in § 210.10.
2. The following terms and conditions apply:
a. The alternate protein product may be used alone or in combination with other food ingredients. Examples of combination items are beef patties, beef crumbles, pizza topping, meat loaf, meat sauce, taco filling, burritos, and tuna salad.
b. Alternate protein products may be used in the dry form (nonhydrated), partially hydrated or fully hydrated form. The moisture content of the fully hydrated alternate protein product (if prepared from a dry concentrated form) must be such that the mixture will have a minimum of 18 percent protein by weight or equivalent amount for the dry or partially hydrated form (based on the level that would be provided if the product were fully hydrated).
Schools, institutions, and service institutions may use a commercially prepared meat or meat alternate product combined with alternate protein products or use a commercially prepared product that contains only alternate protein products.
Appendix B to Part 210 [Reserved]
Appendix C to Part 210—Child Nutrition Labeling Program
1. The Child Nutrition (CN) Labeling Program is a voluntary technical assistance program administered by the Food and Nutrition Service in conjunction with the Food Safety and Inspection Service (FSIS), and Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture, and National Marine Fisheries Service of the U.S. Department of Commerce (USDC) for the Child Nutrition Programs. This program essentially involves the review of a manufacturer’s recipe or product formulation to determine the contribution a serving of a commercially prepared product makes toward meal pattern requirements and a review of the CN label statement to ensure its accuracy. CN labeled products must be produced in accordance with all requirements set forth in this rule.
2. Products eligible for CN labels are as follows:
(a) Commercially prepared food products that contribute significantly to the meat/meat alternate component of meal pattern requirements of 7 CFR 210.10, 225.20, and 226.20 and are served in the main dish.
(b) Juice drinks and juice drink products that contain a minimum of 50 percent full-strength juice by volume.
3. For the purpose of this appendix the following definitions apply:
(a) “CN label” is a food product label that contains a CN label statement and CN logo as defined in paragraph 3 (b) and (c) below.
(b) The “CN logo” (as shown below) is a distinct border which is used around the edges of a “CN label statement” as defined in paragraph 3(c).
(c) The “CN label statement” includes the following:
(1) The product identification number (assigned by FNS),
(2) The statement of the product’s contribution toward meal pattern requirements of 7 CFR 210.10, § 220.8 or § 220.8a, whichever is applicable, §§ 225.20, and 226.20. The statement shall identify the contribution of a specific portion of a meat/meat alternate product toward the meat/meat alternate, bread/bread alternate, and/or vegetable/fruit component of the meal pattern requirements. For juice drinks and juice drink products the statement shall identify their contribution toward the vegetable/fruit component of the meal pattern requirements,
(3) Statement specifying that the use of the CN logo and CN statement was authorized by FNS, and
(4) The approval date.
For example:
(d) Federal inspection means inspection of food products by FSIS, AMS or USDC.
4. Food processors or manufacturers may use the CN label statement and CN logo as defined in paragraph 3 (b) and (c) under the following terms and conditions:
(a) The CN label must be reviewed and approved at the national level by FNS and appropriate USDA or USDC Federal agency responsible for the inspection of the product.
(b) The CN labeled product must be produced under Federal inspection by USDA or USDC. The Federal inspection must be performed in accordance with an approved partial or total quality control program or standards established by the appropriate Federal inspection service.
(c) The CN label statement must be printed as an integral part of the product label along with the product name, ingredient listing, the inspection shield or mark for the appropriate inspection program, the establishment number where appropriate, and the manufacturer’s or distributor’s name and address. The inspection marking for CN labeled non-meat, non-poultry, and non-seafood products with the exception of juice drinks and juice drink products is established as follows:
(d) Yields for determining the product’s contribution toward meal pattern requirements must be calculated using the Food Buying Guide for Child Nutrition Programs (Program AID Number 1331).
5. In the event a company uses the CN logo and CN label statement inappropriately, the company will be directed to discontinue the use of the logo and statement and the matter will be referred to the appropriate agency for action to be taken against the company.
6. Products that bear a CN label statement as set forth in paragraph 3(c) carry a warranty. This means that if a food service authority participating in the Child Nutrition Programs purchases a CN labeled product and uses it in accordance with the manufacturer’s directions, the school or institution will not have an audit claim filed against it for the CN labeled product for noncompliance with the meal pattern requirements of 7 CFR 210.10, § 220.8 or § 220.8a, whichever is applicable, §§ 225.20, and 226.20. If a State or Federal auditor finds that a product that is CN labeled does not actually meet the meal pattern requirements claimed on the label, the auditor will report this finding to FNS. FNS will prepare a report of the findings and send it to the appropriate divisions of FSIS and AMS of the USDA, National Marine Fisheries Services of the USDC, Food and Drug Administration, or the Department of Justice for action against the company. Any or all of the following courses of action may be taken:
(a) The company’s CN label may be revoked for a specific period of time;
(b) The appropriate agency may pursue a misbranding or mislabeling action against the company producing the product;
(c) The company’s name will be circulated to regional FNS offices;
(d) FNS will require the food service program involved to notify the State agency of the labeling violation.
7. FNS is authorized to issue operational policies, procedures, and instructions for the CN Labeling Program. To apply for a CN label and to obtain additional information on CN label application procedures write to: CN Labels, U.S. Department of Agriculture, Food and Nutrition Service, Nutrition and Technical Services Division, 3101 Park Center Drive, Alexandria, Virginia 22302.
PART 215—SPECIAL MILK PROGRAM FOR CHILDREN
§ 215.1 General purpose and scope.
This part announces the policies and prescribes the general regulations with respect to the Special Milk Program for Children, under the Child Nutrition Act of 1966, as amended, and sets forth the general requirements for participation in the program. The Act reads in pertinent part as follows:
Section 3(a)(1) There is hereby authorized to be appropriated for the fiscal year ending June 30, 1970, and for each succeeding fiscal year such sums as may be necessary to enable the Secretary of Agriculture, under such rules and regulations as he may deem in the public interest, to encourage consumption of fluid milk by children in the United States in (A) nonprofit schools of high school grade and under, except as provided in paragraph (2), which do not participate in a meal service program authorized under this Act or the National School Lunch Act, and (B) nonprofit nursery schools, child care centers, settlement houses, summer camps, and similar nonprofit institutions devoted to the care and training of children, which do not participate in a meal service program authorized under this Act or the National School Lunch Act.
(2) The limitation imposed under paragraph (1)(A) for participation of nonprofit schools in the special milk program shall not apply to split-session kindergarten programs conducted in schools in which children do not have access to the meal service program operating in schools the children attend as authorized under this Act or the National School Lunch Act (42 U.S.C. 1751 et seq.).
(3) For the purposes of this section “United States” means the fifty States, Guam, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, the Trust Territory of the Pacific Islands, and the District of Columbia.
(4) The Secretary shall administer the special milk program provided for by this section to the maximum extent practicable in the same manner as he administered the special milk program provided for by Pub. L. 89-642, as amended, during the fiscal year ending June 30, 1969.
(5) Any school or nonprofit child care institution which does not participate in a meal service program authorized under this Act or the National School Lunch Act shall receive the special milk program upon their request.
(6) Children who qualify for free lunches under guidelines established by the Secretary shall, at the option of the school involved (or of the local educational agency involved in the case of a public school) be eligible for free milk upon their request.
(7) For the fiscal year ending June 30, 1975, and for subsequent school years, the minimum rate of reimbursement for a half-pint of milk served in schools and other eligible institutions shall not be less than 5 cents per half-pint served to eligible children, and such minimum rate of reimbursement shall be adjusted on an annual basis each school year to reflect changes in the Producer Price Index for Fresh Processed Milk published by the Bureau of Labor Statistics of the Department of Labor.
(8) Such adjustment shall be computed to the nearest one-fourth cent.
(9) Notwithstanding any other provision of this section, in no event shall the minimum rate of reimbursement exceed the cost to the school or institution of milk served to children.
§ 215.2 Definitions.
For the purpose of this part, the term:
2 CFR part 200, means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by OMB. The part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F). (NOTE: Pre-Federal Award Requirements and Contents of Federal Awards (subpart C) does not apply to the National School Lunch Program).
Act means the Child Nutrition Act of 1966.
Adults means those persons not included under the definition of children.
Applicable credits shall have the meaning established in 2 CFR part 200 and USDA implementing regulations 2 CFR part 400 and part 415.
Child and Adult Care Food Program means the program authorized by section 17 of the National School Lunch Act, as amended.
Child care institution means any nonprofit nursery school, child care center, settlement house, summer camp, service institution participating in the Summer Food Program for Children pursuant to part 225 of this chapter, institution participating in the Child and Adult Care Food Program pursuant to part 226 of this chapter, or similar nonprofit institution devoted to the care and training of children. The term “child care institution” also includes a nonprofit agency to which such institution has delegated authority for the operation of a milk program in the institution. It does not include any institution falling within the definition of “School” of this section.
Child means
(1) A person under 19 chronological years of age in a Child care institution as defined in this section;
(2) A person under 21 chronological years of age attending a school as defined in paragraphs (3) and (4) of the definition of School in this section;
(3) A student of high school grade or under attending school as defined in paragraphs (1) and (2) of the definition of School in this section; or
(4) A student who is mentally or physically disabled as determined by the State and who is participating in a school program established for the mentally or physically disabled, of high school grade or under as determined by the State educational agency in paragraphs (1) and (2) of the definition of School in this section.
CND means the Child Nutrition Division of the Food and Nutrition Service of the Department.
Contractor means a commercial enterprise, public or nonprofit private organization or individual that enters into a contract with a school food authority.
Cost of milk means the net purchase price paid by the school or child care institution to the milk supplier for milk delivered to the school or child care institution. This shall not include any amount paid to the milk supplier for servicing, rental of or installment purchase of milk service equipment.
Cost reimbursable contract means a contract that provides for payment of incurred costs to the extent prescribed in the contract, with or without a fixed fee.
Department means the U.S. Department of Agriculture.
Disclosure means reveal or use individual children’s program eligibility information obtained through the free milk eligibility process for a purpose other than for the purpose for which the information was obtained. The term refers to access, release, or transfer of personal data about children by means of print, tape, microfilm, microfiche, electronic communication or any other means.
Family means a group of related or nonrelated individuals, who are not residents of an institution or boarding house, but who are living as one economic unit.
Fiscal year means the period of 12 calendar months beginning October 1, 1977, and each October 1 of any calendar year thereafter and ending September 30 of the following calendar year.
Fixed fee means an agreed upon amount that is fixed at the inception of the contract. In a cost reimbursable contract, the fixed fee includes the contractor’s direct and indirect administrative costs and profit allocable to the contract.
FNS means the Food and Nutrition Service of the U.S. Department of Agriculture.
FNSRO means Food and Nutrition Services Regional Offices, of the Food and Nutrition Service of the U.S. Department of Agriculture.
Free milk means milk for which neither the child nor any member of his family pays or is required to work in the school or child-care institution or in its food service.
Local educational agency means a public board of education or other public or private nonprofit authority legally constituted within a State for either administrative control or direction of, or to perform a service function for, public or private nonprofit elementary schools or secondary schools in a city, county, township, school district, or other political subdivision of a State, or for a combination of school districts or counties that is recognized in a State as an administrative agency for its public or private nonprofit elementary schools or secondary schools. The term also includes any other public or private nonprofit institution or agency having administrative control and direction of a public or private nonprofit elementary school or secondary school, including residential child care institutions, Bureau of Indian Affairs schools, and educational service agencies and consortia of those agencies, as well as the State educational agency in a State or territory in which the State educational agency is the sole educational agency for all public or private nonprofit schools.
Medicaid means the State medical assistance program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).
Milk means pasteurized fluid types of unflavored or flavored whole milk, lowfat milk, skim milk, or cultured buttermilk which meet State and local standards for such milk. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, and the Virgin Islands, if a sufficient supply of such types of fluid milk cannot be obtained, milk shall include reconstituted or recombined milk. All milk should contain vitamins A and D at levels specified by the Food and Drug Administration and consistent with State and local standards for such milk.
National School Lunch Program means the program under which general cash-for-food assistance and special cash assistance are made available to schools pursuant to part 210 of this chapter.
Needy children means:
(1) Children who attend schools participating in the Program and who meet the School Food Authority’s eligibility standards for free milk approved by the State agency, or FNSRO where applicable, under part 245 of this chapter; and
(2) Children who attend child-care institutions participating in the Program and who meet the eligibility standards for free milk approved by the State agency, or FNSRO where applicable, under § 215.13a of this part.
Nonpricing program means a program which does not sell milk to children. This shall include any such program in which children are normally provided milk, along with food and other services, in a school or child-care institution financed by a tuition, boarding, camping or other fee, or by private donations or endowments.
Nonprofit means, when applied to schools or institutions eligible for the Program, exempt from income tax under section 501(c)(3) of the Internal Revenue Code of 1986.
Nonprofit milk service means milk service maintained by or on behalf of the school or child-care institution for the benefit of the children, all of the income from which is used solely for the operation or improvement of such milk service.
Nonprofit school food service account means the restricted account in which all of the revenue from the nonprofit milk service maintained for the benefit of children is retained and used only for the operation or improvement of the nonprofit milk service.
OA means the Office of Audit of the United States Department of Agriculture.
OIG means the Office of the Inspector General of the Department.
Pricing program means a program which sells milk to children. This shall include any such program in which maximum use is made of Program reimbursement payments in lowering, or reducing to “zero,” wherever possible, the price per half pint which children would normally pay for milk.
Program means the Special Milk Program for Children.
Reimbursement means financial assistance paid or payable to participating schools and child care institutions for milk served to eligible children.
School means: (1) An educational unit of high school grade or under, recognized as part of the educational system in the State and operating under public or nonprofit private ownership in a single building or complex of buildings; (2) any public or nonprofit private classes of preprimary grade when they are conducted in the aforementioned schools; or (3) any public or nonprofit private residential child care institution, or distinct part of such institution, which operates principally for the care of children, and, if private, is licensed to provide residential child care services under the appropriate licensing code by the State or a subordinate level of government, except for residential summer camps which participate in the Summer Food Service Program for Children, Job Corps centers funded by the Department of Labor, and private foster homes. The term residential child care institutions includes, but is not limited to: Homes for the mentally, emotionally or physically impaired, and unmarried mothers and their infants; group homes; halfway houses; orphanages; temporary shelters for abused children and for runaway children; long-term care facilities for chronically ill children; and juvenile detention centers. A long-term care facility is a hospital, skilled nursing facility, intermediate care facility, or distinct part thereof, which is intended for the care of children confined for 30 days or more.
School Breakfast Program means the program authorized by section 4 of the Child Nutrition Act of 1966, as amended.
School Food Authority means the governing body which is responsible for the administration of one or more schools and which has the legal authority to operate a milk program therein. The term “School Food Authority” also includes a nonprofit agency to which such governing body has delegated authority for the operation of a milk program in a school.
School year means the period of 12 calendar months beginning July 1, 1977, and each July 1 of any calendar year thereafter and ending June 30 of the following calendar year.
Split-session means an educational program operating for approximately one-half of the normal school day.
State means any of the 50 States, District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as applicable, American Samoa and the Commonwealth of the Northern Marianas.
State agency means the State educational agency or any other State agency that has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer the Program.
State Children’s Health Insurance Program (SCHIP) means the State medical assistance program under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.).
Summer Food Service Program for Children means the program authorized by section 13 of the National School Lunch Act, as amended.
USDA implementing regulations include the following: 2 CFR part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; 2 CFR part 415, General Program Administrative Regulations; 2 CFR part 416, General Program Administrative Regulations for Grants and Cooperative Agreements to State and Local Governments; and 2 CFR part 418, New Restrictions on Lobbying.
§ 215.3 Administration.
(a) Within the Department, FNS shall act on behalf of the Department in the administration of the Program. Within FNS, CND shall be responsible for Program administration.
(b) Within the States, to the extent practicable and permissible under State law, responsibility for the administration of the Program in schools and child care institutions shall be in the educational agency of the State: Provided, however, That another State agency, upon request by the Governor or other appropriate State executive or legislative authority, may be approved to administer the Program in schools as described in paragraph (3) of the definition of School in § 215.2 or in child care institutions.
(c) FNSRO shall administer the Program in any School or any Child care institution as defined in § 215.2 wherein the State agency is not permitted by law to disburse Federal funds paid to it under the Program; Provided, however, That FNSRO shall also administer the Program in all other schools and child-care institutions which have been under continuous FNS administration since October 1, 1980 unless the administration of such schools and institutions is assumed by a State agency. References in this part to “FNSRO where applicable” are to FNSRO as the agency administering the Program to schools or child-care institutions within certain States.
(d) Each State agency desiring to take part in the Program shall enter into a written agreement with the Department for the administration of the Program in the State in accordance with the provisions of this part, 7 CFR parts 235, 245, 15, 15a, 15b and, as applicable, 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400, subparts B and D and USDA implementing regulations 2 CFR part 400 and part 415, and FNS Instructions. Such agreement shall cover the operation of the Program during the period specified therein and may be extended at the option of the Department.
(e) Authority to waive statute and regulations. (1) As authorized under section 12(l) of the Richard B. Russell National School Lunch Act, FNS may waive provisions of such Act or the Child Nutrition Act of 1966, as amended, and the provisions of this part with respect to a State agency or eligible service provider. The provisions of this part required by other statutes may not be waived under this authority. FNS may only approve requests for a waiver that are submitted by a State agency and comply with the requirements at section 12(l)(1) and the limitations at section 12(l)(4), including that FNS may not grant a waiver that increases Federal costs.
(2)(i) A State agency may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l)(2) and the provisions of this part.
(ii) A State agency may submit a request to waive specific statutory or regulatory requirements on behalf of eligible service providers that operate in the State. Any waiver where the State concurs must be submitted to the appropriate FNSRO.
(3)(i) An eligible service provider may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l) and the provisions of this part. Any waiver request submitted by an eligible service provider must be submitted to the State agency for review. A State agency must act promptly on such a waiver request and must deny or concur with a request submitted by an eligible service provider.
(ii) If a State agency concurs with a request from an eligible service provider, the State agency must promptly forward to the appropriate FNSRO the request and a rationale, consistent with section 12(l)(2), supporting the request. By forwarding the request to the FNSRO, the State agency affirms:
(A) The request meets all requirements for waiver submissions; and,
(B) The State agency will conduct all monitoring requirements related to regular Program operations and the implementation of the waiver.
(iii) If the State agency denies the request, the State agency must notify the requesting eligible service provider and state the reason for denying the request in writing within 30 calendar days of the State agency’s receipt of the request. The State agency response is final and may not be appealed to FNS.
§ 215.4 Payments of funds to States and FNSROs.
(a) For each fiscal year, the Secretary shall make payments to each State agency at such times as he may determine from the funds appropriated for Program reimbursement. Subject to § 215.11(c)(2), the total of these payments for each State for any fiscal year shall be limited to the amount of reimbursement payable to School Food Authorities and child care institutions under § 215.8 of this part for the total number of half-pints of milk served under the Program to eligible children from October 1 to September 30.
(b) Each State agency shall be responsible for controlling Program reimbursement payments so as to keep within the funds made available to it, and for the timely reporting to FNS of the number of half pints of milk actually served. The Secretary shall increase or decrease the available level of funding by adjusting the State agency’s Letter of Credit when appropriate.
§ 215.5 Method of payment to States.
(a) Funds to be paid to any State shall be made available by means of Letters of Credit issued by FNS in favor of the State agency. The State agency shall:
(1) Obtain funds needed to reimburse School Food Authorities and child-care institutions through presentation by designated State officials of a Payment Voucher on Letter of Credit (Treasury Form GFO 7578) in accordance with procedures prescribed by FNS and approved by the U.S. Treasury Department;
(2) Submit requests for funds only at such times and in such amounts as will permit prompt payment of claims;
(3) Use the funds received from such requests without delay for the purpose for which drawn. Notwithstanding the foregoing provisions, if funds are made available by Congress for the operation of the Program under a continuing resolution, Letters of Credit shall reflect only the amount available for the effective period of the resolution.
(b) [Reserved]
(c) The State agency shall release to FNS any Federal funds made available to it under the Program which are unobligated at the end of each fiscal year. Release of funds by the State agency shall be made as soon as practicable but in no event later than 30 days following demand by FNSRO, and shall be reflected by a related adjustment in the State agency’s Letter of Credit.
§ 215.6 Use of funds.
(a) Federal funds made available under the Program shall be used to encourage the consumption of milk through reimbursement payments to schools and child-care institutions in connection with the purchase and service of milk to children in accordance with the provisions of this part: Provided, however, That, with the approval of FNS, any State agency, or FNSRO where applicable, may reserve for use in carrying out special developmental projects an amount equal to not more than 1 per centum of the Federal funds so made available for any fiscal year.
(b) Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property provided under this part, whether received directly or indirectly from the Department, shall: (1) If such funds, assets, or property are of a value of $100 or more, be fined not more than $25,000 or imprisoned not more than 5 years or both; or (2) if such funds, assets, or property are of a value of less than $100, be fined not more than $1,000 or imprisoned not more than one year or both.
(c) Whoever receives, conceals, or retains to his use or gain funds, assets, or property provided under this part, whether received directly or indirectly from the Department, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud, shall be subject to the same penalties provided in paragraph (b) of this section.
§ 215.7 Requirements for participation.
(a) Any school or nonprofit child care institution shall receive the Special Milk Program upon request provided it does not participate in a meal service program authorized under the Child Nutrition Act of 1966 or the National School Lunch Act; except that schools with such meal service may receive the Special Milk Program upon request only for the children attending split-session kindergarten programs who do not have access to the meal service. Each School Food Authority or child-care institution shall make written application to the State agency, or FNSRO where applicable, for any school or child-care institution in which it desires to operate the Program, if such school or child-care institution did not participate in the Program in the prior fiscal year.
(b) Any School Food Authority or child care institution participating in the Program may elect to serve free milk to children eligible for free meals. Upon application for the Program, each School Food Authority or child care institution:
(1) Shall be required by the State agency, or FNSRO where applicable, to state whether or not it wishes to provide free milk in the schools or institutions participating under its jurisdiction and
(2) If it so wishes to provide free milk, shall also submit for approval a free milk policy statement which, if for a school, shall be in accordance with part 245 of this chapter or, if for a child care institution, shall be in accordance with § 215.13a of this part.
(c) The application shall include information in sufficient detail to enable the State agency, or FNSRO where applicable, to determine whether the School Food Authority or child-care institution is eligible to participate in the Program and extent of the need for Program payments.
(d) Each school food authority or child care institution approved to participate in the program shall enter into a written agreement with the State agency or FNSRO, as applicable, that may be amended as necessary. Nothing in the preceding sentence shall be construed to limit the ability of the State agency to suspend or terminate the agreement in accordance with § 215.15. If a single State agency administers any combination of the Child Nutrition Programs, that State agency shall provide each SFA with a single agreement with respect to the operation of those programs. Such agreement shall provide that the School Food Authority or child-care institution shall, with respect to participating schools and child-care institutions under its jurisdiction:
(1) Operate a nonprofit milk service. However, school food authorities may use facilities, equipment, and personnel supported with funds provided to a school food authority under this part to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.).
(2) If electing to provide free milk (i) serve milk free to all eligible children, at times that milk is made available to nonneedy children under the Program; and (ii) make no discrimination against any needy child because of his inability to pay for the milk.
(3) Comply with the requirements of the Department’s regulations respecting nondiscrimination (7 CFR part 15);
(4) Claim reimbursement only for milk as defined in this part and in accordance with the provisions of § 215.8 and § 215.10;
(5) Submit Claims for Reimbursement in accordance with § 215.10 of this part and procedures established by the State agency or FNSRO where applicable;
(6) Maintain a financial management system as prescribed by the State agency, or FNSRO where applicable;
(7) Upon request, make all records pertaining to its milk program available to the State agency and to FNS or OA for audit and administrative review, at any reasonable time and place. Such records shall be retained for a period of three years after the end of the fiscal year to which they pertain, except that, if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit;
(8) Retain the individual applications for free milk submitted by families for a period of three years after the end of the fiscal year to which they pertain, except that, if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.
(e) State requirements. Nothing contained in this part shall prevent a State agency from imposing additional requirements for participation in the Program which are not inconsistent with the provision of this part.
(f) Program evaluations. Local educational agencies, school food authorities, schools, child care institutions and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department, related to programs authorized under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966.
§ 215.7a Fluid milk and non-dairy milk substitute requirements.
Fluid milk and non-dairy fluid milk substitutes served must meet the requirements as outlined in this section.
(a) Types of fluid milk. All fluid milk served in the Program must be pasteurized fluid milk which meets State and local standards for such milk, have vitamins A and D at levels specified by the Food and Drug Administration, and must be consistent with State and local standards for such milk. Lactose-free and reduced-lactose milk that meet the fat content and flavor specifications for each age group may also be offered. Fluid milk must also meet the following requirements:
(1) Children 1 year old. Children one year of age must be served unflavored whole milk.
(2) Children 2 through 5 years old. Children two through five years old must be served either unflavored low-fat (1 percent) or unflavored fat-free (skim) milk.
(3) Children 6 years old and older. Children 6 years old and older must be served low-fat (1 percent fat or less) or fat-free (skim) milk. Milk may be flavored or unflavored.
(b) Fluid milk substitutes. Non-dairy fluid milk substitutions that provide the nutrients listed in the following table and are fortified in accordance with fortification guidelines issued by the Food and Drug Administration may be provided for non-disabled children who cannot consume fluid milk due to medical or special dietary needs when requested in writing by the child’s parent or guardian. A school or day care center need only offer the non-dairy beverage that it has identified as an allowable fluid milk substitute according to the following table.
| Nutrient | Per cup (8 fl oz) |
|---|---|
| Calcium | 276 mg. |
| Protein | 8 g. |
| Vitamin A | 500 IU. |
| Vitamin D | 100 IU. |
| Magnesium | 24 mg. |
| Phosphorus | 222 mg. |
| Potassium | 349 mg. |
| Riboflavin | 0.44 mg. |
| Vitamin B-12 | 1.1 mcg. |
§ 215.8 Reimbursement payments.
(a) [Reserved]
(b)(1) The rate of reimbursement per half-pint of milk purchased and (i) served in nonpricing programs to all children; (ii) served to all children in pricing programs by institutions and School Food Authorities not electing to provide free milk; and (iii) served to children other than needy children in pricing programs by institutions and School Food Authorities electing to provide free milk shall be the rate announced by the Secretary for the applicable school year. However, in no event shall the reimbursement for each half-pint (236 ml.) of milk served to children exceed the cost of the milk to the school or child care institution.
(2) The rate of reimbursement for milk purchased and served free to needy children in pricing programs by institutions and School Food Authorities electing to provide free milk shall be the average cost of milk, i.e., the total cost of all milk purchased during the claim period, divided by the total number of purchased half-pints.
(c) Schools and child-care institutions having pricing programs shall use the reimbursement payments received to reduce the price of milk to children.
§ 215.9 Effective date for reimbursement.
(a) A State Agency, or FNSRO where applicable, may grant written approval to begin operations under the Program prior to the receipt of the application from the School Food Authority or child-care institution. Such written approval shall be attached to the subsequently filed application, and the agreement executed by the School Food Authority or child-care institution shall be effective from the date upon which the School Food Authority or child-care institution was authorized to begin operations: Provided, however, That such effective date shall not be earlier than the calendar month preceding the calendar month in which the agreement is executed by the State Agency or by the Department.
(b) Reimbursement payments pursuant to § 215.8 shall be made for milk purchased and served to children at any time during the effective period of an agreement between a School Food Authority or child care institution and the State agency or the Department.
§ 215.10 Reimbursement procedures.
(a) To be entitled to reimbursement under this part, each School Food Authority shall submit to the State agency, or FNSRO where applicable, a monthly Claim for Reimbursement.
(b) Claims for Reimbursement shall include data in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Reports of School Program Operations required under § 215.11(c)(2). Unless otherwise approved by FNS, the Claim for Reimbursement for any month shall include only milk served in that month except if the first or last month of Program operations for any year contains 10 operating days or less, such month may be added to the Claim for Reimbursement for the appropriate adjacent month; however, Claims for Reimbursement may not combine operations occurring in two fiscal years. If a single State agency administers any combination of the Child Nutrition Programs, the SFA shall be able to use a common claim form with respect to claims for reimbursement for meals served under those programs. A final Claim for Reimbursement shall be postmarked and/or submitted to the State agency, or FNSRO where applicable, not later than 60 days following the last day of the full month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not postmarked and/or submitted within 60 days shall not be paid with Program funds unless FNS determines that an exception should be granted. The State agency, or FNSRO where applicable, shall promptly take corrective action with respect to any Claim for Reimbursement as determined necessary through its claim review process or otherwise. In taking such corrective action, State agencies may make upward adjustments in Program funds claimed on claims filed within the 60 day deadline if such adjustments are completed within 90 days of the last day of the claim month and are reflected in the final Report of School Program Operations (FNS-10) for the claim month which is required under § 215.11(c)(2). Upward adjustments in Program funds claimed which are not reflected in the final FNS-10 for the claim month shall not be made unless authorized by FNS. Downward adjustments in Program funds claimed shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary.
(c) [Reserved]
(d) In submitting a Claim for Reimbursement, each School Food Authority or child-care institution shall certify that the claim is true and correct; that records are available to support the claim; that the claim is in accordance with the existing agreement; and that payment therefor has not been received.
(e) Milk served to adults is not eligible for reimbursement.
(f) Any School Food Authority or child care institution which operates both a nonpricing and pricing milk program in the same school or child care institution, may elect to claim reimbursement for:
(1) All milk purchased and served to children under the Program at the nonpricing rate prescribed in § 215.8(b) (1), or (2) only milk purchased and served to children in the pricing program at the rates prescribed in § 215.8(b) (1) and (2) for pricing programs.
§ 215.11 Special responsibilities of State agencies.
(a) [Reserved]
(b) Program assistance. Each State agency, or FNSRO where applicable, shall provide Program assistance, as follows:
(1) Consultive, technical, and managerial personnel to administer the Program and monitor performance of schools and child-care institutions and to measure progress toward achieving Program goals.
(2) Visits to participating schools and child-care institutions to ensure compliance with Program regulations and with the Department’s nondiscrimination regulations (part 15 of this title), issued under title VI of the Civil Rights Act of 1964. State agencies shall conduct reviews of schools participating in the Program for compliance with the provisions of this part when such schools are being reviewed under the provisions identified under § 210.18 of this title. Compliance reviews of participating schools shall focus on the reviewed school’s compliance with the required certification, counting, claiming, and milk service procedures. School food authorities may appeal a denial of all or a part of the Claim for Reimbursement or withholding of payment arising from review activity conducted by the State agency under § 210.18 of this title or by FNS under § 210.30(d)(2) of this title. Any such appeal shall be subject to the procedures set forth under § 210.18(q) of this title or § 210.30(d)(3) of this title, as appropriate.
(3) Documentation of such Program assistance shall be maintained on file by the State agency, or FNSRO where applicable.
(c) Records and reports. (1) Each State agency shall maintain Program records as necessary to support the reimbursement payments made to child care institutions or School Food Authorities under §§ 215.8 and 215.10 and the reports submitted to FNS under § 215.11(c)(2). The records may be kept in their original form or on microfilm, and shall be retained for a period of three years after the date of submission of the final Financial Status Report for the fiscal year, except that if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.
(2) Each State agency shall submit to FNS a final Report of School Program Operations (FNS-10) for each month which shall be limited to claims submitted in accordance with § 215.10(b) and which shall be postmarked and/or submitted no later than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not submitted within this time limit unless FNS grants an exception. Upward adjustments to a State agency’s report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary. Adjustments shall be reported to FNS in accordance with procedures established by FNS. Each State agency shall also submit to FNS a quarterly Financial Status Report (FNS-777) on the use of Program funds. Such reports shall be postmarked and/or submitted no later than 30 days after the end of each fiscal year quarter. Obligations shall be reported only for the fiscal year in which they occur. A final Financial Status Report for each fiscal year shall be postmarked and/or submitted to FNS within 120 days after the end of the fiscal year. FNS shall not be responsible for reimbursing unpaid program obligations reported later than 120 days after the close of the fiscal year in which they were incurred.
(d) Compliance. State agencies, or FNSROs where applicable, shall require School Food Authorities and child-care institutions to comply with applicable provisions of this part.
(e) Investigations. Each State Agency shall promptly investigate complaints received or irregularities noted in connection with the operation of the Program and shall take appropriate action to correct any irregularities. State Agencies shall maintain on file evidence of such investigations and actions. The Office of Investigation of the Department (OI) shall make investigations at the request of the State Agency or if CND or FNSRO determines investigations by OI are appropriate.
(f) Program evaluations. States, State agencies, and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department, related to programs authorized under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966.
§ 215.12 Claims against schools or child-care institutions.
(a) State agencies, or FNSROs where applicable, shall disallow any portion of a claim and recover any payment made to a School Food Authority or child-care institution that was not properly payable under this part. State agencies will use their own procedures to disallow claims and recover overpayments already made.
(b) [Reserved]
(c) The State Agency may refer any matter in connection with this section to FNSRO and CND for determination of the action to be taken.
(d) Each State agency shall maintain all records pertaining to action taken under this section. Such records shall be retained for a period of three years after the date of the submission of the final Financial Status Report, except that, if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.
(e) If CND does not concur with the State Agency action in paying a claim or a reclaim, or in failing to collect an overpayment FNSRO shall assert a claim against the State Agency for the amount of such claim, reclaim or overpayment. In all such cases, the State Agency shall have full opportunity to submit to CND evidence or information concerning the action taken. If in the determination of CND, the State Agency’s action was unwarranted, the State Agency shall promptly pay to FNS the amount of the claim, reclaim, or overpayment.
(f) The amounts recovered by the State Agency from schools and child-care institutions may be utilized, first, to make reimbursement payments for milk served during the fiscal year for which the funds were initially available, and second, to repay any State funds expended in the reimbursement of claims under the program and not otherwise repaid. Any amounts recovered which are not so utilized shall be returned to FNS in accordance with the requirements of § 215.5(c).
(g) With respect to schools or child-care institutions in which FNSRO administers the Program, when FNSRO disallows a claim or a portion of a claim, or makes a demand for refund of an alleged overpayment, it shall notify the School Food Authority or child-care institutions of the reasons for such disallowance or demand and the School Food Authority or child-care institutions shall have full opportunity to submit evidence or to file reclaim for any amount disallowed or demanded in the same manner afforded in this section to schools or child-care institutions administered by State Agencies.
(h) The Secretary shall have the authority to determine the amount of, to settle, and to adjust any claims arising under the Program, and to compromise or deny such claim or any part thereof. The Secretary shall also have the authority to waive such claims if the Secretary determines that to do so would serve the purposes of the Program. This provision shall not diminish the authority of the Attorney General of the United States under section 516 of Title 28, U.S. Code, to conduct litigation on behalf of the United States.
§ 215.13 Management evaluations and audits.
(a) Unless otherwise exempt, audits at the State and school food authority/child care institution levels shall be conducted in accordance with 2 CFR part 200, subpart F, and Appendix XI, Compliance Supplement and USDA’s implementing regulations 2 CFR part 400 and part 415.
(b) Each State agency shall provide FNS with full opportunity to conduct management evaluations (including visits to schools and child-care institutions) of any operations of the State agency under the Program and shall provide OIG with full opportunity to conduct audits (including visits to schools and child-care institutions) of all operations of the State agency under the Program. Each State agency shall make available its records, including records of the receipt and expenditure of funds under the Program, upon a reasonable request by FNS or OIG. OIG shall also have the right to make audits of the records and operations of any school or child-care institution.
(c) In conducting management evaluations, reviews or audits for any fiscal year, the State agency, FNS, or OIG may disregard any overpayment if the total overpayment does not exceed $600 or, in the case of State agency claims in State administered Programs, it does not exceed the amount established under State law, regulations or procedure as a minimum amount for which claim will be made for State losses but not to exceed $600. However, no overpayment is to be disregarded where there is substantial evidence of violations of criminal law or civil fraud statutes.
§ 215.13a Determining eligibility for free milk in child-care institutions.
(a) General. Child care institutions which operate pricing programs may elect to make free milk available, as set forth in § 215.7(d)(2), to children who meet the approved eligibility criteria. Such child care institutions shall determine the children who are eligible for free milk and assure that there is no physical segregation of, or other discrimination against, or overt identification of, children unable to pay the full price for milk.
(b) Action by State agencies and FNSROs. Each State agency, or FNSRO where applicable, upon application for the program by a child care institution operating a pricing program, and annually thereafter, shall require the institution to state whether or not it wishes to serve free milk to eligible children at times that milk is provided under the Program. It shall annually require each child care institution electing to provide free milk to submit a free milk policy statement and shall provide such institutions with a prototype free milk policy statement and a copy of the State’s family-size income standards for determining eligibility for free meals and milk under the National School Lunch and School Breakfast Programs to assist the institutions in meeting its responsibilities.
(c) Action by institutions. Each child care institution which operates a pricing program shall inform the State agency, or FNSRO where applicable, at the time it applies for Program participation and at least annually thereafter, whether or not it wishes to provide free milk. Institutions electing to provide free milk shall annually submit a written free milk policy statement for determining free milk eligibility of children under their jurisdiction, which shall contain the items specified in paragraph (d) of this section. Such institutions shall not be approved for Program participation of their agreements renewed unless the free milk policy has been reviewed and approved. Pending approval or a revision of a policy statement, the existing policy shall remain in effect.
(d) Policy statement. A free milk policy statement as required in paragraph (c) of this section shall contain the following:
(1) The specific criteria to be used in determining eligibility for free milk. These criteria shall give consideration to economic need as reflected by family size and income. The criteria used by the child-care institution may not result in the eligibility of children from families whose incomes exceed the State’s family-size income standards for determining eligibility for free meals under the National School Lunch and School Breakfast Programs.
(2) The method by which the child-care institution will collect information from families in order to determine a child’s eligibility for free milk.
(3) The method by which the child-care institution will collect milk payments so as to prevent the overt identification of children receiving free milk.
(4) A hearing procedure substantially like that outlined in part 245 of this chapter.
(5) An assurance that there will be no discrimination against free milk recipients and no discrimination against any child on the basis of race, color, or national origin.
(e) Public announcement of eligibility criteria. Each child care institution which elects to make free milk available under the Program shall annually make a public announcement of the availability of free milk to children who meet the approved eligibility criteria to the information media serving the area from which its attendance is drawn. The public announcement must also state that milk is available to all children in attendance without regard to race, color, or national origin.
(f) Statement requirements. The free milk application provided to households must include a statement informing households of how information provided on the application will be used. Each application must include substantially the following statement: “The Richard B. Russell National School Lunch Act requires the information on this application. You do not have to give the information, but if you do not, we cannot approve your child for free milk. You must include the last four digits of the social security number of the adult household member who signs the application. The last four digits of the social security number are not required when you list a Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF) Program or Food Distribution Program on Indian Reservations (FDPIR) case number for your child or other FDPIR identifier or when you indicate that the adult household member signing the application does not have a social security number. We will use your information to determine if your child is eligible for free milk, and for administration and enforcement of the Program.” When the State agency or child care institution, as appropriate, plans to use or disclose children’s eligibility information for non-program purposes, additional information, as specified in paragraph (i) of this section must be added to this statement. State agencies and child care institutions are responsible for drafting the appropriate statement.
(g) Disclosure of children’s free milk eligibility information to certain programs and individuals without parental consent. The State agency or child care institution, as appropriate, may disclose aggregate information about children eligible for free milk to any party without parental notification and consent when children cannot be identified through release of the aggregate data or by means of deduction. Additionally, the State agency or child care institution may disclose information that identifies children eligible for free milk to the programs and the individuals specified in this paragraph (g) without parent/guardian consent. The State agency or child care institution that makes the free milk eligibility determination is responsible for deciding whether to disclose program eligibility information.
(1) Persons authorized to receive eligibility information. Only persons directly connected with the administration or enforcement of a program or activity listed in paragraphs (g)(2) or (g)(3) of this section may have access to children’s free milk eligibility information, without parental consent. Persons considered directly connected with administration or enforcement of a program or activity listed in paragraphs (g)(2) or (g)(3) of this section are Federal, State, or local program operators responsible for the ongoing operation of the program or activity or persons responsible for program compliance. Program operators may include persons responsible for carrying out program requirements and monitoring, reviewing, auditing, or investigating the program. Program operators may include contractors, to the extent those persons have a need to know the information for program administration or enforcement. Contractors may include evaluators, auditors, and others with whom Federal or State agencies and program operators contract with to assist in the administration or enforcement of their program on their behalf.
(2) Disclosure of children’s names and free milk eligibility status. The State agency or child care institution, as appropriate, may disclose, without parental consent, only children’s names and eligibility status (whether they are eligible for free milk) to persons directly connected with the administration or enforcement of:
(i) A Federal education program;
(ii) A State health program or State education program administered by the State or local education agency;
(iii) A Federal, State, or local means-tested nutrition program with eligibility standards comparable to the National School Lunch Program (i.e., food assistance programs for households with incomes at or below 185 percent of the Federal poverty level); or
(iv) A third party contractor assisting in verification of eligibility efforts by contacting households who fail to respond to requests for verification of their eligibility.
(3) Disclosure of all eligibility information. In addition to children’s names and eligibility status, the State agency or child care institution, as appropriate, may disclose, without parental consent, all eligibility information obtained through the free milk eligibility process (including all information on the application or obtained through direct certification) to:
(i) Persons directly connected with the administration or enforcement of programs authorized under the Richard B. Russell National School Lunch Act or the Child Nutrition Act of 1966. This means that all eligibility information obtained for the Special Milk Program may be disclosed to persons directly connected with administering or enforcing regulations under the National School Lunch Program, School Breakfast Program, Child and Adult Care Food Program, Summer Food Service Program and the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) (Parts 210, 220, 226, 225, and 246, respectively, of this chapter);
(ii) The Comptroller General of the United States for purposes of audit and examination; and
(iii) Federal, State, and local law enforcement officials for the purpose of investigating any alleged violation of the programs listed in paragraphs (g)(2) and (g)(3) of this section.
(4) Use of free milk eligibility information by programs other than Medicaid or the State Children’s Health Insurance Program (SCHIP). State agencies and child care institutions may use children’s free milk eligibility information for administering or enforcing the Special Milk Program. Additionally, any other Federal, State, or local agency charged with administering or enforcing the Special Milk Program may use the information for that purpose. Individuals and programs to which children’s free milk eligibility information has been disclosed under this section may use the information only in the administration or enforcement of the receiving program. No further disclosure of the information may be made.
(h) Disclosure of children’s free milk eligibility information to Medicaid and/or SCHIP, unless parents decline. Children’s free milk eligibility information only may be disclosed to Medicaid or SCHIP when both the State agency and the child care institution so elect, the parent/guardian does not decline to have their eligibility information disclosed and the other provisions described in paragraph (h)(1) of this section are met. The State agency or child care institution, as appropriate, may disclose children’s names, eligibility status (whether they are eligible for free milk), and any other eligibility information obtained through the free milk application or obtained through direct certification to persons directly connected with the administration of Medicaid or SCHIP. Persons directly connected to the administration of Medicaid and SCHIP are State employees and persons authorized under Federal and State Medicaid and SCHIP requirements to carry out initial processing of Medicaid or SCHIP applications or to make eligibility determinations for Medicaid or SCHIP.
(1) The State agency must ensure that:
(i) The child care institution and health insurance program officials have a written agreement that requires the health insurance program agency to use the eligibility information to seek to enroll children in Medicaid and SCHIP; and
(ii) Parents/guardians are notified that their eligibility information may be disclosed to Medicaid or SCHIP and given an opportunity to decline to have their children’s eligibility information disclosed, prior to any disclosure.
(2) Use of children’s free milk eligibility information by Medicaid/SCHIP. Medicaid and SCHIP agencies and health insurance program operators receiving children’s free milk eligibility information must use the information to identify eligible children and enroll them in Medicaid or SCHIP. The Medicaid and SCHIP enrollment process may include targeting and identifying children from low-income households who are potentially eligible for Medicaid or SCHIP for the purpose of seeking to enroll them in Medicaid or SCHIP. No further disclosure of the information may be made. Medicaid and SCHIP agencies and health insurance program operators also may verify children’s eligibility in a program under the Child Nutrition Act of 1966 or the Richard B. Russell National School Lunch Act.
(i) Notifying households of potential uses and disclosures of children’s free milk eligibility information. Households must be informed that the information they provide on the free milk application will be used to determine eligibility for free milk and that their eligibility information may be disclosed to other programs.
(1) For disclosures to programs, other than Medicaid or SCHIP, that are permitted access to children’s eligibility information without parent/guardian consent, the State agency or child care institution, as appropriate, must notify parents/guardians at the time of application that their children’s free milk eligibility information may be disclosed. The State agency or child care institution, as appropriate, must add substantially the following statement to the statement required under paragraph (f) of this section, “We may share your eligibility information with education, health, and nutrition programs to help them evaluate, fund, or determine benefits for their programs; auditors for program reviews; and law enforcement officials to help them look into violations of program rules.” For children determined eligible for free milk through direct certification, the notice of potential disclosure may be included in the document informing parents/guardians of their children’s eligibility for free milk through direct certification process.
(2) For disclosure to Medicaid or SCHIP, the State agency or child care institution, as appropriate, must notify parents/guardians that their children’s free milk eligibility information will be disclosed to Medicaid and/or SCHIP unless the parent/guardian elects not to have their information disclosed and notifies the State agency or child care institution, as appropriate, by a date specified by the State agency or child care institution, as appropriate. Only the parent or guardian who is a member of the household or family for purposes of the free milk application may decline the disclosure of eligibility information to Medicaid or SCHIP. The notification must inform parents/guardians that they are not required to consent to the disclosure, that the information, if disclosed, will be used to identify eligible children and seek to enroll them in Medicaid or SCHIP, and that their decision will not affect their children’s eligibility for free milk. The notification may be included in the letter/notice to parents/guardians that accompanies the free milk application, on the application itself or in a separate notice provided to parents/guardians. The notice must give parents/guardians adequate time to respond if they do not want their information disclosed. The State agency or child care institution, as appropriate, must add substantially the following statement to the statement required under paragraph (f) of this section, “We may share your information with Medicaid or the State Children’s Health Insurance Program, unless you tell us not to. The information, if disclosed, will be used to identify eligible children and seek to enroll them in Medicaid or SCHIP.” For children determined eligible for free milk through direct certification, the notice of potential disclosure and opportunity to decline the disclosure may be included in the document informing parents/guardians of their children’s eligibility for free milk through direct certification.
(j) Other disclosures. State agencies and child care institutions that plan to use or disclose identifying information about children eligible for free milk to programs or individuals not specified in this section must obtain written consent from children’s parents or guardians prior to the use or disclosure.
(1) The consent must identify the information that will be shared and how the information will be used.
(2) There must be a statement informing parents and guardians that failing to sign the consent will not affect the child’s eligibility for free milk and that the individuals or programs receiving the information will not share the information with any other entity or program.
(3) Parents/guardians must be permitted to limit the consent only to those programs with which they wish to share information.
(4) The consent statement must be signed and dated by the child’s parent or guardian who is a member of the household for purposes of the free milk application.
(k) Agreements with programs/individuals receiving children’s free milk eligibility information. Agreements or Memoranda of Understanding (MOU) are recommended or required as follows:
(1) The State agency or child care institution, as appropriate, should have a written agreement or MOU with programs or individuals receiving eligibility information, prior to disclosing children’s free milk eligibility information. The agreement or MOU should include information similar to that required for disclosures to Medicaid and SCHIP specified in paragraph (k)(2) of this section.
(2) For disclosures to Medicaid or SCHIP, the State agency or child care institution, as appropriate, must have a written agreement with the State or local agency or agencies administering Medicaid or SCHIP prior to disclosing children’s free milk eligibility information to those agencies. At a minimum, the agreement must:
(i) Identify the health insurance program or health agency receiving children’s eligibility information;
(ii) Describe the information that will be disclosed;
(iii) Require that the Medicaid or SCHIP agency use the information obtained and specify that the information must be used to seek to enroll children in Medicaid or SCHIP;
(iv) Require that the Medicaid or SCHIP agency describe how they will use the information obtained;
(v) Describe how the information will be protected from unauthorized uses and disclosures;
(vi) Describe the penalties for unauthorized disclosure; and
(vii) Be signed by both the Medicaid or SCHIP program or agency and the State agency or child care institution, as appropriate.
(l) Penalties for unauthorized disclosure or misuse of children’s free milk eligibility information. In accordance with section 9(b)(6)(C) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1758(b)(6)(C)), any individual who publishes, divulges, discloses or makes known in any manner, or to any extent not authorized by statute or this section, any information obtained under this section will be fined not more than $1,000 or imprisoned for up to 1 year, or both.
§ 215.14 Nondiscrimination.
The Department’s regulations on nondiscrimination in federally assisted programs are set forth in part 15 of this title. The Department’s agreements with State agencies, the State agencies’ agreements with School Food Authorities and child-care institutions and the FNSRO agreements with School Food Authorities administering nonprofit private schools and with child-care institutions shall contain the assurances required by such regulations. When different types of milk are served to children, (a) a uniform price for each type of milk served shall be charged to all non-needy children in the school or child-care institution who purchase milk, and (b) needy children shall be given the opportunity to select any type of milk offered.
§ 215.14a Procurement standards.
(a) General. State agencies and school food authorities shall comply with the requirements of this part and 2 CFR part 200 and USDA implementing regulations 2 CFR part 400 and part 415, as applicable concerning the procurement of all goods and services with nonprofit school food service account funds.
(b) Contractual responsibilities. The standards contained in this part and 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 200 subparts B and D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable, do not relieve the State agency or School Food Authority of any contractual responsibilities under its contract. The State agency or School Food Authority is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the Program. This includes but is not limited to: Source evaluation, protests, disputes, claims, or other matters of a contractual nature. Matters concerning violation of law are to be referred to the local, State or Federal authority that has proper jurisdiction.
(c) Procedures. The State agency may elect to follow either the State laws, policies and procedures as authorized by 2 CFR 200.317, or the procurement standards for other governmental grantees and all governmental subgrantees in accordance with 2 CFR 200.318 through 2 CFR 200.326. Regardless of the option selected, States must ensure that all contracts include any clauses required by Federal statutes and executive orders and that the requirements of 2 CFR 200.236 and Appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Award are followed. The school food authority or child care institution may use its own procurement procedures which reflect applicable State or local laws and regulations, provided that procurements made with nonprofit school food service account funds adhere to the standards set forth in this part and in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 as applicable. School food authority procedures must include a written code of standards of conduct meeting the minimum standards of 2 CFR 200.318, as applicable.
(1) Pre-issuance review requirement. The State agency may impose a pre-issuance review requirement on a school food authority’s proposed procurement. The school food authority must make available, upon request of the State agency, its procurement documents, including but not limited to solicitation documents, specifications, evaluation criteria, procurement procedures, proposed contracts and contract terms. School food authorities shall comply with State agency requests for changes to procurement procedures and solicitation and contract documents to ensure that, to the State agency’s satisfaction, such procedures and documents reflect applicable procurement and contract requirements and the requirements of this part.
(2) Prototype solicitation documents and contracts. The school food authority must obtain the State agency’s prior written approval for any change made to prototype solicitation or contract documents before issuing the revised solicitation documents or execution of the revised contract.
(3) Prohibited expenditures. No expenditure may be made from the nonprofit school food service account for any cost resulting from a procurement failing to meet the requirements of this part.
(d) Cost reimbursable contracts—(1) Required provisions. The school food authority must include the following provisions in all cost reimbursable contracts, including contracts with cost reimbursable provisions, and in solicitation documents prepared to obtain offers for such contracts:
(i) Allowable costs will be paid from the nonprofit school food service account to the contractor net of all discounts, rebates and other applicable credits accruing to or received by the contractor or any assignee under the contract, to the extent those credits are allocable to the allowable portion of the costs billed to the school food authority;
(ii)(A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account), or
(B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in a manner suitable for contract cost determination and verification;
(iii) The contractor’s determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars;
(iv) The contractor must identify the amount of each discount, rebate and other applicable credit on bills and invoices presented to the school food authority for payment and identify the amount as a discount, rebate, or in the case of other applicable credits, the nature of the credit. If approved by the State agency, the school food authority may permit the contractor to report this information on a less frequent basis than monthly, but no less frequently than annually;
(v) The contractor must identify the method by which it will report discounts, rebates and other applicable credits allocable to the contract that are not reported prior to conclusion of the contract; and
(vi) The contractor must maintain documentation of costs and discounts, rebates and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department.
(2) Prohibited expenditures. No expenditure may be made from the nonprofit school food service account for any cost resulting from a cost reimbursable contract that fails to include the requirements of this section, nor may any expenditure be made from the nonprofit school food service account that permits or results in the contractor receiving payments in excess of the contractor’s actual, net allowable costs.
(e) Geographic preference. A school food authority participating in the Program may apply a geographic preference when procuring milk. When utilizing the geographic preference to procure milk, the school food authority making the purchase has the discretion to determine the local area to which the geographic preference option will be applied.
§ 215.15 Withholding payments and establishing fines.
(a) Withholding payments. In accordance with Departmental regulations 2 CFR 200.338 through 200.342, the State agency must withhold Program payments, in whole or in part, from any school food authority which has failed to comply with the provisions of this part. Program payments must be withheld until the school food authority takes corrective action satisfactory to the State agency, or gives evidence that such corrective actions will be taken, or until the State agency terminates the grant in accordance with § 215.16. Subsequent to the State agency’s acceptance of the corrective actions, payments will be released for any milk served in accordance with the provisions of this part during the period the payments were withheld.
(b) Fines. (1) The State agency may establish a fine against any school food authority when it has determined that the school food authority or a school under its agreement has:
(i) Failed to correct severe mismanagement of the Program;
(ii) Disregarded a Program requirement of which the school food authority or school had been informed; or
(iii) Failed to correct repeated violations of Program requirements.
(2) FNS may direct the State agency to establish a fine against any school food authority when it has determined that the school food authority or school meets the criteria set forth under paragraph (b)(1) of this section.
(3) Funds used to pay a fine established under this paragraph must be derived from non-Federal sources. The State agency must calculate the fine based on the amount of Program reimbursement earned by the school food authority or school for the most recent fiscal year for which full year data is available, provided that the fine does not exceed the equivalent of:
(i) For the first fine, 1 percent of the amount of reimbursement for milk earned for the fiscal year;
(ii) For the second fine, 5 percent of the amount of reimbursement for milk earned for the fiscal year; and
(iii) For the third or subsequent fine, 10 percent of the amount of reimbursement for milk earned for the fiscal year.
(4) The State agency must inform FNS at least 30 days prior to establishing a fine under this paragraph. The State agency must send the school food authority written notification of the fine established under this paragraph and provide a copy of the notification to FNS. The notification must:
(i) Specify the violations or actions which constitute the basis for the fine and indicate the amount of the fine;
(ii) Inform the school food authority that it may appeal the fine and advise the school food authority of the appeal procedures established under § 210.18(p) of this chapter;
(iii) Indicate the effective date and payment procedures should the school food authority not exercise its right to appeal within the specified timeframe.
(5) Any school food authority subject to a fine under paragraph (b)(1) of this section may appeal the State agency’s determination. In appealing a fine, the school food authority must submit to the State agency any pertinent information, explanation, or evidence addressing the Program violations identified by the State agency. Any school food authority seeking to appeal the State agency determination must follow State agency appeal procedures.
(6) The decision of the State agency review official is final and not subject to further administrative or judicial review. Failure to pay a fine established under this paragraph may be grounds for suspension or termination.
(7) Money received by the State agency as a result of a fine established under this paragraph against a school food authority and any interest charged in the collection of these fines must be remitted to FNS, and then remitted to the United States Treasury.
§ 215.16 Suspension, termination and grant closeout procedures.
Whenever it is determined that a State agency has materially failed to comply with the provisions of this part, or with FNS guidelines and instructions, FNS may suspend or terminate the Program in whole, or in part, or take any other action as may be available and appropriate. A State agency may also terminate the Program by mutual agreement with FNS. FNS and the State agency shall comply with the provisions of 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR subparts B and D and USDA implementing regulations 2 CFR part 400 and part 415, concerning grant suspension, termination and closeout procedures. Furthermore, the State agency, or FNSRO where applicable, shall apply these provisions to suspension or termination of the Program in School Food Authorities.
§ 215.17 Program information.
Persons seeking information about this Program should contact their State administering agency or the appropriate FNSRO. The FNS website has contact information for State agencies at https://www.fns.usda.gov/contacts and FNSROs at https://www.fns.usda.gov/fns-regional-offices.
§ 215.18 Information collection/recordkeeping—OMB assigned control numbers.
| 7 CFR section where requirements are described | Current OMB control No. |
|---|---|
| 215.3(d) | 0584-0067 |
| 215.5(a) | 0584-0005 |
| 215.7 | 0584-0005 |
| 215.10(a), (b), (d) | 0584-0005 |
| 215.11(c)(1) | 0584-0005 |
| 215.11(c)(2) | 0584-0594 |
| 215.12(d) | 0584-0005 |
| 215.13a | 0584-0026 |
| 215.14a | 0584-0005 |
PART 220—SCHOOL BREAKFAST PROGRAM
§ 220.1 General purpose and scope.
This part announces the policies and prescribes the regulations necessary to carry out the provisions of section 4 of the Child Nutrition Act of 1966, as amended, which authorizes payments to the States to assist them to initiate, maintain, or expand nonprofit breakfast programs in schools.
§ 220.2 Definitions.
For the purpose of this part the term:
2 CFR part 200, means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by OMB. The part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F). (NOTE: Pre-Federal Award Requirements and Contents of Federal Awards (subpart C) does not apply to the National School Lunch Program).
Act means the Child Nutrition Act of 1966, as amended.
Applicable credits shall have the meaning established in 2 CFR part 200 and USDA implementing regulations 2 CFR part 400 and part 415.
Breakfast means a meal which meets the meal requirements set out in §§ 220.8 and 220.23, and which is served to a child in the morning hours. The meal shall be served at or close to the beginning of the child’s day at school.
Child means:
(1) A student of high school grade or under as determined by the State educational agency, who is enrolled in an educational unit of high school grade or under as described in paragraphs (1) and (2) of the definition of “School”, including students who are mentally or physically disabled as defined by the State and who are participating in a school program established for the mentally or physically disabled; or
(2) A person under 21 chronological years of age who is enrolled in an institution or center as described in paragraph (3) of the definition of School in this section.
CND means the Child Nutrition Division of the Food and Nutrition Service of the Department.
Contractor means a commercial enterprise, public or nonprofit private organization or individual that enters into a contract with a school food authority.
Cost reimbursable contract means a contract that provides for payment of incurred costs to the extent prescribed in the contract, with or without a fixed fee.
Department means the U.S. Department of Agriculture.
Distributing agency means a State, Federal, or private agency which enters into an agreement with the Department for the distribution of commodities pursuant to part 250 of this chapter.
Fiscal year means the period of 15 calendar months beginning July 1, 1976, and ending September 30, 1977; and the period of 12 calendar months beginning October 1, 1977, and each October 1 of any calendar year thereafter and ending September 30 of the following calendar year.
Fixed fee means an agreed upon amount that is fixed at the inception of the contract. In a cost reimbursable contract, the fixed fee includes the contractor’s direct and indirect administrative costs and profit allocable to the contract.
Fixed-price contract means a contract that charges a fixed cost per meal, or a fixed cost for a certain time period. Fixed-price contracts may include an economic price adjustment tied to a standard index.
FNS means the Food and Nutrition Service of the Department.
FNSRO means the appropriate Food and Nutrition Service Regional Office of the Food and Nutrition Service of the Department.
Free breakfast means a breakfast for which neither the child nor any member of his family pays or is required to work in the school or in the school’s food service.
Infant cereal means any iron fortified dry cereal especially formulated and generally recognized as cereal for infants that is routinely mixed with breast milk or iron-fortified infant formula prior to consumption.
Infant formula means any iron-fortified infant formula intended for dietary use solely as a food for normal healthy infants excluding those formulas specifically formulated for infants with inborn errors of metabolism or digestive or absorptive problems. Infant formula, as served, must be in liquid state at recommended dilution.
Local educational agency means a public board of education or other public or private nonprofit authority legally constituted within a State for either administrative control or direction of, or to perform a service function for, public or private nonprofit elementary schools or secondary schools in a city, county, township, school district, or other political subdivision of a State, or for a combination of school districts or counties that is recognized in a State as an administrative agency for its public or private nonprofit elementary schools or secondary schools. The term also includes any other public or private nonprofit institution or agency having administrative control and direction of a public or private nonprofit elementary school or secondary school, including residential child care institutions, Bureau of Indian Affairs schools, and educational service agencies and consortia of those agencies, as well as the State educational agency in a State or territory in which the State educational agency is the sole educational agency for all public or private nonprofit schools.
Menu item means, under Nutrient Standard Menu Planning or Assisted Nutrient Standard Menu Planning, any single food or combination of foods. All menu items or foods offered as part of the reimbursable meal may be considered as contributing towards meeting the nutrition standards provided in § 220.23, except for those foods that are considered as foods of minimal nutritional value as provided for in the definition of Foods of minimal nutritional value in this section which are not offered as part of a menu item in a reimbursable meal. For the purposes of a reimbursable breakfast, a minimum of three menu items must be offered, one of which shall be fluid milk served as a beverage or on cereal or both; under offer versus serve, a student may decline only one menu item.
National School Lunch Program means the Program authorized by the National School Lunch Act.
Net cash resources means all monies as determined in accordance with the State agency’s established accounting system, that are available to or have accrued to a School Food Authority’s nonprofit school food service at any given time, less cash payable. Such monies may include but are not limited to, cash on hand, cash receivable, earnings or investments, cash on deposit and the value of stocks, bonds or other negotiable securities.
Nonprofit means, when applied to schools or institutions eligible for the Program, exempt from income tax under section 501(c)(3) of the Internal Revenue Code of 1986.
Nonprofit school food service means all food service operations conducted by the School Food Authority principally for the benefit of school children, all of the revenue from which is used solely for the operation or improvement of such food service.
Nonprofit school food service account means the restricted account in which all of the revenue from all food service operations conducted by the school food authority principally for the benefit of school children is retained and used only for the operation or improvement of the nonprofit school food service.
Nonprofit when applied to schools or institutions eligible for the Program means exempt from income tax under section 501(c)(3) of the Internal Revenue Code of 1954, as amended; or in the Commonwealth of Puerto Rico, certified by the Governor.
Nutrient Standard Menu Planning/Assisted Nutrient Standard Menu Planning means ways to develop breakfast menus based on the analysis for nutrients in the menu items and foods offered over a school week to determine if specific levels for a set of key nutrients and calories were met in accordance with § 220.23(e)(5). However, for the purposes of Assisted Nutrient Standard Menu Planning, breakfast menu planning and analysis are completed by other entities and must incorporate the production quantities needed to accommodate the specific service requirements of a particular school or school food authority in accordance with § 220.23(f).
OA means the Office of Audit of the Department.
OI means the Office of Investigation of the Department.
OIG means the Office of the Inspector General of the Department.
Program means the School Breakfast Program.
Reduced price breakfast means a breakfast which meets all of the following criteria: (1) The price shall be less than the full price of the breakfast, (2) the price shall be 30 cents or lower, and (3) neither the child nor any member of his family shall be required to supply an equivalent value in work for the school or the school’s food service.
Reimbursement means financial assistance paid or payable to participating schools for breakfasts meeting the requirements of § 220.8 served to eligible children at rates assigned by the State agency, or FNSRO where applicable. The term “reimbursement” also includes financial assistance made available through advances to School Food Authorities.
Revenue when applied to nonprofit school food service means all monies received by or accruing to the nonprofit school food service in accordance with the State agency’s established accounting system including, but not limited to, children’s payments, earnings on investments, other local revenues, State revenues, and Federal cash reimbursements.
School means: (1) An educational unit of high school grade or under, recognized as part of the educational system in the State and operating under public or nonprofit private ownership in a single building or complex of buildings; (2) any public or nonprofit private classes of preprimary grade when they are conducted in the aforementioned schools; or (3) any public or nonprofit private residential child care institution, or distinct part of such institution, which operates principally for the care of children, and, if private, is licensed to provide residential child care services under the appropriate licensing code by the State or a subordinate level of government, except for residential summer camps which participate in the Summer Food Service Program for Children, Job Corps centers funded by the Department of Labor, and private foster homes. The term “residential child care institutions” includes, but is not limited to: Homes for the mentally, emotionally or physically impaired, and unmarried mothers and their infants; group homes; halfway houses; orphanages; temporary shelters for abused children and for runaway children; long-term care facilities for chronically ill children; and juvenile detention centers. A long-term care facility is a hospital, skilled nursing facility, intermediate care facility, or distinct part thereof, which is entended for the care of children confined for 30 days or more.
School Breakfast Program means the program authorized by section 4 of the Child Nutrition Act of 1966.
School in severe need means a school determined to be eligible for rates of reimbursement in excess of the prescribed National Average Payment Factors, based upon the criteria set forth in § 220.9(d).
School Food Authority means the governing body which is responsible for the administration of one or more schools and which has legal authority to operate a breakfast program therein.
School week means the period of time used to determine compliance with the meal requirements in § 220.8 and § 220.23. The period must be a normal school week of five consecutive days; however, to accommodate shortened weeks resulting from holidays and other scheduling needs, the period must be a minimum of three consecutive days and a maximum of seven consecutive days. Weeks in which school breakfasts are offered less than three times must be combined with either the previous or the coming week.
Seamless Summer Option means the meal service alternative authorized by section 13(a)(8) of the Richard B. Russell National School Lunch Act, 42 U.S.C. 1761(a)(8), under which public or nonprofit school food authorities participating in the National School Lunch Program or School Breakfast Program offer meals at no cost to children during the traditional summer vacation periods and, for year-round schools, vacation periods longer than 10 school days.
Secretary means the Secretary of Agriculture.
State means any of the 50 States, District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as applicable, American Samoa and the Commonwealth of the Northern Marianas.
State agency means: (1) The State educational agency or (2) such other agency of the State as has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer the Program in schools as described in paragraph (3) of the definition of School in this section.
State educational agency means, as the State legislature may determine: (1) The chief State school officer (such as the State Superintendent of Public Instruction, Commissioner of Education, or similar officer), or (2) a board of education controlling the State department of education.
Tofu means a soybean-derived food, made by a process in which soybeans are soaked, ground, mixed with water, heated, filtered, coagulated, and formed into cakes. Basic ingredients are whole soybeans, one or more food-grade coagulants (typically a salt or an acid), and water. Tofu products must conform to FNS guidance to count toward the meats/meat alternates component.
USDA implementing regulations include the following: 2 CFR part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; 2 CFR part 415, General Program Administrative Regulations; 2 CFR part 416, General Program Administrative Regulations for Grants and Cooperative Agreements to State and Local Governments; and 2 CFR part 418, New Restrictions on Lobbying.
Whole grains means grains that consist of the intact, ground, cracked, or flaked grain seed whose principal anatomical components—the starchy endosperm, germ and bran—are present in the same relative proportions as they exist in the intact grain seed. Whole grain-rich products must conform to FNS guidance to count toward the grains component.
Yogurt means commercially prepared coagulated milk products obtained by the fermentation of specific bacteria, that meet milk fat or milk solid requirements and to which flavoring foods or ingredients may be added. These products are covered by the Food and Drug Administration’s Definition and Standard of Identity for yogurt, lowfat yogurt, and nonfat yogurt, 21 CFR 131.200, 21 CFR 131.203, and 21 CFR 131.206, respectively.
§ 220.3 Administration.
(a) Within the Department, FNS shall act on behalf of the Department in the administration of the Program covered by this part. Within FNS, CND shall be responsible for administration of the Program.
(b) Within the States, responsibility for the administration of the Program in schools as described in paragraphs (1) and (2) of the definition of School in § 220.2 shall be in the State educational agency, except that FNSRO shall administer the Program with respect to nonprofit private schools and adding in their place the words “as described in paragraph (1) of the definition of School in § 220.2 in any State wherein the State educational agency is not permitted by law to disburse Federal funds paid to it under the Program; Provided, however, That FNSRO shall also administer the Program in all other nonprofit private schools which have been under continuous FNS administration since October 1, 1980, unless the administration of such private schools is assumed by a State agency.
(c) Within the States, responsibility for the administration of the Program in schools, as described in paragraph (3) of the definition of School in § 220.2, shall be in the State educational agency, or if the State educational agency cannot administer the Program in such schools, such other agency of the State as has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer the Program in such schools: Provided, however, That FNSRO shall administer the Program in such schools if the State agency is not permitted by law to disburse Federal funds paid to it under the Program to such schools; and Provided, further, That FNSRO shall also administer the Program in all other such schools which have been under continuous FNS administration since October 1, 1980, unless the administration of such schools is assumed by a State agency.
(d) References in this part to “FNSRO where applicable” are to FNSRO as the agency administering the Program.
(e) Each State agency desiring to take part in any of the programs shall enter into a written agreement with the Department for the administration of the Program in the State in accordance with the provisions of this part, 7 CFR parts 235, 245, 15, 15a, 15b and, as applicable, 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 subparts B and D and USDA implementing regulations 2 CFR part 400 and part 415 and FNS Instructions. Such agreement shall cover the operation of the Program during the period specified therein and may be extended at the option of the Department.
(f) Authority to waive statute and regulations. (1) As authorized under section 12(l) of the Richard B. Russell National School Lunch Act, FNS may waive provisions of such Act or the Child Nutrition Act of 1966, as amended, and the provisions of this part with respect to a State agency or eligible service provider. The provisions of this part required by other statutes may not be waived under this authority. FNS may only approve requests for a waiver that are submitted by a State agency and comply with the requirements at section 12(l)(1) and the limitations at section 12(l)(4), including that FNS may not grant a waiver that increases Federal costs.
(2)(i) A State agency may submit a request for a waiver under paragraph (f)(1) of this section in accordance with section 12(l)(2) and the provisions of this part.
(ii) A State agency may submit a request to waive specific statutory or regulatory requirements on behalf of eligible service providers that operate in the State. Any waiver where the State concurs must be submitted to the appropriate FNSRO.
(3)(i) An eligible service provider may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l) and the provisions of this part. Any waiver request submitted by an eligible service provider must be submitted to the State agency for review. A State agency must act promptly on such a waiver request and must deny or concur with a request submitted by an eligible service provider.
(ii) If a State agency concurs with a request from an eligible service provider, the State agency must promptly forward to the appropriate FNSRO the request and a rationale, consistent with section 12(l)(2), supporting the request. By forwarding the request to the FNSRO, the State agency affirms:
(A) The request meets all requirements for waiver submissions; and,
(B) The State agency will conduct all monitoring requirements related to regular Program operations and the implementation of the waiver.
(iii) If the State agency denies the request, the State agency must notify the requesting eligible service provider and state the reason for denying the request in writing within 30 calendar days of the State agency’s receipt of the request. The State agency response is final and may not be appealed to FNS.
§ 220.4 Payment of funds to States and FNSROs.
(a) To the extent funds are available, the Secretary shall make breakfast assistance payments to each State agency for breakfasts served to children under the Program. Subject to § 220.13(b)(2), the total of these payments for each State for any fiscal year shall be limited to the total amount of reimbursement payable to eligible schools within the State under this part for the fiscal year.
(b) The Secretary shall prescribe by July 1 of each fiscal year annual adjustments to the nearest one-fourth cent in the national average per breakfast factors for all breakfasts and for free and reduced price breakfasts, that shall reflect changes in the cost of operating a breakfast program.
(c) In addition to the funds made available under paragraph (a) of this section, funds shall be made available to the State agencies, and FNSROs where applicable, in such amounts as are needed to finance reimbursement rates assigned in accordance with the provisions of § 220.9(c).
§ 220.5 Method of payment to States.
Funds to be paid to any State for the School Breakfast Program shall be made available by means of Letters of Credit issued by FNS in favor of the State agency. The State agency shall:
(a) Obtain funds needed for reimbursement to School Food Authorities through presentation by designated State officials of a payment Voucher on Letter of Credit in accordance with procedures prescribed by FNS and approved by the U.S. Treasury Department; (b) submit requests for funds only at such times and in such amounts, as will permit prompt payment of claims or authorized advances; and (c) use the funds received from such requests without delay for the purpose for which drawn.
§ 220.6 Use of funds.
(a) Federal funds made available under the School Breakfast Program shall be used by State agencies, or FNSROs where applicable, to reimburse or make advance payments to School Food Authorities in connection with breakfasts served in accordance with the provisions of this part. However, with the approval of FNS, any State agency, or FNSRO where applicable, may reserve for use in carrying out special developmental projects an amount up to 1 per centum of the funds earned in any fiscal year under the School Breakfast Program. Advance payments to School Food Authorities may be made at such times and in such amounts as are necessary to meet current obligations.
(b) Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property provided under this part, whether received directly or indirectly from the Department, shall—
(1) If such funds, assets, or property are of a value of $100 or more, be fined not more than $25,000 or imprisoned not more than 5 years or both; or
(2) If such funds, assets, or property are of a value of less than $100, be fined not more than $1,000 or imprisoned not more than one year or both.
(c) Whoever receives, conceals, or retains to his use or gain funds, assets, or property provided under this part, whether received directly or indirectly from the Department, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud, shall be subject to the same penalties provided in paragraph (b) of this section.
§ 220.7 Requirements for participation.
(a) The School Food Authority shall make written application to the State agency, or FNSRO where applicable, for any school in which it desires to operate the School Breakfast Program, if such school did not participate in the Program in the prior fiscal year. The School Food Authority shall also submit for approval, either with the application or at the request of the State agency, or FNSRO where applicable, a free and reduced price policy statement in accordance with part 245 of this chapter. A School Food Authority which simultaneously makes application for the National School Lunch Program and the School Breakfast Program shall submit one free and reduced price policy statement which shall provide that the terms, conditions, and eligibility criteria set forth in such policy statement shall apply to the service of free and reduced price lunches and to the service of free and reduced price breakfasts. If, at the time application is made for the School Breakfast Program, a School Food Authority has an approved free and reduced price policy statement on file with the State agency, or FNSRO where applicable, for the National School Lunch Program, it need only confirm in writing that such approved policy statement will also apply to the operation of its School Breakfast Program. Applications for the School Breakfast Program shall not be approved in the absence of an approved free and reduced price policy statement.
(1) A school which also either participates in the National School Lunch Program or only receives donations of commodities for its nonprofit lunch program under the provisions of part 250 of this chapter (commodity only school) shall apply the same set of eligibility criteria so that children who are eligible for free lunches shall also be eligible for free breakfasts and children who are eligible for reduced price lunches shall also be eligible for reduced price breakfasts.
(2) Schools shall obtain a minimum of two food safety inspections per school year conducted by a State or local governmental agency responsible for food safety inspections. Schools participating in more than one child nutrition program shall only be required to obtain a minimum of two food safety inspections per school year if the food preparation and service for all meal programs take place at the same facility. Schools shall post in a publicly visible location a report of the most recent inspection conducted, and provide a copy of the inspection report to a member of the public upon request.
(3) The school food authority must implement a food safety program meeting the requirements of §§ 210.13(c) and 210.15(b)(5) of this chapter at each facility or part of a facility where food is stored, prepared, or served.
(b) Applications shall solicit information in sufficient detail to enable the State agency to determine whether the School Food Authority is eligible to participate in the Program and extent of the need for Program payments.
(c) Within the funds available to them, State agencies, or FNSRO’s where applicable, shall approve for participation in the School Breakfast Program any school making application and agreeing to carry out the program in accordance with this part. State agencies, or FNSRO’s where applicable, have a positive obligation, however, to extend the benefits of the School Breakfast Program to children attending schools in areas where poor economic conditions exist.
(d)(1) Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable breakfasts to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall:
(i) Adhere to the procurement standards specified in § 220.16 when contracting with the food service management company;
(ii) Ensure that the food service operation is in conformance with the school food authority’s agreement under the Program;
(iii) Monitor the food service operation through periodic on-site visits;
(iv) Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;
(v) Retain signature authority on the State agency-school food authority agreement, free and reduced price policy statement and claims;
(vi) Ensure that all federally donated foods received by the school food authority and made available to the food service management company accrue only to the benefit of the school food authority’s nonprofit school food service and are fully utilized therein;
(vii) Maintain applicable health certification and assure that all State and local regulations are being met by a food service management company preparing or serving meals at a school food authority facility;
(viii) Obtain written approval of invitations for bids and requests for proposals before their issuance when required by the State agency. The school food authority must incorporate all State agency required changes to its solicitation documents before issuing those documents; and
(ix) Ensure that the State agency has reviewed and approved the contract terms and the school food authority has incorporated all State agency required changes into the contract or amendment before any contract or amendment to an existing food service management company contract is executed. Any changes made by the school food authority or a food service management company to a State agency pre-approved prototype contract or State agency approved contract term must be approved in writing by the State agency before the contract is executed. When requested, the school food authority must submit all procurement documents, including responses submitted by potential contractors, to the State agency, by the due date established by the State agency.
(2) In addition to adhering to the procurement standards under this part, school food authorities contracting with food service management companies shall ensure that:
(i) The invitation to bid or request for proposal contains a 21-day cycle menu developed in accordance with the provisions of § 220.8, to be used as a standard for the purpose of basing bids or estimating average cost per meal. A school food authority with no capability to prepare a cycle menu may, with State agency approval, require that each food service management company include a 21-day cycle menu, developed in accordance with the provisions of § 220.8, with its bid or proposal. The food service management company must adhere to the cycle for the first 21 days of meal service. Changes thereafter may be made with the approval of the school food authority; and
(ii) Any invitation to bid or request for proposal indicate that nonperformance subjects the food service management company to specified sanctions in instances where the food service management company violates or breaches contract terms. The school food authority shall indicate these sanctions in accordance with the procurement provisions stated in § 220.16.
(3) Contracts that permit all income and expenses to accrue to the food service management company and “cost-plus-a-percentage-of-cost” and “cost-plus-a-percentage-of-income” contracts are prohibited. Contracts that provide for fixed fees such as those that provide for management fees established on a per meal basis are allowed. Contractual agreements with food service management companies shall include provisions which ensure that the requirements of this section are met. Such agreements shall also include the following requirements:
(i) The food service management company shall maintain such records as the school food authority will need to support its Claim for Reimbursement under this part, and shall, at a minimum, report claim information to the school food authority promptly at the end of each month. Such records shall be made available to the school food authority, upon request, and shall be available for a period of 3 years from the date of the submission of the final Financial Status Report, for inspection and audit by representatives of the State agency, of the Department, and of the Government Accountability Office at any reasonable time and place. If audit findings have not been resolved, the records shall be retained beyond the three-year period (as long as required for the resolution of the issues raised by the audit);
(ii) The food service management company shall have State or local health certification for any facility outside the school in which it proposes to prepare meals and the food service management company shall maintain this health certification for the duration of the contract; and
(iii) No payment is to be made for meals that are spoiled or unwholesome at time of delivery, do not meet detailed specifications as developed by the school food authority for each food component specified in § 220.8, or do not otherwise meet the requirements of the contract. Specifications shall cover items such a grade, purchase units, style, condition, weight, ingredients, formulations, and delivery time.
(iv) Provisions in part 250, subpart D of this chapter must be included to ensure the value of donated foods, i.e., USDA Foods, are fully used in the nonprofit food service and credited to the nonprofit school food service account.
(4) The contract between a school food authority and food service management company shall be of a duration of no longer than 1 year and options for the yearly renewal of the contract shall not exceed 4 additional years. All contracts shall include a termination clause whereby either party may cancel for cause with 60-day notification.
(e) Each school food authority approved to participate in the program shall enter into a written agreement with the State agency or the Department through the FNSRO, as applicable, that may be amended as necessary. Nothing in the preceding sentence shall be construed to limit the ability of the State agency or the FNSRO to suspend or terminate the agreement in accordance with § 220.18. If a single State agency administers any combination of the Child Nutrition Programs, that State agency shall provide each SFA with a single agreement with respect to the operation of those programs. Such agreements shall provide that the School Food Authority shall, with respect to participating schools under its jurisdiction:
(1)(i) Maintain a nonprofit school food service;
(ii) In accordance with the financial management system established under § 220.13(i) of this part, use all revenues received by such food service only for the operation or improvement of that food service Except that, facilities, equipment, and personnel support with funds provided to a school food authority under this part may be used to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.);
(iii) Revenues received by the nonprofit school food service shall not be used to purchase land or buildings or to contruct buildings;
(iv) Limit its net cash resources to an amount that does not exceed three months average expenditure for its nonprofit school food service or such other amount as may be approved by the State agency; and
(v) Observe the limitations on any competitive food service as set forth in § 220.12 of this part;
(2) Serve breakfasts which meet the minimum requirements prescribed in § 220.8, during a period designated as the breakfast period by the school;
(3) Price the breakfast as a unit;
(4) Supply breakfast without cost or at reduced price to all children who are determined by the School Food Authority to be unable to pay the full price thereof in accordance with the free and reduced price policy statements approved under part 245 of this chapter;
(5) Make no discrimination against any child because of his inability to pay the full price of the breakfasts;
(6) Claim reimbursement at the assigned rates only for breakfasts served in accordance with the agreement;
(7) Submit Claims for Reimbursement in accordance with § 220.11 of this part and procedures established by the State agency, or FNSRO where applicable;
(8) Maintain, in the storage, preparation and service of food, proper sanitation and health standards in conformance with all applicable State and local laws and regulations, and comply with the food safety requirements in paragraph (a)(2) and paragraph (a)(3) of this section;
(9) Purchase, in as large quantities as may be efficiently utilized in its nonprofit school food service, foods designated as plentiful by the State Agency, or CFPDO, where applicable;
(10) Accept and use, in as large quantities as may be efficiently utilized in its nonprofit school food service, such foods as may be offered as a donation by the Department;
(11) Maintain necessary facilities for storing, preparing, and serving food;
(12) Maintain a financial management system as prescribed by the State agency, or FNSRO where applicable;
(13) Upon request, make all accounts and records pertaining to its nonprofit school food service available to the State agency, to FNS and to OA for audit or review at a reasonable time and place. Such records shall be retained for a period of three years after the end of the fiscal year to which they pertain, except that if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit;
(14) Retain documentation of free or reduced price eligibility as follows:
(i) Maintain files of currently approved and denied free and reduced price applications which must be readily retrievable by school for a period of three years after the end of the fiscal year to which they pertain; or
(ii) Maintain files with the names of children currently approved for free meals through direct certification with the supporting documentation, as specified in § 245.6(b)(4) of this chapter, which must be readily retrievable by school. Documentation for direct certification must include information obtained directly from the appropriate State or local agency, or other appropriate individual, as specified by FNS, that:
(A) A child in the Family, as defined in § 245.2 of this chapter, is receiving benefits from SNAP, FDPIR or TANF, as defined in § 245.2 of this chapter; if one child is receiving such benefits, all children in that family are considered to be directly certified;
(B) The child is a homeless child as defined in § 245.2 of this chapter;
(C) The child is a runaway child as defined in § 245.2 of this chapter;
(D) The child is a migrant child as defined in § 245.2 of this chapter;
(E) The child is a Head Start child, as defined in § 245.2 of this chapter; or
(F) The child is a foster child as defined in § 245.2 of this chapter.
(15) Comply with the requirements of the Department’s regulations respecting nondiscrimination (7 CFR part 15).
(f) Nothing contained in this part shall prevent the State Agency from imposing additional requirements for participation in the program which are not inconsistent with the provisions of this part.
(g) Program evaluations. Local educational agencies, school food authorities, schools, and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department, related to programs authorized under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966.
(h) Local educational agencies must comply with the provisions of § 210.30 of this chapter regarding the development, implementation, periodic review and update, and public notification of the local school wellness policy.
§ 220.8 Meal requirements for breakfasts.
(a) General requirements. This section contains the meal requirements applicable to school breakfasts for students in grades K through 12, and for children under the age of 5. In general, school food authorities must ensure that participating schools provide nutritious, well-balanced, and age-appropriate breakfasts to all the children they serve to improve their diet and safeguard their health.
(1) General nutrition requirements. School breakfasts offered to children age 5 and older must meet, at a minimum, the meal requirements in paragraph (b) of this section. Schools must follow a food-based menu planning approach and produce enough food to offer each child the quantities specified in the meal pattern established in paragraph (c) of this section for each age/grade group served in the school. In addition, school breakfasts must meet the dietary specifications in paragraph (f) of this section. Schools offering breakfasts to children ages 1 to 4 and infants must meet the meal pattern requirements in paragraphs (o) and (p), as applicable, of this section. When breakfast is served in the cafeteria, schools must make potable water available and accessible without restriction to children at no charge.
(2) Unit pricing. Schools must price each meal as a unit. The price of a reimbursable lunch does not change if the student does not take a food item or requests smaller portions. Schools must identify, near or at the beginning of the serving line(s), the food items that constitute the unit-priced reimbursable school meal(s).
(3) Production and menu records. Schools or school food authorities, as applicable, must keep production and menu records for the meals they produce. These records must show how the meals offered contribute to the required food components and food quantities for each age/grade group every day. Labels or manufacturer specifications for food products and ingredients used to prepare school meals for students in grades K through 12 must indicate zero grams of trans fat per serving (less than 0.5 grams). Schools or school food authorities must maintain records of the latest nutritional analysis of the school menus conducted by the State agency. Production and menu records must be maintained in accordance with FNS guidance.
(b) Meal requirements for school breakfasts. School breakfasts for children ages 5 and older must reflect food and nutrition requirements specified by the Secretary. Compliance with these requirements is measured as follows:
(1) On a daily basis:
(i) Meals offered to each age/grade group must include the food components and food quantities specified in the meal pattern in paragraph (c) of this section;
(ii) Food products or ingredients used to prepare meals must contain zero grams of trans fat per serving or a minimal amount of naturally occurring trans fat as specified in paragraph (f) of this section; and
(iii) Meal selected by each student must have the number of food components required for a reimbursable meal and include at least one fruit or vegetable.
(2) Over a 5-day school week:
(i) Average calorie content of the meals offered to each age/grade group must be within the minimum and maximum calorie levels specified in paragraph (f) of this section;
(ii) Average saturated fat content of the meals offered to each age/grade group must be less than 10 percent of total calories as specified in paragraph (f) of this section;
(iii) Average sodium content of the meals offered to each age/grade group must not exceed the maximum level specified in paragraph (f) of this section;
(c) Meal pattern for school breakfasts for grades K through 12. A school must offer the food components and quantities required in the breakfast meal pattern established in the following table:
Table 1 to Paragraph (
| Breakfast meal pattern | |||
|---|---|---|---|
| Grades K-5 | Grades 6-8 | Grades 9-12 | |
| Food Components | Amount of Food a per Week | ||
| (minimum per day) | |||
| Fruits (cups) b c | 5 (1) | 5 (1) | 5 (1) |
| Vegetables (cups) b c | 0 | 0 | 0 |
| Dark green | 0 | 0 | 0 |
| Red/Orange | 0 | 0 | 0 |
| Beans and peas (legumes) | 0 | 0 | 0 |
| Starchy | 0 | 0 | 0 |
| Other | 0 | 0 | 0 |
| Grains (oz eq) d | 7-10 (1) | 8-10 (1) | 9-10 (1) |
| Meats/Meat Alternates (oz eq) e | 0 | 0 | 0 |
| Fluid milk (cups) f | 5 (1) | 5 (1) | 5 (1) |
| Min-max calories (kcal) g h | 350-500 | 400-550 | 450-600 |
| Saturated fat (% of total calories) h | |||
| Sodium Target 1 (mg) h | ≤540 | ≤600 | ≤640 |
h | Nutrition label or manufacturer specifications must indicate zero grams of | ||
a Food items included in each group and subgroup and amount equivalents. Minimum creditable serving is
b One-quarter cup of dried fruit counts as
c Schools must offer 1 cup of fruit daily and 5 cups of fruit weekly. Vegetables may be substituted for fruits, but the first two cups per week of any such substitution must be from the dark green, red/orange, beans/peas (legumes), or “Other vegetables” subgroups, as defined in § 210.10(c)(2)(iii) of this chapter.
d At least 80 percent of grains offered weekly must meet the whole grain-rich criteria specified in FNS guidance, and the remaining grain items offered must be enriched. Schools may substitute 1 oz. eq. of meat/meat alternate for 1 oz. eq. of grains after the minimum daily grains requirement is met.
e There is no meat/meat alternate requirement.
f All fluid milk must be fat-free (skim) or low-fat (1 percent fat or less). Milk may be unflavored or flavored, provided that unflavored milk is offered at each meal service.
g The average daily calories for a 5-day school week must be within the range (at least the minimum and no more than the maximum values).
h Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within the specifications for calories, saturated fat, trans fat, and sodium. Foods of minimal nutritional value and fluid milk with fat content greater than 1 percent milk fat are not allowed.
(1) Age/grade groups. Schools must plan menus for students using the following age/grade groups: Grades K-5 (ages 5-10), grades 6-8 (ages 11-13), and grades 9-12 (ages 14-18). If an unusual grade configuration in a school prevents the use of the established age/grade groups, students in grades K-5 and grades 6-8 may be offered the same food quantities at breakfast provided that the calorie and sodium standards for each age/grade group are met. No customization of the established age/grade groups is allowed.
(2) Food components. Schools must offer students in each age/grade group the food components specified in meal pattern in paragraph (c). Food component descriptions in § 210.10 of this chapter apply to this Program.
(i) Meats/meat alternates component. Schools are not required to offer meats/meat alternates as part of the breakfast menu. Schools may substitute meats/meat alternates for grains, after the daily grains requirement is met, to meet the weekly grains requirement. One ounce equivalent of meat/meat alternate is equivalent to one ounce equivalent of grains.
(A) Enriched macaroni. Enriched macaroni with fortified protein as defined in appendix A to part 210 may be used to meet part of the meats/meat alternates requirement when used as specified in appendix A to part 210. An enriched macaroni product with fortified protein as defined in appendix A to part 210 may be used to meet part of the meats/meat alternates component or the grains component but may not meet both food components in the same lunch.
(B) Nuts and seeds. Nuts and seeds and their butters are allowed as meat alternates in accordance with program guidance. Acorns, chestnuts, and coconuts may not be used because of their low protein and iron content. Nut and seed meals or flours may be used only if they meet the requirements for Alternate Protein Products established in appendix A to part 220. Nuts or seeds may be used to meet no more than one-half (50 percent) of the meats/meat alternates component with another meats/meat alternates to meet the full requirement.
(C) Yogurt. Yogurt may be used to meet all or part of the meats/meat alternates component. Yogurt may be plain or flavored, unsweetened or sweetened. Noncommercial and/or non-standardized yogurt products, such as frozen yogurt, drinkable yogurt products, homemade yogurt, yogurt flavored products, yogurt bars, yogurt covered fruits and/or nuts or similar products are not creditable. Four ounces (weight) or
(D) Tofu and soy products. Commercial tofu and soy products may be used to meet all or part of the meats/meat alternates component in accordance with FNS guidance. Noncommercial and/or non-standardized tofu and products are not creditable.
(E) Beans and peas (legumes). Cooked dry beans and peas (legumes) may be used to meet all or part of the meats/meat alternates component. Beans and peas (legumes) are identified in this section and include foods such as black beans, garbanzo beans, lentils, kidney beans, mature lima beans, navy beans, pinto beans, and split peas.
(F) Other meat alternates. Other meat alternates, such as cheese and eggs, may be used to meet all or part of the meats/meat alternates component in accordance with FNS guidance.
(ii) Fruits component. Schools must offer daily the fruit quantities specified in the breakfast meal pattern in paragraph (c) of this section. Fruits that are fresh; frozen without added sugar; canned in light syrup, water or fruit juice; or dried may be offered to meet the fruits component requirements. Vegetables may be offered in place of all or part of the required fruits at breakfast, but the first two cups per week of any such substitution must be from the dark green, red/orange, beans and peas (legumes) or other vegetable subgroups, as defined in this section. All fruits are credited based on their volume as served, except that
(iii) Vegetables component. Schools are not required to offer vegetables as part of the breakfast menu but may offer vegetables to meet part or all of the fruit requirement. Fresh, frozen, or canned vegetables and dry beans and peas (legumes) may be offered to meet the fruit requirement. All vegetables are credited based on their volume as served, except that 1 cup of leafy greens counts as
(iv) Grains component. (A) Enriched and whole grains. All grains must be made with enriched and whole grain meal or flour, in accordance with the most recent FNS guidance on grains. The whole grain-rich criteria included in FNS guidance may be updated to reflect additional information provided by industry on the food label or a whole grains definition by the Food and Drug Administration. Whole grain-rich products must contain at least 50 percent whole grains and the remaining grains in the product must be enriched. Schools may substitute meats/meat alternates for grains, after the daily grains requirement is met, to meet the weekly grains requirement. One ounce equivalent of meat/meat alternate is equivalent to one ounce equivalent of grains.
(B) Daily and weekly servings. The grains component is based on minimum daily servings plus total servings over a 5-day school week. Schools serving breakfast 6 or 7 days per week must increase the weekly grains quantity by approximately 20 percent (
(3) Food components in outlying areas. Schools in American Samoa, Puerto Rico and the Virgin Islands may serve a vegetable such as yams, plantains, or sweet potatoes to meet the grains component.
(d) Fluid milk requirement. Breakfast must include a serving of fluid milk as a beverage or on cereal or used in part for each purpose. Schools must offer students a variety (at least two different options) of fluid milk. All fluid milk must be fat-free (skim) or low-fat (1 percent fat or less). Milk with higher fat content is not allowed. Low-fat or fat-free lactose-free and reduced-lactose fluid milk may also be offered. Milk may be flavored or unflavored, provided that unflavored milk is offered at each meal service. Schools must also comply with other applicable fluid milk requirements in § 210.10(d) of this chapter.
(e) Offer versus serve for grades K through 12. School breakfast must offer daily at least the three food components required in the meal pattern in paragraph (c) of this section. To exercise the offer versus serve option at breakfast, a school food authority or school must offer a minimum of four food items daily as part of the required components. Under offer versus serve, students are allowed to decline one of the four food items, provided that students select at least
(f) Dietary specifications. (1) Calories. Schools breakfasts offered to each age/grade group must meet, on average over the school week, the minimum and maximum calorie levels specified in the following table:
Calorie Ranges for Breakfast—Effective SY 2013-2014
| Grades K-5 | Grades 6-8 | Grades 9-12 | |
|---|---|---|---|
| Minimum-maximum calories (kcal) a b | 350-500 | 400-550 | 450-600 |
a The average daily amount for a 5-day school must fall within the minimum and maximum levels.
b Discretionary sources of calories (solid fats and added sugars) may be added to the meal pattern if within the specifications for calories, saturated fat,
(2) Saturated fat. Schools breakfasts offered to all age/grade groups must, on average over the school week, provide less than 10 percent of total calories from saturated fat.
(3) Sodium. School breakfasts offered to each age/grade group must meet, on average over the school week, the levels of sodium specified in the following table:
Table 3 to Paragraph (
| Age/grade group | Target 1 (mg) |
|---|---|
| K-5 | ≤540 |
| 6-8 | ≤600 |
| 9-12 | ≤640 |
(4) Trans fat. Food products and ingredients used to prepare school meals must contain zero grams of trans fat (less than 0.5 grams) per serving. Schools must add the trans fat specification and request the required documentation (nutrition label or manufacturer specifications) in their procurement contracts. Documentation for food products and food ingredients must indicate zero grams of trans fat per serving. Meats that contain a minimal amount of naturally-occurring trans fats are allowed in the school meal programs.
(g) Compliance assistance. The State agency and school food authority must provide technical assistance and training to assist schools in planning breakfasts that meet the meal pattern in paragraph (c) of this section, the dietary specifications for calorie, saturated fat, sodium, and trans fat established in paragraph (f) of this section, and the meal pattern in paragraphs (o) and (p) of this section, as applicable. Compliance assistance may be offered during training, onsite visits, and/or administrative reviews.
(h) State agency responsibilities for monitoring dietary specifications—(1) Calories, saturated fat, and sodium. When required by the administrative review process set forth in § 210.18, the State agency must conduct a weighted nutrient analysis to evaluate the average levels of calories, saturated fat, and sodium of the breakfasts offered during one week within the review period. The nutrient analysis must be conducted in accordance with the procedures established in § 210.10(i) of this chapter. If the results of the review indicate that the school breakfasts are not meeting the standards for calories, saturated fat, or sodium specified in paragraph (f) of this section, the State agency or school food authority must provide technical assistance and require the reviewed school to take corrective action to meet the requirements.
(2) Trans fat. State agencies conducting an administrative review must review product labels of manufacturer specifications to verify that the food products or ingredients used by the reviewed school(s) contain zero grams of trans fat (less than 0.5 grams) per serving.
(i) Nutrient analyses of school meals. Any nutrient analysis of school breakfasts conducted under the administrative review process set forth in § 210.18 of this chapter must be performed in accordance with the procedures established in § 210.10(i) of this chapter. The purpose of the nutrient analysis is to determine the average levels of calories, saturated fat, and sodium in the breakfasts offered to each age grade group over a school week.
(j) Responsibility for monitoring meal requirements. Compliance with the applicable breakfast requirements in paragraph (b) of this section, including the dietary specifications for calories, saturated fat, sodium and trans fat, and paragraphs (o) and (p) of this section will be monitored by the State agency through administrative reviews authorized in § 210.18 of this chapter.
(k) Menu choices at breakfast. The requirements in § 210.10(k) of this chapter also apply to this Program.
(l) Requirements for breakfast period. (1) Timing. Schools must offer breakfasts meeting the requirements of this section at or near the beginning of the school day.
(2) [Reserved]
(m) Exceptions and variations allowed in reimbursable meals. The requirements in § 210.10(m) of this chapter also apply to this Program.
(n) Nutrition disclosure. The requirements in § 210.10(n) of this chapter also apply to this Program.
(o) Breakfast requirements for preschoolers—(1) Breakfasts served to preschoolers. Schools serving breakfast to children ages 1 through 4 under the School Breakfast Program must serve the meal components and quantities required in the breakfast meal pattern established for the Child and Adult Care Food Program under § 226.20(a), (c)(1), and (d) of this chapter. In addition, schools serving breakfasts to this age group must comply with the requirements set forth in paragraphs (a), (c)(3), (g), (k), (l), and (m) of this section as applicable.
(2) Preschooler breakfast meal pattern table. The minimum amounts of food components to be served at breakfast are as follows:
Table 4 to Paragraph
| Food components and food items | Minimum quantities | |
|---|---|---|
| Ages 1-2 | Ages 3-5 | |
| Fluid Milk 2 | 4 fluid ounces | 6 fluid ounces. |
| Vegetables, fruits, or portions of both 3 | ||
| Grains (oz eq) | ||
1 Must serve all three components for a reimbursable meal.
2 Must be unflavored whole milk for children age one. Must be unflavored low-fat (1 percent) or unflavored fat-free (skim) milk for children two through five years old.
3 Pasteurized full-strength juice may only be used to meet the vegetable or fruit requirement at one meal, including snack, per day.
4 At least one serving per day, across all eating occasions, must be whole grain-rich. Grain-based desserts do not count towards meeting the grains requirement.
5 Meat and meat alternates may be used to meet the entire grains requirement a maximum of three times a week. One ounce of meat and meat alternates is equal to one ounce equivalent of grains.
6 Breakfast cereals must contain no more than 6 grams of sugar per dry ounce (no more than 21.2 grams sucrose and other sugars per 100 grams of dry cereal).
7 Refer to FNS guidance for additional information on crediting different types of grains.
(p) Breakfast requirements for infants—(1) Breakfasts served to infants. Schools serving breakfasts to infants ages birth through 11 months under the School Breakfast Program must serve the food components and quantities required in the breakfast meal pattern established for the Child and Adult Care Food Program, under § 226.20(a), (b), and (d) of this chapter. In addition, schools serving breakfasts to infants must comply with the requirements set forth in paragraphs (a), (c)(3), (g), (k), (l), and (m) of this section as applicable.
(2) Infant breakfast meal pattern table. The minimum amounts of food components to be served at breakfast are as follows:
Table 5 to Paragraph
| Birth through 5 months | 6 through 11 months |
|---|---|
| 4-6 fluid ounces breastmilk 1 or formula 2 | 6-8 fluid ounces breastmilk 1 or formula; 2 and |
| 0- | |
| 0-4 tablespoons meat, fish, poultry, whole egg, cooked dry beans, or cooked dry peas; or | |
| 0-2 ounces of cheese; or | |
| 0-4 ounces (volume) of cottage cheese; or | |
| 0-4 ounces or 4 or a combination of the above; 5 and | |
| 0-2 tablespoons vegetable or fruit, or a combination of both. |
1 Breastmilk or formula, or portions of both, must be served; however, it is recommended that breastmilk be served in place of formula from birth through 11 months. For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered, with additional breastmilk offered at a later time if the infant will consume more.
2 Infant formula and dry infant cereal must be iron-fortified.
3 Refer to FNS guidance for additional information on crediting different types of grains.
4 Yogurt must contain no more than 23 grams of total sugars per 6 ounces.
5 A serving of this component is required when the infant is developmentally ready to accept it.
6 Fruit and vegetable juices must not be served.
§ 220.9 Reimbursement payments.
(a) State agencies, or FNSRO’s where applicable, shall make reimbursement payments to schools only in connection with breakfasts meeting the requirements of § 220.8, and reported in accordance with § 220.11(b) of this part. School Food Authorities shall plan for and prepare breakfasts on the basis of participation trends, with the objective of providing one breakfast per child per day. Production and participation records shall be maintained to demonstrate positive action toward this objective. In recognition of the fluctuation in participation levels which makes it difficult to precisely estimate the number of breakfasts needed and to reduce the resultant waste, any excess breakfasts that are prepared may be served to eligible children and may be claimed for reimbursement unless the State agency, or FNSRO where applicable, determines that the School Food Authority has failed to plan and prepare breakfasts with the objective of providing one breakfast per child per day. In no event shall the School Food Authority claim reimbursement for free and reduced price breakfasts in excess of the number of children approved for free and reduced price meals.
(b) The rates of reimbursement for breakfasts served to eligible children in schools not in severe need are the applicable national average payment factors for breakfasts. The maximum rates of reimbursement for breakfasts served to eligible children in schools determined to be in severe need are those prescribed by the Secretary. National average payment factors and maximum rates of reimbursement for the School Breakfast Program shall be prescribed annually by the Secretary in the
(c) The total reimbursement for breakfasts served to eligible children in schools not in severe need, and schools in severe need during the school year shall not exceed the sum of the products obtained by multiplying the total numbers of such free, reduced price and paid breakfasts, respectively, by the applicable rate of reimbursement for each type of breakfast as prescribed for the school year.
(d) The State agency, or FNSRO where applicable, shall determine whether a school is in severe need based on the following eligibility criteria:
(1) The school is participating in or desiring to initiate a breakfast program; and
(2) At least 40 percent of the lunches served to students at the school in the second preceding school year were served free or at a reduced price. Schools that did not serve lunches in the second preceding year and that would like to receive reimbursement at the severe need rate may apply to their administering State agency. The administering State agency shall approve or deny such requests in accordance with guidance, issued by the Secretary, that determines that the second preceding school year requirement would otherwise have been met.
§ 220.10 Effective date for reimbursement.
Reimbursement payments under the School Breakfast Program may be made only to School Food Authorities operating under an agreement with the State Agency or the Department, and may be made only after execution of the agreement. Such payments may include reimbursement in connection with breakfasts served in accordance with provisions of the program in the calendar month preceding the calendar month in which the agreement is executed.
§ 220.11 Reimbursement procedures.
(a) To be entitled to reimbursement under this part, each School Food Authority shall submit to the State agency, or FNSRO where applicable, a monthly Claim for Reimbursement.
(b) Claims for Reimbursement shall include data in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Reports of School Program Operations required under § 220.13(b)(2). Unless otherwise approved by FNS, the Claim for Reimbursement for any month shall include only breakfasts served in that month except if the first or last month of Program operations for any year contains 10 operating days or less, such month may be added to the Claim for Reimbursement for the appropriate adjacent month; however, Claims for Reimbursement may not combine operations occurring in two fiscal years. If a single State agency administers any combination of the Child Nutrition Programs, the SFA shall be able to use a common claim form with respect to claims for reimbursement for meals served under those programs. A final Claim for Reimbursement shall be postmarked and/or submitted to the State agency, or FNSRO where applicable, not later than 60 days following the last day of the full month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not postmarked and/or submitted within 60 days shall not be paid with Program funds unless FNS determines that an exception should be granted. The State agency, or FNSRO where applicable, shall promptly take corrective action with respect to any Claim for Reimbursement as determined necessary through its claim review process or otherwise. In taking such corrective action, State agencies may make upward adjustments in Program funds claimed on claims filed within the 60 day deadline if such adjustments are completed within 90 days of the last day of the claim month and are reflected in the final Report of School Program Operations (FNS-10) for the claim month which is required under § 220.13(b)(2). Upward adjustments in Program funds claimed which are not reflected in the final FNS-10 for the claim month shall not be made unless authorized by FNS. Downward adjustments in Program funds claimed shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary.
(c) Where a school participates in both the National School Lunch Program and the School Breakfast Program, the State agency or FNSRO, where applicable, may authorize the submission of one claim for reimbursement to cover both programs.
(d) The school food authority shall establish internal controls which ensure the accuracy of breakfast counts prior to the submission of the monthly Claim for Reimbursement. At a minimum, these internal controls shall include: an on-site review of the breakfast counting and claiming system employed by each school within the jurisdiction of the school food authority; comparisons of daily free, reduced price and paid breakfast counts against data which will assist in the identification of breakfast counts in excess of the number of free, reduced price and paid breakfasts served each day to children eligible for such breakfasts; and a system for following up on those breakfast counts which suggest the likelihood of breakfast counting problems.
(1) On-site reviews. Every school year, each school food authority with more than one school shall perform no less than one on-site review of the breakfast counting and claiming system and the readily observable general areas of review identified under § 210.18(h) of this chapter, as specified by FNS, for a minimum of 50 percent of schools under its jurisdiction with every school within the jurisdiction being reviewed at least once every two years. The on-site review shall take place prior to February 1 of each school year. Further, if the review discloses problems with a school’s meal counting or claiming procedures or general review areas, the school food authority shall ensure that the school implements corrective action, and within 45 days of the review, conduct a follow-up on-site review to determine that the corrective action resolved the problems. Each on-site review shall ensure that the school’s claim is based on the counting system and that the counting system, as implemented, yields the actual number of reimbursable free, reduced price and paid breakfasts, respectively, served for each day of operation.
(2) School food authority claims review process. Prior to the submission of a monthly Claim for Reimbursement, each school food authority shall review the breakfast count data for each school under its jurisdiction to ensure the accuracy of the monthly Claim for Reimbursement. The objective of this review is to ensure that monthly claims include only the number of free, reduced price and paid breakfasts served on any day of operation to children currently eligible for such breakfasts.
(e) Notwithstanding any other provision of this section, the State agency, or FNSRO where applicable, may advance funds available for the School Breakfast Program to a School Food Authority in an amount equal to the reimbursement estimated for the total number of breakfasts, including free and reduced price breakfasts, to be served to children for 1 month. The State agency, or FNSRO where applicable, shall require School Food Authorities who receive advances of funds under the provisions of this paragraph to make timely submissions of claims for reimbursement on a monthly basis and shall suspend advances of funds in the absence of such timely submissions. Following the receipt of claims the State agency, or FNSRO where applicable, shall make such adjustments as are necessary in such advances of funds to insure that the total amount of reimbursement received by a School Food Authority for the fiscal year will not exceed an amount equal to the number of breakfasts, including free and reduced price breakfast, served to children times the respective rates of reimbursement assigned by the State agency, or FNSRO where applicable, in accordance with § 220.9.
§ 220.12 Competitive food services.
School food authorities must comply with the competitive food service and standards requirements specified in § 210.11 of this chapter.
§ 220.13 Special responsibilities of State agencies.
(a) [Reserved]
(a-1) Each State agency, or FNSRO where applicable, shall require each School Food Authority of a school participating in the School Breakfast Program to develop and file for approval a free and reduced price policy statement in accordance with paragraph (a) of § 220.7.
(b) Records and reports. (1) Each State agency shall maintain Program records as necessary to support the reimbursement payments made to School Food Authorities under § 220.9 and the reports submitted to FNS under § 220.13(b)(2). The records may be kept in their original form or on microfilm, and shall be retained for a period of three years after the date of submission of the final Financial Status Report for the fiscal year, except that if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.
(2) Each State agency shall submit to FNS a final Report of School Program Operations (FNS-10) for each month which shall be limited to claims submitted in accordance with § 220.11(b) and which shall be postmarked and/or submitted no later than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not submitted within this time limit unless FNS grants an exception. Upward adjustments to a State agency’s report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary. Adjustments shall be reported to FNS in accordance with procedures established by FNS. Each State agency shall also submit to FNS a quarterly Financial Status Report (FNS-777) on the use of Program funds. Such reports shall be postmarked and/or submitted no later than 30 days after the end of each fiscal year quarter. Obligations shall be reported only for the fiscal year in which they occur. A final Financial Status Report for each fiscal year shall be postmarked and/or submitted to FNS within 120 days after the end of the fiscal year. FNS shall not be responsible for reimbursing unpaid Program obligations reported later than 120 days after the close of the fiscal year in which they were incurred.
(3) For each of school years 2005-2006 through 2014-2015, each State agency shall monitor school food authority compliance with the food safety inspection requirement in § 220.7(a)(2) and submit an annual report to FNS documenting school compliance based on data supplied by the school food authorities. The report must be filed by November 15 following each of school years 2005-2006 through 2014-2015, beginning November 15, 2006. The State agency shall keep the records supplied by the school food authorities showing the number of food safety inspections obtained by schools for the current and three most recent school years.
(c) Each State agency shall promptly investigate complaints received or irregularities noted in connection with the operation of either program, and shall take appropriate action to correct any irregularities. State Agencies shall maintain on file evidence of such investigations and actions. FNS or OI shall make investigations at the request of the State Agency or where FNS or OI determines investigations are appropriate.
(d) The State agency shall release to FNS any Federal funds made available to it under the Act which are unobligated at the end of each fiscal year. Any such funds shall remain available to FNS for the purposes of the programs authorized by the Act until expended. Release of funds by the State Agency shall be made as soon as practicable, but in any event not later than 30 days following demand by FNSRO and shall be reflected by related adjustment in the State Agency’s Letter of Credit.
(e) State agencies shall provide School Food Authorities with monthly information on foods available in plentiful supply, based on information provided by the Department.
(f) Each State agency shall provide program assistance as follows:
(1) Each State agency or FNSRO where applicable shall provide consultative, technical, and managerial personnel to administer programs, monitor performance, and measure progress toward achieving program goals.
(2) State agencies must conduct administrative reviews of the school meal programs specified in § 210.18 of this chapter to ensure that schools participating in the designated programs comply with the provisions of this title. The reviews of selected schools must focus on compliance with the critical and general areas of review identified in § 210.18 for each program, as applicable, and must be conducted as specified in the FNS Administrative Review Manual for each program. School food authorities may appeal a denial of all or a part of the Claim for Reimbursement or withholding of payment arising from review activity conducted by the State agency under § 210.18 of this chapter or by FNS under § 210.29(d)(2) of this chapter. Any such appeal shall be subject to the procedures set forth under § 210.18(p) of this chapter or § 210.29(d)(3) of this chapter, as appropriate.
(3) For the purposes of compliance with the meal requirements in §§ 220.8 and 220.23, the State agency must follow the provisions specified in § 210.18(g) of this chapter, as applicable.
(4) State agency assistance must include visits to participating schools selected for administrative reviews under § 210.18 of this chapter to ensure compliance with program regulations and with the Department’s nondiscrimination regulations (part 15 of this title), issued under title VI, of the Civil Rights Act of 1964.
(5) Documentation of such assistance shall be maintained on file by the State agency, or FNSRO where applicable.
(g) State agencies shall adequately safeguard all assets and monitor resource management as required under § 210.18 of this chapter, and in conformance with the procedures specified in the FNS Administrative Review Manual, to assure that assets are used solely for authorized purposes.
(h) [Reserved]
(i) Each State agency, or FNS where applicable, shall establish a financial management system under which School Food Authorities shall account for all revenues and expenditures of their nonprofit school food service. The system shall prescribe the allowability of nonprofit school food service expenditures in accordance with this part and 2 CFR part 200, subpart D and E, as applicable, and USDA implementing regulations 2 CFR part 400 and part 415, as applicable. The system shall permit determination of school food service net cash resources, and shall include any criteria for approval of net cash resources in excess of three months average expenditures. In addition, School Food Authorities shall be required to account separately for other food services which are operated by the School Food Authority.
(j) During audits, administrative reviews, or by other means, State agencies, or FNSROs where applicable, shall be responsible for monitoring the net cash resources of the nonprofit school food service of each School Food Authority participating in the Program. In the event that such resources exceed three months average expenditures for the School Food Authority’s nonprofit school food service, or such amount as may be approved by the State agency or FNSRO where applicable, the State agency or FNSRO where applicable, may require the School Food Authority to reduce children’s prices, improve food quality or take other actions designed to improve the nonprofit school food service. In the absence of any such action, adjustments in the rates of reimbursement under the Program shall be made.
(k) State agencies shall require compliance by School Food Authorities with applicable provisions of this part.
(l) Data collection related to school food authorities. (1) Each State agency must collect data related to school food authorities that have an agreement with the State agency to participate in the program for each of Federal fiscal years 2006 through 2009, including those school food authorities that participated only for part of the fiscal year. Such data shall include:
(i) The name of each school food authority;
(ii) The city in which each participating school food authority was headquartered and the name of the state;
(iii) The amount of funds provided to the participating organization, i.e., the amount of federal funds reimbursed to each participating school food authority; and
(iv) The type of participating organization, e.g., government agency, educational institution, non-profit organization/secular, non-profit organization/faith-based, and “other.”
(2) On or before August 31, 2007, and each subsequent year through 2010, State agencies must report to FNS data as specified in paragraph (l)(1) of this section for the prior Federal fiscal year. State agencies must submit this data in a format designated by FNS.
(m) Program evaluations. States, State agencies, and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department, related to programs authorized under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966.
(a) State agencies shall disallow any portion of a claim and recover any payment made to a School Food Authority that was not properly payable under this part. State agencies will use their own procedures to disallow claims and recover overpayments already made.
(b) [Reserved]
(c) The State agency may refer to CND through the FNSRO for determination any action it proposes to take under this section.
(d) The State agency shall maintain all records pertaining to action taken under this section. Such records shall be retained for a period of 3 years after the end of the fiscal year to which they pertain.
(e) If CND does not concur with the State agency’s action in paying a claim or a reclaim, or in failing to collect an overpayment, CND shall assert a claim against the State agency for the amount of such claim, reclaim, or overpayment. In all such cases the State agency shall have full opportunity to submit to CND evidence or information concerning the action taken. If, in the determination of CND, the State agency’s action was unwarranted, the State agency shall promptly pay to FNS the amount of the claim, reclaim, or overpayment.
(f) The amounts recovered by the State agency from Schools may be utilized, first, to make payments to School Food Authorities for the purposes of the related program during the fiscal year for which the funds were initially available, and second to repay any State funds expended in the reimbursement of claims under the program and not otherwise repaid. Any amounts recovered which are not so utilized shall be returned to FNS in accordance with the requirements of this part.
(g) With respect to School Food Authorities of schools in which the program is administered by FNSRO, when FNSRO disallows a claim or a portion of a claim, or makes a demand for refund of an alleged overpayment, it shall notify the School Food Authority of the reasons for such disallowance or demand and the School Food Authority shall have full opportunity to submit evidence or to file reclaims for any amounts disallowed or demanded in the same manner as that afforded in this section to School Food Authorities of schools in which the program is administered by State agencies.
(h) In the event that the State agency or FNSRO, where applicable, finds that a school food authority is failing to meet the requirements of § 220.8 of this part, the State agency or FNSRO need not disallow payment or collect an overpayment arising out of such failure, if the State agency or FNSRO takes such other action as, in its opinion, will have a corrective effect.
(i) The Secretary shall have the authority to determine the amount of, to settle, and to adjust any claim arising under the Program, and to compromise or deny such claim or any part thereof. The Secretary shall also have the authority to waive such claims if the Secretary determines that to do so would serve the purposes of the Program. This provision shall not diminish the authority of the Attorney General of the United States under section 516 of Title 28, U.S. Code, to conduct litigation on behalf of the United States.
§ 220.15 Management evaluations and audits.
(a) Unless otherwise exempt, audits at the State and institution levels shall be conducted in accordance with 2 CFR part 200, subpart F and Appendix XI, Compliance Supplement, and USDA implementing regulations 2 CFR part 400 and part 415.
(b) Each State agency shall provide FNS with full opportunity to conduct management evaluations (including visits to schools) of all operations of the State agency under the programs covered by this part and shall provide OIG with full opportunity to conduct audits (including visits to schools) of all operations of the State agency under such programs. Each State agency shall make available its records, including records of the receipt and expenditure of funds under such programs, upon a reasonable request by FNS or OIG. OIG shall also have the right to make audits of the records and operations of any school.
(c) In conducting management evaluations, reviews, or audits in a fiscal year, the State agency, FNS, or OIG may disregard an overpayment if the overpayment does not exceed $600. A State agency may establish, through State law, regulation or procedure, an alternate disregard threshold that does not exceed $600. This disregard may be made once per each management evaluation, review, or audit per Program within a fiscal year. However, no overpayment is to be disregarded where there is substantial evidence of violations of criminal law or civil fraud statutes.
§ 220.16 Procurement standards.
(a) General. State agencies and school food authorities shall comply with the requirements of this part 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable, which implement the applicable Office of Management and Budget Circulars, concerning the procurement of all goods and services with nonprofit school food service account funds.
(b) Contractual responsibilities. The standards contained in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable, do not relieve the State agency or School Food Authority of any contractual responsibilities under its contract. The State agency or School Food Authority is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the Program. This includes but is not limited to: Source evaluation, protests, disputes, claims, or other matters of a contractual nature. Matters concerning violation of law are to be referred to the local, State or Federal authority that has proper jurisdiction.
(c) Procedures. The State agency may elect to follow either the State laws, policies and procedures as authorized by 2 CFR 200.317, or the procurement standards for other governmental grantees and all governmental subgrantees in accordance with 2 CFR 200.318 through 2 CFR 200.326. Regardless of the option selected, States must ensure that all contracts include any clauses required by Federal statutes and executive orders and that the requirements of 2 CFR 200.326 are followed. The school food authority may use its own procurement procedures which reflect applicable State and local laws and regulations, provided that procurements made with nonprofit school food service account funds adhere to the standards set forth in this part 2 CFR 200.326 and Appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Award as applicable. School food authority procedures must include a written code of standards of conduct meeting the minimum standards of 2 CFR 200.318, as applicable.
(1) Pre-issuance review requirement. The State agency may impose a pre-issuance review requirement on a school food authority’s proposed procurement. The school food authority must make available, upon request of the State agency, its procurement documents, including but not limited to solicitation documents, specifications, evaluation criteria, procurement procedures, proposed contracts and contract terms. School food authorities shall comply with State agency requests for changes to procurement procedures and solicitation and contract documents to ensure that, to the State agency’s satisfaction, such procedures and documents reflect applicable procurement and contract requirements and the requirements of this part.
(2) Prototype solicitation documents and contracts. The school food authority must obtain the State agency’s prior written approval for any change made to prototype solicitation or contract documents before issuing the revised solicitation documents or execution of the revised contract.
(3) Prohibited expenditures. No expenditure may be made from the nonprofit school food service account for any cost resulting from a procurement failing to meet the requirements of this part.
(d) Buy American—(1) Definition of domestic commodity or product. In this paragraph (d), the term “domestic commodity or product” means—
(i) An agricultural commodity that is produced in the United States; and
(ii) A food product that is processed in the United States substantially using agricultural commodities that are produced in the United States.
(2) Requirement—(i) In general. Subject to paragraph (d)(2)(ii) of this section, the Department shall require that a school food authority purchase, to the maximum extent practicable, domestic commodities or products.
(ii) Limitations. Paragraph (d)(2)(i) of this section shall apply only to—
(A) A school food authority located in the contiguous United States; and
(B) A purchase of domestic commodity or product for the school breakfast program under this part.
(3) Applicability to Hawaii. Paragraph (d)(2)(i) of this section shall apply to a school food authority in Hawaii with respect to domestic commodities or products that are produced in Hawaii in sufficient quantities to meet the needs of meals provided under the school breakfast program under this part.
(e) Cost reimbursable contracts—(1) Required provisions. The school food authority must include the following provisions in all cost reimbursable contracts, including contracts with cost reimbursable provisions, and in solicitation documents prepared to obtain offers for such contracts:
(i) Allowable costs will be paid from the nonprofit school food service account to the contractor net of all discounts, rebates and other applicable credits accruing to or received by the contractor or any assignee under the contract, to the extent those credits are allocable to the allowable portion of the costs billed to the school food authority;
(ii)(A) The contractor must separately identify for each cost submitted for payment to the school food authority the amount of that cost that is allowable (can be paid from the nonprofit school food service account) and the amount that is unallowable (cannot be paid from the nonprofit school food service account), or;
(B) The contractor must exclude all unallowable costs from its billing documents and certify that only allowable costs are submitted for payment and records have been established that maintain the visibility of unallowable costs, including directly associated costs in a manner suitable for contract cost determination and verification;
(iii) The contractor’s determination of its allowable costs must be made in compliance with the applicable Departmental and Program regulations and Office of Management and Budget cost circulars;
(iv) The contractor must identify the amount of each discount, rebate and other applicable credit on bills and invoices presented to the school food authority for payment and identify the amount as a discount, rebate, or in the case of other applicable credits, the nature of the credit. If approved by the State agency, the school food authority may permit the contractor to report this information on a less frequent basis than monthly, but no less frequently than annually;
(v) The contractor must identify the method by which it will report discounts, rebates and other applicable credits allocable to the contract that are not reported prior to conclusion of the contract; and
(vi) The contractor must maintain documentation of costs and discounts, rebates, and other applicable credits, and must furnish such documentation upon request to the school food authority, the State agency, or the Department.
(2) Prohibited expenditures. No expenditure may be made from the nonprofit school food service account for any cost resulting from a cost reimbursable contract that fails to include the requirements of this section, nor may any expenditure be made from the nonprofit school food service account that permits or results in the contractor receiving payments in excess of the contractor’s actual, net allowable costs.
(f) Geographic preference. (1) School food authorities participating in the Program, as well as State agencies making purchases on behalf of such school food authorities, may apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products. When utilizing the geographic preference to procure such products, the school food authority making the purchase or the State agency making purchases on behalf of such school food authorities have the discretion to determine the local area to which the geographic preference option will be applied;
(2) For the purpose of applying the optional geographic preference in paragraph (f)(1) of this section, “unprocessed locally grown or locally raised agricultural products” means only those agricultural products that retain their inherent character. The effects of the following food handling and preservation techniques shall not be considered as changing an agricultural product into a product of a different kind or character: Cooling; refrigerating; freezing; size adjustment made by peeling, slicing, dicing, cutting, chopping, shucking, and grinding; forming ground products into patties without any additives or fillers; drying/dehydration; washing; packaging (such as placing eggs in cartons), vacuum packing and bagging (such as placing vegetables in bags or combining two or more types of vegetables or fruits in a single package); addition of ascorbic acid or other preservatives to prevent oxidation of produce; butchering livestock and poultry; cleaning fish; and the pasteurization of milk.
§ 220.17 Prohibitions.
(a) In carrying out the provisions of this part, the Department shall not impose any requirements with respect to teaching personnel, curriculum, instructions, methods of instruction, and materials of instruction in any school as a condition for participation in the Program.
(b) The value of assistance to children under the Act shall not be considered to be income or resources for any purposes under any Federal or State laws, including, but not limited to, laws relating to taxation, welfare, and public assistance programs. Expenditure of funds from State and local sources for the maintenance of food programs for children shall not be diminished as a result of funds received under the Act.
§ 220.18 Withholding payments and establishing fines.
(a) Withholding payments. In accordance with 2 CFR 200.338 through 342, the State agency must withhold Program payments, in whole or in part, from any school food authority which has failed to comply with the provisions of this part. Program payments must be withheld until the school food authority takes corrective action that is satisfactory to the State agency, or gives evidence that such corrective actions will be taken, or until the State agency terminates the grant in accordance with § 220.19. Subsequent to the State agency’s acceptance of the corrective actions, payments will be released for any breakfasts served in accordance with the provisions of this part during the period the payments were withheld.
(b) Fines. (1) The State agency may establish a fine against any school food authority when it has determined that the school food authority or a school under its agreement has:
(i) Failed to correct severe mismanagement of the Program or a Child Nutrition Program under parts 225 or 226 of this chapter;
(ii) Disregarded a Program requirement of which the school food authority or school had been informed; or
(iii) Failed to correct repeated violations of Program requirements under this part or under parts 225 or 226 of this chapter.
(2) FNS may direct the State agency to establish a fine against any school food authority when it has determined that the school food authority or school meets the criteria set forth under paragraph (b)(1) of this section.
(3) Funds used to pay a fine established under this paragraph must be derived from non-Federal sources. The State agency must calculate the fine based on the amount of Program reimbursement earned by the school food authority or school for the most recent fiscal year for which full year data are available, provided that the fine does not exceed the equivalent of:
(i) For the first fine, 1 percent of the amount of meal reimbursement earned for the fiscal year;
(ii) For the second fine, 5 percent of the amount of meal reimbursement earned for the fiscal year; and
(iii) For the third or subsequent fine, 10 percent of the amount of meal reimbursement earned for the fiscal year.
(4) The State agency must inform FNS at least 30 days prior to establishing a fine under this paragraph. The State agency must send the school food authority written notification of the fine established under this paragraph and provide a copy of the notification to FNS. The notification must:
(i) Specify the violations or actions which constitute the basis for the fine and indicate the amount of the fine;
(ii) Inform the school food authority that it may appeal the fine, and advise the school food authority of the appeal procedures established under § 210.18(p) of this chapter;
(iii) Indicate the effective date and payment procedures should the school food authority not exercise its right to appeal within the specified timeframe.
(5) Any school food authority subject to a fine under paragraph (b)(1) of this section may appeal the State agency’s determination. In appealing a fine, the school food authority must submit to the State agency any pertinent information, explanation, or evidence addressing the Program violations identified by the State agency. Any school food authority seeking to appeal the State agency determination must follow State agency appeal procedures.
(6) The decision of the State agency review official is final and not subject to further administrative or judicial review. Failure to pay a fine established under this paragraph may be grounds for suspension or termination.
(7) Money received by the State agency as a result of a fine established under this paragraph against a school food authority and any interest charged in the collection of these fines must be remitted to FNS, and then remitted to the United States Treasury.
§ 220.19 Suspension, termination and grant closeout procedures.
Whenever it is determined that a State agency has materially failed to comply with the provisions of this part, or with FNS guidelines and instructions, FNS may suspend or terminate the Program in whole, or in part, or take any other action as may be available and appropriate. A State agency may also terminate the Program by mutual agreement with FNS. FNS and the State agency shall comply with the provisions of 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 subparts B and D and USDA implementing regulations 2 CFR part 400 and part 415 concerning grant suspension, termination and closeout procedures. Furthermore, the State agency or FNSRO were applicable, shall apply these provisions to suspension or termination of the Program in School Food Authorities.
§ 220.20 Free and reduced price breakfasts.
The determination of the children to whom free and reduced price breakfasts are to be served because of inability to pay the full price thereof, and the serving of the breakfasts to such children, shall be effected in accordance with part 245 of this chapter.
§ 220.21 Program information.
Persons seeking information about this Program should contact their State administering agency or the appropriate FNSRO. The FNS website has contact information for State agencies at https://www.fns.usda.gov/contacts and FNSROs at https://www.fns.usda.gov/fns-regional-offices.
§ 220.22 Information collection/recordkeeping—OMB assigned control numbers.
| 7 CFR section where requirements are described | Current OMB control No. |
|---|---|
| 220.3(e) | 0584-0067 |
| 220.7(a),(d), (e) | 0584-0012 |
| 220.8(a)(3), (o) | 0584-0012 |
| 220.9(a) | 0584-0012 |
| 220.11 (a)-(b) | 0584-0012 |
| 220.13 (a-1), (b), (c), (e), (f) | 0584-0012 0584-0594 |
| 220.14(d) | 0584-0012 |
| 220.15 | 0584-0012 |
§ 220.23 Seamless Summer Option non-congregate meal service.
A school food authority participating in the National School Lunch Program’s Seamless Summer Option, and which is approved to offer a non-congregate meal service, must comply with the provisions specified in § 210.34 of this chapter.
Appendix A to Part 220—Alternate Foods for Meals
1. An alternate protein product used in meals planned under the food-based menu planning approaches in § 220.8(g), must meet all of the criteria in this section.
2. An alternate protein product whether used alone or in combination with meat or other meat alternates must meet the following criteria:
a. The alternate protein product must be processed so that some portion of the non-protein constituents of the food is removed. These alternate protein products must be safe and suitable edible products produced from plant or animal sources.
b. The biological quality of the protein in the alternate protein product must be at least 80 percent that of casein, determined by performing a Protein Digestibility Corrected Amino Acid Score (PDCAAS).
c. The alternate protein product must contain at least 18 percent protein by weight when fully hydrated or formulated. (“When hydrated or formulated” refers to a dry alternate protein product and the amount of water, fat, oil, colors, flavors or any other substances which have been added).
d. Manufacturers supplying an alternate protein product to participating schools or institutions must provide documentation that the product meets the criteria in paragraphs A.2. a through c of this appendix.
e. Manufacturers should provide information on the percent protein contained in the dry alternate protein product and on an as prepared basis.
f. For an alternate protein product mix, manufacturers should provide information on:
(1) The amount by weight of dry alternate protein product in the package;
(2) Hydration instructions; and
(3) instructions on how to combine the mix with meat or other meat alternates.
1. Schools, institutions, and service institutions may use alternate protein products to fulfill all or part of the meat/meat alternate component discussed in § 220.8. The following terms and conditions apply:
a. The alternate protein product may be used alone or in combination with other food ingredients. Examples of combination items are beef patties, beef crumbles, pizza topping, meat loaf, meat sauce, taco filling, burritos, and tuna salad.
b. Alternate protein products may be used in the dry form (nonhydrated), partially hydrated or fully hydrated form. The moisture content of the fully hydrated alternate protein product (if prepared from a dry concentrated form) must be such that the mixture will have a minimum of 18 percent protein by weight or equivalent amount for the dry or partially hydrated form (based on the level that would be provided if the product were fully hydrated).
Schools, institutions, and service institutions may use a commercially prepared meat or other meat alternate products combined with alternate protein products or use a commercially prepared product that contains only alternate protein products.
Appendix B to Part 220 [Reserved]
Appendix C to Part 220—Child Nutrition (CN) Labeling Program
1. The Child Nutrition (CN) Labeling Program is a voluntary technical assistance program administered by the Food and Nutrition Service (FNS) in conjunction with the Food Safety and Inspection Service (FSIS), and Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture (USDA), and National Marine Fisheries Service of the U.S. Department of Commerce (USDC) for the Child Nutrition Programs. This program essentially involves the review of a manufacturer’s recipe or product formulation to determine the contribution a serving of a commercially prepared product makes toward meal pattern requirements and a review of the CN label statement to ensure its accuracy. CN labeled products must be produced in accordance with all requirements set forth in this rule.
2. Products eligible for CN labels are as follows:
(a) Commercially prepared food products that contribute significantly to the meat/meat alternate component of meal pattern requirements of 7 CFR 210.10 or 210.10a, whichever is applicable, 225.21, and 226.20 and are served in the main dish.
(b) Juice drinks and juice drink products that contain a minimum of 50 percent full-strength juice by volume.
3. For the purpose of this appendix the following definitions apply:
(a) “CN label” is a food product label that contains a CN label statement and CN logo as defined in paragraph 3 (b) and (c) below.
(b) The “CN logo” (as shown below) is a distinct border which is used around the edges of a “CN label statement” as defined in paragraph 3(c).
(c) The “CN label statement” includes the following:
(1) The product identification number (assigned by FNS),
(2) The statement of the product’s contribution toward meal pattern requirements of 7 CFR 210.10 or 210.10a, whichever is applicable, 220.8, 225.21, and 226.20. The statement shall identify the contribution of a specific portion of a meat/meat alternate product toward the meat/meat alternate, bread/bread alternate, and/or vegetable/fruit component of the meal pattern requirements. For juice drinks and juice drink products the statement shall identify their contribution toward the vegetable/fruit component of the meal pattern requirements,
(3) Statement specifying that the use of the CN logo and CN statement was authorized by FNS, and
(4) The approval date.
For example:
(d) Federal inspection means inspection of food products by FSIS, AMS or USDC.
4. Food processors or manufacturers may use the CN label statement and CN logo as defined in paragraph 3 (b) and (c) under the following terms and conditions:
(a) The CN label must be reviewed and approved at the national level by the Food and Nutrition Service and appropriate USDA or USDC Federal agency responsible for the inspection of the product.
(b) The CN labeled product must be produced under Federal inspection by USDA or USDC. The Federal inspection must be performed in accordance with an approved partial or total quality control program or standards established by the appropriate Federal inspection service.
(c) The CN label statement must be printed as an integral part of the product label along with the product name, ingredient listing, the inspection shield or mark for the appropriate inspection program, the establishment number where appropriate, and the manufacturer’s or distributor’s name and address.
(1) The inspection marking for CN labeled non-meat, non-poultry, and non-seafood products with the exception of juice drinks and juice drink products is established as follows:
(d) Yields for determining the product’s contribution toward meal pattern requirements must be calculated using the Food Buying Guide for Child Nutrition Programs (Program Aid Number 1331).
5. In the event a company uses the CN logo and CN label statement inappropriately, the company will be directed to discontinue the use of the logo and statement and the matter will be referred to the appropriate agency for action to be taken against the company.
6. Products that bear a CN label statement as set forth in paragraph 3(c) carry a warranty. This means that if a food service authority participating in the child nutrition programs purchases a CN labeled product and uses it in accordance with the manufacturer’s directions, the school or institution will not have an audit claim filed against it for the CN labeled product for noncompliance with the meal pattern requirements of 7 CFR 210.10 or 210.10a, whichever is applicable, 220.8, 225.21, and 226.20. If a State or Federal auditor finds that a product that is CN labeled does not actually meet the meal pattern requirements claimed on the label, the auditor will report this finding to FNS. FNS will prepare a report of the findings and send it to the appropriate divisions of FSIS and AMS of the USDA, National Marine Fisheries Services of the USDC, Food and Drug Administration, or the Department of Justice for action against the company.
Any or all of the following courses of action may be taken:
(a) The company’s CN label may be revoked for a specific period of time;
(b) The appropriate agency may pursue a misbranding or mislabeling action against the company producing the product;
(c) The company’s name will be circulated to regional FNS offices;
(d) FNS will require the food service program involved to notify the State agency of the labeling violation.
7. FNS is authorized to issue operational policies, procedures, and instructions for the CN Labeling Program.
To apply for a CN label and to obtain additional information on CN label application procedures write to: CN Labels, U.S. Department of Agriculture, Food and Nutrition Service, Nutrition and Technical Services Division, 3101 Park Center Drive, Alexandria, Virginia 22302.
PART 225—SUMMER FOOD SERVICE PROGRAM
Subpart A—General
§ 225.1 General purpose and scope.
This part establishes the regulations under which the Secretary will administer a Summer Food Service Program. Section 13 of the Act authorizes the Secretary to assist States through grants-in-aid to conduct nonprofit food service programs for children during the summer months and at other approved times. The primary purpose of the Program is to provide food service to children from needy areas during periods when area schools are closed for vacation.
§ 225.2 Definitions.
2 CFR part 200, means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by OMB. The part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F). (NOTE: Pre-Federal Award Requirements and Contents of Federal Awards (subpart C) does not apply to the National School Lunch Program).
Act means the National School Lunch Act, as amended.
Administrative costs means costs incurred by a sponsor related to planning, organizing, and managing a food service under the Program, and excluding interest costs and operating costs.
Adult means, for the purposes of the collection of the last four digits of social security numbers as a condition of eligibility for Program meals, any individual 21 years of age or older.
Advance payments means financial assistance made available to a sponsor for its operating costs and/or administrative costs prior to the end of the month in which such costs will be incurred.
Areas in which poor economic conditions exist means:
(1) The attendance area of a school in which at least 50 percent of the enrolled children have been determined eligible for free or reduced-price school meals under the National School Lunch Program and the School Breakfast Program;
(2) A geographic area where, based on the most recent census data available or information provided from a department of welfare or zoning commission, at least 50 percent of the children residing in that area are eligible for free or reduced-price school meals under the National School Lunch Program and the School Breakfast Program;
(3) A geographic area where a site demonstrates, based on other approved sources, that at least 50 percent of the children enrolled at the site are eligible for free or reduced-price school meals under the National School Lunch Program and the School Breakfast Program; or
(4) A closed enrolled site in which at least 50 percent of the enrolled children at the site are eligible for free or reduced-price school meals under the National School Lunch Program and the School Breakfast Program, as determined by approval of applications in accordance with § 225.15(f).
Camps means residential summer camps and nonresidential day camps which offer a regularly scheduled food service as part of an organized program for enrolled children. Nonresidential camp sites shall offer a continuous schedule of organized cultural or recreational programs for enrolled children between meal services.
Children means:
(1) Persons 18 years of age and under; and
(2) Persons over 18 years of age who are determined by a State educational agency or a local public educational agency of a State to be mentally or physically disabled and who participate in a public or nonprofit private school program established for the mentally or physically disabled.
Children’s Health Insurance Program (CHIP) means the State medical assistance program under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.).
Closed enrolled site means a site which is open only to enrolled children, as opposed to the community at large, and in which at least 50 percent of the enrolled children at the site are eligible for free or reduced-price school meals under the National School Lunch Program and the School Breakfast Program, as determined by approval of applications in accordance with § 225.15(f), or on the basis of documentation that the site meets paragraph (1), (2), or (3) of the definition of “Areas in which poor economic conditions exist” as provided in this section.
Conditional non-congregate site means a site which qualifies for Program participation because it conducts a non-congregate meal service for eligible children in an area that does not meet the definition of “areas in which poor economic conditions exist” and is not a “Camp,” as defined in this section.
Congregate meal service means a food service at which meals that are provided to children are consumed on site in a supervised setting.
Continuous school calendar means a situation in which all or part of the student body of a school is (a) on a vacation for periods of 15 continuous school days or more during the period October through April and (b) in attendance at regularly scheduled classes during most of the period May through September.
Costs of obtaining food means costs related to obtaining food for consumption by children. Such costs may include, in addition to the purchase price of agricultural commodities and other food, the cost of processing, distributing, transporting, storing, or handling any food purchased for, or donated to, the Program.
Current income means income, as defined in § 225.15(f)(4)(vi), received during the month prior to application for free meals. If such income does not accurately reflect the household’s annual income, income must be based on the projected annual household income. If the prior year’s income provides an accurate reflection of the household’s current annual income, the prior year may be used as a base for the projected annual income.
Department means the U.S. Department of Agriculture.
Disclosure means reveal or use individual children’s program eligibility information obtained through the free and reduced price meal eligibility process for a purpose other than for the purpose for which the information was obtained. The term refers to access, release, or transfer of personal data about children by means of print, tape, microfilm, microfiche, electronic communication or any other means.
Documentation means:
(1) The completion of the following information on a free meal application:
(i) Names of all household members;
(ii) Income received by each household member, identified by source of income (such as earnings, wages, welfare, pensions, support payments, unemployment compensation, social security and other cash income);
(iii) The signature of an adult household member; and
(iv) The last four digits of the Social Security number of the adult household member who signs the application, or an indication that the adult does not possess a Social Security number; or
(2) For a child who is a member of a household receiving SNAP, FDPIR, or TANF benefits, “documentation” means completion of only the following information on a free meal application:
(i) The name(s) and appropriate SNAP, FDPIR, or TANF case number(s) for the child(ren); and
(ii) The signature of an adult member of the household.
Excess funds means the difference between any advance funding and reimbursement funding, when advance funds received by a sponsor are greater than the reimbursement amount earned by a sponsor.
Experienced site means a site which, as determined by the State agency, has successfully participated in the Program in the prior year.
Experienced sponsor means a sponsor which, as determined by the State agency, has successfully participated in the Program in the prior year.
Family means a group of related or nonrelated individuals who are not residents of an institution or boarding house but who are living as one economic unit.
FDPIR household means any individual or group of individuals which is currently certified to receive assistance as a household under the Food Distribution Program on Indian Reservations.
Fiscal year means the period beginning October 1 of any calendar year and ending September 30 of the following calendar year.
FNS means the Food and Nutrition Service of the Department.
FNSRO means the appropriate FNS Regional Office.
Food service management company means any commercial enterprise or nonprofit organization with which a sponsor may contract for preparing unitized meals, with or without milk, for use in the Program, or for managing a sponsor’s food service operations in accordance with the limitations set forth in § 225.15. Food service management companies may be: (a) Public agencies or entities; (b) private, nonprofit organizations; or (c) private, for-profit companies.
Foster child means a child who is formally placed by a court or a State child welfare agency, as defined in § 245.2 of this chapter.
Good standing means the status of a program operator that meets its Program responsibilities, is current with its financial obligations, and, if applicable, has fully implemented all corrective actions within the required period of time.
Household means “family,” as defined in this section.
Income accruing to the program means all funds used by a sponsor in its food service program, including but not limited to all monies, other than program payments, received from Federal, State and local governments, from food sales to adults, and from any other source including cash donations or grants. Income accruing to the Program will be deducted from combined operating and administrative costs.
Income standards means the family-size and income standards prescribed annually by the Secretary for determining eligibility for reduced price meals under the National School Lunch Program and the School Breakfast Program.
Meals means food which is served to children at a food service site and which meets the nutritional requirements set out in this part.
Medicaid means the State medical assistance program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).
Milk means whole milk, lowfat milk, skim milk, and buttermilk. All milk must be fluid and pasteurized and must meet State and local standards for the appropriate type of milk. Milk served may be flavored or unflavored. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, the Northern Mariana Islands, and the Virgin Islands of the United States, if a sufficient supply of such types of fluid milk cannot be obtained, reconstituted or recombined milk may be used. All milk should contain Vitamins A and D at the levels specified by the Food and Drug Administration and at levels consistent with State and local standards for such milk.
Needy children means children from families whose incomes are equal to or below the Secretary’s published Child Nutrition Programs: Income Eligibility Guidelines.
Net cash resources means all monies, as determined in accordance with the State agency’s established accounting system that are available to or have accrued to a sponsor’s nonprofit food service at any given time, less cash payable. Such monies may include, but are not limited to, cash on hand, cash receivable, earnings on investments, cash on deposit and the value of stocks, bonds, or other negotiable securities.
New site means a site which did not participate in the Program in the prior year, an experienced site that is proposing to operate a non-congregate meal service for the first time, or, as determined by the State agency, a site which has experienced significant staff turnover from the prior year.
New sponsor means a sponsor which did not participate in the Program in the prior year, or, as determined by the State agency, a sponsor which has experienced significant staff turnover from the prior year.
Non-congregate meal service means a food service at which meals are provided for children to consume all of the components off site. Non-congregate meal service must only be operated at sites designated as “Rural” with no “Congregate meal service,” as determined in § 225.6(h)(3) and (4).
Nonprofit food service means all food service operations conducted by the sponsor principally for the benefit of children, all of the revenue from which is used solely for the operation or improvement of such food services.
Nonprofit food service account means the restricted account in which all of the revenue from all food service operations conducted by the sponsor principally for the benefit of children is retained and used only for the operation or improvement of the nonprofit food service. This account must include, as appropriate, non-Federal funds used to support program operations, and proceeds from non-program foods.
NYSP means the National Youth Sports Program administered by the National Collegiate Athletic Association.
NYSP feeding site means a site at which all of the children receiving Program meals are enrolled in the NYSP and which qualifies for Program participation on the basis of documentation that the site meets the definition of “areas in which poor economic conditions exist” as provided in this section.
OIG means the Office of the Inspector General of the Department.
Open site means a site at which meals are made available to all children in the area and which is located in an area in which at least 50 percent of the children are from households that would be eligible for free or reduced price school meals under the National School Lunch Program and the School Breakfast Program, as determined in accordance with paragraph (1), (2), or (3) of the definition of “Areas in which poor economic conditions exist.”
Operating costs means the cost of operating a food service under the Program:
(1) Including the:
(i) Cost of obtaining food;
(ii) Labor directly involved in the preparation and service of food;
(iii) Cost of nonfood supplies;
(iv) Rental and use allowances for equipment and space; and
(v) Cost of transporting children in rural areas to feeding sites in rural areas;
(vi) Cost of delivering non-congregate meals in rural areas; but
(2) Excluding:
(i) The cost of the purchase of land, acquisition or construction of buildings;
(ii) Alteration of existing buildings;
(iii) Interest costs;
(iv) The value of in-kind donations; and
(v) Administrative costs.
Private nonprofit means tax exempt under section 501(a) of the Internal Revenue Code of 1986, as amended.
Private nonprofit organization means an organization (other than private nonprofit residential camps, school food authorities, or colleges or universities participating in the NYSP) that:
(a) Exercises full control and authority over the operation of the Program at all sites under the sponsorship of the organization;
(b) Provides ongoing year-round activities for children or families;
(c) Demonstrates that the organization has adequate management and the fiscal capacity to operate the Program;
(d) Is an organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from taxation under 501(a) of that Code; and
(e) Meets applicable State and local health, safety, and sanitation standards.
Program means the Summer Food Service Program for Children authorized by Section 13 of the Act.
Program funds means Federal financial assistance made available to State agencies for the purpose of making Program payments.
Program payments means financial assistance in the form of start-up payments, advance payments, or reimbursement paid to sponsors for operating and administrative costs.
Restricted open site means a site which is initially open to broad community participation, but at which the sponsor restricts or limits attendance for reasons of security, safety or control. Site eligibility for a restricted open site shall be documented in accordance with paragraph (1), (2), or (3) of the definition of “Areas in which poor economic conditions exist.”
Rural means:
(1) Any area in a county which is not a part of a Metropolitan Statistical Area based on the Office of Management and Budget’s Delineations of Metropolitan Statistical Areas;
(2) Any area in a county classified as a non-metropolitan area based on USDA Economic Research Service’s Rural-Urban Continuum Codes and Urban Influence Codes;
(3) Any census tract classified as a non-metropolitan area based on USDA Economic Research Service’s Rural-Urban Commuting Area codes;
(4) Any area of a Metropolitan Statistical Area which is not part of a Census Bureau-defined urban area;
(5) Any area of a State which is not part of an urban area as determined by the Secretary;
(6) Any subsequent substitution or update of the aforementioned classification schemes that Federal governing bodies create; or
(7) Any “pocket” within a Metropolitan Statistical Area which, at the option of the State agency and with FNSRO approval, is determined to be rural in character based on other data sources.
School food authority means the governing body which is responsible for the administration of one or more schools and which has the legal authority to operate a lunch program in those schools. In addition, for the purpose of determining the applicability of food service management company registration and bid procedure requirements, “school food authority” also means any college or university which participates in the Program.
Secretary means the Secretary of Agriculture.
Self-preparation site means a site that prepares the majority of meals that will be served at its site or receives meals that are prepared at its sponsor’s central kitchen. The site does not contract with a food service management company for unitized meals, with or without milk, or for management services.
Self-preparation sponsor means a sponsor which prepares the meals that will be served at its site(s) and does not contract with a food service management company for unitized meals, with or without milk, or for management services.
Session means a specified period of time during which an enrolled group of children attend camp.
Site means the place where a child receives a program meal. A site may be the indoor or outdoor location where congregate meals are served, a stop on a delivery route of a mobile congregate meal service, or the distribution location or route for a non-congregate meal service. However, a child’s residence is not considered a non-congregate meal site for Program monitoring purposes.
Site supervisor means the individual who has been trained by the sponsor and is responsible for all administrative and management activities at the site, including, but not limited to: maintaining documentation of meal deliveries, ensuring that all meals served are safe, and maintaining accurate point of service meal counts. Except for non-congregate meal service sites using delivery services, the individual is on site for the duration of the food service.
SNAP household means any individual or group of individuals which is currently certified to receive assistance as a household from SNAP, the Supplemental Nutrition Assistance Program, as defined in § 245.2 of this chapter.
Special account means an account which a State agency may require a vended sponsor to establish with the State agency or with a Federally insured bank. Operating costs payable to the sponsor by the State agency are deposited in the account and disbursement of monies from the account must be authorized by both the sponsor and the food service management company.
Sponsor means a public or private nonprofit school food authority, a public or private nonprofit residential summer camp, a unit of local, municipal, county or State government, a public or private nonprofit college or university currently participating in the NYSP, or a private nonprofit organization which develops a special summer or other school vacation program providing food service similar to that made available to children during the school year under the National School Lunch and School Breakfast Programs and which is approved to participate in the Program. Sponsors are referred to in the Act as “service institutions”.
Start-up payments means financial assistance made available to a sponsor for administrative costs to enable it to effectively plan a summer food service, and to establish effective management procedures for such a service. These payments shall be deducted from subsequent administrative cost payments.
State means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands.
State agency means the State educational agency or an alternate agency that has been designated by the Governor or other appropriate executive or legislative authority of the State and which has been approved by the Department to administer the Program within the State, or, in States where FNS administers the Program, FNSRO.
TANF means the State funded program under part A of title IV of the Social Security Act that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995. This program is commonly referred to as Temporary Assistance for Needy Families, although States may refer to the program by another name.
Termination for convenience means:
(1) Termination of a State agency’s participation in the Program in whole, or in part, when FNS and the State agency agree that the continuation of the Program would not produce beneficial results commensurate with the further expenditure of funds; or
(2) Termination of a permanent operating agreement by a State agency or sponsor due to considerations unrelated to either party’s performance of Program responsibilities under the agreement.
Unaffiliated site means a site that is legally distinct from the sponsor.
Unanticipated school closure means any period from October through April (or any time of the year in an area with a continuous school calendar) during which children who are not in school due to a natural disaster, building repair, court order, labor-management disputes, or, when approved by the State agency, similar cause, may be served meals at non-school sites through the Summer Food Service Program.
Unit of local, municipal, county or State government means an entity which is so recognized by the State constitution or State laws, such as the State administrative procedures act, tax laws, or other applicable State laws which delineate authority for government responsibility in the State.
USDA implementing regulations include the following: 2 CFR part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; 2 CFR part 415, General Program Administrative Regulations; 2 CFR part 416, General Program Administrative Regulations for Grants and Cooperative Agreements to State and Local Governments; and 2 CFR part 418, New Restrictions on Lobbying.
Unused reimbursement means the difference between the amount of reimbursement earned and received and allowable costs, when reimbursement exceeds costs.
Vended site means a site that serves unitized meals, with or without milk, that are procured through a formal agreement or contract with:
(1) Public agencies or entities, such as a school food authority;
(2) Private, nonprofit organizations; or
(3) Private, for-profit companies, such as a commercial food distributor or food service management company.
Vended sponsor means a sponsor which purchases from a food service management company the unitized meals, with or without milk, which it will serve at its site(s), or a sponsor which purchases management services, subject to the limitations set forth in § 225.15, from a food service management company.
Yogurt means commercially prepared coagulated milk products obtained by the fermentation of specific bacteria, that meet milk fat or milk solid requirements and to which flavoring foods or ingredients may be added. These products are covered by the Food and Drug Administration’s Standard of Identity for yogurt, lowfat yogurt, and nonfat yogurt, (21 CFR 131.200), (21 CFR 131.203), (21 CFR 131.206), respectively.
§ 225.3 Administration.
(a) Responsibility within the Department. FNS shall act on behalf of the Department in the administration of the Program.
(b) State administered programs. Within the State, responsibility for the administration of the Program must be in the State agency. Each State agency must notify the Department by January 1 of the fiscal year regarding its intention to administer the Program. Each State agency desiring to take part in the Program must enter into a written agreement with FNS for the administration of the Program in accordance with the provisions of this part. The agreement must cover the operation of the Program during the period specified therein and may be extended by written consent of both parties. The agreement must contain an assurance that the State agency will comply with the Department’s nondiscrimination regulations (7 CFR part 15) issued under title VI of the Civil Rights Act of 1964, and any Instructions issued by FNS pursuant to 7 CFR part 15, title IX of the Education Amendments of 1972, and section 504 of the Rehabilitation Act of 1973. However, if a State educational agency is not permitted by law to disburse funds to any of the nonpublic schools in the State, the Secretary must disburse the funds directly to such schools within the State for the same purposes and subject to the same conditions as the disbursements to public schools within the State by the State educational agency.
(c) Regional office administered programs. The Secretary shall not administer the Program in the States, except that if a FNSRO has continuously administered the Program in any State since October 1, 1980, FNS shall continue to administer the Program in that State. In States in which FNSRO administers the Program, it shall have all of the responsibilities of a State agency and shall earn State administrative and Program funds as set forth in this part. A State in which FNS administers the Program may, upon request to FNS, assume administration of the Program.
(d) Authority to waive statute and regulations. (1) As authorized under section 12(l) of the Richard B. Russell National School Lunch Act, FNS may waive provisions of such Act or the Child Nutrition Act of 1966, as amended, and the provisions of this part with respect to a State agency or eligible service provider. The provisions of this part required by other statutes may not be waived under this authority. FNS may only approve requests for a waiver that are submitted by a State agency and comply with the requirements at section 12(l)(1) and the limitations at section 12(l)(4), including that FNS may not grant a waiver that increases Federal costs.
(2)(i) A State agency may submit a request for a waiver under paragraph (d)(1) of this section in accordance with section 12(l)(2) and the provisions of this part.
(ii) A State agency may submit a request to waive specific statutory or regulatory requirements on behalf of eligible service providers that operate in the State. Any waiver where the State concurs must be submitted to the appropriate FNSRO.
(3)(i) An eligible service provider may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l) and the provisions of this part. Any waiver request submitted by an eligible service provider must be submitted to the State agency for review. A State agency must act promptly on such a waiver request and must deny or concur with a request submitted by an eligible service provider.
(ii) If a State agency concurs with a request from an eligible service provider, the State agency must promptly forward to the appropriate FNSRO the request and a rationale, consistent with section 12(l)(2), supporting the request. By forwarding the request to the FNSRO, the State agency affirms:
(A) The request meets all requirements for waiver submissions; and,
(B) The State agency will conduct all monitoring requirements related to regular Program operations and the implementation of the waiver.
(iii) If the State agency denies the request, the State agency must notify the requesting eligible service provider and state the reason for denying the request in writing within 30 calendar days of the State agency’s receipt of the request. The State agency response is final and may not be appealed to FNS.
(e) Coordinated Services Plan. (1) Each State agency must establish, and update annually as needed, a plan to coordinate the statewide availability of services offered through the Summer Food Service Program described in this part and the Summer Electronic Benefits Transfer (EBT) Program regulations (7 CFR part 292).
(2) Only one plan must be established for each State in which both the Summer Food Service Program and the Summer EBT Program is administered. If more than one agency administers the Summer Food Service Program and Summer EBT within a respective State, they must work together to develop and implement the plan. States should also ensure that plans include the National School Lunch Program’s Seamless Summer Program if appropriate.
(3) The plan must include, at minimum, the following information:
(i) A description of the roles and responsibilities of each State administering agency, and, as applicable, any other agencies, Indian Tribal Organizations, or public or private organizations which will be involved in administering the Programs;
(ii) A description of how the State agency and any other organizations included in the plan will coordinate outreach and programmatic activities to maximize the reach of the Summer Food Service Program and Summer EBT Program;
(iii) Metrics to assess Program reach and coverage; and
(iv) The State agency’s plans to partner with other Federal, State, Tribal, or local programs to aid participants in accessing all Federal, State, Tribal, or local programs for which they are eligible.
(4) States must notify the public about their plan and make it available to the public through a website, and should, to the maximum extent practicable, solicit and consider input on plan development and implementation from other State, Tribal, and local agencies; organizations involved in the administration of nutrition and human services programs; participants; and other stakeholders.
(5) States must consult with FNS on the development of and any significant subsequent updates to their plan. Initial Plans must be submitted to FNS no later than January 1, 2025. States must submit updates annually when significant changes are made to the plan, and otherwise no less than every 3 years.
Subpart B—State Agency Provisions
§ 225.4 Program management and administration plan.
(a) Not later than February 15 of each year, each State agency shall submit to FNSRO a Program management and administration plan for that fiscal year.
(b) Each plan shall be acted on or approved by March 15 or, if it is submitted late, within 30 calendar days of receipt of the plan. If the plan initially submitted is not approved, the State agency and FNS shall work together to ensure that changes to the plan, in the form of amendments, are submitted so that the plan can be approved within 60 calendar days following the initial submission of the plan. Upon approval of the plan, the State agency shall be notified of the level of State administrative funding which it is assured of receiving under § 225.5(a)(3).
(c) Approval of the Plan by FNS shall be a prerequisite to the withdrawal of Program funds by the State from the Letter of Credit and to the donation by the Department of any commodities for use in the State’s Program.
(d) The Plan must include, at a minimum, the following information:
(1) The State’s administrative budget for the fiscal year, and the State’s plan to comply with any standards prescribed by the Secretary for the use of these funds;
(2) The State’s plan for use of Program funds and funds from within the State to the maximum extent practicable to reach needy children;
(3) The State’s plans for providing technical assistance and training to eligible sponsors;
(4) The State’s plans for monitoring and inspecting sponsors, feeding sites, and food service management companies and for ensuring that such companies do not enter into contracts for more meals than they can provide effectively and efficiently;
(5) The State’s plan for timely and effective action against Program violators;
(6) The State’s plan for ensuring the fiscal integrity of sponsors not subject to auditing requirements prescribed by the Secretary;
(7) The State’s plan for ensuring compliance with the food service management company procurement monitoring requirements set forth at § 225.6(l);
(8) An estimate of the State’s need, if any, for monies available to pay for the cost of conducting health inspections and meal quality tests;
(9) The State’s plan to provide a reasonable opportunity for children to access meals across all areas of the State; and
(10) The State’s plan for Program delivery in areas that could benefit the most from the provision of non-congregate meals, including the State’s plan to identify areas with no congregate meal service, and target priority areas for non-congregate meal service.
§ 225.5 Payments to State agencies and use of Program funds.
(a) State administrative funds—(1) Administrative funding formula. For each fiscal year, FNS shall pay to each State agency for administrative expenses incurred in the Program an amount equal to
(i) 20 percent of the first $50,000 in Program funds properly payable to the State in the preceding fiscal year;
(ii) 10 percent of the next $100,000 in Program funds properly payable to the State in the preceding fiscal year;
(iii) 5 percent of the next $250,000 in Program funds properly payable to the State in the preceding fiscal year; and
(iv) 2
(2) Use of State administrative funds. State administrative funds paid to any State shall be used by State agencies to employ personnel, including travel and related expenses, and to supervise and give technical assistance to sponsors in their initiation, expansion, and conduct of any food service for which Program funds are made available. State agencies may also use administrative funds for such other administrative expenses as are set forth in their approved Program management and administration plan.
(3) Funding assurance. At the time FNS approves the State’s management and administration plan, the State shall be assured of receiving State administrative funding equal to the lesser of the following amounts: 80 percent of the amount obtained by applying the formula set forth in paragraph (a)(1) of this section to the total amount of Program payments made within the State during the prior fiscal year; or, 80 percent of the amount obtained by applying the formula set forth in paragraph (a)(1) to the amount of Program funds estimated to be needed in the management and administration plan. The State agency shall be assured that it will receive no less than this level unless FNS determines that the State agency has failed or is failing to meet its responsibilities under this part.
(4) Limitation. In no event may the total payment for State administrative costs in any fiscal year exceed the total amount of expenditures incurred by the State agency in administering the Program.
(5) Full use of Federal funds. States and State agencies must support the full use of Federal funds provided to State agencies for the administration of Child Nutrition Programs, and exclude such funds from State budget restrictions or limitations including, hiring freezes, work furloughs, and travel restrictions.
(b) State administrative funds Letter of Credit. (1) At the beginning of each fiscal year, FNS shall make available to each participating State agency by Letter of Credit an initial allocation of State administrative funds for use in that fiscal year. This allocation shall not exceed one-third of the administrative funds provided to the State in the preceding fiscal year. For State agencies which did not receive any Program funds during the preceding fiscal year, the amount to be made available shall be determined by FNS.
(2) Additional State administrative funds shall be made available upon the receipt and approval by FNS of the State’s Program management and administration plan. The amount of such funds, plus the initial allocation, shall not exceed 80 percent of the State administrative funds determined by the formula set forth in paragraph (a)(1) of this section and based on the estimates set forth in the approved Program management and administration plan.
(3) Any remaining State administrative funds shall be paid to each State agency as soon as practicable after the conduct of the funding assessment described in paragraph (c) of this section. However, regardless of whether such assessment is made, the remaining administrative funds shall be paid no later than September 1. The remaining administrative payment shall be in an amount equal to that determined to be needed during the funding evaluation or, if such evaluation is not conducted, the amount owed the State in accordance with paragraph (a)(1) of this section, less the amounts paid under paragraphs (b) (1) and (2) of this section.
(c) Administrative funding evaluation. FNSRO shall conduct data on the need for Program and State administrative funding within any State agency if the funding needs estimated in a State’s management and administration plan are no longer accurate. Based on this data, FNS may make adjustments in the level of State administrative funding paid or payable to the State agency under paragraph (b) of this section to reflect changes in the size of the State’s Program as compared to that estimated in its management and administration plan. The data shall be based on approved Program participation levels and shall be collected during the period of Program operations. As soon as possible following this data collection, payment of any additional administrative funds owed shall be made to the State agency. The payment may reflect adjustments made to the level of State administrative funding based on the information collected during the funding assessment. However, FNS shall not decrease the amount of a State’s administrative funds as a result of this assessment unless the State failed to make reasonable efforts to administer the Program as proposed in its management and administration plan or the State incurred unnecessary expenses.
(d) Letter of Credit for Program payments. (1) Not later than April 15 of each fiscal year, FNS shall make available to each participating State in a Letter of Credit an amount equal to 65 percent of the preceding fiscal year’s Program payments for operating costs plus 65 percent of the preceding fiscal year’s Program payments for administrative costs in the State. This amount may be adjusted to reflect changes in reimbursement rates made pursuant to § 225.9(d)(8). However, the State shall not withdraw funds from this Letter of Credit until its Program management and administration plan is approved by FNS.
(2) Based on the State agency’s approved management and administration plan, FNS shall, if necessary, adjust the State’s Letter of Credit to ensure that 65 percent of estimated current year Program operating and administrative funding needs is available. Such adjustment shall be made no later than May 15, or within 90 days of FNS receipt of the State agency’s management and administration plan, whichever date is later.
(3) Subsequent to the adjustment provided for in paragraph (d)(2) of this section, FNS will, if necessary, make one additional adjustment to ensure that the State agency’s Letter of Credit contains at least 65 percent of the Program operating and administrative funds needed during the current fiscal year. Such adjustment may be based on the administrative funding assessment provided for in paragraph (c) of this section, if one is conducted, or on any additional information which demonstrates that the funds available in the Letter of Credit do not equal at least 65 percent of current year Program needs. In no case will such adjustments be made later than September 1. Funds made available in the Letter of Credit shall be used by the State agency to make Program payments to sponsors.
(4) The Letter of Credit shall include sufficient funds to enable the State agency to make advance payments to sponsors serving areas in which schools operate under a continuous school calendar. These funds shall be made available no later than the first day of the month prior to the month during which the food service will be conducted.
(5) FNS shall make available any remaining Program funds due within 45 days of the receipt of valid claims for reimbursement from sponsors by the State agency. However, no payment shall be made for claims submitted later than 60 days after the month covered by the claim unless an exception is granted by FNS.
(6) Each State agency shall release to FNS any Program funds which it determines are unobligated as of September 30 of each fiscal year. Release of funds by the State agency shall be made as soon as practicable, but in no event later than 30 calendar days following demand by FNS, and shall be accomplished by an adjustment in the State agency’s Letter of Credit.
(e) Adjustment to Letter of Credit. Prior to May 15 of each fiscal year, FNS shall make any adjustments necessary in each State’s Letter of Credit to reflect actual expenditures in the preceding fiscal year’s Program.
(f) Health inspection funds. If the State agency’s approved management and administration plan estimates a need for health inspection funding, FNS shall make available by letter of credit an amount up to one percent of Program funds estimated to be needed in the management and administration plan. Such amount may be adjusted, based on the administrative funding assessment provided for in paragraph (c) of this section, if such assessment is conducted. Health inspection funds shall be used solely to enable State or local health departments or other governmental agencies charged with health inspection functions to carry out health inspections and meal quality tests, provided that if these agencies cannot perform such inspections or tests, the State agency may use the funds to contract with an independent agency to conduct the inspection or meal quality tests. Funds so provided but not expended or obligated shall be returned to the Department by September 30 of the same fiscal year.
§ 225.6 State agency responsibilities.
(a) General responsibilities. (1) The State agency shall provide sufficient qualified consultative, technical, and managerial personnel to administer the Program, monitor performance, and measure progress in achieving Program goals. The State agency shall assign Program responsibilities to personnel to ensure that all applicable requirements under this part are met.
(2) By February 1 of each fiscal year, each State agency must announce the purpose, eligibility criteria, and availability of the Program throughout the State, through appropriate means of communication. As part of this effort, each State agency must:
(i) Identify areas in which poor economic conditions exist to qualify for the Program and actively seek eligible applicant sponsors to serve:
(A) Rural areas;
(B) Indian Tribal territories; and
(C) Areas with a concentration of migrant farm workers.
(ii) The State agency must identify rural areas with no congregate meal service and encourage participating sponsors to provide non-congregate meals to eligible children in those areas.
(iii) The State agency must target outreach efforts to priority outreach areas.
(iv) For approval of closed enrolled sites, the State agency must establish criteria to ensure that operation of a closed enrolled site does not limit Program access for eligible children in the area where the site is located.
(3) Each State agency shall require applicant sponsors submitting Program application site information sheets, Program agreements, or a request for advance payments, and sponsors submitting claims for reimbursement to certify that the information submitted on these forms is true and correct and that the sponsor is aware that deliberate misrepresentation or withholding of information may result in prosecution under applicable State and Federal statutes.
(4) In addition to the warnings specified in paragraph (a)(3) of this section, State agencies may include the following information on applications and pre-application materials distributed to prospective sponsors:
(i) The criminal penalties and provisions established in section 12(g) of the National School Lunch Act (42 U.S.C. 1760(g)) that states substantially: Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property that are the subject of a grant or other form of assistance under this Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.), whether received directly or indirectly from the United States Department of Agriculture, or whoever receives, conceals, or retains such funds, assets, or property to personal use or gain, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud shall, if such funds, assets, or property are of the value of $100 or more, be fined not more than $25,000 or imprisoned not more than five years, or both, or, if such funds, assets, or property are of a value of less than $100, shall be fined not more than $1,000 or imprisoned for not more than one year, or both.
(ii) The procedures for termination from Program participation of any site or sponsor which is determined to be seriously deficient in its administration of the Program. In addition, the application may also state that appeals of sponsor or site terminations will follow procedures mandated by the State agency and will also meet the minimum requirements of 7 CFR 225.13.
(b) Approval of sponsor applications. (1) Each State agency must inform all of the previous year’s sponsors which meet current eligibility requirements and all other potential sponsors of the deadline date for submitting a written application for participation in the Program. The State agency must require that all applicant sponsors submit written applications for Program participation to the State agency by June 15. However, the State agency may establish an earlier deadline for the Program application submission. Sponsors applying for participation in the Program due to an unanticipated school closure shall be exempt from the application submission deadline.
(2) Each State agency shall inform potential sponsors of the procedure for applying for advance operating and administrative costs payments as provided for in § 225.9(c). Where applicable, each State agency shall inform sponsors of the procedure for applying for start-up payments provided for in § 225.9(a).
(3) Within 30 days of receiving a complete and correct application, the State agency shall notify the applicant of its approval or disapproval. If an incomplete application is received, the State agency shall so notify the applicant within 15 days and shall provide technical assistance for the purpose of completing the application. Any disapproved applicant shall be notified of its right to appeal under § 225.13.
(4) The State agency shall determine the eligibility of sponsors applying for participation in the Program in accordance with the applicant sponsor eligibility criteria outlined in § 225.14. However, State agencies may approve the application of an otherwise eligible applicant sponsor which does not provide a year-round service to the community which it proposes to serve under the Program only if it meets one or more of the following criteria: It is a residential camp; it proposes to provide a food service for the children of migrant workers; a failure to do so would deny the Program to an area in which poor economic conditions exist; a significant number of needy children will not otherwise have reasonable access to the Program; or it proposes to serve an area affected by an unanticipated school closure. In addition, the State agency may approve a sponsor for participation during an unanticipated school closure without a prior application if the sponsor participated in the program at any time during the current year or in either of the prior two calendar years.
(5) The State agency must use the following priority system in approving applicants to operate sites that propose to serve the same area or the same enrolled children:
(i) Public or nonprofit private school food authorities;
(ii) Public agencies and private nonprofit organizations that have demonstrated successful program performance in a prior year;
(iii) New public agencies; and
(iv) New private nonprofit organizations.
(v) If two or more sponsors that qualify under paragraph (b)(5)(ii) of this section apply to serve the same area, the State agency must determine on a case-by-case basis which sponsor or sponsors it will select to serve the needy children in the area. The State agency should consider the resources and capabilities of each applicant.
(6) The State agency must not approve any sponsor to operate more than 200 sites or to serve more than an average of 50,000 children per day. However, the State agency may approve exceptions if:
(i) The applicant demonstrates that it has the capability of managing a program larger than the limits in this paragraph (b)(6); and
(ii) The State agency has the capacity to conduct reviews of at least 10 percent of the sponsor’s sites, as described in § 225.7(e)(4)(v).
(7) The State agency shall review each applicant’s administrative budget as a part of the application approval process in order to assess the applicant’s ability to operate in compliance with these regulations within its projected reimbursement. In approving the applicant’s administrative budget, the State agency shall take into consideration the number of sites and children to be served, as well as any other relevant factors. A sponsor’s administrative budget shall be subject to review for adjustments by the State agency if the sponsor’s level of site participation or the number of meals served to children changes significantly. State agencies may exempt school food authorities applying to operate the SFSP from submitting a separate budget to the State agency, if the school food authority submits an annual budget for the National School Lunch Program and the submitted budget includes the operation of SFSP.
(8) Applicants which qualify as camps and sponsors of conditional non-congregate sites must be approved for reimbursement only for meals served free to enrolled children who meet the Program’s income standards.
(9) The State agency shall not approve the application of any applicant sponsor identifiable through its organization or principals as a sponsor which has been determined to be seriously deficient as described in § 225.11(c). However, the State agency may approve the application of a sponsor which has been disapproved or terminated in prior years in accordance with this paragraph if the applicant demonstrates to the satisfaction of the State agency that it has taken appropriate corrective actions to prevent recurrence of the deficiencies.
(10) If the sponsor’s application to participate is denied, the official making the determination of denial must notify the applicant sponsor in writing stating all of the grounds on which the State agency based the denial. Pending the outcome of a review of a denial, the State agency shall proceed to approve other applicants in accordance with its responsibilities under paragraph (b)(5) of this section, without regard to the application under review.
(11) The State agency shall not approve the application of any applicant sponsor which submits fraudulent information or documentation when applying for Program participation or which knowingly withholds information that may lead to the disapproval of its application. Complete information regarding such disapproval of an applicant shall be submitted by the State agency through FNSRO to OIG.
(12) The State agency must not deny a sponsor’s application based solely on the sponsor’s intent to provide a non-congregate meal service.
(c) Content of sponsor application—(1) Application form. (i) The sponsor must submit a written application to the State agency for participation in the Program. The State agency may use the application form developed by FNS, or develop its own application form, provided that the form requests the full legal name, any previously used names, mailing address; date of birth of the sponsor’s responsible principals, which include the executive director and board chair; and the sponsor’s Federal Employer Identification Number (FEIN) or Unique Entity Identifier (UEI). Application to sponsor the Program must be made on a timely basis within the deadlines established under paragraph (b)(1) of this section.
(ii) At the discretion of the State agency, sponsors proposing to serve an area affected by an unanticipated school closure may be exempt from submitting a new application if they have participated in the Program at any time during the current year or in either of the prior two calendar years.
(iii) Requirements for new sponsors and sponsors that have experienced significant operational problems in the prior year, as determined by the State agency, are found under paragraph (c)(2) of this section.
(iv) Requirements for experienced sponsors are found under paragraph (c)(3) of this section.
(2) Application requirements for new sponsors and sponsors that have experienced significant operational problems in the prior year. New sponsors and sponsors that have experienced significant operational problems in the prior year, as determined by the State agency, must include the following information in their applications:
(i) A full management plan, as described in paragraph (e) of this section;
(ii) A free meal policy statement, as described in paragraph (f) of this section;
(iii) A site information sheet for each site where a food service operation is proposed, as described in paragraph (g)(1) of this section;
(iv) Information in sufficient detail to enable the State agency to determine that the sponsor meets the criteria for participation in the Program, as described in § 225.14;
(v) Information on the extent of Program payments needed, including a request for advance payments and start-up payments, if applicable;
(vi) A staffing and monitoring plan;
(vii) A complete administrative budget for State agency review and approval, which includes:
(A) The projected administrative expenses that the sponsor expects to incur during the operation of the Program, and
(B) Information in sufficient detail to enable the State agency to assess the sponsor’s ability to operate the Program within its estimated reimbursement;
(viii) A summary of how meals will be obtained at each site (e.g., self-prepared at each site, self-prepared and distributed from a central kitchen, purchased from a school food authority, competitively procured from a food service management company);
(ix) If an invitation for bid is required under § 225.15(m), a schedule for bid dates and a copy of the invitation for bid;
(x) For each sponsor which seeks approval as a unit of local, municipal, county or State government under § 225.14(b)(3) or as a private nonprofit organization under § 225.14(b)(5), certification that the sponsor has administrative oversight, as required under § 225.14(d)(3); and
(xi) Procedures that document meals are only distributed, to a reasonable extent, to eligible children and that duplicate meals are not distributed to any child, if the applicant sponsor is electing to use the non-congregate meal service options described in § 225.16(i)(1) and (2).
(3) Application requirements for experienced sponsors. The following information must be included in the applications of experienced sponsors:
(i) A simplified or full management plan, as described in paragraph (e) of this section;
(ii) A site information sheet for each site where a food service operation is proposed, as described under paragraph (g)(2) of this section;
(iii) Information on the extent of Program payments needed, including a request for advance payments and start-up payments, if it is applicable;
(iv) A staffing and monitoring plan;
(v) A complete administrative budget for State agency review and approval, which includes:
(A) The projected administrative expenses which a sponsor expects to incur during the operation of the Program; and
(B) Information in sufficient detail to enable the State agency to assess the sponsor’s ability to operate the Program within its estimated reimbursement.
(vi) If the method of obtaining meals is changed, a summary of how meals will be obtained at each site (e.g., self-prepared at each site, self-prepared and distributed from a central kitchen, purchased from a school food authority, competitively procured from a food service management company);
(vii) If an invitation for bid is required under § 225.15(m), a schedule for bid dates, and a copy of the invitation for bid, if it is changed from the previous year; and
(viii) Procedures that document meals are only distributed, to a reasonable extent, to eligible children and that duplicate meals are not distributed to any child, if the applicant sponsor is electing to use the non-congregate meal service options described in § 225.16(i)(1) and (2).
(4) Applications for school food authorities and Child and Adult Care Food Program institutions. At the discretion of the State agency, school food authorities in good standing in the National School Lunch Program or School Breakfast Program, as applicable, and institutions in good standing in the Child and Adult Care Food Program may apply to operate the Summer Food Service Program at the same sites where they provide meals through the aforementioned Programs by following the procedures for experienced sponsors outlined in paragraph (c)(3) of this section.
(d) Performance standards. The State agency may only approve the applications of those sponsors that meet the three performance standards outlined in this section: financial viability, administrative capability, and Program accountability. The State agency must deny applications that do not meet all of these standards. The State agency must consider past performance in the SFSP or another Child Nutrition Program, and any other factors it deems relevant when determining whether the sponsor’s application meets the following standards:
(1) Performance standard 1. The sponsor must be financially viable. The sponsor must expend and account for Program funds, consistent with this part; FNS Instruction 796-4, Financial Management in the Summer Food Service Program; 2 CFR part 200, subpart D; and USDA regulations 2 CFR parts 400 and 415. To demonstrate financial viability and financial management, the sponsor’s management plan must:
(i) Describe the community’s need for summer meals and the sponsor’s recruitment strategy:
(A) Explain how the sponsor’s participation will help ensure the delivery of Program benefits to otherwise unserved sites or children; and
(B) Describe how the sponsor will recruit sites, consistent with any State agency requirements.
(ii) Describe the sponsor’s financial resources and financial history:
(A) Show that the sponsor has adequate sources of funds available to operate the Program, pay employees and suppliers during periods of temporary interruptions in Program payments, and pay debts if fiscal claims are assessed against the sponsor; and
(B) Provide audit documents, financial statements, and other documentation that demonstrate financial viability.
(iii) Ensure that all costs in the sponsor’s budget are necessary, reasonable, allowable, and appropriately documented.
(2) Performance standard 2. The sponsor must be administratively capable. Appropriate and effective management practices must be in effect to ensure that Program operations meet the requirements of this part. To demonstrate administrative capability, the sponsor must:
(i) Have an adequate number and type of qualified staff to ensure the operation of the Program, consistent with this part; and
(ii) Have written policies and procedures that assign Program responsibilities and duties and ensure compliance with civil rights requirements.
(3) Performance standard 3. The sponsor must have internal controls and other management systems in place to ensure fiscal accountability and operation of the Program, consistent with this part. To demonstrate Program accountability, the sponsor must:
(i) Demonstrate that the sponsor has a financial system with management controls specified in written operational policies that will ensure that:
(A) All funds and property received are handled with fiscal integrity and accountability;
(B) All expenses are incurred with integrity and accountability;
(C) Claims will be processed accurately, and in a timely manner;
(D) Funds and property are properly safeguarded and used, and expenses incurred, for authorized Program purposes; and
(E) A system of safeguards and controls is in place to prevent and detect improper financial activities by employees.
(ii) Maintain appropriate records to document compliance with Program requirements, including budgets, approved budget amendments, accounting records, management plans, and site operations.
(e) Management plan—(1) Compliance. The State agency must require the submission of a management plan to determine compliance with performance standards established under paragraph (d) of this section.
(i) Requirements for new sponsors and sponsors that have experienced significant operational problems in the prior year, as determined by the State agency, are found under paragraph (e)(2) of this section.
(ii) Requirements for experienced sponsors are found under paragraph (e)(3) of this section.
(iii) Requirements for school food authorities in good standing in the National School Lunch Program or School Breakfast Program, as applicable, or institutions in good standing in the Child and Adult Care Food Program are found under paragraph (e)(4) of this section.
(2) Requirements for new sponsors and sponsors that have experienced significant operational problems in the prior year. Sponsors must submit a complete management plan that includes:
(i) Detailed information on the sponsor’s management and administrative structure, including information that demonstrates the sponsor’s financial viability and financial management described under paragraph (d)(1) of this section;
(ii) Information that demonstrates compliance with each of the performance standards outlined under paragraph (d) of this section;
(iii) A list or description of the staff assigned to perform Program monitoring required under § 225.15(d)(2) and (3); and
(iv) For each sponsor which submits an application under paragraph (c)(1) of this section, information in sufficient detail to demonstrate that the sponsor will:
(A) Provide adequate and not less than annual training of sponsor’s staff and sponsored sites, as required under § 225.15(d)(1);
(B) Perform monitoring consistent with § 225.15(d)(2) and (3), to ensure that all site operations are accountable and appropriate;
(C) Accurately classify sites consistent with paragraphs (g)(1) and (2) of this section;
(D) Demonstrate the sponsor’s compliance with meal service, recordkeeping, and other operational requirements of this part;
(E) Provide meals that meet the meal patterns set forth in § 225.16;
(F) Have a food service that complies with applicable State and local health and sanitation requirements;
(G) Comply with civil rights requirements;
(H) Maintain complete and appropriate records on file; and
(I) Claim reimbursement only for eligible meals.
(3) Requirements for experienced sponsors. Experienced sponsors must submit a management plan. At the discretion of the State agency, experienced sponsors may submit a full management plan or a simplified management plan. A full management plan must be submitted at least once every 3 years. The simplified management plan must include a certification that any information previously submitted to the State to satisfy the eligibility requirements, set forth in paragraph (d) of this section, for the sponsor, its sites, and all of its current principals is current, or that the sponsor has submitted any changes or updates to the State. This certification must address all required elements of each performance standard.
(4) Requirements for school food authorities in good standing in the National School Lunch Program or School Breakfast Program, as applicable, or institutions in good standing in the Child and Adult Care Food Program. These sponsors are not required to submit a management plan unless requested by the State agency. The State agency may request additional evidence of financial and administrative capability sufficient to ensure that the school food authority or institution has the ability and resources to operate the Program if the State agency has reason to believe that this would pose significant challenges for the applicant.
(f) Free meal policy statement—(1) Nondiscrimination statement. (i) Each sponsor must submit a nondiscrimination statement of its policy for serving meals to children. The statement must consist of:
(A) An assurance that all children are served the same meals and that there is no discrimination in the course of the food service; and
(B) Except for camps and conditional non-congregate sites, a statement that the meals served are free at all sites.
(ii) A school sponsor must submit the policy statement only once, with the initial application to participate as a sponsor. However, if there is a substantive change in the school’s free and reduced price policy, a revised policy statement must be provided at the State agency’s request.
(iii) In addition to the information described in paragraph (i) of this section, the policy statement of all camps and conditional non-congregate sites that charge separately for meals must also include:
(A) A statement that the eligibility standards conform to the Secretary’s family size and income standards for reduced price school meals;
(B) A description of the method to be used in accepting applications from families for Program meals that ensures that households are permitted to apply on behalf of children who are members of households receiving SNAP, FDPIR, or TANF benefits using the categorical eligibility procedures described in § 225.15(f);
(C) A description of the method to be used for collecting payments from children who pay the full price of the meal while preventing the overt identification of children receiving a free meal;
(D) An assurance that the sponsor will establish hearing procedures for families requesting to appeal a denial of an application for free meals. These procedures must meet the requirements set forth in paragraph (f)(2) of this section;
(E) An assurance that, if a family requests a hearing, the child will continue to receive free meals until a decision is rendered; and
(F) An assurance that there will be no overt identification of free meal recipients and no discrimination against any child on the basis of race, color, national origin, sex (including gender identity and sexual orientation), age, or disability.
(2) Hearing procedures statement. Each camp or sponsor of a conditional non-congregate site must submit a copy of its hearing procedures with its application. At a minimum, the procedures must provide that:
(i) A simple, publicly announced method will be used for a family to make an oral or written request for a hearing;
(ii) The family will have the opportunity to be assisted or represented by an attorney or other person (designated representative);
(iii) The family or designated representative will have an opportunity to examine the documents and records supporting the decision being appealed, both before and during the hearing;
(iv) The hearing will be reasonably prompt and convenient for the family or designated representative;
(v) Adequate notice will be given to the family or designated representative of the time and place of the hearing;
(vi) The family or designated representative will have an opportunity to present oral or documented evidence and arguments supporting its position;
(vii) The family or designated representative will have an opportunity to question or refute any testimony or other evidence and to confront and cross-examine any adverse witnesses;
(viii) The hearing will be conducted and the decision made by a hearing official who did not participate in the action being appealed;
(ix) The decision will be based on the oral and documentary evidence presented at the hearing and made a part of the record;
(x) The family or designated representative will be notified in writing of the decision;
(xi) A written record will be prepared for each hearing, which includes the action being appealed, any documentary evidence and a summary of oral testimony presented at the hearing, the decision and the reasons for the decision, and a copy of the notice sent to the family or designated representative; and
(xii) The written record will be maintained for a period of three years following the conclusion of the hearing and will be available for examination by the family or designated representative at any reasonable time and place.
(g) Site information sheet. The State agency must develop a site information sheet for sponsors.
(1) New sites. The application submitted by sponsors must include a site information sheet for each site where a food service operation is proposed. Where a non-congregate meal service operation is proposed for the first time, the sponsor must follow the requirements of this paragraph (g)(1). At a minimum, the site information sheet must demonstrate or describe the following:
(i) An organized and supervised system for serving meals to children;
(ii) The estimated number of meals to be served, types of meals to be served, and meal service times;
(iii) Whether the site is rural, as defined in § 225.2, or non-rural. Documentation supporting the rural designation is required. New documentation is required every 5 years, or earlier, if the State agency determines that an area’s rural status has changed significantly since the last designation;
(iv) Whether the meal service is congregate or non-congregate;
(v) Whether the site is a self-preparation site or a vended site, as defined in § 225.2;
(vi) Arrangements for delivery and holding of meals until meal service times and storing and refrigerating any leftover meals until the next day, within standards prescribed by State or local health authorities;
(vii) Access to a means of communication to make necessary adjustments in the number of meals delivered, based on changes in the number of children in attendance at each site;
(viii) Arrangements for food service during periods of inclement weather;
(ix) For open sites and restricted open sites:
(A) Documentation supporting the eligibility of each site as serving an area in which poor economic conditions exist;
(B) When school data are used, new documentation is required every 5 years;
(C) When census data are used, new documentation is required every 5 years, or earlier, if the State agency determines that an area’s socioeconomic status has changed significantly since the last census; and
(D) At the discretion of the State agency, sponsors proposing to serve an area affected by an unanticipated school closure may be exempt from submitting new site documentation if the sponsor has participated in the Program at any time during the current year or in either of the prior 2 calendar years;
(x) For closed enrolled sites:
(A) The projected number of children enrolled and the projected number of children eligible for free and reduced price school meals for each of these sites; or documentation supporting the eligibility of each site as serving an area in which poor economic conditions exist;
(B) When school data are used, new documentation is required every 5 years; and
(C) When census data are used, new documentation is required every 5 years, or earlier, if the State agency determines that an area’s socioeconomic status has changed significantly since the last census;
(xi) For NYSP sites, certification from the sponsor that all of the children who will receive Program meals are enrolled participants in the NYSP;
(xii) For camps, the number of children enrolled in each session who meet the Program’s income standards. If such information is not available at the time of application, this information must be submitted as soon as possible thereafter, and in no case later than the filing of the camp’s claim for reimbursement for each session;
(xiii) For sites that will serve children of migrant workers:
(A) Certification from a migrant organization, which attests that the site serves children of migrant workers; and
(B) Certification from the sponsor that the site primarily serves children of migrant workers, if non-migrant children are also served; and
(xiv) For conditional non-congregate sites, the number of children enrolled who meet the Program’s income standards. If such information is not available at the time of application, this information must be submitted as soon as possible thereafter, and in no case later than the filing of the sponsor’s claim for reimbursement.
(2) Experienced sites. The application submitted by sponsors must include a site information sheet for each site where a food service operation is proposed. The State agency may require sponsors of experienced sites to provide information described in paragraph (g)(1) of this section. At a minimum, the site information sheet must demonstrate or describe the following:
(i) The estimated number of meals, types of meals to be served, and meal service times;
(ii) Whether the site is rural, as defined in § 225.2, or non-rural. Documentation supporting the rural designation is required. New documentation is required every 5 years, or earlier, if the State agency determines that an area’s rural status has changed significantly since the last designation;
(iii) Whether the meal service is congregate or non-congregate;
(iv) For open sites and restricted open sites:
(A) Documentation supporting the eligibility of each site as serving an area in which poor economic conditions exist;
(B) When school data are used, new documentation is required every 5 years;
(C) When census data are used, new documentation is required every 5 years, or earlier, if the State agency determines that an area’s socioeconomic status has changed significantly since the last census; and
(D) Any site that a sponsor proposes to serve during an unanticipated school closure, which has participated in the Program at any time during the current year or in either of the prior 2 calendar years, is considered eligible without new documentation;
(v) For closed enrolled sites:
(A) The projected number of children enrolled and the projected number of children eligible for free and reduced price school meals for each of these sites; or documentation supporting the eligibility of each site as serving an area in which poor economic conditions exist;
(B) When school data are used, new documentation is required every 5 years; and
(C) When census data are used, new documentation is required every 5 years, or earlier, if the State agency determines that an area’s socioeconomic status has changed significantly since the last census;
(vi) For NYSP sites, certification from the sponsor that all of the children who will receive Program meals are enrolled participants in the NYSP;
(vii) For camps, the number of children enrolled in each session who meet the Program’s income standards. If such information is not available at the time of application, this information must be submitted as soon as possible thereafter, and in no case later than the filing of the camp’s claim for reimbursement for each session; and
(viii) For conditional non-congregate sites, the number of children enrolled who meet the Program’s income standards. If such information is not available at the time of application, this information must be submitted as soon as possible thereafter, and in no case later than the filing of the sponsor’s claim for reimbursement.
(h) Approval of sites. (1) When evaluating a proposed food service site, the State agency must ensure that:
(i) If not a camp or a conditional non-congregate site, the proposed site serves an area in which poor economic conditions exist, as defined by § 225.2;
(ii) The area which the site proposes to serve is not or will not be served in whole or in part by another site, unless it can be demonstrated to the satisfaction of the State agency that each site will serve children not served by any other site in the same area for the same meal;
(iii) The site is approved to serve no more than the number of children for which its facilities are adequate; and
(iv) If it is a site proposed to operate during an unanticipated school closure, it is a non-school site.
(2) When approving the application of a site which will serve meals prepared by a food service management company, the State agency must establish for each meal service an approved level for the maximum number of children’s meals which may be served under the Program. These approved levels must be established in accordance with the following provisions:
(i) The initial maximum approved level must be based upon the historical record of the number of meals served at the site if such a record has been established in prior years and the State agency determines that it is accurate. The State agency must develop a procedure for establishing initial maximum approved levels for sites when no accurate record from prior years is available. The State agency may consider participation at other similar sites located in the area, documentation of programming taking place at the site, statistics on the number of children residing in the area, and other relevant information.
(ii) The maximum approved level must be adjusted, if warranted, based upon information collected during site reviews. If the number of meals served at the site on the day of the review is significantly below the site’s approved level, the State agency should consider making a downward adjustment in the approved level with the objective of providing only one meal per child.
(iii) The sponsor may seek an upward adjustment in the approved level for its sites by requesting a site review or by providing the State agency with evidence that the number of meals served exceeds the sites’ approved levels. The sponsor may request an upward adjustment at any point prior to submitting the claim for the impacted reimbursement period.
(iv) Whenever the State agency establishes or adjusts approved levels of meal service for a site, it must document the action in its files, and it shall provide the sponsor with immediate written confirmation of the approved level.
(v) Upon approval of its application or any adjustment to its maximum approved levels, the sponsor must inform the food service management company with which it contracts of the approved level for each meal service at each site served by the food service management company. This notification of any adjustments in approved levels must take place within the time frames set forth in the contract for adjusting meal orders. Whenever the sponsor notifies the food service management company of the approved levels or any adjustments to these levels for any of its sites, the sponsor must clearly inform the food service management company that an approved level of meal service represents the maximum number of meals which may be served at a site and is not a standing order for a specific number of meals at that site. When the number of children being served meals is below the site’s approved level, the sponsor must adjust meal orders with the objective of serving only one meal per child as required under § 225.15(b)(3).
(3) When approving the application of a site that will provide a non-congregate meal service, the State agency must ensure that the proposed site:
(i) Meets the requirements described in paragraphs (h)(1) and (2) of this section.
(ii) Is rural, as defined in § 225.2.
(iii) Will not serve an area where children would receive the same meal at an approved congregate meal site, unless it can be demonstrated to the satisfaction of the State agency that the site will serve a different group of children who may not be otherwise served.
(iv) Serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet the Program’s income standards.
(v) Distributes up to the allowable number of reimbursable meals that would be provided over a 10-calendar day period. The State agency may establish a shorter calendar day period on a case-by-case basis and without regard to sponsor type.
(4) When approving the application of a site which will provide both congregate and non-congregate meal services, the State agency must ensure that:
(i) The proposed site meets the requirements in paragraphs (h)(1) through (3) of this section.
(ii) The proposed site will only conduct a non-congregate meal service when the site is not providing a congregate meal service.
(iii) The sponsor proposes an organized and supervised system which prevents overlap between meal services and reasonably ensures children are not receiving more than the daily maximum allowance of meals as required in § 225.16(b)(3).
(i) State-sponsor agreement. A sponsor approved for participation in the Program must enter into a permanent written agreement with the State agency. The existence of a valid permanent agreement does not limit the State agency’s ability to terminate the agreement, as provided under § 225.11(c). The State agency must terminate the sponsor’s agreement whenever a sponsor’s participation in the Program ends. The State agency or sponsor may terminate the agreement at its convenience, upon mutual agreement, due to considerations unrelated to either party’s performance of Program responsibilities under the agreement. However, any action initiated by the State agency to terminate an agreement for its convenience requires prior consultation with FNS. All sponsors must agree in writing to:
(1) Operate a nonprofit food service during the period specified, as follows:
(i) From May through September for children on school vacation;
(ii) At any time of the year, in the case of sponsors administering the Program under a continuous school calendar system; or
(iii) During the period from October through April, if it serves an area affected by an unanticipated school closure due to a natural disaster, major building repairs, court orders relating to school safety or other issues, labor-management disputes, or, when approved by the State agency, a similar cause.
(2) For school food authorities, offer meals which meet the requirements and provisions set forth in § 225.16 during times designated as meal service periods by the sponsor and offer the same meals to all children.
(3) For all other sponsors, serve meals which meet the requirements and provisions set forth in § 225.16 during times designated as meal service periods by the sponsor and serve the same meals to all children.
(4) Serve meals without cost to all children, except that camps and conditional non-congregate sites may charge for meals served to children who are not served meals under the Program.
(5) Issue a free meal policy statement in accordance with paragraph (c) of this section.
(6) Meet the training requirement for its administrative and site personnel, as required under § 225.15(d)(1).
(7) Claim reimbursement only for the types of meals specified in the agreement that are served:
(i) Without charge to children at approved sites, except camps and conditional non-congregate sites, during the approved meal service time;
(ii) Without charge to children who meet the Program’s income standards in camps and conditional non-congregate sites;
(iii) Within the approved level for the maximum number of children’s meals that may be served, if a maximum approved level is required under paragraph (h)(2) of this section;
(iv) At the approved meal service time, unless a change is approved by the State agency, as required under § 225.16(c); and
(v) At the approved site, unless the requirements in § 225.16(g) are met.
(8) Submit claims for reimbursement in accordance with procedures established by the State agency, and those stated in § 225.9.
(9) In the storage, preparation and service of food, maintain proper sanitation and health standards in conformance with all applicable State and local laws and regulations.
(10) Accept and use, in quantities that may be efficiently utilized in the Program, such foods as may be offered as a donation by the Department.
(11) Have access to facilities necessary for storing, preparing, and serving food.
(12) Maintain a financial management system as prescribed by the State agency.
(13) Maintain on file documentation of site visits and reviews in accordance with § 225.15(d) (2) and (3).
(14) Upon request, make all accounts and records pertaining to the Program available to State, Federal, or other authorized officials for audit or administrative review, at a reasonable time and place. The records shall be retained for a period of 3 years after the end of the fiscal year to which they pertain, unless audit or investigative findings have not been resolved, in which case the records shall be retained until all issues raised by the audit or investigation have been resolved.
(15) For approved congregate meal service, maintain children on site while meals are consumed. Sponsors may allow a child to take one fruit, vegetable, or grain item off-site for later consumption if the requirements in § 225.16(h) are met.
(16) Retain final financial and administrative responsibility for its program.
(j) Special Account. In addition, the State agency may require any vended sponsor to enter into a special account agreement with the State agency. The special account agreement shall stipulate that the sponsor shall establish a special account with a State agency or Federally insured bank for operating costs payable to the sponsor by the State. The agreement shall also stipulate that any disbursement of monies from the account must be authorized by both the sponsor and the food service management company. The special account agreement may contain such other terms, agreed to by both the sponsor and the food service management company, which are consistent with the terms of the contract between the sponsor and the food service management company. A copy of the special account agreement shall be submitted to the State agency and another copy maintained on file by the sponsor. Any charges made by the bank for the account described in this section shall be considered an allowable sponsor administrative cost.
(k) Food service management company registration. A State agency may require each food service management company, operating within the State, to register based on State procedures. A State agency may further require the food service management company to certify that the information submitted on its application for registration is true and correct and that the food service management company is aware that misrepresentation may result in prosecution under applicable State and Federal statutes.
(l) Monitoring of food service management company procurements. (1) The State agency shall ensure that sponsors’ food service management company procurements are carried out in accordance with §§ 225.15(m) and 225.17.
(2) Each State agency shall develop a standard form of contract for use by sponsors in contracting with food service management companies. Sponsors that are public entities, sponsors with exclusive year-round contracts with a food service management company, and sponsors that have no food service management company contracts exceeding the simplified acquisition threshold in 2 CFR part 200, as applicable, may use their existing or usual form of contract, provided that such form of contract has been submitted to and approved by the State agency. The standard contract developed by the State agency shall expressly and without exception provide that:
(i) All meals prepared by a food service management company shall be unitized, with or without milk or juice, unless the State agency has approved, pursuant to paragraph (l)(3) of this section, a request for exceptions to the unitizing requirement for certain components of a meal;
(ii) A food service management company entering into a contract with a sponsor under the Program shall not subcontract for the total meal, with or without milk, or for the assembly of the meal;
(iii) The sponsor shall provide to the food service management company a list of State agency approved food service sites, along with the approved level for the number of meals which may be claimed for reimbursement for each site, established under § 225.6(h)(2), and shall notify the food service management company of all sites which have been approved, cancelled, or terminated subsequent to the submission of the initial approved site list and of any changes in the approved level of meal service for a site. Such notification shall be provided within the time limits mutually agreed upon in the contract;
(iv) The food service management company shall maintain such records (supported by invoices, receipts, or other evidence) as the sponsor will need to meet its responsibilities under this part, and shall submit all required reports to the sponsor promptly at the end of each month, unless more frequent reports are required by the sponsor;
(v) The food service management company must have State or local health certification for the facility in which it proposes to prepare meals for use in the Program. It must ensure that health and sanitation requirements are met at all times. In addition, the food service management company must ensure that meals are inspected periodically to determine bacteria levels present in the meals and that the bacteria levels found to be present in the meals conform with the standards set by local health authorities. The results of the inspections must be submitted promptly to the sponsor and to the State agency.
(vi) The meals served under the contract shall conform to the cycle menus and meal quality standards and food specifications approved by the State agency and upon which the bid was based;
(vii) The books and records of the food service management company pertaining to the sponsor’s food service operation shall be available for inspection and audit by representatives of the State agency, the Department and the U.S. Government Accountability Office at any reasonable time and place for a period of 3 years from the date of receipt of final payment under the contract, except that, if audit or investigation findings have not been resolved, such records shall be retained until all issues raised by the audit or investigation have been resolved;
(viii) The sponsor and the food service management company shall operate in accordance with current Program regulations;
(ix) The food service management company shall be paid by the sponsor for all meals delivered in accordance with the contract and this part. However, neither the Department nor the State agency assumes any liability for payment of differences between the number of meals delivered by the food service management company and the number of meals served by the sponsor that are eligible for reimbursement;
(x) Meals shall be delivered in accordance with a delivery schedule prescribed in the contract;
(xi) Increases and decreases in the number of meals ordered shall be made by the sponsor, as needed, within a prior notice period mutually agreed upon;
(xii) All meals served under the Program shall meet the requirements of § 225.16;
(xiii) In cases of nonperformance or noncompliance on the part of the food service management company, the company shall pay the sponsor for any excess costs which the sponsor may incur by obtaining meals from another source;
(xiv) If the State agency requires the sponsor to establish a special account for the deposit of operating costs payments in accordance with the conditions set forth in § 225.6(j), the contract shall so specify;
(xv) The food service management company shall submit records of all costs incurred in the sponsor’s food service operation in sufficient time to allow the sponsor to prepare and submit the claim for reimbursement to meet the 60-day submission deadline; and
(xvi) The food service management company shall comply with the appropriate bonding requirements, as set forth in § 225.15(m)(5) through (7).
(3) All meals prepared by a food service management company shall be unitized, with or without milk or juice, unless the sponsor submits to the State agency a request for exceptions to the unitizing requirement for certain components of a meal. These requests shall be submitted to the State agency in writing in sufficient time for the State agency to respond prior to the sponsor’s advertising for bids. The State agency shall notify the sponsor in writing of its determination in a timely manner.
(4) Each State agency shall have a representative present at all food service management company procurement bid openings when sponsors are expected to receive more than $100,000 in Program payments.
(5) Copies of all contracts between sponsors and food service management companies, along with a certification of independent price determination, shall be submitted to the State agency prior to the beginning of Program operations. Sponsors shall also submit to the State agency copies of all bids received and their reason for selecting the food service management company chosen.
(6) All bids in an amount which exceeds the lowest bid shall be submitted to the State agency for approval before acceptance. All bids totaling $100,000 or more shall be submitted to the State agency for approval before acceptance. State agencies shall respond to a request for approval of such bids within 5 working days of receipt.
(7) The contract between a sponsor and food service management company shall be no longer than 1 year; and options for the yearly renewal of a contract may not exceed 4 additional years. All contracts shall include a termination clause whereby either party may cancel for cause or for convenience with up to 60-day notification.
(8) Failure by a sponsor to comply with the provisions of this paragraph or § 225.15(m) shall be sufficient grounds for the State agency to terminate participation by the sponsor in accordance with § 225.18(b).
(m) Meal pattern exceptions. The State agency shall review and act upon requests for exceptions to the meal pattern in accordance with the guidelines and limitations set forth in § 225.16.
§ 225.7 Program monitoring and assistance.
(a) Training. Prior to the beginning of Program operations, each State agency shall make available training in all necessary areas of Program administration to sponsor personnel, food service management company representatives, auditors, and health inspectors who will participate in the Program in that State. Prior to Program operations, the State agency shall ensure that the sponsor’s supervisory personnel responsible for the food service receive training in all necessary areas of Program administration and operations. This training shall reflect the fact that individual sponsors or groups of sponsors require different levels and areas of Program training. State agencies are encouraged to utilize in such training, and in the training of site personnel, sponsor personnel who have previously participated in the Program. Training should be made available at convenient locations or via the internet. State agencies are not required to conduct this training for sponsors operating the Program during unanticipated school closures.
(b) Program materials. Each State agency shall develop and make available all necessary Program materials in sufficient time to enable applicant sponsors to prepare adequately for the Program.
(c) Food specifications and meal quality standards. With the assistance of the Department, each State agency shall develop and make available to all sponsors minimum food specifications and model meal quality standards which shall become part of all contracts between vended sponsors and food service management companies.
(d) Pre-approval visits. The State agency must conduct pre-approval visits of sponsors and sites, as specified in paragraph (d)(1) through (4) of this section, to assess the applicant sponsor’s or site’s potential for successful Program operations and to verify information provided in the application.
(1) The State agency must visit, prior to approval:
(i) All applicant sponsors that did not participate in the program in the prior year;
(ii) All applicant sponsors that had operational problems noted in the prior year; and
(iii) All sites that the State agency has determined need a pre-approval visit.
(2) If a sponsor is a school food authority or Child and Adult Care Food Program institution and was reviewed by the State agency under their respective programs during the preceding 12 months, and had no significant deficiencies noted in that review, a pre-approval visit may be conducted at the discretion of the State agency.
(3) Pre-approval visits of sponsors proposing to operate the Program during unanticipated school closures may be conducted at the discretion of the State agency.
(4) Each State agency must establish a process to determine which sites need pre-approval visits. Characteristics that must be considered include, but are not limited to:
(i) Sites that did not participate in the program in the prior year;
(ii) Existing sites that are new to non-congregate meal service; and
(iii) Existing sites that exhibited operational problems in the prior year.
(e) Sponsor and site reviews—(1) Purpose. The State agency must review sponsors and sites to ensure compliance with Program regulations, the Department’s non-discrimination regulations (7 CFR part 15), and any other applicable instructions issued by the Department.
(2) Sample selection. In determining which sponsors and sites to review, the State agency must, at a minimum, consider the sponsors and sites’ previous participation in the Program, their current and previous Program performance, whether they operate as congregate or non-congregate sites, and the results of previous reviews.
(3) School food authorities. When the same school food authority personnel administer this Program as well as the National School Lunch Program (7 CFR part 210), the State agency is not required to conduct a sponsor or site review in the same year in which the National School Lunch Program operations have been reviewed and determined to be satisfactory.
(4) Frequency and number of required reviews. State agencies must:
(i) Conduct a review of every new sponsor at least once during the first year of operation;
(ii) Annually review every sponsor that experienced significant operational problems in the prior year;
(iii) Review each sponsor at least once every 3 years;
(iv) Review more frequently those sponsors that, in the determination of the State agency, require additional technical assistance; and
(v) As part of each sponsor review, conduct reviews of at least 10 percent of each reviewed sponsor’s sites, or one site, whichever number is greater. The review sample must include sites representative of all meal service models operated by the sponsor.
(5) Site selection criteria. (i) State agencies must develop criteria for site selection when selecting sites to meet the minimum number of sites required under paragraph (e)(4)(v) of this section. State agencies should, to the maximum extent possible, select sites that reflect the sponsor’s entire population of sites. Characteristics that should be reflected in the sites selected for review include:
(A) The maximum number of meals approved to serve under § 225.6(h)(1) and (2);
(B) Method of obtaining meals (i.e., self-preparation or vended meal service);
(C) Time since last site review by State agency;
(D) Type of site (e.g., open, closed enrolled, camp);
(E) Type of physical location (e.g., school, outdoor area, community center);
(F) Rural designation (i.e., rural, as defined in § 225.2, or non-rural);
(G) Type of meal service (i.e., congregate or non-congregate);
(H) If non-congregate, meal distribution method (e.g., meal pick-up, delivery); and
(I) Affiliation with the sponsor, as defined in § 225.2.
(ii) The State agency may use additional criteria to select sites including, but not limited to: recommendations from the sponsor; findings from other audits or reviews; or any indicators of potential error in daily meal counts (e.g., identical or very similar claiming patterns, large changes in free meal counts).
(6) Meal claim validation. As part of every sponsor review under paragraph (e)(4) of this section, the State agency must validate the sponsor’s meal claim utilizing a record review process.
(i) The State agency must develop a record review process. This process must include, at a minimum, reconciliation of delivery receipts, daily meal counts from sites, and the comparison of the sponsor’s claim consolidation spreadsheet with the meals claimed for reimbursement by the sponsor for the period under review.
(ii) For the purposes of this paragraph (e)(6), the percent error includes both overclaims and underclaims. Claims against sponsors as a result of meal claim validation should be assessed after the conclusion of the meal claim validation process in accordance with § 225.12.
(iii) In determining the sample size for each step of this process, fractions must be rounded up (≥0.5) or down (
(iv) State agencies must at a minimum follow the process to conduct the meal claim validation as described in table 1.
(v) In determining the percentage of error, under paragraphs (e)(6)(i) through (iv) of this section, fractions must be rounded up (≥0.5) or down (
(A) Determining the meal counting and claiming discrepancy for each site validated. Subtract the total meals validated from the total meals claimed by the sponsor for each validated site. Take the absolute value of each discrepancy. By applying the absolute value, the numbers will be expressed as positive valued numbers.
(B) Calculating total discrepancy. Add together all discrepancies from each site as determined in paragraph (e)(6)(v)(A) of this section to calculate the total discrepancies for sites validated in the given step.
(C) Calculating percent error. Divide the total discrepancies as determined in paragraph (e)(6)(v)(B) of this section by the total meals claimed by the sponsor for all reviewed sites within the validation sample for the given step. Multiply by 100 to calculate the percentage of error.
(vi) The State agency may expand the validation of meal claims beyond the review period or to include additional sites if the State agency has reason to believe that the sponsor has engaged in unlawful acts in connection with Program operations.
(vii) In lieu of the meal claim validation process described in table 1 to paragraph (e)(6)(iv) of this section, the State agency may complete a validation which includes all meals served on all operating days for all sites under a sponsor for the review period.
(7) Review of sponsor operations. State agencies should determine if:
(i) Expenditures are allowable and consistent with FNS Instructions and guidance and all funds accruing to the food service are properly identified and recorded as food service revenue;
(ii) Expenditures are consistent with budgeted costs, and the previous year’s expenditures taking into consideration any changes in circumstances;
(iii) Reimbursements have not resulted in accumulation of net cash resources as defined in paragraph (m) of this section; and
(iv) The level of administrative spending is reasonable and does not affect the sponsor’s ability to operate a nonprofit food service and provide a quality meal service.
(f) Follow-up reviews. The State agency must conduct follow-up reviews of sponsors and sites as necessary.
(g) Monitoring system. Each State agency must develop and implement a monitoring system to ensure that sponsors, including site personnel, and the sponsor’s food service management company, if applicable, immediately receive a copy of any review reports which indicate Program violations and which could result in a Program disallowance.
(h) Records. Documentation of Program assistance and the results of such assistance must be maintained on file by the State agency 3 years after submission in accordance with § 225.8(a).
(i) Meal preparation facility reviews. As part of the review of any vended sponsor that purchases unitized meals, with or without milk, to be served at a SFSP site, the State agency must review the meal production facility and meal production documentation of any food service management company from which the sponsor purchases meals for compliance with program requirements. If the sponsor does not purchase meals but does purchase management services within the restrictions specified in § 225.15, the State agency is not required to conduct a meal preparation facility review.
(1) Each State agency must establish an order of priority for visiting facilities at which food is prepared for the Program. The facility review must be conducted at least one time within the appropriate review cycle for each vended sponsor. If multiple vended sponsors use the same food service management company and are being reviewed in the same review cycle, a single facility review will fulfill the review requirements for those vended sponsors.
(2) The State agency must respond promptly to complaints concerning facilities. If the food service management company fails to correct violations noted by the State agency during a review, the State agency must notify the sponsor and the food service management company that reimbursement must not be paid for meals prepared by the food service management company after a date specified in the notification.
(3) Funds provided in § 225.5(f) may be used for conducting meal preparation facility reviews.
(j) Forms for reviews by sponsors. Each State agency must develop and provide monitor review forms to all approved sponsors. These forms must be completed by sponsor monitors. The monitor review form must include, but not be limited to:
(1) The time of the reviewer’s arrival and departure;
(2) The site supervisor’s printed name and signature;
(3) A certification statement to be signed by the monitor;
(4) The number of meals prepared or delivered;
(5) Whether the meal service is congregate or non-congregate;
(6) The number of meals served to children;
(7) The deficiencies noted;
(8) The corrective actions taken by the sponsor; and
(9) The date of such actions.
(k) Corrective actions. Corrective actions which the State agency may take when Program violations are observed during the conduct of a review are discussed in § 225.11. The State agency must conduct follow-up reviews as appropriate when corrective actions are required.
(l) Other facility inspections and meal quality tests. In addition to those inspections required by paragraph (i) of this section, the State agency may also conduct, or arrange to have conducted: inspections of self-preparation and vended sponsors’ food preparation facilities; inspections of food service sites; and meal quality tests. The procedures for carrying out these inspections and tests must be consistent with procedures used by local health authorities. For inspections of food service management companies’ facilities not conducted by State agency personnel, copies of the results must be provided to the State agency. The company and the sponsor must also immediately receive a copy of the results of these inspections when corrective action is required. If a food service management company fails to correct violations noted by the State agency during a review, the State agency must notify the sponsor and the food service management company that reimbursement must not be paid for meals prepared by the food service management company after a date specified in the notification. Funds provided for in § 225.5(f) may be used for conducting these inspections and tests.
(m) Financial management. Each State agency must establish a financial management system, in accordance with 2 CFR part 200, subparts D and E, and USDA implementing regulations 2 CFR parts 400 and 415, as applicable, and FNS guidance, to identify allowable Program costs and to establish standards for sponsor recordkeeping and reporting. The State agency must provide guidance on these financial management standards to each sponsor. Additionally, each State agency must establish a system for monitoring and reviewing sponsors’ nonprofit food service to ensure that all Program reimbursement funds are used solely for the conduct of the food service operation. State agencies must review the net cash resources of the nonprofit food service of each sponsor participating in the Program and ensure that the net cash resources do not exceed one months’ average expenditures for sponsors operating only during the summer months and three months’ average expenditure for sponsors operating Child Nutrition Programs throughout the year. State agency approval must be required for net cash resources in excess of requirements set forth in this paragraph (m). Based on this monitoring, the State agency may provide technical assistance to the sponsor to improve meal service quality or take other action designed to improve the nonprofit meal service quality under the following conditions, including but not limited to:
(1) The sponsor’s net cash resources exceed the limits included in this paragraph (m) for the sponsor’s nonprofit food service or such other amount as may be approved in accordance with this paragraph;
(2) The ratio of administrative to operating costs (as defined in § 225.2) is high;
(3) There is significant use of alternative funding for food and/or other costs; or
(4) A significant portion of the food served is privately donated or purchased at a very low price.
(n) Nondiscrimination. (1) Each State agency must comply with all requirements of title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and the Department’s regulations concerning nondiscrimination (7 CFR parts 15, 15a, and 15b), including requirements for racial and ethnic participation data collection, public notification of the nondiscrimination policy, and reviews to assure compliance with such policy, to the end that no person must, on the grounds of race, color, national origin, sex (including gender identity and sexual orientation), age, or disability, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under the Program.
(2) Complaints of discrimination filed by applicants or participants must be referred to FNS or the Secretary of Agriculture, Washington, DC 20250. A State agency which has an established grievance or complaint handling procedure may resolve sex and disability discrimination complaints before referring a report to FNS.
(o) Sponsor site visit. Each State agency must establish criteria that sponsors will use to determine which sites with operational problems in the prior year are required to receive a site visit during the first two weeks of program operations in accordance with § 225.15(d)(2).
§ 225.8 Records and reports.
(a) Each State agency shall maintain complete and accurate current accounting records of its Program operations which will adequately identify funds authorizations, obligations, unobligated balances, assets, liabilities, income, claims against sponsors and efforts to recover overpayments, and expenditures for administrative and operating costs. These records shall be retained for a period of three years after the date of the submission of the final Program Operations and Financial Status Report (FNS-777), except that, if audit findings have not been resolved, the affected records shall be retained beyond the three year period until such time as any issues raised by the audit findings have been resolved. The State agency shall also retain a complete record of each review or appeal conducted, as required under § 225.13, for a period of three years following the date of the final determination on the review or appeal. Records may be kept in their original form or on microfilm.
(b) Each State agency shall submit to FNS a final report on the Summer Food Service Program Operations (FNS-418) for each month no more than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not postmarked and/or submitted within this time limit unless FNS grants an exception. Upward adjustments to a State’s report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments shall always be made without FNS authorization, regardless of when it is determined that such adjustments need to be made. Adjustments to a State’s report shall be reported to FNS in accordance with procedures established by FNS. Each State agency shall also submit to FNS a quarterly Financial Status Report (FNS-777) on the use of Program funds. Such reports shall be submitted no later than 30 days after the end of each fiscal year quarter. Obligations shall be reported only for the fiscal year in which they occur. Action may be taken against the State agency, in accordance with § 225.5(a)(1), for failure to submit accurate and timely reports.
(c) The State agency must submit to FNS a final Financial Status Report no later than 120 days after the end of the fiscal year, on a form (FNS-777) provided by FNS. Any requested increase in reimbursement levels for a fiscal year resulting from corrective action taken after submission of the final Program Operations and Financial Status Reports shall be submitted to FNS for approval. The request shall be accompanied by a written explanation of the basis for the adjustment and the actions taken to minimize the need for such adjustments in the future. If FNS approves such an increase, it will make payment, subject to availability of funds. Any reduction in reimbursement for that fiscal year resulting from corrective action taken after submission of the final fiscal year Program Operations and Financial Status Reports shall be handled in accordance with the provisions of § 225.12(d), except that amounts recovered may not be used to make Program payments.
(d)(1) By May 1 of each year, State agencies must submit to the appropriate FNSRO a list of potential private nonprofit organization sponsors. The list must include the following information for each applicant sponsor:
(i) Name and address;
(ii) Geographical area(s) proposed to be served;
(iii) Proposed number of sites; and
(iv) Any available details of each proposed site including address, dates of operation, and estimated daily attendance.
(2) State agencies must also notify the appropriate FNSRO within 5 working days after they approve each private nonprofit organization to participate as a SFSP sponsor. When State agencies notify the FNSRO of sponsor approval, they must provide the following information:
(i) Any changes to site locations, dates of operation, and estimated daily attendance that was previously provided;
(ii) The hours and type(s) of approved meal service at each site;
(iii) The type of site approval—open, restricted open, closed enrolled, conditional non-congregate, or camp; and
(iv) Any other important details about each site that would help the FNSRO plan reviews, including whether the site is rural or urban, congregate or non-congregate, or vended or self-preparation.
(e) By June 30 of each year, or a later date approved by the appropriate FNSRO, the State agency must submit to FNS a list of open site locations and their operational details and provide a minimum of two updates during the summer operational period. State agencies are encouraged to submit updates weekly if there are any changes to their data.
§ 225.9 Program assistance to sponsors.
(a) Start-up payments. At their discretion, State agencies may make start-up payments to sponsors which have executed Program agreements. Start-up payments shall not be made more than two months before the sponsor is scheduled to begin food service operations and shall not exceed 20 percent of the sponsor’s approved administrative budget. The amount of the start-up payment shall be deducted from the first advance payment or, if the sponsor does not receive advance payments, from the first reimbursement.
(b) Commodity assistance. (1) Sponsors eligible to receive commodities under the Program include: Self-preparation sponsors; sponsors which have entered into an agreement with a school or school food authority for the preparation of meals; and sponsors which are school food authorities and have competitively procured Program meals from the same food service management company from which they competitively procured meals for the National School Lunch Program during the last period in which school was in session. The State agency shall make available to these sponsors information on available commodities. Sponsors shall use in the Program food donated by the Department and accepted by sponsors.
(2) Not later than June 1 of each year, State agencies shall prepare a list of the sponsors which are eligible to receive commodities and the average daily number of eligible meals to be served by each of these sponsors. If the State agency does not handle the distribution of commodities donated by the Department, this list shall be forwarded to the agency of the State responsible for the distribution of commodities. The State agency shall be responsible for promptly revising the list to reflect additions or terminations of sponsors and for adjusting the average daily participation data as it deems necessary.
(c) Advance payments. At the sponsor’s request, State agencies shall make advance payments to sponsors that have executed Program agreements in order to assist these sponsors in meeting expenses. For sponsors operating under a continuous school calendar, all advance payments shall be forwarded on the first day of each month of operation. Advance payments shall be made by the dates specified in paragraph (c)(1)(i) of this section for all other sponsors whose requests are received at least 30 days prior to those dates. Requests received less than 30 days prior to those dates shall be acted upon within 30 days of receipt. When making advance payments, State agencies shall observe the following criteria:
(1) Payments. (i) State agencies shall make advance payments by June 1, July 15, and August 15. To be eligible for the second and third advance payments, the sponsor must certify that it is operating the number of sites for which the budget was approved and that its projected costs do not differ significantly from the approved budget. Except for school food authorities, sponsors must conduct training sessions before receiving the second advance payment. Training sessions must cover Program duties and responsibilities for the sponsor’s staff and for site personnel. A sponsor shall not receive advance payments for any month in which it will participate in the Program for less than 10 days. However, if a sponsor operates for less than 10 days in June but for at least 10 days in August, the second advance payment shall be made by August 15.
(ii) To determine the amount of the advance payment to any sponsor, the State agency shall employ whichever of the following methods will result in the larger payment:
(A) The total reimbursement paid to the sponsor for the same calendar month in the preceding year; or
(B) For vended sponsors, 50 percent of the amount determined by the State agency to be needed that month for meals, or, for self-preparation sponsors, 65 percent of the amount determined by the State agency to be needed that month for meals.
(2) Advance payment estimates. When determining the amount of advance payments payable to the sponsor, the State agency shall make the best possible estimate based on the sponsor’s request and any other available data. Under no circumstances may the amount of the advance payment exceed the amount estimated by the State agency to be needed by the sponsor to meet Program costs.
(3) Limit. The sum of the advance payments to a sponsor for any one month shall not exceed $40,000 unless the State agency determines that a larger payment is necessary for the effective operation of the Program and the sponsor demonstrates sufficient administrative and managerial capability to justify a larger payment.
(4) Deductions from advance payments. The State agency shall deduct from advance payments the amount of any previous payment which is under dispute or which is part of a demand for recovery under § 225.12.
(5) Withholding of advance payments. If the State agency has reason to believe that a sponsor will not be able to submit a valid claim for reimbursement covering the month for which advance payments have already been made, the subsequent month’s advance payment shall be withheld until a valid claim is received.
(6) Repayment of excess advance payments. Upon demand of the State agency, sponsors shall repay any advance Program payments in excess of the amount cited on a valid claim for reimbursement.
(d) Reimbursements. Sponsors shall not be eligible for meal reimbursements unless they have executed an agreement with the State agency. All reimbursements shall be in accordance with the terms of this agreement. Reimbursements shall not be paid for meals served at a site before the sponsor has received written notification that the site has been approved for participation in the Program. Income accruing to a sponsor’s program shall be deducted from costs. The State agency may make full or partial reimbursement upon receipt of a claim for reimbursement, but shall first make any necessary adjustments in the amount to be paid. The following requirements shall be observed in submitting and paying claims:
(1) School food authorities that operate the Program, and operate more than one child nutrition program under a single State agency, must use a common claim form (as provided by the State agency) for claiming reimbursement for meals served under those programs.
(2) No reimbursement may be issued until the sponsor certifies that it operated all sites for which it is approved and that there has been no significant change in its projected expenses since its preceding claim and, for a sponsor receiving an advance payment for only one month, that there has been no significant change in its projected expenses since its initial advance payment.
(3) Sponsors must submit a monthly claim or a combined claim within 60 days of the last day of operation. Sponsors may not submit a combined claim for meal reimbursements that crosses fiscal years. In addition, State agencies must ensure that the correct reimbursement rates are applied for meals claimed for months when different reimbursement rates are in effect. With approval from the State agency, sponsors have the flexibility to combine the claim for reimbursement in the following ways:
(i) For 10 operating days or less in their initial month of operations with the claim for the subsequent month;
(ii) For 10 operating days or less in their final month of operations with the claim for the preceding month; or
(iii) For 3 consecutive months, as long as this combined claim only includes 10 operating days or less from each of the first and last months of program operations.
(4) The State agency must forward reimbursements within 45 calendar days of receiving valid claims. If a claim is incomplete, invalid, or potentially unlawful per paragraph (d)(10) of this section, the State agency must return the claim to the sponsor within 30 calendar days with an explanation of the reason for disapproval and how such claim must be revised for payment. If the sponsor submits a revised claim, final action must be completed within 45 calendar days of receipt unless the State agency has reason to believe the claim is unlawful per paragraph (d)(10) in this section. If the State agency disallows partial or full payment for a claim for reimbursement, it must notify the sponsor which submitted the claim of its right to appeal under § 225.13(a).
(5) Claims for reimbursement shall report information in accordance with the financial management system established by the State agency, and in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Reports of Summer Food Service Program Operations required under § 225.8(b). In submitting a claim for reimbursement, each sponsor shall certify that the claim is correct and that records are available to support this claim. Failure to maintain such records may be grounds for denial of reimbursement for meals claimed during the period covered by the records in question. The costs of meals to adults performing necessary food service labor may be included in the claim. Under no circumstances may a sponsor claim the cost of any disallowed meals as operating costs.
(6) A final Claim for Reimbursement shall be postmarked or submitted to the State agency not later than 60 days after the last day of the month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not filed within the 60 day deadline shall not be paid with Program funds unless FNS determines that an exception should be granted. The State agency shall promptly take corrective action with respect to any Claim for Reimbursement as determined necessary through its claim review process or otherwise. In taking such corrective action, State agencies may make upward adjustments in Program funds claimed on claims filed within the 60 day deadline if such adjustments are completed within 90 days of the last day of the month covered by the claim and are reflected in the final Program Operations Report (FNS-418). Upward adjustments in Program funds claimed which are not reflected in the final FNS-418 for the month covered by the claim cannot be made unless authorized by FNS. Downward adjustments in Program funds claimed shall always be made without FNS authorization, regardless of when it is determined that such adjustments are necessary.
(7) Payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor’s program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites.
(8) On each January 1, or as soon thereafter or as practicable, FNS will publish a notice in the
(9) Sponsors of camps are reimbursed only for meals served to children in camps whose eligibility for Program meals is documented.
(10) Sponsors of NYSP sites are reimbursed only for meals served to children enrolled in the NYSP.
(11) Sponsors of conditional non-congregate sites are reimbursed only for meals served to children whose eligibility for Program meals is documented.
(12) If a State agency has reason to believe that a sponsor or food service management company has engaged in unlawful acts in connection with Program operations, evidence found in audits, reviews, or investigations must be a basis for nonpayment of the applicable sponsor’s claims for reimbursement. The State agency may be exempt from the requirement stated in paragraph (d)(4) of this section that final action on a claim must be complete within 45 calendar days of receipt of a revised claim if the State agency determines that a thorough examination of potentially unlawful acts would not be possible in the required timeframe. The State agency must notify the appropriate FNSRO of its election to take the exemption from the requirement stated in paragraph (d)(4) of this section by submitting to the FNSRO a copy of the claim disapproval at the same time as it is provided to the sponsor.
(e) The sponsor may claim reimbursement for any meals which are examined for meal quality by the State agency, auditors, or local health authorities and found to meet the meal pattern requirements.
(f) Meal claiming. The sponsor must not claim reimbursement for meals served to children at any site in excess of the site’s approved level of meal service, if one has been established under § 225.6(h)(2). However, the total number of meals for which operating costs are claimed may exceed the approved level of meal service if the meals exceeding this level were served to adults performing necessary food service labor in accordance with paragraph (d)(5) of this section. In reviewing a sponsor’s claim for congregate meals served, the State agency must ensure that reimbursements for second meals are limited to the percentage tolerance established in § 225.15(b)(4).
(g) Unused reimbursement. If a sponsor receives more reimbursement than expended on allowable costs, the sponsor should use this unused reimbursement to improve the meal service or management of the Program. Unused reimbursement remaining at the end of the Program year must be used to pay allowable costs of other Child Nutrition Programs or for SFSP operations the following Program year.
(1) If a sponsor does not return to participate in the Program the following year and does not operate any other Child Nutrition Programs, the sponsor is not required to return the unused reimbursement to the State agency.
(2) [Reserved]
§ 225.10 Audits and management evaluations.
(a) Audits. State agencies shall arrange for audits of their own operations to be conducted in accordance with 2 CFR part 200, subpart F and USDA implementing regulations 2 CFR part 400 and part 415. Unless otherwise exempt, sponsors shall arrange for audits to be conducted in accordance with 2 CFR part 200, subpart F and USDA implementing regulations 2 CFR part 400 and part 415. State agencies shall provide OIG with full opportunity to audit the State agency and sponsors. Unless otherwise exempt, audits at the State and sponsor levels shall be conducted in accordance with 2 CFR part 200, subpart F and Appendix XI, Compliance Supplement and USDA implementing regulations 2 CFR part 400 and part 415. While OIG shall rely to the fullest extent feasible upon State-sponsored audits of sponsors, it shall, when considered necessary, (1) make audits on a State-wide basis, (2) perform on-site test audits, and (3) review audit reports and related working papers of audits performed by or for State agencies.
(b) Management evaluations. (1) State agencies shall provide FNS with full opportunity to conduct management evaluations (including visits to sponsors) of all operations of the State agency. Each State agency shall make available its records, including records of the receipts and expenditures of funds, upon a reasonable request by FNS.
(2) The State agency shall fully respond to any recommendations made by FNSRO pursuant to the management evaluation.
(3) FNSRO may require the State agency to submit on 20 days notice a corrective action plan regarding serious problems observed during any phase of the management evaluation.
(c) Disregards. In conducting management evaluations or audits for any fiscal year, the State agency, FNS or OIG may disregard overpayment which does not exceed $100 or, in the case of State agency administered programs, does not exceed the amount established by State law, regulations or procedures as a minimum for which claims will be made for State losses generally. No overpayment shall be disregarded, however, when there are unpaid claims for the same fiscal year from which the overpayment can be deducted or when there is substantial evidence of violation of criminal law or civil fraud statutes.
§ 225.11 Corrective action procedures.
(a) Purpose. The provisions in this section shall be used by the State agency to improve Program performance.
(b) Investigations. Each State agency shall promptly investigate complaints received or irregularities noted in connection with the operation of the Program, and shall take appropriate action to correct any irregularities. The State agency shall maintain on file all evidence relating to such investigations and actions. The State agency shall inform the appropriate FNSRO of any suspected fraud or criminal abuse in the Program which would result in a loss or misuse of Federal funds. The Department may make investigations at the request of the State agency, or where the Department determines investigations are appropriate.
(c) Denial of applications and termination of sponsors. Except as specified below, the State agency shall not enter into an agreement with any applicant sponsor identifiable through its corporate organization, officers, employees, or otherwise, as an institution which participated in any Federal child nutrition program and was seriously deficient in its operation of any such program. The State agency shall terminate the Program agreement with any sponsor which it determines to be seriously deficient. However, the State agency shall afford a sponsor reasonable opportunity to correct problems before terminating the sponsor for being seriously deficient. The State agency may approve the application of a sponsor which has been disapproved or terminated in prior years in accordance with this paragraph if the sponsor demonstrates to the satisfaction of the State agency that the sponsor has taken appropriate corrective actions to prevent recurrence of the deficiencies. Serious deficiencies which are grounds for disapproval of applications and for termination include, but are not limited to, any of the following:
(1) Noncompliance with the applicable bid procedures and contract requirements of Federal child nutrition program regulations;
(2) The submission of false information to the State agency;
(3) Failure to return to the State agency any start-up or advance payments which exceeded the amount earned for serving meals in accordance with this part, or failure to submit all claims for reimbursement in any prior year, provided that failure to return any advance payments for months for which claims for reimbursement are under dispute from any prior year shall not be grounds for disapproval in accordance with this paragraph; and
(4) Program violations at a significant proportion of the sponsor’s sites. Such violations include, but are not limited to, the following:
(i) Noncompliance with the meal service time restrictions set forth at § 225.16(c), as applicable;
(ii) Failure to maintain adequate records;
(iii) Failure to adjust meal orders to conform to variations in the number of participating children;
(iv) For congregate meal service operations, the simultaneous service of more than one meal to any child;
(v) The claiming of Program payments for meals not served to participating children;
(vi) For non-congregate meal service operations, distributing more than the daily meal limit when multi-day service is used;
(vii) Service of a significant number of meals which did not include required quantities of all meal components;
(viii) For congregate meal service operations, excessive instances of off-site meal consumption;
(ix) Continued use of food service management companies that are in violation of health codes.
(d) Meal service restriction. (1) With the exception for residential camps and non-congregate meal service set forth at § 225.16(b)(1)(ii) and (b)(5)(iii), respectively, the State agency must restrict to one meal service per day:
(i) Any food service site which is determined to be in violation of the time restrictions for meal service set forth at § 225.16(c) when corrective action is not taken within a reasonable time as determined by the State agency; and
(ii) All sites under a sponsor if more than 20 percent of the sponsor’s sites are determined to be in violation of the time restrictions set forth at § 225.16(c).
(2) If this action results in children not receiving meals under the Program, the State agency must make reasonable effort to locate another source of meal service for these children.
(e) Meal disallowances. (1) If the State agency determines that a sponsor has failed to plan, prepare, or order meals with the objective of providing only one meal per child at each meal service at a site, the State agency shall disallow the number of children’s meals prepared or ordered in excess of the number of children served.
(2) If the State agency observes meal service violations during the conduct of a site review, the State agency shall disallow as meals served to children all of the meals observed to be in violation.
(3) The State agency shall also disallow children’s meals which are in excess of a site’s approved level established under § 225.6(h)(2).
(f) Corrective action and termination of sites. (1) Whenever the State agency observes violations during the course of a site review, it shall require the sponsor to take corrective action. If the State agency finds a high level of meal service violations, the State agency shall require a specific immediate corrective action plan to be followed by the sponsor and shall either conduct a follow-up visit or in some other manner verify that the specified corrective action has been taken.
(2) The State agency shall terminate the participation of a sponsor’s site if the sponsor fails to take action to correct the Program violations noted in a State agency review report within the timeframes established by the corrective action plan.
(3) The State agency shall immediately terminate the participation of a sponsor’s site if during a review it determines that the health or safety of the participating children is imminently threatened.
(4) If the site is vended, the State agency shall within 48 hours notify the food service management company providing meals to the site of the site’s termination.
(g) Technical assistance for improved meal service. If the State agency finds that a sponsor is operating a program with poor quality meal service and is operating below the reimbursement level, the State agency should provide technical assistance to the sponsor to improve the meal service.
§ 225.12 Claims against sponsors.
(a) The State agency shall disallow any portion of a claim for reimbursement and recover any payment to a sponsor not properly payable under this part, except as provided for in § 225.10(c). State agencies shall consider claims for reimbursement not properly payable if a sponsor’s records do not support all meals claimed and include all costs associated with the Program sufficient to justify that reimbursements were spent only on allowable Child Nutrition Program costs. However, the State agency shall notify the sponsor of the reasons for any disallowance or demand for repayment.
(b) Minimum State agency collection procedures for unearned payments shall include:
(1) Written demand to the sponsor for the return of improper payments;
(2) If after 30 calendar days the sponsor fails to remit full payment or agree to a satisfactory repayment schedule, a second written demand for the return of improper payments, sent by certified mail, return receipt requested;
(3) If after 60 calendar days following the original written demand, the sponsor fails to remit full payment or agree to a satisfactory repayment schedule, a third written demand for the return of improper payments, sent by certified mail, return receipt requested;
(4) If after 90 calendar days following the original written demand, the sponsor fails to remit full payment or agree to a satisfactory repayment schedule, the State agency shall refer the claim against the sponsor to the appropriate State or Federal authorities for pursuit of legal remedies.
(c) If FNS does not concur with the State agency’s action in paying a sponsor or in failing to collect an overpayment, FNS shall notify the State agency of its intention to assert a claim against the State agency. In all such cases, the State agency shall have full opportunity to submit evidence concerning the action taken. The State agency shall be liable to FNS for failure to collect an overpayment unless FNS determines that the State agency has conformed with this part in issuing the payment and has exerted reasonable efforts in accordance with paragraph (b) of this section to recover the improper payment.
(d) The amounts recovered by the State agency from sponsors may be utilized to make Program payments to sponsors for the period for which the funds were initially available and/or to repay the State for any of its own funds used to make payments on claims for reimbursement. Any amounts recovered which are not so utilized shall be returned to FNS in accordance with the requirements of this part.
§ 225.13 Appeal procedures.
(a) Each State agency shall establish a procedure to be followed by an applicant appealing: A denial of an application for participation; a denial of a sponsor’s request for an advance payment; a denial of a sponsor’s claim for reimbursement (except for late submission under § 225.9(d)(6)); a State agency’s refusal to forward to FNS an exception request by the sponsor for payment of a late claim or a request for an upward adjustment to a claim; a claim against a sponsor for remittance of a payment; the termination of the sponsor or a site; a denial of a sponsor’s application for a site; a denial of a food service management company’s application for registration, if applicable; or the revocation of a food service management company’s registration, if applicable. Appeals shall not be allowed on decisions made by FNS with respect to late claims or upward adjustments under § 225.9(d)(6).
(b) At a minimum, appeal procedures shall provide that:
(1) The sponsor or food service management company be advised in writing of the grounds upon which the State agency based the action. The notice of action shall also state that the sponsor or food service management company has the right to appeal the State’s action. The notice is considered to be received by the sponsor or food service management company when it is delivered by certified mail, return receipt (or the equivalent private delivery service), by facsimile, or by email. If the notice is undeliverable, it is considered to be received by the sponsor or food service management company five days after being sent to the addressee’s last known mailing address, facsimile number, or email address;
(2) The sponsor or food service management company be advised in writing that the appeal must be made within a specified time and must meet the requirements of paragraph (b)(4) of this section. The State agency shall establish this period of time at not less than one week nor more than two weeks from the date on which the notice of action is received;
(3) The appellant be allowed the opportunity to review any information upon which the action was based;
(4) The appellant be allowed to refute the charges contained in the notice of action either in person or by filing written documentation with the review official. To be considered, written documentation must be submitted by the appellant within seven days of submitting the appeal, must clearly identify the State agency action being appealed, and must include a photocopy of the notice of action issued by the State agency;
(5) A hearing be held by the review official in addition to, or in lieu of, a review of written information submitted by the appellant only if the appellant so specifies in the letter appealing the action. The appellant may retain legal counsel or may be represented by another person. Failure of the appellant’s representative to appear at a scheduled hearing shall constitute the appellant’s waiver of the right to a personal appearance before the review official, unless the review official agrees to reschedule the hearing. A representative of the State agency shall be allowed to attend the hearing to respond to the appellant’s testimony and written information and to answer questions from the review official;
(6) If the appellant has requested a hearing, the appellant and the State agency shall be provided with at least 5 days advance written notice, sent by certified mail, return receipt requested, of the time and place of the hearing;
(7) The hearing be held within 14 days of the date of the receipt of the request for review, but, where applicable, not before the appellant’s written documentation is received in accordance with paragraphs (b) (4) and (5) of this section;
(8) The review official be independent of the original decision-making process;
(9) The review official make a determination based on information provided by the State agency and the appellant, and on Program regulations;
(10) Within 5 working days after the appellant’s hearing, or within 5 working days after receipt of written documentation if no hearing is held, the reviewing official make a determination based on a full review of the administrative record and inform the appellant of the determination of the review by certified mail, return receipt requested;
(11) The State agency’s action remain in effect during the appeal process. However, participating sponsors and sites may continue to operate the Program during an appeal of termination, and if the appeal results in overturning the State agency’s decision, reimbursement shall be paid for meals served during the appeal process. However, such continued Program operation shall not be allowed if the State agency’s action is based on imminent dangers to the health or welfare of children. If the sponsor or site has been terminated for this reason, the State agency shall so specify in its notice of action; and
(12) The determination by the State review official is the final administrative determination to be afforded to the appellant.
(c) The State agency shall send written notification of the complete appeal procedures and of the actions which are appealable, as specified in paragraph (a) of this section, to each potential sponsor applying to participate and to each food service management company applying to register in accordance with § 225.6(k).
(d) A record regarding each review shall be kept by the State agency, as required under § 225.8(a). The record shall document the State agency’s compliance with these regulations and shall include the basis for its decision.
Subpart C—Sponsor and Site Provisions
§ 225.14 Requirements for sponsor participation.
(a) Applications. Sponsors must make written application to the State agency to participate in the Program which must include all content required under § 225.6(c). Such application must be made on a timely basis in accordance with the requirements of § 225.6(b)(1). Sponsors proposing to operate a site during an unanticipated school closure may be exempt, at the discretion of the State agency, from submitting a new application if they have participated in the program at any time during the current year or in either of the prior 2 calendar years.
(b) Sponsor eligibility. Applicants eligible to sponsor the Program include:
(1) Public or nonprofit private school food authorities;
(2) Public or nonprofit private residential summer camps;
(3) Units of local, municipal, county, or State governments;
(4) Public or private nonprofit colleges or universities which are currently participating in the National Youth Sports Program; and
(5) Private nonprofit organizations as defined in § 225.2, as determined annually.
(c) General requirements. No applicant sponsor shall be eligible to participate in the Program unless it:
(1) Demonstrates financial and administrative capability for Program operations and accepts final financial and administrative responsibility for total Program operations at all sites at which it proposes to conduct a food service in accordance with the performance standards described under § 225.6(d) of this part.
(i) In general, an applicant sponsor which is a school food authority in good standing in the National School Lunch Program or an institution in good standing in the Child and Adult Care Food Program applying to operate the Program at the same sites where they provide meals through the aforementioned Programs, is not required to submit a management plan as described under § 225.6(e) or further demonstrate financial and administrative capability for Program operations.
(ii) If the State agency has reason to believe that financial or administrative capability would pose significant challenges for an applicant sponsor which is a school food authority in the National School Lunch Program or School Breakfast Program, as applicable, or an institution in the Child and Adult Care Food Program, the State agency may request a Management plan or additional evidence of financial and administrative capability sufficient to ensure that the school food authority or institution has the ability and resources to operate the Program.
(iii) If the State agency approving the application for the Program is not responsible for the administration of the National School Lunch Program or the Child and Adult Care Food Program, the State agency must develop a process for sharing information with the agency responsible for approving these programs in order to receive documentation of the applicant sponsor’s financial and administrative capability.
(2) Has not been seriously deficient in operating the Program;
(3) Will conduct a regularly scheduled food service for children from areas in which poor economic conditions exist, or qualifies as a camp or a conditional non-congregate site;
(4) Has adequate supervisory and operational personnel for overall monitoring and management of each site, including a site supervisor, and adequate personnel to conduct the visits and reviews required in § 225.15(d)(2) and (3), as demonstrated in the management plan submitted with the program application described under § 225.6(e);
(5) Provides an ongoing year-round service to the community which it proposes to serve under the Program, except as provided for in § 225.6(b)(4);
(6) Certifies that all sites have been visited and have the capability and the facilities to provide the meal service planned for the number of children anticipated to be served; and
(7) Enters into a written agreement with the State agency upon approval of its application, as required in § 225.6(i).
(d) Requirements specific to sponsor types. (1) If the sponsor is a camp, it must certify that it will collect information on participants’ eligibility to support its claim for reimbursement.
(2) If the sponsor administers the Program at sites that provide summer school sessions, it must ensure that these sites are open to children enrolled in summer school and to all children residing in the area served by the site.
(3) Sponsors which are units of local, municipal, county, or State government, and sponsors which are private nonprofit organizations, will only be approved to administer the Program at sites where they have administrative oversight. Administrative oversight means that the sponsor shall be responsible for:
(i) Maintaining contact with meal service staff, ensuring that there is adequately trained meal service staff on site, monitoring the meal service throughout the period of Program participation, and terminating meal service at a site if staff fail to comply with Program regulations; and
(ii) Exercising management control over Program operations at sites throughout the period of Program participation by performing the functions specified in § 225.15.
(4) If the sponsor administers NYSP sites, it must ensure that all children at these sites are enrolled participants in the NYSP.
(5) If the sponsor is a private nonprofit organization, it must certify that it:
(i) Exercises full control and authority over the operation of the Program at all sites under the sponsorship of the organization;
(ii) Provides ongoing year-round activities for children or families;
(iii) Demonstrates that the organization has adequate management and the fiscal capacity to operate the Program;
(iv) Is an organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from taxation under 501(a) of that Code; and
(v) Meets applicable State and local health, safety, and sanitation standards.
(6) If the sponsor operates a non-congregate meal service that will deliver meals directly to a child’s residence, it must obtain written parental consent prior to providing meals to children in that household.
(7) If the sponsor operates a conditional non-congregate site, it must certify that it will collect information to determine children’s Program eligibility to support its claim for reimbursement.
(8) If the sponsor is not a school food authority, it must enter into a written agreement or Memorandum of Understanding (MOU) with the State agency or school food authority if it chooses to receive school data for the purposes of identifying eligible children and determining children’s Program eligibility, as required under § 225.15(k).
§ 225.15 Management responsibilities of sponsors.
(a) General. (1) Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part.
(2) Sponsors shall not claim reimbursement under parts 210, 215, 220, or 226 of this chapter. In addition, the sponsor must ensure that records of any site serving homeless children accurately reflect commodity allotments received as a “charitable institution”, as defined in §§ 250.3 and 250.41 of this chapter. Commodities received for Program meals must be based only on the number of eligible children’s meals served. Sponsors may use funds from other Federally-funded programs to supplement their meal service but must, in calculating their claim for reimbursement, deduct such funds from total operating and administrative costs in accordance with the definition of “income accruing to the Program” at § 225.2 and with the regulations at § 225.9(d). Sponsors which are school food authorities may use facilities, equipment and personnel supported by funds provided under this part to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.).
(3) No sponsor may contract out for the management responsibilities of the Program described in this section.
(4) Sponsors must maintain documentation of a nonprofit food service including copies of all revenues received and expenses paid from the nonprofit food service account. Program reimbursements and expenditures may be included in a single nonprofit food service account with funds from any other Child Nutrition Programs authorized under the Richard B. Russell National School Lunch Act or the Child Nutrition Act of 1966, except the Special Supplemental Nutrition Program for Women, Infants, and Children. All Program reimbursement funds must be used solely for the conduct of the nonprofit food service operation. The net cash resources of the nonprofit food service of each sponsor participating in the Program may not exceed one month’s average expenditures for sponsors operating only during the summer months and three months’ average expenditures for sponsors operating Child Nutrition Programs throughout the year. State agency approval shall be required for net cash resources in excess of the requirements set forth in this paragraph (a)(4). Sponsors shall monitor Program costs and, in the event that net cash resources exceed the requirements outlined, take action to improve the meal service or other aspects of the Program.
(b) Meal Ordering. (1) Each sponsor shall, to the maximum extent feasible, utilize either its own food service facilities or obtain meals from a school food service facility. If the sponsor obtains meals from a school food service facility, the applicable requirements of this part shall be embodied in a written agreement between the sponsor and the school.
(2) Upon approval of its application or any adjustment in the approved levels of meal service for its sites established under § 225.6(h)(2), vended sponsors shall inform their food service management company of the approved level at each site for which the food service management company will provide meals.
(3) All sponsors must plan for and prepare or order meals on the basis of participation trends with the objective of providing only one meal per child at each meal service.
(i) The sponsor must make the adjustments necessary to achieve this objective using the results from its monitoring of sites.
(ii) The sponsor must adjust the number of meals ordered or prepared whenever the number of children receiving meals is below the maximum approved level of meal service.
(iii) The sponsor must not order or prepare meals for children at any site in excess of the site’s approved level, but may order or prepare meals above the approved level if the meals are to be served to adults performing necessary food service labor in accordance with § 225.9(d)(5).
(iv) Records of participation and of preparation or ordering of meals must be maintained to demonstrate positive action toward meeting the objective of this paragraph (b)(3).
(4) In recognition of the fluctuation in participation levels which makes it difficult to estimate precisely the number of meals needed and to reduce the resultant waste, sponsors may claim reimbursement for a number of second meals which does not exceed 2 percent of the number of first meals served to children for each meal type (i.e., breakfasts, lunches, supplements, or suppers) during the claiming period for congregate meals served. The State agency must disallow all claims for second meals if it determines that the sponsor failed to plan and prepare or order meals with the objective of providing only one meal per child at each meal service. Second meals must be served only after all participating children at the site’s congregate meal service have been served a meal. Second meals may not be served as part of a non-congregate meal service.
(c) Records and claims. (1) Sponsors shall maintain accurate records justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. The sponsor’s records shall be available at all times for inspection and audit by representatives of the Secretary, the Comptroller General of the United States, and the State agency for a period of three years following the date of submission of the final claim for reimbursement for the fiscal year.
(2) Sponsors shall submit claims for reimbursement in accordance with this part. All final claims must be submitted to the State agency within 60 days following the last day of the month covered by the claim.
(d) Training and monitoring. (1) Each sponsor must hold Program training sessions for its administrative and site personnel and must not allow a site to operate until personnel have attended at least one of these training sessions. The State agency may waive these training requirements for operation of the Program during unanticipated school closures.
(i) Training of site personnel must, at a minimum, include: the purpose of the Program; site eligibility; recordkeeping; site operations, including both congregate and non-congregate meal services; meal pattern requirements; and the duties of a monitor.
(ii) Each sponsor must ensure that its administrative personnel attend State agency training provided to sponsors, and sponsors must provide training throughout the summer to ensure that administrative personnel are thoroughly knowledgeable in all required areas of Program administration and operation and are provided with sufficient information to enable them to carry out their Program responsibilities.
(iii) Each site must have present at each meal service at least one person who has received this training.
(2) Sponsors must conduct pre-operational visits for new sites, sites that experienced operational problems the previous year, and existing sites that are new to non-congregate meal service, to determine that the sites have the capacity to provide meal service for the anticipated number of children in attendance and the capability to conduct the proposed meal service.
(3) Sponsors must visit each of their sites, as specified in paragraphs (d)(3)(i) through (iv) of this section, at least once during the first two weeks of program operations and must promptly take such actions as are necessary to correct any deficiencies. In cases where the site operates for seven calendar days or fewer, the visit must be conducted during the period of operation. Sponsors must conduct these visits for:
(i) All new sites;
(ii) All existing sites that are new to providing non-congregate meal service;
(iii) All sites that have been determined by the sponsor to need a visit based on criteria established by the State agency pertaining to operational problems noted in the prior year, as set forth in § 225.7(o); and
(iv) Any other sites that the State agency has determined need a visit.
(4) Sponsors must conduct a full review of food service operations at each site at least once during the first four weeks of Program operations, and thereafter must maintain a reasonable level of site monitoring. Sponsors must complete a monitoring form developed by the State agency during the conduct of these reviews. Sponsors may conduct a full review of food service operations at the same time they are conducting a site visit required under paragraph (d)(3) of this section.
(e) Notification to the community. Each sponsor must annually announce in the media serving the area from which it draws its attendance the availability of free meals. Sponsors of camps, closed enrolled sites, and conditional non-congregate sites must notify participants of the availability of free meals and if a free meal application is needed, as outlined in paragraph (f) of this section. For sites that use free meal applications to determine individual eligibility, notification to enrolled children must include: the Secretary’s family-size and income standards for reduced price school meals labeled “SFSP Income Eligibility Standards;” a statement that a foster child and children who are members of households receiving SNAP, FDPIR, or TANF benefits are automatically eligible to receive free meal benefits at eligible program sites; and a statement that meals are available without regard to race, color, national origin, sex (including gender identity and sexual orientation), age, or disability. State agencies may issue a media release for all sponsors operating SFSP sites in the State as long as the notification meets the requirements in this section.
(f) Application for free Program meals—(1) Purpose of application form. The application is used to determine the eligibility of children attending camps and the eligibility of sites that do not meet the requirements in paragraphs (1) through (3) of the definition of “areas in which poor economic conditions exist” in § 225.2.
(2) Application procedures based on household income. The household member completing the application on behalf of the child enrolled in the Program must provide the following information:
(i) The names of all children for whom application is made;
(ii) The names of all other household members;
(iii) The last four digits of the social security number of the adult household member who signs the application or an indication that the household member does not have a social security number;
(iv) The income received by each household member identified by source of income;
(v) The signature of an adult household member;
(vi) The date the application is completed and signed.
(3) Application based on the household’s receipt of SNAP, FDPIR, or TANF benefits. Households may apply on the basis of receipt of SNAP, FDPIR, or TANF benefits by providing the following information:
(i) The name(s) and SNAP, FDPIR, or TANF case number(s) of the child(ren) who are enrolled in the Program; and
(ii) The signature of an adult household member.
(4) Information or notices required on application forms. Application forms or descriptive materials given to households about applying for free meals must contain the following information:
(i) The family-size and income levels for reduced price school meal eligibility with an explanation that households with incomes less than or equal to these values are eligible for free Program meals (
(ii) A statement that a foster child who is a member of a household that receives SNAP, FDPIR, or TANF benefits is automatically eligible to receive free meals in the Program;
(iii) A statement informing households of how information provided on the application will be used. Each application for free meals must include substantially the following statement:
(A) “The Richard B. Russell National School Lunch Act requires the information on this application. You do not have to give the information, but if you do not, we cannot approve your child for free or reduced-price meals. You must include the last four digits of the social security number of the adult household member who signs the application. The last four digits of the social security number are not required when you apply on behalf of a foster child or you list a Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF) Program or Food Distribution Program on Indian Reservations (FDPIR) case number or other FDPIR identifier for your child or when you indicate that the adult household member signing the application does not have a social security number. We MAY share your eligibility information with education, health, and nutrition programs to help them evaluate, fund, or determine benefits for their programs, and with auditors for program reviews and law enforcement officials to help them look into violations of program rules.”
(B) When the State agency or sponsor, as appropriate, plans to use or disclose children’s eligibility information for non-program purposes, additional information, as specified in paragraph (i) of this section, must be added to the statement. State agencies and sponsors are responsible for drafting the appropriate notice.
(iv) The statement used to inform the household about the use of social security numbers must comply with the Privacy Act of 1974 (Pub. L. 93-579). If a State or local agency plans to use the social security numbers for uses not described in paragraph (f)(4)(iv) of this section, the notice must be revised to explain those uses.
(v) Examples of income that should be provided on the application, including: Earnings, wages, welfare benefits, pensions, support payments, unemployment compensation, social security, and other cash income;
(vi) A notice placed immediately above the signature block stating that the person signing the application certifies that all information provided is correct, that the household is applying for Federal benefits in the form of free Program meals, that Program officials may verify the information on the application, and that purposely providing untrue or misleading statements may result in prosecution under State or Federal criminal laws; and
(vii) A statement that if SNAP, FDPIR, or TANF case numbers are provided, they may be used to verify the current SNAP, FDPIR, or TANF certification for the children for whom free meals benefits are claimed.
(5) Verifying information on Program applications. Households selected to verify information on their Program applications must be notified in writing that:
(i) They will lose Program benefits or be terminated from participation if they do not cooperate with the verification process;
(ii) They will be given the name and phone number of an official who can assist in the verification process;
(iii) Verification may occur during program reviews, audits, and investigations;
(iv) Verification may include contacting employers, SNAP or welfare offices, or State employment offices to determine the accuracy of statements on the application about income, receipt of SNAP, FDPIR, TANF, or unemployment benefits; and
(v) They may lose benefits or face claims or legal action if incorrect information is reported on the application.
(g) Disclosure of children’s free and reduced price meal eligibility information to certain programs and individuals without parental consent. The State agency or sponsor, as appropriate, may disclose aggregate information about children eligible for free and reduced price meals to any party without parental notification and consent when children cannot be identified through release of the aggregate data or by means of deduction. Additionally, the State agency or sponsor may disclose information that identifies children eligible for free and reduced price meals to the programs and the individuals specified in this paragraph (g) without parent/guardian consent. The State agency or sponsor that makes the free and reduced price meal eligibility determination is responsible for deciding whether to disclose program eligibility information.
(1) Persons authorized to receive eligibility information. Only persons directly connected with the administration or enforcement of a program or activity listed in paragraphs (g)(2) or (g)(3) of this section may have access to children’s free and reduced price meal eligibility information, without parental consent. Persons considered directly connected with administration or enforcement of a program or activity listed in paragraphs (g)(2) or (g)(3) of this section are Federal, State, or local program operators responsible for the ongoing operation of the program or activity or persons responsible for program compliance. Program operators may include persons responsible for carrying out program requirements and monitoring, reviewing, auditing, or investigating the program. Program operators may include contractors, to the extent those persons have a need to know the information for program administration or enforcement. Contractors may include evaluators, auditors, and others with whom Federal or State agencies and program operators contract with to assist in the administration or enforcement of their program in their behalf.
(2) Disclosure of children’s names and free or reduced price meal eligibility status. The State agency or sponsor, as appropriate, may disclose, without parental consent, only children’s names and eligibility status (whether they are eligible for free meals or reduced price meals) to persons directly connected with the administration or enforcement of:
(i) A Federal education program;
(ii) A State health program or State education program administered by the State or local education agency;
(iii) A Federal, State, or local means-tested nutrition program with eligibility standards comparable to the National School Lunch Program (i.e., food assistance programs for households with incomes at or below 185 percent of the Federal poverty level); or
(3) Disclosure of all eligibility information. In addition to children’s names and eligibility status, the State agency or sponsor, as appropriate, may disclose, without parental consent, all eligibility information obtained through the free and reduced price meal eligibility process (including all information on the application or obtained through direct certification) to:
(i) Persons directly connected with the administration or enforcement of programs authorized under the Richard B. Russell National School Lunch Act or the Child Nutrition Act of 1966. This means that all eligibility information obtained for the Summer Food Service Program may be disclosed to persons directly connected with administering or enforcing regulations under the National School Lunch Program, Special Milk Program, School Breakfast Program, Child and Adult Care Food Program, and the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) (parts 210, 215, 220, 226 and 246, respectively, of this chapter);
(ii) The Comptroller General of the United States for purposes of audit and examination; and
(iii) Federal, State, and local law enforcement officials for the purpose of investigating any alleged violation of the programs listed in paragraphs (g)(2) and (g)(3) of this section.
(4) Use of free and reduced price meals eligibility information by programs other than Medicaid or the Children’s Health Insurance Program (CHIP). State agencies and sponsors may use children’s free and reduced price meal eligibility information for administering or enforcing the Summer Food Service Program. Additionally, any other Federal, State, or local agency charged with administering or enforcing the Summer Food Service Program may use the information for that purpose. Individuals and programs to which children’s free or reduced price meal eligibility information has been disclosed under this section may use the information only in the administration or enforcement of the receiving program. No further disclosure of the information may be made.
(h) Disclosure of children’s free or reduced price meal eligibility information to Medicaid and/or CHIP, unless parents decline. Children’s free or reduced price meal eligibility information only may be disclosed to Medicaid or CHIP when both the State agency and the sponsor so elect, the parental/guardian does not decline to have their eligibility information disclosed and the other provisions described in paragraph (h)(1) of this section are met. The State agency or sponsor, as appropriate, may disclose children’s names, eligibility status (whether they are eligible for free or reduced price meals), and any other eligibility information obtained through the free and reduced price meal applications or obtained through direct certification to persons directly connected with the administration of Medicaid or CHIP. Persons directly connected to the administration of Medicaid and CHIP are State employees and persons authorized under Federal and State Medicaid and CHIP requirements to carry out initial processing of Medicaid or CHIP applications or to make eligibility determinations for Medicaid or CHIP.
(1) The State agency must ensure that:
(i) The sponsors and health insurance program officials have a written agreement that requires the health insurance program agency to use the eligibility information to seek to enroll children in Medicaid and CHIP; and
(ii) Parents/guardians are notified that their eligibility information may be disclosed to Medicaid or CHIP and given an opportunity to decline to have their children’s eligibility information disclosed, prior to any disclosure.
(2) Use of children’s free and reduced price meal eligibility information by Medicaid/CHIP. Medicaid and CHIP agencies and health insurance program operators receiving children’s free and reduced price meal eligibility information must use the information to seek to enroll children in Medicaid or CHIP. The Medicaid and CHIP enrollment process may include targeting and identifying children from low-income households who are potentially eligible for Medicaid or CHIP for the purpose of seeking to enroll them in Medicaid or CHIP. No further disclosure of the information may be made. Medicaid and CHIP agencies and health insurance program operators also may verify children’s eligibility in a program under the Child Nutrition Act of 1966 or the Richard B. Russell National School Lunch Act.
(i) Notifying households of potential uses and disclosures of children’s free and reduced price meal eligibility information. Households must be informed that the information they provide on the free and reduced price meal application will be used to determine eligibility for free or reduced price meals and that their eligibility information may be disclosed to other programs.
(1) For disclosures to programs, other than Medicaid or the Children’s Health Insurance Program (CHIP), that are permitted access to children’s eligibility information, without parental/guardian consent, the State agency or sponsor, as appropriate, must notify parents/guardians at the time of application that their children’s free or reduced price meal eligibility information may be disclosed. The State agency or sponsor, as appropriate, must add substantially the following statement to the statement required under paragraph (f)(4)(iv) of this section, “We may share your eligibility information with education, health, and nutrition programs to help them evaluate, fund, or determine benefits for their programs; auditors for program reviews; and law enforcement officials to help them look into violations of program rules.” For children determined eligible for free meals through the direct certification, the notice of potential disclosure may be included in the document informing parents/guardians of their children’s eligibility for free meals through direct certification.
(2) For disclosure to Medicaid or CHIP, the State agency or sponsor, as appropriate, must notify parents/guardians that their children’s free or reduced price meal eligibility information will be disclosed to Medicaid and/or CHIP unless the parent/guardian elects not to have their information disclosed and notifies the State agency or sponsor, as appropriate, by a date specified by the State agency or sponsor, as appropriate. Only the parent or guardian who is a member of the household or family for purposes of the free and reduced price meal application may decline the disclosure of eligibility information to Medicaid or CHIP. The notification must inform parents/guardians that they are not required to consent to the disclosure, that the information, if disclosed, will be used to identify eligible children and seek to enroll them in Medicaid or CHIP, and that their decision will not affect their children’s eligibility for free or reduced price meals. The notification may be included in the letter/notice to parents/guardians that accompanies the free and reduced price meal application, on the application itself or in a separate notice provided to parents/guardians. The notice must give parents/guardians adequate time to respond if they do not want their information disclosed. The State agency or sponsor, as appropriate, must add substantially the following statement to the statement required under paragraph (f) of this section, “We may share your information with Medicaid or the Children’s Health Insurance Program, unless you tell us not to. The information, if disclosed, will be used to identify eligible children and seek to enroll them in Medicaid or CHIP.” For children determined eligible for free meals through direct certification, the notice of potential disclosure and opportunity to decline the disclosure may be included in the document informing parents/guardians of their children’s eligibility for free meals through direct certification process.
(j) Other disclosures. State agencies and sponsors that plan to use or disclose information about children eligible for free and reduced price meals in ways not specified in this section must obtain written consent from children’s parents or guardians prior to the use or disclosure.
(1) The consent must identify the information that will be shared and how the information will be used.
(2) There must be a statement informing parents and guardians that failing to sign the consent will not affect the child’s eligibility for free meals and that the individuals or programs receiving the information will not share the information with any other entity or program.
(3) Parents/guardians must be permitted to limit the consent only to those programs with which they wish to share information.
(4) The consent statement must be signed and dated by the child’s parent or guardian who is a member of the household for purposes of the free and reduced price meal application.
(k) Agreements with programs/individuals receiving children’s free or reduced price meal eligibility information. Agreements or Memoranda of Understanding (MOU) are recommended or required as follows:
(1) The State agency or sponsor, as appropriate, should have a written agreement or MOU with programs or individuals receiving eligibility information, prior to disclosing children’s free and reduced price meal eligibility information. The agreement or MOU should include information similar to that required for disclosures to Medicaid and CHIP specified in paragraph (k)(2) of this section.
(2) For disclosures to Medicaid or CHIP, the State agency or sponsor, as appropriate, must have a written agreement with the State or local agency or agencies administering Medicaid or CHIP prior to disclosing children’s free or reduced price meal eligibility information to those agencies. At a minimum, the agreement must:
(i) Identify the health insurance program or health agency receiving children’s eligibility information;
(ii) Describe the information that will be disclosed;
(iii) Require that the Medicaid or CHIP agency use the information obtained and specify that the information must be used to seek to enroll children in Medicaid or CHIP;
(iv) Require that the Medicaid or CHIP agency describe how they will use the information obtained;
(v) Describe how the information will be protected from unauthorized uses and disclosures;
(vi) Describe the penalties for unauthorized disclosure; and
(vii) Be signed by both the Medicaid or CHIP program or agency and the State agency or sponsor, as appropriate.
(l) Penalties for unauthorized disclosure or misuse of children’s free and reduced price meal eligibility information. In accordance with section 9(b)(6)(C) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1758(b)(6)(C)), any individual who publishes, divulges, discloses or makes known in any manner, or to any extent not authorized by statute or this section, any information obtained under this section will be fined not more than $1,000 or imprisoned for up to 1 year, or both.
(m) Food service management companies. (1) Failure by a sponsor to comply with the provisions of this section shall be sufficient grounds for the State agency to terminate that sponsor’s participation in accordance with § 225.18.
(2) Any sponsor may contract with a food service management company to manage the sponsor’s food service operations and/or for the preparation of unitized meals with or without milk or juice. Exceptions to the unitizing requirement may only be made in accordance with the provisions set forth at § 225.6(l)(3).
(3) Any vended sponsor shall be responsible for ensuring that its food service operation is in conformity with its agreement with the State agency and with all the applicable provisions of this part.
(4) In addition to any applicable State or local laws governing bid procedures, and with the exceptions identified in this paragraph, each sponsor which contracts with a food service management company shall comply with the competitive bid procedures described in this paragraph. Sponsors that are schools or school food authorities and have an exclusive contract with a food service management company for year-round service, and sponsors whose total contracts with food service management companies will not exceed the simplified acquisition threshold in 2 CFR part 200, as applicable, shall not be required to comply with these procedures. These exceptions do not relieve the sponsor of the responsibility to ensure that competitive procurement procedures are followed in contracting with any food service management company. Each sponsor whose proposed contract is subject to the specific bid procedures set forth in this paragraph shall ensure, at a minimum, that:
(i) All proposed contracts are publicly announced at least once, not less than 14 calendar days prior to the opening of bids, and the announcement includes the time and place of the bid opening;
(ii) The bids are publicly opened;
(iii) The State agency is notified, at least 14 calendar days prior to the opening of the bids, of the time and place of the bid opening;
(iv) The invitation to bid does not specify a minimum price;
(v) The invitation to bid contains a cycle menu approved by the State agency upon which the bid is based;
(vi) The invitation to bid contains food specifications and meal quality standards approved by the State agency upon which the bid is based;
(vii) The invitation to bid does not specify special meal requirements to meet ethnic or religious needs unless such special requirements are necessary to meet the needs of the children to be served;
(viii) Neither the invitation to bid nor the contract provides for loans or any other monetary benefit or term or condition to be made to sponsors by food service management companies;
(ix) Nonfood items are excluded from the invitation to bid, except where such items are essential to the conduct of the food service;
(x) Copies of all contracts between sponsors and food service management companies, along with a certification of independent price determination, are submitted to the State agency prior to the beginning of Program operations;
(xi) Copies of all bids received are submitted to the State agency, along with the sponsor’s reason for choosing the successful bidder; and
(xii) All bids in an amount which exceeds the lowest bid and all bids totaling the amount specified in the small purchase threshold in 2 CFR part 200, as applicable, or more are submitted to the State agency for approval before acceptance. State agencies shall respond to a request for approval of such bids within 5 working days of receipt.
(5) Each food service management company which submits a bid exceeding the simplified acquisition threshold in 2 CFR part 200, as applicable, shall obtain a bid bond in an amount not less than 5 percent nor more than 10 percent, as determined by the sponsor, of the value of the contract for which the bid is made. A copy of the bid bond shall accompany each bid.
(6) Each food service management company which enters into a food service contract exceeding the small purchase threshold in 2 CFR part 200, as applicable, with a sponsor shall obtain a performance bond in an amount not less than 10 percent nor more than 25 percent of the value of the contract for which the bid is made, as determined by the State agency. Any food service management company which enters into more than one contract with any one sponsor shall obtain a performance bond covering all contracts if the aggregate amount of the contracts exceeds the simplified acquisition threshold in 2 CFR part 200, as applicable. Sponsors shall require the food service management company to furnish a copy of the performance bond within ten days of the awarding of the contract.
(7) Food service management companies shall obtain bid bonds and performance bonds only from surety companies listed in the current Department of the Treasury Circular 570. No sponsor or State agency shall allow food service management companies to post any “alternative” forms of bid or performance bonds, including but not limited to cash, certified checks, letters of credit, or escrow accounts.
(n) Other responsibilities. Sponsors shall comply with all of the meal service requirements set forth in § 225.16.
§ 225.16 Meal service requirements.
(a) Sanitation. Sponsors shall ensure that in storing, preparing, and serving food, proper sanitation and health standards are met which conform with all applicable State and local laws and regulations. Sponsors shall ensure that adequate facilities are available to store food or hold meals. Within two weeks of receiving notification of their approval, but in any case prior to commencement of Program operation, sponsors shall submit to the State agency a copy of their letter advising the appropriate health department of their intention to provide a food service during a specific period at specific sites.
(b) Meal services. The meals which may be served under the Program are breakfast, lunch, supper, and supplements, referred to from this point as “snacks.” No sponsor may be approved to provide more than two snacks per day. A sponsor may claim reimbursement only for the types of meals for which it is approved under its agreement with the State agency. A sponsor may only be reimbursed for meals served in accordance with this section.
(1) Camps. Sponsors of camps shall only be reimbursed for meals served in camps to children from families which meet the eligibility standards for this Program. The sponsor shall maintain a copy of the documentation establishing the eligibility of each child receiving meals under the Program. Meal service at camps shall be subject to the following provisions:
(i) Each day a camp may serve up to three meals or two meals and one snack;
(ii) Residential camps are not subject to the time restrictions for meal service set forth at paragraphs (c) (1) and (2) of this section; and
(iii) A camp shall be approved to serve these meals only if it has the administrative capability to do so; if the service period of the different meals does not coincide or overlap; and, where applicable, if it has adequate food preparation and holding facilities.
(2) NYSP Sites. Sponsors of NYSP sites shall only be reimbursed for meals served to enrolled NYSP participants at these sites.
(3) Restrictions on the number and type of meals served. Food service sites other than camps and sites that primarily serve migrant children may serve either:
(i) One meal each day, a breakfast, a lunch, or snack; or
(ii) Two meals each day, if one is a lunch and the other is a breakfast or a snack.
(4) Sites which serve children of migrant families. Food service sites that primarily serve children from migrant families may be approved to serve each day up to three meals or two meals and one snack. These sites shall serve children in areas where poor economic conditions exist as defined in § 225.2. A sponsor which operates in accordance with this part shall receive reimbursement for all meals served to children at these sites. A site which primarily serves children from migrant families shall only be approved to serve more than one meal each day if it has the administrative capability to do so; if the service period of the different meals does not coincide or overlap; and, where applicable, if it has adequate food preparation and holding facilities.
(5) Non-congregate meal service. A sponsor of a site must have the administrative capability; the capacity to meet State and local health, safety, and sanitation requirements; and, where applicable, have adequate food preparation and holding facilities to be approved to serve non-congregate meals. Sponsors of sites that are approved to provide non-congregate meals in rural areas with no congregate meal service must:
(i) Obtain prior written parental consent, if meals are to be delivered to a child’s home, as described in § 225.14(d)(6).
(ii) Serve meals as described in paragraph (b)(3) of this section.
(iii) Comply with meal service time requirements described in paragraphs (c)(1), (4), and (5) of this section.
(iv) Claim reimbursement for all eligible meals served to children at sites in areas in which poor economic conditions exist, as defined in § 225.2. At all other sites, only the non-congregate meals served to children who meet the eligibility standards for this Program may be reimbursed.
(c) Meal service times. (1) Meal service times must be:
(i) Established by sponsors for each site;
(ii) Included in the sponsor’s application; and
(iii) Approved by the State agency. Approval of meal service times must be in accordance with the State agency or sponsor’s capacity to monitor the full meal service during a review.
(2) Except for non-congregate meal service, breakfast meals must be served at or close to the beginning of a child’s day. Three component meals served after a lunch or supper meal service are not eligible for reimbursement as a breakfast.
(3) At all sites except residential camps and non-congregate meal service, meal services must start at least one hour after the end of the previous meal or snack.
(4) Meals served outside the approved meal service time:
(i) Are not eligible for reimbursement; and
(ii) May be approved for reimbursement by the State agency only if an unanticipated event, outside of the sponsor’s control, occurs. The State agency may request documentation to support approval of meals claimed when an unanticipated event occurs.
(5) The State agency must approve any permanent or planned changes in meal service time.
(6) If congregate meals are not prepared on site:
(i) Meal deliveries must arrive before the approved meal service time; and
(ii) Meals must be delivered within one hour of the start of the meal service if the site does not have adequate storage to hold hot or cold meals at the temperatures required by State or local health regulations.
(d) Meal patterns. The meal requirements for the Program are designed to provide nutritious and well-balanced meals to each child. Sponsors must ensure that meals served meet all of the requirements. Except as otherwise provided in this section, the following tables present the minimum requirements for meals served to children in the Program. Children age 12 and up may be served larger portions based on the greater food needs of older children.
(1) Breakfast. The minimum amount of food components to be served as breakfast are as follows:
(2) Lunch or supper. The minimum amounts of food components to be served as lunch or supper are as follows:
(3) Snacks. The minimum amounts of food components to be served as snacks are as follows. Select two of the following four components. (Juice may not be served when milk is served as the only other component.)
(e) Meat or meat alternate. Meat or meat alternates served under the Program are subject to the following requirements and recommendations.
(1) The required quantity of meat or meat alternate shall be the quantity of the edible portion as served. These foods must be served in a main dish, or in a main dish and one other menu item.
(2) Cooked dry beans or peas may be used as a meat alternate or as a vegetable, but they may not be used to meet both component requirements in a meal.
(3) Enriched macaroni with fortified protein may be used to meet part but not all of the meat/meat alternate requirement. The Department will provide guidance to State agencies on the part of the meat/meat alternate requirement which these foods may be used to meet. If enriched macaroni with fortified protein is served as a meat alternate it shall not be counted toward the bread requirement.
(4) If the sponsor determines that the recommended portion size of any meat or meat alternate is too large to be appealing to children, the sponsor may reduce the portion size of that meat or meat alternate and supplement it with another meat or meat alternate to meet the full requirement.
(5) Nuts and seeds and their butters listed in program guidance are nutritionally comparable to meat or other meat alternates based on available nutritional data. Acorns, chestnuts, and coconuts shall not be used as meat alternates due to their low protein content. Nut and seed meals or flours shall not be used as a meat alternate except as defined in this section under paragraph (e)(3) and in this part under Appendix A: Alternate Foods for Meals. As noted in paragraph (d)(2) of this section, nuts or seeds may be used to meet no more than one-half of the meat/meat alternate requirement for lunch or supper. Therefore, nuts or seeds must be combined with another meat/meat alternate to fulfill the requirement. For the supplemental food pattern, nuts or seeds may be used to fulfill all of the meat/meat alternate requirement.
(f) Exceptions to and variations from the meal pattern—(1) Meals provided by school food authorities—(i) Meal pattern substitution. School food authorities that are Program sponsors and that participate in the National School Lunch or School Breakfast Program during any time of the year may substitute the meal pattern requirements of the regulations governing those programs (Parts 210 and 220 of this chapter, respectively) for the meal pattern requirements in this section.
(ii) Offer versus serve. School food authorities that are Program sponsors may permit a child to refuse one or more items that the child does not intend to eat. The reimbursements to school food authorities for Program meals served under this “offer versus serve” option must not be reduced because children choose not to take all components of the meals that are offered. The school food authority may elect to use the following options:
(A) Provide meal service consistent with the National School Lunch Program, as described in part 210 of this chapter.
(B) Provide breakfast meals by offering four items from all three components specified in the meal pattern in paragraph (d)(1) of this section. Children may be permitted to decline one item.
(C) Provide lunch or supper meals by offering five food items from all four components specified in the meal pattern in paragraph (d)(2) of this section. Children may be permitted to decline two components.
(2) Children under 6. The State agency may authorize the sponsor to serve food in smaller quantities than are indicated in paragraph (d) of this section to children under six years of age if the sponsor has the capability to ensure that variations in portion size are in accordance with the age levels of the children served. Sponsors wishing to serve children under one year of age shall first receive approval to do so from the State agency. In both cases, the sponsor shall follow the age-appropriate meal pattern requirements contained in the Child and Adult Care Food Program regulations (7 CFR part 226).
(3) Statewide substitutions. In American Samoa, Puerto Rico, Guam, the Virgin Islands, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands, the following variations from the meal requirements are authorized: A serving of a starchy vegetable—such as ufi, tanniers, yams, plantains, or sweet potatoes—may be substituted for the bread requirements.
(4) Individual substitutions. Substitutions may be made by sponsors in food listed in paragraph (d) of this section if individual participating children are unable, because of medical or other special dietary needs, to consume such foods. Such substitutions shall be made only when supported by a statement from a recognized medical authority which includes recommended alternate foods. Such statement shall be kept on file by the sponsor.
(5) Special variations. FNS may approve variations in the food components of the meals on an experimental or a continuing basis for any sponsor where there is evidence that such variations are nutritionally sound and are necessary to meet ethnic, religious, economic, or physical needs.
(6) Temporary unavailability of milk. If emergency conditions prevent a sponsor normally having a supply of milk from temporarily obtaining milk deliveries, the State agency may approve the service of breakfasts, lunches or suppers without milk during the emergency period.
(7) Continuing unavailability of milk. The inability of a sponsor to obtain a supply of milk on a continuing basis shall not bar it from participation in the Program. In such cases, the State agency may approve service of meals without milk, provided that an equivalent amount of canned, whole dry or nonfat dry milk is used in the preparation of the milk components set forth in paragraph (d) of this section. In addition, the State agency may approve the use of nonfat dry milk in meals served to children participating in activities which make the service of fluid milk impracticable, and in locations which are unable to obtain fluid milk. Such authorization shall stipulate that nonfat dry milk be reconstituted at normal dilution and under sanitary conditions consistent with State and local health regulations.
(8) Additional foods. To improve the nutrition of participating children, additional foods may be served with each meal.
(g) Meals served away from approved locations. (1) Sponsors may be reimbursed for meals served away from the approved site location when the following conditions are met:
(i) The sponsor notifies the State agency in advance that meals will be served away from the approved site;
(ii) The State agency has determined that all Program requirements in this part will be met, including applicable State and local health, safety, and sanitation standards;
(iii) The meals are served at the approved meal service time, unless a change is approved by the State agency, as required under paragraph (c) of this section; and
(iv) Sponsors of open sites continue operating at the approved location. If not possible, the State agency may permit an open site to close, in which case the sponsor must notify the community of the change in meal service and provide information about alternative open sites.
(2) The State agency may determine that meals served away from the approved site location are not reimbursable if the sponsor did not provide notification in advance of the meal service. The State agency may establish guidelines for the amount of advance notice needed.
(h) Off-site consumption of food items. For congregate meal services, sponsors may allow a child to take one fruit, vegetable, or grain item off-site for later consumption without prior State agency approval provided that all applicable State and local health, safety, and sanitation standards will be met. Sponsors should only allow an item to be taken off-site if the site has adequate staffing to properly administer and monitor the site. A State agency may prohibit individual sponsors on a case-by-case basis from using this option if the State agency determines that the sponsor’s ability to provide adequate oversight is in question. The State agency’s decision to prohibit a sponsor from utilizing this option is not an appealable action.
(i) Non-congregate meal service options. The options described in this paragraph (i) are available to all types of sponsors in good standing, as defined in § 225.2, that are approved to operate non-congregate meal service sites. The State agency may limit the use of these options on a case-by-case basis, if it determines that a sponsor does not have the capability to operate or oversee non-congregate meal services at their sites. The State agency may not limit the use of options to only certain types of sponsors. The State agency’s decision to prohibit a sponsor from using the options described in this paragraph (i) is not an appealable action. Sponsors in good standing may elect to use any of the following options:
(1) Multi-day meal issuance. Approved sponsors may distribute up to the allowable number of reimbursable meals that would be provided over a 10-calendar day period. The State agency may establish a shorter time period, on a case-by-case basis. Sponsors electing this option must have documented procedures, submitted with their application, in place to ensure that the proper number of meals are distributed to each eligible child.
(2) Parent or guardian pick-up of meals. Approved sponsors may distribute meals to parents or guardians to take home to their children. Sponsors electing this option must have documented procedures, submitted with their application, in place to ensure that meals are only distributed to parents or guardians of eligible children and that duplicate meals are not distributed to any child.
(3) Bulk meal components. Approved self-preparation sponsors may provide bulk food items that meet the minimum amounts of each food component of a reimbursable meal breakfast, lunch, supper, or snack, as described in paragraph (d) of this section. Sponsors electing this option must ensure that:
(i) Required food components for each reimbursable meal are served, as described in paragraph (d) of this section.
(ii) All food items that contribute to a reimbursable meal are clearly identifiable.
(ii) Menus are provided and clearly indicate the food items and portion sizes for each reimbursable meal.
(iv) Food preparation, such as heating or warming, is minimal. Sponsors may offer food items that require further preparation only with State agency and FNSRO approval.
(v) The maximum number of reimbursable meals provided to a child does not exceed the number of meals that could be provided over a 5-calendar day period. The State agency may establish a shorter or longer time period, which may not exceed the time period for which the sponsor is approved for multi-day meal issuance, on a case-by-case basis.
Subpart D—General Administrative Provisions
§ 225.17 Procurement standards.
(a) State agencies and sponsors shall comply with the requirements of 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable, concerning the procurement of supplies, food, equipment and other services with Program funds. These requirements ensure that such materials and services are obtained for the program efficiently and economically and in compliance with applicable laws and executive orders. Sponsors may use their own procedures for procurement with Program funds to the extent that:
(1) Procurements by public sponsors comply with applicable State or local laws and the standards set forth in 2 CFR part 200, subpart F and USDA implementing regulations 2 CFR part 400 and part 415; and
(2) Procurements by private nonprofit sponsors comply with standards set forth in 2 CFR part 200, subpart F and USDA implementing regulations 2 CFR part 400 and part 415.
(b) The State agency shall make available to sponsors information on 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable.
(c) Sponsors may use their own procurement procedures which reflect applicable State and local laws and regulations, provided that procurements made with Program funds conform with provisions of this section, as well as with procurement requirements which may be established by the State agency, with approval of FNS, to prevent fraud, waste, and Program abuse.
(d) The State agency shall ensure that each sponsor is aware of the following practices specified in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable, with respect to minority business enterprises:
(1) Including qualified minority business enterprises on solicitation lists,
(2) Soliciting minority business enterprises whenever they are potential sources,
(3) When economically feasible, dividing total requirements into smaller tasks or quantities so as to permit maximum participation by minority business enterprises,
(4) Establishing delivery schedules which will assist minority business enterprises to meet deadlines, and
(5) Using the services and assistance of the Small Business Administration, and the Office of Minority Business Enterprise of the Department of Commerce as required.
(e) Geographic preference. (1) Sponsors participating in the Program may apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products. When utilizing the geographic preference to procure such products, the sponsor making the purchase has the discretion to determine the local area to which the geographic preference option will be applied;
(2) For the purpose of applying the optional geographic preference in paragraph (e)(1) of this section, “unprocessed locally grown or locally raised agricultural products” means only those agricultural products that retain their inherent character. The effects of the following food handling and preservation techniques shall not be considered as changing an agricultural product into a product of a different kind or character: Cooling; refrigerating; freezing; size adjustment made by peeling, slicing, dicing, cutting, chopping, shucking, and grinding; forming ground products into patties without any additives or fillers; drying/dehydration; washing; packaging (such as placing eggs in cartons), vacuum packing and bagging (such as placing vegetables in bags or combining two or more types of vegetables or fruits in a single package); addition of ascorbic acid or other preservatives to prevent oxidation of produce; butchering livestock and poultry; cleaning fish; and the pasteurization of milk.
(f) All contracts in excess of $10,000 must contain a clause allowing termination for cause or for convenience by the sponsor including the manner by which it will be effected and the basis for settlement.
§ 225.18 Miscellaneous administrative provisions.
(a) Grant closeout procedures. Grant closeout procedures for the Program shall be in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable.
(b) Termination for cause. (1) FNS may terminate a State agency’s participation in the Program in whole, or in part, whenever it is determined that the State agency has failed to comply with the conditions of the Program. FNS shall promptly notify the State agency in writing of the termination and reason for the termination, together with the effective date, and shall allow the State 30 calendar days to respond. In instances where the State does respond, FNS shall inform the State of its final determination no later than 30 calendar days after the State responds.
(2) A State agency shall terminate a sponsor’s participation in the Program by written notice whenever it is determined by the State agency that the sponsor has failed to comply with the conditions of the Program.
(3) When participation in the Program has been terminated for cause, any funds paid to the State agency or a sponsor or any recoveries by FNS from the State agency or by the State agency from a sponsor shall be in accordance with the legal rights and liabilities of the parties.
(c) Termination for convenience. FNS and the State agency may agree to terminate the State agency’s participation in the Program in whole, or in part, when both parties agree that the continuation of the Program would not produce beneficial results commensurate with the further expenditure of funds. The two parties shall agree upon the termination conditions, including the effective date, and in the case of partial termination, the portion to be terminated. The State agency shall not incur new obligations for the terminated portion after the effective date, and shall cancel as many outstanding obligations as possible. The Department shall allow full credit to the State agency for the Federal share of the noncancellable obligation properly incurred by the State agency prior to termination. A State agency may terminate a sponsor’s participation in the manner provided for in this paragraph.
(d) Maintenance of effort. Expenditure of funds from State and local sources for the maintenance of food programs for children shall not be diminished as a result of funds received under the Act and a certification to this effect shall become part of the agreement provided for in § 225.3(c).
(e) Program benefits. The value of benefits and assistance available under the Program shall not be considered as income or resources of recipients and their families for any purpose under Federal, State or local laws, including, but not limited to, laws relating to taxation, welfare, and public assistance programs.
(f) State requirements. Nothing contained in this part shall prevent a State agency from imposing additional operating requirements which are not inconsistent with the provisions of this part, provided that such additional requirements shall not deny the Program to an area in which poor economic conditions exist, and shall not result in a significant number of needy children not having access to the Program. Prior to imposing any additional requirements, the State agency must receive approval from FNSRO.
(g) Fraud penalty. Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property that are the subject of a grant or other form of assistance under this part, whether received directly or indirectly from the Department, or whoever receives, conceals, or retains such funds, assets, or property to his use or gain, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen or obtained by fraud shall, if such funds, assets, or property are of the value of $100 or more, be fined not more than $25,000 or imprisoned not more than five years, or both, or if such funds, assets, or property are of a value of less than $100, shall be fined not more than $1,000 or imprisoned for not more than one year, or both.
(h) Claims adjustment authority. The Secretary shall have the authority to determine the amount of, to settle, and to adjust any claim arising under the Program, and to compromise or deny such claim or any part thereof. The Secretary shall also have the authority to waive such claims if the Secretary determines that to do so would serve the purposes of the Program. This provision shall not diminish the authority of the Attorney General of the United States under section 516 of title 28, U.S. Code, to conduct litigation on behalf of the United States.
(i) Data collection related to sponsors. (1) Each State agency must collect data related to sponsors that have an agreement with the State agency to participate in the program for each of Federal fiscal years 2006 through 2009, including those sponsors that participated only for part of the fiscal year. Such data shall include:
(i) The name of each sponsor;
(ii) The city in which each participating sponsor was headquartered and the name of the state;
(iii) The amount of funds provided to the participating organization, i.e., the sum of the amount of federal funds reimbursed for operating and administrative cost; and
(iv) The type of participating organization, e.g., government agency, educational institution, non-profit organization/secular, non-profit organization/faith-based, and “other.”
(2) On or before August 31, 2007, and each subsequent year through 2010, State agencies must report to FNS data as specified in paragraph (i)(1) of this section for the prior Federal fiscal year. State agencies must submit this data in a format designated by FNS.
(j) Program evaluations. States, State agencies, sponsors, sites and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department, related to programs authorized under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966, as amended.
(k) Fines. (1) A sponsor that is a school food authority may be subject to fines. The State agency may establish an assessment when it has determined that the sponsor or its site has:
(i) Failed to correct severe mismanagement of the Program;
(ii) Disregarded a Program requirement of which the sponsor or its site had been informed; or
(iii) Failed to correct repeated violations of Program requirements.
(2) FNS may direct the State agency to establish a fine against any sponsor when it has determined that the sponsor or its site has committed one or more acts under paragraph (k)(1) of this section.
(3) Funds used to pay a fine established under this paragraph must be derived from non-Federal sources. In calculating an assessment, the State agency must calculate the fine based on the amount of Program reimbursement earned by the sponsor or its site for the most recent fiscal year for which full year data is available, provided that the fine does not exceed the equivalent of:
(i) For the first fine, 1 percent of the amount of meal reimbursement earned for the fiscal year;
(ii) For the second fine, 5 percent of the amount of meal reimbursement earned for the fiscal year; and
(iii) For the third or subsequent fine, 10 percent of the amount of meal reimbursement earned for the fiscal year.
(4) The State agency must inform FNS at least 30 days prior to establishing the fine under this paragraph. The State agency must send the sponsor written notification of the fine established under this paragraph and provide a copy of the notification to FNS. The notification must:
(i) Specify the violations or actions which constitute the basis for the fine and indicate the amount of the fine;
(ii) Inform the institution that it may appeal the fine and advise the sponsor of the appeal procedures established under § 225.13;
(iii) Indicate the effective date and payment procedures should the sponsor not exercise its right to appeal within the specified timeframe.
(5) Any sponsor subject to a fine under paragraph (k)(1) of this section may appeal the State agency’s determination. In appealing a fine, the sponsor must submit to the State agency any pertinent information, explanation, or evidence addressing the Program violations identified by the State agency. Any sponsor seeking to appeal the State agency determination must follow State agency appeal procedures.
(6) The decision of the State agency review official is final and not subject to further administrative or judicial review. Failure to pay a fine established under this paragraph may be grounds for suspension or termination.
(7) Money received by the State agency as a result of a fine established under this paragraph against a sponsor and any interest charged in the collection of these fines must be remitted to FNS, and then remitted to the United States Treasury.
(l) Updates to data sources. By January 1 each year, or as soon as is practicable, FNS will issue any necessary updates to approved data sources listed under the definition of “rural” in § 225.2 to be used for rural site designations in that program year. FNS will make this information available and referenceable in a simplified format.
§ 225.19 Program information.
Persons seeking information about this Program should contact their State administering agency or the appropriate FNSRO. The FNS website has contact information for State agencies at https://www.fns.usda.gov/contacts and FNSRO at https://www.fns.usda.gov/fns-regional-offices.
§ 225.20 Information collection/recordkeeping—OMB assigned control numbers.
| 7 CFR section where requirements are described | Current OMB control No. |
|---|---|
| 225.3-225.4. | 0584-0280 |
| 225.6-225.10 | 0584-0280 |
| 225.12-225.13 | 0584-0280 |
| 225.15-225.18 | 0584-0280 |
Appendix A to Part 225—Alternate Foods for Meals
1. An alternate protein product used in meals planned under the provisions in § 225.16 must meet all of the criteria in this section.
2. An alternate protein product whether used alone or in combination with meat or other meat alternates must meet the following criteria:
a. The alternate protein product must be processed so that some portion of the non-protein constituents of the food is removed. These alternate protein products must be safe and suitable edible products produced from plant or animal sources.
b. The biological quality of the protein in the alternate protein product must be at least 80 percent that of casein, determined by performing a Protein Digestibility Corrected Amino Acid Score (PDCAAS).
c. The alternate protein product must contain at least 18 percent protein by weight when fully hydrated or formulated. (“When hydrated or formulated” refers to a dry alternate protein product and the amount of water, fat, oil, colors, flavors or any other substances which have been added).
d. Manufacturers supplying an alternate protein product to participating schools or institutions must provide documentation that the product meets the criteria in paragraphs A. 2. a through c of this appendix.
e. Manufacturers should provide information on the percent protein contained in the dry alternate protein product and on an as prepared basis.
f. For an alternate protein product mix, manufacturers should provide information on:
(1) The amount by weight of dry alternate protein product in the package;
(2) Hydration instructions; and
(3) Instructions on how to combine the mix with meat or other meat alternates.
1. Schools, institutions, and service institutions may use alternate protein products to fulfill all or part of the meat/meat alternate component discussed in § 225.20.
2. The following terms and conditions apply:
a. The alternate protein product may be used alone or in combination with other food ingredients. Examples of combination items are beef patties, beef crumbles, pizza topping, meat loaf, meat sauce, taco filling, burritos, and tuna salad.
b. Alternate protein products may be used in the dry form (nonhydrated), partially hydrated or fully hydrated form. The moisture content of the fully hydrated alternate protein product (if prepared from a dry concentrated form) must be such that the mixture will have a minimum of 18 percent protein by weight or equivalent amount for the dry or partially hydrated form (based on the level that would be provided if the product were fully hydrated).
Schools, institutions, and service institutions may use a commercially prepared meat or meat alternate products combined with alternate protein products or use a commercially prepared product that contains only alternate protein products.
Appendix B to Part 225 [Reserved]
Appendix C to Part 225—Child Nutrition (CN) Labeling Program
1. The Child Nutrition (CN) Labeling Program is a voluntary technical assistance program administered by the Food and Nutrition Service (FNS) in conjunction with the Food Safety and Inspection Service (FSIS) and Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture (USDA), and National Marine Fisheries Service of the U.S. Department of Commerce (USDC) for the Child Nutrition Programs. This program essentially involves the review of a manufacturer’s recipe or product formulation to determine the contribution a serving of a commercially prepared product makes toward meal pattern requirements and a review of the CN label statement to ensure its accuracy. CN labeled products must be produced in accordance with all requirements set forth in this rule.
2. Products eligible for CN labels are as follows:
(a) Commercially prepared food products that contribute significantly to the meat/meat alternate component of meal pattern requirements of 7 CFR 210.10, 225.16, and 226.20 and are served in the main dish.
(b) Juice drinks and juice drink products that contain a minimum of 50 percent full strength juice by volume.
3. For the purpose of this appendix the following definitions apply:
(a) CN label is a food product label that contains a CN label statement and CN logo as defined in paragraph 3(b) and (c) below.
(b) The CN logo (as shown below) is a distinct border which is used around the edges of a “CN label statement” as defined in paragraph 3(c).
(c) The CN label statement includes the following:
(1) The product identification number (assigned by FNS);
(2) The statement of the product’s contribution toward meal pattern requirements of 7 CFR 210.10, 220.8, 225.16, and 226.20. The statement shall identify the contribution of a specific portion of a meat/meat alternate product toward the meat/meat alternate, bread/bread alternate, and/or vegetable/fruit component of the meal pattern requirements. For juice drinks and juice drink products the statement shall identify their contribution toward the vegetable/fruit component of the meal pattern requirements.
(3) Statement specifying that the use of the CN logo and CN statement was authorized by FNS, and
(4) The approval date.
For example:
(d) Federal inspection means inspection of food products by FSIS, AMS or USDC.
4. Food processors or manufacturers may use the CN label statement and CN logo as defined in paragraph 3 (b) and (c) under the following terms and conditions:
(a) The CN label must be reviewed and approved at the national level by the Food and Nutrition Service and appropriate USDA or USDC Federal agency responsible for the inspection of the product.
(b) The CN labeled product must be produced under Federal inspection by USDA or USDC. The Federal inspection must be performed in accordance with an approved partial or total quality control program or standards established by the appropriate Federal inspection service.
(c) The CN label statement must be printed as an integral part of the product label along with the product name, ingredient listing, the inspection shield or mark for the appropriate inspection program, the establishment number where appropriate and the manufacturer’s or distributor’s name and address.
(1) The inspection marking for CN labeled non-meat, non-poultry, and non-seafood products with the exception of juice drinks and juice drink products is established as follows:
(d) Yields for determining the product’s contribution toward meal pattern requirements must be calculated using the Food Buying Guide for Child Nutrition Programs (Program Aid Number 1331).
5. In the event a company uses the CN logo and CN label statement inappropriately, the company will be directed to discontinue the use of the logo and statement and the matter will be referred to the appropriate agency for action to be taken against the company.
6. Products that bear a CN label statement as set forth in paragraph 3(c) carry a warranty. This means that if a food service authority participating in the child nutrition programs purchases a CN labeled product and uses it in accordance with the manufacturer’s directions, the school or institution will not have an audit claim filed against it for the CN labeled product for noncompliance with the meal pattern requirements of 7 CFR 210.10, 220.8, 225.16, and 226.20. If a State or Federal auditor finds that a product that is CN labeled does not actually meet the meal pattern requirements claimed on the label, the auditor will report this finding to FNS. FNS will prepare a report on the findings and send it to the appropriate divisions of FSIS and AMS of the USDA, National Marine Fisheries Service of the USDC, Food and Drug Administration, or the Department of Justice for action against the company. Any or all of the following courses of action may be taken: (a) The company’s CN label may be revoked for a specific period of time; (b) The appropriate agency may pursue a misbranding or mislabeling action against the company producing the product; (c) The company’s name will be circulated to regional FNS offices; and (d) FNS will require the food service program involved to notify the State agency of the labeling violation.
7. FNS is authorized to issue operational policies, procedures, and instructions for the CN Labeling Program. To apply for a CN label and to obtain additional information on CN label application procedures, write to: CN Labels, U.S. Department of Agriculture, Food and Nutrition Service, Nutrition and Technical Services Division, 3101 Park Center Drive, Alexandria, Virginia 22302.
PART 226—CHILD AND ADULT CARE FOOD PROGRAM
Subpart A—General
§ 226.1 General purpose and scope.
This part announces the regulations under which the Secretary of Agriculture will carry out the Child and Adult Care Food Program. Section 17 of the Richard B. Russell National School Lunch Act, as amended, authorizes assistance to States through grants-in-aid and other means to initiate, maintain, and expand nonprofit food service programs for children and adult participants in non-residential institutions which provide care. The Program is intended to provide aid to child and adult participants and family or group day care homes for provision of nutritious foods that contribute to the wellness, healthy growth, and development of young children, and the health and wellness of older adults and chronically impaired persons.
§ 226.2 Definitions.
2 CFR part 200, means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by OMB. The part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F). (NOTE: Pre-Federal Award Requirements and Contents of Federal Awards (subpart C) does not apply to the National School Lunch Program).
Act means the National School Lunch Act, as amended.
Administrative costs means costs incurred by an institution related to planning, organizing, and managing a food service under the Program, and allowed by the State agency financial management instruction. These administrative costs may include administrative expenses associated with outreach and recruitment of unlicensed family or group day care homes and the allowable licensing-related expenses of such homes.
Administrative review means the fair hearing provided upon request to:
(a) An institution that has been given notice by the State agency of any action or proposed action that will affect their participation or reimbursement under the Program, in accordance with § 226.6(k);
(b) A principal or individual responsible for an institution’s serious deficiency after the responsible principal or responsible individual has been given a notice of intent to disqualify them from the Program; and
(c) A day care home that has been given a notice of proposed termination for cause.
Administrative review official means the independent and impartial official who conducts the administrative review held in accordance with § 226.6(k).
Adult means, for the purposes of the collection of the last four digits of social security numbers as a condition of eligibility for free or reduced-price meals, any individual 21 years of age or older.
Adult day care center means any public or private nonprofit organization or any for-profit center (as defined in this section) which (a) is licensed or approved by Federal, State or local authorities to provide nonresidential adult day care services to functionally impaired adults (as defined in this section) or persons 60 years of age or older in a group setting outside their homes or a group living arrangement on a less than 24-hour basis and (b) provides for such care and services directly or under arrangements made by the agency or organization whereby the agency or organization maintains professional management responsibility for all such services. Such centers shall provide a structured, comprehensive program that provides a variety of health, social and related support services to enrolled adult participants through an individual plan of care.
Adult day care facility means a licensed or approved adult day care center under the auspices of a sponsoring organization.
Adult participant means a person enrolled in an adult day care center who is functionally impaired (as defined in this section) or 60 years of age or older.
Advanced payments means financial assistance made available to an institution for its Program costs prior to the month in which such costs will be incurred.
At-risk afterschool care center means a public or private nonprofit organization that is participating or is eligible to participate in the CACFP as an institution or as a sponsored facility and that provides nonresidential child care to children after school through an approved afterschool care program located in an eligible area. However, an Emergency shelter, as defined in this section, may participate as an at-risk afterschool care center without regard to location.
At-risk afterschool meal means a meal that meets the requirements described in § 226.20(b)(6) and/or (c)(1), (c)(2), or (c)(3), that is reimbursed at the appropriate free rate and is served by an At-risk afterschool care center as defined in this section, which is located in a State designated by law or selected by the Secretary as directed by law.
At-risk afterschool snack means a snack that meets the requirements described in § 226.20(b)(6) and/or (c)(4) that is reimbursed at the free rate for snacks and is served by an At-risk afterschool care center as defined in this section.
CACFP child care standards means the Child and Adult Care Food Program child care standards developed by the Department for alternate approval of child care centers, and day care homes by the State agency under the provisions of § 226.6(d)(3) and (4).
Center means a child care center, at-risk afterschool care center, an adult day care center, an emergency shelter, or an outside-school-hours care center.
Child care center means any public or private nonprofit institution or facility (except day care homes), or any for-profit center, as defined in this section, that is licensed or approved to provide nonresidential child care services to enrolled children, primarily of preschool age, including but not limited to day care centers, settlement houses, neighborhood centers, Head Start centers and organizations providing day care services for children with disabilities. Child care centers may participate in the Program as independent centers or under the auspices of a sponsoring organization.
Child care facility means a licensed or approved child care center, at-risk afterschool care center, day care home, emergency shelter, or outside-school-hours care center under the auspices of a sponsoring organization.
Children means:
(a) Persons age 12 and under;
(b) Persons age 15 and under who are children of migrant workers;
(c) Persons with disabilities as defined in this section;
(d) For emergency shelters, persons age 18 and under; and
(e) For at-risk afterschool care centers, persons age 18 and under at the start of the school year.
Claiming percentage means the ratio of the number of enrolled participants in an institution in each reimbursement category (free, reduced-price or paid) to the total of enrolled participants in the institution. In the case of an outside-school-hours care center that is not required to collect enrollment forms from each participating child, a claiming percentage is the ratio of the number of children in each reimbursement category (free, reduced-price or paid) to the total number of children participating in the program in that center.
Current income means income received during the month prior to application for free or reduced-price meals. If such income does not accurately reflect the household’s annual income, income shall be based on the projected annual household income. If the prior year’s income provides an accurate reflection of the household’s current annual income, the prior year may be used as a base for the projected annual income.
Day care home means an organized nonresidential child care program for children enrolled in a private home, licensed or approved as a family or group day care home and under the auspices of a sponsoring organization.
Days means calendar days unless otherwise specified.
Department means the U.S. Department of Agriculture.
Disclosure means reveal or use individual children’s program eligibility information obtained through the free and reduced price meal eligibility process for a purpose other than for the purpose for which the information was obtained. The term refers to access, release, or transfer of personal data about children by means of print, tape, microfilm, microfiche, electronic communication or any other means.
Disqualified means the status of an institution, a responsible principal or responsible individual, or a day care home that is ineligible for participation.
Documentation means:
(a) The completion of the following information on a free and reduced-price application:
(1) Names of all household members;
(2) Income received by each household member, identified by source of income (such as earnings, wages, welfare, pensions, support payments, unemployment compensation, social security and other cash income);
(3) The signature of an adult household member; and
(4) The last four digits of the social security number of the adult household member who signs the application, or an indication that the adult does not possess a social security number; or
(b) For a child who is a member of a SNAP or FDPIR household or who is a TANF recipient, “documentation” means the completion of only the following information on a free and reduced price application:
(1) The name(s) and appropriate SNAP, FDPIR or TANF case number(s) for the child(ren); and
(2) The signature of an adult member of the household; or
(c) For a child in a tier II day care home who is a member of a household participating in a Federally or State supported child care or other benefit program with an income eligibility limit that does not exceed the eligibility standard for free or reduced price meals:
(1) The name(s), appropriate case number(s) (if the program utilizes case numbers), and name(s) of the qualifying program(s) for the child(ren), and the signature of an adult member of the household; or
(2) If the sponsoring organization or day care home possesses it, official evidence of the household’s participation in a qualifying program (submission of a free and reduced price application by the household is not required in this case); or
(d) For an adult participant who is a member of a SNAP or FDPIR household or is an SSI or Medicaid participant, as defined in this section, “documentation” means the completion of only the following information on a free and reduced price application:
(1) The name(s) and appropriate SNAP or FDPIR case number(s) for the participant(s) or the adult participant’s SSI or Medicaid identification number, as defined in this section; and
(2) The signature of an adult member of the household; or
(e) For a child who is a Head Start participant, the Head Start statement of income eligibility issued upon initial enrollment in the Head Start Program or, if such statement is unavailable, other documentation from Head Start officials that the child’s family meets the Head Start Program’s low-income criteria.
Eligible area means:
(a) For the purpose of determining the eligibility of at-risk afterschool care centers, the attendance area of a school in which at least 50 percent of the enrolled children are certified eligible for free or reduced-price school meals; or
(b) For the purpose of determining the tiering status of day care homes, the attendance area of a school in which at least 50 percent of the enrolled children are certified eligible for free or reduced-price meals, or the area based on the most recent census data in which at least 50 percent of the children residing in the area are members of households that meet the income standards for free or reduced-price meals.
Emergency shelter means a public or private nonprofit organization or its site that provides temporary shelter and food services to homeless children, including a residential child care institution (RCCI) that serves a distinct group of homeless children who are not enrolled in the RCCI’s regular program.
Enrolled child means a child whose parent or guardian has submitted to an institution a signed document which indicates that the child is enrolled for child care. In addition, for the purposes of calculations made by sponsoring organizations of family day care homes in accordance with §§ 226.13(d)(3)(ii) and 226.13(d)(3)(iii), “enrolled child” (or “child in attendance”) means a child whose parent or guardian has submitted a signed document which indicates that the child is enrolled for child care; who is present in the day care home for the purpose of child care; and who has eaten at least one meal during the claiming period. For at-risk afterschool care centers, outside-school-hours care centers, or emergency shelters, the term “enrolled child” or “enrolled participant” does not apply.
Enrolled participant means an “Enrolled child” (as defined in this section) or “Adult participant” (as defined in this section).
Expansion payments means financial assistance made available to a sponsoring organization for its administrative expenses associated with expanding a food service program to day care homes located in low-income or rural areas. These expansion payments may include administrative expenses associated with outreach and recruitment of unlicensed family or group day care homes and the allowable licensing-related expenses of such homes.
Facility means a sponsored center or a day care home.
Family means, in the case of children, a group of related or nonrelated individuals, who are not residents of an institution or boarding house, but who are living as one economic unit or, in the case of adult participants, the adult participant, and if residing with the adult participant, the spouse and dependent(s) of the adult participant.
FDPIR household means any individual or group of individuals which is currently certified to receive assistance as a household under the Food Distribution Program on Indian Reservations.
Fiscal Year means a period of 12 calendar months beginning October 1 of any year and ending with September 30 of the following year.
FNS means the Food and Nutrition Service of the Department.
FNSRO means the appropriate Regional Office of the Food and Nutrition Service.
Food service equipment assistance means Federal financial assistance formerly made available to State agencies to assist institutions in the purchase or rental of equipment to enable institutions to establish, maintain or expand food service under the Program.
Food service management company means an organization other than a public or private nonprofit school, with which an institution may contract for preparing and, unless otherwise provided for, delivering meals, with or without milk for use in the Program.
For-profit center means a child care center, outside-school-hours care center, or adult day care center providing nonresidential care to adults or children that does not qualify for tax-exempt status under the Internal Revenue Code of 1986. For-profit centers serving adults must meet the criteria described in paragraph (a) of this definition. For-profit centers serving children must meet the criteria described in paragraphs (b)(1) or (b)(2) of this definition, except that children who only participate in the at-risk afterschool snack and/or meal component of the Program must not be considered in determining the percentages under paragraphs (b)(1) or (b)(2) of this definition.
(a) A for-profit center serving adults must meet the definition of Adult day care center as defined in this section and, during the calendar month preceding initial application or reapplication, the center receives compensation from amounts granted to the States under title XIX or title XX and twenty-five percent of the adults enrolled in care are beneficiaries of title XIX, title XX, or a combination of titles XIX and XX of the Social Security Act.
(b) A for-profit center serving children must meet the definition of Child care center or Outside-school-hours care center as defined in this section and one of the following conditions during the calendar month preceding initial application or reapplication:
(1) Twenty-five percent of the children in care (enrolled or licensed capacity, whichever is less) are eligible for free or reduced-price meals; or
(2) Twenty-five percent of the children in care (enrolled or licensed capacity, whichever is less) receive benefits from title XX of the Social Security Act and the center receives compensation from amounts granted to the States under title XX.
Foster child means a child who is formally placed by a court or a State child welfare agency, as defined in § 245.2 of this chapter.
Free meal means a meal served under the Program to:
(a) A participant from a family which meets the income standards for free school meals, or
(b) A foster child, or
(c) A child who is automatically eligible for free meals by virtue of SNAP, FDPIR, or TANF benefits, or
(d) A child who is a Head Start participant, or
(e) A child who is receiving temporary housing and meal services from an approved emergency shelter, or
(f) A child participating in an approved at-risk afterschool care program, or
(g) An adult participant who is automatically eligible for free meals by virtue of SNAP or FDPIR benefits, or
(h) An adult who is an SSI or Medicaid participant.
Functionally impaired adult means chronically impaired disabled persons 18 years of age or older, including victims of Alzheimer’s disease and related disorders with neurological and organic brain dysfunction, who are physically or mentally impaired to the extent that their capacity for independence and their ability to carry out activities of daily living is markedly limited. Activities of daily living include, but are not limited to, adaptive activities such as cleaning, shopping, cooking, taking public transportation, maintaining a residence, caring appropriately for one’s grooming or hygiene, using telephones and directories, or using a post office. Marked limitations refer to the severity of impairment, and not the number of limited activities, and occur when the degree of limitation is such as to seriously interfere with the ability to function independently.
Group living arrangement means residential communities which may or may not be subsidized by federal, State or local funds but which are private residences housing an individual or a group of individuals who are primarily responsible for their own care and who maintain a presence in the community but who may receive on-site monitoring.
Head Start participant means a child currently receiving assistance under a Federally-funded Head Start Program who is categorically eligible for free meals in the CACFP by virtue of meeting Head Start’s low-income criteria.
Household means “family”, as defined in § 226.2 (“Family”).
Household contact means a contact made by a sponsoring organization or a State agency to an adult member of a household with a child in a family day care home or a child care center in order to verify the attendance and enrollment of the child and the specific meal service(s) which the child routinely receives while in care.
Income standards means the family-size and income standards prescribed annually by the Secretary for determining eligibility for free and reduced-price meals under the National School Lunch Program and the School Breakfast Program.
Income to the program means any funds used in an institution’s food service program, including, but not limited to all monies, other than Program payments, received from other Federal, State, intermediate, or local government sources; participant’s payments for meals and food service fees; income from any food sales to adults; and other income, including cash donations or grants from organizations or individuals.
Independent center means a child care center, at-risk afterschool care center, emergency shelter, outside-school-hours care center or adult day care center which enters into an agreement with the State agency to assume final administrative and financial responsibility for Program operations.
Independent governing board of directors means, in the case of a nonprofit organization, or in the case of a for-profit institution required to have a board of directors, a governing board which meets regularly and has the authority to hire and fire the institution’s executive director.
Infant cereal means any iron-fortified dry cereal specially formulated for and generally recognized as cereal for infants that is routinely mixed with breast milk or iron-fortified infant formula prior to consumption.
Infant formula means any iron-fortified formula intended for dietary use solely as a food for normal, healthy infants; excluding those formulas specifically formulated for infants with inborn errors of metabolism or digestive or absorptive problems. Infant formula, as served, must be in liquid state at recommended dilution.
Institution means a sponsoring organization, child care center, at-risk afterschool care center, outside-school-hours care center, emergency shelter or adult day care center which enters into an agreement with the State agency to assume final administrative and financial responsibility for Program operations.
Internal controls means the policies, procedures, and organizational structure of an institution designed to reasonably assure that:
(a) The Program achieves its intended result;
(b) Program resources are used in a manner that protects against fraud, abuse, and mismanagement and in accordance with law, regulations, and guidance; and
(c) Timely and reliable Program information is obtained, maintained, reported, and used for decision-making.
Key Element Reporting System (KERS) means a comprehensive national system for reporting critical key element performance data on the operation of the program in institutions.
Low-income area means a geographical area in which at least 50 percent of the children are eligible for free or reduced price school meals under the National School Lunch Program and the School Breakfast Program, as determined in accordance with paragraphs (b) and (c), definition of tier I day care home.
Meals means food which is served to enrolled participants at an institution, child care facility or adult day care facility and which meets the nutritional requirements set forth in this part. However, children participating in at-risk afterschool care centers, emergency shelters, or outside-schools-hours care centers do not have to be enrolled.
Medicaid means Title XIX of the Social Security Act.
Medicaid participant means an adult participant who receives assistance under title XIX of the Social Security Act, the Grant to States for Medical Assistance Programs—Medicaid.
Milk means pasteurized fluid types of unflavored or flavored whole milk, lowfat milk, skim milk, or cultured buttermilk which meet State and local standards for such milk, except that, in the meal pattern for infants (0 to 1 year of age), milk means breast milk or iron-fortified infant formula. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, the Northern Mariana Islands, and the Virgin Islands if a sufficient supply of such types of fluid milk cannot be obtained, “milk” shall include reconstituted or recombined milk. All milk should contain vitamins A and D at levels specified by the Food and Drug Administration and be consistent with State and local standards for such milk.
National disqualified list means the list, maintained by the Department, of institutions, responsible principals and responsible individuals, and day care homes disqualified from participation in the Program.
New institution means a sponsoring organization or an independent center making an application to participate in the Program or applying to participate in the Program after a lapse in participation.
Nonpricing program means an institution, child care facility, or adult day care facility in which there is no separate identifiable charge made for meals served to participants.
Nonprofit food service means all food service operations conducted by the institution principally for the benefit of enrolled participants, from which all of the Program reimbursement funds are used solely for the operations or improvement of such food service.
Nonresidential means that the same participants are not maintained in care for more than 24 hours on a regular basis.
Notice means a letter sent by certified mail, return receipt (or the equivalent private delivery service), by facsimile, or by email, that describes an action proposed or taken by a State agency or FNS with regard to an institution’s Program reimbursement or participation. Notice also means a letter sent by certified mail, return receipt (or the equivalent private delivery service), by facsimile, or by email, that describes an action proposed or taken by a sponsoring organization with regard to a day care home’s participation. The notice must specify the action being proposed or taken and the basis for the action, and is considered to be received by the institution or day care home when it is delivered, sent by facsimile, or sent by email. If the notice is undeliverable, it is considered to be received by the institution, responsible principal or responsible individual, or day care home five days after being sent to the addressee’s last known mailing address, facsimile number, or email address.
OIG means the Office of the Inspector General of the Department.
Operating costs means expenses incurred by an institution in serving meals to participants under the Program, and allowed by the State agency financial management instruction.
Outside-school-hours care center means a public or private nonprofit institution or facility (except day care homes), or a For-profit center as defined in this section, that is licensed or approved in accordance with § 226.6(d)(1) to provide organized nonresidential child care services to children during hours outside of school. Outside-school-hours care centers may participate in the Program as independent centers or under the auspices of a sponsoring organization.
Participants means “Children” or “Adult participants” as defined in this section.
Participating institution means a sponsoring organization or an independent center, including a renewing institution, that holds a current agreement with the State agency to operate the Program.
Personal property means property of any kind except real property. It may be tangible—having physical existence—or intangible—having no physical existence such as patents, inventions, and copyrights.
Persons with disabilities means persons of any age who have one or more disabilities, as determined by the State, and who are enrolled in an institution or child care facility serving a majority of persons who are age 18 and under.
Pricing program means an institution, child care facility, or adult day care facility in which a separate identifiable charge is made for meals served to participants.
Principal means any individual who holds a management position within, or is an officer of, an institution or a sponsored center, including all members of the institution’s board of directors or the sponsored center’s board of directors.
Program means the Child and Adult Care Food Program authorized by section 17 of the National School Lunch Act, as amended.
Program payments means financial assistance in the form of start-up payments, expansion payments, advance payments, or reimbursement paid or payable to institutions for operating costs and administrative costs.
Reduced-price meal means a meal served under the Program to a participant from a family that meets the income standards for reduced-price school meals. Any separate charge imposed must be less than the full price of the meal, but in no case more than 40 cents for a lunch or supper, 30 cents for a breakfast, and 15 cents for a snack. Neither the participant nor any member of his family may be required to work in the food service program for a reduced-price meal.
Reimbursement means Federal financial assistance paid or payable to institutions for Program costs within the rates assigned by the State agency.
Renewing institution means a sponsoring organization or an independent center that is participating in the Program at the time it submits annual renewal information.
Responsible principal or responsible individual means:
(a) A principal, whether compensated or uncompensated, who the State agency or FNS determines to be responsible for an institution’s serious deficiency;
(b) Any other individual employed by, or under contract with, an institution or sponsored center, who the State agency or FNS determines to be responsible for an institution’s serious deficiency; or
(c) An uncompensated individual who the State agency or FNS determines to be responsible for an institution’s serious deficiency.
Rural area means any geographical area in a county which is not a part of a Metropolitan Statistical Area or any “pocket” within a Metropolitan Statistical Area which, at the option of the State agency and with FNSRO concurrence, is determined to be geographically isolated from urban areas.
SSI participant means an adult participant who receives assistance under title XVI of the Social Security Act, the Supplemental Security Income (SSI) for the Aged, Blind and Disabled Program.
School year means a period of 12 calendar months beginning July 1 of any year and ending June 30 of the following year.
Seriously deficient means the status of an institution or a day care home that has been determined to be non-compliant in one or more aspects of its operation of the Program.
Snack means a meal supplement that meets the meal pattern requirements specified in § 226.20(b)(6) or (c)(4).
SNAP household means any individual or group of individuals which is currently certified to receive assistances as a household from SNAP, the Supplemental Nutrition Assistance Program, as defined in § 245.2 of this chapter.
Sponsored center means a child care center, an at-risk afterschool care center, an adult day care center, an emergency shelter, or an outside-school-hours care center that operates the Program under the auspices of a sponsoring organization. The two types of sponsored centers are as follows:
(1) An affiliated center is a part of the same legal entity as the CACFP sponsoring organization; or
(2) An unaffiliated center is legally distinct from the sponsoring organization.
Sponsoring organization means a public or nonprofit private organization that is entirely responsible for the administration of the food program in:
(1) One or more day care homes;
(2) A child care center, emergency shelter, at-risk afterschool care center, outside-school-hours care center, or adult day care center which is a legally distinct entity from the sponsoring organization;
(3) Two or more child care centers, emergency shelters, at-risk afterschool care centers, outside-school-hours care center, or adult day care centers; or
(4) Any combination of child care centers, emergency shelters, at-risk afterschool care centers, outside-school-hours care centers, adult day care centers, and day care homes.
The term “sponsoring organization” also includes an organization that is entirely responsible for administration of the Program in any combination of two or more child care centers, at-risk afterschool care centers, adult day care centers or outside-school-hours care centers, which meet the definition of For-profit center in this section and are part of the same legal entity as the sponsoring organization.
Start-up payments means financial assistance made available to a sponsoring organization for its administrative expenses associated with developing or expanding a food service program in day care homes and initiating successful Program operations. These start-up payments may include administrative expenses associated with outreach and recruitment of unlicensed family or group day care homes and the allowable licensing-related expenses of such homes.
State means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands.
State agency means the State educational agency or any other State agency that has been designated by the Governor or other appropriate executive, or by the legislative authority of the State, and has been approved by the Department to administer the Program within the State or in States in which FNS administers the Program, FNSRO. This also may include a State agency other than the existing CACFP State Agency, when such agency is designated by the Governor of the State to administer only the adult day care component of the CACFP.
State agency list means an actual paper or electronic list, or the retrievable paper records, maintained by the State agency, that includes a synopsis of information concerning seriously deficient institutions and providers terminated for cause in that State. The list must be made available to FNS upon request, and must include the following information:
(a) Institutions determined to be seriously deficient by the State agency, including the names and mailing addresses of the institutions, the basis for each serious deficiency determination, and the status of the institutions as they move through the possible subsequent stages of corrective action, proposed termination, suspension, agreement termination, and/or disqualification, as applicable;
(b) Responsible principals and responsible individuals who have been disqualified from participation by the State agency, including their names, mailing addresses, and dates of birth; and
(c) Day care home providers whose agreements have been terminated for cause by a sponsoring organization in the State, including their names, mailing addresses, and dates of birth.
State Children’s Health Insurance Program (SCHIP) means the State medical assistance program under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.).
Suspended means the status of an institution or day care home that is temporarily ineligible for participation (including Program payments).
Suspension review means the review provided, upon the institution’s request, to an institution that has been given a notice of intent to suspend participation (including Program payments), based on a determination that the institution has knowingly submitted a false or fraudulent claim.
Suspension review official means the independent and impartial official who conducts the suspension review.
Termination for cause means the termination of a day care home’s Program agreement by the sponsoring organization due to the day care home’s violation of the agreement.
TANF recipient means an individual or household receiving assistance (as defined in 45 CFR 260.31) under a State-administered Temporary Assistance for Needy Families program.
Termination for convenience means termination of a Program agreement due to considerations unrelated to either party’s performance of Program responsibilities under the agreement between:
(1) A State agency and the independent center,
(2) A State agency and the sponsoring organization,
(3) A sponsoring organization and the unaffiliated center, or
(4) A sponsoring organization and the day care home.
Tier I day care home means (a) a day care home that is operated by a provider whose household meets the income standards for free or reduced-price meals, as determined by the sponsoring organization based on a completed free and reduced price application, and whose income is verified by the sponsoring organization of the home in accordance with § 226.23(h)(6);
(b) A day care home that is located in an area served by a school enrolling students in which at least 50 percent of the total number of children enrolled are certified eligible to receive free or reduced price meals; or
(c) A day care home that is located in a geographic area, as defined by FNS based on census data, in which at least 50 percent of the children residing in the area are members of households which meet the income standards for free or reduced price meals.
Tier II day care home means a day care home that does not meet the criteria for a Tier I day care home.
Title XVI means Title XVI of the Social Security Act which authorizes the Supplemental Security Income for the Aged, Blind, and Disabled Program—SSI.
Title XIX means Title XIX of the Social Security Act which authorizes the Grants to States for Medical Assistance Programs—Medicaid.
Title XX means Title XX of the Social Security Act.
Tofu means a commercially prepared soy-bean derived food, made by a process in which soybeans are soaked, ground, mixed with water, heated, filtered, coagulated, and formed into cakes. Basic ingredients are whole soybeans, one or more food-grade coagulates (typically a salt or acid), and water.
Unannounced review means an on-site review for which no prior notification is given to the facility or institution.
USDA implementing regulations include the following: 2 CFR part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; 2 CFR part 415, General Program Administrative Regulations; 2 CFR part 416, General Program Administrative Regulations for Grants and Cooperative Agreements to State and Local Governments; and 2 CFR part 418, New Restrictions on Lobbying.
Verification means a review of the information reported by institutions to the State agency regarding the eligibility of participants for free or reduced-price meals, and, in addition, for a pricing program, confirmation of eligibility for free or reduced-price benefits under the program. Verification for a pricing program shall include confirmation of income eligibility and, at State discretion, any other information required on the application which is defined as documentation in § 226.2. Such verification may be accomplished by examining information (e.g., wage stubs, etc.) provided by the household or other sources of information as specified in § 226.23(h)(2)(iv). However, if a SNAP, FDPIR or TANF case number is provided for a child, verification for such child shall include only confirmation that the child is included in a currently certified SNAP or FDPIR household or is a TANF recipient. If a Head Start statement of income eligibility is provided for a child, verification for such child shall include only confirmation that the child is a Head Start participant. For an adult participant, if a SNAP or FDPIR case number or SSI or Medicaid assistance identification number is provided, verification for such participant shall include only confirmation that the participant is included in a currently certified SNAP or FDPIR household or is a current SSI or Medicaid participant.
Whole grains means foods that consist of intact, ground, cracked, or flaked grain seed whose principal anatomical components—the starchy endosperm, germ, and bran—are present in the same relative proportions as they exist in the intact grain seed.
Yogurt means commercially coagulated milk products obtained by the fermentation of specific bacteria, that meet milk fat or milk solid requirements to which flavoring foods or ingredients may be added. These products are covered by the Food and Drug Administration’s Standard of Identity for yogurt, lowfat yogurt, and nonfat yogurt, (21 CFR 131.200), (21 CFR 131.203), (21 CFR 131.206), respectively.
§ 226.3 Administration.
(a) Within the Department, FNS shall act on behalf of the Department in the administration of the Program.
(b) Within the States, responsibility for the administration of the Program shall be in the State agency, except that if FNS has continuously administered the Program in any State since October 1, 1980, FNS shall continue to administer the Program in that State. A State in which FNS administers the Program may, upon request to FNS, assume administration of the Program.
(c) Each State agency desiring to take part in the Program shall enter into a written agreement with the Department for the administration of the Program in the State in accordance with the provisions of this part. This agreement shall cover the operation of the Program during the period specified therein and may be extended by consent of both parties.
(d) FNSRO shall, in each State in which it administers the Program, have available all funds and assume all responsibilities of a State agency as set forth in this part.
(e)(1) As authorized under section 12(l) of the Richard B. Russell National School Lunch Act, FNS may waive provisions of such Act or the Child Nutrition Act of 1966, as amended, and the provisions of this part with respect to a State agency or eligible service provider. The provisions of this part required by other statutes may not be waived under this authority. FNS may only approve requests for a waiver that are submitted by a State agency and comply with the requirements at section 12(l)(1) and the limitations at section 12(l)(4), including that FNS may not grant a waiver that increases Federal costs.
(2)(i) A State agency may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l)(2) and the provisions of this part.
(ii) A State agency may submit a request to waive specific statutory or regulatory requirements on behalf of eligible service providers that operate in the State. Any waiver where the State concurs must be submitted to the appropriate FNSRO.
(3)(i) An eligible service provider may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l) and the provisions of this part. Any waiver request submitted by an eligible service provider must be submitted to the State agency for review. A State agency must act promptly on such a waiver request and must deny or concur with a request submitted by an eligible service provider.
(ii) If a State agency concurs with a request from an eligible service provider, the State agency must promptly forward to the appropriate FNSRO the request and a rationale, consistent with section 12(l)(2), supporting the request. By forwarding the request to the FNSRO, the State agency affirms:
(A) The request meets all requirements for waiver submissions; and,
(B) The State agency will conduct all monitoring requirements related to regular Program operations and the implementation of the waiver.
(iii) If the State agency denies the request, the State agency must notify the requesting eligible service provider and state the reason for denying the request in writing within 30 calendar days of the State agency’s receipt of the request. The State agency response is final and may not be appealed to FNS.
Subpart B—Assistance to States
§ 226.4 Payments to States and use of funds.
(a) Availability of funds. For each fiscal year based on funds provided to the Department, FNS must make funds available to each State agency to reimburse institutions for their costs in connection with food service operations, including administrative expenses, under this part. Funds must be made available in an amount no less than the sum of the totals obtained under paragraphs (b), (c), (d), (e), (f), (g), and (j) of this section. However, in any fiscal year, the aggregate amount of assistance provided to a State under this part must not exceed the sum of the Federal funds provided by the State to participating institutions within the State for that fiscal year and any funds used by the State under paragraphs (j) and (l) of this section.
(b) Center funds. For meals served to participants in child care centers, adult day care centers and outside-school-hours care centers, funds shall be made available to each State agency in an amount no less than the sum of the products obtained by multiplying:
(1) The number of breakfasts served in the Program within the State to participants from families that do not satisfy the eligibility standards for free and reduced-price school meals enrolled in institutions by the national average payment rate for breakfasts for such participants under section 4 of the Child Nutrition Act of 1966;
(2) The number of breakfasts served in the Program within the State to participants from families that satisfy the eligibility standards for free school meals enrolled in institutions by the national average payment rate for free breakfasts under section 4 of the Child Nutrition Act of 1966;
(3) The number of breakfasts served to participants from families that satisfy the eligibility standard for reduced-price school meals enrolled in institutions by the national average payment rate for reduced-price school breakfasts under section 4 of the Child Nutrition Act of 1966;
(4) The number of lunches and suppers served in the Program within the State by the national average payment rate for lunches under section 4 of the National School Lunch Act. (All lunches and suppers served in the State are funded under this provision);
(5) The number of lunches and suppers served in the Program within the State to participants from families that satisfy the eligibility standard for free school meals enrolled in institutions by the national average payment rate for free lunches under section 11 of the National School Lunch Act;
(6) The number of lunches and suppers served in the Program within the State to participants from families that satisfy the eligibility standard for reduced-price school meals enrolled in institutions by the national average payment rate for reduced-price lunches under section 11 of the National School Lunch Act;
(7) The number of snacks served in the Program within the State to participants from families that do not satisfy the eligibility standards for free and reduced-price school meals enrolled in institutions by 2.75 cents;
(8) The number of snacks served in the Program within the State to participants from families that satisfy the eligibility standard for free school meals enrolled in institutions by 30 cents;
(9) The number of snacks served in the Program within the State to participants from families that satisfy the eligibility standard for reduced-price school meals enrolled in institutions by 15 cents.
(c) Emergency shelter funds. For meals and snacks served to children in emergency shelters, funds will be made available to each State agency in an amount equal to the total calculated by multiplying the number of meals and snacks served in the Program within the State to such children by the national average payment rate for free meals and free snacks under section 11 of the National School Lunch Act.
(d) At-risk afterschool care center funds. For snacks served to children in at-risk afterschool care centers, funds will be made available to each State agency in an amount equal to the total calculated by multiplying the number of snacks served in the Program within the State to such children by the national average payment rate for free snacks under section 11 of the National School Lunch Act. For at-risk afterschool meals and at-risk afterschool snacks served to children, funds will be made available to each eligible State agency in an amount equal to the total calculated by multiplying the number of at-risk afterschool meals and the number of at-risk afterschool snacks served in the Program within the State by the national average payment rate for free meals and free snacks, respectively, under section 11 of the Richard B. Russell National School Lunch Act.
(e) Day care home funds. For meals served to children in day care homes, funds shall be made available to each State agency in an amount no less than the sum of products obtained by multiplying:
(1) The number of breakfasts served in the Program within the State to children enrolled in tier I day care homes by the current tier I day care home rate for breakfasts;
(2) The number of breakfasts served in the Program within the State to children enrolled in tier II day care homes that have been determined eligible for free or reduced price meals by the current tier I day care home rate for breakfasts;
(3) The number of breakfasts served in the Program within the State to children enrolled in tier II day care homes that do not satisfy the eligibility standards for free or reduced price meals, or to children from whose households applications were not collected, by the current tier II day care home rate for breakfasts;
(4) The number of lunches and suppers served in the Program within the State to children enrolled in tier I day care homes by the current tier I day care home rate for lunches/suppers;
(5) The number of lunches and suppers served in the Program within the State to children enrolled in tier II day care homes that have been determined eligible for free or reduced price meals by the current tier I day care home rate for lunches/suppers;
(6) The number of lunches and suppers served in the Program within the State to children enrolled in tier II day care homes that do not satisfy the eligibility standards for free or reduced price meals, or to children from whose households applications were not collected, by the current tier II day care home rate for lunches/suppers;
(7) The number of snacks served in the Program within the State to children enrolled in tier I day care homes by the current tier I day care home rate for snacks;
(8) The number of snacks served in the Program within the State to children enrolled in tier II day care homes that have been determined eligible for free or reduced price meals by the current tier I day care home rate for snacks; and
(9) The number of snacks served in the Program within the State to children enrolled in tier II day care homes that do not satisfy the eligibility standards for free or reduced price meals, or to children from whose households applications were not collected, by the current tier II day care home rate for snacks.
(f) Administrative funds. For administrative payments to day care home sponsoring organizations, funds shall be made available to each State agency in an amount not less than the product obtained each month by multiplying the number of day care homes participating under each sponsoring organization within the State by the applicable rates specified in § 226.12(a)(3).
(g) Start-up and expansion funds. For start-up and expansion payments to eligible sponsoring organizations, funds shall be made available to each State agency in an amount equal to the total amount of start-up and expansion payments made in the most recent period for which reports are available for that State or on the basis of estimates by FNS.
(h) Funding assurance. FNS shall ensure that, to the extent funds are appropriated, each State has sufficient Program funds available for providing start-up, expansion and advance payments in accordance with this part.
(i) Rate adjustments. FNS shall publish a notice in the
(1) The rates for meals, including snacks, served in tier I and tier II day care homes shall be adjusted annually, on July 1 (beginning July 1, 1997), on the basis of changes in the series for food at home of the Consumer Price Index for All Urban Consumers published by the Department of Labor. Such adjustments shall be rounded to the nearest lower cent based on changes measured over the most recent twelve-month period for which data are available. The adjustments shall be computed using the unrounded rate in effect for the preceding school year.
(2) The rates for meals, including snacks, served in child care centers, emergency shelters, at-risk afterschool care centers, adult day care centers and outside-school-hours care centers will be adjusted annually, on July 1, on the basis of changes in the series for food away from home of the Consumer Price Index for All Urban Consumers published by the Department of Labor. Such adjustment must be rounded to the nearest lower cent, based on changes measured over the most recent twelve-month period for which data are available. The adjustment to the rates must be computed using the unrounded rate in effect for the preceding year.
(3) The rate for administrative payments to day care home sponsoring organizations shall be adjusted annually, on July 1, on the basis of changes in the series for all items of the Consumer Price Index for All Urban Consumers published by the Department of Labor. Such adjustments shall be made to the nearest dollar based on changes measured over the most recent twelve-month period for which data are available.
(j) Audit funds. (1) Funds are available to each State agency in an amount equal to 1.5 percent of the Program funds used by the State during the second fiscal year preceding the fiscal year for which these funds are to be made available. These funds are for the expense of conducting audits under § 226.8 and Program monitoring under § 226.6(m).
(2) State agencies may request an increase in the amount of funds made available under this paragraph.
(i) FNS approval for increased funding will be based on the State agency’s expressed need for an increase in resources to meet audit requirements, fulfill monitoring requirements, or effectively improve Program management.
(ii) The total amount of audit funds made available to any State agency under this paragraph may not exceed 2 percent of Program funds used by the State during the second fiscal year preceding the fiscal year for which the funds are made available.
(iii) The amount of assistance provided to a State agency under this paragraph in any fiscal year may not exceed the State’s expenditures under §§ 226.6(m) and 226.8 during the fiscal year in which the funds are made available.
(k) Method of funding. FNS shall authorize funds for State agencies in accordance with 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR part 400 and part 415, as applicable.
(l) Special developmental projects. The State agency may use in carrying out special developmental projects an amount not to exceed one percent of Program funds used in the second prior fiscal year. Special developmental projects shall conform to FNS guidance and be approved in writing by FNS.
§ 226.5 Donation of commodities.
(a) USDA foods available under section 6 of this Act, section 416 of the Agricultural Act of 1949 (7 U.S.C. 1431) or purchased under section 32 of the Act of August 24, 1935 (7 U.S.C. 1431), section 709 of the Food and Agriculture Act of 1965 (7 U.S.C. 1446a-1), or other authority, and donated by the Department shall be made available to each State.
(b) The value of such commodities donated to each State for each school year shall be, at a minimum, the amount obtained by multiplying the number of reimbursable lunches and suppers served in participating institutions in that State during the preceding school year by the rate for commodities established under section 6(e) of the Act for the current school year. Adjustments shall be made at the end of each school year to reflect the difference between the number of reimbursable lunches and suppers served during the preceding year and the number served during the current year, and subsequent commodity entitlement shall be based on the adjusted meal counts. At the discretion of FNS, current-year adjustments may be made for significant variations in the number of reimbursable meals served. Such current-year adjustments will not be routine and will only be made for unusual problems encountered in a State, such as a disaster that necessitates institutional closures for a prolonged period of time. CACFP State agencies electing to receive cash-in-lieu of commodities will receive payments based on the number of reimbursable meals actually served during the current school year.
Subpart C—State Agency Provisions
§ 226.6 State agency administrative responsibilities.
(a) State agency personnel. Each State agency must provide sufficient consultative, technical, and managerial personnel to:
(1) Administer the Program;
(2) Provide sufficient training and technical assistance to institutions;
(3) Monitor Program performance;
(4) Facilitate expansion of the Program in low-income and rural areas; and
(5) Ensure effective operation of the Program by participating institutions.
(b) Program applications and agreements. Each State agency must establish application review procedures, as described in paragraph (b)(1) of this section, to determine the eligibility of new institutions and facilities for which applications are submitted by sponsoring organizations. Each State agency must establish procedures for the review of renewal information, as described in paragraph (b)(2) of this section, to determine the continued eligibility of renewing institutions. The State agency must enter into written agreements with institutions, as described in paragraph (b)(4) of this section.
(1) Application procedures for new institutions. Each State agency must establish application procedures to determine the eligibility of new institutions under this part. At a minimum, such procedures must require that institutions submit information to the State agency in accordance with paragraph (f) of this section. For new private nonprofit and proprietary child care institutions, such procedures must also include a pre-approval visit by the State agency to confirm the information in the institution’s application and to further assess its ability to manage the Program. The State agency must establish factors, consistent with § 226.16(b)(1), that it will consider in determining whether a new sponsoring organization has sufficient staff to perform required monitoring responsibilities at all of its sponsored facilities. As part of the review of the sponsoring organization’s management plan, the State agency must determine the appropriate level of staffing for each sponsoring organization, consistent with the staffing range of monitors set forth at § 226.16(b)(1) and the factors it has established. The State agency must ensure that each new sponsoring organization applying for participation after July 29, 2002 meets this requirement. In addition, the State agency’s application review procedures must ensure that the following information is included in a new institution’s application:
(i) Participant eligibility information. Centers must submit current information on the number of enrolled participants who are eligible for free, reduced-price and paid meals;
(ii) Enrollment information. Sponsoring organizations of day care homes must submit current information on:
(A) The total number of children enrolled in all homes in the sponsorship;
(B) An assurance that day care home providers’ own children whose meals are claimed for reimbursement in the Program are eligible for free or reduced-price meals;
(C) The total number of tier I and tier II day care homes that it sponsors;
(D) The total number of children enrolled in tier I day care homes;
(E) The total number of children enrolled in tier II day care homes; and
(F) The total number of children in tier II day care homes that have been identified as eligible for free or reduced-price meals;
(iii) Nondiscrimination statement. Institutions must submit their nondiscrimination policy statement and a media release, unless the State agency has issued a Statewide media release on behalf of all institutions;
(iv) Management plan. Sponsoring organizations must submit a complete management plan that includes:
(A) Detailed information on the organization’s management and administrative structure;
(B) A list or description of the staff assigned to Program monitoring, in accordance with the requirements set forth at § 226.16(b)(1);
(C) An administrative budget that includes projected CACFP administrative earnings and expenses;
(D) The procedures to be used by the organization to administer the Program in, and disburse payments to, the child care facilities under its sponsorship; and
(E) For sponsoring organizations of family day care homes, a description of the system for making tier I day care home determinations, and a description of the system of notifying tier II day care homes of their options for reimbursement;
(v) Budget. An institution must submit a budget that the State agency must review in accordance with § 226.7(g);
(vi) Documentation of licensing/approval. All centers and family day care homes must document that they meet Program licensing/approval requirements;
(vii) Documentation of tax-exempt status. All private nonprofit institutions must document their tax-exempt status;
(viii) At-risk afterschool care centers. Institutions (independent at-risk afterschool care centers and sponsoring organizations of at-risk afterschool care centers) must submit documentation sufficient to determine that each at-risk afterschool care center meets the program eligibility requirements in § 226.17a(a), and sponsoring organizations must submit documentation that each sponsored at-risk afterschool care center meets the area eligibility requirements in § 226.17a(i).
(ix) Documentation of for-profit center eligibility. Institutions must document that each for-profit center for which application is made meets the definition of a For-profit center, as set forth at § 226.2;
(x) Preference for commodities/cash-in-lieu of commodities. Institutions must state their preference to receive commodities or cash-in-lieu of commodities;
(xi) Providing benefits to unserved facilities or participants—(A) Criteria. The State agency must develop criteria for determining whether a new sponsoring organization’s participation will help ensure the delivery of benefits to otherwise unserved facilities or participants, and must disseminate these criteria to new sponsoring organizations when they request information about applying to the Program; and
(B) Documentation. The new sponsoring organization must submit documentation that its participation will help ensure the delivery of benefits to otherwise unserved facilities or participants in accordance with the State agency’s criteria;
(xii) Presence on the National disqualified list. If an institution or one of its principals is on the National disqualified list and submits an application, the State agency may not approve the application. If a sponsoring organization submits an application on behalf of a facility, and either the facility or any of its principals is on the National disqualified list, the State agency may not approve the application. In accordance with paragraph (k)(3)(vii) of this section, in this circumstance, the State agency’s refusal to consider the application is not subject to administrative review.
(xiii) Ineligibility for other publicly funded programs—(A) General. A State agency is prohibited from approving an institution’s application if, during the past seven years, the institution or any of its principals have been declared ineligible for any other publicly funded program by reason of violating that program’s requirements. However, this prohibition does not apply if the institution or the principal has been fully reinstated in, or determined eligible for, that program, including the payment of any debts owed;
(B) Certification. Institutions must submit:
(1) A statement listing the publicly funded programs in which the institution and its principals have participated in the past seven years; and
(2) A certification that, during the past seven years, neither the institution nor any of its principals have been declared ineligible to participate in any other publicly funded program by reason of violating that program’s requirements; or
(3) In lieu of the certification, documentation that the institution or the principal previously declared ineligible was later fully reinstated in, or determined eligible for, the program, including the payment of any debts owed; and
(C) Follow-up. If the State agency has reason to believe that the institution or its principals were determined ineligible to participate in another publicly funded program by reason of violating that program’s requirements, the State agency must follow up with the entity administering the publicly funded program to gather sufficient evidence to determine whether the institution or its principals were, in fact, determined ineligible;
(xiv) Information on criminal convictions. (A) A State agency is prohibited from approving an institution’s application if the institution or any of its principals has been convicted of any activity that occurred during the past seven years and that indicated a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency; and
(B) Institutions must submit a certification that neither the institution nor any of its principals has been convicted of any activity that occurred during the past seven years and that indicated a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency;
(xv) Certification of truth of applications and submission of names and addresses. Institutions must submit a certification that all information on the application is true and correct, along with the names, mailing addresses, and dates of birth of the institution’s executive director and chair of the board of directors or the owner, in the case of a for-profit center that does not have an executive director or is not required to have a board of directors. In addition, the institution’s Federal Employer Identification Number (FEIN) or the Unique Entity Identifier (UEI) must be provided;
(xvi) Outside employment policy. Sponsoring organizations must submit an outside employment policy. The policy must restrict other employment by employees that interferes with an employee’s performance of Program-related duties and responsibilities, including outside employment that constitutes a real or apparent conflict of interest. Sponsoring organizations that are participating on July 29, 2002, must submit an outside employment policy not later than September 27, 2002. The policy will be effective unless disapproved by the State agency;
(xvii) Bond. Sponsoring organizations applying for initial participation on or after June 20, 2000, must submit a bond, if such bond is required by State law, regulation, or policy. If the State agency requires a bond for sponsoring organizations pursuant to State law, regulation, or policy, the State agency must submit a copy of that requirement and a list of sponsoring organizations posting a bond to the appropriate FNSRO on an annual basis; and
(xviii) Compliance with performance standards. Each new institution must submit information sufficient to document that it is financially viable, is administratively capable of operating the Program in accordance with this part, and has internal controls in effect to ensure accountability. To document this, any new institution must demonstrate in its application that it is capable of operating in conformance with the following performance standards. The State agency must only approve the applications of those new institutions that meet these performance standards, and must deny the applications of those new institutions that do not meet the standards. In ensuring compliance with these performance standards, the State agency should use its discretion in determining whether the institution’s application, in conjunction with its past performance in CACFP, establishes to the State agency’s satisfaction that the institution meets the performance standards.
(A) Performance Standard 1—Financial viability and financial management. The new institution must be financially viable. Program funds must be expended and accounted for in accordance with the requirements of this part, FNS Instruction 796-2 (“Financial Management in the Child and Adult Care Food Program”), and 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415. To demonstrate financial viability, the new institution must document that it meets the following criteria:
(1) Description of need/recruitment. A new sponsoring organization must demonstrate in its management plan that its participation will help ensure the delivery of Program benefits to otherwise unserved facilities or participants, in accordance with criteria developed by the State agency pursuant to paragraph (b)(1)(x) of this section. A new sponsoring organization must demonstrate that it will use appropriate practices for recruiting facilities, consistent with paragraph (p) of this section and any State agency requirements;
(2) Fiscal resources and financial history. A new institution must demonstrate that it has adequate financial resources to operate the CACFP on a daily basis, has adequate sources of funds to continue to pay employees and suppliers during periods of temporary interruptions in Program payments and/or to pay debts when fiscal claims have been assessed against the institution, and can document financial viability (for example, through audits, financial statements, etc.); and
(3) Budgets. Costs in the institution’s budget must be necessary, reasonable, allowable, and appropriately documented;
(B) Performance Standard 2—Administrative capability. The new institution must be administratively capable. Appropriate and effective management practices must be in effect to ensure that the Program operates in accordance with this part. To demonstrate administrative capability, the new institution must document that it meets the following criteria:
(1) Has an adequate number and type of qualified staff to ensure the operation of the Program in accordance with this part;
(2) If a sponsoring organization, documents in its management plan that it employs staff sufficient to meet the ratio of monitors to facilities, taking into account the factors that the State agency will consider in determining a sponsoring organization’s staffing needs, as set forth in § 226.16(b)(1); and
(3) If a sponsoring organization, has Program policies and procedures in writing that assign Program responsibilities and duties, and ensure compliance with civil rights requirements; and
(C) Performance Standard 3—Program accountability. The new institution must have internal controls and other management systems in effect to ensure fiscal accountability and to ensure that the Program will operate in accordance with the requirements of this part. To demonstrate Program accountability, the new institution must document that it meets the following criteria:
(1) Governing board of directors. Has adequate oversight of the Program by an independent governing board of directors as defined at § 226.2;
(2) Fiscal accountability. Has a financial system with management controls specified in writing. For new sponsoring organizations, these written operational policies must assure:
(i) Fiscal integrity and accountability for all funds and property received, held, and disbursed;
(ii) The integrity and accountability of all expenses incurred;
(iii) That claims will be processed accurately, and in a timely manner;
(iv) That funds and property are properly safeguarded and used, and expenses incurred, for authorized Program purposes; and
(v) That a system of safeguards and controls is in place to prevent and detect improper financial activities by employees;
(3) Recordkeeping. Maintains appropriate records to document compliance with Program requirements, including budgets, accounting records, approved budget amendments, and, if a sponsoring organization, management plans and appropriate records on facility operations;
(4) Sponsoring organization operations. If a new sponsoring organization, documents in its management plan that it will:
(i) Provide adequate and regular training of sponsoring organization staff and sponsored facilities in accordance with §§ 226.15(e)(12) and (e)(14) and 226.16(d)(2) and (d)(3);
(ii) Perform monitoring in accordance with § 226.16(d)(4), to ensure that sponsored facilities accountably and appropriately operate the Program;
(iii) If a sponsor of family day care homes, accurately classify day care homes as tier I or tier II in accordance with § 226.15(f); and
(iv) Have a system in place to ensure that administrative costs funded from Program reimbursements do not exceed regulatory limits set forth at §§ 226.12(a) and 226.16(b)(1); and
(5) Meal service and other operational requirements. Independent centers and facilities will follow practices that result in the operation of the Program in accordance with the meal service, recordkeeping, and other operational requirements of this part. These practices must be documented in the independent center’s application or in the sponsoring organization’s management plan and must demonstrate that independent centers or sponsored facilities will:
(i) Provide meals that meet the meal patterns set forth in § 226.20;
(ii) Comply with licensure or approval requirements set forth in paragraph (d) of this section;
(iii) Have a food service that complies with applicable State and local health and sanitation requirements;
(iv) Comply with civil rights requirements;
(v) Maintain complete and appropriate records on file; and
(vi) Claim reimbursement only for eligible meals.
(2) Annual information submission requirements for State agency review of renewing institutions. Each State agency must establish annual information submission procedures to confirm the continued eligibility of renewing institutions under this part. Renewing institutions must not be required to submit a free and reduced-price policy statement or a nondiscrimination statement unless they make substantive changes to either statement. In addition, the State agency’s review procedures must ensure that institutions annually submit information or certify that certain information is still true based on the requirements of this section. For information that must be certified, any new changes made in the past year and not previously reported to the State agency must be updated in the annual renewal information submission. Any additional information submitted in the renewal must be certified by the institution to be true.
(i) This paragraph (b)(2) contains the information that must be certified. The State agency must ensure that renewing independent centers certify the following to be true:
(A) The institution and its principals are not currently on the National disqualified list, per paragraph (b)(1)(xii) of this section;
(B) A list of any publicly funded programs that the sponsoring organization and its principals have participated in, in the past 7 years, is current, per paragraph (b)(1)(xiii)(B) of this section;
(C) The institution and its principals have not been determined ineligible for any other publicly funded programs due to violation of that program’s requirements, in the past 7 years, per paragraphs (b)(1)(xiii)(B) and (C) of this section;
(D) No principals have been convicted of any activity that occurred during the past 7 years and that indicated a lack of business integrity, per paragraph (b)(1)(xiv)(B) of this section;
(E) The names, mailing addresses, and dates of birth of all current principals have been submitted to the State agency, per paragraph (b)(1)(xv) of this section;
(F) The institution is currently compliant with the required performance standards of financial viability and management, administrative capability, and program accountability, per paragraph (b)(1)(xviii) of this section; and
(G) Licensing or approval status of each child care center or adult day care center is up-to-date.
(ii) The State agency must ensure that renewing sponsoring organizations certify the following to be true:
(A) All of the requirements under paragraph (b)(2)(i) of this section are certified to be true;
(B) The management plan on file with the State agency is complete and up to date, per paragraph (b)(1)(iv) of this section;
(C) No sponsored facility or principal of a sponsored facility is currently on the National disqualified list, per paragraph (b)(1)(xii) of this section;
(D) The outside employment policy most recently submitted to the State agency remains current and in effect, per paragraph (b)(1)(xvi) of this section;
(E) Licensing or approval status of each sponsored child care center, adult day care center, or day care home is up-to-date;
(F) The list of the sponsoring organization’s facilities on file with the State agency is up-to-date; and
(G) All facilities under the sponsoring organization’s oversight have adhered to Program training requirements.
(iii) State agency review of institution information. The State agency’s review of information that must be submitted, certified or updated annually is as follows:
(A) Management plan. The State agency must ensure that renewing sponsoring organizations certify that the sponsoring organization has reviewed the current management plan on file with the State agency and that it is complete and up to date. If the management plan has changed, the sponsoring organization must submit updates to the management plan that meet the requirements of § 226.16(b)(1). The State agency must establish factors, consistent with § 226.16(b)(1), that it will consider in determining whether a renewing sponsoring organization has sufficient staff to perform required monitoring responsibilities at all of its sponsored facilities. As part of its management plan review, the State agency must determine the appropriate level of staffing for the sponsoring organization, consistent with the staffing range of monitors set forth at § 226.6(b)(1) and the factors the State agency has established.
(B) Administrative budget submission. The State agency must ensure that renewing sponsoring organizations submit an administrative budget for the upcoming year with sufficiently detailed information concerning projected CACFP administrative earnings and expenses, as well as other non-Program funds to be used in Program administration. The State agency must be able to determine the allowability, necessity, and reasonableness of all proposed expenditures, and to assess the sponsoring organization’s capability to manage Program funds. The administrative budget must demonstrate that the sponsoring organization will expend and account for funds in accordance with regulatory requirements, FNS Instruction 796-2 (Financial Management in the Child and Adult Care Food Program), 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, and applicable Office of Management and Budget circulars. The administrative budget submitted by a sponsoring organization of centers must demonstrate that the administrative costs to be charged to the Program do not exceed 15 percent of the meal reimbursements estimated or actually earned during the budget year, unless the State agency grants a waiver, as described in § 226.7(g). For sponsoring organizations of day care homes seeking to carry over administrative funds, as described in § 226.12(a)(3), the budget must include an estimate of requested administrative fund carryover amounts and a description of proposed purpose for which those funds would be obligated or expended.
(C) Presence on the National disqualified list. The State agency must ensure that renewing institutions certify that neither the institution nor its principals are on the National disqualified list. The State agency must also ensure that renewing sponsoring organizations certify that no sponsored facility or facility principal is on the National disqualified list.
(D) Ineligibility for other publicly funded programs. A State agency is prohibited from approving a renewing institution or facility’s application if, during the past 7 years, the institution, facility, responsible principals, or responsible individuals have been declared ineligible for any other publicly funded program by reason of violating that program’s requirements. However, this prohibition does not apply if the institution, facility, responsible principals, or responsible individuals have been fully reinstated in or determined eligible for that program, including the payment of any debts owed. The State agency must follow up with the entity administering the publicly funded program to gather sufficient evidence to determine whether the institution or its principals were, in fact, determined ineligible.
(E) Information on criminal convictions. The State agency must ensure that renewing institutions certify that the institution’s principals have not been convicted of any activity that occurred during the past 7 years and that indicates a lack of business integrity, as defined in paragraph (c)(1)(ii)(A) of this section.
(F) Submission of names and addresses. The State agency must ensure that renewing institutions submit a certification attesting to the validity of the following information: full legal name and any names previously used, mailing address, and dates of birth of the institution’s executive director and chair of the board of directors or the owner, in the case of a for-profit center that does not have an executive director or is not required to have a board of directors. In addition, the institution’s Federal Employer Identification Number (FEIN) or the Unique Entity Identifier (UEI) must be provided.
(G) Outside employment policy. The State agency must ensure that renewing sponsoring organizations certify that the outside employment policy most recently submitted to the State agency remains current and in effect or the sponsoring organization must submit an updated outside employment policy at the time of renewal. The policy must restrict other employment by employees that interferes with an employee’s performance of Program-related duties and responsibilities, including outside employment that constitutes a real or apparent conflict of interest.
(H) Compliance with performance standards. The State agency must ensure that each renewing institution certifies that it is still in compliance with the performance standards described in paragraph (b)(1)(xviii) of this section, meaning it is financially viable, is administratively capable of operating the Program in accordance with this part, and has internal controls in effect to ensure accountability.
(I) Licensing. The State agency must ensure that each independent center certifies that its licensing or approval status is up-to-date and that it continues to meet the licensing requirements described in paragraphs (d) and (e) of this section. Sponsoring organizations must certify that the licensing or approval status of their facilities is up-to-date and that they continue to meet the licensing requirements described in paragraphs (d) and (e) of this section. If the independent center or facility has a new license not previously on file with the State agency, a copy must be submitted, unless the State agency has other means of confirming the licensing or approval status of any independent center or facility providing care.
(J) Facility lists. The State agency must ensure that each sponsoring organization certifies that the list of all of their applicant day care homes, child care centers, outside-school-hours-care centers, at-risk afterschool care centers, emergency shelters, and adult day care centers on file with the State agency is up-to-date.
(K) Facility training. The State agency must ensure that renewing sponsoring organizations certify that all facilities under their oversight have adhered to the training requirements set forth in Program regulations.
(iv) Additional Information collection. Institutions must provide information to the State agency as specified in paragraphs (f)(3), (f)(4), and (f)(7) of this section.
(3) State agency notification requirements. (i) Any new institution applying for participation in the Program must be notified in writing of approval or disapproval by the State agency, within 30 calendar days of the State agency’s receipt of a complete application. Whenever possible, State agencies should provide assistance to institutions that have submitted an incomplete application. Any disapproved applicant institution must be notified of the reasons for its disapproval and its right to appeal, as described in paragraph (k) of this section. Any disapproved applicant day care home or unaffiliated center must be notified of the reasons for its disapproval and its right to appeal, as described in paragraph (l) of this section.
(ii) Any renewing institution must be provided written notification indicating whether it has completely and sufficiently met all renewal information requirements within 30 days of the submission of renewal information. Whenever possible, State agencies should provide assistance to institutions whose information is incomplete.
(4) Program agreements. (i) The State agency must require each institution that has been approved for participation in the Program to enter into a permanent agreement governing the rights and responsibilities of each party. The existence of a valid permanent agreement, however, does not eliminate the need for an institution to comply with the annual information submission requirements and related provisions at paragraphs (b) and (f) of this section.
(ii) The existence of a valid permanent agreement does not limit the State agency’s ability to terminate the agreement, as provided under paragraph (c)(3) of this section. The State agency must terminate the institution’s agreement whenever an institution’s participation in the Program ends. The State agency must terminate the agreement for cause based on violations by the institution, facility, responsible principals, or responsible individuals, as described in paragraph (c) of this section. The State agency or institution may terminate the agreement at its convenience for considerations unrelated to the institution’s performance of Program responsibilities under the agreement. However, any action initiated by the State agency to terminate an agreement for its convenience requires prior consultation with FNS. Termination for convenience does not result in ineligibility for any program authorized under this part or parts 210, 215, 220, or 225 of this chapter.
(iii) The Program agreement must include the following requirements:
(A) The responsibility of the institution to accept final financial and administrative management of a proper, efficient, and effective food service, and comply with all requirements under this part.
(B) The responsibility of the institution to comply with all requirements of title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and the Department’s regulations concerning nondiscrimination (parts 15, 15a and 15b of this title), including requirements for racial and ethnic participation data collection, public notification of the nondiscrimination policy, and reviews to assure compliance with the nondiscrimination policy, to the end that no person may, on the grounds of race, color, national origin, sex, age, or disability, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under, the Program.
(C) The right of the State agency, the Department, and other State or Federal officials to make announced or unannounced reviews of their operations during the institution’s normal hours of child or adult care operations, and that anyone making such reviews must show photo identification that demonstrates that they are employees of one of these entities.
(c) Denial of applications and termination of agreements—(1) Denial of a new institution’s application—(i) General. If a new institution’s application does not meet all of the requirements in paragraph (b) of this section and in §§ 226.15(b) and 226.16(b), the State agency must deny the application. If, in reviewing a new institution’s application, the State agency determines that the institution has committed one or more serious deficiency listed in paragraph (c)(1)(ii) of this section, the State agency must initiate action to:
(A) Deny the new institution’s application; and
(B) Disqualify the new institution and the responsible principals and responsible individuals (e.g., the person who signs the application).
(ii) List of serious deficiencies for new institutions. The list of serious deficiencies is not identical for each category of institution (new, renewing, participating) because the type of information likely to be available to the State agency is different, depending on whether the State agency is reviewing a new or renewing institution’s application or is conducting a review of a participating institution. Serious deficiencies for new institutions are:
(A) Submission of false information on the institution’s application, including but not limited to a determination that the institution has concealed a conviction for any activity that occurred during the past seven years and that indicates a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency; or
(B) Any other action affecting the institution’s ability to administer the Program in accordance with Program requirements.
(iii) Serious deficiency notification procedures for new institutions. If the State agency determines that a new institution has committed one or more serious deficiency listed in paragraph (c)(1)(ii) of this section, the State agency must use the following procedures to provide the institution and the responsible principals and responsible individuals with notice of the serious deficiency(ies) and an opportunity to take corrective action.
(A) Notice of serious deficiency. The State agency must notify the institution’s executive director and chairman of the board of directors that the institution has been determined to be seriously deficient. The notice must identify the responsible principals and responsible individuals (e.g., for new institutions, the person who signed the application) and must be sent to those persons as well. The State agency may specify in the notice different corrective action, and time periods for completing the corrective action, for the institution and the responsible principals and responsible individuals. At the same time the notice is issued, the State agency must add the institution to the State agency list, along with the basis for the serious deficiency determination, and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:
(1) The serious deficiency(ies);
(2) The actions to be taken to correct the serious deficiency(ies);
(3) The time allotted to correct the serious deficiency(ies) in accordance with paragraph (c)(4) of this section.
(4) That the serious deficiency determination is not subject to administrative review;
(5) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time will result in denial of the institution’s application and the disqualification of the institution and the responsible principals and responsible individuals;
(6) That the State agency will not pay any claims for reimbursement for eligible meals served or allowable administrative expenses incurred until the State agency has approved the institution’s application and the institution has signed a Program agreement; and
(7) That the institution’s withdrawal of its application, after having been notified that it is seriously deficient, will still result in the institution’s formal termination by the State agency and placement of the institution and its responsible principals and individuals on the National disqualified list; and
(8) That, if the State agency does not possess the date of birth for any individual named as a “responsible principal or individual” in the serious deficiency notice, the submission of that person’s date of birth is a condition of corrective action for the institution and/or individual.
(B) Successful corrective action. (1) If corrective action has been taken to fully and permanently correct the serious deficiency(ies) within the allotted time and to the State agency’s satisfaction, the State agency must:
(i) Notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the State agency has temporarily defer its serious deficiency determination; and
(ii) Offer the new institution the opportunity to resubmit its application. If the new institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.
(2) If corrective action is complete for the institution but not for all of the responsible principals and responsible individuals (or vice versa), the State agency must:
(i) Continue with the actions (as set forth in paragraph (c)(1)(iii)(C) of this section) against the remaining parties;
(ii) At the same time the notice is issued, the State agency must also update the State agency list to indicate that the serious deficiency(ies) has(ve) been corrected and provide a copy of the notice to the appropriate FNSRO; and
(iii) If the new institution has corrected the serious deficiency(ies), offer it the opportunity to resubmit its application. If the new institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.
(3) If the State agency initially determines that the institution’s corrective action is complete, but later determines that the serious deficiency(ies) has recurred, the State agency must move immediately to issue a notice of intent to terminate and disqualify the institution, in accordance with paragraph (c)(1)(iii)(C) of this section.
(C) Application denial and proposed disqualification. If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies), the State agency must notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution’s application has been denied. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:
(1) That the institution’s application has been denied and the State agency is proposing to disqualify the institution and the responsible principals and responsible individuals;
(2) The basis for the actions; and
(3) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the application denial and proposed disqualifications.
(D) Program payments. The State agency is prohibited from paying any claims for reimbursement from a new institution for eligible meals served or allowable administrative expenses incurred until the State agency has approved its application and the institution and State agency have signed a Program agreement.
(E) Disqualification. When the time for requesting an administrative review expires or when the administrative review official upholds the State agency’s denial and proposed disqualifications, the State agency must notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals that the institution and the responsible principal and responsible individuals have been disqualified. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice and the mailing address and date of birth for each responsible principal and responsible individual to the appropriate FNSRO.
(2) Denial of a renewing institution’s application—(i) General. If a renewing institution’s application does not meet all of the requirements in paragraph (b) of this section and in §§ 226.15(b) and 226.16(b), the State agency must deny the application. If, in reviewing a renewing institution’s application, the State agency determines that the institution has committed one or more serious deficiency listed in paragraph (c)(2)(ii) of this section, the State agency must initiate action to deny the renewing institution’s application and initiate action to disqualify the renewing institution and the responsible principals and responsible individuals.
(ii) List of serious deficiencies for renewing institutions. The list of serious deficiencies is not identical for each category of institution (new, renewing, participating) because the type of information likely to be available to the State agency is different, depending on whether the State agency is reviewing a new or renewing institution’s application or is conducting a review of a participating institution. Serious deficiencies for renewing institutions are:
(A) Submission of false information on the institution’s application, including but not limited to a determination that the institution has concealed a conviction for any activity that occurred during the past seven years and that indicates a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency;
(B) Failure to operate the Program in conformance with the performance standards set forth in paragraphs (b)(1)(xviii) and (b)(2)(vii) of this section;
(C) Failure to comply with the bid procedures and contract requirements of applicable Federal procurement regulations;
(D) Use of a food service management company that is in violation of health codes;
(E) Failure by a sponsoring organization of day care homes to properly classify day care homes as tier I or tier II in accordance with § 226.15(f);
(F) Failure by a sponsoring organization to properly train or monitor sponsored facilities in accordance with § 226.16(d);
(G) Failure to perform any of the other financial and administrative responsibilities required by this part;
(H) Failure to properly implement and administer the day care home termination and administrative review provisions set forth at paragraph (l) of this section and § 226.16(l); or
(I) Any other action affecting the institution’s ability to administer the Program in accordance with Program requirements.
(iii) Serious deficiency notification procedures for renewing institutions. If the State agency determines that a renewing institution has committed one or more serious deficiency listed in paragraph (c)(2)(ii) of this section, the State agency must use the following procedures to provide the institution and the responsible principals and responsible individuals notice of the serious deficiency(ies) and an opportunity to take corrective action.
(A) Notice of serious deficiency. The State agency must notify the institution’s executive director and chairman of the board of directors that the institution has been determined to be seriously deficient. The notice must identify the responsible principals and responsible individuals and must be sent to those persons as well. The State agency may specify in the notice different corrective action, and time periods for completing the corrective action, for the institution and the responsible principals and responsible individuals. At the same time the notice is issued, the State agency must add the institution to the State agency list, along with the basis for the serious deficiency determination, and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:
(1) The serious deficiency(ies);
(2) The actions to be taken to correct the serious deficiency(ies);
(3) The time allotted to correct the serious deficiency(ies) in accordance with paragraph (c)(4) of this section;
(4) That the serious deficiency determination is not subject to administrative review.
(5) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time will result in the State agency’s denial of the institution’s application, the proposed termination of the institution’s agreement and the proposed disqualification of the institution and the responsible principals and responsible individuals;
(6) That the institution’s voluntary termination of its agreement with the State agency after having been notified that it is seriously deficient will still result in the institution’s formal termination by the State agency and placement of the institution and its responsible principals and responsible individuals on the National disqualified list; and
(7) That, if the State agency does not possess the date of birth for any individual named as a “responsible principal or individual” in the serious deficiency notice, the submission of that person’s date of birth is a condition of corrective action for the institution and/or individual.
(B) Successful corrective action. (1) If corrective action has been taken to fully and permanently correct the serious deficiency(ies) within the allotted time and to the State agency’s satisfaction, the State agency must:
(i) Notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the State agency has temporarily defer its serious deficiency determination; and
(ii) Offer the renewing institution the opportunity to resubmit its application. If the renewing institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.
(2) If corrective action is complete for the institution but not for all of the responsible principals and responsible individuals (or vice versa), the State agency must:
(i) Continue with the actions (as set forth in paragraph (c)(2)(iii)(C) of this section) against the remaining parties;
(ii) At the same time the notice is issued, the State agency must also update the State agency list to indicate that the serious deficiency(ies) has(ve) been corrected and provide a copy of the notice to the appropriate FNSRO; and
(iii) If the renewing institution has corrected the serious deficiency(ies), offer it the opportunity to resubmit its application. If the renewing institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.
(3) If the State agency initially determines that the institution’s corrective action is complete, but later determines that the serious deficiency(ies) have recurred, the state agency must move immediately to issue a notice of intent to terminate and disqualify the institution, in accordance with paragraph (c)(2)(iii)(C) of this section.
(C) Application denial and proposed disqualification. If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies), the State agency must notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution’s application has been denied. At the same time the notice is issued, the State agency must update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:
(1) That the institution’s application has been denied and the State agency is proposing to terminate the institution’s agreement and to disqualify the institution and the responsible principals and responsible individuals;
(2) The basis for the actions;
(3) That, if the institution voluntarily terminates its agreement after receiving the notice of the proposed termination, the institution and the responsible principals and responsible individuals will be disqualified;
(4) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the application denial and proposed disqualifications; and
(5) That the institution may continue to participate in the Program and receive Program reimbursement for eligible meals served and allowable administrative costs incurred until its administrative review is completed.
(D) Agreement termination and disqualification. When the time for requesting an administrative review expires or when the administrative review official upholds the State agency’s denial of the institution’s application, the proposed termination, and the proposed disqualifications, the State agency must:
(1) Notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the agreement has been terminated and that the institution and the responsible principals and responsible individuals have been disqualified;
(2) Update the State agency list at the time such notice is issued; and
(3) Provide a copy of the notice and the mailing address and date of birth for each responsible principal and responsible individual to the appropriate FNSRO.
(3) Termination of a participating institution’s agreement. (i) General. If the State agency holds an agreement with an institution operating in more than one State that has been disqualified from the Program by another State agency and placed on the National disqualified list, the State agency must terminate the institution’s agreement effective no later than 45 days of the date of the institution’s disqualification by the other State agency. At the same time the notice of termination is issued, the State agency must add the institution to the State agency list and indicate that the institution’s agreement has been terminated and provide a copy of the notice to the appropriate FNSRO. If the State agency determines that a participating institution has committed one or more serious deficiency listed in paragraph (c)(3)(ii) of this section, the State agency must initiate action to terminate the agreement of a participating institution and initiate action to disqualify the institution and any responsible principals and responsible individuals.
(ii) List of serious deficiencies for participating institutions. The list of serious deficiencies is not identical for each category of institution (new, renewing, participating) because the type of information likely to be available to the State agency is different, depending on whether the State agency is reviewing a new or renewing institution’s application or is conducting a review of a participating institution. Serious deficiencies for participating institutions are:
(A) Submission of false information on the institution’s application, including but not limited to a determination that the institution has concealed a conviction for any activity that occurred during the past seven years and that indicates a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency;
(B) Permitting an individual who is on the National disqualified list to serve in a principal capacity with the institution or, if a sponsoring organization, permitting such an individual to serve as a principal in a sponsored center or as a day care home;
(C) Failure to operate the Program in conformance with the performance standards set forth in paragraphs (b)(1)(xviii) and (b)(2)(vii) of this section;
(D) Failure to comply with the bid procedures and contract requirements of applicable Federal procurement regulations;
(E) Failure to return to the State agency any advance payments that exceeded the amount earned for serving eligible meals, or failure to return disallowed start-up or expansion payments;
(F) Failure to maintain adequate records;
(G) Failure to adjust meal orders to conform to variations in the number of participants;
(H) Claiming reimbursement for meals not served to participants;
(I) Claiming reimbursement for a significant number of meals that do not meet Program requirements;
(J) Use of a food service management company that is in violation of health codes;
(K) Failure of a sponsoring organization to disburse payments to its facilities in accordance with the regulations at § 226.16(g) and (h) or in accordance with its management plan;
(L) Claiming reimbursement for meals served by a for-profit child care center or a for-profit outside-school-hours care center during a calendar month in which less than 25 percent of the children in care (enrolled or licensed capacity, whichever is less) were eligible for free or reduced-price meals or were title XX beneficiaries;
(M) Claiming reimbursement for meals served by a for-profit adult day care center during a calendar month in which less than 25 percent of its enrolled adult participants were title XIX or title XX beneficiaries;
(N) Failure by a sponsoring organization of day care homes to properly classify day care homes as tier I or tier II in accordance with § 226.15(f);
(O) Failure by a sponsoring organization to properly train or monitor sponsored facilities in accordance with § 226.16(d);
(P) Use of day care home funds by a sponsoring organization to pay for the sponsoring organization’s administrative expenses;
(Q) Failure to perform any of the other financial and administrative responsibilities required by this part;
(R) Failure to properly implement and administer the day care home termination and administrative review provisions set forth at paragraph (l) of this section and § 226.16(l);
(S) The fact the institution or any of the institution’s principals have been declared ineligible for any other publicly funded program by reason of violating that program’s requirements. However, this prohibition does not apply if the institution or the principal has been fully reinstated in, or is now eligible to participate in, that program, including the payment of any debts owed;
(T) Conviction of the institution or any of its principals for any activity that occurred during the past seven years and that indicates a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency; or
(U) Any other action affecting the institution’s ability to administer the Program in accordance with Program requirements.
(iii) Serious deficiency notification procedures for participating institutions. If the State agency determines that a participating institution has committed one or more serious deficiency listed in paragraph (c)(3)(ii) of this section, the State agency must use the following procedures to provide the institution and the responsible principals and responsible individuals notice of the serious deficiency(ies) and an opportunity to take corrective action. However, if the serious deficiency(ies) constitutes an imminent threat to the health or safety of participants, or the institution has engaged in activities that threaten the public health or safety, the State agency must follow the procedures in paragraph (c)(5)(i) of this section instead of the procedures below. Further, if the serious deficiency is the submission of a false or fraudulent claim, in addition to the procedures below, the State agency may suspend the institution’s participation in accordance with paragraph (c)(5)(ii) of this section.
(A) Notice of serious deficiency. The State agency must notify the institution’s executive director and chairman of the board of directors that the institution has been determined seriously deficient. The notice must identify the responsible principals and responsible individuals and must be sent to those persons as well. The State agency may specify in the notice different corrective action and time periods for completing the corrective action for the institution and the responsible principals and responsible individuals. At the same time the notice is issued, the State agency must add the institution to the State agency list, along with the basis for the serious deficiency determination, and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:
(1) The serious deficiency(ies);
(2) The actions to be taken to correct the serious deficiency(ies);
(3) The time allotted to correct the serious deficiency(ies) in accordance with paragraph (c)(4) of this section;
(4) That the serious deficiency determination is not subject to administrative review.
(5) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time will result in the State agency’s proposed termination of the institution’s agreement and the proposed disqualification of the institution and the responsible principals and responsible individuals;
(6) That the institution’s voluntary termination of its agreement with the State agency after having been notified that it is seriously deficient will still result in the instituion’s formal termination by the State agency and placement of the institution and its responsible principals and responsible individuals on the National disqualified list; and
(7) That, if the State agency does not possess the date of birth for any individual named as a “responsible principal or individual” in the serious deficiency notice, the submission of that person’s date of birth is a condition of corrective action for the institution and/or individual.
(B) Successful corrective action. (1) If corrective action has been taken to fully and permanently correct the serious deficiency(ies) within the allotted time and to the State agency’s satisfaction, the State agency must:
(i) Notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the State agency has temporarily defer its serious deficiency determination; and
(ii) Offer the participating institution the opportunity to resubmit its application. If the participating institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.
(2) If corrective action is complete for the institution but not for all of the responsible principals and responsible individuals (or vice versa), the State agency must:
(i) Continue with the actions (as set forth in paragraph (c)(3)(iii)(C) of this section) against the remaining parties;
(ii) At the same time the notice is issued, the State agency must also update the State agency list to indicate that the serious deficiency(ies) has(ve) been corrected and provide a copy of the notice to the appropriate FNSRO; and
(iii) If the participating institution has corrected the serious deficiency(ies), offer it the opportunity to resubmit its application. If the participating institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.
(3) If the State agency initially determines that the institution’s corrective action is complete, but later determines that the serious deficiency(ies) has recurred, the State agency must move immediately to issue a notice of intent to terminate and disqualify the institution, in accordance with paragraph (c)(1)(iii)(C) of this section.
(C) Proposed termination and proposed disqualification. If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies), the State agency must notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the State agency is proposing to terminate the institution’s agreement and to disqualify the institution and the responsible principals and responsible individuals. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:
(1) That the State agency is proposing to terminate the institution’s agreement and to disqualify the institution and the responsible principals and responsible individuals;
(2) The basis for the actions;
(3) That, if the institution voluntarily terminates its agreement after receiving the notice of proposed termination, the institution and the responsible principals and responsible individuals will be disqualified.
(4) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the application denial and proposed disqualifications; and
(5) That, unless participation has been suspended, the institution may continue to participate and receive Program reimbursement for eligible meals served and allowable administrative costs incurred until its administrative review is completed.
(D) Program payments and extended agreement. If the participating institution must renew its application, or its agreement expires, before the end of the time allotted for corrective action and/or the conclusion of any administrative review requested by the participating institution:
(1) The State agency must temporarily extend its current agreement with the participating institution and continue to pay any valid unpaid claims for reimbursement for eligible meals served and allowable administrative expenses incurred; and
(2) During this period, the State agency may base administrative payments to the institution on the institution’s previous approved budget, or may base administrative payments to the institution on the budget submitted by the institution as part of its renewal application; and
(3) The actions set forth in paragraphs (c)(3)(iii)(D)(1) and (c)(3)(iii)(D)(2) of this section must be taken either until the serious deficiency(ies) is corrected or until the institution’s agreement is terminated, including the period of any administrative review;
(E) Agreement termination and disqualification. When the time for requesting an administrative review expires or when the administrative review official upholds the State agency’s proposed termination and disqualifications, the State agency must:
(1) Notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution’s agreement has been terminated and that the institution and the responsible principals and responsible individuals have been disqualified;
(2) Update the State agency list at the time such notice is issued; and
(3) Provide a copy of the notice and the mailing address and date of birth for each responsible principal and responsible individual to the appropriate FNSRO.
(4) Corrective action timeframes—(i) General. Except as noted in this paragraph (c)(4), the State agency is prohibited from allowing more than 90 days for corrective action from the date the institution receives the serious deficiency notice.
(ii) Unlawful practices. If the State agency determines that the institution has engaged in unlawful practices, submitted false or fraudulent claims or other information to the State agency, or been convicted of or concealed a criminal background, the State agency is prohibited from allowing more than 30 days for corrective action.
(iii) Long-term changes. For serious deficiencies requiring the long-term revision of management systems or processes, the State agency may permit more than 90 days to complete the corrective action as long as a corrective action plan is submitted to and approved by the State agency within 90 days (or such shorter deadline as the State agency may establish). The corrective action must include milestones and a definite completion date that the State agency will monitor. The determination of serious deficiency will remain in effect until the State agency determines that the serious deficiency(ies) has(ve) been fully and permanently corrected within the allotted time.
(5) Suspension of an institution’s participation. A State agency is prohibited from suspending an institution’s participation (including all Program payments) except for the reasons set forth in this paragraph (c)(5).
(i) Public health or safety—(A) General. If State or local health or licensing officials have cited an institution for serious health or safety violations, the State agency must immediately suspend the institution’s Program participation, initiate action to terminate the institution’s agreement, and initiate action to disqualify the institution and the responsible principals and responsible individuals prior to any formal action to revoke the institution’s licensure or approval. If the State agency determines that there is an imminent threat to the health or safety of participants at an institution, or that the institution has engaged in activities that threaten the public health or safety, the State agency must immediately notify the appropriate State or local licensing and health authorities and take action that is consistent with the recommendations and requirements of those authorities. An imminent threat to the health or safety of participants and engaging in activities that threaten the public health or safety constitute serious deficiencies; however, the State agency must use the procedures in this paragraph (c)(5)(i) (instead of the procedures in paragraph (c)(3) of this section) to provide the institution notice of the suspension of participation, serious deficiency, proposed termination of the institution’s agreement, and proposed disqualification of the responsible principals and responsible individuals.
(B) Notice of suspension, serious deficiency, proposed termination, and proposed disqualification. The State agency must notify the institution’s executive director and chairman of the board of directors that the institution’s participation (including Program payments) has been suspended, that the institution has been determined to be seriously deficient, and that the State agency proposes to terminate the institution’s agreement and to disqualify the institution and the responsible principals and responsible individuals. The notice must also identify the responsible principals and responsible individuals and must be sent to those persons as well. At the same time this notice is sent, the State agency must add the institution and the responsible principals and responsible individuals to the State agency list, along with the basis for the serious deficiency determination and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:
(1) That the State agency is suspending the institution’s participation (including Program payments), proposing to terminate the institution’s agreement, and proposing to disqualify the institution and the responsible principals and responsible individuals;
(2) The serious deficiency(ies);
(3) That, if the institution voluntary terminates its agreement with the State agency after having been notified of the proposed termination, the institution and the responsible principals and responsible individuals will be disqualified;
(4) That the serious deficiency determination is not subject to administrative review;
(5) The procedures for seeking an administrative review (consistent with paragraph (k) of this section) of the suspension, proposed termination, and proposed disqualifications; and
(6) That, if the administrative review official overturns the suspension, the institution may claim reimbursement for eligible meals served and allowable administrative costs incurred during the suspension period.
(C) Agreement termination and disqualification. When the time for requesting an administrative review expires or when the administrative review official upholds the State agency’s proposed termination and disqualifications, the State agency must:
(1) Notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution’s agreement has been terminated and that the institution and the responsible principals and responsible individuals have been disqualified;
(2) Update the State agency list at the time such notice is issued; and
(3) Provide a copy of the notice and the mailing address and date of birth for each responsible principal and responsible individual to the appropriate FNSRO.
(D) Program payments. The State agency is prohibited from paying any claims for reimbursement from a suspended institution. However, if the suspended institution prevails in the administrative review of the proposed termination, the State agency must pay any claims for reimbursement for eligible meals served and allowable administrative costs incurred during the suspension period.
(ii) False or fraudulent claims—(A) General. If the State agency determines that an institution has knowingly submitted a false or fraudulent claim, the State agency may initiate action to suspend the institution’s participation and must initiate action to terminate the institution’s agreement and initiate action to disqualify the institution and the responsible principals and responsible individuals (in accordance with paragraph (c)(3) of this section). The submission of a false or fraudulent claim constitutes a serious deficiency as set forth in paragraph (c)(3)(ii) of this section, which lists serious deficiencies for participating institutions. If the State agency wishes to suspend the institution’s participation, it must use the following procedures to issue the notice of proposed suspension of participation at the same time it issues the serious deficiency notice, which must include the information described in paragraph (c)(3)(iii)(A) of this section.
(B) Proposed suspension of participation. If the State agency decides to propose to suspend an institution’s participation due to the institution’s submission of a false or fraudulent claim, it must notify the institution’s executive director and chairman of the board of directors that the State agency intends to suspend the institution’s participation (including all Program payments) unless the institution requests a review of the proposed suspension. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must identify the responsible principals and responsible individuals and must be sent to those persons as well. The notice must also specify:
(1) That the State agency is proposing to suspend the institution’s participation;
(2) That the proposed suspension is based on the institution’s submission of a false or fraudulent claim, as described in the serious deficiency notice;
(3) The effective date of the suspension (which may be no earlier than 10 days after the institution receives the suspension notice);
(4) The name, address and telephone number of the suspension review official who will conduct the suspension review; and
(5) That if the institution wishes to have a suspension review, it must request a review and submit to the suspension review official written documentation opposing the proposed suspension within 10 days of the institution’s receipt of the notice.
(C) Suspension review. If the institution requests a review of the State agency’s proposed suspension of participation, the suspension review must be heard by a suspension review official who must:
(1) Be an independent and impartial person other than, and not accountable to, any person involved in the decision to initiate suspension proceedings;
(2) Immediately notify the State agency that the institution has contested the proposed suspension and must obtain from the State agency its notice of proposed suspension of participation, along with all supporting documentation; and
(3) Render a decision on suspension of participation within 10 days of the deadline for receiving the institution’s documentation opposing the proposed suspension.
(D) Suspension review decision. If the suspension review official determines that the State agency’s proposed suspension is not appropriate, the State agency is prohibited from suspending participation. If the suspension review official determines, based on a preponderance of the evidence, that the State agency’s action was appropriate, the State agency must suspend the institution’s participation (including all Program payments), effective on the date of the suspension review decision. The State agency must notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution’s participation has been suspended. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:
(1) That the State agency is suspending the institution’s participation (including Program payments);
(2) The effective date of the suspension (the date of the suspension review decision);
(3) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the suspension; and
(4) That if the administrative review official overturns the suspension, the institution may claim reimbursement for eligible meals served and allowable administrative costs incurred during the suspension period.
(E) Program payments. A State agency is prohibited from paying any claims for reimbursement submitted by a suspended institution. However, if the institution suspended for the submission of false or fraudulent claims is a sponsoring organization, the State agency must ensure that sponsored facilities continue to receive reimbursement for eligible meals served during the suspension period. If the suspended institution prevails in the administrative review of the proposed termination, the State agency must pay any valid unpaid claims for reimbursement for eligible meals served and allowable administrative costs incurred during the suspension period.
(F) Maximum time for suspension. Under no circumstances may the suspension of participation remain in effect for more than 120 days following the suspension review decision.
(6) FNS determination of serious deficiency—(i) General. FNS may determine independently that a participating institution has committed one or more serious deficiency listed in paragraph (c)(3)(ii) of this section, which lists serious deficiencies for participating institutions.
(ii) Serious deficiency notification procedures. If FNS determines that an institution has committed one or more serious deficiency listed in paragraph (c)(3)(ii) of this section (the list of serious deficiencies for participating institutions), FNS will use the following procedures to provide the institution and the responsible principals and responsible individuals with notice of the serious deficiency(ies) and an opportunity to take corrective action.
(A) Notice of serious deficiency. FNS will notify the institution’s executive director and chairman of the board of directors that the institution has been found to be seriously deficient. The notice will identify the responsible principals and responsible individuals and will be sent to them as well. FNS may specify in the notice different corrective action and time periods for completing the corrective action, for the institution and the responsible principals and responsible individuals. The notice will also specify:
(1) The serious deficiency(ies);
(2) The actions to be taken to correct the serious deficiency(ies);
(3) The time allotted to correct the serious deficiency(ies) in accordance with paragraph (c)(4) of this section;
(4) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time, or the institution’s voluntary termination of its agreement(s) with any State agency after having been notified that it is seriously deficient, will result in the proposed disqualification of the institution and the responsible principals and responsible individuals and the termination of its agreement(s) with all State agencies; and
(5) That the serious deficiency determination is not subject to administrative review.
(B) Suspension of participation. If FNS determines that there is an imminent threat to the health or safety of participants at an institution, or that the institution has engaged in activities that threaten the public health or safety, any State agency that holds an agreement with the institution must suspend the participation of the institution. If FNS determines that the institution has submitted a false or fraudulent claim, it may require any State agency that holds an agreement with the institution to initiate action to suspend the institution’s participation for false or fraudulent claims in accordance with paragraph (c)(5)(ii) of this section (which deals with an institution’s suspension by a State agency for submission of false or fraudulent claims). In both cases, FNS will provide the State agency the information necessary to support these actions and, in the case of a false and fraudulent claim, will provide an individual to serve as the suspension review official if requested by the State agency.
(C) Successful corrective action. (1) If corrective action has been taken to fully and permanently correct the serious deficiency(ies) within the allotted time and to FNS’s satisfaction, FNS will notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that it has temporarily defer its serious deficiency determination; and
(2) If corrective action is complete for the institution but not for all of the responsible principals and responsible individuals (or vice versa), FNS will continue with the actions (as set forth in paragraph (c)(6)(ii)(D) of this section) against the remaining parties.
(3) If FNS initially determines that the institution’s corrective action is complete, but later determines that the serious deficiency(ies) has recurred, FNS will move immediately to issue a notice of intent to terminate and disqualify the institution, in accordance with paragraph (c)(6)(ii)(D) of this section.
(D) Proposed disqualification. If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies), FNS will notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that FNS is proposing to disqualify them. The notice will also specify:
(1) That FNS is proposing to disqualify the institution and the responsible principals and responsible individuals;
(2) The basis for the actions;
(3) That, if the institution seeks to voluntarily terminate its agreement after receiving the notice of proposed disqualification, the institution and the responsible principals and responsible individuals will be disqualified;
(4) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the proposed disqualifications;
(5) That unless participation has been suspended, the institution may continue to participate and receive Program reimbursement for eligible meals served and allowable administrative costs incurred until its administrative review is completed; and
(6) That if the institution does not prevail in the administrative review, any State agency holding an agreement with the institution will be required to terminate that agreement and the institution is prohibited from seeking an administrative review of the termination of the agreement by the State agency(ies).
(E) Disqualification. When the time for requesting an administrative review expires or when the administrative review official upholds FNS’s proposed disqualifications, FNS will notify the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution and the responsible principal or responsible individual have been disqualified.
(F) Program payments. If the State agency holds an agreement with an institution that FNS has determined to be seriously deficient, the State agency must continue to pay any valid unpaid claims for reimbursement for eligible meals served and allowable administrative expenses incurred until the serious deficiency(ies) is corrected or the State agency terminates the institution’s agreement, including the period of any administrative review, unless participation has been suspended.
(G) Required State agency action. (1) Disqualified institutions. If the State agency holds an agreement with an institution that FNS determines to be seriously deficient and subsequently disqualifies, the State agency must terminate the institution’s agreement effective no later than 45 days after the date of the institution’s disqualification by FNS. As noted in paragraph (k)(3)(iv) of this section, the termination is not subject to administrative review. At the same time the notice of termination is issued, the State agency must add the institution to the State agency list and provide a copy of the notice to the appropriate FNSRO.
(2) Disqualified principals. If the State agency holds an agreement with an institution whose principal FNS determines to be seriously deficient and subsequently disqualifies, the State agency must determine the institution to be seriously deficient and initiate action to terminate and disqualify the institution in accordance with the procedures in paragraph (c)(3) of this section. The State agency must initiate these actions no later than 45 days after the date of the principal’s disqualification by FNS.
(7) National disqualified list—(i) Maintenance and availability of list. FNS will maintain the National disqualified list and make it available to all State agencies and all sponsoring organizations.
(ii) Effect on institutions. No organization on the National disqualified list may participate in the Program as an institution. As noted in paragraphs (b)(1)(xii) and (b)(2)(ii) of this section, the State agency must must not approve the application of a new or renewing institution if the institution is on the National disqualified list. In addition, as noted in paragraphs (c)(3)(i) and (c)(6)(ii)(G)(1) of this section, the State agency must terminate the agreement of any participating institution that is disqualified by another State agency or by FNS.
(iii) Effect on sponsored centers. No organization on the National disqualified list may participate in the Program as a sponsored center. As noted in § 226.16(b) and paragraphs (b)(1)(xii) and (b)(2)(ii) of this section, a sponsoring organization is prohibited from submitting an application on behalf of a sponsored facility (and a State agency is prohibited from approving such an application) if the facility is on the National disqualified list.
(iv) Effect on individuals. No individual on the National disqualified list may serve as a principal in any institution or facility or as a day care home provider.
(A) Principal for an institution or a sponsored facility. As noted in paragraphs (b)(1)(xii) and (b)(2)(ii) of this section, the State agency must must not approve the application of a new or renewing institution if any of the institution’s principals is on the National disqualified list. As noted in paragraphs (c)(3)(ii)(B) and (c)(6)(ii)(G)(2) of this section, the State agency must declare an institution seriously deficient and initiate action to terminate the institution’s agreement and disqualify the institution if the institution permits an individual who is on the National disqualified list to serve in a principal capacity for the institution or one of its facilities.
(B) Principal for a sponsored facility. As noted in § 226.16(b) and paragraphs (b)(1)(xii) and (b)(2)(ii) of this section, a sponsoring organization is prohibited from submitting an application on behalf of a sponsored facility (or a State agency from approving such an application) if any of the facility’s principals are on the National disqualified list.
(C) Serving as a day care home. As noted in § 226.16(b) and paragraphs (b)(1)(xii) and (b)(2)(ii) of this section, a sponsoring organization is prohibited from submitting an application on behalf of a sponsored facility (and a State agency is prohibited from approving such an application) if the facility is on the National disqualified list.
(v) Removal of institutions, principals, and individuals from the list. Once included on the National disqualified list, an institution and responsible principals and responsible individuals remain on the list until such time as FNS, in consultation with the appropriate State agency, determines that the serious deficiency(ies) that led to their placement on the list has(ve) been corrected, or until seven years have elapsed since they were disqualified from participation. However, if the institution, principal or individual has failed to repay debts owed under the Program, they will remain on the list until the debt has been repaid.
(vi) Removal of day care homes from the list. Once included on the National disqualified list, a day care home will remain on the list until such time as the State agency determines that the serious deficiency(ies) that led to its placement on the list has(ve) been corrected, or until seven years have elapsed since its agreement was terminated for cause. However, if the day care home has failed to repay debts owed under the Program, it will remain on the list until the debt has been repaid.
(8) State agency list—(i) Maintenance of the State agency list. The State agency must maintain a State agency list (in the form of an actual paper or electronic list or retrievable paper records). The list must be made available to FNS upon request, and must include the following information:
(A) Institutions determined to be seriously deficient by the State agency, including the names and mailing addresses of the institutions and the status of the institutions as they move through the possible subsequent stages of corrective action, proposed termination, suspension, agreement termination, and/or disqualification, as applicable;
(B) Responsible principals and individuals who have been disqualified from participation by the State agency, including their names, mailing addresses, and dates of birth; and
(C) Day care home providers whose agreements have been terminated for cause by a sponsoring organization in the State, including their names, mailing addresses, and dates of birth.
(ii) Referral of disqualified day care homes to FNS. Within 10 days of receiving a notice of termination and disqualification from a sponsoring organization, the State agency must provide the appropriate FNSRO the name, mailing address, and date of birth of each day care home provider whose agreement is terminated for cause on or after July 29, 2002.
(iii) Prior lists of disqualified day care homes. If on July 29, 2002 the State agency maintains a list of day care homes that have been disqualified from participation, the State agency may continue to prohibit participation by those day care homes. However, the State agency must remove a day care home from its prior list no later than the time at which the State agency determines that the serious deficiency(ies) that led to the day care home’s placement on the list has(ve) been corrected or July 29, 2009 (unless the day care home has failed to repay debts owed under the Program). If the day care home has failed to repay its debt, the State agency may keep the day care home on its prior list until the debt has been repaid.
(d) Licensing/approval for institutions or facilities providing child care. This section prescribes State agency responsibilities to ensure that child care centers, at-risk afterschool care centers, outside-school-hours care centers, and day care homes meet the licensing/approval criteria set forth in this part. Emergency shelters are exempt from licensing/approval requirements contained in this section but must meet the requirements of paragraph (d)(2) to be eligible to participate in the Program. Independent centers shall submit such documentation to the State agency on their own behalf.
(1) General. Each State agency must establish procedures to annually review information submitted by institutions to ensure that all participating child care centers, at-risk afterschool care centers, outside-school hours care centers, and day care homes:
(i) Are licensed or approved by Federal, State, or local authorities, provided that institutions that are approved for Federal programs on the basis of State or local licensing are not eligible for the Program if their licenses lapse or are terminated; or
(ii) Are complying with applicable procedures to renew licensing or approval in situations where the State agency has no information that licensing or approval will be denied; or
(iii) Demonstrate compliance with applicable State or local child care standards to the State agency, if licensing is not available; or
(iv) Demonstrate compliance with CACFP child care standards to the State agency, if licensing or approval is not available; or
(v) If Federal, State or local licensing or approval is not otherwise required, at-risk afterschool care centers and outside-school-hours care centers must meet State or local health and safety standards. When State or local health and safety standards have not been established, State agencies are encouraged to work with appropriate State and local officials to create such standards. Meeting these standards will remain a precondition for any afterschool center’s eligibility for CACFP nutrition benefits.
(2) Health and safety requirements for emergency shelters. To be eligible to participate in the Program, emergency shelters must meet applicable State or local health and safety standards.
(3) CACFP child care standards. When licensing or approval is not available, independent child care centers, and sponsoring organizations on behalf of their child care centers or day care homes, may elect to demonstrate compliance, annually, with the following CACFP child care standards or other standards specified in paragraph (d)(4) of this section:
(i) Staff/child ratios. (A) Day care homes provide care for no more than 12 children at any one time. One home caregiver is responsible for no more than 6 children ages 3 and above, or no more than 5 children ages 0 and above. No more than 2 children under the age of 3 are in the care of 1 caregiver. The home provider’s own children who are in care and under the age of 14 are counted in the maximum ratios of caregivers to children.
(B) Child care centers do not fall below the following staff/child ratios:
(1) For children under 6 weeks of age—1:1;
(2) For children ages 6 weeks up to 3 years—1:4;
(3) For children ages 3 years up to 6 years—1:6;
(4) For children ages 6 years up to 10 years—1:15; and
(5) For children ages 10 and above—1:20.
(ii) Nondiscrimination. Day care services are available without discrimination on the basis of race, color, national origin, sex, age, or handicap.
(iii) Safety and sanitation. (A) A current health/sanitation permit or satisfactory report of an inspection conducted by local authorities within the past 12 months shall be submitted.
(B) A current fire/building safety permit or satisfactory report of an inspection conducted by local authorities within the past 12 months shall be submitted.
(C) Fire drills are held in accordance with local fire/building safety requirements.
(iv) Suitability of facilities. (A) Ventilation, temperature, and lighting are adequate for children’s safety and comfort.
(B) Floors and walls are cleaned and maintained in a condition safe for children.
(C) Space and equipment, including rest arrangements for preschool age children, are adequate for the number of age ranges of participating children.
(v) Social services. Independent centers, and sponsoring organizations in coordination with their facilities, have procedures for referring families of children in care to appropriate local health and social service agencies.
(vi) Health services. (A) Each child is observed daily for indications of difficulties in social adjustment, illness, neglect, and abuse, and appropriate action is initiated.
(B) A procedure is established to ensure prompt notification of the parent or guardian in the event of a child’s illness or injury, and to ensure prompt medical treatment in case of emergency.
(C) Health records, including records of medical examinations and immunizations, are maintained for each enrolled child. (Not applicable to day care homes.)
(D) At least one full-time staff member is currently qualified in first aid, including artificial respiration techniques. (Not applicable to day care homes.)
(E) First aid supplies are available.
(F) Staff members undergo initial and periodic health assessments.
(vii) Staff training. The institution provides for orientation and ongoing training in child care for all caregivers.
(viii) Parental involvement. Parents are afforded the opportunity to observe their children in day care.
(ix) Self-evaluation. The institution has established a procedure for periodic self-evaluation on the basis of CACFP child care standards.
(4) Alternate approval procedures. Each State agency shall establish procedures to review information submitted by institutions for centers or homes for which licensing or approval is not available in order to establish eligibility for the Program. Licensing or approval is not available when (i) no Federal, State, or local licensing/approval standards have been established for child care centers, or day care homes; or (ii) no mechanism exists to determine compliance with licensing/approval standards. In these situations, independent centers, and sponsoring organizations on behalf of their facilities, may choose to demonstrate compliance with either CACFP child care standards, applicable State child care standards, or applicable local child care standards. State agencies shall provide information about applicable State child care standards and CACFP child care standards to institutions, but may require institutions electing to demonstrate compliance with applicable local child care standards to identify and submit these standards. The State agency may permit independent centers, and sponsoring organizations on behalf of their facilities, to submit self-certification forms, and may grant approval without first conducting a compliance review at the center or facility. But the State agency shall require submission of health/sanitation and fire/safety permits or certificates for all independent centers and facilities seeking alternate child care standards approval. Compliance with applicable child care standards are subject to review in accordance with § 226.6(o).
(e) Licensing/approval for adult day care centers. This paragraph prescribes State agency responsibilities to ensure that adult day care centers meet the licensing/approval criteria set forth in this part. Sponsoring organizations shall submit to the State agency documentation that facilities under their jurisdiction are in compliance with licensing/approval requirements. Independent adult day care centers shall submit such documentation to the State agency on their own behalf. Each State agency shall establish procedures to annually review information submitted by institutions to ensure that all participating adult day care centers either:
(1) Are licensed or approved by Federal, State or local authorities, provided that institutions which are approved for Federal programs on the basis of State or local licensing shall not be eligible for the Program if their licenses lapse or are terminated; or
(2) Are complying with applicable procedures to renew licensing or approval in situations where the State agency has no information that licensing or approval will be denied.
(f) Miscellaneous responsibilities. State agencies must require institutions to comply with the applicable provisions of this part and must provide or collect the information specified in this paragraph (f).
(1) Annual responsibilities. In addition to its other responsibilities under this part, each State agency must annually:
(i) Inform institutions that are pricing programs of their responsibility to ensure that free and reduced-price meals are served to participants unable to pay the full price;
(ii) Provide to all institutions a copy of the income standards to be used by institutions for determining the eligibility of participants for free and reduced-price meals under the Program;
(iii) Require centers to submit current eligibility information on enrolled participants, in order to calculate a blended rate or claiming percentage in accordance with § 226.9(b);
(iv) Require each sponsoring organization to submit an administrative budget with sufficiently detailed information concerning projected CACFP administrative earnings and expenses, as well as other non-Program funds to be used in Program administration, for the State agency to determine the allowability, necessity, and reasonableness of all proposed expenditures, and to assess the sponsoring organization’s capability to manage Program funds. The administrative budget must demonstrate that the sponsoring organization will expend and account for funds in accordance with regulatory requirements, FNS Instruction 796-2 (Financial Management—Child and Adult Care Food Program), 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR part 400 and part 415, and applicable Office of Management and Budget circulars. The administrative budget submitted by a sponsoring organization of centers must demonstrate that the administrative costs to be charged to the Program do not exceed 15 percent of the meal reimbursements estimated or actually earned during the budget year, unless the State agency grants a waiver, as described in § 226.7(g). For sponsoring organizations of day care homes seeking to carry over administrative funds, as described in § 226.12(a)(3), the budget must include an estimate of requested administrative fund carryover amounts and a description of proposed purpose for which those funds would be obligated or expended.
(v) Require each institution to issue a media release, unless the State agency has issued a Statewide media release on behalf of all its institutions;
(vi) Require each independent center to provide information concerning its licensing/approval status, and require each sponsoring organization to provide information concerning the licensing/approval status of its facilities, unless the State agency has other means of confirming the licensing/approval status of any independent center or facility providing care;
(vii) Require each sponsoring organization to submit verification that all facilities under its sponsorship have adhered to the training requirements set forth in Program regulations; and
(viii) Comply with the following requirements for tiering of day care homes:
(A) Coordinate with the State agency that administers the National School Lunch Program (the NSLP State agency) to ensure the receipt of a list of schools in the State in which at least one-half of the children enrolled are certified eligible to receive free or reduced-price meals. The State agency must provide the list of schools to sponsoring organizations of day care homes by February 15 each year unless the NSLP State agency has elected to base data for the list on a month other than October. In that case, the State agency must provide the list to sponsoring organizations of day care homes within 15 calendar days of its receipt from the NSLP State agency.
(B) For tiering determinations of day care homes that are based on school or census data, the State agency must ensure that sponsoring organizations of day care homes use the most recent available data, as described in § 226.15(f).
(C) For tiering determinations of day care homes that are based on the provider’s household income, the State agency must ensure that sponsoring organizations annually determine the eligibility of each day care home, as described in § 226.15(f).
(D) The State agency must provide all sponsoring organizations of day care homes in the State with a listing of State-funded programs, participation in which by a parent or child will qualify a meal served to a child in a tier II home for the tier I rate of reimbursement.
(E) The State agency must require each sponsoring organization of family day care homes to submit to the State agency a list of family day care home providers receiving tier I benefits on the basis of their participation in the SNAP. Within 30 days of receiving this list, the State agency will provide this list to the State agency responsible for the administration of the SNAP.
(ix) Comply with the following requirements for determining the eligibility of at-risk afterschool care centers:
(A) Coordinate with the NSLP State agency to ensure the receipt of a list of schools in the State in which at least one-half of the children enrolled are certified eligible to receive free or reduced-price meals. The State agency must provide the list of schools to independent at-risk afterschool care centers and sponsoring organizations of at-risk afterschool care centers upon request. The list must represent data from the preceding October, unless the NSLP State agency has elected to base data for the list on a month other than October. If the NSLP State agency chooses a month other than October, it must do so for the entire State.
(B) The State agency must determine the area eligibility for each independent at-risk afterschool care center. The State agency must use the most recent data available, as described in § 226.6(f)(1)(ix)(A). The State agency must use attendance area information that it has obtained, or verified with the appropriate school officials to be current, within the last school year.
(C) The State agency must determine the area eligibility of each sponsored at-risk afterschool care center based on the documentation submitted by the sponsoring organization in accordance with § 226.15(g).
(D) The State agency must determine whether the afterschool care programs of at-risk afterschool care centers meet the requirements of § 226.17a(b) before the centers begin participating in the Program.
(2) Responsibilities at other time intervals—(i) Day care home tiering redeterminations based on school data. As described in § 226.15(f), tiering determinations are valid for five years if based on school data. The State agency must ensure that the most recent available data is used if the determination of a day care home’s eligibility as a tier I day care home is made using school data. The State agency must not routinely require annual redeterminations of the tiering status of tier I day care homes based on updated school data. However, a sponsoring organization, the State agency, or FNS may change the determination if information becomes available indicating that a day care home is no longer in a qualified area.
(ii) Area eligibility redeterminations for at-risk afterschool care centers. Area eligibility determinations are valid for five years for at-risk afterschool care centers that are already participating in the Program. The State agency may determine the date in the fifth year when the next five-year cycle of area eligibility will begin. The State agency must redetermine the area eligibility for each independent at-risk afterschool care center in accordance with § 226.6(f)(1)(ix)(B). The State agency must redetermine the area eligibility of each sponsored at-risk afterschool care center based on the documentation submitted by the sponsoring organization in accordance with § 226.15(g). The State agency must not routinely require annual redeterminations of area eligibility based on updated school data during the five-year period, except in cases where the State agency has determined it is most efficient to incorporate area eligibility decisions into the three-year application cycle. However, a sponsoring organization, the State agency, or FNS may change the determination if information becomes available indicating that an at-risk afterschool care center is no longer area eligible.
(iii) State agency transmittal of census data. Upon receipt of census data from FNS (on a decennial basis), the State agency must provide each sponsoring organization of day care homes with census data showing areas in the State in which at least 50 percent of the children are from households meeting the income standards for free or reduced-price meals.
(iv) Additional institution requirements. At intervals and in a manner specified by the State agency, but not more frequently than annually, the State agency may:
(A) Require independent centers to submit a budget with sufficiently detailed information and documentation to enable the State agency to make an assessment of the independent center’s qualifications to manage Program funds. Such budget must demonstrate that the independent center will expend and account for funds in accordance with regulatory requirements, FNS Instruction 796-2 (“Financial Management in the Child and Adult Care Food Program”), and 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 and applicable Office of Management and Budget circulars;
(B) Request institutions to report their commodity preference;
(C) Require a private nonprofit institution to submit evidence of tax exempt status in accordance with § 226.15(a);
(D) Require for-profit institutions to submit documentation on behalf of their centers of:
(1) Eligibility of at least 25 percent of children in care (enrolled or licensed capacity, whichever is less) for free or reduced-price meals; or
(2) Compensation received under title XX of the Social Security Act of nonresidential day care services and certification that at least 25 percent of children in care (enrolled or licensed capacity, whichever is less) were title XX beneficiaries during the most recent calendar month.
(E) Require for-profit adult care centers to submit documentation that they are currently providing nonresidential day care services for which they receive compensation under title XIX or title XX of the Social Security Act, and certification that not less than 25 percent of enrolled participants in each such center during the most recent calendar month were title XIX or title XX beneficiaries;
(F) Request each institution to indicate its choice to receive all, part or none of advance payments, if the State agency chooses to make advance payments available; and
(G) Perform verification in accordance with § 226.23(h) and paragraph (m)(4) of this section. State agencies verifying the information on free and reduced-price applications must ensure that verification activities are conducted without regard to the participant’s race, color, national origin, sex, age, or disability.
(g) Program expansion. Each State agency must take action to expand the availability of benefits under this Program, and must conduct outreach to potential sponsoring organizations of family day care homes that might administer the Program in low-income or rural areas.
(h) Commodity distribution. The State agency must require new institutions to state their preference to receive commodities or cash-in-lieu of commodities when they apply, and may periodically inquire as to participating institutions’ preference to receive commodities or cash-in-lieu of commodities. State agencies must annually provide institutions with information on foods available in plentiful supply, based on information provided by the Department. Each institution electing cash-in-lieu of commodities shall receive such payments. Each institution which elects to receive commodities shall have commodities provided to it unless the State agency, after consultation with the State commodity distribution agency, demonstrates to FNS that distribution of commodities to the number of such institutions would be impracticable. The State agency may then, with the concurrence of FNS, provide cash-in-lieu of commodities for all institutions. A State agency request for cash-in-lieu of all commodities shall be submitted to FNS not later than May 1 of the school year preceding the school year for which the request is made. The State agency shall, by June 1 of each year, submit a list of institutions which have elected to receive commodities to the State commodity distribution agency, unless FNS has approved a request for cash-in-lieu of commodities for all institutions. The list shall be accompanied by information on the average daily number of lunches and suppers to be served to participants by each such institution.
(i) Standard contract. Each State agency shall develop a standard contract in accordance with § 226.21 and provide for its use between institutions and food service management companies. The contract shall expressly and without exception stipulate:
(1) The institution shall provide the food service management company with a list of the State agency approved child care centers, day care homes, adult day care centers, and outside-school-hours care centers to be furnished meals by the food service management company, and the number of meals, by type, to be delivered to each location;
(2) The food service management company shall maintain such records (supported by invoices, receipts or other evidence) as the institution will need to meet its responsibilities under this part, and shall promptly submit invoices and delivery reports to the institution no less frequently than monthly;
(3) The food service management company shall have Federal, State or local health certification for the plant in which it proposes to prepare meals for use in the Program, and it shall ensure that health and sanitation requirements are met at all times. In addition, the State agency may require the food service management company to provide for meals which it prepares to be periodically inspected by the local health department or an independent agency to determine bacteria levels in the meals being prepared. These bacteria levels shall conform to the standards which are applied by the local health authority with respect to the level of bacteria which may be present in meals prepared or served by other establishments in the locality. Results of these inspections shall be submitted to the institution and to the State agency;
(4) The meals served under the contract shall conform to the cycle menus upon which the bid was based, and to menu changes agreed upon by the institution and food service management company;
(5) The books and records of the food service management company pertaining to the institution’s food service operation shall be available for inspection and audit by representatives of the State agency, of the Department, and of the U.S. General Accounting Office at any reasonable time and place, for a period of 3 years from the date of receipt of final payment under the contract, or in cases where an audit requested by the State agency or the Department remains unresolved, until such time as the audit is resolved;
(6) The food service management company shall operate in accordance with current Program regulations;
(7) The food service management company shall not be paid for meals which are delivered outside of the agreed upon delivery time, are spoiled or unwholesome at the time of delivery, or do not otherwise meet the meal requirements contained in the contract;
(8) Meals shall be delivered in accordance with a delivery schedule prescribed in the contract;
(9) Increases and decreases in the number of meal orders may be made by the institution, as needed, within a prior notice period mutually agreed upon in the contract;
(10) All meals served under the Program shall meet the requirements of § 226.20;
(11) All breakfasts, lunches, and suppers delivered for service in outside-school-hours care centers shall be unitized, with or without milk, unless the State agency determines that unitization would impair the effectiveness of food service operations. For meals delivered to child care centers and day care homes, the State agency may require unitization, with or without milk, of all breakfasts, lunches, and suppers only if the State agency has evidence which indicates that this requirement is necessary to ensure compliance with § 226.20.
(j) Procurement provisions. State agencies must require institutions to adhere to the procurement provisions set forth in § 226.22 and must determine that all meal procurements with food service management companies are in conformance with bid and contractual requirements of § 226.22.
(k) Administrative reviews for institutions and responsible principals and responsible individuals—(1) General. The State agency must develop procedures for offering administrative reviews to institutions and responsible principals and responsible individuals. The procedures must be consistent with paragraph (k) of this section.
(2) Actions subject to administrative review. Except as provided in § 226.8(g), the State agency must offer an administrative review for the following actions:
(i) Application denial. Denial of a new or renewing institution’s application for participation (see paragraph (b) of this section, on State agency review of an institution’s application; and paragraphs (c)(1) and (c)(2) of this section, on State agency denial of a new or renewing institution’s application);
(ii) Denial of sponsored facility application. Denial of an application submitted by a sponsoring organization on behalf of a facility;
(iii) Notice of proposed termination. Proposed termination of an institution’s agreement (see paragraphs (c)(2)(iii)(C), (c)(3)(iii)(C), and (c)(5)(i)(B) of this section, dealing with proposed termination of agreements with renewing institutions, participating institutions, and participating institutions suspended for health or safety violations);
(iv) Notice of proposed disqualification of a responsible principal or responsible individual. Proposed disqualification of a responsible principal or responsible individual (see paragraphs (c)(1)(iii)(C), (c)(2)(iii)(C), (c)(3)(iii)(C), and (c)(5)(i)(B) of this section, dealing with proposed disqualification of responsible principals or responsible individuals in new, renewing, and participating institutions, and participating institutions suspended for health or safety violations);
(v) Suspension of participation. Suspension of an institution’s participation (see paragraphs (c)(5)(i)(B) and (c)(5)(ii)(D) of this section, dealing with suspension for health or safety reasons or submission of a false or fraudulent claim);
(vi) Start-up or expansion funds denial. Denial of an institution’s application for start-up or expansion payments (see § 226.7(h));
(vii) Advance denial. Denial of a request for an advance payment (see § 226.10(b));
(viii) Recovery of advances. Recovery of all or part of an advance in excess of the claim for the applicable period. The recovery may be through a demand for full repayment or an adjustment of subsequent payments (see § 226.10(b)(3));
(ix) Claim denial. Denial of all or a part of an institution’s claim for reimbursement (except for a denial based on a late submission under § 226.10(e)) (see §§ 226.10(f) and 226.14(a));
(x) Claim deadline exceptions and requests for upward adjustments to a claim. Decision by the State agency not to forward to FNS an exception request by an institution for payment of a late claim, or a request for an upward adjustment to a claim (see § 226.10(e));
(xi) Overpayment demand. Demand for the remittance of an overpayment (see § 226.14(a)); and
(xii) Other actions. Any other action of the State agency affecting an institution’s participation or its claim for reimbursement.
(3) Actions not subject to administrative review. The State agency is prohibited from offering administrative reviews of the following actions:
(i) FNS decisions on claim deadline exceptions and requests for upward adjustments to a claim. A decision by FNS to deny an exception request by an institution for payment of a late claim, or for an upward adjustment to a claim (see § 226.10(e));
(ii) Determination of serious deficiency. A determination that an institution is seriously deficient (see paragraphs (c)(1)(iii)(A), (c)(2)(iii)(A), (c)(3)(iii)(A), and (c)(5)(i)(B) of this section, dealing with proposed disqualification of responsible principals or responsible individuals in new, renewing, and participating institutions, and participating institutions suspended for health or safety violations);
(iii) State agency determination that corrective action is inadequate. A determination by the State agency that the corrective action taken by an institution or by a responsible principal or individual does not completely and permanently correct a serious deficiency;
(iv) Disqualification and placement on State agency list and National disqualified list. Disqualification of an institution or a responsible principal or responsible individual, and the subsequent placement on the State agency list and the National disqualified list (see paragraphs (c)(1)(iii)(E), (c)(2)(iii)(E), (c)(3)(iii)(E), and (c)(5)(i)(C) of this section, dealing with proposals to disqualify related to new, renewing, and participating institutions, and in institutions suspended for health or safety violations);
(v) Termination. Termination of a participating institution’s agreement, including termination of a participating institution’s agreement based on the disqualification of the institution by another State agency or FNS (see paragraphs (c)(3)(i) and (c)(7)(ii) of this section);
(vi) State agency or FNS decision regarding removal from the National disqualified list. A determination, by either the State agency or by FNS, that the corrective action taken by an institution or a responsible principal or individual is not adequate to warrant the removal of the institution or the responsible principal or individual from the National disqualified list; or
(vii) State agency’s refusal to consider an application submitted by an institution or facility on the National disqualified list. The State agency’s refusal to consider an institution’s application when either the institution or one of its principals is on the National disqualified list, or the State agency’s refusal to consider an institution’s submission of an application on behalf of a facility when either the facility or one of its principals is on the National disqualified list.
(4) Provision of administrative review procedures to institutions and responsible principals and responsible individuals. The State agency’s administrative review procedures must be provided:
(i) Annually to all institutions;
(ii) To an institution and to each responsible principal and responsible individual when the State agency takes any action subject to an administrative review as described in paragraph (k)(2) of this section; and
(iii) Any other time upon request.
(5) Procedures. Except as described in paragraph (k)(9) of this section, which sets forth the circumstances under which an abbreviated administrative review is held, the State agency must follow the procedures in this paragraph (k)(5) when an institution or a responsible principal or responsible individual appeals any action subject to administrative review as described in paragraph (k)(2) of this section.
(i) Notice of action. The institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, must be given notice of the action being taken or proposed, the basis for the action, and the procedures under which the institution and the responsible principals or responsible individuals may request an administrative review of the action.
(ii) Time to request administrative review. The request for administrative review must be submitted in writing not later than 15 days after the date the notice of action is received, and the State agency must acknowledge the receipt of the request for an administrative review within 10 days of its receipt of the request. The State agency must provide a copy of the written request for an administrative review, including the date of receipt of the request to FNS within 10 days of its receipt of the request.
(iii) Representation. The institution and the responsible principals and responsible individuals may retain legal counsel, or may be represented by another person.
(iv) Review of record. Any information on which the State agency’s action was based must be available to the institution and the responsible principals and responsible individuals for inspection from the date of receipt of the request for an administrative review.
(v) Opposition. The institution and the responsible principals and responsible individuals may refute the findings contained in the notice of action in person or by submitting written documentation to the administrative review official. In order to be considered, written documentation must be submitted to the administrative review official not later than 30 days after receipt of the notice of action.
(vi) Hearing. A hearing must be held by the administrative review official in addition to, or in lieu of, a review of written information only if the institution or the responsible principals and responsible individuals request a hearing in the written request for an administrative review. If the institution’s representative, or the responsible principals or responsible individuals or their representative, fail to appear at a scheduled hearing, they waive the right to a personal appearance before the administrative review official, unless the administrative review official agrees to reschedule the hearing. A representative of the State agency must be allowed to attend the hearing to respond to the testimony of the institution and the responsible principals and responsible individuals and to answer questions posed by the administrative review official. If a hearing is requested, the institution, the responsible principals and responsible individuals, and the State agency must be provided with at least 10 days advance notice of the time and place of the hearing.
(vii) Administrative review official. The administrative review official must be independent and impartial. This means that, although the administrative review official may be an employee of the State agency, he/she must not have been involved in the action that is the subject of the administrative review, or have a direct personal or financial interest in the outcome of the administrative review. The institution and the responsible principals and responsible individuals must be permitted to contact the administrative review official directly if they so desire.
(viii) Basis for decision. The administrative review official must make a determination based solely on the information provided by the State agency, the institution, and the responsible principals and responsible individuals, and based on Federal and State laws, regulations, policies, and procedures governing the Program.
(ix) Time for issuing a decision. Within 60 days of the State agency’s receipt of the request for an administrative review, the administrative review official must inform the State agency, the institution’s executive director and chairman of the board of directors, and the responsible principals and responsible individuals, of the administrative review’s outcome. This timeframe is an administrative requirement for the State agency and may not be used as a basis for overturning the State agency’s action if a decision is not made within the specified timeframe. State agencies failing to meet the timeframe set forth in this paragraph are liable for all valid claims for reimbursement to aggrieved institutions, as specified in paragraph (k)(11)(i) of this section.
(x) Final decision. The determination made by the administrative review official is the final administrative determination to be afforded the institution and the responsible principals and responsible individuals.
(6) Federal audit findings. FNS may assert a claim against the State agency, in accordance with the procedures set forth in § 226.14(c), when an administrative review results in the dismissal of a claim against an institution asserted by the State agency based upon Federal audit findings.
(7) Record of result of administrative reviews. The State agency must maintain searchable records of all administrative reviews and their disposition.
(8) Combined administrative reviews for responsible principals and responsible individuals. The State agency must conduct the administrative review of the proposed disqualification of the responsible principals and responsible individuals as part of the administrative review of the application denial, proposed termination, and/or proposed disqualification of the institution with which the responsible principals or responsible individuals are associated. However, at the administrative review official’s discretion, separate administrative reviews may be held if the institution does not request an administrative review or if either the institution or the responsible principal or responsible individual demonstrates that their interests conflict.
(9) Abbreviated administrative review. The State agency must limit the administrative review to a review of written submissions concerning the accuracy of the State agency’s determination if the application was denied or the State agency proposes to terminate the institution’s agreement because:
(i) The information submitted on the application was false (see paragraphs (c)(1)(ii)(A), (c)(2)(ii)(A), and (c)(3)(ii)(A) of this section);
(ii) The institution, one of its sponsored facilities, or one of the principals of the institution or its facilities is on the national disqualified list (see paragraph (b)(12) of this section);
(iii) The institution, one of its sponsored facilities, or one of the principals of the institution or its facilities is ineligible to participate in any other publicly funded program by reason of violation of the requirements of the program (see paragraph (b)(13) and (c)(3)(ii)(S) of this section); or
(iv) The institution, one of its sponsored facilities, or one of the principals of the institution or its facilities has been convicted for any activity that indicates a lack of business integrity (see paragraphs (b)(14) and (c)(3)(ii)(T) of this section).
(10) Effect of State agency action. The State agency’s action must remain in effect during the administrative review. The effect of this requirement on particular State agency actions is as follows.
(i) Overpayment demand. During the period of the administrative review, the State agency is prohibited from taking action to collect or offset the overpayment. However, the State agency must assess interest beginning with the initial demand for remittance of the overpayment and continuing through the period of administrative review unless the administrative review official overturns the State agency’s action.
(ii) Recovery of advances. During the administrative review, the State agency must continue its efforts to recover advances in excess of the claim for reimbursement for the applicable period. The recovery may be through a demand for full repayment or an adjustment of subsequent payments.
(iii) Program payments. The availability of Program payments during an administrative review of the denial of a new institution’s application, denial of a renewing institution’s application, proposed termination of a participating institution’s agreement, and suspension of an institution are addressed in paragraphs (c)(1)(iii)(D), (c)(2)(iii)(D), (c)(3)(iii)(D), (c)(5)(i)(D), and (c)(5)(ii)(E), respectively, of this section.
(11) State liability for payments. (i) A State agency that fails to meet the 60-day timeframe set forth in paragraph (k)(5)(ix) of this section must pay, from non-Federal sources, all valid claims for reimbursement to the institution during the period beginning on the 61st day and ending on the date on which the hearing determination is made, unless FNS determines that an exception should be granted.
(ii) FNS will notify the State agency of its liability for reimbursement at least 30 days before liability is imposed. The timeframe for written notice from FNS is an administrative requirement and may not be used to dispute the State’s liability for reimbursement.
(iii) The State agency may submit, for FNS review, information supporting a request for a reduction in the State’s liability, a reconsideration of the State’s liability, or an exception to the 60-day deadline, for exceptional circumstances. After review of this information, FNS will recover any improperly paid Federal funds.
(l) Administrative reviews for day care homes—(1) General. The State agency must ensure that, when a sponsoring organization proposes to terminate its Program agreement with a day care home for cause, the day care home is provided an opportunity for an administrative review of the proposed termination. The State agency may do this either by electing to offer a State-level administrative review, or by electing to require the sponsoring organization to offer an administrative review. The State agency must notify the appropriate FNSRO of its election under this option, or any change it later makes under this option, by September 25, 2002 or within 30 days of any subsequent change under this option. The State agency must make the same election with regard to who offers the administrative review to any day care home in the Program in that State. The State agency or the sponsoring organization must develop procedures for offering and providing these administrative reviews, and these procedures must be consistent with this paragraph (l).
(2) Actions subject to administrative review. The State agency or sponsoring organization must offer an administrative review to a day care home that appeals a notice of intent to terminate their agreement for cause or a suspension of their participation (see §§ 226.16(l)(3)(iii) and (l)(4)(ii)).
(3) Actions not subject to administrative review. Neither the State agency nor the sponsoring organization is required to offer an administrative review for reasons other than those listed in paragraph (l)(2) of this section.
(4) Provision of administrative review procedures to day care homes. The administrative review procedures must be provided:
(i) Annually to all day care homes;
(ii) To a day care home when the sponsoring organization takes any action subject to an administrative review as described in paragraph (l)(2) of this section; and
(iii) Any other time upon request.
(5) Procedures. The State agency or sponsoring organization, as applicable (depending on the State agency’s election pursuant to paragraph (l)(1) of this section) must follow the procedures in this paragraph (l)(5) when a day care home requests an administrative review of any action described in paragraph (l)(2) of this section.
(i) Uniformity. The same procedures must apply to all day care homes.
(ii) Representation. The day care home may retain legal counsel, or may be represented by another person.
(iii) Review of record and opposition. The day care home may review the record on which the decision was based and refute the action in writing. The administrative review official is not required to hold a hearing.
(iv) Administrative review official. The administrative review official must be independent and impartial. This means that, although the administrative review official may be an employee of the State agency or an employee or board member of the sponsoring organization, he/she must not have been involved in the action that is the subject of the administrative review or have a direct personal or financial interest in the outcome of the administrative review;
(v) Basis for decision. The administrative review official must make a determination based on the information provided by the sponsoring organization and the day care home and on Federal and State laws, regulations, polices, and procedures governing the Program.
(vi) Time for issuing a decision. The administrative review official must inform the sponsoring organization and the day care home of the administrative review’s outcome within the period of time specified in the State agency’s or sponsoring organization’s administrative review procedures. This timeframe is an administrative requirement for the State agency or sponsoring organization and may not be used as a basis for overturning the termination if a decision is not made within the specified timeframe.
(vii) Final decision. The determination made by the administrative review official is the final administrative determination to be afforded the day care home.
(m) Program assistance—(1) General. The State agency must provide technical and supervisory assistance to institutions and facilities to facilitate effective Program operations, monitor progress toward achieving Program goals, and ensure compliance with all requirements of title VI of the Civil Rights Act of 1964, title IX of the Education amendments of 1972, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and the Department’s regulations concerning nondiscrimination (parts 15, 15a, and 15b of this title). The State agency must maintain documentation of supervisory assistance activities, including reviews conducted, corrective actions prescribed, and follow-up efforts.
(2) Review priorities. In choosing institutions for review, in accordance with paragraph (m)(6) of this section, the State agency must target for more frequent review institutions whose prior review included a finding of serious deficiency.
(3) Review content. As part of its conduct of reviews, the State agency must assess each institution’s compliance with the requirements of this part pertaining to:
(i) Recordkeeping;
(ii) Meal counts;
(iii) Administrative costs;
(iv) Any applicable instructions and handbooks issued by FNS and the Department to clarify or explain this part, and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part;
(v) Facility licensing and approval;
(vi) Compliance with the requirements for annual updating of enrollment forms;
(vii) Compliance with the requirements for submitting and ensuring the accuracy of the annual renewal information;
(viii) If an independent center, observation of a meal service;
(ix) If a sponsoring organization, training and monitoring of facilities, including the timing of reviews, as described in § 226.16(d)(4)(iii);
(x) If a sponsoring organization, implementation of the household contact system established by the State agency pursuant to paragraph (m)(5) of this section;
(xi) If a sponsoring organization of day care homes, the requirements for classification of tier I and tier II day care homes; and
(xii) All other Program requirements.
(4) Review of sponsored facilities. As part of each required review of a sponsoring organization, the State agency must select a sample of facilities, in accordance with paragraph (m)(6) of this section. As part of such reviews, the State agency must conduct verification of Program applications in accordance with § 226.23(h) and must compare enrollment and attendance records (except in those outside-school-hours care centers, at-risk afterschool care centers, and emergency shelters where enrollment records are not required and the sponsoring organization’s review results for that facility to meal counts submitted by those facilities for five days.
(5) Household contacts. As part of their monitoring of institutions, State agencies must establish systems for making household contacts to verify the enrollment and attendance of participating children. Such systems must specify the circumstances under which household contacts will be made, as well as the procedures for conducting household contacts. In addition, State agencies must establish a system for sponsoring organizations to use in making household contacts as part of their review and oversight of participating facilities. Such systems must specify the circumstances under which household contacts will be made, as well as the procedures for conducting household contacts. State agencies must submit to FNSROs, no later than April 1, 2005, the policies and procedures they have developed governing household contacts conducted by both the State agency, as part of institution and facility reviews conducted in accordance with this paragraph (m), and by sponsoring organizations as part of the facility review process described in § 226.16(d)(5).
(6) Frequency and number of required institution reviews. The State agency must annually review at least 33.3 percent of all institutions. At least 15 percent of the total number of facility reviews required must be unannounced. The State agency must review institutions according to the following schedule:
(i) At least once every 3 years, independent centers and sponsoring organizations that operate 1 to 100 facilities must be reviewed. A sponsoring organization review must include reviews of 10 percent of the sponsoring organization’s facilities.
(ii) At least once every 2 years, sponsoring organizations that operate more than 100 facilities, that conduct activities other than CACFP, that have been identified during a recent review as having serious management problems, or that are at risk of having serious management problems must be reviewed. These reviews must include reviews of 5 percent of the sponsoring organization’s first 1,000 facilities and 2.5 percent of the sponsoring organization’s facilities in excess of 1,000.
(iii) At least once every 2 years, independent centers that conduct activities other than CACFP, that have been identified during a recent review as having serious management problems, or that are at risk of having serious management problems must be reviewed.
(iv) New sponsoring organizations that operate five or more facilities must be reviewed within the first 90 days of Program operations.
(n) Program irregularities. Each State agency shall promptly investigate complaints received or irregularities noted in connection with the operation of the Program, and shall take appropriate action to correct any irregularities. State agencies shall maintain on file evidence of such investigations and actions. FNS and OIG may make investigations at the request of the State agency, or whenever FNS or OIG determines that investigations are appropriate.
(o) Child care standards compliance. The State agency shall, when conducting administrative reviews of child care centers, and day care homes approved by the State agency under paragraph (d)(3) of this section, determine compliance with the child care standards used to establish eligibility, and the institution shall ensure that all violations are corrected and the State shall ensure that the institution has corrected all violations. If violations are not corrected within the specified timeframe for corrective action, the State agency must issue a notice of serious deficiency in accordance with paragraph (c) of this section or § 226.16(l), as appropriate. However, if the health or safety of the children is imminently threatened, the State agency or sponsoring organization must follow the procedures set forth at paragraph (c)(5)(i) of this section, or § 226.16(l)(4), as appropriate. The State agency may deny reimbursement for meals served to attending children in excess of authorized capacity.
(p) Sponsoring organization agreement. (1) Each State agency must develop and provide for the use of a standard form of written permanent agreement between each sponsoring organization and the day care homes or unaffiliated child care centers, outside-school-hours-care centers, at-risk afterschool care centers, emergency shelters, or adult day care centers for which it has responsibility for Program operations. The agreement must specify the rights and responsibilities of both parties. The State agency may, at the request of the sponsoring organization, approve an agreement developed by the sponsoring organization. Nothing in this paragraph limits the ability of the sponsoring organization to suspend or terminate the permanent agreement, as described in § 226.16(l).
(2) At a minimum, the standard agreement must require day care homes and centers to:
(i) Allow visits by sponsoring organizations or State agencies to review meal service and records;
(ii) Promptly inform the sponsoring organization about any change in its licensing or approval status;
(iii) Meet any State agency approved time limit for submission of meal records; and
(iv) Distribute to parents a copy of the sponsoring organization’s notice to parents if directed to do so by the sponsoring organization.
(3) The agreement must include the right of day care homes and centers to receive timely reimbursement. The sponsoring organization must pay program funds to day care homes and centers within 5 working days of receipt from the State agency.
(4) The State agency must include in this agreement its policy to restrict transfers of day care homes among sponsoring organizations. The policy must restrict the transfers to no more frequently than once per year, except under extenuating circumstances, such as termination of the sponsoring organization’s agreement or other circumstances defined by the State agency.
(5) The State agency may, at the request of the sponsoring organization, approve an agreement developed by the sponsoring organization.
(q) Following its reviews of institutions and facilities under §§ 226.6(m) and 226.23(h) conducted prior to July 1, 1988, the State agency shall report data on key elements of program operations on a form designated by FNS. These key elements include but are not limited to the program areas of meal requirements, determination of eligibility for free and reduced price meals, and the accuracy of reimbursement claims. These forms shall be submitted within 90 days of the completion of the data collection for the institutions except that, if the State has elected to conduct reviews of verification separate from its administrative reviews, the State shall retain data until all key elements have been reviewed and shall report all data for each institution on one form within 90 days of the completion of the data collection for all key elements for that institution. States shall ensure that all key element data for an institution is collected during a 12-month period.
(r) WIC program information. State agencies must provide information on the importance and benefits of the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and WIC income eligibility guidelines, to participating institutions. In addition, the State agency must ensure that:
(1) Participating family day care homes and sponsored child care centers receive this information, and periodic updates of this information, from their sponsoring organizations or the State agency; and
(2) The parents of enrolled children also receive this information.
§ 226.7 State agency responsibilities for financial management.
(a) This section prescribes standards of financial management systems in administering Program funds by the State agency and institutions.
(b) Financial management system. Each State agency must establish and maintain an acceptable financial management system, adhere to financial management standards and otherwise carry out financial management policies in accordance with 2 CFR parts 200, 400, 415, 416, 417, 418, and 421, and FNS Instruction 796-2, as applicable, and related FNS guidance to identify allowable Program costs and establish standards for institutional recordkeeping and reporting. The State agency must provide guidance on financial management requirements to each institution.
(1) State agencies must also have a system in place for:
(i) Annually reviewing at least 1 month’s bank account activity of all sponsoring organizations against documents adequate to support that the financial transactions meet Program requirements. The State agency may expand the review to examine additional months of bank account activity if discrepancies are found. If the State agency identifies and is unable to verify any expenditures that have the appearance of violating Program requirements, or if the discrepancy is significant, the State agency must refer the sponsoring organization’s bank account activity to the appropriate State authorities.
(ii) Annually reviewing actual expenditures reported of Program funds and the amount of meal reimbursement funds retained from centers, if any, for administrative costs for all sponsoring organizations of unaffiliated centers. State agencies must reconcile reported expenditures with Program payments to ensure that funds are fully accounted for, and use the reported actual expenditures as the basis for selecting a sample of expenditures for validation. If the State agency identifies and is unable to verify any expenditures that have the appearance of violating Program requirements, the State agency must refer the sponsoring organization’s bank account activity to the appropriate State authorities.
(iii) Monitoring and reviewing the institutions’ documentation of their nonprofit status to ensure that all Program reimbursement funds are used solely for the conduct of the food service operation or to improve food service operations, principally for the benefit of children or adult participants.
(2) The financial management system standards for institutional recordkeeping and reporting must:
(i) Prohibit claiming reimbursement for meals provided by a child or an adult participant’s family, except as authorized at §§ 226.18(e) and 226.20(b)(2), (g)(1)(ii), and (g)(2)(ii); and
(ii) Allow the cost of meals served to adults who perform necessary food service labor under the Program, except in day care homes.
(c) Management evaluations and audits. State agencies shall provide FNS with full opportunity to conduct management evaluations (including visits to institutions and facilities) of all operations of the State agency under the Program and shall provide OIG with full opportunity to conduct audits (including visits to institutions and facilities) of all operations of the State agency under the Program. Within 60 calendar days of receipt of each management evaluation report, the State agency shall submit to FNSRO a written plan for correcting serious deficiencies, including specific timeframes for accomplishing corrective actions and initiating follow-up efforts. If a State agency makes a showing of good cause, however, FNS may allow more than 60 days in which to submit a plan. Each State agency shall make available its records, including records of the receipt and expenditure of funds, upon request by FNS or OIG. OIG shall also have the right to make audits of the records and operation of any institution.
(d) Reports. Each State agency shall submit to FNS the final Report of the Child and Adult Care Food Program (FNS 44) for each month which shall be limited to claims submitted in accordance with § 226.10(e) and which shall be postmarked and/or submitted no later than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not submitted within this time limit unless FNS grants an exception. Upward adjustments to a State agency’s report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary. Adjustments shall be reported to FNS in accordance with procedures established by FNS. Each State agency shall also submit to FNS a quarterly Financial Status Report (FNS-777) on the use of Program funds. Such reports shall be postmarked and/or submitted no later than 30 days after the end of each fiscal year quarter. Obligations shall be reported only for the fiscal year in which they occur. A final Financial Status Report for each fiscal year shall be postmarked and/or submitted to FNS within 120 days after the end of the fiscal year. FNS shall not be responsible for reimbursing unpaid Program obligations reported later than 120 days after the close of the fiscal year in which they were incurred.
(e) Annual plan. Each State shall submit to the Secretary for approval by August 15 of each year an annual plan for the use of State administrative expense funds, including a staff formula for State personnel.
(f) Rate assignment. Each State agency must require institutions (other than emergency shelters, at-risk afterschool care centers, and sponsoring organizations of emergency shelters, at-risk afterschool care centers, or day care homes) to submit, not less frequently than annually, information necessary to assign rates of reimbursement as outlined in § 226.9.
(g) Budget approval. The State agency must review institution budgets and must limit allowable administrative claims by each sponsoring organization to the administrative costs approved in its budget, except as provided in this section. The budget must demonstrate the institution’s ability to manage Program funds in accordance with this part, FNS Instruction 796-2, 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, and applicable Office of Management and Budget circulars. Sponsoring organizations must submit an administrative budget to the State agency annually, and independent centers must submit budgets as frequently as required by the State agency. Budget levels may be adjusted to reflect changes in Program activities. If the institution does not intend to use non-CACFP funds to support any required CACFP functions, the institution’s budget must identify a source of non-Program funds that could be used to pay overclaims or other unallowable costs. If the institution intends to use any non-Program resources to meet CACFP requirements, these non-Program funds should be accounted for in the institution’s budget, and the institution’s budget must identify a source of non-Program funds that could be used to pay overclaims or other unallowable costs.
(1) For sponsoring organizations of centers, the State agency is prohibited from approving the sponsoring organization’s administrative budget, or any amendments to the budget, if the administrative budget shows the Program will be charged for administrative costs in excess of 15 percent of the meal reimbursements estimated to be earned during the budget year. However, the State agency may waive this limit if the sponsoring organization provides justification that it requires Program funds in excess of 15 percent to pay its administrative costs and if the State agency is convinced that the institution will have adequate funding to provide meals meeting the requirements of § 226.20. The State agency must document all waiver approvals and denials in writing and provide a copy of all such letters to the appropriate FNSRO.
(2) For sponsoring organizations of day care homes seeking to carry over administrative funds, as described in § 226.12(a)(3), the State agency must require the budget to include an estimate of the requested administrative fund carryover amount and a description of the purpose for which those funds would be obligated or expended by the end of the fiscal year following the fiscal year in which they were received. In approving a carryover request, State agencies must take into consideration whether the sponsoring organization has a financial management system that meets Program requirements and is capable of controlling the custody, documentation, and disbursement of carryover funds. As soon as possible after fiscal year close-out, the State agency must require sponsoring organizations carrying over administrative funds to submit an amended budget for State agency review and approval. The amended budget must identify the amount of administrative funds actually carried over and describe the purpose for which the carry-over funds have been or will be used.
(h) Start-up and expansion payments. Each State agency shall establish procedures for evaluating requests for start-up and expansion payments, issuing these payments to eligible sponsoring organizations, and monitoring the use of these payments.
(i) Advance payments. Each State agency shall establish procedures for issuing advance payments by the first day of each month and comparing these payments with earned reimbursement on a monthly basis. The State agency shall maintain on file a statement of the State’s law and policy governing the use of interest earned on advanced funds by sponsors, institutions, child care facilities and adult day care facilities.
(j) Recovery of overpayments. Each State agency must establish procedures to recover outstanding start-up, expansion, and advance payments from institutions which, in the opinion of the State agency, will not be able to earn these payments. In addition, each State agency must establish procedures to recover administrative funds from sponsoring organizations of day care homes that are not properly payable under FNS Instruction 796-2, administrative funds that are in excess of the 10 percent maximum carryover amount, and carryover amounts that are not expended or obligated by the end of the fiscal year following the fiscal year in which they were received.
(k) Claims processing. Each State agency shall establish procedures for institutions to properly submit claims for reimbursement. Such procedures must include State agency edit checks, including but not limited to ensuring that payments are made only for approved meal types and that the number of meals for which reimbursement is provided does not exceed the product of the total enrollment times operating days times approved meal types. All valid claims shall be paid within 45 calendar days of receipt. Within 15 calendar days of receipt of any incomplete or incorrect claim which must be revised for payment, the State agency shall notify the institution as to why and how such claim must be revised. If the State agency disallows partial or full payment for a claim for reimbursement, it shall notify the institution which submitted the claim of its right to appeal under § 226.6(k). State agencies may permit disallowances to be appealed separately from claims for reimbursement.
(l) Participation controls. The State agency may establish control procedures to ensure that payment is not made for meals served to participants attending in excess of the authorized capacity of each independent center, adult day care facility or child care facility.
§ 226.8 Audits.
(a) Unless otherwise exempt, audits at the State and institution levels must be conducted in accordance with 2 CFR part 200, subpart F, Appendices X and XI, Data Collection Form and Compliance Supplement, respectively and USDA implementing regulations 2 CFR parts 400, 415 and 416. State agencies must establish audit policy for for-profit institutions. However, the audit policy established by the State agency must not conflict with the authority of the State agency or the Department to perform, or cause to be performed, audits, reviews, agreed-upon procedures engagements, or other monitoring activities.
(b) The funds provided to the State agency under § 226.4(j) may be made available to institutions to fund a portion of organization-wide audits made in accordance with 2 CFR part 200, subpart F and USDA implementing regulations 2 CFR part 400 and part 415. The funds provided to an institution for an organization-wide audit must be determined in accordance with 2 CFR part 200, subpart F and USDA implementing regulations 2 CFR part 400 and part 415.
(c) Funds provided under § 226.4(j) may be used by the State agency to conduct program-specific audits of institutions not subject to organization-wide audits, or for which the State agency considers program specific audits to be needed. The State agency may use any funds remaining after all required program-specific audits have been performed to conduct administrative reviews or agreed-upon procedures engagements of institutions.
(d) Funds provided under § 226.4(j) may only be obligated during the fiscal year for which those funds are allocated. If funds provided under § 226.4(i) are not sufficient to meet the requirements of this section, the State agency may then use available State administrative expense funds to conduct audits, provided that the State agency is arranging for the audits and has not passed the responsibility down to the institution.
(e) Full use of Federal funds. States and State agencies must support the full use of Federal funds provided to State agencies under 226.4(j) of this part to support State audit activities, and exclude such funds from State budget restrictions or limitations, including hiring freezes, work furloughs, and travel restrictions.
(f) In conducting management evaluations, reviews, or audits in a fiscal year, the State agency, FNS, or OIG may disregard an overpayment if the overpayment does not exceed $600. A State agency may establish, through State law, regulation or procedure, an alternate disregard threshold that does not exceed $600. This disregard may be made once per each management evaluation, review, or audit per Program within a fiscal year. However, no overpayment is to be disregarded where there is substantial evidence of violations of criminal law or civil fraud statutes.
(g) While OIG shall rely to the fullest extent feasible upon State sponsored audits, OIG may, whenever it considers necessary:
(1) Make audits on a statewide basis;
(2) Perform on-site test audits;
(3) Review audit reports and related working papers of audits performed by or for State agencies.
(h) State agencies are not required to provide a hearing to an institution for State actions taken on the basis of a Federal audit determination. If a State agency does not provide a hearing in such situations, FNS will provide a hearing, upon request, in accordance with procedures set forth in § 226.6(k).
Subpart D—Payment Provisions
§ 226.9 Assignment of rates of reimbursement for centers.
(a) The State agency shall assign rates of reimbursement, not less frequently than annually, on the basis of family-size and income information reported by each institution. However, no rates should be assigned for emergency shelters and at-risk afterschool care centers. Assigned rates of reimbursement may be changed more frequently than annually if warranted by changes in family-size and income information. Assigned rates of reimbursement shall be adjusted annually to reflect changes in the national average payment rates.
(b) Except for emergency shelters and at-risk afterschool care centers, the State agency must either:
(1) Require that institutions submit each month’s figures for meals served daily to participants from families meeting the eligibility standards for free meals, to participants from families meeting the eligibility standards for reduced-price meals, and to participants from families not meeting such guidelines; or
(2) Establish claiming percentages, not less frequently than annually, for each institution on the basis of the number of enrolled participants eligible for free, reduced-price, and paid meals, except that children who only participate in emergency shelters or the at-risk afterschool care component of the Program must not be considered to be enrolled participants for the purpose of establishing claiming percentages; or
(3) Determine a blended per-meal rate of reimbursement, not less frequently than annually, by adding the products obtained by multiplying the applicable national average payment rate of reimbursement for each category (free, reduced-price, paid) by the claiming percentage for that category.
(c) States have two methods of reimbursing institutions. The method chosen by the State agency must be applied to all institutions participating in the Program in that State. These methods are:
(1) Meals times rates payment, which involves reimbursing an institution for meals served at the assigned rate for each meal. This method entails no comparison to the costs incurred by the institution for the meal service; and,
(2) Meals times rates or actual costs, whichever is the lesser, which involves reimbursing an institution for meals served at the assigned rate for each meal or at the level of the costs actually incurred by the institution for the meal service. This method does entail a comparison of the costs incurred to the meal rates, with the costs being a limiting factor on the level of reimbursement an institution may receive.
(d) In those States where the State agency has chosen the option to implement a meals times rates payment system State-wide, the State agency may elect to pay an institution’s final claim for reimbursement for the fiscal year at higher reassigned rates of reimbursement for lunches and suppers; however, the reassigned rates may not exceed the applicable maximum rates of reimbursement established under § 210.11(b) of the National School Lunch Program regulations. In those States which use the method of comparing meals times rates or actual costs, whichever is lesser, the total payments made to an institution shall not exceed the total net costs incurred for the fiscal year.
§ 226.10 Program payment procedures.
(a) If a State agency elects to issue advance payments to all or some of the participating institutions in the State, it must provide such advances no later than the first day of each month to those eligible institutions electing to receive advances in accordance with § 226.6 (f)(3)(iv)(F). Advance payments shall equal the full level of claims estimated by the State agency to be submitted in accordance with paragraph (c) of this section, considering prior reimbursement claims and other information such as fluctuations in enrollment. The institution may decline to receive all or any part of the advance.
(b) For each fiscal year, the amount of payment made, including funds advanced to an institution, shall not exceed the amount of valid reimbursement claimed by that institution. To ensure that institutions do not receive excessive advance payments, the State agency shall observe the following procedures:
(1) After three advance payments have been made to an institution, the State agency shall ensure that no subsequent advance is made until the State agency has validated the institution’s claim for reimbursement for the third month prior to the month for which the next advance is to be paid.
(2) If the State agency has audit or monitoring evidence of extensive program deficiencies or other reasons to believe that an institution will not be able to submit a valid claim for reimbursement, advance payments shall be withheld until the claim is received or the deficiencies are corrected.
(3) Each month the State agency shall compare incoming claims against advances to ensure that the level of funds authorized under paragraph (a) of this section does not exceed the claims for reimbursement received from the institution. Whenever this process indicates that excessive advances have been authorized, the State agency shall either demand full repayment or adjust subsequent payments, including advances.
(4) If, as a result of year end reconciliation as required by 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable, the State agency determines that reimbursement earned by an institution during a fiscal year is less than the amount paid, including funds advanced to that institution, the State agency shall demand repayment of the outstanding balance or adjust subsequent payments.
(c) Claims for Reimbursement must report information in accordance with the financial management system established by the State agency, and in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the final Report of the Child and Adult Care Food Program (FNS 44) required under § 226.7(d). In submitting a Claim for Reimbursement, each institution must certify that the claim is correct and that records are available to support that claim.
(1) Prior to submitting its consolidated monthly claim to the State agency, each sponsoring organization must perform edit checks on each facility’s meal claim. At a minimum, the sponsoring organization’s edit checks must:
(i) Verify that each facility has been approved to serve the types of meals claimed; and
(ii) Compare the number of children or eligible adult participants enrolled for care at each facility, multiplied by the number of days on which the facility is approved to serve meals, to the total number of meals claimed by the facility for that month. Discrepancies between the facility’s meal claim and its enrollment must be subjected to more thorough review to determine if the claim is accurate.
(2) Sponsoring organizations of unaffiliated centers must make available to the State agency an annual report detailing actual expenditures of Program funds and the amount of meal reimbursement funds retained from centers, if any, for administrative costs for the year to which the claims apply. The report must use the same cost categories as the approved annual budget submitted by the sponsoring organization.
(3) Sponsoring organizations of for-profit child care centers or for-profit outside-school-hours care centers must submit the number and percentage of children in care—enrolled or licensed capacity, whichever is less—that documents that at least 25 percent are eligible for free or reduced-price meals or are title XX beneficiaries. Sponsoring organizations must not submit a claim for any for-profit center in which less than 25 percent of the children in care—enrolled or licensed capacity, whichever is less—during the claim month were eligible for free or reduced-price meals or were title XX beneficiaries.
(4) For each month they claim reimbursement, independent for-profit child care centers and independent for-profit outside-school-hours care centers must submit the number and percentage of children in care—enrolled or licensed capacity, whichever is less—that documents at least 25 percent are eligible for free or reduced-price meals or are title XX beneficiaries. However, children who only receive at-risk afterschool meals or snacks must not be considered in determining this eligibility.
(5) For each month they claim reimbursement, independent for-profit adult day care centers must submit the percentages of enrolled adult participants receiving title XIX or title XX benefits for months in which not less than 25 percent of enrolled adult participants were title XIX or title XX beneficiaries. For the claim, sponsoring organizations of adult day care centers must submit the percentage of enrolled adult participants receiving title XIX or title XX benefits for each center. Sponsoring organizations must not submit claims for adult day care centers for months in which less than 25 percent of enrolled adult participants were title XIX or title XX beneficiaries.
(d) All records to support the claim shall be retained for a period of three years after the date of submission of the final claim for the fiscal year to which they pertain, except that if audit findings have not been resolved, the records shall be retained beyond the end of the three year period as long as may be required for the resolution of the issues raised by the audit. All accounts and records pertaining to the Program shall be made available, upon request, to representatives of the State agency, of the Department, and of the U.S. Government Accountability Office for audit or review, at a reasonable time and place.
(e) Unless otherwise approved by FNS, the Claim for Reimbursement for any month shall cover only Program operations for that month except if the first or last month of Program operations in any fiscal year contains 10 operating days or less, such month may be added to the Claim for Reimbursement for the appropriate adjacent month; however, Claims for Reimbursement may not combine operations occurring in two fiscal years. A final Claim for Reimbursement shall be postmarked and/or submitted to the State agency not later than 60 days following the last day of the full month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not postmarked and/or submitted within 60 days shall not be paid with Program funds unless FNS determines that an exception should be granted. The State agency shall promptly take corrective action with respect to any Claim for Reimbursement as determined necessary through its claim review process or otherwise. In taking such corrective action, State agencies may make upward adjustments in Program funds claimed on claims filed within the 60 day deadline if such adjustments are completed within 90 days of the last day of the claim month and are reflected in the final Report of the Child and Adult Care Food Programs (FNS-44) for the claim month which is required under 226.7(d). Upward adjustments in Program funds claimed which are not reflected in the final FNS-44 for the claim month shall not be made unless authorized by FNS. Downward adjustments in Program funds claimed shall always be made without FNS authorization regardless of when it is determined that such adjustments are necessary.
(f) If, based on the results of audits, investigations, or other reviews, a State agency has reason to believe that an institution, child or adult care facility, or food service management company has engaged in unlawful acts with respect to Program operations, the evidence found in audits, investigations, or other reviews is a basis for non-payment of claims for reimbursement.
§ 226.11 Program payments for centers.
(a) Requirement for agreements. Payments must be made only to institutions operating under an agreement with the State agency for the meal types specified in the agreement served at approved child care centers, at-risk afterschool care centers, adult day care centers, emergency shelters, and outside-school-hours care centers. A State agency may develop a policy under which centers are reimbursed for meals served in accordance with provisions of the Program in the calendar month preceding the calendar month in which the agreement is executed, or the State agency may develop a policy under which centers receive reimbursement only for meals served in approved centers on and after the effective date of the Program agreement. If the State agency’s policy permits centers to earn reimbursement for meals served prior to the execution of a Program agreement, program reimbursement must not be received by the center until the agreement is executed.
(b) Institutions—(1) Edit checks of sponsored centers. Prior to submitting its consolidated monthly claim to the State agency, each sponsoring organization must conduct reasonable edit checks on the sponsored centers’ meal claims, which at a minimum, must include those edit checks specified at § 226.10(c).
(2) Child and adult care institutions. Each child care institution and each adult day care institution must report each month to the State agency the total number of Program meals, by type (breakfasts, lunches, suppers, and snacks), served to children or adult participants, respectively, except as provided in paragraph (b)(3) of this section.
(3) For-profit center exception. For-profit child care centers, including for-profit at-risk afterschool care centers and outside-school-hours care centers, must provide the reports required in paragraph (b)(2) of this section only for calendar months during which at least 25 percent of the children in care (enrolled or licensed capacity, whichever is less) were eligible for free or reduced-price meals or were title XX beneficiaries. However, children who only receive at-risk afterschool snacks and/or at-risk afterschool meals must not be considered in determining this eligibility. For-profit adult day care centers must provide the reports required in paragraph (b)(2) of this section only for calendar months during which at least 25 percent of enrolled adult participants were beneficiaries of title XIX, title XX, or a combination of titles XIX and XX.
(c) Reimbursement—(1) Child and adult care institutions. Each State agency must base reimbursement to each approved child care center and adult day care center on actual time of service meal counts of meals, by type, served to children or adult participants multiplied by the assigned rates of reimbursement, except as provided in paragraph (c)(4) of this section. In the case of a sponsoring organization of family day care homes, each State agency must base reimbursement to each approved family day care home on daily meal counts recorded by the provider.
(2) At-risk afterschool care institutions. Except as provided in paragraph (c)(4) of this section, State agencies must base reimbursement to each at-risk afterschool care center on the number of at-risk afterschool snacks and/or at-risk afterschool meals that are served to children.
(3) Emergency shelters. Each State agency must base reimbursement to each emergency shelter on the number of meals served to children multiplied by the free rates for meals and snacks.
(4) For-profit center exception. For-profit child care centers, including for-profit at-risk and outside-school-hours care centers, must be reimbursed only for the calendar months during which at least 25 percent of the children in care (enrolled or licensed capacity, whichever is less) were eligible for free or reduced-price meals or were title XX beneficiaries. However, children who only receive at-risk afterschool snacks and/or at-risk afterschool meals must not be considered in determining this eligibility. For-profit adult day care centers must be reimbursed only for the calendar months during which at least 25 percent of enrolled adult participants were beneficiaries of title XIX, title XX, or a combination of titles XIX and XX.
(5) Computation of reimbursement. Except for at-risk afterschool care centers and emergency shelters, the State agency must compute reimbursement by either:
(i) Actual counts. Base reimbursement to institutions on actual time of service counts of meals served, and multiply the number of meals, by type, served to participants that are eligible to receive free meals, participants eligible to receive reduced-price meals, and participants not eligible for free or reduced-price meals by the applicable national average payment rate; or
(ii) Claiming percentages. Apply the applicable claiming percentage or percentages to the total number of meals, by type, served to participants and multiply the product or products by the assigned rate of reimbursement for each meal type; or
(iii) Blended rates. Multiply the assigned blended per meal rate of reimbursement by the total number of meals, by type, served to participants.
(d) Limits on reimbursement. If the State agency elects to reimburse its institutions according to the lesser of rates or actual costs, total Program payments to an institution during any fiscal year, including any cash payments in lieu of commodities, shall not exceed allowable Program operating and administrative costs, less income to the Program. The State agency may limit payments for administrative costs to the amount approved in the annual administrative budget of the institution. The State agency may prohibit an institution from using payments for operating costs to pay for administrative expenses.
(e) Institution recordkeeping. Each institution shall maintain records as prescribed by the State agency’s financial management system.
§ 226.12 Administrative payments to sponsoring organizations for day care homes.
(a) General. Sponsoring organizations of day care homes receive payments for administrative costs, subject to the following conditions:
(1) Sponsoring organizations will receive reimbursement for the administrative costs of the sponsoring organization in an amount that is not less than the product obtained each month by multiplying:
(i) The number of day care homes of the sponsoring organization submitting a claim for reimbursement during the month, by
(ii) The appropriate administrative rates announced annually in the
(2) FNS determines administrative reimbursement by annually adjusting the following base administrative rates, as set forth in § 226.4(i):
(i) Initial 50 day care homes, 42 dollars;
(ii) Next 150 day care homes, 32 dollars;
(iii) Next 800 day care homes, 25 dollars;
(iv) Additional day care homes, 22 dollars.
(3) With State agency approval, a sponsoring organization may carry over a maximum of 10 percent of administrative funds received under paragraph (a)(1) of this section for use in the following fiscal year. If any carryover funds are not obligated or expended in the following fiscal year, they must be returned to the State agency, as described in § 226.7(j).
(4) State agencies must recover any administrative funds not properly payable, as described in FNS Instruction 796-2.
(b) Start-up and expansion payments. (1) Prospective sponsoring organizations of day care homes, participating sponsoring organizations of child care centers or outside-school-hours care centers, independent centers, and participating sponsoring organizations of less than 50 homes which meet the criteria in paragraph (b)(2) of this section shall be entitled to receive start-up payments to develop or expand successful Program operations in day care homes. Participating sponsoring organizations of day care homes which meet the criteria in paragraph (b)(2) of this section shall be entitled to receive expansion payments to initiate or expand Program operations in day care homes in low-income or rural areas. The State agency shall approve start-up payments only once for any eligible sponsoring organization, but may approve expansion payments for any eligible sponsoring organization more than once, provided that: the request must be for expansion into an area(s) other than that specified in their initial or prior request; and 12 months has elapsed since the sponsoring organization has satisfied all obligations under its initial or prior expansion agreement. Eligible sponsoring organizations which have received start-up payments shall be eligible to apply for expansion payments at a date no earlier than 12 months after it has satisfied all its obligations under its start-up agreement with the State agency.
(2) Sponsoring organizations which apply for start-up or expansion payments shall evidence:
(i) Public status or tax exempt status under the Internal Revenue Code of 1986;
(ii) An organizational history of managing funds and ongoing activities (i.e., administering public or private programs);
(iii) An acceptable and realistic plan for recruiting day care homes to participate in the Program (such as the method of contacting providers), which may be based on estimates of the number of day care homes to be recruited and information supporting their existence, and in the case of sponsoring organizations applying for expansion payments, documentation that the day care homes to be recruited are located in low-income or rural areas; and
(iv) An acceptable preliminary sponsoring organization management plan including, but not limited to, plans for preoperational visits and training.
(3) The State agency shall deny start-up and expansion payments to applicant sponsoring organizations which fail to meet the criteria of paragraph (b)(2) of this section or which have not been financially responsible in the operation of other programs funded by Federal, State, or local governments. The State agency shall notify the sponsoring organization of the reasons for denial and allow the sponsoring organization full opportunity to submit evidence on appeal as provided for in § 226.6(k). Any sponsoring organization applying for start-up or expansion funds shall be notified of approval or disapproval by the State agency in writing within 30 calendar days of filing a complete and correct application. If a sponsoring organization submits an incomplete application, the State agency shall notify the sponsoring organization within 15 calendar days of receipt of the application and shall provide technical assistance, if necessary, to the sponsoring organization for the purpose of completing its application.
(4) Sponsoring organizations which apply for and meet the criteria for start-up or expansion payments shall enter into an agreement with the State agency. The agreement shall specify:
(i) Activities which the sponsoring organization will undertake to initiate or expand Program operations in day care homes;
(ii) The amount of start-up or expansion payments to be issued to the sponsoring organization, together with an administrative budget detailing the costs which the sponsoring organization shall incur, document, and claim;
(iii) The time allotted to the sponsoring organization for the initiation or expansion of Program operations in family day care homes;
(iv) The responsibility of the applicant sponsoring organization to repay, upon demand by the State agency, start-up or expansion payments not expended in accordance with the agreement.
(5) Upon execution of the agreement, the State agency shall issue a start-up or expansion payment to the sponsoring organization in an amount equal to not less than one, but not more than two month’s anticipated administrative reimbursement to the sponsoring organization as determined by the State agency. However, no sponsoring organization may receive start-up or expansion payments for more than 50 day care homes. Eligible sponsoring organizations with fewer than 50 homes under their jurisdiction at the time of application for start-up payments may receive such payments for up to 50 homes, less the number of homes under their jurisdiction. Eligible sponsoring organizations applying for expansion funds may receive at a maximum such payments for up to 50 homes at the currently assigned administrative payment for the first 50 homes. In determining the amount of start-up or expansion payments to be made to a sponsoring organization, the State agency shall consider the anticipated level of start-up or expansion costs to be incurred by the sponsoring organization and alternate sources of funds available to the sponsoring organization.
(6) Upon expiration of the time allotted to the sponsoring organization for initiating or expanding Program operations in day care homes, the State agency shall obtain and review documentation of activities performed and costs incurred by the sponsoring organization under the terms of the start-up or expansion agreement. If the sponsoring organization has not made every reasonable effort to carry out the activities specified in the agreement, the State agency shall demand repayment of all or part of the payment. The sponsoring organization may retain start-up or expansion payments for all day care homes which initiate Program operations. However, no sponsoring organization may retain any start-up or expansion payments in excess of its actual costs for the expenditures specified in the agreement.
§ 226.13 Food service payments to sponsoring organizations for day care homes.
(a) Payments will be made only to sponsoring organizations operating under an agreement with the State agency for the meal types specified in the agreement served to enrolled nonresident children and eligible enrolled children of day care home providers, at approved day care homes. Each State agency must base reimbursement to each approved day care home on daily meal counts recorded by the provider.
(b) Each sponsoring organization shall report each month to the State agency the total number of meals, by type (breakfasts, lunches, suppers, and snacks) and by category (tier I and tier II), served to children enrolled in approved day care homes. Prior to submitting its consolidated monthly claim to the State agency, each sponsoring organization must conduct reasonable edit checks on the day care homes’ meal claims which, at a minimum, include those edit checks specified at § 226.10(c).
(c) Each sponsoring organization shall receive payment for meals served to children enrolled in approved day care homes at the tier I and tier II reimbursement rates, as applicable based on daily meal counts taken in the home, and as established by law and adjusted in accordance with § 226.4. However, the rates for lunches and suppers shall be reduced by the value of commodities established under § 226.5(b) for all sponsoring organizations for day care homes which have elected to receive commodities. For tier I day care homes, the full amount of food service payments shall be disbursed to each day care home on the basis of the number of meals served, by type, to enrolled children. For tier II day care homes, the full amount of food service payments shall be disbursed to each day care home on the basis of the number of meals served to enrolled children by type, and by category (tier I and tier II) as determined in accordance with paragraphs (d)(2) and (d)(3) of this section. However, the sponsoring organization may withhold from Program payments to each home an amount equal to costs incurred for the provision of Program foodstuffs or meals by the sponsoring organization on behalf of the home and with the home provider’s written consent.
(d) As applicable, each sponsoring organization for day care homes shall:
(1) Require that tier I day care homes submit the number of meals served, by type, to enrolled children.
(2) Require that tier II day care homes in which the provider elects not to have the sponsoring organization identify enrolled children who are eligible for free or reduced price meals submit the number of meals served, by type, to enrolled children.
(3) Not more frequently than annually, select one of the methods described in paragraphs (d)(3) (i)-(iii) of this section for all tier II day care homes in which the provider elects to have the sponsoring organization identify enrolled children who are eligible for free or reduced price meals. In such homes, the sponsoring organization shall either:
(i) Require that such day care homes submit the number and types of meals served each day to each enrolled child by name. The sponsoring organization shall use the information submitted by the homes to produce an actual count, by type and by category (tier I and tier II), of meals served in the homes; or
(ii) Establish claiming percentages, not less frequently than semiannually, for each such day care home on the basis of one month’s data concerning the number of enrolled children determined eligible for free or reduced-price meals. Sponsoring organizations shall obtain one month’s data by collecting either enrollment lists (which show the name of each enrolled child in the day care home), or attendance lists (which show, by days or meals, the rate of participation of each enrolled child in the day care home). The State agency may require a sponsoring organization to recalculate the claiming percentage for any of its day care homes before the required semiannual calculation if the State agency has reason to believe that a home’s percentage of income-eligible children has changed significantly or was incorrectly established in the previous calculation. Under this system, day care homes shall be required to submit the number of meals served, by type, to enrolled children; or
(iii) Determine a blended per-meal rate of reimbursement, not less frequently than semiannually, for each such day care home by adding the products obtained by multiplying the applicable rates of reimbursement for each category (tier I and tier II) by the claiming percentage for that category, as established in accordance with paragraph (d)(3)(ii) of this section. The State agency may require a sponsoring organization to recalculate the blended rate for any of its day care homes before the required semiannual calculation if the State agency has reason to believe that a home’s percentage of income-eligible children has changed significantly or was incorrectly established in the previous calculation. Under this system, day care homes shall be required to submit the number of meals served, by type, to enrolled children.
§ 226.14 Claims against institutions.
(a) State agencies shall disallow any portion of a claim for reimbursement and recover any payment to an institution not properly payable under this part. State agencies may consider claims for reimbursement not properly payable if an institution does not comply with the recordkeeping requirements contained in this part. The State agency may permit institutions to pay overclaims over a period of one or more years. However, the State agency must assess interest beginning with the date stipulated in the State agency’s demand letter, or 30 days after the date of the demand letter, whichever date is later. Further, when an institution requests and is granted an administrative review of the State agency’s overpayment demand, the State agency is prohibited from taking action to collect or offset the overpayment until the administrative review is concluded. The State agency must maintain searchable records of funds recovery activities. If the State agency determines that a sponsoring organization of centers has spent more than 15 percent of its meal reimbursements for a budget year for administrative costs (or more than any higher limit established pursuant to a waiver granted under § 226.7(g)), the State agency must take appropriate fiscal action. In addition, except with approval from the appropriate FNSRO, State agencies shall consider claims for reimbursement not payable when an institution fails to comply with the recordkeeping requirements that pertain to records directly supporting claims for reimbursement. Records that directly support claims for reimbursement include, but are not limited to, daily meal counts, menu records, and enrollment and attendance records, as required by § 226.15(e). State agencies shall assert overclaims against any sponsoring organization of day care homes which misclassifies a day care home as a tier I day care home unless the misclassification is determined to be inadvertent under guidance issued by FNS. However, the State agency shall notify the institution of the reasons for any disallowance or demand for repayment, and allow the institution full opportunity to submit evidence on appeal as provided for in § 226.6(k). Miminum State agency collection procedures for unearned payments shall include:
(1) Written demand to the institution for the return of improper payments; (2) if, after 30 calendar days, the institution fails to remit full payment or agree to a satisfactory repayment schedule, a second written demand for the return of improper payments sent by certified mail return receipt requested; and (3) if, after 60 calendar days, the institution fails to remit full payment or agree to a satisfactory repayment schedule, the State agency shall refer the claim against the institution to appropriate State or Federal authorities for pursuit of legal remedies.
(b) In the event that the State agency finds that an institution which prepares its own meals is failing to meet the meal requirements of § 226.20, the State agency need not disallow payment or collect an overpayment arising out of such failure if the institution takes such other action as, in the opinion of the State agency, will have a corrective effect. However, the State agency shall not disregard any overpayments or waive collection action arising from the findings of Federal audits.
(c) If FNS does not concur with the State agency’s action in paying an institution or in failing to collect an overpayment, FNS shall notify the State agency of its intention to assert a claim against the State agency. In all such cases, the State agency shall have full opportunity to submit evidence concerning the action taken. The State agency shall be liable to FNS for failure to collect an overpayment, unless FNS determines that the State agency has conformed with this part in issuing the payment and has exerted reasonable efforts to recover the improper payment.
Subpart E—Operational Provisions
§ 226.15 Institution provisions.
(a) Tax exempt status. Except for for-profit centers and sponsoring organizations of such centers, institutions must be public, or have tax exempt status under the Internal Revenue Code of 1986.
(b) New applications and renewals. Each new institution must submit to the State agency an application with all information required for its approval, as set forth in §§ 226.6(b)(1) and 226.6(f). This information must demonstrate that a new institution has the administrative and financial capability to operate the Program, as described in the performance standards set forth in § 226.6(b)(1)(xviii). Renewing institutions must annually certify that they are capable of operating the Program, as set forth in § 226.6(b)(2).
(c) Responsibility. Each institution shall accept final administrative and financial responsibility for Program operations. No institution may contract out for management of the Program.
(d) Staffing. Each institution shall provide adequate supervisory and operational personnel for management and monitoring of the Program.
(e) Recordkeeping. Each institution shall establish procedures to collect and maintain all program records required under this part, as well as any records required by the State agency. Failure to maintain such records shall be grounds for the denial of reimbursement for meals served during the period covered by the records in question and for the denial of reimbursement for costs associated with such records. At a minimum, the following records shall be collected and maintained:
(1) Copies of all applications and supporting documents submitted to the State agency;
(2) Documentation of the enrollment of each participant at centers (except for outside-school-hours care centers, emergency shelters, and at-risk afterschool care centers). All types of centers, except for emergency shelters and at-risk afterschool care centers, must maintain information used to determine eligibility for free or reduced-price meals in accordance with § 226.23(e)(1). For child care centers, such documentation of enrollment must be updated annually, signed by a parent or legal guardian, and include information on each child’s normal days and hours of care and the meals normally received while in care.
(3) Documentation of: The enrollment of each child at day care homes; information used to determine the eligibility of enrolled providers’ children for free or reduced price meals; information used to classify day care homes as tier I day care homes, including official source documentation obtained from school officials when the classification is based on school data; and information used to determine the eligibility of enrolled children in tier II day care homes that have been identified as eligible for free or reduced price meals in accordance with § 226.23(e)(1). Such documentation of enrollment must be updated annually, signed by a parent or legal guardian, and include information on each child’s normal days and hours of care and the meals normally received while in care.
(4) Daily records indicating the number of participants in attendance and the daily meal counts, by type (breakfast, lunch, supper, and snacks), served to family day care home participants, or the time of service meal counts, by type (breakfast, lunch, supper, and snacks), served to center participants. State agencies may require family day care homes to record meal counts at the time of meal service only in day care homes providing care for more than 12 children in a single day, or in day care homes that have been found seriously deficient due to problems with their meal counts and claims.
(5) Except at day care homes, daily records indicating the number of meals, by type, served to adults performing labor necessary to the food service;
(6) Copies of invoices, receipts, or other records required by the State agency financial management instruction to document:
(i) Administrative costs claimed by the institution;
(ii) Operating costs claimed by the institution except sponsoring organizations of day care homes; and
(iii) Income to the Program.
(7) Copies of all claims for reimbursement submitted to the State agency;
(8) Receipts for all Program payments received from the State agency;
(9) If applicable, information concerning the dates and amounts of disbursement to each child care facility or adult day care facility under its auspices;
(10) Copies of menus, and any other food service records required by the State agency;
(11) If applicable, information concerning the location and dates of each child care or adult day care facility review, any problems noted, and the corrective action prescribed and effected;
(12) Information on training session date(s) and location(s), as well as topics presented and names of participants; and
(13) Documentation of nonprofit food service to ensure that all Program reimbursement funds are used: (i) Solely for the conduct of the food service operation; or (ii) to improve such food service operations, principally for the benefit of the enrolled participants.
(14) For sponsoring organizations, records documenting the attendance at annual training of each staff member with monitoring responsibilities. Training must include instruction, appropriate to the level of staff experience and duties, on the Program’s meal patterns, meal counts, claims submission and claim review procedures, recordkeeping requirements, and an explanation of the Program’s reimbursement system.
(f) Day care home classifications. Each sponsoring organization of day care homes shall determine which of the day care homes under its sponsorship are eligible as tier I day care homes. A sponsoring organization may use current school or census data provided by the State agency or free and reduced price applications collected from day care home providers in making a determination for each day care home. When using school or census data for making tier I day care home determinations, a sponsoring organization shall first consult school data, except in cases in which busing or other bases of attendance, such as magnet or charter schools, result in school data not being representative of an attendance area’s household income levels. In these cases, census data should generally be consulted instead of school data. A sponsoring organization may also use census data if, after reasonable efforts are made, as defined by the State agency, the sponsoring organization is unable to obtain local school attendance area information. A sponsoring organization may also consult census data after having consulted school data which fails to support a tier I day care home determination for rural areas with geographically large school attendance areas, for other areas in which a school’s free and reduced price enrollment is above 40 percent, or in other cases with State agency approval. However, if a sponsoring organization believes that a segment of an otherwise eligible school attendance area is above the criteria for free or reduced price meals, then the sponsoring organization shall consult census data to determine whether the homes in that area qualify as tier I day care homes based on census data. If census data does not support a tier I classification, then the sponsoring organization shall reclassify homes in segments of such areas as tier II day care homes unless the individual providers can document tier I eligibility on the basis of their household income. When making tier I day care home determinations based on school data, a sponsoring organization shall use attendance area information that it has obtained, or verified with appropriate school officials to be current, within the last school year. Determinations of a day care home’s eligibility as a tier I day care home shall be valid for one year if based on a provider’s household income, five years if based on school data, or until more current data are available if based on census data. However, a sponsoring organization, State agency, or FNS may change the determination if information becomes available indicating that a home is no longer in a qualified area. The State agency shall not routinely require annual redeterminations of the tiering status of tier I day care homes based on updated school data.
(g) Area eligibility determinations for at-risk afterschool care centers. Sponsoring organizations of at-risk afterschool care centers must provide information, as required by the State agency, which permits the State agency to determine whether the centers they sponsor are located in eligible areas. Such information may include the most recent free and reduced-price school data available pursuant to § 226.6(f)(1)(ix) and attendance area information that it has obtained, or verified with the appropriate school officials to be current, within the last school year.
(h) Payment to employees. No institution that is a sponsoring organization of family day care homes and that employs more than one person is permitted to base payment (including bonuses or gratuities) to its employees, contractors, or family day care home providers solely on the number of new family day care homes recruited for the sponsoring organization’s Program.
(i) Claims submission. Each institution shall submit claims for reimbursement to the State agency in accordance with § 226.10.
(j) Program agreement. Each institution shall enter into a Program agreement with the State agency in accordance with § 226.6(b)(4).
(k) Commodities. Each institution receiving commodities shall ensure proper commodity utilization.
(l) Special Milk Program. No institution may participate in both the Child and Adult Care Food Program and the Special Milk Program at the same time.
(m) Elderly feeding programs. Institutions which are school food authorities (as defined in part 210 of this chapter) may use facilities, equipment and personnel supported by funds provided under this part to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.).
(n) Regulations and guidance. Each institution must comply with all regulations issued by FNS and the Department, all instructions and handbooks issued by FNS and the Department to clarify or explain existing regulations, and all regulations, instructions and handbooks issued by the State agency that are consistent with the provisions established in Program regulations.
(o) Information on WIC. Each institution (other than outside-school-hours care centers, at-risk afterschool care centers, emergency shelters, and adult day care centers) must ensure that parents of enrolled children are provided with current information on the benefits and importance of the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the eligibility requirements for WIC participation.
§ 226.16 Sponsoring organization provisions.
(a) Each sponsoring organization shall comply with all provisions of § 226.15.
(b) Each sponsoring organization must submit to the State agency with its application all information required for its approval, and the approval of the facilities under its jurisdiction, as set forth in §§ 226.6(b) and 226.6(f). The application must demonstrate that the institution has the administrative and financial capability to operate the Program in accordance with the Program regulations. In addition to the information required in §§ 226.6(b) and 226.6(f), the application must include:
(1) A sponsoring organization management plan and administrative budget, in accordance with §§ 226.6(b)(1)(iv), 226.6(b)(1)(v), 226.6(b)(2)(i), 226.6(f)(2)(i), and 226.7(g), which includes information sufficient to document the sponsoring organization’s compliance with the performance standards set forth at § 226.6(b)(1)(xviii) and 226.6(b)(2)(vii). As part of its management plan, a sponsoring organization of day care homes must document that, to perform monitoring, it will employ the equivalent of one full-time staff person for each 50 to 150 day care homes it sponsors. As part of its management plan, a sponsoring organization of centers must document that, to perform monitoring, it will employ the equivalent of one full-time staff person for each 25 to 150 centers it sponsors. It is the State agency’s responsibility to determine the appropriate level of staffing for monitoring for each sponsoring organization, consistent with these specified ranges and factors that the State agency will use to determine the appropriate level of monitoring staff for each sponsor. The monitoring staff equivalent may include the employee’s time spent on scheduling, travel time, review time, follow-up activity, report writing, and activities related to the annual updating of children’s enrollment forms. Sponsoring organizations that were participating in the Program on July 29, 2002, were to have submitted, no later than July 29, 2003, a management plan or plan amendment that meets the monitoring staffing requirement. For sponsoring organizations of centers, the portion of the administrative costs to be charged to the Program may not exceed 15 percent of the meal reimbursements estimated or actually earned during the budget year, unless the State agency grants a waiver in accordance with § 226.7(g). A sponsoring organization of centers must include in the administrative budget all administrative costs, whether incurred by the sponsoring organization or its sponsored centers. If at any point a sponsoring organization determines that the meal reimbursements estimated to be earned during the budget year will be lower than that estimated in its administrative budget, the sponsoring organization must amend its administrative budget to stay within the 15 percent limitation (or any higher limit established pursuant to a waiver granted under § 226.7(g)) or seek a waiver. Failure to do so will result in appropriate fiscal action in accordance with § 226.14(a).
(2) An application for participation, or renewal materials, for each facility accompanied by all necessary supporting documentation;
(3) Timely information concerning the eligibility status of facilities (such as licensing/approval actions);
(4) For sponsoring organizations applying for initial participation, if required by State law, regulation, or policy, a bond in the form prescribed by such law, regulation, or policy;
(5) A copy of the sponsoring organization’s notice to parents, in a form and, to the maximum extent practicable, language easily understandable by the participant’s parents or guardians. The notice must inform them of their facility’s participation in CACFP, the Program’s benefits, the name and telephone number of the sponsoring organization, and the name and telephone number of the State agency responsible for administration of CACFP;
(6) If the sponsoring organization chooses to establish procedures for determining a day care home seriously deficient that supplement the procedures in paragraph (l) of this section, a copy of those supplemental procedures. If the State agency has made the sponsoring organization responsible for the administrative review of a proposed termination of a day care home’s agreement for cause, pursuant to § 226.6(l)(1), a copy of the sponsoring organization’s administrative review procedures. The sponsoring organization’s supplemental serious deficiency and administrative review procedures must comply with paragraph (l) of this section and § 226.6(l);
(7) A copy of their outside employment policy. The policy must restrict other employment by employees that interferes with an employee’s performance of Program-related duties and responsibilities, including outside employment that constitutes a real or apparent conflict of interest;
(8) For sponsoring organizations of day care homes, the name, mailing address, and date of birth of each provider; and
(9) For sponsoring organizations of unaffiliated centers, the name and mailing address of each center.
(c) Each sponsoring organization shall accept final administrative and financial responsibility for food service operations in all facilities under its jurisdiction.
(d) Each sponsoring organization must provide adequate supervisory and operational personnel for the effective management and monitoring of the program at all facilities it sponsors. Each sponsoring organization must employ monitoring staff sufficient to meet the requirements of paragraph (b)(1) of this section. At a minimum, Program assistance must include:
(1) Pre-approval visits to each facility for which application is made to discuss Program benefits and verify that the proposed food service does not exceed the capability of the child care facility;
(2) Training on Program duties and responsibilities to key staff from all sponsored facilities prior to the beginning of Program operations. At a minimum, such training must include instruction, appropriate to the level of staff experience and duties, on the Program’s meal patterns, meal counts, claims submission and review procedures, recordkeeping requirements, and reimbursement system. Attendance by key staff, as defined by the State agency, is mandatory;
(3) Additional mandatory training sessions, as defined by the State agency, for key staff from all sponsored facilities not less frequently than annually. At a minimum, this training must include instruction, appropriate to the level of staff experience and duties, on the Program’s meal patterns, meal counts, claims submission and review procedures, recordkeeping requirements, and reimbursement system.
(4)(i) Review elements. Reviews that assess whether the facility has corrected problems noted on the previous review(s), a reconciliation of the facility’s meal counts with enrollment and attendance records for a five-day period, as specified in paragraph (d)(4)(ii) of this section, and an assessment of the facility’s compliance with the Program requirements pertaining to:
(A) The meal pattern;
(B) Licensing or approval;
(C) Attendance at training;
(D) Meal counts;
(E) Menu and meal records; and
(F) The annual updating and content of enrollment forms (if the facility is required to have enrollment forms on file, as specified in §§ 226.15(e)(2) and 226.15(e)(3)).
(ii) Reconciliation of meal counts. Reviews must examine the meal counts recorded by the facility for five consecutive days during the current and/or prior claiming period. For each day examined, reviewers must use enrollment and attendance records (except in those outside-school-hours care centers, at-risk afterschool care centers, and emergency shelters where enrollment records are not required) to determine the number of participants in care during each meal service and attempt to reconcile those numbers to the numbers of breakfasts, lunches, suppers, and/or snacks recorded in the facility’s meal count for that day. Based on that comparison, reviewers must determine whether the meal counts were accurate. If there is a discrepancy between the number of participants enrolled or in attendance on the day of review and prior meal counting patterns, the reviewer must attempt to reconcile the difference and determine whether the establishment of an overclaim is necessary.
(iii) Frequency and type of required facility reviews. Sponsoring organizations must review each facility three times each year, except as described in paragraph (d)(4)(iv) of this section. In addition:
(A) At least two of the three reviews must be unannounced;
(B) At least one unannounced review must include observation of a meal service;
(C) At least one review must be made during each new facility’s first four weeks of Program operations; and
(D) Not more than six months may elapse between reviews.
(E) The timing of unannounced reviews must be varied so that they are unpredictable to the facility; and
(F) All types of meal service must be subject to review and sponsoring organizations must vary the meal service reviewed.
(iv) Averaging of required reviews. If a sponsoring organization conducts one unannounced review of a facility in a year and finds no serious deficiencies (as described in paragraph (l)(2) of this section, regardless of the type of facility), the sponsoring organization may choose not to conduct a third review of the facility that year, and may make its second review announced, provided that the sponsoring organization conducts an average of three reviews of all of its facilities that year, and that it conducts an average of two unannounced reviews of all of its facilities that year. When the sponsoring organization uses this averaging provision, and a specific facility receives two reviews in one review year, its first review in the next review year must occur no more than nine months after the previous review.
(v) Follow-up reviews. If, in conducting a facility review, a sponsoring organization detects one or more serious deficiency, the next review of that facility must be unannounced. Serious deficiencies are those described at paragraph (l)(2) of this section, regardless of the type of facility.
(vi) Notification of unannounced reviews. Sponsoring organizations of centers must provide each center with written notification of the right of the sponsoring organization, the State agency, the Department, and other State and Federal officials to make announced or unannounced reviews of its operations during the center’s normal hours of operation, and must also notify sponsored centers that anyone making such reviews must show photo identification that demonstrates that they are employees of one of these entities. For sponsored centers participating on July 29, 2002, the sponsoring organization was to have provided this notice no later than August 29, 2002. For sponsored centers that are approved after July 29, 2002, the sponsoring organization must provide the notice before meal service under the Program begins. Sponsoring organizations must provide day care homes notification of unannounced visits in accordance with § 226.18(b)(1).
(vii) Other requirements pertaining to unannounced reviews. Unannounced reviews must be made only during the facility’s normal hours of operation, and monitors making such reviews must show photo identification that demonstrates that they are employees of the sponsoring organization, the State agency, the Department, or other State and Federal agencies authorized to audit or investigate Program operations.
(viii) Imminent threat to health or safety. Sponsoring organizations that discover in a facility conduct or conditions that pose an imminent threat to the health or safety of participating children or the public, must immediately notify the appropriate State or local licensing or health authorities and take action that is consistent with the recommendations and requirements of those authorities.
(5) For sponsoring organizations, as part of their monitoring of facilities, compliance with the household contact requirements established pursuant to § 226.6(m)(5) of this part.
(e) Each sponsoring organization shall comply with the recordkeeping requirements established in §§ 226.10(d) and 226.15(e) and any recordkeeping requirements established by the State agency in order to justify the administrative payments made in accordance with § 226.12(a). Failure to maintain such records shall be grounds for the denial of reimbursement.
(f) The State agency may require a sponsoring organization to enter into separate agreements for the administration of separate types of facilities (child care centers, day care homes, adult day care centers, emergency shelters, at-risk afterschool care centers, and outside-school-hours care centers).
(g) Each sponsoring organization electing to receive advance payments of program funds for day care homes shall disburse the full amount of such payments within five working days of receipt from the State agency. If the sponsor requests the full operating advance to which it is entitled, the advances to day care homes shall be the full amount which the sponsor expects the home to earn based on the number of meals projected to be served to enrolled children during the period covered by the advance multiplied by the applicable payment rate as specified in § 226.13(c). If a sponsor elects to receive only a part of the operating advance to which it is entitled, or if the full operating advance is insufficient to provide a full advance to each home, the advance shall be disbursed to its homes in a manner and an amount the sponsor deems appropriate. Each sponsor shall disburse any reimbursement payments for food service due to each day care home within five working days of receipt from the State agency. Such payment shall be based on the number of meals served to enrolled children at each day care home, less any payments advanced to such home. However, the sponsoring organization may withhold from Program payments to each home an amount equal to food service operating costs incurred by the sponsoring organization in behalf of the home and with the home provider’s written consent. If payments from the State agency are not sufficient to provide all day care homes under the sponsoring organization’s jurisdiction with advance payments and reimbursement payments, available monies shall be used to provide all due reimbursement payments before advances are disbursed.
(h) Sponsoring organizations shall make payments of program funds to child care centers, adult day care centers, emergency shelters, at-risk afterschool care centers, or outside-school-hours care centers within five working days of receipt from the State agency, on the basis of the management plan approved by the State agency, and may not exceed the Program costs documented at each facility during any fiscal year; except in those States where the State agency has chosen the option to implement a meals times rates payment system. In those States which implement this optional method of reimbursement, such disbursements may not exceed the rates times the number of meals documented at each facility during any fiscal year.
(i) Disbursements of advance payments may be withheld from facilities which fail to submit reports required by § 226.15(e).
(j) A for-profit organization shall be eligible to serve as a sponsoring organization for for-profit centers which have the same legal identity as the organization, but shall not be eligible to sponsor for-profit centers which are legally distinct from the organization, day care homes, or public or private nonprofit centers.
(k) Before sponsoring organizations expend administrative funds to assist family day care homes in becoming licensed, they shall obtain the following information from each such home: a completed free and reduced price application which documents that the provider meets the Program’s income standards; evidence of its application for licensing and official documentation of the defects that are impeding its licensing approval; and a completed CACFP application. These funding requests are limited to $300 per home and are only available to each home once.
(l) Termination of agreements for cause—(1) General. The sponsoring organization must initiate action to terminate the agreement of a day care home for cause if the sponsoring organization determines the day care home has committed one or more serious deficiency listed in paragraph (l)(2) of this section.
(2) List of serious deficiencies for day care homes. Serious deficiencies for day care homes are:
(i) Submission of false information on the application;
(ii) Submission of false claims for reimbursement;
(iii) Simultaneous participation under more than one sponsoring organization;
(iv) Non-compliance with the Program meal pattern;
(v) Failure to keep required records;
(vi) Conduct or conditions that threaten the health or safety of a child(ren) in care, or the public health or safety;
(vii) A determination that the day care home has been convicted of any activity that occurred during the past seven years and that indicated a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency, or the concealment of such a conviction;
(viii) Failure to participate in training; or
(ix) Any other circumstance related to non-performance under the sponsoring organization-day care home agreement, as specified by the sponsoring organization or the State agency.
(3) Serious deficiency notification procedures. If the sponsoring organization determines that a day care home has committed one or more serious deficiency listed in paragraph (l)(2) of this section, the sponsoring organization must use the following procedures to provide the day care home notice of the serious deficiency(ies) and offer it an opportunity to take corrective action. However, if the serious deficiency(ies) constitutes an imminent threat to the health or safety of participants, or the day care home has engaged in activities that threaten the public health or safety, the sponsoring organization must follow the procedures in paragraph (l)(4) of this section instead of those in this paragraph (l)(3).
(i) Notice of serious deficiency. The sponsoring organization must notify the day care home that it has been found to be seriously deficient. The sponsoring organization must provide a copy of the serious deficiency notice to the State agency. The notice must specify:
(A) The serious deficiency(ies);
(B) The actions to be taken by the day care home to correct the serious deficiency(ies);
(C) The time allotted to correct the serious deficiency(ies) (as soon as possible, but not to exceed 30 days);
(D) That the serious deficiency determination is not subject to administrative review.
(E) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time will result in the sponsoring organization proposed termination of the day care home’s agreement and the proposed disqualification of the day care home and its principals; and
(F) That the day care home’s voluntary termination of its agreement with the sponsoring organization after having been notified that it is seriously deficient will still result in the day care home’s formal termination by the sponsoring organization and placement of the day care home and its principals on the National disqualified list.
(ii) Successful corrective action. If the day care home corrects the serious deficiency(ies) within the allotted time and to the sponsoring organization’s satisfaction, the sponsoring organization must notify the day care home that it has temporarily defer its determination of serious deficiency. The sponsoring organization must also provide a copy of the notice to the State agency. However, if the sponsoring organization accepts the provider’s corrective action, but later determines that the corrective action was not permanent or complete, the sponsoring organization must then propose to terminate the provider’s Program agreement and disqualify the provider, as set forth in paragraph (l)(3)(iii) of this section.
(iii) Proposed termination of agreement and proposed disqualification. If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies) cited, the sponsoring organization must issue a notice proposing to terminate the day care home’s agreement for cause. The notice must explain the day care home’s opportunity for an administrative review of the proposed termination in accordance with § 226.6(l). The sponsoring organization must provide a copy of the notice to the State agency. The notice must:
(A) Inform the day care home that it may continue to participate and receive Program reimbursement for eligible meals served until its administrative review is concluded;
(B) Inform the day care home that termination of the day care home’s agreement will result in the day care home’s termination for cause and disqualification; and
(C) State that if the day care home seeks to voluntarily terminate its agreement after receiving the notice of intent to terminate, the day care home will still be placed on the National disqualified list.
(iv) Program payments. The sponsoring organization must continue to pay any claims for reimbursement for eligible meals served until the serious deficiency(ies) is corrected or the day care home’s agreement is terminated, including the period of any administrative review.
(v) Agreement termination and disqualification. The sponsoring organization must immediately terminate the day care home’s agreement and disqualify the day care home when the administrative review official upholds the sponsoring organization’s proposed termination and proposed disqualification, or when the day care home’s opportunity to request an administrative review expires. At the same time the notice is issued, the sponsoring organization must provide a copy of the termination and disqualification letter to the State agency.
(4) Suspension of participation for day care homes.
(i) General. If State or local health or licensing officials have cited a day care home for serious health or safety violations, the sponsoring organization must immediately suspend the home’s CACFP participation prior to any formal action to revoke the home’s licensure or approval. If the sponsoring organization determines that there is an imminent threat to the health or safety of participants at a day care home, or that the day care home has engaged in activities that threaten the public health or safety, and the licensing agency cannot make an immediate onsite visit, the sponsoring organization must immediately notify the appropriate State or local licensing and health authorities and take action that is consistent with the recommendations and requirements of those authorities. An imminent threat to the health or safety of participants and engaging in activities that threaten the public health or safety constitute serious deficiencies; however, the sponsoring organization must use the procedures in this paragraph (l)(4) (and not the procedures in paragraph (l)(3) of this section) to provide the day care home notice of the suspension of participation, serious deficiency, and proposed termination of the day care home’s agreement.
(ii) Notice of suspension, serious deficiency, and proposed termination. The sponsoring organization must notify the day care home that its participation has been suspended, that the day care home has been determined seriously deficient, and that the sponsoring organization proposes to terminate the day care home’s agreement for cause, and must provide a copy of the notice to the State agency. The notice must:
(A) Specify the serious deficiency(ies) found and the day care home’s opportunity for an administrative review of the proposed termination in accordance with § 226.6(l);
(B) State that participation (including all Program payments) will remain suspended until the administrative review is concluded;
(C) Inform the day care home that if the administrative review official overturns the suspension, the day care home may claim reimbursement for eligible meals served during the suspension;
(D) Inform the day care home that termination of the day care home’s agreement will result in the placement of the day care home on the National disqualified list; and
(E) State that if the day care home seeks to voluntarily terminate its agreement after receiving the notice of proposed termination, the day care home will still be terminated for cause and disqualified.
(iii) Agreement termination and disqualification. The sponsoring organization must immediately terminate the day care home’s agreement and disqualify the day care home when the administrative review official upholds the sponsoring organization’s proposed termination, or when the day care home’s opportunity to request an administrative review expires.
(iv) Program payments. A sponsoring organization is prohibited from making any Program payments to a day care home that has been suspended until any administrative review of the proposed termination is completed. If the suspended day care home prevails in the administrative review of the proposed termination, the sponsoring organization must reimburse the day care home for eligible meals served during the suspension period.
(m) Sponsoring organizations of day care homes or unaffiliated centers must not make payments to employees or contractors solely on the basis of the number of homes or centers recruited. However, employees or contractors may be paid or evaluated on the basis of recruitment activities accomplished.
§ 226.17 Child care center provisions.
(a) Child care centers may participate in the Program either as independent centers or under the auspices of a sponsoring organization; provided, however, that public and private nonprofit centers shall not be eligible to participate in the Program under the auspices of a for-profit sponsoring organization. Child care centers participating as independent centers shall comply with the provisions of § 226.15.
(b) All child care centers, independent or sponsored, shall meet the following requirements
(1) Child care centers must have Federal, State, or local licensing or approval to provide day care services to children. Child care centers, which are complying with applicable procedures to renew licensing or approval, may participate in the Program during the renewal process, unless the State agency has information that indicates that renewal will be denied. If licensing or approval is not available, a child care center may participate if it demonstrates compliance with the CACFP child care standards or any applicable State or local child care standards to the State agency.
(2) Except for for-profit centers, child care centers shall be public, or have tax exempt status under the Internal Revenue Code of 1986.
(3) Each child care center participating in the Program must serve one or more of the following meal types—breakfast; lunch; supper; and snack. Reimbursement must not be claimed for more than two meals and one snack or one meal and two snacks provided daily to each child.
(4) Each child care center participating in the Program shall claim only the meal types specified in its approved application in accordance with the meal pattern requirements specified in § 226.20. For-profit child care centers may not claim reimbursement for meals served to children in any month in which less than 25 percent of the children in care (enrolled or licensed capacity, whichever is less) were eligible for free or reduced price meals or were title XX beneficiaries. However, children who only receive at-risk afterschool snacks and/or at-risk afterschool meals must not be included in this percentage. Menus and any other nutritional records required by the State agency shall be maintained to document compliance with such requirements.
(5) A child care center with preschool children may also be approved to serve a breakfast, snack, and supper to school-age children participating in an outside-school-hours care program meeting the criteria of § 226.19(b) that is distinct from its day care program for preschool-age children. The State agency may authorize the service of lunch to such participating children who attend a school that does not offer a lunch program, provided that the limit of two meals and one snack, or one meal and two snacks, per child per day is not exceeded.
(6) A child care center with preschool children may also be approved to serve a snack to school age children participating in an afterschool care program meeting the requirements of § 226.17a that is distinct from its day care program for preschool children, provided that the limit of two meals, and one snack, or one meal and two snacks, per child per day is not exceeded.
(7) A child care center may utilize existing school food service facilities or obtain meals from a school food service facility, and the pertinent requirements of this part shall be embodied in a written agreement between the child care center and school. The center shall maintain responsibility for all Program requirements set forth in this part.
(8) Child care centers shall collect and maintain documentation of the enrollment of each child, including information used to determine eligibility for free and reduced price meals in accordance with § 226.23(e)(1). In addition, Head Start participants need only have a Head Start statement of income eligibility, or a statement of Head Start enrollment from an authorized Head Start representative, to be eligible for free meal benefits under the CACFP. Such documentation of enrollment must be updated annually, signed by a parent or legal guardian, and include information on each child’s normal days and hours of care and the meals normally received while in care.
(9) Each child care center must maintain daily records of time of service meal counts by type (breakfast, lunch, supper, and snacks) served to enrolled children, and to adults performing labor necessary to the food service.
(10) Each child care center must require key staff, as defined by the State agency, to attend Program training prior to the center’s participation in the Program, and at least annually thereafter, on content areas established by the State agency.
(c) Each child care center shall comply with the recordkeeping requirements established in § 226.10(d), in paragraph (b) of this section and, if applicable, in § 226.15(e). Failure to maintain such records shall be grounds for the denial of reimbursement.
(d) If so instructed by its sponsoring organization, a sponsored center must distribute to parents a copy of the sponsoring organization’s notice to parents.
(e) Unaffiliated sponsored child care centers must enter into a written permanent agreement with the sponsoring organization. The agreement must specify the rights and responsibilities of both parties. At a minimum, the agreement must include the provisions set forth in paragraph (b) of this section.
(f) Independent child care centers must enter into a written permanent agreement with the State agency. The agreement must specify the rights and responsibilities of both parties as required by § 226.6(b)(4). At a minimum, the agreement must include the provisions set forth in paragraph (b) of this section.
§ 226.17a At-risk afterschool care center provisions.
(a) Organizations eligible to receive reimbursement for at-risk afterschool snacks and at-risk afterschool meals—(1) Eligible organizations. To receive reimbursement for at-risk afterschool snacks, organizations must meet the criteria in paragraphs (a)(1)(i) through (a)(1)(iv) of this section. To receive reimbursement for at-risk afterschool meals, organizations must meet the criteria in paragraphs (a)(1)(i) through (a)(1)(v) of this section.
(i) Organizations must meet the definition of an At-risk afterschool care center in § 226.2. An organization may participate in the Program either as an independent center or as a child care facility under the auspices of a sponsoring organization. Public and private nonprofit centers may not participate under the auspices of a for-profit sponsoring organization.
(ii) Organizations must operate an eligible afterschool care program, as described in paragraph (b) of this section.
(iii) Organizations must meet the licensing/approval requirements in § 226.6(d)(1).
(iv) Except for for-profit centers, at-risk afterschool care centers must be public, or have tax-exempt status under the Internal Revenue Code of 1986 or be currently participating in another Federal program requiring nonprofit status.
(v) Organizations eligible to be reimbursed for at-risk afterschool meals must be located in one of the eligible States designated by law or selected by the Secretary as directed by law.
(2) Limitations. (i) To be reimbursed for at-risk afterschool snacks and/or at-risk afterschool meals, all organizations must:
(A) Serve the at-risk afterschool snacks and/or at-risk afterschool meals to children who are participating in an approved afterschool care program; and
(B) Not exceed the authorized capacity of the at-risk afterschool care center.
(ii) In any calendar month, a for-profit center must be eligible to participate in the Program as described in the definition of For-profit center in § 226.2. However, children who only receive at-risk afterschool snacks and/or at-risk afterschool meals must not be considered in determining this eligibility.
(b) Eligible at-risk afterschool care programs—(1) Eligible programs. To be eligible for reimbursement, an afterschool care program must:
(i) Be organized primarily to provide care for children after school or on weekends, holidays, or school vacations during the regular school year (an at-risk afterschool care center may not claim snacks during summer vacation, unless it is located in the attendance area of a school operating on a year-round calendar);
(ii) Have organized, regularly scheduled activities (i.e., in a structured and supervised environment);
(iii) Include education or enrichment activities; and
(iv) Except for Emergency shelters as defined in § 226.2, be located in an eligible area, as described in paragraph (i) of this section.
(2) Eligibility limitation. Organized athletic programs engaged in interscholastic or community level competitive sports are not eligible afterschool care programs.
(c) Eligibility requirements for children. At-risk afterschool snacks and/or at-risk afterschool meals are reimbursable only if served to children who are participating in an approved afterschool care program and who either are age 18 or under at the start of the school year or meet the definition of Persons with disabilities in § 226.2.
(d) Licensing requirements for at-risk afterschool care centers. In accordance with § 226.6(d)(1), if Federal, State or local licensing or approval is not otherwise required, at-risk afterschool care centers must meet State or local health and safety standards. When State or local health and safety standards have not been established, State agencies are encouraged to work with appropriate State and local officials to create such standards. Meeting these standards will remain a precondition for any afterschool center’s eligibility for CACFP nutrition benefits. In cases where Federal, State or local licensing or approval is required, at-risk afterschool care centers that are complying with applicable procedures to renew licensing or approval may participate in the Program during the renewal process, unless the State agency has information that indicates the renewal will be denied.
(e) Application procedures—(1) Application. An official of the organization must make written application to the State agency for any afterschool care program that it wants to operate as an at-risk afterschool care center.
(2) Required information. At a minimum, an organization must submit:
(i) An indication that the applicant organization meets the eligibility criteria for organizations as specified in paragraph (a) of this section;
(ii) A description of how the afterschool care program(s) meets the eligibility criteria in paragraph (b) of this section;
(iii) In the case of a sponsoring organization, a list of all applicant afterschool care centers;
(iv) Documentation that permits the State agency to confirm that all applicant afterschool care centers are located in an eligible area, as described in paragraph (i) of this section; and
(v) Other information required as a condition of eligibility in the CACFP must be submitted with an application for participation in accordance with § 226.6(b)(1).
(f) State agency action on applications—(1) State agency approval. The State agency must determine the eligibility of the afterschool care program for each sponsored afterschool care center based on the information submitted by the sponsoring organization in accordance with §§ 226.6(b)(1) and 226.15(g) and the requirements of this section. The State agency must determine the eligibility of the afterschool care programs of independent afterschool care centers based on the information submitted by the independent center in accordance with § 226.6(b)(1) and the requirements of this section. The State agency must determine the area eligibility of independent at-risk afterschool care centers in accordance with the requirements of § 226.6(f)(1)(ix)(B). An approved organization must enter into an agreement with the State agency as described in paragraph (f)(2) of this section.
(2) Agreements. The State agency must enter into a permanent agreement with an institution approved to operate one or more at-risk afterschool care centers, as described in § 226.6(b)(4). The agreement must describe the approved afterschool care programs and list the approved centers. The agreement must also require the institution to comply with the applicable requirements of this part 226.
(i) Unaffiliated sponsored afterschool care centers must enter into a written permanent agreement with the sponsoring organization. The agreement must specify the rights and responsibilities of both parties. At a minimum, the agreement must include the applicable provisions set forth in this section.
(ii) Independent afterschool care centers must enter into a written permanent agreement with the State agency. The agreement must specify the rights and responsibilities of both parties as required by § 226.6(b)(4). At a minimum, the agreement must include the applicable provisions set forth in this section.
(g) Application process in subsequent years. To continue participating in the Program, independent at-risk afterschool care centers must comply with the annual information submission requirements, as described in §§ 226.6(b)(2)(i) and (f)(3)(ii). Sponsoring organizations of at-risk afterschool care centers must comply with the annual information submission requirements, as described in in § 226.6(b)(2)(ii), and provide area eligibility data, as described in § 226.15(g).
(h) Changes to participating centers. Independent at-risk afterschool care centers or sponsors of at-risk afterschool care centers must advise the State agency of any substantive changes to the afterschool care program. Sponsoring organizations that want to add new at-risk afterschool care centers must provide the State agency with the information sufficient to demonstrate that the new centers meet the requirements of this section.
(i) Area eligibility. Except for emergency shelters, at-risk afterschool care centers must be located in an area described in paragraph (a) of the Eligible area definition in § 226.2 and in paragraph (i)(1) of this section.
(1) Definition. An at-risk afterschool care center is in an eligible area if it is located in the attendance area of a school in which at least 50 percent of the enrolled children are certified eligible for free or reduced-price school meals.
(2) Data used. Area eligibility determinations must be based on the total number of children approved for free and reduced-price school meals for the preceding October, or another month designated by the State agency that administers the National School Lunch Program (the NSLP State agency). If the NSLP State agency chooses a month other than October, it must do so for the entire State.
(3) Frequency of area eligibility determinations. Area eligibility determinations are valid for five years. The State agency may determine the date in the fifth year in which the next five-year cycle of area eligibility will begin. The State agency must not routinely require redeterminations of area eligibility based on updated school data during the five-year period, except in cases where the State agency has determined it is most efficient to incorporate area eligibility decisions into the three-year application cycle. However, a sponsoring organization, the State agency, or FNS may change the determination of area eligibility if information becomes available indicating that an at-risk afterschool care center is no longer area eligible.
(j) Cost of at-risk afterschool snacks and meals. All at-risk afterschool snacks and at-risk afterschool meals served under this section must be provided at no charge to participating children.
(k) Limit on daily reimbursements. Only one at-risk afterschool snack and, in eligible States, one at-risk afterschool meal per child per day may be claimed for reimbursement. An at-risk afterschool care center that provides care to a child under another component of the Program during the same day may not claim reimbursement for more than two meals and one snack, or one meal and two snacks, per child per day, including the at-risk afterschool snack and the at-risk afterschool meal. All meals and snacks must be claimed in accordance with the requirements for the applicable component of the Program.
(l) Meal pattern requirements for at-risk afterschool snacks and at-risk afterschool meals. At-risk afterschool snacks must meet the meal pattern requirements for snacks in § 226.20(b)(6) and/or (c)(4); at-risk afterschool meals must meet the meal pattern requirements for meals in § 226.20(b)(6) and/or (c)(1), (c)(2), or (c)(3).
(m) Time periods for snack and meal services—(1) At-risk afterschool snacks. When school is in session, the snack must be served after the child’s school day. With State agency approval, the snack may be served at any time on weekends and vacations during the regular school year. Afterschool snacks may not be claimed during summer vacation, unless an at-risk afterschool care center is located in the attendance area of a school operating on a year-round calendar.
(2) At-risk afterschool meals. When school is in session, the meal must be served after the child’s school day. With State agency approval, any one meal may be served (breakfast, lunch, or supper) per day on weekends and vacations during the regular school year. Afterschool meals may not be claimed during summer vacation, unless an at-risk afterschool care center is located in the attendance area of a school operating on a year-round calendar.
(n) Reimbursement rates. At-risk afterschool snacks are reimbursed at the free rate for snacks. At-risk afterschool meals are reimbursed at the respective free rates for breakfast, lunch, or supper
(o) Recordkeeping requirements. In addition to the other records required by this part, at-risk afterschool care centers must maintain:
(1) Daily attendance rosters, sign-in sheets or, with State agency approval, other methods which result in accurate recording of daily attendance;
(2) The number of at-risk afterschool snacks prepared or delivered for each snack service and/or, in eligible States, the number of at-risk afterschool meals prepared or delivered for each meal service;
(3) The number of at-risk afterschool snacks served to participating children for each snack service and/or, in eligible States, the number of at-risk afterschool meals served to participating children for each meal service; and
(4) Menus for each at-risk afterschool snack service and each at-risk afterschool meal service.
(p) Reporting requirements. In addition to other reporting requirements under this part, at-risk afterschool care centers must report the total number of at-risk afterschool snacks and/or (in eligible States) the total number of at-risk afterschool meals served to eligible children based on daily attendance rosters or sign-in sheets.
(q) Monitoring requirements. State agencies must monitor independent centers in accordance with § 226.6(m). Sponsoring organizations of at-risk afterschool care centers must monitor their centers in accordance with § 226.16(d)(4).
§ 226.18 Day care home provisions.
(a) Day care homes shall have current Federal, State or local licensing or approval to provide day care services to children. Day care homes which cannot obtain their license because they lack the funding to comply with licensing standards may request a total limit per home of $300 in administrative funds from a sponsoring organization to assist them in obtaining their license. Day care homes that, at the option of their sponsoring organization, receive administrative funds for licensing-related expenses must complete documentation requested by their sponsor as described in § 226.16(k) prior to receiving any funds. The agreement must be signed by the sponsoring organization and the provider and must include the provider’s full name, mailing address, and date of birth. Day care homes which are complying with applicable procedures to renew licensing or approval may participate in the Program during the renewal process, unless the State agency has information which indicates that renewal will be denied. If licensing or approval is not available, a day care home may participate in the Program if:
(1) It receives title XX funds for providing child care; or
(2) It demonstrates compliance with CACFP child care standards or applicable State or local child care standards to the State agency.
(b) Day care homes participating in the program shall operate under the auspices of a public or private nonprofit sponsoring organization. Sponsoring organizations shall enter into a written permanent agreement with each sponsored day care home which specifies the rights and responsibilities of both parties. Nothing in the preceding sentence shall be construed to limit the ability of the sponsoring organization to suspend or terminate the permanent agreement in accordance with § 226.16(l). This agreement shall be developed by the State agency, unless the State agency elects, at the request of the sponsor, to approve an agreement developed by the sponsor. At a minimum, the agreement shall embody:
(1) The right of the sponsoring organization, the State agency, the Department, and other State and Federal officials to make announced or unannounced reviews of the day care home’s operations and to have access to its meal service and records during normal hours of operation.
(2) The responsibility of the sponsoring organization to require key staff, as defined by the State agency, to receive Program training prior to the day care home’s participation in the Program, and at least annually thereafter, on content areas established by the State agency, and the responsibility of the day care home to participate in that training;
(3) The responsibility of the day care home to prepare and serve meals which meet the meal patterns specified in § 226.20;
(4) The responsibility of the day care home to maintain records of menus, and of the number of meals, by type, served to enrolled children;
(5) The responsibility of the day care home to promptly inform the sponsoring organization about any change in the number of children enrolled for care or in its licensing or approval status;
(6) The meal types approved for reimbursement to the day care home by the State agency;
(7) The right of the day care home to receive in a timely manner the full food service rate for each meal served to enrolled children for which the sponsoring organization has received payment from the State agency. However, if, with the home provider’s consent, the sponsoring organization will incur costs for the provision of program foodstuffs or meals in behalf of the home, and subtract such costs from Program payments to the home, the particulars of this arrangement shall be specified in the agreement. The sponsoring organization must not withhold Program payments to any family day care home for any other reason, except that the sponsoring organization may withhold from the provider any amounts that the sponsoring organization has reason to believe are invalid, due to the provider having submitted a false or erroneous meal count;
(8) The right of the sponsoring organization or the day care home to terminate the agreement for cause or, subject to stipulations by the State agency, convenience;
(9) A prohibition of any sponsoring organization fee to the day care home for its Program administrative services;
(10) If the State agency has approved a time limit for submission of meal records by day care homes, that time limit shall be stated in the agreement;
(11) The responsibility of the sponsoring organization to inform tier II day care homes of all of their options for receiving reimbursement for meals served to enrolled children. These options include:
(i) Receiving tier I rates for the meals served to eligible enrolled children, by electing to have the sponsoring organization identify all income-eligible children through the collection of free and reduced-price applications and the sponsoring organization or day care home’s possession of other proof of a child or household’s participation in a categorically eligible program;
(ii) Receiving tier I rates for the meals served to eligible enrolled children, by electing to have the sponsoring organization identify only those children for whom the sponsoring organization or day care home possess documentation of the child or household’s participation in a categorically eligible program, under the expanded categorical eligibility provision, as described in § 226.23(e)(1); or
(iii) Receiving tier II rates of reimbursement for all meals served to enrolled children;
(12) The responsibility of the sponsoring organization, upon the request of a tier II day care home, to collect applications and determine the eligibility of enrolled children for free or reduced price meals;
(13) The right of the tier II day care home to assist in collecting applications from households and transmitting the applications to the sponsoring organization. However, a tier II day care home may not review the collected applications. The sponsoring organizations may prohibit a tier II day care home from assisting in collection and transmittal of applications if the day care home does not comply with the process, as described in § 226.23(e)(2)(viii);
(14) The State agency’s policy to restrict transfers of day care homes between sponsoring organizations;
(15) The responsibility of the day care home to notify their sponsoring organization in advance whenever they are planning to be out of their home during the meal service period. The agreement must also state that, if this procedure is not followed and an unannounced review is conducted when the children are not present in the day care home, claims for meals that would have been served during the unannounced review will be disallowed;
(16) The day care home’s opportunity to request an administrative review if a sponsoring organization issues a notice of proposed termination of the day care home’s Program agreement, or if a sponsoring organization suspends participation due to health and safety concerns, in accordance with § 226.6(1)(2); and
(17) If so instructed by its sponsoring organization, the day care home’s responsibility to distribute to parents a copy of the sponsoring organization’s notice to parents.
(c) Each day care home must serve one or more of the following meal types—breakfast, lunch, supper, and snack. Reimbursement may not be claimed for more than two meals and one snack, or one meal and two snacks, provided daily to each child.
(d) Each day care home participating in the program shall serve the meal types specified in its approved application in accordance with the meal pattern requirements specified in § 226.20. Menu records shall be maintained to document compliance with these requirements. Meals shall be served at no separate charge to enrolled children;
(e) Each day care home must maintain on file documentation of each child’s enrollment and must maintain daily records of the number of children in attendance and the number of meals, by type, served to enrolled children. Such documentation of enrollment must be updated annually, signed by a parent or legal guardian, and include information on each child’s normal days and hours of care and the meals normally received while in care. Each tier II day care home in which the provider elects to have the sponsoring organization identify enrolled children who are eligible for free or reduced price meals, and in which the sponsoring organization employs a meal counting and claiming system in accordance with § 226.13(d)(3)(i), shall maintain and submit each month to the sponsoring organization daily records of the number and types of meals served to each enrolled child by name. Payment may be made for meals served to the provider’s own children only when (1) such children are enrolled and participating in the child care program during the time of the meal service, (2) enrolled nonresident children are present and participating in the child care program and (3) providers’ children are eligible to receive free or reduced-price meals. Reimbursement may not be claimed for meals served to children who are not enrolled, or for meals served at any one time to children in excess of the home’s authorized capacity or for meals served to providers’ children who are not eligible for free or reduced-price meals.
(f) The State agency may not require a day care home or sponsoring organization to maintain documentation of home operating costs.
(g) Each day care home shall comply with the recordkeeping requirements established in § 226.10(d) and in this section. Failure to maintain such records shall be grounds for the denial of reimbursement.
§ 226.19 Outside-school-hours care center provisions.
(a) Outside-school-hours care centers may participate in the Program either as independent centers or under the auspices of a sponsoring organization; Provided, however, That public and private nonprofit centers shall not be eligible to participate in the Program under the auspices of a for-profit sponsoring organization. Outside-school-hours care centers participating as independent centers shall comply with the provisions of § 226.15.
(b) All outside-school-hours care centers, independent or sponsored, shall meet the following requirements:
(1) In accordance with § 226.6(d)(1), if Federal, State or local licensing or approval is not otherwise required, outside-school-hours care centers must meet State or local health and safety standards. When State or local health and safety standards have not been established, State agencies are encouraged to work with appropriate State and local officials to create such standards. Meeting these standards will remain a precondition for any outside-school-hours care center’s eligibility for CACFP nutrition benefits. In cases where Federal, State or local licensing or approval is required, outside-school-hours care centers that are complying with applicable procedures to renew licensing or approval may participate in the Program during the renewal process, unless the State agency has information that indicates the renewal will be denied.
(2) Except for for-profit centers, outside-school-hours care centers shall be public, or have tax-exempt status under the Internal Revenue Code of 1986.
(3) Nonresidential public or private nonprofit schools which provide organized child care programs for school children may participate in the Program as outside-school-hours care centers if:
(i) Children participate in a regularly scheduled program that meets the criteria of paragraph (b)(1) of this section. The program is organized for the purpose of providing services to children and is distinct from any extracurricular programs organized primarily for scholastic, cultural, or athletic purposes; and
(ii) Separate Program records are maintained.
(4) Outside-school-hours care centers shall be eligible to serve one or more of the following meal types: breakfasts, snacks and suppers. In addition, outside-school-hours care centers shall be eligible to serve lunches to enrolled children during periods of school vacation, including weekends and holidays, and to children attending schools which do not offer a lunch program. Notwithstanding the eligibility of outside-school-hours care centers to serve Program meals to children on school vacation, including holidays and weekends, such centers shall not operate under the Program on weekends only.
(5) Each outside-school-hours care center participating in the Program shall claim only the meal types specified in its approved application and served in compliance with the meal pattern requirements of § 226.20. Reimbursement may not be claimed for more than two meals and one snack provided daily to each child or for meals served to children at any one time in excess of authorized capacity. For-profit centers may not claim reimbursement for meals served to children in any month in which less than 25 percent of the children in care (enrolled or licensed capacity, whichever is less) were eligible for free or reduced price meals or were title XX beneficiaries.
(6) Each outside-school-hours care center must require key operational staff, as defined by the State agency, to attend Program training prior to the center’s participation in the Program, and at least annually thereafter, on content areas established by the State agency. Each meal service must be supervised by an adequate number of operational personnel who have been trained in Program requirements as outlined in this section. Operational personnel must ensure that:
(i) Meals are served only to children and to adults who perform necessary food service labor;
(ii) Meals served to children meet the meal pattern requirements specified in § 226.20;
(iii) Meals served are consumed on the premises of the centers;
(iv) Accurate records are maintained; and
(v) The number of meals prepared or ordered is promptly adjusted on the basis of participation trends.
(7) Each outside-school-hours care center shall accurately maintain the following records:
(i) Information used to determine eligibility for free or reduced price meals in accordance with § 226.23(e)(1);
(ii) Number of meals prepared or delivered for each meal service;
(iii) Daily menu records for each meal service;
(iv) Number of meals served to children at each meal service;
(v) Number of children in attendance during each meal service;
(vi) Number of meals served to adults performing necessary food service labor for each meal service; and
(vii) All other records required by the State agency financial management system.
(8) An outside-school-hours care center may utilize existing school food service facilities or obtain meals from a school food service facility, and the pertinent requirements of this part shall be embodied in a written agreement between the outside-school-hours care center and the school. The center shall maintain responsibility for all Program requirements set forth in this part.
(c) Each outside-school-hours care center shall comply with the recordkeeping requirements established in § 226.10(d), in paragraph (b) of this section and, if applicable, in § 226.15(e). Failure to maintain such records shall be grounds for the denial of reimbursement.
(d) Unaffiliated sponsored outside-school-hours-care centers must enter into a written permanent agreement with the sponsoring organization. The agreement must specify the rights and responsibilities of both parties. At a minimum, the agreement must include the provisions set forth in paragraph (b) of this section.
(e) Independent outside-school-hours care centers must enter into a written permanent agreement with the State agency. The agreement must specify the rights and responsibilities of both parties as required by § 226.6(b)(4). At a minimum, the agreement must include the provisions described in paragraph (b) of this section.
§ 226.19a Adult day care center provisions.
(a) Adult day care centers may participate in the Program either as independent centers or under the auspices of a sponsoring organization; provided, however, that public and private nonprofit centers shall not be eligible to participate in the Program under the auspices of a for-profit sponsoring organization. Adult day care centers participating as independent centers shall comply with the provisions of § 226.15.
(b) All adult day care centers, independent or sponsored, shall meet the following requirements:
(1) Adult day care centers shall provide a community-based group program designed to meet the needs of functionally impaired adults through an individual plan of care. Such a program shall be a structured, comprehensive program that provides a variety of health, social and related support services to enrolled adult participants.
(2) Adult day care centers shall provide care and services directly or under arrangements made by the agency or organization whereby the agency or organization maintains professional management responsibility for all such services.
(3) Adult day care centers shall have Federal, State or local licensing or approval to provide day care services to functionally impaired adults (as defined in § 226.2) or individuals 60 years of age or older in a group setting outside their home or a group living arrangement on a less than 24-hour basis. Adult day care centers which are complying with applicable procedures to renew licensing or approval may participate in the Program during the renewal process, unless the State agency has information which indicates that renewal will be denied.
(4) Except for for-profit centers, adult day care centers shall be public, or have tax-exempt status under the Internal Revenue Code of 1986.
(5) Each adult day care center participating in the Program must serve one or more of the following meal types—breakfast, lunch, supper, and snack. Reimbursement may not be claimed for more than two meals and one snack, or one snack and two meals, provided daily to each adult participant.
(6) Each adult day care center participating in the Program shall claim only the meal types specified in its approved application in accordance with the meal pattern requirements specified in § 226.20. Participating centers may not claim CACFP reimbursement for meals claimed under part C of title III of the Older Americans Act of 1965. Reimbursement may not be claimed for meals served to persons who are not enrolled, or for meals served to participants at any one time in excess of the center’s authorized capacity, or for any meal served at a for-profit center during a calendar month when less than 25 percent of enrolled participants were title XIX or title XX beneficiaries. Menus and any other nutritional records required by the State agency shall be maintained to document compliance with such requirements.
(7) An adult day care center may obtain meals from a school food service facility, and the pertinent requirements of this part shall be embodied in a written agreement between the center and school. The center shall maintain responsibility for all Program requirements set forth in this part.
(8) Adult day care centers shall collect and maintain documentation of the enrollment of each adult participant including information used to determine eligibility for free and reduced price meals in accordance with § 226.23(e)(1).
(9) Each adult day care center must maintain daily records of time of service meal counts by type (breakfast, lunch, supper, and snacks) served to enrolled participants, and to adults performing labor necessary to the food service.
(10) Each adult day care center shall maintain records on the age of each enrolled person. In addition, each adult day care center shall maintain records which demonstrate that each enrolled person under the age of 60 meets the functional impairment eligibility requirements established under the definition of “functionally impaired adult” contained in this part. Finally, each adult day care center shall maintain records which document that qualified adult day care participants reside in their own homes (whether alone or with spouses, children or guardians) or in group living arrangements as defined in § 226.2.
(11) Each adult day care center must require key operational staff, as defined by the State agency, to attend Program training prior to the facility’s participation in the Program, and at least annually thereafter, on content areas established by the State agency. Each meal service must be supervised by an adequate number of operational personnel who have been trained in Program requirements as outlined in this section.
(c) Each adult day care center shall comply with the recordkeeping requirements established in § 226.10(d), in paragraph (b) of this section and, if applicable, in § 226.15(e). Failure to maintain such records shall be grounds for the denial of reimbursement.
(d) Unaffiliated sponsored adult day care centers must enter into a written permanent agreement with the sponsoring organization. The agreement must specify the rights and responsibilities of both parties. At a minimum, the agreement must address the provisions set forth in paragraph (b) this section.
(e) Independent adult day care centers must enter into a written permanent agreement with the State agency. The agreement must specify the rights and responsibilities of both parties as required by § 226.6(b)(4). At a minimum, the agreement must include the provisions described in paragraph (b) of this section.
§ 226.20 Requirements for meals.
(a) Food components. Except as otherwise provided in this section, each meal served in the Program must contain, at a minimum, the indicated food components:
(1) Fluid milk. Fluid milk must be served as a beverage or on cereal, or a combination of both. Lactose-free and reduced-lactose milk that meet the fat content and flavor specifications for each age group may also be offered.
(i) Children 1 year old. Unflavored whole milk must be served.
(ii) Children 2 through 5 years old. Either unflavored low-fat (1 percent) or unflavored fat-free (skim) milk must be served.
(iii) Children 6 years old and older. Low-fat (1 percent fat or less) or fat-free (skim) milk must be served. Milk may be unflavored or flavored.
(iv) Adults. Low-fat (1 percent fat or less) or fat-free (skim) milk must be served. Milk may be unflavored or flavored. Six ounces (weight) or
(2) Vegetables. A serving may contain fresh, frozen, or canned vegetables, dry beans and peas (legumes), or vegetable juice. All vegetables are credited based on their volume as served, except that 1 cup of leafy greens counts as
(i) Pasteurized, full-strength vegetable juice may be used to fulfill the entire requirement. Vegetable juice or fruit juice may only be served at one meal, including snack, per day.
(ii) Cooked dry beans or dry peas may be counted as either a vegetable or as a meat alternate, but not as both in the same meal.
(3) Fruits. A serving may contain fresh, frozen, canned, dried fruits, or fruit juice. All fruits are based on their volume as served, except that
(i) Pasteurized, full-strength fruit juice may be used to fulfill the entire requirement. Fruit juice or vegetable juice may only be served at one meal, including snack, per day.
(ii) A vegetable may be used to meet the entire fruit requirement at lunch and supper. When two vegetables are served at lunch or supper, two different kinds of vegetables must be served.
(4) Grains—(i) Enriched and whole grains. All grains must be made with enriched or whole grain meal or flour.
(A) At least one serving per day, across all eating occasions of bread, cereals, and grains, must be whole grain-rich. Whole grain-rich foods contain at least 50 percent whole grains and the remaining grains in the food are enriched, and must meet the whole grain-rich criteria specified in FNS guidance.
(B) A serving may contain whole grain-rich or enriched bread, cornbread, biscuits, rolls, muffins, and other bread products; or whole grain-rich, enriched, or fortified cereal grain, cooked pasta or noodle products, or breakfast cereal; or any combination of these foods.
(ii) Breakfast cereals. Breakfast cereals are those as defined by the Food and Drug Administration in 21 CFR 170.3(n)(4) for ready-to-eat and instant and regular hot cereals. Breakfast cereals must contain no more than 6 grams of sugar per dry ounce (no more than 21.2 grams sucrose and other sugars per 100 grams of dry cereal).
(iii) Desserts. Grain-based desserts do not count towards meeting the grains requirement.
(5) Meat and meat alternates. (i) Meat and meat alternates must be served in a main dish, or in a main dish and one other menu item. The creditable quantity of meat and meat alternates must be the edible portion as served of:
(A) Lean meat, poultry, or fish;
(B) Alternate protein products;
(C) Cheese, or an egg;
(D) Cooked dry beans or peas;
(E) Peanut butter; or
(F) Any combination of these foods.
(ii) Nuts and seeds. Nuts and seeds and their butters are allowed as meat alternates in accordance with FNS guidance. For lunch and supper meals, nuts or seeds may be used to meet one-half of the meat and meat alternate component. They must be combined with other meat and meat alternates to meet the full requirement for a reimbursable lunch or supper.
(A) Nut and seed meals or flours may be used only if they meet the requirements for alternate protein products established in appendix A of this part.
(B) Acorns, chestnuts, and coconuts cannot be used as meat alternates because of their low protein and iron content.
(iii) Yogurt. Four ounces (weight) or
(A) Yogurt may be plain or flavored, unsweetened, or sweetened;
(B) Yogurt must contain no more than 23 grams of total sugars per 6 ounces;
(C) Noncommercial or commercial standardized yogurt products, such as frozen yogurt, drinkable yogurt products, homemade yogurt, yogurt flavored products, yogurt bars, yogurt covered fruits or nuts, or similar products are not creditable; and
(D) For adults, yogurt may only be used as a meat alternate when it is not also being used as a fluid milk substitute in the same meal.
(iv) Tofu and soy products. Commercial tofu and soy products may be used to meet all or part of the meat and meat alternate component in accordance with FNS guidance and appendix A of this part. Non-commercial and non-standardized tofu and soy products cannot be used.
(v) Beans and peas (legumes). Cooked dry beans and peas may be used to meet all or part of the meat and meat alternate component. Beans and peas include black beans, garbanzo beans, lentils, kidney beans, mature lima beans, navy beans, pinto beans, and split peas. Beans and peas may be counted as either a meat alternate or as a vegetable, but not as both in the same meal.
(vi) Other meat alternates. Other meat alternates, such as cheese, eggs, and nut butters may be used to meet all or part of the meat and meat alternate component.
(b) Infant meals—(1) Feeding infants. Foods in reimbursable meals served to infants ages birth through 11 months must be of a texture and a consistency that are appropriate for the age and development of the infant being fed. Foods must also be served during a span of time consistent with the infant’s eating habits.
(2) Breastmilk and iron-fortified formula. Breastmilk or iron-fortified infant formula, or portions of both, must be served to infants birth through 11 months of age. An institution or facility must offer at least one type of iron-fortified infant formula. Meals containing breastmilk or iron-fortified infant formula supplied by the institution or facility, or by the parent or guardian, are eligible for reimbursement.
(i) Parent or guardian provided breastmilk or iron-fortified formula. A parent or guardian may choose to accept the offered formula, or decline the offered formula and supply expressed breastmilk or an iron-fortified infant formula instead. Meals in which a mother directly breastfeeds her child at the child care institution or facility are also eligible for reimbursement. When a parent or guardian chooses to provide breastmilk or iron-fortified infant formula and the infant is consuming solid foods, the institution or facility must supply all other required meal components in order for the meal to be reimbursable.
(ii) Breastfed infants. For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered. In these situations, additional breastmilk must be offered at a later time if the infant will consume more.
(3) Solid foods. The gradual introduction of solid foods may begin at six months of age, or before or after six months of age if it is developmentally appropriate for the infant and in accordance with FNS guidance.
(4) Infant meal pattern. Infant meals must have, at a minimum, each of the food components indicated, in the amount that is appropriate for the infant’s age.
(i) Birth through 5 months—(A) Breakfast. Four to 6 fluid ounces of breastmilk or iron-fortified infant formula, or portions of both.
(B) Lunch or supper. Four to 6 fluid ounces of breastmilk or iron-fortified infant formula, or portions of both.
(C) Snack. Four to 6 fluid ounces of breastmilk or iron-fortified infant formula, or portions of both.
(ii) 6 through 11 months. Breastmilk or iron-fortified formula, or portions of both, is required. Meals are reimbursable when institutions and facilities provide all the components in the meal pattern that the infant is developmentally ready to accept.
(A) Breakfast, lunch, or supper. Six to 8 fluid ounces of breastmilk or iron-fortified infant formula, or portions of both; and 0 to
(B) Snack. Two to 4 fluid ounces of breastmilk or iron-fortified infant formula; and 0 to
(5) Infant meal pattern table. The minimum amounts of food components to serve to infants, as described in paragraph (b)(4) of this section, are:
Table 1 to Paragraph (
| Infants | Birth through 5 months | 6 through 11 months |
|---|---|---|
| Breakfast, Lunch, or Supper | 4-6 fluid ounces breastmilk 1 or formula 2 | 6-8 fluid ounces breastmilk 1 or formula; 2 and |
| 0- 2 3 or | ||
| 0-4 tablespoons meat, fish, poultry, whole egg, cooked dry beans, or cooked dry peas; or | ||
| 0-2 ounces of cheese; or | ||
| 0-4 ounces (volume) of cottage cheese; or | ||
| 0-4 ounces or 4 or a combination of the above; 5 and | ||
| 0-2 tablespoons vegetable or fruit, or a combination of both. 5 6 | ||
| Snack | 4-6 fluid ounces breastmilk 1 or formula 2 | 2-4 fluid ounces breastmilk 1 or formula; 2 and |
| 0- 3 7 or | ||
| 0- 3 7 or | ||
| 0- 2 3 or | ||
| 0- 3 5 7 8 and | ||
| 0-2 tablespoons vegetable or fruit, or a combination of both. 5 6 |
1 Breastmilk or formula, or portions of both, must be served; however, it is recommended that breastmilk be served in place of formula from birth through 11 months. For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered, with additional breastmilk offered at a later time if the infant will consume more.
2 Infant formula and dry infant cereal must be iron-fortified.
3 Refer to FNS guidance for additional information on crediting different types of grains.
4 Yogurt must contain no more than 23 grams of total sugars per 6 ounces.
5 A serving of this component is required when the infant is developmentally ready to accept it.
6 Fruit and vegetable juices must not be served.
7 A serving of grains must be whole grain-rich, enriched meal, or enriched flour.
8 Breakfast cereals must contain no more than 6 grams of sugar per dry ounce (no more than 21.2 grams sucrose and other sugars per 100 grams of dry cereal).
(c) Meal patterns for children age 1 through 18 and adult participants. Institutions and facilities must serve the food components and quantities specified in the following meal patterns for children and adult participants in order to qualify for reimbursement.
(1) Breakfast. Fluid milk, vegetables or fruit, or portions of both, and grains are required components of the breakfast meal. Meat and meat alternates may be used to meet the entire grains requirement a maximum of three times per week. The minimum amounts of food components to be served at breakfast are as follows:
Table 2 to Paragraph (
[Select the appropriate components for a reimbursable meal]
| Food components and food items 1 | Minimum quantities | ||||
|---|---|---|---|---|---|
| Ages 1-2 | Ages 3-5 | Ages 6-12 | Ages 13-18 2 (at-risk afterschool programs and emergency shelters) | Adult participants | |
| Fluid Milk 3 | 4 fluid ounces | 6 fluid ounces | 8 fluid ounces | 8 fluid ounces | 8 fluid ounces. |
| Vegetables, fruits, or portions of both 4 | |||||
| Grains (oz. eq.) 5 6 7 8 | 1 ounce equivalent | 1 ounce equivalent | 2 ounce equivalents. | ||
1 Must serve all three components for a reimbursable meal. Offer versus serve is an option for at-risk afterschool participants.
2 Larger portion sizes than specified may need to be served to children 13 through 18 years old to meet their nutritional needs.
3 Must be unflavored whole milk for children age one. Must be unflavored low-fat (1 percent fat or less) or unflavored fat-free (skim) milk for children two through five years old. Must be unflavored or flavored fat-free (skim) or low-fat (1 percent fat or less) milk for children 6 years old and older and adults. For adult participants, 6 ounces (weight) or
4 Pasteurized full-strength juice may only be used to meet the vegetable or fruit requirement at one meal, including snack, per day.
5 At least one serving per day, across all eating occasions, must be whole grain-rich. Grain-based desserts do not count towards meeting the grains requirement.
6 Meat and meat alternates may be used to meet the entire grains requirement a maximum of three times a week. One ounce of meat and meat alternates is equal to one ounce equivalent of grains.
7 Refer to FNS guidance for additional information on crediting different types of grains.
8 Breakfast cereals must contain no more than 6 grams of sugar per dry ounce (no more than 21.2 grams sucrose and other sugars per 100 grams of dry cereal).
(2) Lunch and supper. Fluid milk, meat and meat alternates, vegetables, fruits, and grains are required components in the lunch and supper meals. The minimum amounts of food components to be served at lunch and supper are as follows:
Table 3 to Paragraph (
[Select the appropriate components for a reimbursable meal]
| Food components and food items 1 | Minimum quantities | ||||
|---|---|---|---|---|---|
| Ages 1-2 | Ages 3-5 | Ages 6-12 | Ages 13-18 2 (at-risk afterschool programs and emergency shelters) | Adult participants | |
| Fluid Milk 3 | 4 fluid ounces | 6 fluid ounces | 8 fluid ounces | 8 fluid ounces | 8 fluid ounces. 4 |
| Meat/meat alternates (edible portion as served): | |||||
| Lean meat, poultry, or fish | 1 ounce | 1 | 2 ounces | 2 ounces | 2 ounces. |
| Tofu, soy products, or alternate protein products 5 | 1 ounce | 1 | 2 ounces | 2 ounces | 2 ounces. |
| Cheese | 1 ounce | 1 | 2 ounces | 2 ounces | 2 ounces. |
| Large egg | 1 | 1 | 1. | ||
| Cooked dry beans or peas | |||||
| Peanut butter or soy nut butter or other nut or seed butters | 2 Tbsp | 3 Tbsp | 4 Tbsp | 4 Tbsp | 4 Tbsp. |
| Yogurt, plain or flavored unsweetened or sweetened 6 | 4 ounces or | 6 ounces or | 8 ounces or 1 cup | 8 ounces or 1 cup | 8 ounces or 1 cup. |
| The following may be used to meet no more than 50% of the requirement: | |||||
| Peanuts, soy nuts, tree nuts, or seeds, as listed in program guidance, or an equivalent quantity of any combination of the above meat/meat alternates (1 ounce of nuts/seeds = 1 ounce of cooked lean meat, poultry, or fish) | 1 ounce = 50% | 1 ounce = 50% | 1 ounce = 50%. | ||
| Vegetables 7 8 | |||||
| Fruits 7 8 | |||||
| Grains (oz eq) 9 10 11 | 1 ounce equivalent | 1 ounce equivalent | 2 ounce equivalents. | ||
1 Must serve all five components for a reimbursable meal. Offer versus serve is an option for at-risk afterschool and adult participants.
2 Larger portion sizes than specified may need to be served to children 13 through 18 years old to meet their nutritional needs.
3 Must be unflavored whole milk for children age one. Must be unflavored low-fat (1 percent fat or less) or unflavored fat-free (skim) milk for children two through five years old. Must be unflavored or flavored fat-free (skim) or low-fat (1 percent fat or less) milk for children 6 years old and older and adults. For adult participants, 6 ounces (weight) or
4 A serving of fluid milk is optional for suppers served to adult participants.
5 Alternate protein products must meet the requirements in Appendix A to Part 226 of this chapter.
6 Yogurt must contain no more than 23 grams of total sugars per 6 ounces.
7 Pasteurized full-strength juice may only be used to meet the vegetable or fruit requirement at one meal, including snack, per day.
8 A vegetable may be used to meet the entire fruit requirement. When two vegetables are served at lunch or supper, two different kinds of vegetables must be served.
9 At least one serving per day, across all eating occasions, must be whole grain-rich. Grain-based desserts do not count towards the grains requirement.
10 Refer to FNS guidance for additional information on crediting different types of grains.
11 Breakfast cereals must contain no more than 6 grams of sugar per dry ounce (no more than 21.2 grams sucrose and other sugars per 100 grams of dry cereal).
(3) Snack. Serve two of the following five components: Fluid milk, meat and meat alternates, vegetables, fruits, and grains. Fruit juice, vegetable juice, and milk may comprise only one component of the snack. The minimum amounts of food components to be served at snacks are as follows:
Table 4 to Paragraph (
[Select the appropriate components for a reimbursable meal]
| Food components and food items 1 | Minimum quantities | ||||
|---|---|---|---|---|---|
| Ages 1-2 | Ages 3-5 | Ages 6-12 | Ages 13-18 2 (at-risk afterschool programs and emergency shelters) | Adult participants | |
| Fluid Milk 3 | 4 fluid ounces | 4 fluid ounces | 8 fluid ounces | 8 fluid ounces | 8 fluid ounces. |
| Meat/meat alternates (edible portion as served): | |||||
| Lean meat, poultry, or fish | 1 ounce | 1 ounce | 1 ounce | ||
| Tofu, soy products, or alternate protein products 4 | 1 ounce | 1 ounce | 1 ounce. | ||
| Cheese | 1 ounce | 1 ounce | 1 ounce. | ||
| Large egg | |||||
| Cooked dry beans or peas | |||||
| Peanut butter or soy nut butter or other nut or seed butters | 1 Tbsp | 1 Tbsp | 2 Tbsp | 2 Tbsp | 2 Tbsp. |
| Yogurt, plain or flavored unsweetened or sweetened 5 | 2 ounces or | 2 ounces or | 4 ounces or | 4 ounces or | 4 ounces or |
| Peanuts, soy nuts, tree nuts, or seeds | 1 ounce | 1 ounce | 1 ounce. | ||
| Vegetables 6 | |||||
| Fruits 6 | |||||
| Grains (oz. eq.) 7 8 9 | 1 ounce equivalent | 1 ounce equivalent | 1 ounce equivalent. | ||
1 Select two of the five components for a reimbursable snack. Only one of the two components may be a beverage.
2 Larger portion sizes than specified may need to be served to children 13 through 18 years old to meet their nutritional needs.
3 Must be unflavored whole milk for children age one. Must be unflavored low-fat (1 percent fat or less) or unflavored fat-free (skim) milk for children two through five years old. Must be unflavored or flavored fat-free (skim) or low-fat (1 percent fat or less) milk for children 6 years old and older and adults. For adult participants, 6 ounces (weight) or
4 Alternate protein products must meet the requirements in Appendix A to part 226 of this chapter.
5 Yogurt must contain no more than 23 grams of total sugars per 6 ounces.
6 Pasteurized full-strength juice may only be used to meet the vegetable or fruit requirement at one meal, including snack, per day.
7 At least one serving per day, across all eating occasions, must be whole grain-rich. Grain-based desserts do not count towards the grains requirement.
8 Refer to FNS guidance for additional information on crediting different types of grains.
9 Breakfast cereals must contain no more than 6 grams of sugar per dry ounce (no more than 21.2 grams sucrose and other sugars per 100 grams of dry cereal).
(d) Food preparation. Deep-fat fried foods that are prepared on-site cannot be part of the reimbursable meal. For this purpose, deep-fat frying means cooking by submerging food in hot oil or other fat. Foods that are pre-fried, flash-fried, or par-fried by a commercial manufacturer may be served, but must be reheated by a method other than frying.
(e) Unavailability of fluid milk—(1) Temporary. When emergency conditions prevent an institution or facility normally having a supply of milk from temporarily obtaining milk deliveries, the State agency may approve the service of breakfast, lunches, or suppers without milk during the emergency period.
(2) Continuing. When an institution or facility is unable to obtain a supply of milk on a continuing basis, the State agency may approve service of meals without milk, provided an equivalent amount of canned, whole dry or fat-free dry milk is used in the preparation of the components of the meal set forth in paragraph (a) of this section.
(f) Statewide substitutions. In American Samoa, Puerto Rico, Guam, and the Virgin Islands, the following variations from the meal requirements are authorized: a serving of starchy vegetable, such as yams, plantains, or sweet potatoes, may be substituted for the grains requirement.
(g) Exceptions and variations in reimbursable meals—(1) Exceptions for disability reasons. Reasonable substitutions must be made on a case-by-case basis for foods and meals described in paragraphs (a), (b), and (c) of this section for individual participants who are considered to have a disability under 7 CFR 15b.3 and whose disability restricts their diet.
(i) A written statement must support the need for the substitution. The statement must include recommended alternate foods, unless otherwise exempted by FNS, and must be signed by a licensed physician or licensed health care professional who is authorized by State law to write medical prescriptions.
(ii) A parent, guardian, adult participant, or a person on behalf of an adult participant may supply one or more components of the reimbursable meal as long as the institution or facility provides at least one required meal component.
(2) Exceptions for non-disability reasons. Substitutions may be made on a case-by-case basis for foods and meals described in paragraphs (a), (b), and (c) of this section for individual participants without disabilities who cannot consume the regular meal because of medical or special dietary needs.
(i) A written statement must support the need for the substitution. The statement must include recommended alternate foods, unless otherwise exempted by FNS. Except for substitutions of fluid milk, as set forth below, the statement must be signed by a recognized medical authority.
(ii) A parent, guardian, adult participant, or a person on behalf of an adult participant may supply one component of the reimbursable meal as long as the component meets the requirements described in paragraphs (a), (b), and (c) of this section and the institution or facility provides the remaining components.
(3) Fluid milk substitutions for non-disability reasons. Non-dairy fluid milk substitutions that provide the nutrients listed in the following table and are fortified in accordance with fortification guidelines issued by the Food and Drug Administration may be provided for non-disabled children and adults who cannot consume fluid milk due to medical or special dietary needs when requested in writing by the child’s parent or guardian, or by, or on behalf of, an adult participant. An institution or facility need only offer the non-dairy beverage that it has identified as an allowable fluid milk substitute according to the following table.
| Nutrient | Per cup (8 fl oz) |
|---|---|
| Calcium | 276 mg. |
| Protein | 8 g. |
| Vitamin A | 500 IU. |
| Vitamin D | 100 IU. |
| Magnesium | 24 mg. |
| Phosphorus | 222 mg. |
| Potassium | 349 mg. |
| Riboflavin | 0.44 mg. |
| Vitamin B-12 | 1.1 mcg. |
(h) Special variations. FNS may approve variations in the food components of the meals on an experimental or continuing basis in any institution or facility where there is evidence that such variations are nutritionally sound and are necessary to meet ethnic, religious, economic, or physical needs.
(i) Meals prepared in schools. The State agency must allow institutions and facilities which serve meals to children 5 years old and older and are prepared in schools participating in the National School Lunch and School Breakfast Programs to substitute the meal pattern requirements of the regulations governing those Programs (7 CFR parts 210 and 220, respectively) for the meal pattern requirements contained in this section.
(j) Meal planning. Institutions and facilities must plan for and order meals on the basis of current participant trends, with the objective of providing only one meal per participant at each meal service. Records of participation and of ordering or preparing meals must be maintained to demonstrate positive action toward this objective. In recognition of the fluctuation in participation levels which makes it difficult to estimate precisely the number of meals needed and to reduce the resultant waste, any excess meals that are ordered may be served to participants and may be claimed for reimbursement, unless the State agency determines that the institution or facility has failed to plan and prepare or order meals with the objective of providing only one meal per participant at each meal service.
(k) Time of meal service. State agencies may require any institution or facility to allow a specific amount of time to elapse between meal services or require that meal services not exceed a specified duration.
(l) Sanitation. Institutions and facilities must ensure that in storing, preparing, and serving food proper sanitation and health standards are met which conform with all applicable State and local laws and regulations. Institutions and facilities must ensure that adequate facilities are available to store food or hold meals.
(m) Donated commodities. Institutions and facilities must efficiently use in the Program any foods donated by the Department and accepted by the institution or facility.
(n) Family style meal service. Family style is a type of meal service which allows children and adults to serve themselves from common platters of food with the assistance of supervising adults. Institutions and facilities choosing to exercise this option must be in compliance with the following practices:
(1) A sufficient amount of prepared food must be placed on each table to provide the full required portions of each of the components, as outlined in paragraphs (c)(1) and (2) of this section, for all children or adults at the table and to accommodate supervising adults if they wish to eat with the children and adults.
(2) Children and adults must be allowed to serve the food components themselves, with the exception of fluids (such as milk). During the course of the meal, it is the responsibility of the supervising adults to actively encourage each child and adult to serve themselves the full required portion of each food component of the meal pattern. Supervising adults who choose to serve the fluids directly to the children or adults must serve the required minimum quantity to each child or adult.
(3) Institutions and facilities which use family style meal service may not claim second meals for reimbursement.
(o) Offer versus serve. (1) Each adult day care center and at-risk afterschool program must offer its participants all of the required food servings as set forth in paragraphs (c)(1) and (c)(2) of this section. However, at the discretion of the adult day care center or at-risk afterschool program, participants may be permitted to decline:
(i) For adults. (A) One of the four food items required at breakfast (one serving of fluid milk; one serving of vegetable or fruit, or a combination of both; and two servings of grains, or meat or meat alternates);
(B) Two of the five food components required at lunch (fluid milk; vegetables; fruit; grain; and meat or meat alternate); and
(C) One of the four food components required at supper (vegetables; fruit; grain; and meat or meat alternate).
(ii) For children. Two of the five food components required at supper (fluid milk; vegetables; fruit; grain; and meat or meat alternate).
(2) In pricing programs, the price of the reimbursable meal must not be affected if a participant declines a food item.
(p) Prohibition on using foods and beverages as punishments or rewards. Meals served under this part must contribute to the development and socialization of children. Institutions and facilities must not use foods and beverages as punishments or rewards.
§ 226.21 Food service management companies.
(a) Any institution may contract with a food service management company. An institution which contracts with a food service management company must remain responsible for ensuring that the food service operation conforms to its agreement with the State agency. All procurements of meals from food service management companies must adhere to the procurement standards set forth in § 226.22 and comply with the following procedures intended to prevent fraud, waste, and Program abuse:
(1) All proposed contracts shall be publicly announced at least once 14 calendar days prior to the opening of bids. The announcement shall include the time and place of the bid opening;
(2) The institution shall notify the State agency at least 14 calendar days prior to the opening of the bids of the time and place of the bid opening;
(3) The invitation to bid shall not provide for loans or any other monetary benefit or terms or conditions to be made to institutions by food service management companies;
(4) Nonfood items shall be excluded from the invitation to bid, except where such items are essential to the conduct of the food service;
(5) The invitation to bid shall not specify special meal requirements to meet ethnic or religious needs unless special requirements are necessary to meet the needs of the participants to be served;
(6) The bid shall be publicly opened;
(7) All bids totaling $50,000 or more shall be submitted to the State agency for approval before acceptance. All bids shall be submitted to the State agency for approval before accepting a bid which exceeds the lowest bid. State agencies shall respond to any request for approval within 10 working days of receipt;
(8) The institutions shall inform the State agency of the reason for selecting the food service management company chosen. State agencies may require institutions to submit copies of all bids submitted under this section.
(b) The institution and the food service management company shall enter into a standard contract as required by § 226.6(i). However, public institutions may, with the approval of the State agency, use their customary form of contract if it incorporates the provisions of § 226.6(i).
(c) A copy of the contract between each institution and food service management company shall be submitted to the State agency prior to the beginning of Program operations under the subject contract.
(d) Each proposed additional provision to the standard form of contract shall be submitted to the State agency for approval.
(e) A food service management company may not subcontract for the total meal, with or without milk, or for the assembly of the meal.
§ 226.22 Procurement standards.
(a) General. This section establishes standards and guidelines for the procurement of foods, supplies, equipment, and other goods and services. These standards are furnished to ensure that goods and services are obtained efficiently and economically and in compliance with the provisions of applicable Federal law and Executive orders.
(b) Compliance. Institutions may use their own procedures for procurement with Program funds to the extent that:
(1) Procurements by public institutions comply with applicable State or local laws and standards set forth in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR parts 400 and 415; and
(2) Procurements by private nonprofit institutions comply with standards set forth in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR parts 400 and 415.
(c) Geographic preference. (1) Institutions participating in the Program may apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products. When utilizing the geographic preference to procure such products, the institution making the purchase has the discretion to determine the local area to which the geographic preference option will be applied;
(2) For the purpose of applying the optional geographic preference in paragraph (c)(1) of this section, “unprocessed locally grown or locally raised agricultural products” means only those agricultural products that retain their inherent character. The effects of the following food handling and preservation techniques will not be considered as changing an agricultural product into a product of a different kind or character: Cooling; refrigerating; freezing; size adjustment made by peeling, slicing, dicing, cutting, chopping, shucking, and grinding; forming ground products into patties without any additives or fillers; drying/dehydration; washing; packaging (such as placing eggs in cartons), vacuum packing and bagging (such as placing vegetables in bags or combining two or more types of vegetables or fruits in a single package); addition of ascorbic acid or other preservatives to prevent oxidation of produce; butchering livestock and poultry; cleaning fish; and the pasteurization of milk.
§ 226.23 Free and reduced-price meals.
(a) The State agency must not enter into a Program agreement with a new institution until the institution has submitted, and the State agency has approved, a written policy statement concerning free and reduced-price meals to be used in all child and adult day care facilities under its jurisdiction, as described in paragraph (b) of this section. The State agency must not require an institution to revise its free and reduced-price policy statement or its nondiscrimination statement unless the institution makes a substantive change to either policy. Pending approval of a revision to these statements, the existing policy must remain in effect.
(b) Institutions that may not serve meals at a separate charge to children (including emergency shelters, at-risk afterschool care centers, and sponsoring organizations of emergency shelters, at-risk afterschool care centers, and day care homes) and other institutions that elect to serve meals at no separate charge must develop a policy statement consisting of an assurance to the State agency that all participants are served the same meals at no separate charge, regardless of race, color, national origin, sex, age, or disability and that there is no discrimination in the course of the food service.This statement shall also contain an assurance that there will be no identification of children in day care homes in which meals are reimbursed at both the tier I and tier II reimbursement rates, and that the sponsoring organization will not make any free and reduced price eligibility information concerning individual households available to day care homes and will otherwise limit the use of such information to persons directly connected with the administration and enforcement of the Program.
(c) Independent centers and sponsoring organizations of centers which charge separately for meals shall develop a policy statement for determining eligibility for free and reduced-price meals which shall include the following:
(1) The specific criteria to be used in determining eligibility for free and reduced-price meals. The institution’s standards of eligibility shall conform to the Secretary’s income standards;
(2) A description of the method or methods to be used in accepting applications from families for free and reduced-price meals. These methods will ensure that applications are accepted from households on behalf of a foster child and children who receive SNAP, FDPIR, or TANF assistance, or for adult participants who receive SNAP, FDPIR, SSI, or Medicaid assistance;
(3) A description of the method or methods to be used to collect payments from those participants paying the full or reduced price of the meal which will protect the anonymity of the participants receiving a free or reduced-price meal;
(4) An assurance which provides that the institution will establish a hearing procedure for use when benefits are denied or terminated as a result of verification:
(i) A simple, publicly announced method for a family to make an oral or written request for a hearing;
(ii) An opportunity for the family to be assisted or represented by an attorney or other person in presenting its appeal;
(iii) An opportunity to examine, prior to and during the hearing, the documents and records presented to support the decision under appeal;
(iv) That the hearing shall be held with reasonable promptness and convenience to the family and that adequate notice shall be given to the family as to the time and place of the hearing;
(v) An opportunity for the family to present oral or documentary evidence and arguments supporting its position;
(vi) An opportunity for the family to question or refute any testimony or other evidence and to confront and cross-examine any adverse witnesses;
(vii) That the hearing shall be conducted and the determination made by a hearing official who did not participate in making the initial decision;
(viii) The determination of the hearing official shall be based on the oral and documentary evidence presented at the hearing and made a part of that hearing record;
(ix) That the family and any designated representatives shall be notified in writing of the decision of the hearing official;
(x) That a written record shall be prepared with respect to each hearing, which shall include the decision under appeal, any documentary evidence and a summary of any oral testimony presented at the hearing, the decision of the hearing official, including the reasons therefor, and a copy of the notification to the family of the decision of the hearing official; and
(xi) That such written record of each hearing shall be preserved for a period of three years and shall be available for examination by the family or its representatives at any reasonable time and place during such period;
(5) An assurance that there will be no overt identification of free and reduced-price meal recipients and no discrimination against any participant on the basis of race, color, national origin, sex, age, or handicap;
(6) An assurance that the charges for a reduced-price lunch or supper will not exceed 40 cents, that the charge for a reduced-price breakfast will not exceed 30 cents, and that the charge for a reduced-price snack will not exceed 15 cents.
(d) Each institution shall annually provide the information media serving the area from which the institution draws its attendance with a public release, unless the State agency has issued a Statewide media release on behalf of all institutions. All media releases issued by institutions other than emergency shelters, at-risk afterschool care centers, and sponsoring organizations of emergency shelters, at-risk afterschool care centers, or day care homes must include the Secretary’s Income Eligibility Guidelines for Free and Reduced-Price Meals. The release issued by all emergency shelters, at-risk afterschool care centers, and sponsoring organizations of emergency shelters, at-risk afterschool care centers, or day care homes, and by other institutions which elect not to charge separately for meals, must announce the availability of meals at no separate charge. The release issued by child care institutions which charge separately for meals shall announce the availability of free and reduced-price meals to children meeting the approved eligibility criteria. The release issued by child care institutions shall also announce that a foster child, or a child who is a member of a household receiving SNAP, FDPIR, or TANF assistance, or a Head Start participant is automatically eligible to receive free meal benefits. The release issued by adult day care centers which charge separately for meals shall announce the availability of free and reduced-price meals to participants meeting the approved eligibility criteria. The release issued by adult day care centers shall also announce that adult participants who are members of SNAP or FDPIR households or who are SSI or Medicaid participants are automatically eligible to receive free meal benefits. All releases shall state that meals are available to all participants without regard to race, color, national origin, sex, age or disability.
(e)(1) Application for free and reduced-price meals. (i) For the purpose of determining eligibility for free and reduced price meals, institutions (other than emergency shelters and at-risk afterschool care centers) shall distribute applications for free and reduced price meals to the families of participants enrolled in the institution. Sponsoring organizations of day care homes shall distribute applications for free and reduced price meals to day care home providers who wish to enroll their own eligible children in the Program. At the request of a provider in a tier II day care home, sponsoring organizations of day care homes shall distribute applications for free and reduced price meals to the households of all children enrolled in the home, except that applications need not be distributed to the households of enrolled children that the sponsoring organization determines eligible for free and reduced price meals under the circumstances described in paragraph (e)(1)(vi) of this section. These applications, and any other descriptive material distributed to such persons, shall contain only the family-size income levels for reduced price meal eligibility with an explanation that households with incomes less than or equal to these levels are eligible for free or reduced price meals. Such forms and descriptive materials may not contain the income standards for free meals. However, such forms and materials distributed by child care institutions other than sponsoring organizations of day care homes shall state that, if a child is a member of a SNAP or FDPIR household or is a TANF recipient, the child is automatically eligible to receive free Program meal benefits, subject to the completion of the application as described in paragraph (e)(1)(ii) of this section; such forms and materials distributed by sponsoring organizations of day care homes shall state that, if a child or a child’s parent is participating in or subsidized under a Federally or State supported child care or other benefit program with an income eligibility limit that does not exceed the eligibility standard for free or reduced price meals, meals served to the child are automatically eligible for tier I reimbursement, subject to the completion of the application as described in paragraph (e)(1)(ii) of this section, and shall list any programs identified by the State agency as meeting this standard; such forms and materials distributed by adult day care centers shall state that, if an adult participant is a member of a SNAP or FDPIR household or is a SSI or Medicaid participant, the adult participant is automatically eligible to receive free Program meal benefits, subject to the completion of the application as described in paragraph (e)(1)(iii) of this section. Sponsoring organizations of day care homes shall not make free and reduced price eligibility information concerning individual households available to day care homes and shall otherwise limit the use of such information to persons directly connected with the administration and enforcement of the Program. However, sponsoring organizations may inform tier II day care homes of the number of identified income-eligible enrolled children. If a State agency distributes, or chooses to permit its sponsoring organizations to distribute, applications to the households of children enrolled in tier II day care homes which include household confidentiality waiver statements, such applications shall include a statement informing households that their participation in the program is not dependent upon signing the waivers. Furthermore, such forms and materials distributed by child care institutions shall state that a foster child is automatically eligible to receive free Program meal benefits, and a child who is a Head Start participant is automatically eligible to receive free Program meal benefits, subject to submission by Head Start officials of a Head Start statement of income eligibility or income eligibility documentation.
(ii) Except as provided in paragraph (e)(1)(iv) of this section, the application for children shall contain a request for the following information:
(A) The names of all children for whom application is made;
(B) The names of all other household members;
(C) The last four digits of the social security number of the adult household member who signs the application, or an indication that the adult does not possess a social security number.
(D) The income received by each household member identified by source of income (such as earnings, wages, welfare, pensions, support payments, unemployment compensation, social security, and other cash income received or withdrawn from any other source, including savings, investments, trust accounts, and other resources);
(E) A statement which includes substantially the following information:
(1) “The Richard B. Russell National School Lunch Act requires the information on this application. You do not have to give the information, but if you do not, we cannot approve the participant for free or reduced-price meals. You must include the last four digits of the Social Security Number of the adult household member who signs the application. The last four digits of the Social Security Number are not required when you apply on behalf of a foster child or you list a Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF) Program or Food Distribution Program on Indian Reservations (FDPIR) case number for the participant or other (FDPIR) identifier or when you indicate that the adult household member signing the application does not have a Social Security Number. We will use your information to determine if the participant is eligible for free or reduced-price meals, and for administration and enforcement of the Program.”
(2) When either the State agency or the child care institution plans to use or disclose children’s eligibility information for non-program purposes, additional information, as specified in paragraph (k) of this section, must be added to this statement; and
(F) The signature of an adult member of the household which appears immediately below a statement that the person signing the application certifies that all information furnished is true and correct; that the application is being made in connection with the receipt of Federal funds; that Program officials may verify the information on the application; and that the deliberate misrepresentation of any of the information on the application may subject the applicant to prosecution under applicable State and Federal criminal statutes.
(iii) Except as provided in paragraph (e)(1)(v) of this section, the application for adults shall contain a request for the following information:
(A) The names of all adults for whom application is made;
(B) The names of all other household members;
(C) The last four digits of the social security number of the adult household member who signs the application, or an indication that the adult does not possess a social security number.
(D) The income received by source of income (such as earnings, wages, welfare, pensions, support payments, unemployment compensation, social security, and other cash income received or withdrawn from any other source, including savings, investments, trust accounts and other resources);
(E) A statement which includes substantially the following information: “The Richard B. Russell National School Lunch Act requires the information on this meal benefit form. You do not have to give the information, but if you do not, we cannot approve the participant for free or reduced-price meals. You must include the last four digits of the social security number of the adult household member who signs the meal benefit form. The last four digits of the social security number are not required when you list a Supplemental Nutrition Assistance Program (SNAP), Food Distribution Program on Indian Reservations (FDPIR) or other FDPIR identifier, SSI or Medicaid case number for the participant receiving meal benefits or when you indicate that the adult household member signing the application does not have a social security number. We will use your information to determine if the participant is eligible for free or reduced-price meals, and for administration and enforcement of the CACFP;” and
(F) The signature of an adult member of the household which appears immediately below a statement that the person signing the application certifies that all information furnished is true and correct; that the application is being made in connection with the receipt of Federal funds; that Program officials may verify the information on the application; and that the deliberate misrepresentation of any of the information on the application may subject the applicant to prosecution under applicable State and Federal criminal statutes.
(iv) If they so desire, households applying on behalf of children who are members of SNAP or FDPIR households who are TANF recipients may apply under this paragraph rather than under the procedures described in paragraph (e)(1)(ii) of this section. In addition, households of children enrolled in tier II day care homes who are participating in a Federally or State supported child care or other benefit program with an income eligibility limit that does not exceed the eligibility standard for free and reduced price meals may apply under this paragraph rather than under the procedures described in paragraph (e)(1)(ii) of this section. Households applying on behalf of children who are members of SNAP or FDPIR households; children who are TANF recipients; or for children enrolled in tier II day care homes, other qualifying Federal or State program, shall be required to provide:
(A) For the child(ren) for whom automatic free meal eligibility is claimed, their names and SNAP, FDPIR, or TANF case number; or for the households of children enrolled in tier II day care homes, their names and other program case numbers (if the program utilizes case numbers); and
(B) The signature of an adult member of the household as provided for in paragraph (e)(1)(ii)(G) of this section. In accordance with paragraph (e)(1)(ii)(F) of this section, if a case number is provided, it may be used to verify the current certification for the child(ren) for whom free meal benefits are claimed. Whenever households apply for children not receiving SNAP, FDPIR, or TANF benefits; or for tier II homes, other qualifying Federal or State program benefits, they must apply in accordance with the requirements set forth in paragraph (e)(1)(ii) of this section.
(v) If they so desire, households applying on behalf of adults who are members of SNAP or FDPIR households or SSI or Medicaid participants may apply for free meal benefits under this paragraph rather than under the procedures described in paragraph (e)(1)(iii) of this section. Households applying on behalf of adults who are members of SNAP or FDPIR households or SSI or Medicaid participants shall be required to provide:
(A) The names and SNAP or FDPIR case numbers or SSI or Medicaid assistance identification numbers of the adults for whom automatic free meal eligibility is claimed; and
(B) The signature of an adult member of the household as provided in paragraph (e)(1)(iii)(F) of this section. In accordance with paragraph (e)(1)(iii)(G) of this section, if a SNAP or FDPIR case number or SSI or Medicaid assistance identification number is provided, it may be used to verify the current SNAP, FDPIR, SSI, or Medicaid certification for the adult(s) for whom free meal benefits are being claimed. Whenever households apply for benefits for adults not receiving SNAP, FDPIR, SSI, or Medicaid benefits, they must apply in accordance with the requirements set forth in paragraph (e)(1)(iii) of this section.
(vi) A sponsoring organization of day care homes may identify enrolled children eligible for free and reduced price meals (i.e., tier I rates), without distributing free and reduced price applications, by documenting the child’s or household’s participation in or receipt of benefits under a Federally or State supported child care or other benefit program with an income eligibility limit that does not exceed the eligibility standard for free and reduced price meals. Documentation shall consist of official evidence, available to the tier II day care home or sponsoring organization, and in the possession of the sponsoring organization, of the household’s participation in the qualifying program.
(vii) If a tier II day care home elects to assist in collecting and transmitting the applications to the sponsoring organization, it is the responsibility of the sponsoring organization to establish procedures to ensure the provider does not review or alter the application. The household consent form must explain that:
(A) The household is not required to complete the income eligibility form in order for their children to participate in CACFP:
(B) The household may return the application to either the sponsoring organization or the day care home provider;
(C) By signing the letter and giving it to the day care home provider, the household has given the day care home provider written consent to collect and transmit the household’s application to the sponsoring organization; and
(D) The application will not be reviewed by the day care home provider.
(2) Letter to households. Institutions shall distribute a letter to households or guardians of enrolled participants in order to inform them of the procedures regarding eligibility for free and reduced-price meals. The letter shall accompany the application required under paragraph (e)(1) of this section and shall contain:
(i) The income standards for reduced-price meals, with an explanation that households with incomes less than or equal to the reduced-price standards would be eligible for free or reduced-price meals (the income standards for free meals shall not be included in letters or notices to such applicants);
(ii) How a participant’s household may make application for free or reduced-price meals;
(iii) An explanation that an application for free or reduced price benefits cannot be approved unless it contains complete “documentation” as defined in § 226.2.
(iv) The statement: “In the operation of child feeding programs, no person will be discriminated against because of race, color, national origin, sex, age, or disability”;
(v) A statement to the effect that participants having family members who become unemployed are eligible for free or reduced-price meals during the period of unemployment, provided that the loss of income causes the family income during the period of unemployment to be within the eligibility standards for those meals;
(vi) An explanation that households receiving free and reduced-price meals must notify appropriate institution officials during the year of any decreases in household size or increases in income of over $50 per month or $600 per year or—
(A) In the case of households of enrolled children that provide a SNAP, FDPIR or TANF case number to establish a child’s eligibility for free meals, any termination in the child’s certification to participate in the SNAP, FDPIR or TANF Programs, or
(B) In the case of households of adult participants that provide a food stamp or FDPIR case number or an SSI or Medicaid assistance identification number to establish an adult’s eligibility for free meals, any termination in the adult’s certification to participate in the SNAP, FDPIR, SSI or Medicaid Programs.
(3) In addition to the information listed in paragraph (e)(2) of this section pricing institutions must include in their letter to household an explanation that indicates that: (i) The information in the application may be verified at any time during the year; and (ii) how a family may appeal a decision of the institution to deny, reduce, or terminate benefits as described under the hearing procedure set forth in paragraph (c)(4) of this section.
(4) Determination of eligibility. The institution shall take the income information provided by the household on the application and calculate the household’s total current income. When a completed application furnished by a family indicates that the family meets the eligibility criteria for free or reduced-price meals, the participants from that family shall be determined eligible for free or reduced-price meals. Institutions that are pricing programs shall promptly provide written notice to each family informing them of the results of the eligibility determinations. When the information furnished by the family is not complete or does not meet the eligibility criteria for free or reduced-price meals, institution officials must consider the participants from that family as not eligible for free or reduced-price meals, and must consider the participants as eligible for “paid” meals. When information furnished by the family of participants enrolled in a pricing program does not meet the eligibility criteria for free or reduced-price meals, pricing program officials shall provide written notice to each family denied free or reduced-price benefits. At a minimum, this notice shall include:
(i) The reason for the denial of benefits, e.g., income in excess of allowable limits or incomplete application;
(ii) Notification of the right to appeal;
(iii) Instructions on how to appeal; and
(iv) A statement reminding the household that they may reapply for free or reduced-price benefits at any time during the year,
(5) Appeals of denied benefits. A family that wishes to appeal the denial of an application in a pricing program shall do so under the hearing procedures established under paragraph (c)(4) of this section. However, prior to initiating the hearing procedures, the household may request a conference to provide all affected parties the opportunity to discuss the situation, present information and obtain an explanation of the data submitted on the application or the decision rendered. The request for a conference shall not in any way prejudice or diminish the right to a fair hearing. The institution shall promptly schedule a fair hearing, if requested.
(f) Free, reduced-price and paid meal eligibility figures must be reported by institutions to State agencies at least once each year and shall be based on current family-size and income information of enrolled participants. Such information shall be no more than 12 months old.
(g) Sponsoring organizations for family day care homes shall ensure that no separate charge for food service is imposed on families of children enrolled in participating family day care homes.
(h) Verification of eligibility. State agencies shall conduct verification of eligibility for free and reduced-price meals on an annual basis, in accordance with the verification procedures outlined in paragraphs (h) (1) and (2) of this section. Verification may be conducted in accordance with Program assistance requirements of § 226.6(m); however, the performance of verification for individual institutions shall occur no less frequently than once every three years. Any State may, with the written approval of FNSRO, use alternative approaches in the conduct of verification, provided that the results achieved meet the requirements of this part. If the verification process discloses deficiencies with the determination of eligibility and/or application procedures which exceed maximum levels established by FNS, State agencies shall conduct follow-up reviews for the purpose of determining that corrective action has been taken by the institution. These reviews shall be conducted within one year of the date the verification process was completed. The verification effort shall be applied without regard to race, color, national origin, sex, age, or disability. State agencies shall maintain on file for review a description of the annual verification to be accomplished in order to demonstrate compliance with paragraphs (h) (1) and (2) of this section.
(1) Verification procedures for nonpricing programs. Except for sponsoring organizations of family day care homes, State agency verification procedures for nonpricing programs shall consist of a review of all approved free and reduced price applications on file. For sponsoring organizations of family day care homes, State agency verification procedures shall consist of a review only of the approved free and reduced price applications (or other documentation, if vouchers or other documentation are used in lieu of free and reduced price applications) on file for those day care homes that are required to be reviewed when the sponsoring organization is reviewed, in accordance with the review requirements set forth in § 226.6(m). However, the State agency shall ensure that the day care homes selected for review are representative of the proportion of tier I, tier II, and tier II day care homes with a mix of income-eligible and non-income-eligible children in the sponsorship, and shall ensure that at least 10 percent of all free and reduced price applications (or other documentation, if applicable) on file for the sponsorship are verified. The review of applications shall ensure that:
(i) The application has been correctly and completely executed by the household;
(ii) The institution has correctly determined and classified the eligibility of enrolled participants for free or reduced price meals or, for family day care homes, for tier I or tier II reimbursement, based on the information included on the application submitted by the household;
(iii) The institution has accurately reported to the State agency the number of enrolled participants meeting the criteria for free or reduced price meal eligibility or, for day care homes, the number of participants meeting the criteria for tier I reimbursement, and the number of enrolled participants that do not meet the eligibility criteria for those meals; and
(iv) In addition, the State agency may conduct further verification of the information provided by the household on the approved application for program meal eligibility. If this effort is undertaken, the State agency shall conduct this further verification for nonpricing programs in accordance with the procedures described in paragraph (h)(2) of this section.
(2) Verification procedures for pricing programs. (i) For pricing programs, in addition to the verification procedures described in paragraph (h)(1) of this section, State agencies shall also conduct verification of the income information provided on the approved application for free and reduced price meals and, at State agency discretion, verification may also include confirmation of other information required on the application. However,
(A) If a SNAP, FDPIR or TANF case number is provided for a child, verification for such child shall include only confirmation that the child is included in a currently certified SNAP or FDPIR household or is a TANF recipient; or
(B) If a SNAP or FDPIR case number or SSI or Medicaid assistance identification number is provided for an adult, verification for such adult shall include only confirmation that the adult is included in a currently certified SNAP or FDPIR household or is currently certified to receive SSI or Medicaid benefits.
(ii) State agencies shall perform verification on a random sample of no less than 3 percent of the approved free and reduced price applications in an institution which is a pricing program.
(iii) Households shall be informed in writing that they have been selected for verification and they are required to submit the requested verification information to confirm their eligibility for free or reduced-price benefits by such date as determined by the State agency. Those households shall be informed of the type or types of information and/or documents acceptable to the State agency and the name and phone number of an official who can answer questions and assist the household in the verification effort.
(iv) Households of enrolled children selected for verification shall also be informed that if they are currently certified to participate in SNAP, FDPIR or TANF they may submit proof of that certification in lieu of income information. In those cases, such proof shall consist of a current “Notice of Eligibility” for SNAP, FDPIR or TANF benefits or equivalent official documentation issued by a SNAP, Indian Tribal Organization, or welfare office which shows that the children are members of households or assistance units currently certified to participate in SNAP, FDPIR or TANF. An identification card for any of these programs is not acceptable as verification unless it contains an expiration date. Households of enrolled adults selected for verification shall also be informed that if they are currently certified to participate in SNAP or FDPIR or SSI or Medicaid Programs, they may submit proof of that certification in lieu of income information. In those cases, such proof shall consist of:
(A) A current “Notice of Eligibility” for SNAP or FDPIR benefits or equivalent official documentation issued by a SNAP, Indian Tribal Organization, or welfare office which shows that the adult participant is a member of a household currently certified to participate in the SNAP Program or FDPIR. An identification card is not acceptable as verification unless it contains an expiration date; or
(B) Official documentation issued by an appropriate SSI or Medicaid office which shows that the adult participant currently receives SSI or Medicaid assistance. An identification card is not acceptable as verification unless it contains an expiration date. All households selected for verification shall be advised that failure to cooperate with verification efforts will result in a termination of benefits.
(v) Sources of information for verification may include written evidence, collateral contacts, and/or systems of records.
(A) Written evidence shall be used as the primary source of information for verification. Written evidence includes written confirmation of a household’s circumstances, such as wage stubs, award letters, letters from employers, and, for enrolled children, current certification to participate in the SNAP, FDPIR or TANF Programs, or, for adult participants, current certification to participate in the SNAP, FDPIR, SSI or Medicaid Programs. Whenever written evidence is insufficient to confirm eligibility, the State agency may use collateral contacts.
(B) Collateral contact is a verbal confirmation of a household’s circumstances by a person outside of the household. The collateral contact may be made in person or by phone and shall be authorized by the household. The verifying official may select a collateral contact if the household fails to designate one or designates one which is unacceptable to the verifying official. If the verifying official designates a collateral contact, the contact shall not be made without providing written or oral notice to the household. At the time of this notice, the household shall be informed that it may consent to the contact or provide acceptable verification in another form. The household shall be informed that its eligibility for free or reduced price meals shall be terminated if it refuses to choose one of these options. Termination shall be made in accordance with paragraph (h)(2)(vii) of this section. Collateral contacts could include employers, social service agencies, and migrant agencies.
(C) Systems of records to which the State agency may have routine access are not considered collateral contacts. Information concerning income, family size, or SNAP/FDPIR/TANF certification for enrolled children, or SNAP/FDPIR/SSI/Medicaid certification for enrolled adults, which is maintained by other government agencies and to which a State agency can legally gain access may be used to confirm a household’s eligibility for Program meal benefits. One possible source could be wage and benefit information maintained by the State unemployment agency, if that information is available. The use of any information derived from other agencies must be used with applicable safeguards concerning disclosure.
(vi) Verification by State agencies of receipt of SNAP, FDPIR, TANF, SSI or Medicaid benefits shall be limited to a review to determine that the period of eligibility is current. If the benefit period is found to have expired, or if the household’s certification has been terminated, the household shall be required to document their income eligibility.
(vii) The State agency may work with the institution to verify the documentation submitted by the household on the application; however, the responsibility to complete the verification process may not be delegated to the institution.
(viii) If a household refuses to cooperate with efforts to verify, or the verification of income indicates that the household is ineligible to receive benefits or is eligible to receive reduced benefits, the State agency shall require the pricing program institution to terminate or adjust eligibility in accordance with the following procedures. Institution officials shall immediately notify families of the denial of benefits in accordance with paragraphs (e)(4) and (e)(5) of this section. Advance notification shall be provided to families which receive a reduction or termination of benefits 10 calendar days prior to the actual reduction or termination. The 10-day period shall begin the day the notice is transmitted to the family. The notice shall advise the household of: (A) The change; (B) the reasons for the change; (C) notification of the right to appeal the action and the date by which the appeal must be requested in order to avoid a reduction or termination of benefits; (D) instructions on how to appeal; and (E) the right to reapply at any time during the year. The reasons for ineligibility shall be properly documented and retained on file at the institution.
(ix) When a household disagrees with an adverse action which affects its benefits and requests a fair hearing, benefits shall be continued as follows while the household awaits the hearing:
(A) Households which have been approved for benefits and which are subject to a reduction or termination of benefits later in the same year shall receive continued benefits if they appeal the adverse action within the 10-day advance notice period; and
(B) Households which are denied benefits upon application shall not received benefits.
(3) State agencies shall inform institution officials of the results of the verification effort and the action which will be taken in response to the verification findings. This notification shall be made in accordance with the procedures outlined in § 226.14(a).
(4) If the verification results disclose that an institution has inaccurately classified or reported the number of participants eligible for free, reduced-price or paid meals, the State agency shall adjust institution rates of reimbursement retroactive to the month in which the incorrect eligibility figures were reported by the institution to the State agency.
(5) If the verification results disclose that a household has not reported accurate documentation on the application which would support continued eligibility for free or reduced-price meals, the State agency shall immediately adjust institution rates of reimbursement. However, this rate adjustment shall not become effective until the affected households have been notified in accordance with the procedures of paragraph (h)(2)(vi) of this section and any ensuing appeals have been heard as specified in paragraph (h)(2)(viii) of this section.
(6) Verification procedures for sponsoring organizations of day care homes. Prior to approving an application for a day care home that qualifies as tier I day care home on the basis of the provider’s household income, sponsoring organizations of day care homes shall conduct verification of such income in accordance with the procedures contained in paragraph (h)(2)(i) of this section. Sponsoring organizations of day care homes may verify the information on applications submitted by households of children enrolled in day care homes in accordance with the procedures contained in paragraph (h)(2)(i) of this section.
(i) Disclosure of children’s free and reduced price meal eligibility information to certain programs and individuals without parental consent. The State agency or child care institution, as appropriate, may disclose aggregate information about children eligible for free and reduced price meals to any party without parental notification and consent when children cannot be identified through release of the aggregate data or by means of deduction. Additionally, the State agency or institution may disclose information that identifies children eligible for free and reduced price meals to the programs and the individuals specified in this paragraph (i) without parental/guardian consent. The State agency or child care institution that makes the free and reduced price meal eligibility determination is responsible for deciding whether to disclose program eligibility information.
(1) Persons authorized to receive eligibility information. Only persons directly connected with the administration or enforcement of a program or activity listed in paragraphs (i)(2) or (i)(3) of this section may have access to children’s free milk eligibility information, without parental consent. Persons considered directly connected with administration or enforcement of a program or activity listed in paragraphs (i)(2) or (i)(3) of this section are Federal, State, or local program operators responsible for the ongoing operation of the program or activity or persons responsible for program compliance. Program operators may include persons responsible for carrying out program requirements and monitoring, reviewing, auditing, or investigating the program. Program operators may include contractors, to the extent those persons have a need to know the information for program administration or enforcement. Contractors may include evaluators, auditors, and others with whom Federal or State agencies and program operators contract with to assist in the administration or enforcement of their program in their behalf.
(2) Disclosure of children’s names and free or reduced price meal eligibility status. The State agency or child care institution, as appropriate, may disclose, without parental consent, only children’s names and eligibility status (whether they are eligible for free meals or reduced price meals) to persons directly connected with the administration or enforcement of:
(i) A Federal education program;
(ii) A State health program or State education program administered by the State or local education agency;
(iii) A Federal, State, or local means-tested nutrition program with eligibility standards comparable to the National School Lunch Program (i.e., food assistance programs for households with incomes at or below 185 percent of the Federal poverty level); or
(iv) A third party contractor assisting in verification of eligibility efforts by contacting households who fail to respond to requests for verification of their eligibility.
(3) Disclosure of all eligibility information. In addition to children’s names and eligibility status, the State agency or child care institution, as appropriate, may disclose, without parental/guardian consent, all eligibility information obtained through the free and reduced price meal eligibility process (including all information on the application or obtained through direct certification) to:
(i) Persons directly connected with the administration or enforcement of programs authorized under the Richard B. Russell National School Lunch Act or the Child Nutrition Act of 1966. This means that all eligibility information obtained for the Child and Adult Care Food Program may be disclosed to persons directly connected with administering or enforcing regulations under the National School Lunch Program, Special Milk Program, School Breakfast Program, Summer Food Service Program, and the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) (Parts 210, 215, 220, 225 and 246, respectively, of this chapter);
(ii) The Comptroller General of the United States for purposes of audit and examination; and
(iii) Federal, State, and local law enforcement officials for the purpose of investigating any alleged violation of the programs listed in paragraphs (i)(2) and (i)(3) of this section.
(4) Use of free and reduced price meals eligibility information by programs other than Medicaid or the State Children’s Health Insurance Program (SCHIP). State agencies and child care institutions may use children’s free milk eligibility information for administering or enforcing the Child and Adult Care Food Program. Additionally, any other Federal, State, or local agency charged with administering or enforcing the Child and Adult Care Food Program may use the information for that purpose. Individuals and programs to which children’s free or reduced price meal eligibility information has been disclosed under this section may use the information only in the administration or enforcement of the receiving program. No further disclosure of the information may be made.
(j) Disclosure of children’s free or reduced price meal eligibility information to Medicaid and/or SCHIP, unless parents decline. Children’s free or reduced price meal eligibility information only may be disclosed to Medicaid or SCHIP when both the State agency and the child care institution so elect, the parent/guardian does not decline to have their eligibility information disclosed and the other provisions described in paragraph (j)(1) of this section are met. The State agency or child care institution, as appropriate, may disclose children’s names, eligibility status (whether they are eligible for free or reduced price meals), and any other eligibility information obtained through the free and reduced price meal application or obtained through direct certification to persons directly connected with the administration of Medicaid or SCHIP. Persons directly connected to the administration of Medicaid and SCHIP are State employees and persons authorized under Federal and State Medicaid and SCHIP requirements to carry out initial processing of Medicaid or SCHIP applications or to make eligibility determinations for Medicaid or SCHIP.
(1) The State agency must ensure that:
(i) The child care institution and health insurance program officials have a written agreement that requires the health insurance program agency to use the eligibility information to seek to enroll children in Medicaid and SCHIP; and
(ii) Parents/guardians are notified that their eligibility information may be disclosed to Medicaid or SCHIP and given an opportunity to decline to have their children’s eligibility information disclosed, prior to any disclosure.
(2) Use of children’s free and reduced price meal eligibility information by Medicaid/SCHIP. Medicaid and SCHIP agencies and health insurance program operators receiving children’s free and reduced price meal eligibility information must use the information to seek to enroll children in Medicaid or SCHIP. The Medicaid and SCHIP enrollment process may include targeting and identifying children from low-income households who are potentially eligible for Medicaid or SCHIP for the purpose of seeking to enroll them in Medicaid or SCHIP. No further disclosure of the information may be made. Medicaid and SCHIP agencies and health insurance program operators also may verify children’s eligibility in a program under the Child Nutrition Act of 1966 or the Richard B. Russell National School Lunch Act.
(k) Notifying households of potential uses and disclosures of children’s free and reduced price meal eligibility information. Households must be informed that the information they provide on the free and reduced price meal application will be used to determine eligibility for free or reduced price meals and that their eligibility information may be disclosed to other programs.
(1) For disclosures to programs, other than Medicaid or SCHIP, that are permitted access to children’s eligibility information, without parent/guardian consent, the State agency or child care institution, as appropriate, must notify parents/guardians at the time of application that their children’s free or reduced price meal eligibility information may be disclosed. The State agency or child care institution, as appropriate, must add substantially the following statement to the statement required under paragraph (e)(1)(ii)(F) of this section, “We may share your eligibility information with education, health, and nutrition programs to help them evaluate, fund, or determine benefits for their programs; auditors for program reviews; and law enforcement officials to help them look into violations of program rules.” For children determined eligible for free meals through direct certification, the notice of potential disclosure may be included in the document informing parents/guardians of their children’s eligibility for free meals through direct certification.
(2) For disclosure to Medicaid or SCHIP, the State agency or child care institution, as appropriate, must notify parents/guardians that their children’s free or reduced price meal eligibility information will be disclosed to Medicaid and/or SCHIP unless the parent/guardian elects not to have their information disclosed and notifies the State agency or child care institution, as appropriate, by a date specified by the State agency or child care institution, as appropriate. Only the parent or guardian who is a member of the household or family for purposes of the free and reduced price meal application may decline the disclosure of eligibility information to Medicaid or SCHIP. The notification must inform parents/guardians that they are not required to consent to the disclosure, that the information, if disclosed, will be used to identify eligible children and seek to enroll them in Medicaid or SCHIP, and that their decision will not affect their children’s eligibility for free or reduced price meals. The notification may be included in the letter/notice to parents/guardians that accompanies the free and reduced price meal application, on the application itself or in a separate notice provided to parents/guardians. The notice must give parents/guardians adequate time to respond if they do not want their information disclosed. The State agency or child care institution, as appropriate, must add substantially the following statement to the statement required under paragraph (e)(1)(ii)(F) of this section, “We may share your information with Medicaid or the State Children’s Health Insurance Program, unless you tell us not to. The information, if disclosed, will be used to identify eligible children and seek to enroll them in Medicaid or SCHIP.” For children determined eligible for free meals through direct certification, the notice of potential disclosure and opportunity to decline the disclosure may be included in the document informing parents/guardians of their children’s eligibility for free meals through direct certification process.
(l) Other disclosures. State agencies and child care institutions that plan to use or disclose information about children eligible for free and reduced price meals in ways not specified in this section must obtain written consent from children’s parents or guardians prior to the use or disclosure.
(1) The consent must identify the information that will be shared and how the information will be used.
(2) There must be a statement informing parents and guardians that failing to sign the consent will not affect the child’s eligibility for free or reduced price meals and that the individuals or programs receiving the information will not share the information with any other entity or program.
(3) Parents/guardians must be permitted to limit the consent only to those programs with which they wish to share information.
(4) The consent statement must be signed and dated by the child’s parent or guardian who is a member of the household for purposes of the free and reduced price meal application.
(m) Agreements with programs/individuals receiving children’s free or reduced price meal eligibility information. Agreements or Memoranda of Understanding (MOU) are recommended or required as follows:
(1) The State agency or child care institution, as appropriate, should have a written agreement or MOU with programs or individuals receiving eligibility information, prior to disclosing children’s free and reduced price meal eligibility information. The agreement or MOU should include information similar to that required for disclosures to Medicaid and SCHIP specified in paragraph (m)(2) of this section.
(2) For disclosures to Medicaid or SCHIP, the State agency or child care institution, as appropriate, must have a written agreement with the State or local agency or agencies administering Medicaid or SCHIP prior to disclosing children’s free or reduced price meal eligibility information to those agencies. At a minimum, the agreement must:
(i) Identify the health insurance program or health agency receiving children’s eligibility information;
(ii) Describe the information that will be disclosed;
(iii) Require that the Medicaid or SCHIP agency use the information obtained and specify that the information must be used to seek to enroll children in Medicaid or SCHIP;
(iv) Require that the Medicaid or SCHIP agency describe how they will use the information obtained;
(v) Describe how the information will be protected from unauthorized uses and disclosures;
(vi) Describe the penalties for unauthorized disclosure; and
(vii) Be signed by both the Medicaid or SCHIP program or agency and the State agency or child care institution, as appropriate.
(n) Penalties for unauthorized disclosure or misuse of children’s free and reduced price meal eligibility information. In accordance with section 9(b)(6)(C) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1758(b)(6)(C)), any individual who publishes, divulges, discloses or makes known in any manner, or to any extent not authorized by statute or this section, any information obtained under this section will be fined not more than $1,000 or imprisoned for up to 1 year, or both.
Subpart F—Food Service Equipment Provisions
§ 226.24 Property management requirements.
Institutions and administering agencies shall follow the policies and procedures governing title, use, and disposition of equipment obtained by purchase, whose cost was acquired in whole or part with food service equipment assistance funds in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable.
Subpart G—Other Provisions
§ 226.25 Other provisions.
(a) Grant closeout procedures. Grant closeout procedures for the Program shall be in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, as applicable.
(b) State requirements. Nothing contained in this part shall prevent a State agency from imposing additional requirements for participation in the Program which are not inconsistent with the provisions of this part; however, any additional requirements shall be approved by FNSRO and may not deny the Program to an eligible institution.
(c) Value of assistance. The value of assistance to participants under the Program shall not be considered to be income or resources for any purposes under any Federal or State laws, including, but not limited to laws relating to taxation, welfare, and public assistance programs.
(d) Maintenance of effort. Expenditure of funds from State and local sources for the maintenance of food programs for children shall not be diminished as a result of funds received under the Act.
(e) Fraud penalty. Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property that are the subject of a grant or other form of assistance under this part, whether received directly or indirectly from the Department or whoever receives, conceals, or retains such funds, assets, or property to his use or gain, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud shall, if such funds, assets, or property are of the value of $100 or more, be fined not more than $10,000 or imprisoned not more than five years, or both, or, if such funds, assets, or property are of value of less than $100, shall be fined not more than $1,000 or imprisoned for not more than one year, or both.
(f) Claims adjustment authority. The Secretary shall have the authority to determine the amount of, to settle, and to adjust any claim arising under the Program, and to compromise or deny such claim or any part thereof. The Secretary shall also have the authority to waive such claims if the Secretary determines that to do so would serve the purposes of the program. This provision shall not diminish the authority of the Attorney General of the United States under section 516 of title 28, U.S. Code, to conduct litigation on behalf of the United States.
(g) Data collection related to organizations. (1) Each State agency must collect data related to institutions that have an agreement with the State agency to participate in the program for each of Federal fiscal years 2006 through 2009, including those institutions that participated only for part of the fiscal year. Such data shall include:
(i) The name of each institution;
(ii) The city in which each participating institution was headquartered and the name of the state;
(iii) The amount of funds provided to the participating organization, i.e., the sum of the amount of federal funds reimbursed for operating and, where applicable, administrative costs; and
(iv) The type of participating organization, e.g., government agency, educational institution, for-profit organization, non-profit organization/secular, non-profit organization/faith-based, and “other.”
(2) On or before August 31, 2007, and each subsequent year through 2010, State agencies must report to FNS data as specified in paragraph (g)(1) of this section for the prior Federal fiscal year. State agencies must submit this data in a format designated by FNS.
(h) Program evaluations. States, State agencies, institutions, facilities and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department, related to programs authorized under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966.
(i) Drinking water. A child care institution or facility must offer and make potable drinking water available to children throughout the day.
(j) Fines. (1) An institution that is a school food authority may be subject to fines. The State agency may establish an assessment when it has determined that the institution or its facility has:
(i) Failed to correct severe mismanagement of the Program;
(ii) Disregarded a Program requirement of which the institution or its facility had been informed; or
(iii) Failed to correct repeated violations of Program requirements.
(2) FNS may direct the State agency to establish a fine against any institution when it has determined that the institution or its facility has committed one or more acts under paragraph (j)(1) of this section.
(3) Funds used to pay a fine established under this paragraph must be derived from non-Federal sources. In calculating an assessment, the State agency must calculate the fine based on the amount of Program reimbursement earned by the institution or its facility for the most recent fiscal year for which full year data is available, provided that the fine does not exceed the equivalent of:
(i) For the first fine, 1 percent of the amount of meal reimbursement earned for the fiscal year;
(ii) For the second fine, 5 percent of the amount of meal reimbursement earned for the fiscal year; and
(iii) For the third or subsequent fine, 10 percent of the amount of meal reimbursement earned for the fiscal year.
(4) The State agency must inform FNS at least 30 days prior to establishing the fine under this paragraph. The State agency must send the institution written notification of the fine established under this paragraph and provide a copy of the notification to FNS. The notification must:
(i) Specify the violations or actions which constitute the basis for the fine and indicate the amount of the fine;
(ii) Inform the institution that it may appeal the fine and advise the institution of the appeal procedures established under § 226.6(k);
(iii) Indicate the effective date and payment procedures should the institution not exercise its right to appeal within the specified timeframe.
(5) Any institution subject to a fine under paragraph (j)(1) of this section may appeal the State agency’s determination. In appealing a fine, the institution must submit to the State agency any pertinent information, explanation, or evidence addressing the Program violations identified by the State agency. Any institution seeking to appeal the State agency determination must follow State agency appeal procedures.
(6) The decision of the State agency review official is final and not subject to further administrative or judicial review. Failure to pay a fine established under this paragraph may be grounds for suspension or termination.
(7) Money received by the State agency as a result of a fine established under this paragraph against an institution and any interest charged in the collection of these fines must be remitted to FNS, and then remitted to the United States Treasury.
§ 226.26 Program information.
Persons seeking information about this Program should contact their State administering agency or the appropriate FNSRO. The FNS website has contact information for State agencies at https://www.fns.usda.gov/fns-contacts and FNSROs at https://www.fns.usda.gov/fns-regional-offices.
§ 226.27 Information collection/recordkeeping—OMB assigned control numbers.
| 7 CFR section where requirements are described | Current OMB control number |
|---|---|
| 226.3-226.4 | 0584-0055 |
| 226.6-226.10 | 0584-0055 |
| 226.14-226.16 | 0584-0055 |
| 226.23-226.24 | 0584-0055 |
Appendix A to Part 226—Alternate Foods for Meals
1. An alternate protein product used in meals planned under the provisions in § 226.20 must meet all of the criteria in this section.
2. An alternate protein product whether used alone or in combination with meat or meat alternate must meet the following criteria:
a. The alternate protein product must be processed so that some portion of the non-protein constituents of the food is removed. These alternate protein products must be safe and suitable edible products produced from plant or animal sources.
b. The biological quality of the protein in the alternate protein product must be at least 80 percent that of casein, determined by performing a Protein Digestibility Corrected Amino Acid Score (PDCAAS).
c. The alternate protein product must contain at least 18 percent protein by weight when fully hydrated or formulated. (“When hydrated or formulated” refers to a dry alternate protein product and the amount of water, fat, oil, colors, flavors or any other substances which have been added).
d. Manufacturers supplying an alternate protein product to participating schools or institutions must provide documentation that the product meets the criteria in paragraphs A.2. through c of this appendix.
e. Manufacturers should provide information on the percent protein contained in the dry alternate protein product and on an as prepared basis.
f. For an alternate protein product mix, manufacturers should provide information on:
(1) The amount by weight of dry alternate protein product in the package;
(2) Hydration instructions; and
(3) Instructions on how to combine the mix with meat or other meat alternates.
1. Schools, institutions, and service institutions may use alternate protein products to fulfill all or part of the meat/meat alternate component discussed in § 226.20.
2. The following terms and conditions apply:
a. The alternate protein product may be used alone or in combination with other food ingredients. Examples of combination items are beef patties, beef crumbles, pizza topping, meat loaf, meat sauce, taco filling, burritos, and tuna salad.
b. Alternate protein products may be used in the dry form (nonhydrated), partially hydrated or fully hydrated form. The moisture content of the fully hydrated alternate protein product (if prepared from a dry concentrated form) must be such that the mixture will have a minimum of 18 percent protein by weight or equivalent amount for the dry or partially hydrated form (based on the level that would be provided if the product were fully hydrated).
C. How are commercially prepared products used in the Child and Adult Care Food Program?
Schools, institutions, and service institutions may use a commercially prepared meat or meat alternate product combined with alternate protein products or use a commercially prepared product that contains only alternate protein products.
Appendix B to Part 226 [Reserved]
Appendix C to Part 226—Child Nutrition (CN) Labeling Program
1. The Child Nutrition (CN) Labeling Program is a voluntary technical assistance program administered by the Food and Nutrition Service (FNS) in conjunction with the Food Safety and Inspection Service (FSIS), and Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture (USDA), and National Marine Fisheries Service of the U.S. Department of Commerce (USDC) for the Child Nutrition Programs. This program essentially involves the review of a manufacturer’s recipe or product formulation to determine the contribution a serving of a commercially prepared product makes toward meal pattern requirements and a review of the CN label statement to ensure its accuracy. CN labeled products must be produced in accordance with all requirements set forth in this rule.
2. Products eligible for CN labels are as follows:
(a) Commercially prepared food products that contribute significantly to the meat/meat alternate component of meal pattern requirements of 7 CFR 210.10, 225.21, and 226.20 and are served in the main dish.
(b) Juice drinks and juice drink products that contain a minimum of 50 percent full-strength juice by volume.
3. For the purpose of this appendix the following definitions apply:
(a) CN label is a food product label that contains a CN label statement and CN logo as defined in paragraph 3 (b) and (c) below.
(b) The CN logo (as shown below) is a distinct border which is used around the edges of a “CN label statement” as defined in paragraph 3(c).
(c) The CN label statement includes the following:
(1) The product identification number (assigned by FNS),
(2) The statement of the product’s contribution toward meal pattern requirements of 7 CFR 210.10, 220.8, 225.21, and 226.20. The statement shall identify the contribution of a specific portion of a meat/meat alternate product toward the meat/meat alternate, bread/bread alternate, and/or vegetable/fruit component of the meal pattern requirements. For juice drinks and juice drink products the statement shall identify their contribution toward the vegetable/fruit component of the meal pattern requirements,
(3) Statement specifying that the use of the CN logo and CN statement was authorized by FNS, and
(4) The approval date.
For example:
(d) Federal inspection means inspection of food products by FSIS, AMS or USDC.
4. Food processors or manufacturers may use the CN label statement and CN logo as defined in paragraph 3 (b) and (c) under the following terms and conditions:
(a) The CN label must be reviewed and approved at the national level by the Food and Nutrition Service and appropriate USDA or USDC Federal agency responsible for the inspection of the product.
(b) The CN labeled product must be produced under Federal inspection by USDA or USDC. The Federal inspection must be performed in accordance with an approved partial or total quality control program or standards established by the appropriate Federal inspection service.
(c) The CN label statement must be printed as an integral part of the product label along with the product name, ingredient listing, the inspection shield or mark for the appropriate inspection program, the establishment number where appropriate, and the manufacturer’s or distributor’s name and address.
(1) The inspection marking for CN labeled non-meat, non-poultry, and non-seafood products with the exception of juice drinks and juice drink products is established as follows:
(d) Yields for determining the product’s contribution toward meal pattern requirements must be calculated using the Food Buying Guide for Child Nutrition Programs (Program Aid Number 1331).
5. In the event a company uses the CN logo and CN label statement inappropriately, the company will be directed to discontinue the use of the logo and statement and the matter will be referred to the appropriate agency for action to be taken against the company.
6. Products that bear a CN label statement as set forth in paragraph 3(c) carry a warranty. This means that if a food service authority participating in the child nutrition programs purchases a CN labeled product and uses it in accordance with the manufacturer’s directions, the school or institution will not have an audit claim filed against it for the CN labeled product for noncompliance with the meal pattern requirements of 7 CFR 210.10, 220.8, 225.21, and 226.20. If a State or Federal auditor finds that a product that is CN labeled does not actually meet the meal pattern requirements claimed on the label, the auditor will report this finding to FNS. FNS will prepare a report of the findings and send it to the appropriate divisions of FSIS and AMS of the USDA, National Marine Fisheries Services of the USDC, Food and Drug Administration, or the Department of Justice for action against the company.
Any or all of the following courses of action may be taken:
(a) The company’s CN label may be revoked for a specific period of time;
(b) The appropriate agency may pursue a misbranding or mislabeling action against the company producing the product;
(c) The company’s name will be circulated to regional FNS offices;
(d) FNS will require the food service program involved to notify the State agency of the labeling violation.
7. FNS is authorized to issue operational policies, procedures, and instructions for the CN Labeling Program.
To apply for a CN label and to obtain additional information on CN label application procedures write to: CN Labels, U.S. Department of Agriculture, Food and Nutrition Service, Nutrition and Technical Services Division, 3101 Park Center Drive, Alexandria, Virginia 22302.
PART 227—NUTRITION EDUCATION AND TRAINING PROGRAM
Subpart A—General
§ 227.1 General purpose and scope.
The purpose of these regulations is to implement section 19 of the Child Nutrition Act (added by Pub. L. 95-166, effective November 10, 1977) which authorizes the Secretary to formulate and carry out a nutrition information and education program through a system of grants to State agencies to provide for (a) the nutritional training of educational and foodservice personnel, (b) the foodservice management training of school foodservice personnel, and (c) the conduct of nutrition education activities in schools and child care institutions. To the maximum extent possible, the Program shall fully utilize the child nutrition programs as a learning experience.
§ 227.2 Definitions.
(a) Administrative costs means costs allowable under Federal Management Circular 74-4, other than program costs, incurred by a State agency for overall administrative and supervisory purposes, including, but not limited to, costs of financial management, data processing, recordkeeping and reporting, personnel management, and supervising the State Coordinator.
(b) Child Care Food Program means the program authorized by section 17 of the National School Lunch Act, as amended.
(c) Child Nutrition Programs means any or all of the following: National School Lunch Program, School Breakfast Program, Child Care Food Program.
(d) Commodity only school means a school which has entered into an agreement under § 210.15a(b) of this subchapter to receive commodities donated under part 250 of this chapter for a nonprofit lunch program.
(e) Department means the U.S. Department of Agriculture.
(f) Federal fiscal year means a period of 12 calendar months beginning October 1 of any calendar year and ending September 30 of the following calendar year.
(g) FNS means the Food and Nutrition Service of the Department.
(h) FNSRO means the appropriate Regional Office of the Food and Nutrition Service of the Department.
(i) Institution means any licensed, nonschool, public or private nonprofit organization providing day care services where children are not maintained in permanent residence, including but not limited to day care centers, settlement houses, after school recreation centers, neighborhood centers, Head Start centers, and organizations providing day care services for handicapped children and includes a sponsoring organization under the Child Care Food Program regulations.
(j) National School Lunch Program means the lunch program authorized by the National School Lunch Act.
(k) Needs assessment means a systematic process for delineating the scope, extent (quantity), reach and success of any current nutrition education activities, including those relating to:
(1) Methods and materials available inside and outside the classroom;
(2) Training of teachers in the principles of nutrition and in nutrition education strategies, methods, and techniques;
(3) Training of school foodservice personnel in the principles and practices of foodservice management; and
(4) Compilation of existing data concerning factors impacting on nutrition education and training such as statistics on child health and competency levels achieved by foodservice personnel.
(l) Program costs means costs, other than administrative costs, incurred in connection with any or all of the following:
(1) The State Coordinator’s salary, and related support personnel costs, including fringe benefits and travel expenses;
(2) Applying for assessment and planning funds;
(3) The conduct of the needs assessment;
(4) The development of the State Plan; and
(5) The implementation of the approved State Plan, including related support services.
(m) Program means the Nutrition Education and Training Program authorized by section 19 of the Child Nutrition Act of 1966, as amended.
(n) School means:
(1) An educational unit of high school grade or under operating under public or nonprofit private ownership in a single building or complex of buildings. The term “high school grade or under” includes classes of preprimary grade when they are conducted in a school having classes of primary or higher grade, or when they are recognized as a part of the educational system in the State, regardless of whether such preprimary grade classes are conducted in a school having classes of primary or higher grade.
(2) With the exception of residential summer camps which participate in the Summer Food Service Program for Children and private foster homes, any distinct part of a public or nonprofit private institution or any public or nonprofit private child care institution, which (i) maintains children in residence, (ii) operates principally for the care of children and (iii) if private, is licensed to provide residential child care services under the appropriate licensing code by the State or a subordinate level of government. The term “child care institution” includes, but is not limited to: Homes for the mentally retarded, the emotionally disturbed, the physically handicapped, and unmarried mothers and their infants; group homes; halfway houses; orphanages; temporary shelters for abused children and for runaway children; long term care facilities of chronically ill children; and juvenile detention centers.
(3) With respect to the Commonwealth of Puerto Rico, non-profit child care centers certified as such by the Governor of Puerto Rico.
(o) School Breakfast Program means the program authorized by section 4 of the Child Nutrition Act of 1966, as amended.
(p) Foodservice personnel means those individuals responsible for planning, preparing, serving and otherwise operating foodservice programs funded by USDA grants as provided for in the National School Lunch Act and the Child Nutrition Act of 1966.
(q) State means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands.
(r) State agency means the State educational agency.
(s) State educational agency means, as the State legislature may determine:
(1) The Chief State School Officer (such as the State Superintendent of Public Instruction, Commissioner of Education, or similar officer), or (2) a board of education controlling the State Department of Education.
§ 227.3 Administration.
(a) Within the Department, FNS shall act on behalf of the Department in the administration of the Program.
(b) Within the States, responsibility for administration of the Program shall be in the State agency, except that FNSRO shall administer the Program with respect to nonprofit private schools or institutions in any State where the State agency is prohibited by law from administering the Program in nonprofit private schools or institutions.
§ 227.4 Application and agreement.
After the initial fiscal year of participation each State agency desiring to take part in the Program shall enter into a written agreement with the Department for the administration of the Program in accordance with the provisions of this part. The State agency shall execute Form FNS-74, which shall constitute the written agreement.
§ 227.5 Program funding.
(a) Total grant. The total grant to each State agency for each fiscal year for program costs and administrative costs shall consist of an amount equal to 50 cents per child enrolled in schools and institutions within the State during such year, but in no event shall such grant be less than $50,000: Provided, however, That a State’s total grant shall be reduced proportionately if the State does not administer the program in nonprofit private schools and institutions. If funds appropriated for a fiscal year are insufficient to pay the amount to which each State is entitled, the amount of such grant shall be ratably reduced to the extent necessary so that the total of the amounts paid to each State does not exceed the amount of appropriated funds. Each State agency which receives funds based on all children enrolled in public and nonprofit private schools and institutions shall make the Program available to those schools and institutions. Enrollment figures shall be the latest available as certified by the Department of Education.
(b) First fiscal year participation—(1) Assessment and planning grant. A portion of the total grant shall be made available to each State agency during its first fiscal year of participation as an assessment and planning grant for:
(i) Employing a State Coordinator, as provided for in § 227.30, and related support personnel costs including fringe benefits and travel expenses,
(ii) Undertaking a needs assessment in the State,
(iii) Developing a State Plan for nutrition education and training within the State, and
(iv) Applying for the State assessment and planning grant.
(2) Advances for the assessment and planning grant. FNS shall make advances to any State desiring to participate in the Program, to enable the State to carry out the responsibilities set forth in paragraph (b)(1) of this section. Advances shall be made in two phases, in accordance with the following procedures:
(i) Initially, State agencies may receive an advance up to $35,000 for the purpose of hiring a State coordinator, as provided for in § 227.30. Application for such an advance shall be made on Form AD-623 when the State agency applies for participation in the Program. The information required for this advance shall be set out in Part III, Budget Information, Section B, Budget Categories. The State agency shall there indicate the funds required for the salary, travel, and fringe benefits of the State Coordinator, and related personnel costs necessary to carry out the duties and responsibilities of the State Coordinator.
(ii) After appointment of the State Coordinator, the State agency may receive an additional advance of up to 50 percent of the total grant to which the State agency is entitled for the first year of participation, after deduction of the advance made for the State Coordinator under § 227.5(b)(2), but not to exceed $100,000, for the purpose of undertaking a needs assessment in the State, developing a State Plan for nutrition education and training, and applying for the assessment and planning grant. Application for such advance shall be made by amending Part III, Budget Information, of Form AD-623.
(3) Funds for implementing State plan. (i) States receiving advances. Each State agency shall receive the remaining portion of its total grant in order to implement its State plan, which has been approved by FNS, if the State agency has carried out the responsibilities for which advances were received. With the submission of the State plan each State agency may apply for the funds remaining of its total grant.
(ii) States previously participating. Those States which previously participated may apply for their total grant upon submission of the State Plan.
(c) Administrative costs. Each State agency may use up to 15 percent of its total grant for up to 50 percent of its cash expenditures for administrative costs.
(d) Payment to State agencies. Approval of the State plan by FNS is a prerequisite to the payment of funds to the State agency. All funds made available for the Program shall be provided through a letter of credit or check, as determined by FNS.
(e) Unobligated funds. The State agency will release to FNS any Federal funds made available to it under the Program which are unobligated by September 30 of each fiscal year.
(f) Funds for existing programs. State agencies shall maintain their present level of funding for existing nutrition education and training programs. FNS funds for the Program shall augment current nutrition education and training programs and projects. Funds made available by FNS for this Program shall not replace such funds.
Subpart B—State Agency Provisions
§ 227.30 Responsibilities of State agencies.
(a) General. Except to the extent that it would be inconsistent with this part, the Program shall be administered in accordance with the applicable provisions of the Departmental regulations 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR part 400 and part 415, as applicable.
(b) Application. For the initial fiscal year of participation States shall make application for administration of the Program on Form and are responsible for amending Form AD-623 to request advance funding. In the initial application, in connection with the request for advance funding for the State Coordinator, part IV, Program Narrative, of Form AD-623 shall indicate the State agency’s procedures for hiring a State Coordinator and contain a justification for the dollar value of salary requested. The narrative shall also indicate the time frame for hiring the State Coordinator. In amending Form AD-623 in connection with the request for advance funding for the remaining portion of the assessment and planning grant, part IV, Program Narrative, shall set forth the details for areas of the assessment and planning grant, other than employment of the State Coordinator.
(b-1) If any State does not apply for participation in the Program, by April 1 of a fiscal year by submitting Form AD 623 as required in §§ 227.30(b) and 227.5(b)(2)(i), the State’s share of the funds shall be provided to the remaining States, so long as this does not take the remaining States’ grants above 50 cents per child enrolled in schools or institutions, except in those States which receive a minimum grant of $75,000 for a fiscal year.
(c) State Coordinator. After execution of the agreement the State agency shall appoint a nutrition education specialist to serve as a State Coordinator for the Program who may be employed on a full-time or part-time basis. The State Coordinator may be a State employee who reports directly or indirectly to the Chief State School Officer or an individual under contract with the State agency to serve as the State Coordinator. A State agency shall not contract with an organization to provide for the services of a State Coordinator. The State Coordinator, at a minimum, shall meet both of the following requirements:
(1) The State Coordinator shall have a Masters degree or equivalent experience. Equivalent experience is experience related to the position being filled or as defined by State civil service or personnel policies. If the Masters degree is not in foods and nutrition or dietetics, the Bachelors degree shall include academic preparations in foods and nutrition or dietetics.
(2) In addition, the State Coordinator shall have recognized and demonstrated skills in management and education through at least three years experience in one or more of these areas: Elementary or secondary education, but not limited to classroom teaching; foodservice management and training for adults; community nutrition or public health programs; foodservice operations for children; or community action or assistance programs.
(d) Needs assessment. Each State agency shall conduct an ongoing needs assessment in accordance with § 227.36 The needs assessment shall be the data base utilized in formulating the State plan for each fiscal year. For the first year of participation a State agency may apply for funds in order to carry out the needs assessment in accordance with § 227.5.
(e) Developing and submitting the State plan. Each State agency shall submit to the Secretary a State plan for Nutrition Education and Training in accordance with § 227.37 prior to the beginning of each fiscal year. The date of submission for the State plan shall be designated by the Secretary. The Secretary shall act on the submitted State plan within 60 days after it is received. For the first year of participation the State agency shall submit to the Secretary, within nine months after the award of the planning and assessment grant, a State plan for nutrition education and training in accordance with § 227.37.
(f) Records and reports. (1) Each State agency shall maintain full and complete records concerning Program operations and shall retain such records in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(2) Each State agency shall submit to FNS a quarterly Financial Status Report, FNS-777, as required 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(3) Each State agency shall submit an annual performance report (Form FNS-42) to FNS within 30 days after the close of the Fiscal Year.
(4) Each State agency shall maintain a financial management system in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(5) Each State agency shall comply with the requirements of 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, for property management and the procurement of supplies, equipment and other services with these Program funds.
(6) Any income accruing to a State or local agency because of the Program shall be used in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(g) Nondiscrimination. Each State agency shall ensure that Program operations are in compliance with the Department’s nondiscrimination regulations (part 15 of this title) issued under title VI of the Civil Rights Act of 1964.
§ 227.31 Audits, management reviews, and evaluations.
(a) Audits. (1) Examinations by the State agencies in the form of audits or internal audits shall be performed in accord with 2 CFR part 200, subpart F and Appendix XI, Compliance Supplement.
(b) Management reviews. The State agency is responsible for meeting the following requirements:
(1) The State agency shall establish management evaluation and review procedures to monitor compliance with the State plan for local educational agencies and land grant colleges, other institutions of higher education and public or private nonprofit educational or research agencies, institutions, or organizations.
(2) The State agency shall require participating agencies to establish program review procedures to be used in reviewing the Agencies operations and those of subsidiaries or contractors.
(c) Evaluations. The State agency shall conduct formal evaluations of program activities at least annually. These evaluations shall be aimed at assessing the effectiveness of the various activities undertaken by the State and local agencies. State officials shall analyze why some activities have proved effective while others have not and shall initiate appropriate improvements. The results of the evaluations shall be used to make adjustments in ongoing activities and to plan activities and programs for the next year’s State plan. The State agency shall submit a plan for evaluation of Program activities as part of the State plan in accordance with § 227.37(b)(14).
Subpart C—State Coordinator Provisions
§ 227.35 Responsibilities of State coordinator.
At a minimum, the State Coordinator shall be responsible for:
(a) Preparation of a budget,
(b) The conduct of the needs assessment,
(c) Development of a State plan,
(d) Implementation of the approved State Plan,
(e) Evaluation of the progress and implementation of the State Plan,
(f) Coordination of the Program with the Child Nutrition Programs at the State and local levels,
(g) Coordination of the Program with other nutrition education and training programs conducted with Federal or State funds,
(h) Communication of needs and accomplishments of State nutrition education and training programs to parents and the community at large,
(i) Use of Program funds in compliance with all regulations, instructions, or other guidance material provided by FNS,
(j) Coordinating the submission and preparation of the Program financial status report (FNS-777), and
(k) Annual evaluation of the effectiveness of the State Plan.
§ 227.36 Requirements of needs assessment.
(a) The needs assessment is an ongoing process which identifies the discrepancies between “what should be” and “what is” and shall be applied to each category listed below to enable State agencies to determine their nutrition education and training needs for each year. The needs assessment shall identify the following as a minimum:
(1) Children, teachers, and food service personnel in need of nutrition education and training;
(2) Existing State or federally funded nutrition education and training programs including their:
(i) Goals and objectives;
(ii) Source and level of funding;
(iii) Any available documentation of their relative success or failure; and
(iv) Factors contributing to their success or failure;
(3) Offices or agencies at the State and local level designated to be responsible for nutrition education and training of teachers and school food service personnel;
(4) Any relevant State nutrition education mandates;
(5) Funding levels at the State and local level for preservice and inservice nutrition education and training of food service personnel and teachers;
(6) State and local individuals, and groups conducting nutrition education and training;
(7) Materials which are currently available for nutrition education and training programs, and determine for each:
(i) Subject area and content covered;
(ii) Grade level;
(iii) How utilized;
(iv) Acceptability by user;
(v) Currency of materials;
(8) Any major child nutrition related health problems in each State;
(9) Existing sources of primary and secondary data, including any data that has been collected for documenting the State’s nutrition education and training needs;
(10) Available documentation of the competencies of teachers in the area of nutrition education;
(11) Available documentation of the competencies of food service personnel;
(12) Problems encountered by schools and institutions in procuring nutritious food economically and in preparing nutritious appetizing meals and areas where training can assist in alleviating these problems;
(13) Problems teachers encounter in conducting effective nutrition education activities and areas where inservice training or materials can assist in alleviating these problems;
(14) Problems in dietary habits of children and areas where nutrition education may assist in positive changes;
(15) Problems encountered in coordinating the nutrition education by teachers with the meal preparation and activities of the food service facility and areas where training might alleviate these problems.
(b) The needs assessment should be an ongoing process and provide not only data on current activities but also a description of the problems and needs in each category and whether training or materials would help alleviate the identified problems.
§ 227.37 State plan for nutrition education and training.
(a) General. Each fiscal year the State agency shall submit a State plan for Nutrition Education and Training for approval to FNS. The State plan shall be based on the needs identified from the ongoing needs assessment and evaluation of the State plans from previous years. The State plan shall be submitted in accordance with § 227.30(e). Guidance for the preparation and submission of the State plan shall be provided by FNS.
(b) Requirements for the State plan. The State plan shall provide the following:
(1) Description of the ongoing needs assessment conducted within the State;
(2) The findings of the needs assessment within the State used to determine the goals and objectives of the State plan and results of the evaluation of the previous years’ State plans for:
(i) Inservice training of food service personnel,
(ii) Nutrition education of children,
(iii) Inservice training in nutrition education for teachers;
(3) Goals and objectives of the State plan;
(4) Identification of the priority populations to be reached during the fiscal year;
(5) Provisions for coordinating the nutrition education and training programs carried out with funds made available under this part with any related publicly supported programs being carried out within the State to include:
(i) Identification of existing programs that may be utilized,
(ii) Description of how representatives of such groups are to be involved in the planning and implementation of the State program;
(iii) Criteria and procedure for selection of such representatives;
(6) Plans to solicit advice and recommendations of the National Advisory Council on Child Nutrition, State educational or other appropriate agencies; the U.S. Department of Education; the U.S. Department of Health and Human Services; and other interested groups and individuals concerned with improvement of child nutrition.
(7) Plans, including a timetable, for reaching all children in the State with instruction in the nutritional value of foods and the relationship among food, nutrition and health, for inservice training of food service personnel in the principles and skills of food service management and nutrition and for inservice instruction for teachers in sound principles of nutrition education;
(8) Any plans for using, on a priority basis, the resources of the land-grant colleges eligible to receive funds under the Act of July 2, 1862 (12 Stat. 503; 7 U.S.C. 301 through 305, 307, and 308) or the Act of August 30, 1890 (26 Stat. 417, as amended; 7 U.S.C. 312 through 326 and 328), including the Tuskegee Institute;
(9) A brief description of the program or activities to be contracted with land-grant colleges, described above, and other institutions of higher education, and other public or private nonprofit educational or research agencies, institutions or organizations for carrying out nutrition education and training activities;
(10) A brief description of pilot projects, including objectives, subject matter and expected outcomes, to be contracted with the land-grant colleges described above, other institutions of higher education, public and nonprofit educational or research agencies, institutions, or organizations for but not limited to projects for development, demonstration, testing and evaluation of curricula for use in early childhood, elementary, and secondary education programs;
(11) Identification of schools, school districts, and sponsoring agencies which may agree to participate in the nutrition education and training program;
(12) A brief description of (i) State agency sponsored pilot projects including objectives, subject matter and anticipated outcomes and (ii) nutrition education and training programs to be conducted by schools, school districts, and sponsoring agencies receiving funds under this provision including objectives, subject matter and expected outcomes;
(13) Time frame and milestones for implementation of State plans;
(14) Plans to evaluate program activities including an evaluation component for each objective of the State plan;
(15) Description of staff available to perform State agency responsibilities of the State nutrition education and training program which includes:
(i) Definition of duties and responsibilities,
(ii) Minimum professional qualifications,
(iii) Number and classification of personnel;
(16) A description of the procedures used to comply with the requirements of Title VI of the Civil Rights Act of 1964, including racial and ethnic participation data collection, public notification procedures and the annual civil rights compliance review process;
(17) Plans for the conduct of audits in accordance with § 227.31;
(18) A budget detailing the use of program funds;
(19) Description of the financial management system in accordance with § 227.30(e);
(20) Description of the management evaluation and review procedures established in accordance with § 227.31(b); and
(21) Other components that the States determine necessary.
(c) States eligible to receive additional funds pursuant to § 227.30(b-1) shall submit an amendment to the State plan to the Food and Nutrition Service Regional Office for prior approval.
Subpart D—Miscellaneous
§ 227.40 Program information.
Persons desiring information concerning the program may write to the appropriate State agency or Regional Office of FNS as indicated below:
(a) In the States of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont: New England Regional Office, FNS, U.S. Department of Agriculture, 33 North Avenue, Burlington, Mass. 01803.
(b) In the States of Delaware, District of Columbia, Maryland, New Jersey, New York, Pennsylvania, Puerto Rico, Virginia, Virgin Islands, and West Virginia: Mid-Atlantic Regional Office, FNS, U.S. Department of Agriculture, One Vahlsing Center, Robbinsville, N.J. 08691.
(c) In the States of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee: Southeast Regional Office, FNS, U.S. Department of Agriculture, 1100 Spring Street NW., Atlanta, Ga. 30309.
(d) In the States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin: Midwest Regional Office, FNS, U.S. Department of Agriculture, 536 South Clark Street, Chicago, Ill. 60605.
(e) In the States of Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah, and Wyoming: Mountain Plains Regional Office, FNS, U.S. Department of Agriculture, 2420 West 26th Avenue, Room 430D, Denver, Colo. 80211.
(f) In the States of Arkansas, Louisiana, New Mexico, Oklahoma, and Texas: Southwest Regional Office, FNS, U.S. Department of Agriculture, 1100 Commerce Street, Room 5-C-30, Dallas, Tex. 75242.
(g) In the States of Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, Trust Territory of the Pacific Islands, the Northern Mariana Islands, and Washington: Western Regional Office, FNS, U.S. Department of Agriculture, 550 Kearny Street, Room 400, San Francisco, Calif. 94108.
§ 227.41 Recovery of funds.
(a) FNS may recover funds from a State agency under any of the following conditions:
(1) If FNS determines, through a review of the State agency’s reports, program, or financial analysis, monitoring, audit or otherwise, that the State agency’s performance is inadequate or that the State agency has failed to comply with this part or FNS instructions and guidelines.
(2) If FNS determines that the State agency is not expending funds at a rate commensurate with the amount of funds distributed or provided for expenditure under the program.
(3) If FNS determines that a State agency is not providing full and timely reports.
(b) FNS shall effect such recoveries of funds through adjustments in the amount of funds provided under the program.
§ 227.42 Grant closeout procedures.
The requirements of 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR part 400 and part 415, are applicable in the termination of any grant under this part.
§ 227.43 Participation of adults.
Nothing in this part shall prohibit a State or local educational agency from making available or distributing to adults education materials, resources, activities or programs authorized by this part.
§ 227.44 Management evaluations and reviews.
FNS shall establish evaluation procedures to determine whether State agencies carry out the purpose and provisions of this part, the State agency plan and FNS guidelines and instructions. To the maximum extent possible the State’s performance shall be reviewed and evaluated by FNS on a regular basis including the use of public hearings.
Appendix to Part 227—Apportionment of Funds for Nutrition Education and Training
Pursuant to sections 19(j) of the Child Nutrition Act of 1966, as amended (42 U.S.C. 1788), funds available for the fiscal year ending September 30, 1980, are apportioned among the States as follows:
| State | Public schools 1 | Private schools 2 | Residential child care institutions 3 | Nonresidential child care institutions 4 | Total 5 |
|---|---|---|---|---|---|
| Connecticut | 231,069 | 38,488 | 1,260 | 2,866 | 273,683 |
| Maine | 93,406 | 6,538 | 387 | 808 | 101,139 |
| Massachusetts | 420,866 | 68,337 | 2,697 | 5,352 | 497,252 |
| New Hampshire | 67,087 | 7,978 | 331 | 1,160 | 76,556 |
| Rhode Island | 62,521 | 12,570 | 304 | 767 | 76,162 |
| Vermont | 39,419 | 3,814 | 247 | 579 | 75,000 |
| 914,368 | 137,725 | 5,226 | 11,532 | 1,099,792 | |
| Delaware | 43,210 | 7,277 | 107 | 1,339 | 75,000 |
| District of Columbia | 44,309 | 7,511 | 447 | 2,458 | 75,000 |
| Maryland | 315,196 | 51,992 | 1,292 | 5,234 | 373,714 |
| New Jersey | 520,438 | 117,060 | 3,930 | 8,588 | 650,016 |
| New York | 1,204,026 | 274,593 | 14,068 | 19,756 | 1,512,443 |
| Pennsylvania | 796,518 | 182,089 | 9,026 | 7,312 | 994,945 |
| Puerto Rico | 280,750 | 36,776 | 0 | 0 | 317,526 |
| Virginia | 410,660 | 34,947 | 6,239 | 6,068 | 457,914 |
| Virgin Islands | 9,783 | 2,452 | 11 | 0 | 75,000 |
| West Virginia | 154,000 | 4,942 | 770 | 854 | 160,566 |
| 3,778,890 | 719,639 | 35,890 | 51,609 | 4,692,124 | |
| Alabama | 296,412 | 21,949 | 892 | 10,607 | 329,860 |
| Florida | 589,122 | 57,440 | 2,116 | 19,074 | 667,752 |
| Georgia 5 | 424,042 | 27,708 | 2,783 | 14,806 | 469,339 |
| Kentucky | 269,690 | 27,786 | 3,685 | 3,652 | 304,813 |
| Mississippi | 192,134 | 25,802 | 541 | 12,175 | 230,652 |
| North Carolina | 452,523 | 22,104 | 3,052 | 19,722 | 497,401 |
| South Carolina 5 | 243,200 | 19,225 | 1,255 | 6,559 | 270,239 |
| Tennessee | 339,753 | 17,396 | 1,448 | 7,847 | 366,444 |
| 2,806,876 | 219,410 | 15,772 | 94,442 | 3,136,500 | |
| Illinois | 793,671 | 160,491 | 5,343 | 15,971 | 975,476 |
| Indiana | 433,267 | 39,967 | 2,814 | 5,279 | 481,327 |
| Michigan | 747,374 | 85,655 | 3,069 | 7,817 | 843,915 |
| Minnesota | 314,333 | 38,994 | 1,245 | 3,135 | 357,707 |
| Ohio | 818,192 | 110,561 | 5,836 | 10,767 | 945,356 |
| Wisconsin | 344,962 | 73,707 | 1,922 | 3,579 | 424,170 |
| 3,451,799 | 509,375 | 20,229 | 46,548 | 4,027,951 | |
| Arkansas | 177,730 | 8,095 | 385 | 4,453 | 190,663 |
| Louisiana | 317,817 | 64,562 | 1,551 | 6,307 | 390,237 |
| New Mexico | 108,673 | 5,448 | 235 | 2,619 | 116,975 |
| Oklahoma | 229,166 | 3,969 | 1,916 | 8,639 | 243,690 |
| Texas | 1,115,829 | 52,654 | 4,163 | 38,934 | 1,211,580 |
| 1,949,215 | 134,728 | 8,250 | 60,952 | 2,153,145 | |
| Colorado 5 | 217,264 | 15,800 | 937 | 4,399 | 238,400 |
| Iowa | 221,255 | 25,957 | 3,204 | 2,631 | 253,047 |
| Kansas | 168,720 | 12,765 | 330 | 1,062 | 182,877 |
| Missouri | 350,248 | 54,950 | 1,271 | 6,629 | 413,098 |
| Montana | 63,950 | 3,425 | 75 | 677 | 75,000 |
| Nebraska | 115,891 | 17,629 | 376 | 1,694 | 135,590 |
| North Dakota 5 | 47,486 | 4,826 | 309 | 383 | 75,000 |
| South Dakota | 53,792 | 5,760 | 267 | 390 | 75,000 |
| Utah | 126,488 | 1,518 | 541 | 1,325 | 129,872 |
| Wyoming | 36,709 | 1,206 | 74 | 497 | 75,000 |
| 1,401,803 | 143,836 | 7,384 | 19,687 | 1,652,884 | |
| Alaska | 35,308 | 739 | 310 | 392 | 75,000 |
| Samoa | 3,616 | 778 | 0 | 0 | 75,000 |
| Arizona | 198,407 | 21,871 | 661 | 4,712 | 225,651 |
| California | 1,629,801 | 170,376 | 28,777 | 44,277 | 1,873,231 |
| Guam | 11,118 | 1,985 | 0 | 0 | 75,000 |
| Hawaii | 66,454 | 13,348 | 1,854 | 3,352 | 85,008 |
| Idaho | 79,009 | 1,868 | 119 | 860 | 81,856 |
| Nevada | 56,927 | 2,179 | 473 | 1,643 | 75,000 |
| Oregon | 183,441 | 9,379 | 859 | 3,703 | 197,382 |
| Trust Territory | 11,590 | 0 | 0 | 0 | 75,000 |
| Washington | 299,362 | 17,318 | 2,140 | 5,656 | 324,476 |
| N Marianas | 1,945 | 0 | 0 | 0 | 75,000 |
| 2,576,978 | 239,841 | 35,193 | 64,595 | 3,237,604 | |
| 16,879,929 | 2,104,554 | 127,944 | 349,365 | 20,000,000 |
1 Sources: (1) U.S. Department of Health, Education, and Welfare, Education Division, NCES,
2 U.S. Department of Health, Education, and Welfare, Education Division, (NCES). Digest of Education Statistics, 1976, Table 46, p. 47, Northern Marianas and Trust Territory 1975-76 data from Department of Interior, adjust to include pre-school.
3 U.S. Department of Agriculture, Food and Nutrition Service, Annual Report of Meal Service in Schools (Form FNS-47), October 1978.
4 U.S. Department of Health, Education, and Welfare,
5 A portion of these funds will be withheld from the States’ allocations for use by FNS in administering the Program in nonprofit private schools or institutions.
PART 235—STATE ADMINISTRATIVE EXPENSE FUNDS
§ 235.1 General purpose and scope.
This part announces the policies and prescribes the regulations necessary to carry out the provisions of section 7 of the Child Nutrition Act of 1966, as amended. It prescribes the methods for making payments of funds to State agencies for use for administrative expenses incurred in supervising and giving technical assistance in connection with activities undertaken by them under the National School Lunch Program (7 CFR part 210), the Special Milk Program (7 CFR part 215), the School Breakfast Program (7 CFR part 220), the Child and Adult Care Food Program (7 CFR part 226) and the Food Distribution Program (7 CFR part 250).
§ 235.2 Definitions.
For the purpose of this part, the term:
2 CFR part 200, means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by OMB. The part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F). (NOTE: Pre-Federal Award Requirements and Contents of Federal Awards (subpart C) does not apply to the National School Lunch Program).
Act means the Child Nutrition Act of 1966, as amended.
CND means the Child Nutrition Division of the Food and Nutrition Service of the U.S. Department of Agriculture.
Department means the U.S. Department of Agriculture.
Distributing agency means a State agency which enters into an agreement with the Department for the distribution of donated foods pursuant to part 250 of this title.
FNS means the Food and Nutrition Service of the U.S. Department of Agriculture.
FNSRO means the appropriate Food and Nutrition Service Regional Office of the Food and Nutrition Service of the U.S. Department of Agriculture.
Fiscal year means a period of 12 calendar months beginning October 1, 1976, and October 1 of each calendar year thereafter and ending with September 30 of the following calendar year.
Institution means a child or adult care center or a sponsoring organization as defined in part 226 of this chapter.
Large school food authority means, in any State:
(1) All school food authorities that participate in the National School Lunch Program (7 CFR part 210) and have enrollments of 40,000 children or more each; or
(2) If there are less than two school food authorities with enrollments of 40,000 or more, the two largest school food authorities that participate in the National School Lunch Program (7 CFR part 210) and have enrollments of 2,000 children or more each.
Nonprofit means exempt from income tax under section 501(c)(3) of the Internal Revenue Code of 1986.
OIG means the Office of the Inspector General of the Department.
SAE means federally provided State administrative expense funds for State agencies under this part.
School means the term as defined in §§ 210.2, 215.2, and 220.2 of this chapter, as applicable.
School Food Authority means the governing body which is responsible for the administration of one or more schools and which has the legal authority to operate a breakfast or a lunch program therein. The term “School Food Authority” also includes a nonprofit agency or organization to which such governing body has delegated authority to operate the lunch or breakfast program in schools under its jurisdiction, provided the governing body retains the responsibility to comply with breakfast or lunch program regulations.
Secretary means the Secretary of Agriculture.
State means any of the 50 States, District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as applicable, American Samoa and the Commonwealth of the Northern Marianas.
State agency means (1) the State educational agency or (2) such other agency of the State as has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer programs under part 210, 215, 220, 226 or 250 of this title. Unless otherwise indicated, “State agency” shall also mean Distributing agency as defined in this section,, when such agency is receiving funds directly from FNS under this part.
State educational agency means, as the State legislature may determine: (1) The chief State school officer (such as the State Superintendent of Public Instruction, Commissioner of Education, or similar officer), or (2) a board of education controlling the State department of education.
USDA implementing regulations include the following: 2 CFR part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; 2 CFR part 415, General Program Administrative Regulations; 2 CFR part 416, General Program Administrative Regulations for Grants and Cooperative Agreements to State and Local Governments; and 2 CFR part 418, New Restrictions on Lobbying.
§ 235.3 Administration.
(a) Within the Department, FNS shall act on behalf of the Department in the administration of the program for payment to States of State administrative expense funds covered by this part. Within FNS, CND shall be responsible for administration of the program.
(b) Each State agency desiring to receive payments under this part shall enter into a written agreement with the Department for the administration of the child nutrition programs in accordance with the applicable requirements of this part, 7 CFR parts 210, 215, 220, 225, 226, 245, 15, 15a, 15b, and 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415. Each agreement shall cover the operation of the Program during the period specified therein and may be extended at the option of the Department.
§ 235.4 Allocation of funds to States.
(a) Nondiscretionary SAE Funds. For each fiscal year, FNS shall allocate the following:
(1) To each State which administers the National School Lunch, School Breakfast or Special Milk Programs an amount equal to one (1) percent of the funds expended by such State during the second preceding fiscal year under sections 4 and 11 of the National School Lunch Act, as amended, and sections 3, 4 and 17A of the Child Nutrition Act of 1966, as amended. However, the total amount allocated to any State under this paragraph shall not be less than $200,000 or the amount allocated to the State in the fiscal year ending September 30, 1981, whichever is greater. On October 1, 2008 and each October 1 thereafter, the minimum dollar amount for a fiscal year for administrative costs shall be adjusted to reflect the percentage change between the value of the index for State and local government purchases, as published by the Bureau of Economic Analysis of the Department of Commerce, for the 12-month period ending June 30 of the second preceding fiscal year, and the value of that index for the 12-month period ending June 30 of the preceding fiscal year.
(2) To each State which administers the Child and Adult Care Food Program an amount equal to the sum of: Twenty percent of the first $50,000; ten percent of the next $100,000; five percent of the next $250,000; and two and one-half percent of any remaining funds expended within the State under section 17 of the National School Lunch Act, as amended, during the second preceding fiscal year. FNS may adjust the amount of any such allocation in accordance with changes in the size of the Child and Adult Care Food Program in a State.
(3) For each of fiscal years 2005 through 2007 no State shall receive less than its fiscal year 2004 allocation for administrative costs for all child nutrition programs.
(b) Discretionary SAE Funds. For each fiscal year, FNS shall provide the following additional allocations:
(1) Allocate $30,000 to each State which administers the Child and Adult Care Food Program (7 CFR part 226).
(2) $30,000 to each State which administers the Food Distribution Program (part 250 of this chapter) in schools and/or institutions which participate in programs under parts 210, 220, and 226 of this chapter; provided that the State meets the training requirements set forth in § 235.11(h).
(3) Amounts derived by application of the following four-part formula to each State agency which is allocated funds under paragraph (a) of this section:
(i) One equal share of forty (40) percent of the funds designated by FNS for the reviews conducted under § 210.18 of this title.
(ii) The ratio of the number of School Food Authorities participating in the National School Lunch or Commodity School Programs under the jurisdiction of the State agency to such School Food Authorities in all States times twenty (20) percent of the funds designated by FNS for reviews conducted under § 210.18 or of this title.
(iii) The ratio of the number of free and reduced price meals served in School Food Authorities under the jurisdiction of the State agency during the second preceding fiscal year to the number of free and reduced price meals served in all States in the second preceding fiscal year times twenty (20) percent of the funds designated by FNS for reviews conducted under § 210.18 of this title.
(iv) Equal shares of twenty (20) percent of the funds designated by FNS for reviews conducted under § 210.18 of this title for each School Food Authority under the jurisdiction of the State agency participating in the National School Lunch or Commodity School Programs which has an enrollment of 40,000 or more; Provided, however, That for State agencies with fewer than two School Food Authorities with enrollments of 40,000 or more, an equal share shall be provided to the State agency, for either, or both, of the two largest School Food Authorities which have enrollments of more than 2,000; and Provided, further, That State agencies with only one School Food Authority, regardless of size, shall be provided with one equal share. For each fiscal year, the amount of State Administrative Expense Funds designated by FNS for reviews conducted under § 210.18 of this title and subject to allocation under this paragraph shall be equal to or greater than the amount designated by FNS for program management improvements for the fiscal year ending September 30, 1980.
(4) Funds which remain after the allocations required in paragraphs (a)(1), (a)(2), (b)(1), (b)(2) and (b)(3) of this section, and after any payments provided for under paragraph (c) of this section, as determined by the Secretary, to those States which administer the Food Distribution Program (part 250 of this chapter) in schools and/or institutions which participate in programs under parts 210, 220, or 226 of this chapter and to those States which administer part 226 of this chapter. The amount of funds to be allocated to each State for the Food Distribution Program for any fiscal year shall bear the same ratio to the total amount of funds made available for allocation to the State for the Food Distribution Program under this paragraph as the value of USDA donated foods delivered to the State for schools and institutions participating in programs under parts 210, 220 and 226 of this chapter during the second preceding fiscal year bears to the value of USDA donated foods delivered to all the States for such schools and institutions during the second preceding fiscal year. The amount of funds to be allocated to each State which administers the Child and Adult Care Food Program for any fiscal year shall bear the same ratio to the total amount of funds made available for allocation to all such States under this paragraph as the amount of funds allocated to each State under paragraph (a)(2) of this section bears to the amount allocated to all States under that paragraph.
(c) SAE Funds for the Child and Adult Care Food Program. If a State elects to have a separate State agency administer the adult care component of the Child and Adult Care Food Program, such separate State agency shall receive a pro rata share of the SAE funds allocated to the State under paragraphs (a)(2), (b)(1), and (b)(4) of this section which is equal to the ratio of funds expended by the State for the adult care component of the Child and Adult Care Food Program during the second preceding fiscal year to the funds expended by the State for the entire Child and Adult Care Food Program during the second preceding fiscal year. The remaining funds shall be allocated to the State agency administering the child care component of the Child and Adult Care Food Program.
(d) SAE Start-up Cost Assistance for State Administration of Former ROAPs. For any State agency which agrees to assume responsibility for the administration of food service programs in nonprofit private schools or child and adult care institutions that were previously administered by FNS, an appropriate adjustment in the administrative funds paid under this part to the State shall be made by FNS not later than the succeeding fiscal year. Such an adjustment shall consist of an amount of start-up cost assistance, negotiated with the State agency, of no less than $10,000 and not exceeding $100,000, per State.
(e) SAE Funding Reduction Upon State Agency Termination of a Food Service Program. For any State agency which terminates its administration of any food service program for which State administrative expense funds are provided under this part, a reduction in the amount of such funds, negotiated with the State agency, shall be made by FNS.
(f) SAE Funds for ROAPs. FNS shall have available to it the applicable amounts provided for in paragraphs (a)(1), (a)(2), and (b)(1) of this section, and part 225 of this title, when it is responsible for the administration of a program or programs within a State.
(g) Reallocation. Funds allotted to State agencies under this section shall be subject to the reallocation provisions of § 235.5(d).
(h) Withholding SAE funds. The Secretary may withhold some or all of the funds allocated to the State agency under this section if the Secretary determines that the State agency is seriously deficient in the administration of any program for which State administrative expense funds are provided under this part or in the compliance of any regulation issued pursuant to those programs. On a subsequent determination by the Secretary that State agency administration of the programs or compliance with regulations is no longer seriously deficient and is operated in an acceptable manner, the Secretary may allocate some or all of the funds withheld.
§ 235.5 Payments to States.
(a) Method of payment. FNS will specify the terms and conditions of the State agency’s annual grant of SAE funds in conjunction with the grant award document and will make funds available for payment by means of a Letter of Credit issued in favor of the State agency. The total amount of a State agency’s grant shall be equal to the sum of the amounts allocated to such agency under § 235.4 plus or minus any adjustments resulting from the reallocation provisions under paragraph (d) of this section plus any transfers under § 235.6(a) and/or § 235.6(c) of this part. The amount of SAE funds made available for payment to a State agency in any fiscal year shall be determined by FNS upon approval of the State agency’s administrative plan under paragraph (b) of this section and any amendments to such plan under paragraph (c) of this section. Funds shall not be made available before the State agency’s plan or amendment to such plan, as applicable, has been approved by FNS. However, if the plan has not been approved by October 1 of the base year, FNS may advance SAE funds to the State agency, in amounts determined appropriate by FNS, pending approval of the plan.
(b) Administrative plan. (1) Each State agency shall submit, subject to FNS approval, an initial State Administrative Expense plan based upon guidance provided by FNS. This base year plan shall include:
(i) The staffing pattern for State level personnel;
(ii) A budget for the forthcoming fiscal year showing projected amounts (combined SAE and State funds) by cost category;
(iii) The total amount of budgeted funds to be provided from State sources;
(iv) The total amount of budgeted funds to be provided under this part;
(v) The State agency’s estimate of the total amount of budgeted funds (combined SAE and State funds) attributable to administration of the School Nutrition Programs (National School Lunch, School Breakfast and Special Milk Programs), Child and Adult Care Food Program, and/or Food Distribution Program in schools and child and adult care institutions and to each of the major activity areas of the State agency; and
(vi) The State agency’s estimate of the total Child and Adult Care Food Program audit funds to be used for the forthcoming fiscal year.
(2) These activity areas shall be defined and described by the State agency in accordance with guidance issued by FNS and may include such activities as program monitoring, technical assistance, Federal reporting/claims processing, policy implementation, and allocation of foods to recipient agencies.
(3) Except in specific instances where determined necessary by FNS, State agencies shall not be required to maintain expenditure records by activity area or program. State agencies shall refer to 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415.
(4) FNS shall approve a State agency’s plan, or any amendment to such plan under paragraph (c) of this section, if it determines that the plan or amendment is consistent with program administrative needs and SAE requirements under this part.
(5) To the extent practicable, State agencies shall implement their approved plans (as amended). FNS shall monitor State agency implementation of the plans through management evaluations, State agency reports submitted under this part, audits, and through other available means.
(6) FNS may expand plan requirements for individual State agencies in order to address specific administrative deficiencies which affect compliance with program requirements and which have been identified by FNS through its monitoring activities.
(c) Amendments to the administrative plan. A State agency may amend its plan at any time to reflect changes in funding or activities, except that, if such changes are substantive as defined in the June 5, 1997 guidance, and any amendments or updates to this guidance, the State agency shall amend its plan in accordance with guidance provided by FNS. Plan amendments shall provide information in a format consistent with that provided in the State agency’s plan, but shall only require FNS approval if it results in a substantive change as defined by FNS.
(d) Reallocation of funds. Annually, between March 1 and May 1 on a date specified by FNS, of each year, each State agency shall submit to FNS a State Administrative Expense Funds Reallocation Report (FNS-525) on the use of SAE funds. At such time, a State agency may release to FNS any funds that have been allocated, reallocated or transferred to it under this part or may request additional funds in excess of its current grant level. Based on this information or on other available information, FNS shall reallocate, as it determines appropriate, any funds allocated to State agencies in the current fiscal year which will not be obligated in the following fiscal year and any funds carried over from the prior fiscal year which remain unobligated at the end of the current fiscal year. Reallocated funds shall be made available for payment to a State agency upon approval by FNS of the State agency’s amendment to the base year plan which covers the reallocated funds, if applicable. Notwithstanding any other provision of this part, a State agency may, at any time, release to FNS for reallocation any funds that have been allocated, reallocated or transferred to it under this part and are not needed to implement its approved plan under this section.
(e) Return of funds. (1) In Fiscal Year 1991, up to 25 per cent of the SAE funds allocated to each State agency under § 235.4 may remain available for obligation and expenditure in the second fiscal year of the grant. In subsequent fiscal years, up to 20 percent may remain available for obligation and expenditure in the second fiscal year. The maximum amount to remain available will be calculated at the time of the formula allocation by multiplying the appropriate percentage by each State agency’s formula allocation as provided under § 235.4(a) through (c). At the end of the first fiscal year, the amount subject to the retention limit is determined by subtracting the amount reported by the State agency as Total Federal share of outlays and unliquidated obligations on the fourth quarter Standard Form FNS 777, Financial Status Report, from the total amount of SAE funds made available for that fiscal year (i.e., the formula allocation adjusted for any transfers or reallocations). However, funds provided under § 235.4(d) are not subject to the retention limit. Any funds in excess of the amount that remains available to each State agency shall be returned to FNS.
(2) At the end of the fiscal year following the fiscal year for which funds were allocated, each State agency shall return any funds made available which are unobligated.
(3) Return of funds by the State agency shall be made as soon as practicable, but in any event, not later than 30 days following demand by FNS.
§ 235.6 Use of funds.
(a) Funds allocated under this part and 7 CFR part 225 shall be used for State agency administrative costs incurred in connection with the programs governed by 7 CFR parts 210, 215, 220, 225, 226, and 250 of this title. Except as provided under § 235.6(c), funds allocated under § 235.4, paragraphs (a) and (b) and 7 CFR part 225 shall be used for the program(s) for which allocated, except that the State agency may transfer funds allocated for any such program(s) to other such program(s). Subject to the provisions of this paragraph, a State agency may also transfer SAE funds that are not needed to implement its approved plan § 235.5(b) to another State agency within the State that is eligible to receive SAE funds under this part. Up to 25 per cent of funds allocated under § 235.4(a) through (c) for Fiscal Year 1991 and up to 20 per cent of funds allocated in subsequent fiscal years to a State agency may, subject to the provisions of § 235.5 of this part, remain available for obligation and expenditure by such State agency during the following fiscal year.
(a)(1) State administrative expense funds paid to any State may be used by State agencies to pay salaries, including employee benefits and travel expenses for administrative and supervisory personnel, for support services, for office equipment, and for staff development, particularly for monitoring and training of food service personnel at the local level in areas such as food purchasing and merchandizing. Such funds shall be used to employ additional personnel, as approved in the applicable State plan to supervise, improve management, and give technical assistance to school food authorities and to institutions in their initiation, expansion, and conduct of any programs for which the funds are made available. State agencies may also use these funds for their general administrative expenses in connection with any such programs, including travel and related expenses. Additional personnel or part-time personnel hired are expected to meet professional qualifications and to be paid at salary scales of positions of comparable difficulty and responsibility under the State agency. Personnel may be used on a staff year equivalent basis, thus permitting new personnel and existing staff to be cross-utilized for most effective and economical operation under existing and new programs. State agencies may also use these funds for the purposes of State director annual continuing education/training as described in § 235.11(h)(3); however, costs associated with obtaining college credits to meet the hiring standards in § 235.11(h)(1) and (2) are not allowable.
(a)(2) State Administrative Expense Funds paid to any State agency under § 235.4(b)(3) shall be available for reviews conducted under § 210.18 activities associated with carrying out actions to ensure adherence to the program performance standards.
(b) State administrative expense funds shall be used consistent with the cost principles and constraints on allowable and unallowable costs and indirect cost rates as prescribed in 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415.
(c) In addition to State Administrative Expense funds made available specifically for food distribution purposes under § 235.4 (b)(2) and (b)(4), State Administrative Expense funds allocated under § 235.4 (a)(1), (a)(2), (b)(1), (b)(3), and (d), and under (b)(4) for the Child and Adult Care Food Program may be used to assist in the administration of the Food Distribution Program (7 CFR part 250) in schools and institutions which participate in programs governed by parts 210, 220, and 226 of this title when such Food Distribution Program is administered within the State agency and may also be used to pay administrative expenses of a distributing agency, when such agency is other than the State agency and is responsible for administering all or part of such Food Distribution Program.
(d) FNS shall allocate, for the purpose of providing grants on an annual basis to public entities and private nonprofit organizations participating in projects under section 18(c) of the National School Lunch Act, not more than $4,000,000 in each of Fiscal Years 1993 and 1994. Subject to the maximum allocation for such projects for each fiscal year, at the beginning of each of Fiscal Years 1993 and 1994, FNS shall allocate, from funds available under § 235.5(d) that have not otherwise been allocated to States, an amount equal to the estimates by FNS of the funds to be returned under paragraph (a) of this section, but not less than $1,000,000 in each fiscal year. To the extent that amounts returned to FNS are less than estimated or are insufficient to meet the needs of the projects, FNS may allocate amounts to meet the needs of the projects from funds available under this section that have not been otherwise allocated to States. FNS shall reallocate any of the excess funds above the minimum level in accordance with § 235.5(d).
(e) Where State Administrative Expense Funds are used to acquire personal property or services the provisions of §§ 235.9 and 235.10 must be observed.
(f) Each State agency shall adequately safeguard all assets and assure that they are used solely for authorized purposes.
(g) Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property provided under this part, whether received directly or indirectly from the Department, shall:
(1) If such funds, assets, or property are of a value of $100 or more, be fined not more than $25,000 or imprisoned not more than five years or both; or
(2) If such funds, assets, or property are of a value of less than $100, be fined not more than $1,000 or imprisoned not more than one year or both.
(h) Whoever receives, conceals, or retains to his use or gain funds, assets, or property provided under this part, whether received directly or indirectly from the Department, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud, shall be subject to the same penalties provided in paragraph (h) of this section.
(i) Full use of Federal funds. States and State agencies must support the full use of Federal funds provided to State agencies for the administration of Child Nutrition Programs, and exclude such funds from State budget restrictions or limitations including hiring freezes, work furloughs, and travel restrictions.
§ 235.7 Records and reports.
(a) Each State agency shall keep records on the expenditure of State administrative expense funds provided under this part and part 225 of this title. Such records shall conform with the applicable State plan for use of State administrative expense funds. The State agency shall make such records available, upon a reasonable request, to FNS, OIG, or the U.S. Comptroller General and shall maintain current accounting records of State administrative expense funds which shall adequately identify fund authorizations, obligations, unobligated balances, assets, liabilities, outlays and income. The records may be kept in their original form or on microfilm, and shall be retained for a period of three years after the date of the submission of the final Financial Status Report, subject to the exceptions noted below:
(1) If audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.
(2) Records for nonexpendable property acquired with State Administrative Expense Funds shall be retained for three years after its final disposition.
(b) Each State agency shall submit to FNS a quarterly Financial Status Report (FNS-777) on the use of State administrative expense funds provided for each fiscal year under this part. Reports shall be postmarked and/or submitted to FNS no later than 30 days after the end of each quarter of the fiscal year and, in case of funds carried over under § 235.6(a), each quarter of the following fiscal year until all such funds have been obligated and expended. Obligations shall be reported for the fiscal year in which they occur. Each State agency shall submit a final Financial Status Report for each fiscal year’s State administrative expense funds. This report shall be postmarked and/or submitted to FNS no later than 30 days after the end of the fiscal year following the fiscal year for which the funds were initially made available. Based on guidance provided by FNS, each State agency shall also use the quarterly FNS-777 to report on the use of State funds provided during the fiscal year. Each State agency shall also submit an annual report containing information on School Food Authorities under agreement with the State agency to participate in the National School Lunch or Commodity School programs.
(c) State agencies operating those programs governed by parts 210, 215, 220 and 226 and those State agencies which are distributing agencies eligible for SAE funds shall participate in surveys and studies of programs authorized under the National School Lunch Act, as amended, and the Child Nutrition Act of 1966, as amended, when such studies and surveys are authorized by the Secretary of Agriculture. The aforementioned State agencies shall encourage individual School Food Authorities, child and adult care institutions, and distributing agencies (as applicable) to participate in such studies and surveys. Distribution of State Administrative Expense funds to an individual State agency is contingent upon that State agency’s cooperation in such studies and surveys.
§ 235.8 Management evaluations and audits.
(a) Unless otherwise exempt, audits at the State level shall be conducted in accordance with 2 CFR part 200, subpart F and Appendix XI, Compliance Supplement and USDA implementing regulations 2 CFR part 400 and part 415.
(b) While OIG shall rely to the fullest extent feasible upon State sponsored audits, it shall, whenever considered necessary, (1) perform on-site test audits, and (2) review audit reports and related working papers of audits performed by or for State agencies.
(c) Each State agency shall provide FNS with full opportunity to conduct management evaluations of all operations of the State agency under this part and shall provide OIG with full opportunity to conduct audits of all such operations. Each State agency shall make available its records, including records of the receipt and expenditure of funds, upon a reasonable request by FNS, OIG, or the U.S. Comptroller General.
§ 235.9 Procurement and property management standards.
(a) Requirements. State agencies shall comply with the requirements of 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 concerning the procurement of supplies, equipment and other services with State Administrative Expense Funds.
(b) Contractual responsibilities. The standards contained in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 do not relieve the State agency of any contractual responsibilities under its contract. The State agency is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the Program. This includes, but is not limited to source evaluation, protests, disputes, claims, or other matters of a contractual nature. Matters concerning violation of law are to be referred to the local, State or Federal authority that has proper jurisdiction.
(c) Procurement procedure. The State agency may use its own procurement procedures which reflect applicable State laws and regulations, in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(d) Property acquired with State administrative expense funds. State Agencies shall comply with the requirements of 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 in their utilization and disposition of property acquired in whole or in part with State Administrative Expense Funds.
§ 235.10 [Reserved]
§ 235.11 Other provisions.
(a) State funds. Expenditures of funds from State sources in any fiscal year for the administration of the National School Lunch Program, School Breakfast Program, Special Milk Program, Child and Adult Care Food Program shall not be less than that expended or obligated in fiscal year 1977. Failure of a State to maintain this level of funding will result in the total withdrawal of SAE funds. State agencies shall follow the provisions of 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415 in identifying and documenting expenditures of funds from State revenues to meet the State funding requirement of this paragraph.
(b) Sanctions imposed. (1) FNS may recover, withhold or cancel payment of up to one hundred (100) percent of the funds payable to a State agency under this part, whenever it is determined by FNS that the State agency has failed to comply with the requirements contained in this part and in parts 210, 215, 220 and 226 of this title and in part 250 of this title as it applies to the operation of the Food Distribution Program in schools and child and adult care institutions.
(2) In addition to the general provisions found in paragraph (b)(1) of this section, FNS may, for any fiscal year, recover, withhold or cancel payment of up to thirty-three and one-third (33
(i) Implementing the requirements in § 210.18;
(ii) Conducting the number of reviews required in § 210.18 within the timeframes specified;
(iii) Covering the areas of review set forth in the § 210.18, carrying out corrective action, and assessing and recovering claims as prescribed in §§ 210.18 and 210.19 of this title;
(iv) Conducting reviews with sufficient thoroughness to identify violations of the areas of review identified in § 210.18;
(v) Meeting the reporting deadlines prescribed for the forms (FNS-10 and FNS-777) required under § 210.5(d) of this title; and
(vi) Meeting the professional standards required in paragraph (g) of this section.
(3) Furthermore, FNS may for any fiscal year, recover, withhold or cancel payment of up to thirty-three and one-third (33
(4) In establishing the amounts of funds to be recovered, withheld or cancelled under paragraph (b)(2) and (b)(3) of this section, FNS shall determine the current or projected rate of funds usage by the State agency for all funds subject to sanction, and after considering the severity and longevity of the cumulative deficiencies, shall apply an appropriate sanction percentage to the amount so determined. During the fiscal year under sanction, a State agency may not use funds not included in the determination of funds usage to replace sanctioned funds. The maximum sanction percentage that may be imposed against a State agency for failure within one or more of the five deficiency areas specified in paragraph (b)(2) of this section for any fiscal year shall be thirty-three and one-third (33
(5) Before carrying out any sanction against a State agency under this section, the following procedures shall be implemented:
(i) FNS shall notify the Chief State School Officer or equivalent of the deficiencies found and of its intention to impose sanctions unless an acceptable corrective action plan is submitted and approved by FNS within 60 calendar days.
(ii) The State agency shall develop a corrective action plan with specific timeframes to correct the deficiencies and/or prevent their future recurrence. The plan will include dates by which the State agency will accomplish such corrective action.
(iii) FNS shall review the corrective action plan. If it is acceptable, FNS shall issue a letter to the Chief State School Officer or equivalent approving the corrective action plan, and detailing the technical assistance that is available to the State agency to correct the deficiencies. The letter shall advise the Chief State School Officer or equivalent of the specific sanctions to be imposed if the corrective action plan is not implemented within timeframes set forth in the approved plan.
(iv) Upon advice from the State agency that corrective action has been taken, FNS shall assess such action and, if necessary, shall perform a follow-up review to determine if the noted deficiencies have been corrected. FNS shall then advise the State agency if the actions taken are in compliance with the corrective action plan or if additional corrective action is needed.
(v) If an acceptable corrective action plan is not submitted and approved within 60 calendar days, or if corrective action is not completed within the time limits established in the corrective action plan, FNS may impose a sanction by assessing a claim against the State agency or taking action in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 FNS shall notify the Chief State School Officer or equivalent of any such action.
(vi) If, subsequent to the imposition of any sanction, FNS determines that the noted deficiencies have been resolved and that the programs for which SAE funds were made available are being operated in an acceptable manner, FNS may return to the State agency or restore to the State agency’s Letter of Credit (LOC) part or all of any sanctioned SAE funds.
(6) In carrying out sanctions under this part for any fiscal year, FNS may reduce the amount of allocated SAE funds payable to a State agency in whole or in part during such fiscal year and during following fiscal years if necessary.
(7) Any State agency which has a sanction imposed against it in accordance with this paragraph shall not be eligible to participate in any reallocation of SAE funds under § 235.5(d) of this part during any fiscal year in which such sanction is being applied.
(c) Fines. (1) FNS may establish a fine against any State agency administering the programs under parts 210, 215, 220, 225, 226, and 250 of this chapter, as it applies to the operation of the Food Distribution Program in schools and child and adult care institutions, when it has determined that the State agency has:
(i) Failed to correct severe mismanagement of the programs;
(ii) Disregarded a program requirement of which the State has been informed; or
(iii) Failed to correct repeated violations of program requirements.
(2) Funds used to pay a fine established under paragraph (c)(1) of this section must be derived from non-Federal sources. The amount of the fine will not exceed the equivalent of:
(i) For the first fine, 1 percent of all allocations made available under § 235.4 during the most recent fiscal year for which full year data are available;
(ii) For the second fine, 5 percent of all allocations made available under § 235.4 during the most recent fiscal year for which full year data are available; and
(iii) For the third or subsequent fines, 10 percent of all allocations made available under § 235.4 during the most recent fiscal year for which full year data are available.
(3) State agencies seeking to appeal a fine established under this paragraph must follow the procedures set forth in this paragraph (g).
(d) Termination for convenience. FNS and the State agency may terminate the State agency’s participation under this part in whole, or in part, when both parties agree that continuation would not produce beneficial results commensurate with the further expenditure of funds. The two parties shall agree upon the termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated. The State agency shall not incur new obligations for the terminated portion after the effective date, and shall cancel as many outstanding obligations as possible. FNS shall allow full credit to the State agency for the Federal share of the noncancellable obligations, properly incurred by the State agency prior to termination.
(e) In taking any action under paragraphs (b), (c), or (d) of this section, FNS and the State agency shall comply with the provisions of 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 concerning grant suspension, termination and closeout procedures.
(f) State requirements. Nothing contained in this part shall prevent a State agency from imposing additional operating requirements which are not inconsistent with the provisions of this part.
(g) Administrative review process. When FNS asserts a sanction or fine against a State agency under the provisions of paragraphs (b) and (c) of this section, the State agency may appeal the case and be afforded a review by an FNS Administrative Review Officer of the record including any additional written submissions prepared by the State agency.
(1) FNS shall provide a written notice and shall ensure the receipt of such notice when asserting a sanction or fine against a State agency.
(2) A State agency aggrieved by a sanction or fine asserted against it may file a written request with the Director, Administrative Review Staff, U.S. Department of Agriculture, Food and Nutrition Service, 3101 Park Center Drive, Alexandria, Va. 22302 for a review of the record. Such request must be postmarked within 30 calendar days of the date of delivery of the sanction or fine notice and the envelope containing the request shall be prominently marked “REQUEST FOR REVIEW.” If the State agency does not request a review within 30 calendar days of the date of delivery of the sanction or fine notice, the administrative decision on the sanction or fine shall be final.
(3) Upon receipt of a request for review, FNS shall promptly provide the State agency with a written acknowledgment of the request. The acknowledgment shall include the name and address of the FNS Administrative Review Officer reviewing the sanction or fine. The acknowledgment shall also notify the State agency that any additional information in support of its position must be submitted within 30 calendar days of the receipt of the acknowledgment.
(4) When a review is requested, the FNS Administrative Review Officer shall review all available information and shall make a final determination within 45 calendar days after receipt of the State agency’s additional information. The final determination shall take effect upon delivery of the written notice of this final decision to the State agency.
(5) The final determination of the FNS Administrative Review Officer will be the Department’s final decision in the case and will not be subject to reconsideration.
(h) Professional standards. State agencies must meet the minimum hiring and training standards established by FNS.
(1) Hiring standards for State directors of school nutrition programs. Beginning July 1, 2015, newly hired State agency directors with responsibility for the administration of the National School Lunch Program under part 210 of this chapter and the School Breakfast Program under part 220 of this chapter must have:
(i) Bachelor’s degree, master’s degree, or doctorate degree with an academic major in areas including food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field;
(ii) Extensive relevant knowledge and experience in areas such as institutional food service operations, management, business, and/or nutrition education (experience in three or more of these areas highly recommended); and
(iii) Additional abilities and skills needed to lead, manage and supervise people to support the mission of Child Nutrition programs.
(iv) It is also strongly preferred that new hires possess:
(A) Both a bachelor’s degree and a master’s or doctorate degree with an academic major in areas including food and nutrition, food service management, dietetics, family and consumer sciences, nutrition education, culinary arts, business, or a related field;
(B) At least five years of experience leading people in successfully accomplishing major multi-faceted projects related to child nutrition and/or institutional foodservice management; and
(C) Professional certification in food and nutrition, food service management, school business management or a related field as determined by FNS.
(2) Hiring standards for State directors of distributing agencies. Beginning July 1, 2015, newly hired State agency directors with responsibility for the administration of the distribution of USDA donated foods under part 250 of this chapter must have:
(i) Bachelor’s degree in any academic major;
(ii) Extensive relevant knowledge and experience in areas such as institutional food service operations, management, business, and/or nutrition education; and
(iii) Additional abilities and skills needed to lead, manage and supervise people to support the mission of Child Nutrition programs.
(iv) It is also strongly preferred that new hires possess at least five years of experience in institutional food service operations.
(3) Continuing education and training standards for State directors of school nutrition programs and distributing agencies. Each school year, all State directors with responsibility for the National School Lunch Program under part 210 of this chapter and the School Breakfast Program under part 220 of this chapter, as well as those responsible for the distribution of USDA donated foods under part 250 of this chapter, must complete a minimum of 15 hours of training in core areas that may include nutrition, operations, administration, communications and marketing. State directors tasked with National School Lunch Program procurement responsibilities must complete annual procurement training, as required under § 210.21(h) of this chapter. Additional hours and topics may be specified by FNS, as needed, to address program integrity and other critical issues.
(4) Provision of annual training. At least annually, State agencies with responsibility for the National School Lunch Program under part 210 of this chapter and the School Breakfast Program under part 220 of this chapter, as well as State agencies with responsibility for the distribution of USDA donated foods under part 250 of this chapter, must provide or ensure that State agency staff receive annual continuing education/training.
(i) Each State agency with responsibility for the National School Lunch Program under part 210 of this chapter and the School Breakfast Program under part 220 of this chapter must provide a minimum of 18 hours of continuing education/training to school food authorities. Topics include administrative practices (including training in application, certification, verification, meal counting, and meal claiming procedures); the accuracy of approvals for free and reduced price meals; the identification of reimbursable meals at the point of service; nutrition; health and food safety standards; the efficient and effective use of USDA donated foods; and any other appropriate topics, as determined by FNS, to ensure program compliance and integrity or to address other critical issues.
(ii) Each State agency with responsibility for the distribution of USDA donated foods under part 250 of this chapter must provide or ensure receipt of continuing education/training to State distribution agency staff on an annual basis. Topics may include the efficient and effective use of USDA donated foods; inventory rotation and control; health and food safety standards; and any other appropriate topics, as determined by FNS, to ensure program compliance and integrity or to address other critical issues.
(5) Records and recordkeeping. State agencies must annually retain records for a period of three years to adequately demonstrate compliance with the professional standards for State directors of school nutrition programs established in this paragraph.
(6) Failure to comply. Failure to comply with the professional standards in this paragraph may result in sanctions as specified in paragraph (b) of this section.
§ 235.12 Information collection/recordkeeping—OMB assigned control numbers.
| 7 CFR Section where requirements are described | Current OMB control No. |
|---|---|
| 235.3(b) | 0584-0067. |
| 235.4 | 0584-0067. |
| 235.5(b), (d) | 0584-0067. |
| 235.7(a), (b) | 0584-0067. |
| 235.9(c), (d) | 0584-0067. |
| 235.11 | 0584-0067. |
| 210.7 | 0584-0067. |
PART 240—CASH IN LIEU OF DONATED FOODS
§ 240.1 General purpose and scope.
(a) Each school year the Department programs agricultural commodities and other foods to States for delivery to program and commodity schools, nonresidential child care institutions, and service institutions pursuant to the regulations governing the donation of foods for use in the United States, its territories and possessions and areas under its jurisdiction (7 CFR part 250).
(b) Section 6(b) of the Act requires that not later than June 1 of each school year, the Secretary shall make an estimate of the value of the agricultural commodities and other foods that will be delivered during that school year for use in lunch programs by schools participating in the National School Lunch Program (7 CFR part 210). If this estimate is less than the total level of assistance authorized under section 6(e) of the Act the Secretary shall pay to the State administering agency not later than July 1 of that school year, an amount of funds equal to the difference between the value of donated foods as then programmed for that school year and the total level of assistance authorized under such section.
(c) Section 6(e)(1) of the Act requires:
(1) That for each school year, the total commodity assistance, or cash in lieu thereof, available to each State for the National School Lunch Program shall be the amount obtained by multiplying the national average value of donated foods, described in paragraph (c)(2) of this section, by the number of lunches served in that State in the preceding school year; and
(2) That the national average value of foods donated to schools participating in the National School Lunch Program, or cash payments made in lieu thereof, shall be 11 cents, adjusted on July 1, 1982, and each July 1 thereafter to reflect changes in the Price Index for Food Used in Schools and Institutions. Section 6(e)(1) further requires that not less than 75 percent of the assistance under that section shall be in the form of donated foods for the National School Lunch Program. After the end of each school year, FNS shall reconcile the number of lunches served by schools in each State with the number served in the preceding school year and, based on such reconciliation, shall increase or reduce subsequent commodity assistance or cash in lieu thereof provided to each State.
(d) Section 12(g) of the Act provides that whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property that are the subject of a grant or other form of assistance under this Act or the Child Nutrition Act of 1966, whether received directly or indirectly from the United States Department of Agriculture, or whoever receives, conceals, or retains such funds, assets, or property to his use or gain, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud shall, if such funds, assets, or property are of the value of $100 or more, be fined not more than $10,000 or imprisoned not more than five years, or both, or, if such funds, assets, or property are of a value of less than $100, shall be fined not more than $1,000 or imprisoned for not more than one year, or both.
(e) Section 14(f) of the Act provides that the value of foods donated to States for use in commodity schools for any school year shall be the sum of the national average value of donated foods established under section 6(e) of the Act and the national average payment established under section 4 of the Act. Section 14(f) also provides that such schools shall be eligible to receive up to five cents of such value in cash for processing and handling expenses related to the use of the donated foods.
(f) Sections 17(h)(1) (B) and (C) of the Act provide that the value of commodities, or cash in lieu thereof, donated to States for use in nonresidential child or adult care institutions participating in the Child and Adult Care Food Program (7 CFR part 226) for any school year shall be, at a minimum, the amount obtained by multiplying the number of lunches and suppers served during the preceding school year by the rate established for lunches for that school year under section 6(e) of the Act. At the end of each school year, FNS shall reconcile the number of lunches and suppers served in participating institutions in each State during such school year with the number of lunches and suppers served in the preceding school year and, based on such reconciliation, shall increase or reduce subsequent commodity assistance or cash in lieu of commodities provided to each State.
(g) Section 16 of the Act provides that a State which has phased out its food distribution facilities prior to June 30, 1974, may elect to receive cash payments in lieu of donated foods for the purposes of the applicable child nutrition programs—i.e., the National School Lunch Program, the Summer Food Service Program for Children (7 CFR part 225) and the Child Care Food Program.
(h) These regulations prescribe the methods for determination of the amount of payments, the manner of disbursement and the requirements for accountability for funds when these respective statutory authorities require the Department to make cash payments in lieu of donating agricultural commodities and other foods.
§ 240.2 Definitions.
For the purpose of this part the term:
Act means the National School Lunch Act, as amended.
Child Care Food Program means the Program authorized by section 17 of the Act.
Commodity school means a school that does not participate in the National School Lunch Program under part 210 of this chapter but which operates a nonprofit lunch program under agreement with the State educational agency or FNSRO and receives donated foods, or donated foods and cash or services of a value of up to 5 cents per lunch in lieu of donated foods under this part for processing and handling the foods.
Department means the U.S. Department of Agriculture.
Distributing agencies means State, Federal or private agencies which enter into agreements with the Department for the distribution of donated foods to program schools, commodity schools, and nonresidential child care institutions.
Donated-food processing and handling expenses means any expenses incurred by or on behalf of a commodity school for processing or other aspects of the preparation, delivery, and storage of donated foods for use in its lunch program.
Donated foods means foods donated, or available for donation, by the Department under any of the legislation referred to in part 250 of this chapter.
Fiscal year means the period of 12 months beginning October 1 of any calendar year and ending September 30 of the following calendar year.
FNS means the Food and Nutrition Service of the Department.
FNSRO means the appropriate Food and Nutrition Service Regional Office.
National School Lunch Program means the Program authorized by sections 4 and 11 of the Act.
Nonprofit means exempt from income tax under section 501(c)(3) of the Internal Revenue Code of 1954, as amended; or in the Commonwealth of Puerto Rico, certified as nonprofit by its Governor.
Nonresidential child care institution means any child care center, day care home, or sponsoring organization (as those terms are defined in part 226 of this chapter) which participates in the Child Care Food Program.
Program school means a school which participates in the National School Lunch Program.
School means (1) an educational unit of high school grade or under except for a private school with an average yearly tuition exceeding $1,500 per child, operating under public or nonprofit private ownership in a single building or complex of buildings. The term “high school grade or under” includes classes of preprimary grade when they are conducted in a school having classes of primary or higher grade, or when they are recognized as a part of the educational system in the State, regardless of whether such preprimary grade classes are conducted in a school having classes of primary or higher grade; (2) with the exception of residential summer camps which participate in the Summer Food Service Program for Children, Job Corps centers funded by the Department of Labor and private foster homes, any public or nonprofit private child care institution, or distinct part of such institution, which (i) maintains children in residence, (ii) operates principally for the care of children, and (iii) if private, is licensed to provide residential child care services under the appropriate licensing code by the State or a subordinate level of government. The term “child care institutions” includes, but is not limited to: homes for the mentally retarded, the emotionally disturbed, the physically handicapped, and unmarried mothers and their infants; group homes; halfway houses; orphanages; temporary shelters for abused children and for runaway children; long-term care facilities for chronically ill children; and juvenile detention centers; and (3) with respect to the Commonwealth of Puerto Rico, nonprofit child care centers certified as such by the Governor of Puerto Rico.
School food authority means the governing body which is responsible for the administration of one or more schools and which has the legal authority to operate a nonprofit lunch program therein.
School year means the period of 12 months beginning July 1 of any calendar year and ending June 30 of the following calendar year.
Secretary means the Secretary of Agriculture.
Service institutions means camps or sponsors (as those terms are defined in part 225 of this chapter) which participate in the Summer Food Service Program for Children.
Special needs children means children who are emotionally, mentally or physically handicapped.
State means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American-Samoa, the Trust Territory of the Pacific Islands, or the Commonwealth of the Northern Mariana Islands.
State agency means the State educational agency or such other agency of the State as has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer, in the State, the National School Lunch Program, the Child Care Food Program, the Summer Food Service Program for Children, or nonprofit lunch programs in commodity schools.
State educational agency means, as the State legislature may determine, (1) the chief State school officer (such as the State Superintendent of Public Instruction, Commissioner of Education, or similar officer), or (2) a board of education controlling the State Department of Education.
Summer Food Service Program for Children means the Program authorized by section 13 of the Act.
Tuition means any educational expense required by the school as part of the students’ educational program; not including transportation fees for commuting to and from school, and the cost of room and board. The following monies shall not be included when calculating a school’s average yearly tuition per child:
(1) Academic scholarship aid from public or private organizations or entities given to students, or to schools for students, and (2) state, county or local funds provided to schools operating principally for the purpose of educating handicapped or other special needs children for whose education the State, county or local government is primarily or solely responsible. In a school which varies tuition, the average yearly tuition shall be calculated by dividing the total tuition receipts for the current school year by the total number of students enrolled for purposes of determining if the average yearly tuition exceeds $1,500 per child.
§ 240.3 Cash in lieu of donated foods for program schools.
(a) Not later than June 1 of each school year, FNS shall make an estimate of the value of agricultural commodities and other foods that will be delivered to States during the school year under the food distribution regulations (7 CFR part 250) for use in program schools. If the estimated value is less than the total value of assistance authorized under section 6(e) of the Act for the National School Lunch Program, FNS shall determine the difference between the value of the foods then programmed for each State for the school year and the required value and shall pay the difference to each State agency not later than July 1 of that school year.
(b) Notwithstanding any other provision of this section, in any State in which FNS administers the National School Lunch Program in any of the schools of the State, FNS shall withhold from the funds payable to that State under this section an amount equal to the ratio of the number of lunches served in schools in which the program is administered by FNS to the total number of lunches served in all program schools in the State.
§ 240.4 Cash in lieu of donated foods for nonresidential child and adult care institutions.
(a) For each school year any State agency may, upon application to FNS prior to the beginning of the school year, elect to receive cash in lieu of donated foods for use in nonresidential child care or adult care institutions participating in the Child and Adult Care Food Program. FNS shall pay each State agency making such election, at a minimum, an amount calculated by multiplying the number of lunches and suppers served in the State’s nonresidential child and adult care institutions which meet the meal pattern requirements prescribed in the regulations for the Child and Adult Care Food Program under part 226 of this chapter by the national average value of donated food prescribed in section 6(e)(1) of the Act. However, if a State agency has elected to receive a combination of donated foods and cash, the required amount shall be reduced based upon the number of such lunches and suppers served for which the State receives donated foods.
(b) Notwithstanding any other provision of this section in any State in which FNS administers the Child Care Food Program in any nonresidential child care institution, FNS shall withhold from the funds payable to such State under this section an amount equal to the ratio of the number of lunches and suppers served in such institutions in which the program is administered by the FNS and for which cash payments are provided to the total number of lunches and suppers served in that program and for which cash in lieu of payments are received, in all nonresidential child care institutions in the State.
§ 240.5 Cash in lieu of donated foods for commodity schools.
(a) The school food authority of a commodity school may elect (1) to receive cash payments in lieu of up to five cents per lunch of the value specified in § 250.4(b)(2)(ii) of this chapter to be used for donated-food processing and handling expenses, or (2) to have such payments retained for use on its behalf by the State agency. The school food authority shall consult with commodity schools before making the election.
(b) When a school food authority makes an election regarding receipt of cash payments and the amount of any payments to be received under this paragraph, such election shall be binding on the school food authority for the school year to which the election applies.
(c) The State agency shall (1) no later than May 14, 1982 for the school year ending June 30, 1982, and no later than August 15 of each subsequent school year, contact all school food authorities of commodity schools to learn their election regarding cash payments under this section and the amount of any such payments, and (2) forward this information to the distributing agency and FNSRO, in accordance with § 210.14(d)(2) of this chapter.
§ 240.6 Funds for States which have phased out facilities.
Notwithstanding any other provision of this part, any State which phased out its food distribution facilities prior to June 30, 1974, may, for purposes of the National School Lunch Program, the Summer Food Service Program for Children, and the Child Care Food Program, elect to receive cash payments in lieu of donated foods. Where such an election is made, FNS shall make cash payments to such State in an amount equivalent in value to the donated foods (or cash in lieu thereof) to which the State would otherwise have been entitled under section 6(e) of the Act, if it had retained its food distribution facilities, except that the amount may be based on the number of meals served in the current school year, rather than on the number of meals served in the preceding school year with a subsequent reconciliation.
§ 240.7 Payments to States.
(a) Funds to be paid to any State agency under § 240.3 of this part for disbursement to program schools shall be made available by means of United States Treasury Department checks. The State agency shall use the funds received without delay for the purpose for which issued.
(b) Funds to be paid to any State agency under § 240.4(a) for disbursement to nonresidential child care institutions and funds to be paid to any State agency under § 240.6 for disbursement to program schools, service institutions, or nonresidential child care institutions shall be made available by means of Letters of Credit issued by FNS in favor of the State agency. The State agency shall:
(1) Obtain funds needed to pay school food authorities, nonresidential child care institutions, and service institutions, as applicable through presentation by designated State Officials of a Payment Voucher on Letter of Credit (Treasury Form GFO 7578) in accordance with procedures prescribed by FNS and approved by the United States Treasury Department;
(2) Submit requests for funds on a monthly basis in such amounts as necessary to make payments with respect to meals served the previous month;
(3) Use the funds received without delay for the purpose for which drawn.
(c) FNS shall make any cash payments elected under § 240.5 of this part by increasing the amount of the Letter of Credit or, where applicable, of the Federal Treasury check, in accordance with the information provided under § 240.5(c) of this part.
(d) Funds received by State agencies pursuant to this part for disbursement to program schools and to commodity schools shall not be subject to the matching provisions of § 210.6 of part 210 of this chapter.
§ 240.8 Payments to program schools, service institutions, nonresidential child care institutions and commodity schools.
(a) Each State agency shall promptly and equitably disburse any cash received in lieu of donated foods under this part to eligible program schools, service institutions and nonresidential child care institutions, as applicable. Funds withheld from States under §§ 240.3 and 240.4 shall be disbursed to eligible program schools, service institutions, and nonresidential child care institutions by FNSRO’s in the same manner.
(b) Unless the school food authority of a commodity school elects to have cash payments for donated-food processing and handling expenses retained for use on its behalf by the State agency, the State agency shall make such payments to the school food authority of such a school on a monthly basis in an amount equal to the number of lunches served (as reported in accordance with § 210.13(a) of this chapter) times the value per lunch elected by the school food authority in accordance with § 240.5 of this part. For the period November 11, 1981, through the close of the month in which this part is published in the
§ 240.9 Use of funds.
(a) Funds made available to school food authorities (for program schools), service institutions and nonresidential child care institutions under this part shall be used only to purchase United States agricultural commodities and other foods for use in their food service under the National School Lunch Program, Child Care Food Program, or Summer Food Service Program for Children, as applicable. Such foods shall be limited to those necessary to meet the requirements set forth in § 210.10 of part 210 of this chapter, § 225.10 of part 225 of this chapter and § 226.10 of part 226 of this chapter, respectively. On or before disbursing funds to school food authorities (for program schools), service institutions and nonresidential child care institutions, State agencies and FNSRO’s shall notify them of the reason for special disbursement, the purpose for which these funds may be used, and, if possible, the amount of funds they will receive.
(b) Cash payments received under § 240.5 of this part shall be used only to pay donated-food processing and handling expenses of commodity schools.
(c) Funds provided under this part shall be subject to 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
§ 240.10 Unobligated funds.
State agencies shall release to FNS any funds paid to them under this part which are unobligated at the end of each fiscal year. Release of funds by any State agency shall be made as soon as practicable, but in any event, not later than 30 days following demand by FNS. Release of funds shall be reflected by a related adjustment in the State agency’s Letter of Credit where appropriate or payment by State check where the funds have been paid by United States Treasury Department check.
§ 240.11 Records and reports.
(a) State agencies and distributing agencies shall maintain records and reports on the receipt and disbursement of funds made available under this part, and shall retain such records and reports for a period of three years after the end of the fiscal year to which they pertain, except that, if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.
(b) State agencies shall establish controls and procedures which will assure that the funds made available under this part are not included in determining the State’s matching requirements under § 210.6 of part 210 of this chapter.
PART 245—DETERMINING ELIGIBILITY FOR FREE AND REDUCED PRICE MEALS AND FREE MILK IN SCHOOLS
§ 245.1 General purpose and scope.
(a) This part established the responsibilities of State agencies, Food and Nutrition Service Regional Offices, school food authorities or local educational agencies, as defined in § 245.2, as applicable in providing free and reduced price meals and free milk in the National School Lunch Program (7 CFR part 210), the School Breakfast Program (7 CFR part 220), the Special Milk Program for Children (7 CFR part 215), and commodity schools. Section 9 of the National School Lunch Act, as amended, and sections 3 and 4 of the Child Nutrition Act of 1966, as amended, require schools participating in any of the programs and commodity schools to make available, as applicable, free and reduced price lunches, breakfasts, and at the option of the School Food Authority for schools participating only in the Special Milk Program free milk to eligible children.
(b) This part sets forth the responsibilities under these Acts of State agencies, the Food and Nutrition Service Regional Offices, school food authorities or local educational agencies, as applicable, with respect to the establishment of income guidelines, determination of eligibility of children for free and reduced price meals, and for free milk and assurance that there is no physical segregation of, or other discrimination against, or overt identification of children unable to pay the full price for meals or milk.
§ 245.2 Definitions.
Adult means any individual 21 years of age or older.
Categorically eligible means considered income eligible for free meals or free milk, as applicable, based on documentation that a child is a member of a Family, as defined in this section, and one or more children in that family are receiving assistance under SNAP, FDPIR or the TANF program, as defined in this section. A Foster child, Homeless child, a Migrant child, a Head Start child and a Runaway child, as defined in this section, are also categorically eligible. Categorical eligibility and automatic eligibility may be used synonymously.
Commodity school means a school which does not participate in the National School Lunch Program under part 210 of this chapter, but which enters into an agreement as provided in § 210.15a(b) to receive commodities donated under part 250 of this chapter for a nonprofit lunch program.
Current income means income, as defined in § 245.6(a), received during the month prior to application. If such income does not accurately reflect the household’s annual rate of income, income shall be based on the projected annual household income. If the prior year’s income provides an accurate reflection of the household’s current annual income, the prior year may be used as a base for the projected annual rate of income.
Direct certification means determining a child is eligible for free meals or free milk, as applicable, based on documentation obtained directly from the appropriate State or local agency or individuals authorized to certify that the child is a member of a household receiving assistance under SNAP, as defined in this section; is a member of a household receiving assistance under FDPIR or under the TANF program, as defined in this section; a Foster child, Homeless child, a Migrant child, a Head Start child and a Runaway child, as defined in this section.
Disclosure means reveal or use individual children’s program eligibility information obtained through the free and reduced price meal or free milk eligibility process for a purpose other than for the purpose for which the information was obtained. The term refers to access, release, or transfer of personal data about children by means of print, tape, microfilm, microfiche, electronic communication or any other means.
Documentation means:
(1) The completion of a free and reduced price school meal or free milk application which includes:
(i) For households applying on the basis of income and household size, names of all household members; income received by each household member, identified by source of the income (such as earnings, wages, welfare, pensions, support payments, unemployment compensation, and social security and other cash income); the signature of an adult household member; and the last four digits of the social security number of the adult household member who signs the application or an indication that the adult does not possess a social security number; or
(ii) For a child who is receiving assistance under SNAP, FDPIR or TANF, as defined in this section, the child’s name and appropriate SNAP or TANF case number or FDPIR case number or other FDPIR identifier and signature of an adult household member.
(2) In lieu of completion of the free and reduced price meal application:
(i) Information obtained from the State or local agency responsible for administering SNAP, FDPIR or TANF, as defined in this section. Documentation for these programs includes the name of the child; a statement certifying that the child is a member of a household receiving assistance under SNAP, FDPIR or TANF, as defined in this section; information in sufficient detail to match the child attending school in the local educational agency with the name of a child who is a member of one of the applicable programs as defined in this section; the signature of the official from the applicable program who is authorized to provide such documentation on behalf of that program and the date that the official signed the certification statement;
(ii) A letter or other document provided to the household by the agency administering FDPIR or the TANF program, as defined in this section or by the court, entity, or official authorized to administer an eligible program for a Foster child, a Homeless child, a Migrant child, a Head Start child, or a Runaway child as defined in this section.
(iii) Information from the local educational agency, such as enrollment information or information from applications submitted for free or reduced price meals, or from SNAP, FDPIR or TANF program officials that indicate there are children in a Family, as defined in this section, who were not documented as receiving assistance under SNAP, FDPIR or TANF, in order to extend categorical eligibility to such children as found in § 245.6(b)(7). Documentation for these purposes is the information discussed in paragraph (2)(i) of this definition, plus a written statement by a local educational agency official briefly explaining how the presence of additional children in the family was determined.
(iv) Information obtained from an official responsible for determining if a child is a Foster child, a Homeless child, a Migrant child, a Head Start child, or a Runaway child, as defined in the section. Documentation for these children includes the name of the child; a statement certifying that the child has been determined eligible for that program or is enrolled in the Head Start Program; information in sufficient detail to match the child attending school in the local educational agency with the name of a child who has been determined eligible for that program or is enrolled in an eligible Head Start Program; the signature of the official from the program who is authorized to provide such documentation on behalf of that program and the date that the official signed the certification statement. Documentation may also be a list of children, a computer match, or a court document that includes this information.
(v) When a signature is impracticable to obtain, such as in a computer match, the local educational agency shall have a method to ensure that a responsible official can attest to the accuracy of the information provided.
Family means a group of related or nonrelated individuals, who are not residents of an institution or boarding house, but who are living as one economic unit.
FDPIR means the food distribution program for households on Indian reservations operated under part 253 of this title.
FNS means the Food and Nutrition Service, United States Department of Agriculture.
FNSRO where applicable means the appropriate Food and Nutrition Service Regional Office when that agency administers the National School Lunch Program, School Breakfast Program or Special Milk Program with respect to nonprofit private schools.
Foster child means a child who is formally placed by a court or an agency that administers a State plan under parts B or E of title IV of the Social Security Act (42 U.S.C. 621 et seq.). It does not include a child in an informal arrangement that may exist outside of State or court based systems.
Free meal means a meal for which neither the child nor any member of his family pays or is required to work in the school or in the school’s food service.
Free milk means milk served under the regulations governing the Special Milk Program and for which neither the child nor any member of his family pays or is required to work in the school or in the school’s food service.
Head Start child means a child enrolled as a participant in a Head Start program authorized under the Head Start Act (42 U.S.C. 9831 et seq.)
Homeless child means a child identified as lacking a fixed, regular and adequate nighttime residence, as specified under section 725(a) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)) by the local educational agency liaison, director of a homeless shelter or other individual identified by FNS.
Household means “family” as defined in this section.
Household application means an application for free and reduced price meal or milk benefits, submitted by a household for a child or children who attend school(s) in the same local educational agency.
Income eligibility guidelines means the family-size income levels prescribed annually by the Secretary for use by States in establishing eligibility for free and reduced price meals and for free milk.
Local educational agency means a public board of education or other public or private nonprofit authority legally constituted within a State for either administrative control or direction of, or to perform a service function for, public or private nonprofit elementary schools or secondary schools in a city, county, township, school district, or other political subdivision of a State, or for a combination of school districts or counties that is recognized in a State as an administrative agency for its public or private nonprofit elementary schools or secondary schools. The term also includes any other public or private nonprofit institution or agency having administrative control and direction of a public or private nonprofit elementary school or secondary school, including residential child care institutions, Bureau of Indian Affairs schools, and educational service agencies and consortia of those agencies, as well as the State educational agency in a State or territory in which the State educational agency is the sole educational agency for all public or private nonprofit schools.
Meal means a lunch or meal supplement or a breakfast which meets the applicable requirements prescribed in §§ 210.10, 210.15a, and 220.8 of this chapter.
Medicaid means the State medical assistance program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).
Migrant child means a child identified as meeting the definition of migrant in section 1309 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6399) by the State or local Migrant Education Program coordinator or the local educational liaison, or other individual identified by FNS.
Milk means pasteurized fluid types of unflavored or flavored whole milk, lowfat milk, skim milk, or cultured buttermilk which meet State and local standards for such milk except that, in the meal pattern for infants (0 to 1 year of age) milk means unflavored types of whole fluid milk or an equivalent quantity of reconstituted evaporated milk which meet such standards. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, and the Virgin Islands, if a sufficient supply of such types of fluid milk cannot be obtained, “milk” shall include reconstituted or recombined milk. All milk should contain vitamins A and D at levels specified by the Food and Drug Administration and consistent with State and local standards for such milk.
Nonprofit means exempt from income tax under section 501(c)(3) of the Internal Revenue Code of 1986.
Operating day means a day that reimbursable meals are offered to eligible students under the National School Lunch Program or School Breakfast Program.
Reduced price meal means a meal which meets all of the following criteria: (1) The price shall be less than the full price of the meal; (2) the price shall not exceed 40 cents for a lunch and 30 cents for a breakfast; and (3) neither the child nor any member of his family shall be required to supply an equivalent value in work for the school or the school’s food service.
Runaway child means a child identified as a runaway receiving assistance under a program under the Runaway and Homeless Youth Act (42 U.S.C. 5701 et seq.) by the local educational liaison, or other individual in accordance with guidance issued by FNS.
Service institution shall have the meaning ascribed to it in part 225 of this chapter.
School, school food authority, and other terms and abbreviations used in this part shall have the meanings ascribed to them in part 210 of this chapter.
SNAP means the Supplemental Nutrition Assistance Program established under the Food and Nutrition Act of 2008 (7 U.S.C. 2011 et. seq.) and operated under parts 271 and 283 of this chapter.
SNAP household means any individual or group of individuals currently certified to receive assistance as a household from SNAP.
Special Assistance Certification and Reimbursement Alternatives means the three optional alternatives for free and reduced price meal application and claiming procedures in the National School Lunch Program and School Breakfast Program which are available to those School Food Authorities with schools in which at least 80 percent of the enrolled children are eligible for free or reduced price meals, or schools which are currently, or who will be serving all children free meals.
State Children’s Health Insurance Program (SCHIP) means the State medical assistance program under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.).
TANF means the State funded program under part A of title IV of the Social Security Act that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995. This program is commonly referred to as Temporary Assistance for Needy Families, although States may refer to the program by another name.
Verification means confirmation of eligibility for free or reduced price benefits under the National School Lunch Program or School Breakfast Program. Verification shall include confirmation of income eligibility and, at State or local discretion, may also include confirmation of any other information required in the application which is defined as Documentation in § 245.2. Such verification may be accomplished by examining information provided by the household such as wage stubs, or by other means as specified in § 245.6a(a)(7). If a SNAP or TANF case number or a FDPIR case number or other identifier is provided for a child, verification for such child shall only include confirmation that the child is a member of a household receiving SNAP, TANF or FDPIR benefits. Verification may also be completed through direct contact with one or more of the public agencies as specified in § 245.6a(g).
§ 245.3 Eligibility standards and criteria.
(a) Each State agency, or FNSRO where applicable, shall by July 1 of each year announce family-size income standards to be used by local educational agencies, as defined in § 245.2, under the jurisdiction of such State agency, or FNSRO where applicable, in making eligibility determinations for free or reduced price meals and for free milk. Such family size income standards for free and reduced price meals and for free milk shall be in accordance with Income Eligibility Guidelines published by the Department by notice in the
(b) Each participating local educational agency and all participating schools under its jurisdiction must adhere to the eligibility criteria specified in this part. Local educational agencies must include these eligibility criteria in their policy statement as required under § 245.10 and it must be publicly announced in accordance with the provisions of § 245.5. Additionally, each State agency, or FNSRO where applicable, must require that local educational agencies accept as income eligible for free meals and free milk, children who are categorically eligible for those benefits based on documentation of eligibility, as specified in § 245.6 (b).
(c) Each School Food Authority shall serve free and reduced price meals or free milk in the respective programs to children eligible under its eligibility criteria. When a child is not a member of a family (as defined in § 245.2), the child shall be considered a family of one. In any school which participates in more than one of the child nutrition programs, eligibility shall be applied uniformly so that eligible children receive the same benefits in each program. If a child transfers from one school to another school under the jurisdiction of the same School Food Authority, his eligibility for free or reduced price meals or for free milk, if previously established, shall be transferred to, and honored by, the receiving school if it participates in the National School Lunch Program, School Breakfast Program, Special Milk Program and the School Food Authority has elected to provide free milk, or is a commodity-only school.
§ 245.4 Exceptions for Puerto Rico and the Virgin Islands.
Because the State agencies of Puerto Rico and the Virgin Islands provide free meals or milk to all children in schools under their jurisdiction, regardless of the economic need of the child’s family, they are not required to make individual eligibility determinations or publicly announce eligibility criteria. Instead, such State agencies may use a statistical survey to determine the number of children eligible for free or reduced price meals and milk on which a percentage factor for the withdrawal of special cash assistance funds will be developed subject to the following conditions:
(a) State agencies shall conduct a statistical survey once every three years in accordance with the standards provided by FNS;
(b) State agencies shall submit the survey design to FNS for approval before proceeding with the survey;
(c) State agencies shall conduct the survey and develop the factor for withdrawal between July 1 and December 31 of the first school year of the three-year period;
(d) State agencies shall submit the results of the survey and the factor for fund withdrawal to FNS for approval before any reimbursement may be received under that factor;
(e) State agencies shall keep all material relating to the conduct of the survey and determination of the factor for fund withdrawal in accordance with the record retention requirements in § 210.8(e)(14) of this chapter;
(f) Until the results of the triennial statistical survey are available, the factor for fund withdrawal will be based on the most recently established percentages. The Department shall make retroactive adjustments to the States’ Letter of Credit, if appropriate, for the year of the survey;
(g) If any school in these States wishes to charge a student for meals, the State agency, School Food Authority and school shall comply with all the applicable provisions of this part and parts 210, 215 and 220 of this chapter.
§ 245.5 Public announcement of the eligibility criteria.
(a) After the State agency, or FNSRO where applicable, notifies the local educational agency (as defined in § 245.2) that its criteria for determining the eligibility of children for free and reduced price meals and for free milk have been approved, the local educational agency (as defined in § 245.2) shall publicly announce such criteria: Provided however, that no such public announcement shall be required for boarding schools, residential child care institutions (see § 210.2 of this chapter, definition of Schools), or a school which includes food service fees in its tuition, where all attending children are provided the same meals or milk. Such announcements shall be made at the beginning of each school year or, if notice of approval is given thereafter, within 10 days after the notice is received. The public announcement of such criteria, as a minimum, shall include the following:
(1) Except as provided in § 245.6(b), a letter or notice and application distributed on or about the beginning of each school year, to the parents of all children in attendance at school. The letter or notice shall contain the following information:
(i) In schools participating in a meal service program, the eligibility criteria for reduced price benefits with an explanation that households with incomes less than or equal to the reduced price criteria would be eligible for either free or reduced price meals, or in schools participating in the free milk option, the eligibility criteria for free milk benefits;
(ii) How a household may make application for free or reduced price meals or for free milk for its children;
(iii) An explanation that an application for free or reduced price benefits cannot be approved unless it contains complete information as described in paragraph (1)(i) of the definition of Documentation in § 245.2;
(iv) An explanation that households with children who are members of currently certified SNAP, FDPIR or TANF households may submit applications for these children with the abbreviated information described in paragraph (2)(ii) of the definition of Documentation in § 245.2;
(v) An explanation that the information on the application may be verified at any time during the school year;
(vi) How a household may apply for benefits at any time during the school year as circumstances change;
(vii) A statement to the effect that children having parents or guardians who become unemployed are eligible for free or reduced price meals or for free milk during the period of unemployment, Provided, that the loss of income causes the household income during the period of unemployment to be within the eligibility criteria;
(viii) The statement: “In the operation of child feeding programs, no child will be discriminated against because of race, sex, color, national origin, age or disability;”
(ix) An explanation that Head Start enrollees and foster, homeless, migrant, and runaway children, as defined in § 245.2, are categorically eligible for free meals and free milk and their families should contact the school for more information;
(x) How a household may appeal the decision of the local educational agencywith respect to the application under the hearing procedure set forth in § 245.7. The letter or notice shall be accompanied by a copy of the application form required under § 245.6.
(xi) A statement to the effect that the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) participants may be eligible for free or reduced price meals.
(2) On or about the beginning of each school year, a public release, containing the same information supplied to parents, and including both free and reduced price eligibility criteria shall be provided to the informational media, the local unemployment office, and to any major employers contemplating large layoffs in the area from which the school draws its attendance.
(b) Copies of the public release shall be made available upon request to any interested persons. Any subsequent changes in a school’s eligibility criteria during the school year shall be publicly announced in the same manner as the original criteria were announced.
§ 245.6 Application, eligibility and certification of children for free and reduced price meals and free milk.
(a) General requirements—content of application and descriptive materials. Each local educational agency, as defined in § 245.2, for schools participating in the National School Lunch Program, School Breakfast Program or Special Milk Program or a commodity only school, shall provide meal benefit forms for use by families in making application for free or reduced price meals or free milk for their children.
(1) Household applications. The State agency or local educational agency must provide a form that permits a household to apply for all children in that household who attend schools in the same local educational agency. The local educational agency must provide newly enrolled students with an application and determine eligibility promptly. The local educational agency cannot require the household to submit an application for each child attending its schools. The application shall be clear and simple in design and the information requested therein shall be limited to that required to demonstrate that the household does, or does not, meet the eligibility criteria for free or reduced price meals, respectively, or for free milk, provided by the local educational agency.
(2) Understandable communications. Any communication with households for eligibility determination purposes must be in an understandable and uniform format and to the maximum extent practicable, in a language that parents and guardians can understand.
(3) Electronic availability. In addition to the distribution of applications and descriptive materials in paper form as provided for in this section, the local educational agency may establish a system for executing household applications electronically and using electronic signatures. The electronic submission system must comply with the disclosure requirements in this section and with technical assistance and guidance provided by FNS. Descriptive materials may also be made available electronically by the local educational agency.
(4) Transferring eligibility status. When a student transfers to a new school district, the new local educational agency may accept the eligibility determination from the student’s former local educational agency without incurring liability for the accuracy of the initial determination. As required under paragraph (c)(3) of this section, the accepting local educational agency must make changes that occur as a result of verification activities or coordinated review findings conducted in that local educational agency.
(5) Required income information. The information requested on the application with respect to the current income of the household must be limited to:
(i) The income received by each member identified by the household member who received the income or an indication which household members had no income; and
(ii) The source of the income (such as earnings, wages, welfare, pensions, support payments, unemployment compensation, social security and other cash income). Other cash income includes cash amounts received or withdrawn from any source, including savings, investments, trust accounts, and other resources which are available to pay for a child’s meals or milk.
(6) Household members and social security numbers. The application must require applicants to provide the names of all household members. In addition, the last four digits of the social security number of the adult household member who signs the application must be provided. If the adult member signing the application does not possess a social security number, the household must so indicate. However, if application is being made for a child(ren) who is a member of a household receiving assistance under the SNAP, or is in a FDPIR or TANF household, the application shall enable the household to provide the appropriate SNAP or TANF case number or FDPIR case number or other FDPIR identifier in lieu of names of all household members, household income information and social security number.
(7) Adult member’s signature. The application must be signed by an adult member of the family. The application must contain clear instructions with respect to the submission of the completed application to the official or officials designated by the local educational agency to make eligibility determinations. A household must be permitted to file an application at any time during the school year. A household may, but is not required to, report any changes in income, household size or program participation during the school year.
(8) Required statements for the application. (i) The application and descriptive materials must include substantially the following statements:
(A) “The Richard B. Russell National School Lunch Act requires the information on this application. You do not have to give the information, but if you do not, we cannot approve your child for free or reduced-price meals. You must include the last four digits of the social security number of the adult household member who signs the application. The last four digits of the social security number are not required when you list a Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF) Program or Food Distribution Program on Indian Reservations (FDPIR) case number or other FDPIR identifier for your child or when you indicate that the adult household member signing the application does not have a social security number. We will use your information to determine if your child is eligible for free or reduced-price meals, and for administration and enforcement of the lunch and breakfast programs. We MAY share your eligibility information with education, health, and nutrition programs to help them evaluate, fund, or determine benefits for their programs, auditors for program reviews, and law enforcement officials to help them look into violations of program rules.”
(B) “Foster, migrant, homeless, and runaway children, and children enrolled in a Head Start program are categorically eligible for free meals and free milk. If you are completing an application for these children, contact the school for more information.”
(ii) When either the State agency or the local educational agency plans to use or disclose children’s eligibility information for non-program purposes, additional information, as specified in paragraph (h) of this section, must be added to this statement. State agencies and local educational agencies are responsible for drafting the appropriate statement.
(9) Attesting to information on the application. The application must also include a statement, immediately above the space for signature, that the person signing the application certifies that all information furnished in the application is true and correct, that the application is being made in connection with the receipt of Federal funds, that school officials may verify the information on the application, and that deliberate misrepresentation of the information may subject the applicant to prosecution under applicable State and Federal criminal statutes. Applicants must attest to changes in information as specified in this paragraph (b), if changes are voluntarily reported in writing during the eligibility period.
(b) Direct certification. In lieu of requiring a household to complete the free and reduced price meal or free milk application, as specified in paragraph (a) of this section, the local educational agency must certify children as eligible for free meals or free milk in accordance with paragraph (b)(1)(i) of this section or may certify children as eligible for free meals or free milk in accordance with paragraph (b)(2) of this section. If a household also submits an application for directly certified children, the direct certification eligibility determination will take precedence.
(1) Mandatory direct certification of children in SNAP households. (i) All local educational agencies conducting eligibility determinations must directly certify children who are members of a household receiving assistance under SNAP, as defined in § 245.2, in School Year 2008-2009, which begins on July 1, 2008, and each subsequent school year.
(ii) Schools participating only in the Special Milk Program authorized under part 215 of this chapter may directly certify children for that program but are not required to conduct direct certification with SNAP. In addition, residential child care institutions, as defined in paragraph (c) of the definition of School in § 210.2 of this chapter, that do not have non-residential children are also not required to conduct direct certification with SNAP.
(iii) Beginning in School Year 2012-2013, direct certification shall be conducted using a data matching technique only and letters to household for direct certification may be used only as an additional means to notify households of children’s eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-12.
(iv) Each State agency must enter into an agreement with the State agency conducting eligibility determinations for SNAP. The agreement must specify the procedures that will be used to facilitate the direct certification of children who are members of a household receiving assistance under SNAP, as defined in § 245.2. The agreement must address procedures to comply with the requirements of paragraphs (b)(3) through (b)(9) of this section. Direct certification must allow for notifying parents that their children have been determined eligible for free meals or free milk, as applicable, and that no further application is required. Such agreements must address how phase-out of non-electronic matches as the primary method for conducting direct certification for SNAP will be completed by School Year 2012-2013. The agreement shall be maintained by the State agency.
(v) Local educational agencies and schools currently operating Provision 2 or Provision 3 in non-base years, or the community eligibility provision, as permitted under § 245.9, are required to conduct a data match between Supplemental Nutrition Assistance Program records and student enrollment records at least once annually. State agencies may conduct data matching on behalf of LEAs and exempt LEAs from this requirement.
(2) Children who may be directly certified. The local educational agency may directly certify children for free meals or free milk based on documentation received from the appropriate State or local agency that administers FDPIR or TANF, as defined in § 245.2, when that agency indicates that the children are members of a household receiving assistance under one of these programs. In addition, the local educational agency may directly certify children for free meals or free milk based on documentation from the appropriate State or local agency or other appropriate individual, as specified by FNS, that the child is a Foster child, a Homeless child, a Migrant, a Runaway child, or a Head Start child, as defined in § 245.2.
(3) Frequency of direct certification contacts with SNAP. (i) Until School Year 2011-2012, local educational agencies must conduct direct certification activities with SNAP at least at the beginning of the school year.
(ii) (A) Beginning in School Year 2011-2012, at a minimum, all local educational agencies must conduct direct certification as follows:
(1) At or around the beginning of the school year;
(2) Three months after the initial effort; and
(3) Six months after the initial effort.
(B) The information used shall be the most recent available.
(iii) The names of all newly enrolled children and all children not certified for free meals shall be submitted for the direct certification required in paragraph (b)(3)(ii)(B) and paragraph (b)(3)(ii)(C) of this section. Newly enrolled children must be provided with application materials in order to alleviate a delay in receipt of free meals or free milk if direct certification for these children cannot be completed promptly upon enrollment.
(iv) State agencies are encouraged to conduct direct certification more frequently to obtain information about newly enrolled children or children who may be newly certified for that program’s benefits.
(4) Frequency of direct certification with other programs. Local educational agencies opting to conduct direct certification activities with FDPIR or TANF should conduct such activities at or around the beginning of the school year. Obtaining information about foster, homeless, migrant, or runaway children or Head Start enrollees should be done, at a minimum, at or around the beginning of the school year and when newly enrolled children or children newly eligible for those programs are being certified.
(5) Direct certification documentation. (i) The required documentation for direct certification is provided in paragraph (2) of the definition of Documentation in § 245.2.
(ii) (A) Beginning in School Year 2012-2013, direct certification with SNAP shall be conducted using a data matching technique only. Letters to households for direct certification may be used only as an additional means to notify households of children’s eligibility based on receipt of SNAP benefits. The last period that letters to households may be used as the primary method for direct certification is School Year 2011-2012. While such notices cannot be the primary method used by a state to document receipt of SNAP, the local educational agency shall accept such a letter if presented by a household.
(B) Letters or other documents may be used as the primary method for direct certification to document receipt of FDPIR or TANF benefits.
(iii) Individual notices from officials of eligible programs for a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, as defined in § 245.2, may continue to be used. These notices are provided to school officials who must certify these children as eligible for free meals or free milk, as applicable, without further application, upon receipt of such notice.
(6) Officials who can provide documentation for direct certification. (i) The local educational agency must accept documentation from officials of the State or local agency that administers SNAP, certifying that a child is a member of a household receiving assistance under SNAP as defined in § 245.2, or officials of the State or local agency that administers FDPIR or TANF, as defined in § 245.2, certifying that a child is a member of a household receiving assistance under one of those programs.
(ii) For a Foster child, as defined in § 245.2, an official document indicating the status of the child as a foster child from an appropriate State or local agency or a court where the foster child received placement may provide appropriate documentation. In the case of a child who is a Homeless child, as defined in § 245.2, the director of a homeless shelter or the local educational liaison for homeless children and youth may provide the appropriate documentation. The Migrant Education Program coordinator or the local educational liaison, as applicable, may provide the supporting documentation for a Migrant child, as defined in § 245.2. For a Head Start child, as defined in § 245.2, an official from that program may supply the documentation indicating enrollment in the Head Start program. Once the appropriate official has provided the direct certification documentation to the local educational agency, the child must have free benefits made available as soon as possible but no later than three operating days after the date the local educational agency receives the direct certification documentation.
(7) Extension of eligibility to all children in a family. If any child is identified as a member of a household receiving assistance under SNAP, FDPIR, or TANF, all children in the Family, as defined in § 245.2, shall be categorically eligible for free meals or free milk. This applies to children identified through direct certification or through a free and reduced price application.
(8) Foster, Homeless, Migrant, Runaway, or Head Start Children. To be categorically eligible as a Foster child, a Homeless child, a Migrant child, a Runaway child, or a Head Start child, the child’s individual eligibility or participation for these programs shall be established. Categorical eligibility based on these programs shall not be extended to other children in the household.
(9) Confidential nature of direct certification information. Information about children or their households obtained through the direct certification process must be kept confidential and is subject to the limitations on disclosure of information in section 9 of the Richard B. Russell National School Lunch Act, 42 U.S.C. 1758. Therefore, information that a household is receiving benefits from SNAP, FDPIR or TANF or that a child is participating in another program which makes children categorically eligible for free school meals or free milk must be used solely for the purposes of direct certification for determining children’s eligibility for free school meals or free milk and as otherwise permitted under § 245.6(f).
(10) Notification to families. For children who are directly certified, local educational agencies are not required to provide application materials and notice to parents informing them of the availability of free and reduced price meal benefits, as specified in § 245.5(a), when that information is distributed by mail, individualized student packets, or other method which prevents overt identification of children eligible for direct certification.
(c) Determination of eligibility—(1) Duration of eligibility. Except as otherwise specified in paragraph (c)(3) of this section, eligibility for free or reduced price meals, as determined through an approved application or by direct certification, must remain in effect for the entire school year and for up to 30 operating days into the subsequent school year. The local educational agency must determine household eligibility for free or reduced price meals either through direct certification or the application process at or about the beginning of the school year. The local educational agency must determine eligibility for free or reduced price meals when a household submits an application or, if feasible, through direct certification, at any time during the school year.
(2) Use of prior year’s eligibility status. Prior to the processing of applications or the completion of direct certification procedures for the current school year, children from households with approved applications or documentation of direct certification on file from the preceding year, shall be offered reimbursable free and reduced price meals or free milk, as appropriate. The local educational agency must extend eligibility to newly enrolled children when other children in their household (as defined in § 245.2) were approved for benefits the previous year. However, applications and documentation of direct certification from the preceding year shall be used only to determine eligibility for the first 30 operating days following the first operating day at the beginning of the school year, or until a new eligibility determination is made in the current school year, whichever comes first. At the State agency’s discretion, students who, in the preceding school year, attended a school operating a special assistance certification and reimbursement alternative (as permitted in § 245.9)) may be offered free reimbursable meals for up to 30 operating days or until a new eligibility determination is made in the current school year, whichever comes first.
(3) Exceptions for year-long duration of eligibility—(i) Voluntary reporting of changes. Households are not required to report changes in circumstances during the school year, but a household may voluntarily contact the local educational agency to report any changes. If the household voluntarily reports a change in income or in program participation that would result in loss of categorical eligibility, the local educational agency may only reduce benefits if the household requests the reduction in writing, for example, by submitting a new application.
(ii) Households must attest to changes in information as specified in § 245.6(a)(9). In addition, benefits cannot be reduced by information received through other sources without the written consent of the household, except for information received through verification.
(iii) Changes resulting from verification or administrative reviews. The local educational agency must change the children’s eligibility status when a change is required as a result of verification activities conducted under § 245.6a or as a result of a review conducted in accordance with § 210.18 of this chapter.
(4) Calculating income. The local educational agency must use the income information provided by the household on the application to calculate the household’s total current income. When a household submits an application containing complete documentation, as defined in § 245.2, and the household’s total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines as defined in § 245.2, the children in that household must be approved for free or reduced price benefits, as applicable.
(5) Categorical eligibility—(i) SNAP, FDPIR, TANF When a household submits an application containing the required SNAP, FDPIR or TANF documentation, as defined under Documentation in § 245.2, all children in that household shall be categorically eligible for free meals or free milk. Additionally, when the local educational agency obtains confirmation of eligibility for these programs through direct certification, all children who are identified as members of a Family, as defined in § 245.2, shall be categorically eligible for free meals or milk.
(ii) Foster, homeless, migrant, andrunaway children and Head Start enrollees. Upon receipt of Documentation, as defined in paragraph (2)(ii) and (2)(iv) of the definition in § 245.2, the local educational agency must approve such children for free benefits without further application.
(6) Notice of approval—(i) Income applications. The local educational agency must notify the household of the children’s eligibility and provide the eligible children the benefits to which they are entitled within 10 operating days of receiving the application from the household.
(ii) Direct Certification. Households approved for benefits based on information provided by the appropriate State or local agency responsible for the administration of the SNAP, FDPIR or TANF must be notified, in writing, that their children are eligible for free meals or free milk, that no application for free and reduced price school meals or free milk is required. The notice of eligibility must also inform the household that the parent or guardian must notify the local educational agency if they do not want their children to receive free benefits. However, when the parent or guardian transmits a notice of eligibility provided by the SNAP, FDPIR or TANF office, the local educational agency is not required to provide a separate notice of eligibility. The local educational agency must notify, in writing, households with children who are approved on the basis of documentation that they are Categorically eligible, as defined in § 245.2, that their children are eligible for free meals or free milk, and that no application is required.
(iii) Households declining benefits. Children from households that notify the local educational agency that they do not want free or reduced price benefits must have their benefits discontinued as soon as possible. Any notification from the household declining benefits must be documented and maintained on file, as required under paragraph (e) of this section, to substantiate the eligibility determination.
(7) Denied applications and the notice of denial. When the application furnished by a family is not complete or does not meet the eligibility criteria for free or reduced price benefits, the local educational agency must document and retain the reasons for ineligibility and must retain the denied application. In addition, the local educational agency must promptly provide written notice to each family denied benefits. At a minimum, this notice shall include:
(i) The reason for the denial of benefits, e.g. income in excess of allowable limits or incomplete application;
(ii) Notification of the right to appeal;
(iii) Instructions on how to appeal; and
(iv) A statement reminding parents that they may reapply for free or reduced price benefits at any time during the school year.
(8) Appeals of denied benefits. A family that wishes to appeal an application that was denied may do so in accordance with the procedures established by the local educational agency as required by § 245.7. However, prior to initiating the hearing procedure, the family may request a conference to provide the opportunity for the family and local educational agency officials to discuss the situation, present information, and obtain an explanation of the data submitted in the application or the decision rendered. The request for a conference shall not in any way prejudice or diminish the right to a fair hearing. The local educational authority shall promptly schedule a fair hearing, if requested.
(d) Households that fail to apply. After the letter to parents and the applications have been disseminated, the local educational agency may determine, based on information available to it, that a child for whom an application has not been submitted meets the local educational agency’s eligibility criteria for free and reduced price meals or for free milk. In such a situation, the local educational agency shall complete and file an application for such child setting forth the basis of determining the child’s eligibility. When a local educational agency has obtained a determination of individual family income and family-size data from other sources, it need not require the submission of an application for any child from a family whose income would qualify for free or reduced price meals or for free milk under the local educational agency’s established criteria. In such event, the School Food Authority shall notify the family that its children are eligible for free or reduced price meals or for free milk. Nothing in this paragraph shall be deemed to provide authority for the local educational agency to make eligibility determinations or certifications by categories or groups of children.
(e) Recordkeeping. The local educational agency must maintain documentation substantiating eligibility determinations on file for 3 years after the date of the fiscal year to which they pertain, except that if audit findings have not been resolved, the documentation must be maintained as long as required for resolution of the issues raised by the audit.
(f) Disclosure of children’s free and reduced price meal or free milk eligibility information to education and certain other programs and individuals without parental consent. The State agency or local educational agency, as appropriate, may disclose aggregate information about children eligible for free and reduced price meals or free milk to any party without parental notification and consent when children cannot be identified through release of the aggregate data or by means of deduction. Additionally, the State agency or local educational agency also may disclose information that identifies children eligible for free and reduced price meals or free milk to persons directly connected with the administration or enforcement of the programs and the individuals specified in this paragraph (f) without parent/guardian consent. The State agency or local educational agency that makes the free and reduced price meal or free milk eligibility determination is responsible for deciding whether to disclose children’s free and reduced price meal or free milk eligibility information.
(1) Persons authorized to receive eligibility information. Only persons directly connected with the administration or enforcement of a program or activity listed in paragraphs (f)(2) or (f)(3) of this section may have access to children’s eligibility information, without parental consent. Persons considered directly connected with administration or enforcement of a program or activity listed in paragraphs (f)(2) or (f)(3) of this section are Federal, State, or local program operators responsible for the ongoing operation of the program or activity or responsible for program compliance. Program operators may include persons responsible for carrying out program requirements and monitoring, reviewing, auditing, or investigating the program. Program operators may include contractors, to the extent those persons have a need to know the information for program administration or enforcement. Contractors may include evaluators, auditors, and others with whom Federal or State agencies and program operators contract with to assist in the administration or enforcement of their program in their behalf.
(2) Disclosure of children’s names and eligibility status only. The State agency or local educational agency, as appropriate, may disclose, without parental consent, children’s names and eligibility status (whether they are eligible for free or reduced price meals or free milk) to persons directly connected with the administration or enforcement of:
(i) A Federal education program;
(ii) A State health program or State education program administered by the State or local education agency;
(iii) A Federal, State, or local means-tested nutrition program with eligibility standards comparable to the National School Lunch Program (i.e., food assistance programs for households with incomes at or below 185 percent of the Federal poverty level); or
(iv) A third party contractor assisting in verification of eligibility efforts by contacting households who fail to respond to requests for verification of their eligibility.
(3) Disclosure of all eligibility information in addition to eligibility status. In addition to children’s names and eligibility status, the State agency or local educational agency, as appropriate, may disclose, without parental consent, all eligibility information obtained through the free and reduced price meals or free milk eligibility process (including all information on the application or obtained through direct certification) to:
(i) Persons directly connected with the administration or enforcement of programs authorized under the Richard B. Russell National School Lunch Act or the Child Nutrition Act of 1966. This means that all eligibility information obtained for the National School Lunch Program, School Breakfast Program or Special Milk Program may be disclosed to persons directly connected with administering or enforcing regulations under the National School Lunch or School Breakfast Programs (Parts 210 and 220, respectively, of this chapter), Child and Adult Care Food Program (Part 226 of this chapter), Summer Food Service Program (Part 225 of this chapter) and the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) (Part 246 of this chapter);
(ii) The Comptroller General of the United States for purposes of audit and examination; and
(iii) Federal, State, and local law enforcement officials for the purpose of investigating any alleged violation of the programs listed in paragraphs (g)(3) and (g)(4) of this section.
(4) Use of free and reduced price meal or free milk eligibility information by other programs other than Medicaid or the State Children’s Health Insurance Program (SCHIP). State agencies and local educational agencies may use free and reduced price meal or free milk eligibility information for administering or enforcing the National School Lunch, Special Milk or School Breakfast Programs (Parts 210, 215 and 220, respectively, of this chapter). Additionally, any other Federal, State, or local agency charged with administering or enforcing these programs may use the information for that purpose. Individuals and programs to which children’s free and reduced price meal eligibility information has been disclosed under this section may use the information only in the administration or enforcement of the receiving program. No further disclosure of the information may be made.
(g) Disclosure of children’s eligibility information to Medicaid and/or SCHIP, unless parents decline. Children’s free or reduced price meal or free milk eligibility information only may be disclosed to Medicaid or SCHIP when both the State agency and the local educational agency so elect, the parent/guardian does not decline to have their eligibility information disclosed and the other provisions described in paragraph (i) of this section are met. Provided that both the State agency and local educational agency opt to allow the disclosure of eligibility information to Medicaid and/or SCHIP, the State agency or local educational agency, as appropriate, may disclose children’s names, eligibility status (whether they are eligible for free or reduced price meals or free milk), and any other eligibility information obtained through the free and reduced price meal or free milk application or obtained through direct certification to persons directly connected with the administration of Medicaid or SCHIP. Persons directly connected to the administration of Medicaid and SCHIP are State employees and persons authorized under Federal and State Medicaid and SCHIP requirements to carry out initial processing of Medicaid or SCHIP applications or to make eligibility determinations for Medicaid or SCHIP.
(1) The State agency must ensure that:
(i) The child care institution and health insurance program officials have a written agreement that requires the health insurance program agency to use the eligibility information to seek to enroll children in Medicaid and SCHIP; and
(ii) Parents/guardians are notified that their eligibility information may be disclosed to Medicaid or SCHIP and given an opportunity to decline to have their children’s eligibility information disclosed, prior to any disclosure.
(2) Use of children’s free and reduced price meal eligibility information by Medicaid/SCHIP. Medicaid and SCHIP agencies and health insurance program operators receiving children’s free and reduced price meal or free milk eligibility information may use the information to seek to enroll children in Medicaid or SCHIP. The Medicaid and SCHIP enrollment process may include targeting and identifying children from low-income households who are potentially eligible for Medicaid or SCHIP for the purpose of seeking to enroll them in Medicaid or SCHIP. No further disclosure of the information may be made. Medicaid and SCHIP agencies and health insurance program operators also may verify children’s eligibility in a program under the Child Nutrition Act of 1966 or the Richard B. Russell National School Lunch Act.
(h) Notifying households of potential uses and disclosures of children’s eligibility information. Households must be informed that the information they provide on the free and reduced price meal or free milk application will be used to determine eligibility for free and reduced price meals or free milk and that eligibility information may be disclosed to other programs.
(1) For disclosures to programs, other than Medicaid or SCHIP, that are permitted access to children’s eligibility information, without parent/guardian consent, the State agency or local educational agency, as appropriate, must notify parents/guardians at the time of application that their children’s free and reduced price meal or free milk eligibility information may be disclosed. The State agency or local educational agency, as appropriate, must add substantially the following statement to the statement required under paragraph (a)(8)(i) of this section, “We may share your eligibility information with education, health, and nutrition programs to help them evaluate, fund, or determine benefits for their programs; auditors for program reviews; and law enforcement officials to help them look into violations of program rules.” For children determined eligible through direct certification, the notice of potential disclosure may be included in the document informing parents/guardians of their children’s eligibility for free meals or free milk through direct certification.
(2) For disclosure to Medicaid or SCHIP, the State agency or local educational agency, as appropriate, must notify parents/guardians that their children’s free and reduced price meal or free milk eligibility information will be disclosed to Medicaid and/or SCHIP unless the parent/guardian elects not to have their information disclosed. Additionally, the State agency or local educational agency, as appropriate, must give parents/guardians an opportunity to elect not to have their information disclosed to Medicaid or SCHIP. Only the parent or guardian who is a member of the household or family for purposes of the free and reduced price meal or free milk application may decline the disclosure of eligibility information to Medicaid or SCHIP. The notification must inform parents/guardians that they are not required to consent to the disclosure, that the information, if disclosed, will be used to identify children eligible for and to seek to enroll children in a health insurance program, and that their decision will not affect their children’s eligibility for free and reduced price meals or free milk. The notification may be included in the letter/notice to parents/guardians that accompanies the free and reduced price meal or free milk application, on the application itself or in a separate notice provided to parents/guardians. The notice must give parents/guardians adequate time to respond. The State agency or local educational agency, as appropriate, must add substantially the following statement to the statement required under paragraph (a)(8)(i) of this section, “We may share your information with Medicaid or the State Children’s Health Insurance Program, unless you tell us not to. The information, if disclosed, will be used to identify eligible children and seek to enroll them in Medicaid or SCHIP.” For children determined eligible through direct certification, the notice of potential disclosure and opportunity to decline the disclosure may be included in the document informing parents/guardians of their children’s eligibility for free meal or free milk through direct certification.
(i) Other disclosures. State agencies and local educational agencies that plan to use or disclose information about children eligible for free or reduced price meals or free milk in ways not specified in this section must obtain written consent from the child’s parent or guardian prior to the use or disclosure. Only a parent or guardian who is a member of the child’s household for purposes of the free and reduced price meal or free milk application may give consent to the disclosure of free and reduced price meal eligibility information.
(1) The consent must identify the information that will be shared and how the information will be used.
(2) The consent statement must be signed and dated by the child’s parent or guardian who is a member of the household for purposes of the free and reduced price meal or free milk application.
(3) There must be a statement informing parents and guardians that failing to sign the consent will not affect the child’s eligibility for free or reduced price meals or free milk and that the individuals or programs receiving the information will not share the information with any other entity or program.
(4) Parents/guardians must be permitted to limit the consent only to those programs with which they wish to share information.
(j) Agreements with programs/individuals receiving children’s free and reduced price meal or free milk eligibility information. (1) An agreement with programs or individuals receiving free and reduced price meal or free milk eligibility information is recommended for programs other than Medicaid or SCHIP. The agreement or MOU should include information similar to that required for disclosures to Medicaid and SCHIP specified in paragraph (j)(2) of this section.
(2) The State agency or school food authorities, as appropriate, must have a written agreement with the State or local agency or agencies administering Medicaid or SCHIP prior to disclosing children’s free and reduced price meal or free milk eligibility information. At a minimum, the agreement must:
(i) Identify the health insurance program or health agency receiving children’s eligibility information;
(ii) Describe the information that will be disclosed;
(iii) Require that the Medicaid or SCHIP agency use the information obtained and specify that the information must be used to seek to enroll children in Medicaid or SCHIP;
(iv) Require that the Medicaid or SCHIP agency describe how they will use the information obtained;
(v) Describe how the information will be protected from unauthorized uses and disclosures;
(vi) Describe the penalties for unauthorized disclosure; and
(vii) Be signed by both the Medicaid or SCHIP program or agency and the State agency or child care institution, as appropriate.
(k) Penalties for unauthorized disclosure or misuse of information. In accordance with section 9(b)(6)(C) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1758(b)(6)(C)), any individual who publishes, divulges, discloses or makes known in any manner, or to any extent not authorized by statute or this section, any information obtained under this section will be fined not more than $1,000 or imprisoned for up to 1 year, or both.
§ 245.6a Verification requirements.
(a) Definitions—(1) Eligible programs. For the purposes of this section, the following programs qualify as programs for which a case number may be provided in lieu of income information and that may be used for direct verification purposes:
(i) SNAP, as defined in 245.2;
(ii) The Food Distribution Program on Indian Reservations (FDPIR) as defined in § 245.2; and
(iii) A State program funded under the program of block grants to States for temporary assistance for needy families (TANF) as defined in § 245.2.
(2) Error prone application. For the purposes of this section, “error prone application” means an approved household application that indicates monthly income within $100 or annual income within $1,200 of the applicable income eligibility limit for free or for reduced meals.
(3) Non-response rate. For the purposes of this section, “non-response rate” means the percentage of approved household applications for which verification information was not obtained by the local educational agency after verification was attempted. The non-response rate is reported on the FNS-742 in accordance with paragraph (h) of this section.
(4) Official poverty line. For the purposes of this section, “official poverty line” means that described in section 1902(l)(2)(A) of the Social Security Act (42 U.S.C. 1396a(l)(2)(A)).
(5) Sample size. For the purposes of this section, “sample size” means the number of approved applications that a local educational agency is required to verify based on the number of approved applications on file as of October 1 of the current school year.
(6) School year. For the purposes of this section, a school year means a period of 12 calendar months beginning July 1 of any year and ending June 30 of the following year.
(7) Sources of information. For the purposes of this section, sources of information for verification may include written evidence, collateral contacts, and systems of records as follows:
(i) Written evidence shall be used as the primary source of information for verification. Written evidence includes written confirmation of a household’s circumstances, such as wage stubs, award letters, and letters from employers. Whenever written evidence is insufficient to confirm income information on the application or current eligibility, the local educational agency may require collateral contacts.
(ii) Collateral contacts are verbal confirmations of a household’s circumstances by a person outside of the household. The collateral contact may be made in person or by phone. The verifying official may select a collateral contact if the household fails to designate one or designates one which is unacceptable to the verifying official. If the verifying official designates a collateral contact, the contact shall not be made without providing written or oral notice to the household. At the time of this notice, the household shall be informed that it may consent to the contact or provide acceptable documentation in another form. If the household refuses to choose one of these options, its eligibility shall be terminated in accordance with the normal procedures for failure to cooperate with verification efforts. Collateral contacts could include employers, social service agencies, and migrant agencies.
(iii) Agency records to which the State agency or local educational agency may have access are not considered collateral contacts. Information concerning income, household size, or SNAP, FDPIR, or TANF eligibility, maintained by other government agencies to which the State agency, the local educational agency, or school can legally gain access, may be used to confirm a household’s income, size, or receipt of benefits. Information may also be obtained from individuals or agencies serving foster, homeless, migrant, or runaway children, as defined in § 245.2. Agency records may be used for verification conducted after the household has been notified of its selection for verification or for the direct verification procedures in paragraph (g) of this section.
(iv) Households which dispute the validity of income information acquired through collateral contacts or a system of records shall be given the opportunity to provide other documentation.
(b) Deadline and extensions for local educational agencies—(1) Deadline. The local education agency must complete the verification efforts specified in paragraph (c) of this section not later than November 15 of each school year.
(2) Deadline extensions. (i) The local educational agency may request an extension of the November 15 deadline, in writing, from the State agency. The State agency may approve an extension up to December 15 of the current school year due to natural disaster, civil disorder, strike or other circumstances that prevent the local educational agency from timely completion of verification activities.
(ii) In the case of natural disaster, civil disorder or other local conditions, USDA may substitute alternatives for the verification deadline in paragraph (b)(1) of this section.
(3) Beginning verification activities. The local educational agency may conduct verification activity once it begins the application approval process for the current school year and has approved applications on file. However, the final required sample size must be based on the number of approved applications on file as of October 1.
(c) Verification requirement—(1) General. The local educational agency must verify eligibility of children in a sample of household applications approved for free and reduced price meal benefits for that school year.
(i) A State may, with the written approval of FNS, assume responsibility for complying with the verification requirements of this section on behalf of its local educational agencies. When assuming such responsibility, States may qualify, if approved by FNS, to use one of the alternative sample sizes provided for in paragraph (c)(4) of this section if qualified under paragraph (d) of this section.
(ii) An application must be approved if it contains the essential documentation specified in the definition of Documentation in § 245.2 and, if applicable, the household meets the income eligibility criteria for free or reduced price benefits. Verification efforts must not delay the approval of applications.
(2) Exceptions from verification. Verification is not required in residential child care institutions; in schools in which FNS has approved special cash assistance claims based on economic statistics regarding per capita income; or in schools in which all children are served with no separate charge for food service and no special cash assistance is claimed. Local educational agencies in which all schools participate in the special assistance certification and reimbursement alternatives specified in § 245.9 shall meet the verification requirement only in those years in which applications are taken for all children in attendance. Verification of eligibility is not required of households if all children in the household are determined eligible based on documentation provided by the State or local agency responsible for the administration of the SNAP, FDPIR or TANF or if all children in the household are determined to be foster, homeless, migrant, or runaway, as defined in § 245.2.
(3) Standard sample size. Unless eligible for an alternative sample size under paragraph (d) of this section, the sample size for each local educational agency shall equal the lesser of:
(i) Three (3) percent of all applications approved by the local educational agency for the school year, as of October 1 of the school year, selected from error prone applications; or
(ii) 3,000 error prone applications approved by the local educational agency for the school year, as of October 1 of the school year.
(iii) Local educational agencies shall not exceed the standard sample size in paragraphs (c)(3)(i) or (c)(3)(ii) of this section, as applicable, and, unless eligible for one of the alternative sample sizes provided in paragraph (c)(4) of this section, the local educational agency shall not use a smaller sample size than those in paragraphs (c)(3)(i) or (c)(3)(ii) of this section, as applicable.
(iv) If the number of error-prone applications exceeds the required sample size, the local educational agency shall select the required sample at random, i.e., each application has an equal chance of being selected, from the total number of error-prone applications.
(4) Alternative sample sizes. If eligible under paragraph (d) of this section for an alternative sample size, the local educational agency may use one of the following alternative sample sizes:
(i) Alternative One. The sample size shall equal the lesser of:
(A) 3,000 of all applications selected at random from applications approved by the local educational agency as of October 1 of the school year; or
(B) Three (3) percent of all applications selected at random from applications approved by the local educational agency as of October 1 of the school year.
(ii) Alternative Two. The sample size shall equal the lesser of the sum of:
(A) 1,000 of all applications approved by the local educational agency as of October 1 of the school year, selected from error prone applications or
(B) One (1) percent of all applications approved by the local educational agency as of October 1 of the school year, selected from error prone applications PLUS
(C) The lesser of:
(1) 500 applications approved by the local educational agency as of October 1 of the school year that provide a case number in lieu of income information showing participation in an eligible program as defined in paragraph (a)(1) of this section; or
(2) One-half (
(5) Completing the sample size. When there are an insufficient number of error prone applications or applications with case number to meet the sample sizes provided for in paragraphs (c)(3) or (c)(4) of this section, the local educational agency shall select, at random, additional approved applications to comply with the specified sample size requirements.
(6) Local conditions. In the case of natural disaster, civil disorder, strike or other local conditions as determined by FNS, FNS may substitute alternatives for the sample size and sample selection criteria in paragraphs (c)(3) and (c)(4) of this section.
(7) Verification for cause. In addition to the required verification sample, local educational agencies must verify any questionable application and should, on a case-by-case basis, verify any application for cause such as an application on which a household reports zero income or when the local educational agency is aware of additional income or persons in the household. Any application verified for cause is not considered part of the required sample size. If the local educational agency verifies a household’s application for cause, all verification procedures in this section must be followed.
(d) Eligibility for alternative sample sizes—(1) State agency oversight. At a minimum, the State agency shall establish a procedure for local educational agencies to designate use of an alternative sample size and may set a deadline for such notification. The State agency may also establish criteria for reviewing and approving the use of an alternative sample size, including deadlines for submissions.
(2) Lowered non-response rate. Any local educational agency is eligible to use one of the alternative sample sizes in paragraph (c)(4) of this section for any school year when the non-response rate for the preceding school year is less than twenty percent.
(3) Improved non-response rate. A local educational agency with more than 20,000 children approved by application as eligible for free or reduced price meals as of October 1 of the school year is eligible to use one of the alternative sample sizes in paragraph (c)(4) of this section for any school year when the non-response rate for the preceding school year is at least ten percent below the non-response rate for the second preceding school year.
(4) Continuing eligibility for alternative sample sizes. The local educational agency must annually determine if it is eligible to use one of the alternative sample sizes provided in paragraph (c)(4) of this section. If qualified, the local educational agency shall contact the State agency in accordance with procedures established by the State agency under paragraph (d)(1) of this section.
(e) Activities prior to household notification—(1) Confirmation of a household’s initial eligibility. (i) Prior to conducting any other verification activity, an individual, other than the individual who made the initial eligibility determination, shall review for accuracy each approved application selected for verification to ensure that the initial determination was correct. If the initial determination was correct, the local educational agency shall verify the approved application. If the initial determination was incorrect, the local educational agency must:
(A) If the eligibility status changes from reduced price to free, make the increased benefits immediately available and notify the household of the change in benefits; the local educational agency will then verify the application;
(B) If the eligibility status changes from free to reduced price, first verify the application and then notify the household of the correct eligibility status after verification is completed and, if required, send the household a notice of adverse action in accordance with paragraph (j) of this section; or
(C) If the eligibility status changes from free or reduced price to paid, send the household a notice of adverse action in accordance with paragraph (j) of this section and do not conduct verification on this application and select a similar application (for example, another error-prone application) to replace it.
(ii) The requirements in paragraph (e)(1)(i) of this section are waived if the local educational agency is using a technology-based system that demonstrates a high level of accuracy in processing an initial eligibility determination based on the income eligibility guidelines for the National School Lunch Program. Any local educational agency that conducts a confirmation review of all applications at the time of certification meets this requirement. The State agency may request documentation to support the accuracy of the local educational agency’s system. If the State agency determines that the technology-based system is inadequate, it may require that the local educational agency conduct a confirmation review of each application selected for verification.
(2) Replacing applications. The local educational agency may, on a case-by-case basis, replace up to five percent of applications selected and confirmed for verification. Applications may be replaced when the local educational agency determines that the household would be unable to satisfactorily respond to the verification request. Any application removed shall be replaced with another approved application selected on the same basis (i.e., an error-prone application must be substituted for a withdrawn error-prone application).
(f) Verification procedures and assistance for households—(1) Notification of selection. Other than households verified through the direct verification process in paragraph (g) of this section, households selected for verification must be notified in writing that their applications were selected for verification. The written statement must include a telephone number for assistance as required in paragraph (f)(5) of this section. Any communications with households concerning verification must be in an understandable and uniform format and, to the maximum extent practicable, in a language that parents and guardians can understand. These households must be advised of the type of information or documents the school accepts. Households selected for verification must be informed that:
(i) They are required to submit the requested information to verify eligibility for free or reduced-price meals, by the date determined by the local educational agency.
(ii) They may, instead, submit proof that the children receive SNAP, FDPIR, or TANF assistance, as explained in paragraph (f)(3) of this section.
(iii) They may, instead, request that the local educational agency contact the appropriate officials to confirm that their children are foster, homeless, migrant, or runaway, as defined in § 245.2.
(iv) Failure to cooperate with verification efforts will result in the termination of benefits.
(2) Documentation timeframe. Households selected and notified of their selection for verification must provide documentation of income. The documentation must indicate the source, amount and frequency of all income and can be for any point in time between the month prior to application for school meal benefits and the time the household is requested to provide income documentation.
(3) SNAP FDPIR or TANF recipients. On applications where households have furnished SNAP or TANF case numbers or FDPIR case numbers or other FDPIR identifiers, verification shall be accomplished by confirming with the SNAP, FDPIR, or TANF office that at least one child who is eligible because a case number was furnished, is a member of a household participating in one of the eligible programs in paragraph (a)(1) of this section. The household may also provide a copy of “Notice of Eligibility” for the SNAP, FDPIR or the TANF Program or equivalent official documentation issued by the SNAP, FDPIR or TANF office which confirms that at least one child who is eligible because a case number was provided is a member of a household receiving assistance under the SNAP, FDPIR or the TANF program. An identification card for these programs is not acceptable as verification unless it contains an expiration date. If it is not established that at least one child is a member of a household receiving assistance under the SNAP, FDPIR or the TANF program (in accordance with the timeframe in paragraph (f)(2) of this section), the procedures for adverse action specified in paragraph (j) of this section must be followed.
(4) Household cooperation. If a household refuses to cooperate with efforts to verify, eligibility for free or reduced price benefits shall be terminated in accordance with paragraph (j) of this section. Households which refuse to complete the verification process and which are consequently determined ineligible for such benefits shall be counted toward meeting the local educational agency’s required sample of verified applications.
(5) Telephone assistance. The local educational agency shall provide a telephone number to households selected for verification to call free of charge to obtain information about the verification process. The telephone number must be prominently displayed on the letter to households selected for verification.
(6) Followup attempts. The local educational agency shall make at least one attempt to contact any household that does not respond to a verification request. The attempt may be through a telephone call, e-mail, mail or in person and must be documented by the local educational agency. Non-response to the initial request for verification includes no response and incomplete or ambiguous responses that do not permit the local educational agency to resolve the children’s eligibility for free or reduced price meal and milk benefits. The local educational agency may contract with another entity to conduct followup activity in accordance with § 210.21 of this chapter, the use and disclosure of information requirements of the Richard B. Russell National School Lunch Act and this section.
(7) Eligibility changes. Based on the verification activities, the local educational agency shall make appropriate modifications to the eligibility determinations made initially. The local educational agency must notify the household of any change. Households must be notified of any reduction in benefits in accordance with paragraph (j) of this section. Households with reduced benefits or that are longer eligible for free or reduced price meals must be notified of their right to reapply at any time with documentation of income or participation in one of the eligible programs in paragraph (a)(1) of this section.
(g) Direct verification. Local educational agencies may conduct direct verification activities with the eligible programs defined in paragraph (a)(1) of this section and with the public agency that administers the State plan for medical assistance under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.), (Medicaid), and under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.), the State Children’s Health Insurance Program (SCHIP) as defined in § 245.2. Records from the public agency may be used to verify income and program participation. The public agency’s records are subject to the timeframe in paragraph (g)(5) of this section. Direct verification must be conducted prior to contacting the household for documentation.
(1) Names submitted. The local educational agency must only submit the names of school children certified for free or reduced price meal benefits or free milk to the agency administering an eligible program, the Medicaid program or the SCHIP program. Names and other identifiers of adult or non-school children must not be submitted for direct verification purposes.
(2) Eligible programs. If information obtained through direct verification of an application for free or reduced price meal benefits indicates a child is participating in one of the eligible programs in paragraph (a)(1) of this section, no additional verification is required.
(3) States with Medicaid Income Limits of 133%. In States in which the income eligibility limit applied in the Medicaid program or in SCHIP is not more than 133% of the official poverty line or in States that otherwise identify households that have income that is not more than 133% of the official poverty line, records from these agencies may be used to verify eligibility. If information obtained through direct verification with these programs verifies the household’s eligibility status, no additional verification is required.
(4) States with Medicaid Income Limits between 133%-185%. In States in which the income eligibility limit applied in the Medicaid program or in SCHIP exceeds 133% of the official poverty line, direct verification information must include either the percentage of the official poverty line upon which the applicant’s Medicaid participation is based or Medicaid income and Medicaid household size in order to determine that the applicant is either at or below 133% of the Federal poverty line, or is between 133% and 185% of the Federal poverty line. Verification for children approved for free meals is complete if Medicaid data indicates that the percentage is at or below 133% of the Federal poverty line. Verification for children approved for reduced price meals is complete if Medicaid data indicates that the percentage is at or below 185% of the Federal poverty line. If information obtained through direct verification with these programs verifies eligibility status, no additional verification is required.
(5) Documentation timeframe. For the purposes of direct verification, documentation must be the most recent available but such documentation must indicate eligibility for participation or income within the 180-day period ending on the date of application. In addition, local educational agencies may use documentation, which must be within the 180-day period ending on the date of application, for any one month or for all months in the period from the month prior to application through the month direct verification is conducted. The information provided only needs to indicate eligibility for participation in the program at that point in time, not that the child was certified for that program’s benefits within the 180-day period.
(6) Incomplete information. If it is the information provided by the public agency does not verify eligibility, the local educational agency must conduct verification in accordance with paragraph (f) of this section. In addition, households must be able to dispute the validity of income information acquired through direct verification and shall be given the opportunity to provide other documentation.
(h) Verification reporting and recordkeeping requirements. By February 1, each local educational agency must report information related to its annual statutorily required verification activity, which excludes verification conducted in accordance with paragraph (c)(7) of this section, to the State agency in accordance with guidelines provided by FNS. These required data elements will be specified by FNS. Contingent upon new funding to support this purpose, FNS will also require each local educational agency to collect and report the number of students who were terminated as a result of verification but who were reinstated as of February 15th. The first report containing this data element would be required in the school year beginning July 1, 2005 and each school year thereafter. State agencies may develop paper or electronic reporting forms to collect this data from local educational agencies, as long as all required data elements are collected from each local educational agency. Local educational agencies shall retain copies of the information reported under this section and all supporting documents for a minimum of 3 years. All verified applications must be readily retrievable on an individual school basis and include all documents submitted by the household for the purpose of confirming eligibility, reproductions of those documents, or annotations made by the determining official which indicate which documents were submitted by the household and the date of submission. All relevant correspondence between the households selected for verification and the school or local educational agency must be retained. Local educational agencies are encouraged to collect and report any or all verification data elements before the required dates.
(i) Nondiscrimination. The verification efforts shall be applied without regard to race, sex, color, national origin, age, or disability.
(j) Adverse action. If verification activities fail to confirm eligibility for free or reduced price benefits or should the household fail to cooperate with verification efforts, the school or local educational agencyshall reduce or terminate benefits, as applicable, as follows: Ten days advance notification shall be provided to households that are to receive a reduction or termination of benefits, prior to the actual reduction or termination. The first day of the 10 day advance notice period shall be the day the notice is sent. The notice shall advise the household of:
(1) The change;
(2) The reasons for the change;
(3) Notification of the right to appeal and when the appeal must be filed to ensure continued benefits while awaiting a hearing and decision;
(4) Instructions on how to appeal; and
(5) The right to reapply at any time during the school year. The reasons for ineligibility shall be properly documented and retained on file at the local educational agency.
§ 245.7 Hearing procedure for families and local educational agencies.
(a) Each local educational agency of a school participating in the National School Lunch Program, School Breakfast Program or the Special Milk Program or of a commodity only school shall establish a hearing procedure under which:
(1) A family can appeal from a decision made by the local educational agency with respect to an application the family has made for free or reduced price meals or for free milk, and
(2) The local educational agency can challenge the continued eligibility of any child for a free or reduced price meal or for free milk. The hearing procedure shall provide for both the family and the local educational agency:
(i) A simple, publicly announced method to make an oral or written request for a hearing;
(ii) An opportunity to be assisted or represented by an attorney or other person;
(iii) An opportunity to examine, prior to and during the hearing, any documents and records presented to support the decision under appeal;
(iv) That the hearing shall be held with reasonable promptness and convenience, and that adequate notice shall be given as to the time and place of the hearing;
(v) An opportunity to present oral or documentary evidence and arguments supporting a position without undue interference;
(vi) An opportunity to question or refute any testimony or other evidence and to confront and cross-examine any adverse witnesses;
(vii) That the hearing shall be conducted and the decision made by a hearing official who did not participate in making the decision under appeal or in any previously held conference;
(viii) That the decision of the hearing official shall be based on the oral and documentary evidence presented at the hearing and made a part of the hearing record;
(ix) That the parties concerned and any designated representative shall be notified in writing of the decision of the hearing official;
(x) That a written record shall be prepared with respect to each hearing, which shall include the challenge or the decision under appeal, any documentary evidence and a summary of any oral testimony presented at the hearing, the decision of the hearing official, including the reasons therefor, and a copy of the notification to the parties concerned of the decision of the hearing official; and
(xi) That the written record of each hearing shall be preserved for a period of 3 years and shall be available for examination by the parties concerned or their representatives at any reasonable time and place during that period.
(b) Continuation of benefits. When a household disagrees with an adverse action which affects its benefits and requests a fair hearing, benefits shall be continued as follows while the household awaits the hearing and decision:
(1) Households that have been approved for benefits and that are subject to a reduction or termination of benefits later in the same school year shall receive continued benefits if they appeal the adverse action within the 10 day advance notice period; and
(2) Households that are denied benefits upon application shall not receive benefits.
§ 245.8 Nondiscrimination practices for children eligible to receive free and reduced price meals and free milk.
School Food Authorities and local educational agencies of schools participating in the National School Lunch Program, School Breakfast Program or Special Milk Program or of commodity only schools shall take all actions that are necessary to insure compliance with the following nondiscrimination practices for children eligible to receive free and reduced price meals or free milk:
(a) The names of the children shall not be published, posted or announced in any manner;
(b) There shall be no overt identification of any of the children by the use of special tokens or tickets or by any other means;
(c) The children shall not be required to work for their meals or milk;
(d) The children shall not be required to use a separate dining area, go through a separate serving line, enter the dining area through a separate entrance or consume their meals or milk at a different time;
(e) When more than one lunch or breakfast or type of milk is offered which meets the requirements prescribed in § 210.10, § 220.8 or the definition of Milk in § 215.2 of this chapter, the children shall have the same choice of meals or milk that is available to those children who pay the full price for their meal or milk.
§ 245.9 Special assistance certification and reimbursement alternatives.
(a) Provision 1. A Local educational agency of a school having at least 80 percent of its enrolled children determined eligible for free or reduced price meals may, at its option, authorize the school to reduce annual certification and public notification for those children eligible for free meals to once every two consecutive school years. This alternative shall be known as provision 1 and the following requirements shall apply:
(1) A Local educational agency of a school operating under provision 1 requirements shall publicly notify in accordance with § 245.5, parents of enrolled children who are receiving free meals once every two consecutive school years, and shall publicly notify in accordance with § 245.5, parents of all other enrolled children on an annual basis.
(2) The 80 percent enrollment eligibility for this alternative shall be based on the school’s March enrollment data of the previous school year, or on other comparable data.
(3) A Local educational agency of a school operating under provision 1, shall count the number of free, reduced price and paid meals served to children in that school as the basis for monthly reimbursement claims.
(b) Provision 2. A local educational agency may certify children for free and reduced price meals for up to 4 consecutive school years in the schools which serve meals at no charge to all enrolled children; provided that public notification and eligibility determinations are in accordance with §§ 245.5 and 245.3, respectively, during the base year as defined in paragraph (b)(6) of this section. The Provision 2 base year is the first year, and is included in the 4-year cycle. The following requirements apply:
(1) Meals at no charge. Participating schools must serve reimbursable meals, as determined by a point of service observation, or as otherwise approved under part 210 of this chapter, to all participating children at no charge.
(2) Cost differential. The local educational agency of a school participating in Provision 2 must pay, with funds from non-Federal sources, the difference between the cost of serving lunches and/or breakfasts at no charge to all participating children and Federal reimbursement.
(3) Meal counts. During the base year, even though meals are served to participating students at no charge, schools must take daily meal counts of reimbursable student meals by type (free, reduced price, and paid) at the point of service, or as otherwise approved under part 210 of this chapter. During the non-base years, participating Provision 2 schools must take total daily meal counts (not by type) of reimbursable student meals at the point of service, or as otherwise approved under part 210 of this chapter. For the purpose of calculating reimbursement claims in the non-base years, local educational agencies must establish school specific monthly or annual claiming percentages, as follows:
(i) Monthly percentages. In any given Provision 2 school, the monthly meal counts of the actual number of meals served by type (free, reduced price, and paid) during the base year must be converted to monthly percentages for each meal type. For example, the free lunch percentage is derived by dividing the monthly total number of reimbursable free lunches served by the total number of reimbursable lunches served in the same month (free, reduced price and paid). The percentages for the reduced price and paid lunches are calculated using the same method as the above example for free lunches. These three percentages, calculated at the end of each month of the first school year, are multiplied by the corresponding monthly lunch count total of all reimbursable lunches served in the second, third and fourth consecutive school years, and applicable extensions, in order to calculate reimbursement claims for free, reduced price and paid lunches each month. The free, reduced price and paid percentages for breakfasts and, as applicable, snacks, are calculated using the same method; or
(ii) Annual percentages. In any given Provision 2 school, the actual number of all reimbursable meals served by type (free, reduced price, and paid) during the base year must be converted to an annual percentage for each meal type. For example, the free lunch percentage is derived by dividing the annual total number of reimbursable free lunches served by the annual total number of reimbursable lunches served for all meal types (free, reduced price and paid). The percentages for the reduced price and paid lunches are calculated using the same method as the above example for free lunches. These three percentages, calculated at the end of the base year, are multiplied by the total monthly lunch count of all reimbursable lunches served in each month of the second, third and fourth consecutive school years, and applicable extensions, in order to calculate reimbursement claims for free, reduced price and paid lunches each month. The free, reduced price and paid percentages for breakfasts and, as applicable, snacks, are calculated using the same method for each type of meal service.
(4) Local educational agency claims review process. During the Provision 2 base year (not including a streamlined base year under paragraph (c)(2)(iii) of this section), local educational agencies are required to review the lunch count data for each school under its jurisdiction to ensure the accuracy of the monthly Claim for Reimbursement in accordance with § 210.8(a)(2) of this chapter. During non-base years and streamlined base years, local educational agencies must compare each Provision 2 school’s total daily meal counts to the school’s total enrollment, adjusted by an attendance factor. The local educational agency must promptly follow-up as specified in § 210.8(a)(4) of this chapter when the claims review suggests the likelihood of lunch count problems. When a school elects to operate Provision 2 only in the School Breakfast Program, local educational agencies must continue to comply with the claims review requirements of § 210.8(a)(2) of this chapter for the National School Lunch Program.
(5) Verification. Except as otherwise specified in § 245.6a(a)(5), local educational agencies are required to conduct verification in accordance with § 245.6a. When a school elects to participate under Provision 2 or for all of the meal programs in which it participates (breakfast 7 CFR part 220 and/or lunch 7 CFR part 210), the applications from that school are excluded from the local educational agency’s required verification sample size and are exempt from verification during non-base years.
(6) Base year. For purposes of this paragraph (b), the term base year means the last school year for which eligibility determinations were made and meal counts by type were taken or the school year in which a school conducted a streamlined base year as authorized under paragraph (c)(2)(iii) of this section. Schools shall offer reimbursable meals to all students at no charge during the Provision 2 base year except as otherwise specified in paragraph (b)(6)(ii) of this section.
(i) Duration of the base year. The base year must begin at the start of the school year or as otherwise specified in paragraph (b)(6)(ii) of this section.
(ii) Delayed implementation. At State agency discretion, schools may delay implementation of Provision 2 for a period of time not to exceed the first claiming period of the school year in which the base year is established. Schools implementing this option may conduct standard meal counting and claiming procedures, including charging students eligible for reduced price and paid meals, during the first claiming period of the school year. Such schools must submit claims reflecting the actual number of meals served by type. In subsequent years, such schools shall convert the actual number of reimbursable meals served by type (free, reduced price and paid) during the remaining claiming periods of the base year, in which meals were served at no charge to all participating students, to an annual percentage for each type of meal. The annual claiming percentages must be applied to the total number of reimbursable meals served during the first claiming period in all non-base years of operation for that cycle and any extensions.
(c) Extension of Provision 2. At the end of the initial cycle, and each subsequent 4-year cycle, the State agency may allow a school to continue under Provision 2 for another 4 years using the claiming percentages calculated during the most recent base year if the local educational agency can establish, through available and approved socioeconomic data, that the income level of the school’s population, as adjusted for inflation, has remained stable, declined or has had only negligible improvement since the base year.
(1) Extension criteria. Local educational agencies must submit to the State agency available and approved socioeconomic data to establish whether the income level of a school’s population, as adjusted for inflation, remained constant with the income level of the most recent base year.
(i) Available and approved sources of socioeconomic data. Pre-approved sources of socioeconomic data which may be used by local educational agencies to establish the income level of the school’s population are: local data collected by the city or county zoning and economic planning office; unemployment data; local SNAP certification data including direct certification; Food Distribution Program on Indian Reservations data; statistical sampling of the school’s population using the application or equivalent income measurement process; and, Temporary Assistance for Needy Families data (provided that the eligibility standards were the same or more restrictive in the base year as the current year with allowance for inflation). To grant an extension using pre-approved socioeconomic data sources, State agencies must review and evaluate the socioeconomic data submitted by the local educational agency to ensure that it is reflective of the school’s population, provides equivalent data for both the base year and the last year of the current cycle, and demonstrates that the income level of the school’s population, as adjusted for inflation, has remained stable, declined or had only negligible improvement. If the local educational agency wants to establish the income level of the school’s population using alternate sources of socioeconomic data, the use of such data must be approved by the Food and Nutrition Service. Data from alternate sources must be reflective of the school’s population, be equivalent data for both the base year and the last year of the current cycle, and effectively measure whether the income level of the school’s population, as adjusted for inflation, has remained stable, declined or had only negligible improvement.
(ii) Negligible improvement. The change in the income level of the school’s population shall be considered negligible if there is a 5 percent or less improvement, after adjusting for inflation, over the base year in the level of the socioeconomic indicator which is used to establish the income level of the school’s population.
(2) Extension not approved. The State agency shall not approve an extension of Provision 2 procedures in those schools for which the available and approved socioeconomic data does not reflect the school’s population, is not equivalent data for the base year and the last year of the current cycle, or shows over 5 percent improvement, after adjusting for inflation, in the income level of the school’s population. Such schools shall:
(i) Return to standard meal counting and claiming. Return to standard meal counting and claiming procedures;
(ii) Establish a new base year. Establish a new Provision 2 base year by taking new free and reduced price applications, making new free and reduced price eligibility determinations, and taking point of service counts of free, reduced price and paid meals for the first year of the new cycle. For these schools, the new Provision 2 cycle will be 4 years. Schools electing to establish a Provision 2 base year shall follow procedures contained in paragraph (b) of this section;
(iii) Establish a streamlined base year. With prior approval by the State agency, establish a streamlined base year by providing reimbursable meals to all participating students at no charge and developing either enrollment based or participation based claiming percentages.
(A) Enrollment based percentages. In accordance with guidance established by the Food and Nutrition Service, establish a new Provision 2 base year by determining program eligibility on the basis of household size and income, and direct certification if applicable, for a statistically valid proportion of the school’s enrollment as of October 31, or other date approved by the State agency. The statistically valid measurement of the school’s enrollment must be obtained during the first year of the new cycle and meet the requirements of paragraph (m) of this section. Using the data obtained, enrollment based claiming percentages representing a proportion of the school’s population eligible for free, reduced price and paid benefits shall be developed and applied to total daily meal counts of reimbursable meals at the point of service, or as otherwise approved under part 210 of this chapter. For schools electing to participate in Provision 2, these percentages shall be used for claiming reimbursement for each year of the new cycle and any extensions; or
(B) Participation based percentages. In accordance with guidance established by the Food and Nutrition Service, establish a new Provision 2 base year by determining program eligibility on the basis of household size and income, and direct certification if applicable, for a statistically valid proportion of participating students established over multiple operating days. The statistically valid measurement of the school’s student participation must be obtained during the first year of the new cycle and meet the requirements of paragraph (m) of this section. Using the data obtained, participation based claiming percentages representing a proportion of the school’s participating students which are eligible for free, reduced price and paid benefits shall be developed and applied to total daily meal counts of reimbursable meals at the point of service or as otherwise approved under part 210 of this chapter. These percentages shall be used for claiming reimbursement for each year of the new cycle and any extensions; or
(iv) Establish a Provision 3 base year. Schools may convert to Provision 3 using the procedures contained in paragraphs (e)(2)(ii) or (e)(2)(iii) of this section.
(d) Provision 3. A local educational agency of a school which serves all enrolled children in that school reimbursable meals at no charge during any period for up to 4 consecutive school years may elect to receive Federal cash reimbursement and commodity assistance at the same level as the total Federal cash and commodity assistance received by the school during the last year that eligibility determinations for free and reduced price meals were made and meals were counted by type (free, reduced price and paid) at the point of service, or as otherwise authorized under part 210 of this chapter. Such cash reimbursement and commodity assistance will be adjusted for each of the 4 consecutive school years pursuant to paragraph (d)(4) of this section. For purposes of this paragraph (d), the term base year means the last complete school year for which eligibility determinations were made and meal counts by type were taken or the school year in which a school conducted a streamlined base year as authorized under paragraph (e)(2)(iii) of this section. The base year must begin at the start of a school year. Reimbursable meals may be offered to all students at no charge or students eligible for reduced price and paid meal benefits may be charged for meals during a Provision 3 base, except that schools conducting a Provision 3 streamlined base year must provide reimbursable meals to all participating students at no charge in accordance with paragraph (e)(2)(iii) of this section. The Provision 3 base year immediately precedes, and is not included in, the 4-year cycle. This alternative shall be known as Provision 3, and the following requirements shall apply:
(1) Meals at no charge. Participating schools must serve reimbursable meals, as determined by a point of service observation, or as otherwise authorized under part 210 of this chapter, to all participating children at no charge during non-base years of operation or as specified in paragraph (e)(2)(iii) of this section, if applicable.
(2) Cost differential. The local educational agency of a school participating in Provision 3 must pay, with funds from non-Federal sources, the difference between the cost of serving lunches and/or breakfasts at no charge to all participating children and Federal reimbursement.
(3) Meal counts. Participating schools must take total daily meal counts of reimbursable meals served to participating children at the point of service, or as otherwise authorized under part 210 of this chapter, during the non-base years. Such meal counts must be retained at the local level in accordance with paragraph (h) of this section. State agencies may require the submission of the meal counts on the local educational agency’s monthly Claim for Reimbursement or through other means. In addition, local educational agencies must establish a system of oversight using the daily meal counts to ensure that participation has not declined significantly from the base year. If participation declines significantly, the local educational agency must provide the school with technical assistance, adjust the level of financial assistance received through the State agency or return the school to standard eligibility determination and meal counting procedures, as appropriate. In residential child care institutions, the State agency may approve implementation of Provision 3 without the requirement to obtain daily meal counts of reimbursable meals at the point of service if:
(i) The State agency determines that enrollment, participation and meal counts do not vary; and
(ii) There is an approved mechanism in place to ensure that students will receive reimbursable meals.
(4) Annual adjustments. The State agency or local educational agency shall make annual adjustments for enrollment and inflation to the total Federal cash and commodity assistance received by a Provision 3 school in the base year. The adjustments shall be made for increases and decreases in enrollment of children with access to the program(s). The annual adjustment for enrollment shall be based on the school’s base year enrollment as of October 31 compared to the school’s current year enrollment as of October 31. Another date within the base year may be used if it is approved by the State agency, and provides a more accurate reflection of the school’s enrollment or accommodates the reporting system in effect in that State. If another date is used for the base year, the current year date must correspond to the base year date of comparison. State agencies may, at their discretion, make additional adjustments to a participating school’s enrollment more frequently than once per school year. If more frequent enrollment is calculated, it must be applied for both upward and downward adjustments. The annual adjustment for inflation shall be effected through the application of the current year rates of reimbursement. To the extent that the number of operating days in the current school year differs from the number of operating days in the base year, and the difference affects the number of meals, a prorata adjustment shall also be made to the base year level of assistance, as adjusted by enrollment and inflation. Upward and downward adjustments to the number of operating days shall be made. Such adjustment shall be effected by either:
(i) Multiplying the average daily meal count by type (free, reduced price and paid) by the difference in the number of operating days between the base year and the current year and adding/subtracting that number of meals from the Claim for Reimbursement, as appropriate. In developing the average daily meal count by type for the current school year, schools shall use the base year data adjusted by enrollment; or
(ii) Multiplying the dollar amount otherwise payable (i.e., the base year level of assistance, as adjusted by enrollment and inflation) by the ratio of the number of operating days in the current year to the number of operating days in the base year.
(5) Reporting requirements. The State agency shall submit to the Department on the monthly FNS-10, Report of School Programs Operations, the number of meals, by type (i.e., monthly meal counts by type for the base year, as adjusted); or the number of meals, by type, constructed to reflect the adjusted levels of cash assistance. State agencies may employ either method to effect payment of reimbursement for Provision 3 schools.
(6) Local educational agency claims review process. During the Provision 3 base year (not including a streamlined base year under paragraph (e)(2)(iii) of this section), local educational agencies are required to review the lunch count data for each school under its jurisdiction to ensure the accuracy of the monthly Claim for Reimbursement in accordance with § 210.8(a)(2) of this chapter. During non-base years and streamlined base years, local educational agencies must conduct their own system of oversight or compare each Provision 3 school’s total daily meal counts to the school’s total enrollment, adjusted by an attendance factor. The local educational agency must promptly follow-up as specified in § 210.8(a)(4) of this chapter when the claims review suggests the likelihood of lunch count problems. When a school elects to operate Provision 3 only in the School Breakfast Program, local educational agencies must continue to comply with the claims review requirements of § 210.8(a)(2) of this chapter for the National School Lunch Program.
(7) Verification. Except as otherwise specified in § 245.6a(a)(5), local educational agencies are required to conduct verification in accordance with § 245.6a. When a school elects to participate under Provision 3 for all of the meal programs in which it participates (breakfast 7 CFR part 220 and/or lunch 7 CFR part 210), the applications from that school are excluded from the local educational agency’s required verification sample size and are exempt from verification during non-base years.
(e) Extension of Provision 3. At the end of the initial cycle, and each subsequent 4-year cycle, the State agency may allow a school to continue under Provision 3 for another 4 years without taking new free and reduced price applications and meal counts by type. State agencies may grant an extension of Provision 3 if the local educational agency can establish, through available and approved socioeconomic data, that the income level of the school’s population, as adjusted for inflation, has remained stable, declined, or has had only negligible improvement since the most recent base year.
(1) Extension criteria. Local educational agencies must submit to the State agency available and approved socioeconomic data to establish whether the income level of the school’s population, as adjusted for inflation, remained constant with the income level of the most recent base year.
(i) Available and approved sources of socioeconomic data. Pre-approved sources of socioeconomic data which may be used by local educational agencies to establish the income level of the school’s population are: local data collected by the city or county zoning and economic planning office; unemployment data; local SNAP certification data including direct certification; Food Distribution Program on Indian Reservations data; statistical sampling of the school’s population using the application process; and Temporary Assistance for Needy Families data (provided that the eligibility standards were the same or more restrictive in the base year as the current year with allowance for inflation). To grant an extension using pre-approved socioeconomic data sources, State agencies must review and evaluate the socioeconomic data submitted by the local educational agency to ensure that it is reflective of the school’s population, provides equivalent data for both the base year and the last year of the current cycle, and demonstrates that the income level of the school’s population, as adjusted for inflation, has remained stable, declined or had only negligible improvement. If the local educational agency wants to establish the income level of the school’s population using alternate sources of data, the use of such data must be approved by the Food and Nutrition Service. Data from alternate sources must be reflective of the school’s population, be equivalent data for both the base year and the last year of the current cycle, and effectively measure whether the income level of the school’s population, as adjusted for inflation, has remained stable, declined or had only negligible improvement.
(ii) Negligible improvement. The change in the income level of the school population shall be considered negligible if there is a 5 percent or less improvement, after adjusting for inflation, over the base year in the level of the socioeconomic indicator which is used to establish the income level of the school’s population.
(2) Extension not approved. Schools for which the available and approved socioeconomic data does not reflect the school’s population, is not equivalent data for the base year and the last year of the current cycle, or shows over 5 percent improvement after adjusting for inflation, shall not be approved for an extension. Such schools must elect one of the following options:
(i) Return to standard meal counting and claiming. Return to standard meal counting and claiming procedures;
(ii) Establish a new base year. Establish a new Provision 3 base year by taking new free and reduced price applications, making new free and reduced price eligibility determinations, and taking point of service counts of free, reduced price and paid meals for the first year of the new cycle. Schools electing to establish a Provision 3 base year shall follow procedures contained in paragraph (d) of this section;
(iii) Establish a streamlined base year. With prior approval by the State agency, establish a streamlined base year by providing reimbursable meals to all participating students at no charge and developing either enrollment based or participation based claiming percentages.
(A) Enrollment based percentages. In accordance with guidance established by the Food and Nutrition Service, establish a new Provision 3 base year by determining program eligibility on the basis of household size and income, and direct certification if applicable, for a statistically valid proportion of the school’s enrollment as of October 31, or other date approved by the State agency. The statistically valid measurement of the school’s enrollment must be obtained during the first year of the new cycle and meet the requirements of paragraph (m) of this section. Using the data obtained, enrollment based claiming percentages representing a proportion of the school’s population eligible for free, reduced price and paid benefits shall be developed and applied to total daily meal counts of reimbursable meals at the point of service, or as otherwise approved under part 210 of this chapter. For schools electing to participate in Provision 3, the streamlined base year level of assistance will be adjusted for enrollment, inflation and, if applicable, operating days, for each subsequent year of the new cycle and any extensions; or
(B) Participation based percentages. In accordance with guidance established by the Food and Nutrition Service, establish a new Provision 3 base year by determining program eligibility on the basis of household size and income, and direct certification if applicable, for a statistically valid proportion of participating students established over multiple operating days. The statistically valid measurement of the school’s student participation must be obtained during the first year of the new cycle and meet the requirements of paragraph (m) of this section. Using the data obtained, participation based claiming percentages representing a proportion of the school’s participating students which are eligible for free, reduced price and paid benefits shall be developed and applied to total daily meal counts of reimbursable meals at the point of service or as otherwise approved under part 210 of this chapter. For schools electing to participate in Provision 3, the streamlined base year level of assistance as described in this paragraph (e)(2)(iii)(B) will be adjusted for enrollment, inflation and, if applicable, operating days, for each subsequent year of the new cycle and any extensions; or
(iv) Establish a Provision 2 base year. Schools may convert to Provision 2 using the procedures contained in paragraphs (c)(2)(ii) or (c)(2)(iii) of this section.
(f) Community eligibility. The community eligibility provision is an alternative reimbursement option for eligible high poverty local educational agencies. Each CEP cycle lasts up to four years before the LEA or school is required to recalculate their reimbursement rate. LEAs and schools have the option to recalculate sooner, if desired. A local educational agency may elect this provision for all of its schools, a group of schools, or an individual school. Participating local educational agencies must offer free breakfasts and lunches for the length of their CEP cycle, not to exceed four successive years, to all children attending participating schools and receive meal reimbursement based on claiming percentages, as described in paragraph (f)(4)(v) of this section.
(1) Definitions. For the purposes of this paragraph,
(i) Enrolled students means students who are enrolled in and attending schools participating in the community eligibility provision and who have access to at least one meal service (breakfast or lunch) daily.
(ii) Identified students means students with access to at least one meal service who are not subject to verification as prescribed in § 245.6a(c)(2). Identified students are students approved for free meals based on documentation of their receipt of benefits from SNAP, TANF, the Food Distribution Program on Indian Reservations, or Medicaid where applicable (where approved by USDA to conduct matching with Medicaid data to identify children eligible for free meals). The term identified students also includes homeless children, migrant children, runaway children, or Head Start children (approved for free school meals without application and not subject to verification), as these terms are defined in § 245.2. In addition, the term includes foster children certified for free meals through means other than an application for free and reduced price school meals. The term does not include students who are categorically eligible based on submission of an application for free and reduced price school meals.
(iii) Identified student percentage means a percentage determined by dividing the number of identified students as of a specified period of time by the number of enrolled students as defined in paragraph (f)(1)(i) of this section as of the same period of time and multiplying the quotient by 100. The identified student percentage may be determined by an individual participating school, a group of participating schools in the local educational agency, or in the aggregate for the entire local educational agency if all schools participate, following procedures established in FNS guidance.
(2) Implementation. A local educational agency may elect the community eligibility provision for all schools, a group of schools, or an individual school. Community eligibility may be implemented for one or more 4-year cycles.
(3) Eligibility criteria. To be eligible to participate in the community eligibility provision, a local educational agency (except a residential child care institution, as defined under the definition of “School” in § 210.2), group of schools, or school must meet the eligibility criteria set forth in this paragraph.
(i) Minimum identified student percentage. A local educational agency, group of schools, or school must have an identified student percentage of at least 25 percent, as of April 1 of the school year prior to participating in the community eligibility provision, unless otherwise specified by FNS. Individual schools participating in a group may have less than 25 percent identified students, provided that the average identified student percentage for the group is at least 25 percent.
(ii) Lunch and breakfast program participation. A local educational agency, group of schools, or school must participate in the National School Lunch Program and School Breakfast Program, under parts 210 and 220 of this title, for the duration of the 4-year cycle. Schools that operate on a limited schedule, where it is not operationally feasible to offer both lunch and breakfast, may elect CEP with FNS approval.
(iii) Compliance. A local educational agency, group of schools, or school must comply with the procedures and requirements specified in paragraph (f)(4) of this section to participate in the community eligibility provision.
(4) Community eligibility provision procedures—(i) Election documentation and deadline. A local educational agency, group of schools, or school that intends to elect the community eligibility provision for the following year for one or more schools must submit to the State agency documentation demonstrating the LEA, group of schools, or school meets the identified student percentage, as specified under paragraph (f)(3)(i) of this section. Such documentation must be submitted no later than June 30 and must include, at a minimum, the counts of identified students and enrolled students as of April 1 of the school year prior to CEP implementation.
(ii) State agency review of election documentation. The State agency must review the identified student percentage documentation submitted by the local educational agency to confirm that the local educational agency, group of schools, or school meets the minimum identified student percentage, participates in the National School Lunch Program and School Breakfast Program, and has a record of administering the meal program in accordance with program regulations, as indicated by the most recent administrative review.
(iii) Meals at no cost. A local educational agency must ensure participating schools offer reimbursable breakfasts and lunches at no cost to all students attending participating schools during the 4-year cycle, and count the number of reimbursable breakfasts and lunches served to students daily.
(iv) Household applications. A local educational agency, group of schools, or school must not collect applications for free and reduced price school meals on behalf of children in schools participating in the community eligibility provision. Any local educational agency seeking to obtain socioeconomic data from children receiving free meals under this section must develop, conduct, and fund this effort entirely separate from, and not under the auspices of, the National School Lunch Program or School Breakfast Program.
(v) Free and paid claiming percentages. Reimbursement is based on free and paid claiming percentages applied to the total number of reimbursable lunches and breakfasts served each month, respectively. Reduced price students are accounted for in the free claiming percentage, eliminating the need for a separate percentage.
(A) To determine the free claiming percentage, multiply the applicable identified student percentage by a factor of 1.6. The product of this calculation may not exceed 100 percent. The difference between the free claiming percentage and 100 percent represents the paid claiming percentage. The applicable identified student percentage means:
(1) In the first year of participation in the community eligibility provision, the identified student percentage as of April 1 of the prior school year.
(2) In the second, third, and fourth year of the 4-year cycle, LEAs may choose the higher of the identified student percentage as of April 1 of the prior school year or the identified student percentage as of April 1 of the year prior to the current 4-year cycle. LEAs and schools may begin a new 4-year cycle with a higher identified student percentage based on data as of the most recent April 1, as specified in paragraph (viii).
(B) To determine the number of lunches to claim for reimbursement, multiply the free claiming percentage as described in this paragraph by the total number of reimbursable lunches served to determine the number of free lunches to claim for reimbursement. The paid claiming percentage is multiplied by the total number of reimbursable lunches served to determine the number of paid lunches to claim for reimbursement. In the breakfast meal service, the free and paid claiming percentages are multiplied by the total number of reimbursable breakfasts served to determine the number of free and paid breakfasts to claim for reimbursement. For any claim, if the total number of meals claimed for free and paid reimbursement does not equal the total number of meals served, the paid category must be adjusted so that all served meals are claimed for reimbursement.
(vi) Multiplier factor. A 1.6 multiplier must be used for an entire 4-year cycle to calculate the percentage of lunches and breakfasts to be claimed at the Federal free rate.
(vii) Cost differential. If there is a difference between the cost of serving lunches and breakfasts at no cost to all participating children and the Federal assistance provided, the local educational agency must pay such difference with non-Federal sources of funds. Expenditure of additional non-federal funds is not required if all operating costs are covered by the Federal assistance provided.
(viii) New 4-year cycle. To begin a new 4-year cycle, local educational agencies or schools must establish a new identified student percentage as of April 1 prior to the 4-year cycle. If the local educational agency, group of schools, or school meet the eligibility criteria set forth in paragraph (f)(3) of this section, a new 4-year cycle may begin.
(ix) Grace year. A local educational agency, group of schools, or school with an identified student percentage of less than 25 percent but equal to or greater than 15 percent as of April 1 of the fourth year of a community eligibility cycle may continue using community eligibility for a grace year that continues the 4-year cycle for one additional, or fifth, year. If the local educational agency, group of schools, or school regains the 25 percent threshold as of April 1 of the grace year, the State agency may authorize a new 4-year cycle for the following school year. If the local educational agency, group of schools, or school does not regain the required threshold as of April 1 of the grace year, they must return to collecting household applications in the following school year in accordance with paragraph (j) of this section. Reimbursement in a grace year is determined by multiplying the identified student percentage at the local educational agency, group of schools, or school as of April 1 of the fourth year of the 4-year CEP cycle by the 1.6 multiplier.
(5) Identification of potential community eligibility schools. No later than April 15 of each school year, each local educational agency must submit to the State agency a list(s) of schools as described in this paragraph. The State agency may exempt local educational agencies from this requirement if the State agency already collects the required information. The list(s) must include:
(i) Schools with an identified student percentage of at least 25 percent;
(ii) Schools with an identified student percentage that is less than 25 percent but greater than or equal to 15 percent; and
(iii) Schools currently in year 4 of the community eligibility provision with an identified student percentage that is less than 25 percent but greater than or equal to 15 percent.
(6) State agency notification requirements. No later than April 15 of each school year, the State agency must notify the local educational agencies described in this paragraph about their community eligibility status. Each State agency must notify:
(i) Local educational agencies with an identified student percentage of at least 25 percent district wide, of the potential to participate in community eligibility in the subsequent year; the estimated cash assistance the local educational agency would receive; and the procedures to participate in community eligibility.
(ii) Local educational agencies with an identified student percentage that is less than 25 percent district wide but greater than or equal to 15 percent, that they may be eligible to participate in community eligibility in the subsequent year if they meet the eligibility requirements set forth in paragraph (f)(3) of this section as of April 1.
(iii) Local educational agencies currently using community eligibility district wide, of the options available in establishing claiming percentages for next school year.
(iv) Local educational agencies currently in year 4 with an identified student percentage district wide that is less than 25 percent but greater than or equal to 15 percent, of the grace year eligibility.
(7) Public notification requirements. By May 1 of each school year, the State agency must make the following information readily accessible on its Web site in a format prescribed by FNS:
(i) The names of schools identified in paragraph (f)(5) of this section, grouped as follows: Schools with an identified student percentage of least 25 percent, schools with an identified student percentage of less than 25 percent but greater than or equal to 15 percent, and schools currently in year 4 of the community eligibility provision with an identified student percentage that is less than 25 percent but greater than or equal to 15 percent.
(ii) The names of local educational agencies receiving State agency notification as required under paragraph (f)(6) of this section, grouped as follows: Local educational agencies with an identified student percentage of at least 25 percent district wide, local educational agencies with an identified student percentage that is less than 25 percent district wide but greater than or equal to 15 percent, local educational agencies currently using community eligibility district wide, and local educational agencies currently in year 4 with an identified student percentage district wide that is less than 25 percent but greater than or equal to 15 percent.
(iii) The State agency must maintain eligibility lists as described in paragraphs (i) and (ii) of this section until such time as new lists are made available annually by May 1.
(8) Notification data. For purposes of fulfilling the requirements in paragraphs (f)(5) and (6) of this section, the State agency must:
(i) Obtain data representative of the current school year, and
(ii) Use the identified student percentage as defined in paragraph (f)(1) of this section. If school-specific identified student percentage data are not readily available by school, use direct certifications as a percentage of enrolled students, i.e., the percentage derived by dividing the number of students directly certified under § 245.6(b) by the number of enrolled students as defined in paragraph (f)(1) as an indicator of potential eligibility. If direct certification data are used, the State agency must clearly indicate that the data provided does not fully reflect the number of identified students.
(iii) If data are not as of April 1 of the current school year, ensure the data includes a notation that the data are intended for informational purposes and do not confer eligibility for community eligibility. Local educational agencies must meet the eligibility requirements specified in paragraph (f)(3) of this section to participate in community eligibility.
(9) Other uses of the free claiming percentage. For purposes of determining a school’s or site’s eligibility to participate in a Child Nutrition Program, a community eligibility provision school’s free claiming percentage, i.e., the product of the school’s identified student percentage multiplied by 1.6, serves as a proxy for free and reduced price certification data.
(g) Policy statement requirement. A local educational agency that elects to participate in the special assistance provisions or the community eligibility provision set forth in this section must:
(1) Amend its Free and Reduced Price Policy Statement, specified in § 245.10 of this part, to include a list of all schools participating in each of the special assistance provisions specified in this section. The following information must also be included for each school:
(i) The initial school year of implementing the special assistance provision;
(ii) The school years the cycle is expected to remain in effect;
(iii) The school year the special assistance provision must be reconsidered; and
(iv) The available and approved data that will be used in reconsideration, as applicable.
(2) Certify that the school(s) meet the criteria for participating in each of the special assistance provisions, as specified in paragraphs (a), (b), (c), (d), (e) or (f) of this section, as appropriate.
(h) Recordkeeping. Local educational agencies that elect to participate in the special assistance provisions set forth in this section must retain implementation records for each of the participating schools. Failure to maintain sufficient records will result in the State agency requiring the school to return to standard meal counting and claiming procedures and/or fiscal action. Recordkeeping requirements include, as applicable:
(1) Base year records. A local educational agency shall ensure that records as specified in §§ 210.15(b) and 220.7(e) of this chapter which support subsequent year earnings are retained for the base year for schools under Provision 2 and Provision 3. In addition, records of enrollment data for the base year must be retained for schools under Provision 3. Such base year records must be retained during the period the provision is in effect, including all extensions, plus 3 fiscal years after the submission of the last Claim for Reimbursement which employed the base year data. Local educational agencies that conduct a streamlined base year must retain all records related to the statistical methodology and the determination of claiming percentages. Such records shall be retained during the period the provision is in effect, including all extensions, plus 3 fiscal years after the submission of the last Claim for Reimbursement which employed the streamlined base year data. In either case, if audit findings have not been resolved, base year records must be retained beyond the 3-year period as long as required for the resolution of the issues raised by the audit.
(2) Non-base year records. Local educational agencies that are granted an extension of a provision must retain records of the available and approved socioeconomic data which is used to determine the income level of the school’s population for the base year and year(s) in which extension(s) are made. In addition, State agencies must also retain records of the available and approved socioeconomic data which is used to determine the income level of the school’s population for the base year and year(s) in which extensions are made. Such records must be retained at both the local educational agency level and at the State agency during the period the provision is in effect, including all extensions, plus 3 fiscal years after the submission of the last monthly Claim for Reimbursement which employed base year data. If audit findings have not been resolved, records must be retained beyond the 3-year period as long as required for the resolution of the issues raised by the audit. In addition, for schools operating under Provision 2, a local educational agency must retain non-base year records pertaining to total daily meal count information, edit checks and on-site review documentation. For schools operating under Provision 3, a local educational agency must retain non-base year records pertaining to total daily meal count information, the system of oversight or edit checks, on-site review documentation, annual enrollment data and the number of operating days, which are used to adjust the level of assistance. Such records shall be retained for three years after submission of the final monthly Claim for Reimbursement for the fiscal year.
(3) Records for the community eligibility provision. Local educational agencies must ensure records are maintained, including: data used to calculate the identified student percentage, annual selection of the identified student percentage, total number of breakfasts and lunches served daily, percentages used to claim meal reimbursement, non-Federal funding sources used to cover any excess meal costs, and school-level information provided to the State agency for publication, if applicable. Documentation must be made available at any reasonable time for review and audit purposes. Such records shall be retained during the period the community eligibility provision is in effect, including all extensions, plus three fiscal years after the submission of the last Claim for Reimbursement which was based on the data. In any case, if audit findings have not been resolved, these records must be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.
(i) Availability of documentation. Upon request, the local educational agency must make documentation available for review or audit to document compliance with the requirements of this section. Depending on the certification or reimbursement alternative used, such documentation includes, but is not limited to, enrollment data, participation data, identified student percentages, available and approved socioeconomic data that was used to grant an extension, if applicable, or other data. In addition, upon request from FNS, local educational agencies under Provision 2 or Provision 3, or State agencies must submit to FNS all data and documentation used in granting extensions including documentation as specified in paragraphs (c) and (e) of this section. Data used to establish a new cycle for the community eligibility provision must also be available for review.
(j) Restoring standard meal counting and claiming. Under Provisions 1, 2, or 3 or community eligibility provision, a local educational agency may restore a school to standard notification, certification, and counting and claiming procedures at any time during the school year or for the following school year if standard procedures better suit the school’s program needs. If standard procedures are restored during a school year, the local educational agency must offer all students reimbursable, free meals for a period of at least 30 operating days following the date of restoration of standard procedures or until a new eligibility determination is made, whichever comes first. Prior to the change taking place, but no later than June 30, the local educational agency must:
(1) Notify the State agency of the intention to stop participating in a special assistance certification and reimbursement alternative under this section and seek State agency guidance and review regarding the restoration of standard operating procedures.
(2) Notify the public and meet the certification and verification requirements of §§ 245.6 and 245.6a in affected schools.
(k) Puerto Rico and Virgin Islands. A local educational agency in Puerto Rico and the Virgin Islands, where a statistical survey procedure is permitted in lieu of eligibility determinations for each child, may: Maintain their standard procedures in accordance with § 245.4, select Provision 2 or Provision 3, or elect the community eligibility provision provided the applicable eligibility requirements as set forth in paragraphs (a) through (f) of this section are met. For the community eligibility provision, current direct certification data must be available to determine the identified student percentage.
(l) Transferring eligibility for free meals during the school year. For student transfers during the school year within a local educational agency, a student’s access to free, reimbursable meals under the special assistance certification and reimbursement alternatives specified in this section must be extended by a receiving school using standard counting and claiming procedures for up to 10 operating school days or until a new eligibility determination for the current school year is made, whichever comes first. For student transfers between local educational agencies, this requirement applies not later than July 1, 2019. At the State agency’s discretion, students who transfer within or between local educational agencies may be offered free reimbursable meals for up to 30 operating days or until a new eligibility determination for the current school year is made, whichever comes first.
(m) Statistical income measurements. Statistical income measurements that are used under this section to establish enrollment or participation base claiming percentages must comply with the standards outlined as follows:
(1) For enrollment based claiming percentages, statistical income measurements must meet the following standards:
(i) The sample frame shall be limited to enrolled students who have access to the school meals program;
(ii) A sample of enrolled students shall be randomly selected from the sample frame;
(iii) The response rate to the survey shall be at least 80 percent;
(iv) The number of households that complete the survey shall be sufficiently large so that it can be asserted with 95 percent confidence that the true percentage of students who are enrolled in the school, have access to the school meals program, and are eligible for free meals is within plus or minus 2.5 percentage points of the point estimate determined from the sample; and
(v) To minimize statistical bias, data from all households that complete the survey must be used when calculating the enrollment based claiming percentages for paragraphs (c)(2)(iii)(A) and (e)(2)(iii)(A) of this section.
(2) For participation based claiming percentages, statistical income measurements must meet the following standards:
(i) The sample frame must be limited to students participating in the meal program for which the participation based claiming percentages are being developed;
(ii) The sample frame must represent multiple operating days, as established through guidance, in the meal program for which the participation based claiming percentages are being developed;
(iii) A sample of participating students shall be randomly selected from the sample frame;
(iv) The response rate to the survey shall be at least 80 percent;
(v) The number of households that complete the survey shall be sufficiently large so that it can be asserted with 95 percent confidence that the true percentage of participating students who are eligible for free meals is within plus or minus 2.5 percentage points of the point estimate determined from the sample; and,
(vi) To minimize statistical bias, data from all households that complete the survey must be used when calculating the participation based claiming percentages for paragraphs (c)(2)(iii)(B) and (e)(2)(iii)(B) of this section.
§ 245.10 Action by local educational agencies.
(a) Each local educational agencyof a school desiring to participate in the National School Lunch Program, School Breakfast Program, or to provide free milk under the Special Milk Program, or to become a commodity-only school shall submit for approval to the State agency a free and reduced price policy statement. Once approved, the policy statement shall be a permanent document which may be amended as necessary, except as specified in paragraph (c) of this section. Such policy statement, as a minimum, shall contain the following:
(1) The official or officials designated by the local educational agency to make eligibility determinations on its behalf for free and reduced price meals or for free milk;
(2) An assurance that for children who are not categorically eligible for free and reduced price benefits the local educational agency will determine eligibility for free and reduced price meals or free milk in accordance with the current Income Eligibility Guidelines.
(3) The specific procedures the local educational agency will use in accepting applications from families for free and reduced price meals or for free milk. Additionally, the local educational agency must include the specific procedures it will use for obtaining documentation for determining children’s eligibility through direct certification, in lieu of an application. Local educational agencies shall also provide households that are directly certified with a notice of eligibility, as specified in § 245.6(c)(2) and shall include in their policy statement a copy of such notice.
(4) A description of the method or methods to be used to collect payments from those children paying the full price of the meal or milk, or a reduced price of a meal, which will prevent the overt identification of the children receiving a free meal or free milk or a reduced price meal, and
(5) An assurance that the school will abide by the hearing procedure set forth in § 245.7 and the nondiscrimination practices set forth in § 245.8.
(b) The policy statement submitted by each local educational agency shall be accompanied by a copy of the application form to be used by the school and of the proposed letter or notice to parents.
(c) Each local educational agency shall amend its permanent free and reduced price policy statement to reflect substantive changes. Any amendment to a policy shall be approved by the State agency prior to implementation, or as provided in paragraph (e) of this section. Each year, if a local educational agency does not have its policy statement approved by the State agency, or FNSRO where applicable, by October 15, reimbursement shall be suspended for any meals or milk served until such time as the local educational agency’s free and reduced price policy statement has been approved by the State agency, or FNSRO where applicable. Furthermore, no commodities donated by the Department shall be used in any school after October 15, until such time as the local educational agency’s free and reduced price policy statement has been approved by the State agency, or FNSRO where applicable. Once the local educational agency’s free and reduced price policy statement has been approved, reimbursement may be allowed, at the discretion of the State agency, or FNSRO where applicable, for eligible meals and milk served during the period of suspension.
(d) If any free and reduced price policy statement submitted for approval by any local educational agency to the State agency, or FNSRO where applicable, is determined to be not in compliance with the provisions of this part, the local educational agency shall submit a policy statement that does meet the provisions within 30 days after notification by the State agency, or FNSO where applicable.
(e) When revision of a local educational agency’s approved free and reduced price policy statement is necessitated because of a change in the family-size income standards of the State agency, or FNSRO where applicable, or because of other program changes, the local educational agency shall have 60 days from the date the State agency announces the change in which to have its revised policy statement approved by the State agency, or FNSRO where applicable. In the event that a local educational agency’s proposed revised free and reduced price policy statement has not been submitted to, and approved by, the State agency, or FNSRO where applicable, within 60 days following the public announcement by the State agency, reimbursement shall be suspended for any meals or milk served after the end of the 60-day period. No commodities donated by the Department shall be used in any school after the end of the 60-day period, until such time as the local educational agency’s free and reduced price policy statement has been approved by the State agency, or FNSRO where applicable. Reimbursement may be allowed at the discretion of the State agency, or FNSRO where applicable, for eligible meals and milk served during the period of suspension once the local educational agency’s free and reduced price policy statement has been approved by the State agency, or FNSRO where applicable. Pending approval of a revision of a policy statement, the existing statement shall remain in effect.
§ 245.11 Second review of applications.
(a) General. On an annual basis not later than the end of each school year, State agencies must identify local educational agencies demonstrating a high level of, or risk for, administrative error associated with certification processes and notify the affected local educational agencies that they must conduct a second review of applications beginning in the following school year. The second review of applications must be completed prior to notifying the household of the eligibility or ineligibility of the household for free or reduced price meals.
(b) State agency requirements—(1) Selection criteria. Local educational agencies subject to a second review must include:
(i) Administrative review certification errors. All local educational agencies with 10 percent or more of the certification/benefit issuances in error, as determined by the State agency during an administrative review; and
(ii) State agency discretion. Local educational agencies not selected under paragraph (b)(1)(i) that are at risk for certification error, as determined by the State agency.
(2) Reporting requirement. Beginning March 15, 2015, and every March 15 thereafter, each State agency must submit a report, as specified by FNS, describing the results of the second reviews conducted by each local educational agency in their State. The report must provide information about applications reviewed in each local educational agency and include:
(i) The number of free and reduced price applications subject to a second review;
(ii) The number of reviewed applications for which the eligibility determination was changed;
(iii) The percentage of reviewed applications for which the eligibility determination was changed; and
(iv) A summary of the types of changes that were made.
(3) State agencies must provide technical assistance to ameliorate certification related problems at local educational agencies determined to be at risk for certification.
(c) Local educational agency requirements. Beginning July 1, 2014, and each July 1 thereafter, local educational agencies selected by the State agency to conduct a second review of applications must ensure that the initial eligibility determination for each application is reviewed for accuracy prior to notifying the household of the eligibility or ineligibility of the household for free and reduced price meals. The second review must be conducted by an individual or entity who did not make the initial determination. This individual or entity is not required to be an employee of the local educational agency but must be trained on how to make application determinations. All individuals or entities who conduct a second review of applications are subject to the disclosure requirements set forth in § 245.6(f) through (k).
(1) Timeframes. The second review of initial determinations must be completed by the local educational agency in a timely manner and must not result in a delay in notifying the household, as set forth in § 245.6(c)(6)(i).
(2) Duration of requirement to conduct a second review of applications. Selected local educational agencies must conduct a second review of applications annually until the State agency determines that local educational agency-provided documentation provided in accordance with paragraph (c)(3) of this section or data obtained by the State agency during an administrative review, demonstrates that no more than 5 percent of reviewed applications required a change in eligibility determination.
(3) Reporting requirement. Each local educational agency required to conduct a second review of applications must annually submit to the State agency, on a date established by the State agency, the following information as of October 31st:
(i) The number of free and reduced price applications subject to a second review;
(ii) The number of reviewed applications for which the eligibility determination was changed;
(iii) The percentage of reviewed applications for which the eligibility determination was changed; and
(iv) A summary of the types of changes that were made.
§ 245.12 Action by State agencies and FNSROs.
(a) Each State agency, or FNSRO where applicable, shall, for schools under its jurisdiction:
(1) As necessary, each State agency or FNSRO, as applicable, shall issue a prototype free and reduced price policy statement and any other instructions to ensure that each local educational agency as defined in § 245.2 is fully informed of the provisions of this part. If the State elects to establish for all schools a maximum price for reduced price lunches that is less than 40 cents, the State shall establish such price in its prototype policy. Such State shall then receive the adjusted national average factor provided for in § 210.4(b);
(2) Prescribe and publicly announce by July 1 of each fiscal year, in accordance with § 245.3(a), family-size income standards. Any standards prescribed by FNSRO with respect to nonprofit private schools shall be developed by FNSRO after consultation with the State agency.
(a-1) When a revision of the family-size income standards of the State agency, or FNSRO where applicable, is necessitated because of a change in the Secretary’s income poverty guidelines or because of other program changes, the State agency shall publicly announce its revised family-size income standards no later than 30 days after the Secretary has announced such change.
(b) State agencies, and FNSRO where applicable, shall review the policy statements submitted by school-food authorities for compliance with the provisions of this part and inform the school-food authorities of any necessary changes or amendments required in any policy statement to bring such statement into compliance. They shall notify school-food authorities in writing of approval of their policy statements and shall direct them to distribute promptly the public announcements required under the provisions of § 245.5.
(c) Each State agency, or FNSRO where applicable, shall instruct local educational agencies under their jurisdiction that they may not alter or amend the eligibility criteria set forth in an approved policy statement without advance approval of the State agency, or FNSRO where applicable.
(d) Not later than 10 days after the State agency, or FNSRO where applicable, announces its family-size income standards, it shall notify local educational agencies in writing of any amendment to their free and reduced price policy statements necessary to bring the family-sized income criteria into conformance with the State agency’s or FNSRO’s family-size income standards.
(e) Except as provided in § 245.10, the State agency, or FNSRO where applicable, shall neither disburse any funds, nor authorize the distribution of commodities donated by the Department to any school unless the local educational agency has an approved free and reduced price policy statement on file with the State Agency, or FNSRO where applicable.
(f) Each State agency, or FNSRO where applicable, shall, in the course of its supervisory assistance, review and evaluate the performance of local educational agencies and of schools in fulfilling the requirements of this part, and shall advise local educational agencies of any deficiencies found and any corrective action required to be taken.
(g) The State agency must notify FNS whether the TANF Program in their State is comparable to or more restrictive than the State’s Aid to Families with Dependent Children Program that was in effect on June 1, 1995. Automatic eligibility and direct certification for TANF households is allowed only in States in which FNS has been assured that the TANF standards are comparable to or more restrictive than the program it replaced. State agencies must inform FNS when there is a change in the State’s TANF Program that would no longer make households participating in TANF automatically eligible for free school meals.
(h) The State agency shall take action to ensure the proper implementation of Provisions 1, 2, and 3. Such action shall include:
(1) Notification. Notifying school food authorities of schools implementing Provision 2 and/or 3 that each Provision 2 or Provision 3 school must return to standard eligibility determination and meal counting procedures or apply for an extension under Provision 2 or 3. Such notification must be in writing, and be sent no later than February 15, or other date established by the State agency, of the fourth year of a school’s current cycle;
(2) Return to standard procedures. Returning the school to standard eligibility determination and meal counting procedures and fiscal action as required under § 210.19(c) of this chapter if the State agency determines that records were not maintained; and
(3) Technical assistance. Providing technical assistance, adjustments to the level of financial assistance for the current school year, and returning the school to standard eligibility determination and meal counting procedures, as appropriate, if a State agency determines at any time that:
(i) The school or school food authority has not correctly implemented Provision 1, Provision 2 or Provision 3;
(ii) Meal quality has declined because of the implementation of the provision;
(iii) Participation in the program has declined over time;
(iv) Eligibility determinations or the verification procedures were incorrectly conducted; or
(v) Meal counts were incorrectly taken or incorrectly applied.
(4) State agency recordkeeping. State agencies shall retain the following information annually for the month of October and, upon request, submit to FNS:
(i) The number of schools using Provision 1, Provision 2 and Provision 3 for NSLP;
(ii) The number of schools using Provision 2 and Provision 3 for SBP only;
(iii) The number of extensions granted to schools using Provision 2 and Provision 3 during the previous school year;
(iv) The number of extensions granted during the previous year on the basis of SNAP/FDPIR data;
(v) The number of extensions granted during the previous year on the basis of Temporary Assistance for Needy Families (TANF) data;
(vi) The number of extensions granted during the previous year on the basis of local data collected by a city or county zoning and/or economic planning office;
(vii) The number of extensions granted during the previous year on the basis of applications collected from enrolled students;
(viii) The number of extensions granted during the previous year on the basis of statistically valid surveys of enrolled students; and
(ix) The number of extensions granted during the previous year on the basis of alternate data as approved by the State agency’s respective FNS Regional Office.
(5) State agency approval. Prior to approval for participation under Provision 2 or Provision 3, State agencies shall ensure school and/or school food authority program compliance as required under §§ 210.19(a)(4) and 220.13(k) of this chapter.
(i) No later than February 1, 2013, and by February 1st each year thereafter, each State agency must collect annual verification data from each local educational agency as described in § 245.6a(h) and in accordance with guidelines provided by FNS. Each State agency must analyze these data, determine if there are potential problems, and formulate corrective actions and technical assistance activities that will support the objective of certifying only those children eligible for free or reduced price meals. No later than March 15, 2013, and by March 15th each year thereafter, each State agency must report to FNS, in a consolidated electronic file by local educational agency, the verification information that has been reported to it as required under § 245.6a(h), as well as any ameliorative actions the State agency has taken or intends to take in local educational agencies with high levels of applications changed due to verification. State agencies are encouraged to collect and report any or all verification data elements before the required dates.
§ 245.13 State agencies and direct certification requirements.
(a) Direct certification requirements. State agencies are required to meet the direct certification performance benchmarks set forth in paragraph (b) of this section for directly certifying children who are members of households receiving assistance under SNAP. A State agency that fails to meet the benchmark must develop and submit to FNS a continuous improvement plan (CIP) to fully meet the requirements of this paragraph and to improve direct certification for the following school year in accordance with the provisions in paragraphs (e), (f), and (g) of this section.
(b) Direct certification performance benchmarks. State agencies must meet performance benchmarks for directly certifying for free school meals children who are members of households receiving assistance under SNAP. The performance benchmarks are as follows:
(1) 80% for the school year beginning July 1, 2011;
(2) 90% for the school year beginning July 1, 2012; and
(3) 95% for the school year beginning July 1, 2013, and for each school year thereafter.
(c) Data elements required for direct certification rate calculation. Each State agency must provide FNS with specific data elements each year, as follows:
(1) Data Element #1—The number of children who are members of households receiving assistance under SNAP that are directly certified for free school meals as of the last operating day in October, collected and reported in the same manner and timeframes as specified in § 245.11(i).
(2) Data Element #2—The unduplicated count of children ages 5 to 17 years old who are members of households receiving assistance under SNAP at any time during the period July 1 through September 30. This data element must be provided by the SNAP State agency, as required under 7 CFR 272.8(a)(5), and reported to FNS and to the State agency administering the NSLP in the State by December 1st each year, in accordance with guidelines provided by FNS.
(3) Data Element #3—The count of the number of children who are members of households receiving assistance under SNAP who attend a school operating under the provisions of 7 CFR 245.9 in a year other than the base year or that is exercising the community eligibility provision (CEP). The proxy for this data element must be established each school year through the State’s data matching efforts between SNAP records and student enrollment records for these special provision schools that are operating in a non-base year or that are exercising the CEP. Such matching efforts must occur in or close to October each year, but no later than the last operating day in October. However, States that have special provision schools exercising the CEP may alternatively choose to include, for these schools, the count from the SNAP match conducted as of April 1 of the same calendar year, whether or not it was used in the CEP claiming percentages. State agencies must report this aggregated data element to FNS by December 1 each year, in accordance with guidelines provided by FNS.
(d) State notification. For each school year, FNS will notify State agencies that fail to meet the direct certification performance benchmark.
(e) Continuous improvement plan required. A State agency having a direct certification rate with SNAP that is less than the direct certification performance benchmarks set forth in paragraph (b) of this section must submit to FNS for approval, within 90 days of notification, a CIP in accordance with paragraph (f) of this section.
(f) Continuous improvement plan required components. CIPs must include, at a minimum:
(1) The specific measures that the State will use to identify more children who are eligible for direct certification, including improvements or modifications to technology, information systems, or databases;
(2) A multiyear timeline for the State to implement these measures;
(3) Goals for the State to improve direct certification results for the following school year; and
(4) Information about the State’s progress toward implementing other direct certification requirements, as provided in FNS guidance.
(g) Continuous improvement plan implementation. A State must maintain its CIP and implement it according to the timeframes in the approved plan.
§ 245.14 Fraud penalties.
(a) Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property provided under this part, whether received directly or indirectly from the Department, shall—
(1) If such funds, assets, or property are of a value of $100 or more, be fined not more than $25,000 or imprisoned not more than five years of both; or
(2) If such funds, assets, or property are of a value of less than $100, be fined not more than $1,000 or imprisoned not more than one year or both.
(b) Whoever receives, conceals, or retains to his use or gain funds, assets, or property provided under this part, whether received directly or indirectly from the Department, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud, shall be subject to the same penalties provided in paragraph (a) of this section.
§ 245.15 Information collection/recordkeeping—OMB assigned control numbers.
| 7 CFR section where requirements are described | Current OMB control number |
|---|---|
| 245.3 (a), (b) | 0584-0026 |
| 245.4 | 0584-0026 |
| 245.5 (a), (b) | 0584-0026 |
| 245.6 (a), (b), (c), (e) | 0584-0026 |
| 245.7(a) | 0584-0026 |
| 245.9 (a), (b), (c) | 0584-0026 |
| 245.10 (a), (d), (e) | 0584-0026 |
| 245.11 (a), (a-1), (b), (c), (d), (f) | 0584-0026 |
| 245.13(a)-(c) | 0584-0026 |
PART 246—SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN
Subpart A—General
§ 246.1 General purpose and scope.
This part announces regulations under which the Secretary of Agriculture shall carry out the Special Supplemental Nutrition Program for Women, Infants and Children (WIC Program). Section 17 of the Child Nutrition Act of 1966, as amended, states in part that the Congress finds that substantial numbers of pregnant, postpartum and breastfeeding women, infants and young children from families with inadequate income are at special risk with respect to their physical and mental health by reason of inadequate nutrition or health care, or both. The purpose of the Program is to provide supplemental foods and nutrition education, including breastfeeding promotion and support, through payment of cash grants to State agencies which administer the Program through local agencies at no cost to eligible persons. The Program shall serve as an adjunct to good health care during critical times of growth and development, in order to prevent the occurrence of health problems, including drug and other harmful substance abuse, and to improve the health status of these persons. The program shall be supplementary to SNAP; any program under which foods are distributed to needy families in lieu of SNAP benefits; and receipt of food or meals from soup kitchens, or shelters, or other forms of emergency food assistance.
§ 246.2 Definitions.
For the purpose of this part and all contracts, guidelines, instructions, forms and other documents related hereto, the term:
2 CFR part 200, means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by OMB. The part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F). (NOTE: Pre-Federal Award Requirements and Contents of Federal Awards (subpart C) does not apply to the National School Lunch Program).
Above-50-percent vendors means vendors that derive more than 50 percent of their annual food sales revenue from WIC food instruments, and new vendor applicants expected to meet this criterion under guidelines approved by FNS.
Affirmative Action Plan means that portion of the State Plan which describes how the Program will be initiated and expanded within the State’s jurisdiction in accordance with § 246.4(a).
A-130 means Office of Management and Budget Circular A-130, which provides guidance for the coordinated development and operation of information systems.
Applicants means pregnant women, breastfeeding women, postpartum women, infants, and children who are applying to receive WIC benefits, and the breastfed infants of applicant breastfeeding women. Applicants include individuals who are currently participating in the program but are re-applying because their certification period is about to expire.
Authorized supplemental foods means those supplemental foods authorized by the State or local agency for issuance to a particular participant.
Breastfeeding means the practice of feeding a mother’s breastmilk to her infant(s) on the average of at least once a day.
Breastfeeding women means women up to one year postpartum who are breastfeeding their infants.
Cash-value voucher means a fixed-dollar amount check, voucher, electronic benefit transfer (EBT) card or other document which is used by a participant to obtain authorized fruits and vegetables. Cash-value voucher is also known as cash-value benefit (CVB) in an EBT environment.
Categorical eligibility means persons who meet the definitions of pregnant women, breastfeeding women, postpartum women, or infants or children.
Certification means the implementation of criteria and procedures to assess and document each applicant’s eligibility for the Program.
Children means persons who have had their first birthday but have not yet attained their fifth birthday.
Clinic means a facility where applicants are certified.
Competent professional authority means an individual on the staff of the local agency authorized to determine nutritional risk and prescribe supplemental foods. The following persons are the only persons the State agency may authorize to serve as a competent professional authority: Physicians, nutritionists (bachelor’s or master’s degree in Nutritional Sciences, Community Nutrition, Clinical Nutrition, Dietetics, Public Health Nutrition or Home Economics with emphasis in Nutrition), dieticians, registered nurses, physician’s assistants (certified by the National Committee on Certification of Physician’s Assistants or certified by the State medical certifying authority), or State or local medically trained health officials. This definition also applies to an individual who is not on the staff of the local agency but who is qualified to provide data upon which nutritional risk determinations are made by a competent professional authority on the staff of the local agency.
Competitive bidding means a procurement process under which FNS or the State agency selects a single source (such as a single infant formula manufacturer offering the lowest price), as determined by the submission of sealed bids, for a product for which bids are sought for use in the Program.
Compliance buy means a covert, on-site investigation in which a representative of the Program poses as a participant, parent or caretaker of an infant or child participant, or proxy, transacts one or more food instruments or cash-value vouchers, and does not reveal during the visit that he or she is a program representative.
Contract brand infant formula means all infant formulas (except exempt infant formulas) produced by the manufacturer awarded the infant formula cost containment contract. If under a single solicitation the manufacturer subcontracts for soy-based infant formula, then all soy-based infant formulas covered by the subcontract are also considered contract brand infant formulas (see § 246.16a(c)(1)(i)). If a State agency elects to solicit separate bids for milk-based and soy-based infant formulas, all infant formulas issued under each contract are considered the contract brand infant formula (see § 246.16a(c)(1)(ii)). For example, all of the milk-based infant formulas issued by a State agency that are produced by the manufacturer that was awarded the milk-based contract are considered contract brand infant formulas. Similarly, all of the soy-based infant formulas issued by a State agency that are produced by the manufacturer that was awarded the soy-based contract are also considered to be contract brand infant formulas. Contract brand infant formulas also include all infant formulas (except exempt infant formulas) introduced after the contract is awarded.
Cost containment measure means a competitive bidding, rebate, direct distribution, or home delivery system implemented by a State agency as described in its approved State Plan of operation and administration.
CSFP means the Commodity Supplemental Food Program administered by the Department, authorized by section 5 of the Agriculture and Consumer Protection Act of 1973, as amended, and governed by part 247 of this title.
Days means calendar days.
Department means the U.S. Department of Agriculture.
Discount means, with respect to a State agency that provides Program foods to participants without the use of retail grocery stores (such as a State agency that provides for the home delivery or direct distribution of supplemental food), the amount of the price reduction or other price concession provided to any State agency by the manufacturer or supplier of the particular food product as the result of the purchase of Program food by each such State agency, or its representative, from the manufacturer or supplier.
Disqualification means the act of ending the Program participation of a participant, authorized food vendor, or authorized State or local agency, whether as a punitive sanction or for administrative reasons.
Documentation means the presentation of written documents which substantiate statements made by an applicant or participant or a person applying on behalf of an applicant.
Drug means:
(a) A beverage containing alcohol;
(b) A controlled substance (having the meaning given it in section 102(6) of the Controlled Substance Act (21 U.S.C. 802(6)); or
(c) A controlled substance analogue (having the meaning given it in section 102(32) of the Controlled Substance Act (21 U.S.C. 802(32)).
Dual participation means simultaneous participation in the Program in one or more than one WIC clinic, or participation in the Program and in the CSFP during the same period of time.
EBT Capable means the WIC vendor demonstrates their cash register system or payment device can accurately and securely obtain WIC food balances associated with an EBT card, maintain the necessary files such as the authorized product list, hot card file and claim file and successfully complete WIC EBT purchases.
Electronic Benefit Transfer (EBT) means a method that permits electronic access to WIC food benefits using a card or other access device approved by the Secretary.
Electronic signature means an electronic sound, symbol, or process, attached to or associated with an application or other record and executed and or adopted by a person with the intent to sign the record.
Emergency period means a period during which there exists:
(1) A presidentially declared major disaster as defined under section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).
(2) A presidentially declared emergency as defined under section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).
(3) A public health emergency declared by the Secretary of HHS under section 319 of the Public Health Service Act (42 U.S.C. 247d).
(4) A renewal of such a public health emergency pursuant to section 319.
Employee fraud and abuse means the intentional conduct of a State, local agency or clinic employee which violates program regulations, policies, or procedures, including, but not limited to, misappropriating or altering food instruments or cash-value vouchers, entering false or misleading information in case records, or creating case records for fictitious participants.
Exempt infant formula means an infant formula that meets the requirements for an exempt infant formula under section 412(h) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 350a(h)) and the regulations at 21 CFR parts 106 and 107.
Family means a group of related or nonrelated individuals who are living together as one economic unit, except that residents of a homeless facility or an institution shall not all be considered as members of a single family.
Farmer means an individual authorized by the State agency to sell eligible fruits and vegetables to participants at a farmers’ market or roadside stands. Individuals who exclusively sell produce grown by someone else, such as wholesale distributors, cannot be authorized.
Farmers’ market means an association of local farmers who assemble at a defined location for the purpose of selling their produce directly to consumers.
Fiscal year means the period of 12 calendar months beginning October 1 of any calendar year and ending September 30 of the following calendar year.
FNS means the Food and Nutrition Service of the U.S. Department of Agriculture.
Food costs means the costs of supplemental foods, determined in accordance with § 246.14(b).
Food delivery system means the method used by State and local agencies to provide supplemental foods to participants.
Food instrument means a voucher, check, electronic benefits transfer card (EBT), coupon or other document which is used by a participant to obtain supplemental foods.
Food sales means sales of all SNAP eligible foods intended for home preparation and consumption, including meat, fish, and poultry; bread and cereal products; dairy products; fruits and vegetables. Food items such as condiments and spices, coffee, tea, cocoa, and carbonated and noncarbonated drinks may be included in food sales when offered for sale along with foods in the categories identified above. Food sales do not include sales of any items that cannot be purchased with SNAP benefits, such as hot foods or food that will be eaten in the store.
Full nutrition benefit means the minimum amount of reconstituted fluid ounces of liquid concentrate infant formula as specified in Table 1 of § 246.10(e)(9) for each food package category and infant feeding variation (e.g., Food Package IA fully formula fed, IA-FF).
Health services means ongoing, routine pediatric and obstetric care (such as infant and child care and prenatal and postpartum examinations) or referral for treatment.
High-risk vendor means a vendor identified as having a high probability of committing a vendor violation through application of the criteria established in § 246.12(j)(3) and any additional criteria established by the State agency.
Home food delivery contractor means a sole proprietorship, partnership, cooperative association, corporation, or other business entity that contracts with a State agency to deliver authorized supplemental foods to the residences of participants under a home food delivery system.
Homeless facility means the following types of facilities which provide meal service. A supervised publicly or privately operated shelter (including a welfare hotel or congregate shelter) designed to provide temporary living accommodations; a facility that provides a temporary residence for individuals intended to be institutionalized; or a public or private place not designed for, or normally used as, a regular sleeping accommodation for human beings.
Homeless individual means a woman, infant or child:
(a) Who lacks a fixed and regular nighttime residence; or
(b) Whose primary nighttime residence is:
(1) A supervised publicly or privately operated shelter (including a welfare hotel, a congregate shelter, or a shelter for victims of domestic violence) designated to provide temporary living accommodation;
(2) An institution that provides a temporary residence for individuals intended to be institutionalized;
(3) A temporary accommodation of not more than 365 days in the residence of another individual; or
(4) A public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings.
IHS means the Indian Health Service of the U.S. Department of Health and Human Services.
Individual with disabilities means a handicapped person as defined in 7 CFR 15b.3.
Infant formula means a food that meets the definition of an infant formula in section 201(z) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(z)) and that meets the requirements for an infant formula under section 412 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 350a) and the regulations at 21 CFR parts 106 and 107.
Institution means any residential accommodation which provides meal service, except private residences and homeless facilities.
Infants means persons under one year of age.
Inventory audit means the examination of food invoices or other proofs of purchase to determine whether a vendor has purchased sufficient quantities of supplemental foods to provide participants the quantities specified on food instruments redeemed by the vendor during a given period of time.
Local agency means: (a) A public or private, nonprofit health or human service agency which provides health services, either directly or through contract, in accordance with § 246.5; (b) an IHS service unit; (c) an Indian tribe, band or group recognized by the Department of the Interior which operates a health clinic or is provided health services by an IHS service unit; or (d) an intertribal council or group that is an authorized representative of Indian tribes, bands or groups recognized by the Department of the Interior, which operates a health clinic or is provided health services by an IHS service unit.
Members of populations means persons with a common special need who do not necessarily reside in a specific geographic area, such as off-reservation Indians or migrant farmworkers and their families.
Migrant farmworker means an individual whose principal employment is in agriculture on a seasonal basis, who has been so employed within the last 24 months, and who establishes, for the purposes of such employment, a temporary abode.
Multi-function equipment means Point-of-Sale equipment obtained by a WIC vendor through commercial suppliers, which is capable of supporting WIC EBT and other payment tender types.
Net price means the difference between an infant formula manufacturer’s lowest national wholesale price per unit for a full truckload of infant formula and the rebate level or the discount offered or provided by the manufacturer under an infant formula cost containment contract.
Non-contract brand infant formula means all infant formula, including exempt infant formula, that is not covered by an infant formula cost containment contract awarded by that State agency.
Nonprofit agency means a private agency which is exempt from income tax under the Internal Revenue Code of 1954, as amended.
Nutrition education means individual and group sessions and the provision of materials that are designed to improve health status and achieve positive change in dietary and physical activity habits, and that emphasize the relationship between nutrition, physical activity, and health, all in keeping with the personal and cultural preferences of the individual.
Nutrition Services and Administration (NSA) Costs means those direct and indirect costs, exclusive of food costs, as defined in § 246.14(c), which State and local agencies determine to be necessary to support Program operations. Costs include, but are not limited to, the costs of Program administration, start-up, monitoring, auditing, the development of and accountability for food delivery systems, nutrition education and breastfeeding promotion and support, outreach, certification, and developing and printing food instruments and cash-value vouchers.
Nutritional risk means: (a) Detrimental or abnormal nutritional conditions detectable by biochemical or anthropometric measurements; (b) Other documented nutritionally related medical conditions; (c) Dietary deficiencies that impair or endanger health; (d) Conditions that directly affect the nutritional health of a person, including alcoholism or drug abuse; or (e) Conditions that predispose persons to inadequate nutritional patterns or nutritionally related medical conditions, including, but not limited to, homelessness and migrancy.
OIG means the Department’s Office of the Inspector General.
Other harmful substances means other substances such as tobacco, prescription drugs and over-the-counter medications that can be harmful to the health of the WIC population, especially the pregnant woman and her fetus.
Partially-redeemed food instrument means a paper food instrument which is redeemed for less than all of the supplemental foods authorized for that food instrument.
Participant violation means any deliberate action of a participant, parent or caretaker of an infant or child participant, or proxy that violates Federal or State statutes, regulations, policies, or procedures governing the Program. Participant violations include, but are not limited to, deliberately making false or misleading statements or deliberately misrepresenting, concealing, or withholding facts, to obtain benefits; selling or offering to sell WIC benefits, including cash-value vouchers, food instruments, EBT cards, or supplemental foods in person, in print, or online; exchanging or attempting to exchange WIC benefits, including cash-value vouchers, food instruments, EBT cards, or supplemental foods for cash, credit, services, non-food items, or unauthorized food items, including supplemental foods in excess of those listed on the participant’s food instrument; threatening to harm or physically harming clinic, farmer, or vendor staff; and dual participation.
Participants means pregnant women, breastfeeding women, postpartum women, infants and children who are receiving supplemental foods or food instruments or cash-value vouchers under the Program, and the breastfed infants of participant breastfeeding women.
Participation means the sum of:
(1) The number of persons who received supplemental foods or food instruments during the reporting period;
(2) The number of infants who did not receive supplemental foods or food instruments but whose breastfeeding mother received supplemental foods or food instruments during the report period; and
(3) The number of breastfeeding women who did not receive supplemental foods or food instruments but whose infant received supplemental foods or food instruments during the report period.
Postpartum women means women up to six months after termination of pregnancy.
Poverty income guidelines means the poverty income guidelines prescribed by the Department of Health and Human Services. These guidelines are adjusted annually by the Department of Health and Human Services, with each annual adjustment effective July 1 of each year. The poverty income guidelines prescribed by the Department of Health and Human Services shall be used for all States, as defined in this section, except for Alaska and Hawaii. Separate poverty income guidelines are prescribed for Alaska and Hawaii.
Pregnant women means women determined to have one or more embryos or fetuses in utero.
Price adjustment means an adjustment made by the State agency, in accordance with the vendor agreement, to the purchase price on a food instrument after it has been submitted by a vendor for redemption to ensure that the payment to the vendor for the food instrument complies with the State agency’s price limitations.
Primary contract infant formula means the specific infant formula for which manufacturers submit a bid to a State agency in response to a rebate solicitation and for which a contract is awarded by the State agency as a result of that bid.
Program means the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) authorized by section 17 of the Child Nutrition Act of 1966, as amended.
Proxy means any person designated by a woman participant, or by a parent or caretaker of an infant or child participant, to obtain and transact food instruments or cash-value vouchers or to obtain supplemental foods on behalf of a participant. The proxy must be designated consistent with the State agency’s procedures established pursuant to § 246.12(r)(1). Parents or caretakers applying on behalf of child and infant participants are not proxies.
Qualified administrative requirement means a statutory requirement under Section 17 of the Child Nutrition Act of 1966 (CNA; 42 U.S.C. 1786) or a regulatory requirement issued pursuant to this section.
Rebate means the amount of money refunded under cost containment procedures to any State agency from the manufacturer of the particular food product as the result of the purchase of the supplemental food with a voucher or other purchase instrument by a participant in each State agency’s program. Such rebates shall be payments made subsequent to the exchange of a food instrument for food.
Recall means recall as defined in 21 CFR 7.3(g) or any successor regulation. Recalls may be conducted voluntarily by a manufacturer or may be required by FDA.
Remote Indian or Native village means an Indian or Native village that is located in a rural area, has a population of less than 5,000 inhabitants, and is not accessible year-round by means of a public road (as defined in 23 U.S.C. 101).
Routine monitoring means overt, on-site monitoring during which program representatives identify themselves to vendor personnel.
Secretary means the Secretary of Agriculture.
SFPD means the Supplemental Food Programs Division of the Food and Nutrition Service of the U.S. Department of Agriculture.
Sign or signature means a handwritten signature on paper or an electronic signature. If the State agency chooses to use electronic signatures, the State agency must ensure the reliability and integrity of the technology used and the security and confidentiality of electronic signatures collected in accordance with sound management practices, and applicable Federal law and policy, and the confidentiality requirements in § 246.26.
Single-function equipment means Point-of-Sale equipment, such as barcode scanners, card readers, PIN pads and printers, provided to an authorized WIC vendor solely for use with the WIC Program.
State means any of the fifty States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands.
State agency means the health department or comparable agency of each State; an Indian tribe, band or group recognized by the Department of the Interior; an intertribal council or group which is an authorized representative of Indian tribes, bands or groups recognized by the Department of the Interior and which has an ongoing relationship with such tribes, bands or groups for other purposes and has contracted with them to administer the Program; or the appropriate area office of the IHS.
State alliance means two or more State agencies that join together for the purpose of procuring infant formula under the Program by soliciting competitive bids for infant formula.
State Plan means a plan of Program operation and administration that describes the manner in which the State agency intends to implement and operate all aspects of Program administration within its jurisdiction in accordance with § 246.4.
Statewide EBT means the State agency has converted all WIC clinics to an EBT delivery method and all authorized vendors are capable of transacting EBT purchases.
Supplemental foods means those foods containing nutrients determined by nutritional research to be lacking in the diets of pregnant, breastfeeding and postpartum women, infants, and children, and foods that promote the health of the population served by the WIC Program as indicated by relevant nutrition science, public health concerns, and cultural eating patterns, as prescribed by the Secretary in § 246.10.
Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, is the program authorized by the Food and Nutrition Act of 2008 (7 U.S.C. 2011, et. seq.), in which eligible households receive benefits that can be used to purchase food items from authorized retail stores and farmers’ markets.
Supply chain disruption means a shortage of WIC supplemental foods that limits WIC participants’ ability reasonably to purchase supplemental foods using WIC benefits within a State agency’s jurisdiction, as determined, and declared by the Secretary for the purposes of WIC.
USDA implementing regulations include the following: 2 CFR part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; 2 CFR part 415, General Program Administrative Regulations; 2 CFR part 416, General Program Administrative Regulations for Grants and Cooperative Agreements to State and Local Governments; and 2 CFR part 418, New Restrictions on Lobbying.
Vendor means a sole proprietorship, partnership, cooperative association, corporation, or other business entity operating one or more stores authorized by the State agency to provide authorized supplemental foods to participants under a retail food delivery system. Each store operated by a business entity constitutes a separate vendor and must be authorized separately from other stores operated by the business entity. Each store must have a single, fixed location, except when the authorization of mobile stores is necessary to meet the special needs described in the State agency’s State Plan in accordance with § 246.4(a)(14)(xiv).
Vendor authorization means the process by which the State agency assesses, selects, and enters into agreements with stores that apply or subsequently reapply to be authorized as vendors.
Vendor limiting criteria means criteria established by the State agency to determine the maximum number and distribution of vendors it authorizes pursuant to § 246.12(g)(2).
Vendor overcharge means intentionally or unintentionally charging the State agency more for authorized supplemental foods than is permitted under the vendor agreement. It is not a vendor overcharge when a vendor submits a food instrument for redemption and the State agency makes a price adjustment to the food instrument.
Vendor peer group system means a classification of authorized vendors into groups based on common characteristics or criteria that affect food prices, for the purpose of applying appropriate competitive price criteria to vendors at authorization and limiting payments for food to competitive levels.
Vendor selection criteria means the criteria established by the State agency to select individual vendors for authorization consistent with the requirements in § 246.12(g)(3) and (g)(4).
Vendor violation means any intentional or unintentional action of a vendor’s current owners, officers, managers, agents, or employees (with or without the knowledge of management) that violates the vendor agreement or Federal or State statutes, regulations, policies, or procedures governing the Program.
WIC means the Special Supplemental Nutrition Program for Women, Infants and Children authorized by section 17 of the Child Nutrition Act of 1966, 42 U.S.C. 1786.
WIC-eligible nutritionals for participants with qualifying conditions (hereafter referred to as “WIC-eligible nutritionals) means certain enteral products that are specifically formulated to provide nutritional support for individuals with a qualifying condition, when the use of conventional foods is precluded, restricted, or inadequate. Such WIC-eligible nutritionals must serve the purpose of a food, meal or diet (may be nutritionally complete or incomplete) and provide a source of calories and one or more nutrients; be designed for enteral digestion via an oral or tube feeding; and may not be a conventional food, drug, flavoring, or enzyme. WIC-eligible nutritionals include many, but not all, products that meet the definition of medical food in Section 5(b)(3) of the Orphan Drug Act (21 U.S.C. 360ee(b)(3)).
§ 246.3 Administration.
(a) Delegation to FNS. Within the Department, FNS shall act on behalf of the Department in the administration of the Program. Within FNS, SFPD and the Regional Offices are responsible for Program administration. FNS shall provide assistance to State and local agencies and evaluate all levels of Program operations to ensure that the goals of the Program are achieved in the most effective and efficient manner possible.
(b) Delegation to the State agency. The State agency is responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department’s regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F and USDA implementing regulations 2 CFR part 400 and part 415); governing non-procurement debarment/suspension (2 CFR part 180, OMB Guidelines to Agencies on Government-wide Debarment and Suspension and USDA implementing regulations 2 CFR part 417); governing restrictions on lobbying (2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400, part 415, and part 418); and governing the drug-free workplace requirements (2 CFR part 182, Government-wide Requirements for Drug-Free Workplace); FNS guidelines; and, instructions issued under the FNS Directives Management System. The State agency shall provide guidance to local agencies on all aspects of Program operations.
(c) Agreement and State Plan. (1) Each State agency desiring to administer the Program shall annually submit a State Plan and enter into a written agreement with the Department for administration of the Program in the jurisdiction of the State agency in accordance with the provisions of this part.
(2) The written agreement shall include a certification regarding lobbying and, if applicable, a disclosure of lobbying activities, as required by 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400, part 415, and part 418.
(3) The written agreement must include a statement that supports full use of Federal funds provided to State agencies for the administration of the WIC Program, and excludes such funds from State budget restrictions or limitations including hiring freezes, work furloughs, and travel restrictions.
(d) State agency eligibility. A State agency shall be ineligible to participate in the WIC Program if State or local sales tax is collected on WIC food purchases in the area in which it administers the program, except that, if sales tax is collected on WIC food purchases by sovereign Indian entities which are not State agencies, the State agency shall remain eligible if any vendors collecting such tax are disqualified.
(e) State staffing standards. Each State agency shall ensure that sufficient staff is available to administer an efficient and effective Program including, but not limited to, the functions of nutrition education, breastfeeding promotion and support, certification, food delivery, fiscal reporting, monitoring, and training. Based on the June participation of the previous fiscal year, each State agency, as a minimum, shall employ the following staff:
(1) A full-time or equivalent administrator when the monthly participation level exceeds 1,500, or a half-time or equivalent administrator when the monthly participation exceeds 500.
(2) At least one full-time or equivalent Program specialist for each 10,000 participants above 1,500, but the State agency need not employ more than eight Program specialists unless the State agency considers it necessary. Program specialists should be utilized for providing fiscal management and technical assistance, monitoring vendors, reviewing local agencies, training, and nutritional services, or other Program duties as assigned by the State agency.
(3) For nutrition-related services, one full-time or equivalent nutritionist when the monthly participation is above 1,500, or a half-time or equivalent nutritionist when the monthly participation exceeds 500. The nutritionist shall be named State WIC Nutrition Coordinator and shall meet State personnel standards and qualifications in paragraphs (e)(3) (i), (ii), (iii), (iv), or (v) of this section and have the qualifications in paragraph (e)(3)(vi) of this section. Upon request, an exception to these qualifications may be granted by FNS. The State WIC Nutrition Coordinator shall—
(i) Hold a Master’s degree with emphasis in food and nutrition, community nutrition, public health nutrition, nutrition education, human nutrition, nutrition science or equivalent and have at least two years responsible experience as a nutritionist in education, social service, maternal and child health, public health, nutrition, or dietetics; or
(ii) Be registered or eligible for registration with the American Dietetic Association and have at least two years experience; or
(iii) Have at least a Bachelor of Science or Bachelor of Arts degree, from an accredited four-year institution, with emphasis in food and nutrition, community nutrition, public health nutrition, nutrition education, human nutrition, nutrition science or equivalent and have at least three years of responsible experience as a nutritionist in education, social service, maternal and child health, public health nutrition, or dietetics; or
(iv) Be qualified as a Senior Public Health Nutritionist under the Department of Health and Human Services guidelines; or
(v) Meet the IHS standards for a Public Health Nutritionist; and
(vi) Have at least one of the following: Program development skills, education background and experience in the development of educational and training resource materials, community action experience, counseling skills or experience in participant advocacy.
(4) A designated breastfeeding promotion coordinator, to coordinate breastfeeding promotion efforts identified in the State plan in accordance with the requirement of § 246.4(a)(9) of this part. The person to whom the State agency assigns this responsibility may perform other duties as well.
(5) A staff person designated for food delivery system management. The person to whom the State agency assigns this responsibility may perform other duties as well.
(6) The State agency shall enforce hiring practices which comply with the nondiscrimination criteria set forth in § 246.8. The hiring of minority staff is encouraged.
(f) Delegation to local agency. The local agency shall provide Program benefits to participants in the most effective and efficient manner, and shall comply with this part, the Department’s regulations governing nondiscrimination (7 CFR parts 15, 15a, 15b), the regulations governing the administration of grants (2 CFR part 200, subpart A-F and USDA implementing regulations 2 CFR part 400 and part 415), Office of Management and Budget Circular A-130, and State agency and FNS guidelines and instructions.
Subpart B—State and Local Agency Eligibility
§ 246.4 State plan.
(a) Requirements. By August 15 of each year, each State agency shall submit to FNS for approval a State Plan for the following fiscal year as a prerequisite to receiving funds under this section. The State agency may submit the State Plan in the format provided by FNS guidance. Alternatively, the State agency may submit the Plan in combination with other federally required planning documents or develop its own format, provided that the information required below is included. FNS requests advance notification that a State agency intends to use an alternative format. The State Plan shall be signed by the State designated official responsible for ensuring that the Program is operated in accordance with the State Plan. FNS will provide written approval or denial of a completed State Plan or amendment within 30 days of receipt. Within 15 days after FNS receives an incomplete Plan, FNS will notify the State agency that additional information is needed to complete the Plan. Any disapproval will be accompanied by a statement of the reasons for the disapproval. After receiving approval of the State Plan, each State agency shall only submit to FNS for approval substantive changes in the State Plan. A complete and approved Plan shall include:
(1) An outline of the State agency’s goals and objectives for improving Program operations, to include EBT and/or EBT implementation.
(2) A budget for nutrition services and administration funds, and an estimate of food expenditures.
(3) An estimate of Statewide participation for the coming fiscal year by category of women, infants and children.
(4) The State agency staffing pattern.
(5) An Affirmative Action Plan which includes—
(i) A list of all areas and special populations, in priority order based on relative need, within the jurisdiction of the State agency, the State agency’s plans to initiate or expand operations under the Program in areas most in need of supplemental foods, including plans to inform nonparticipating local agencies of the availability and benefits of the Program and the availability of technical assistance in implementing the Program, and a description of how the State agency will take all reasonable actions to identify potential local agencies and encourage agencies to implement or expand operations under the Program within the following year in the neediest one-third of all areas unserved or partially served;
(ii) An estimate of the number of potentially eligible persons in each area and a list of the areas in the Affirmative Action Plan which are currently operating the Program and their current participation, which participant priority levels as specified in § 246.7 are being reached in each of these areas, and which areas in the Affirmative Action Plan are currently operating CSFP and their current participation; and
(iii) A list of the names and addresses of all local agencies.
(6) Plans to provide program benefits to eligible migrant farmworkers and their families, to Indians, and to homeless individuals.
(7) The State agency’s plans, to be conducted in cooperation with local agencies, for informing eligible persons of the availability of Program benefits, including the eligibility criteria for participation, the location of local agencies operating the Program, and the institutional conditions of § 246.7(n)(1)(i) of this part, with emphasis on reaching and enrolling eligible women in the early months of pregnancy and migrants. Such information shall be publicly announced by the State agency and by local agencies at least annually. Such information shall also be distributed to offices and organizations that deal with significant numbers of potentially eligible persons, including health and medical organizations, hospitals and clinics, welfare and unemployment offices, social service agencies, farmworker organizations, Indian tribal organizations, organizations and agencies serving homeless individuals, and religious and community organizations in low-income areas.
(8) A description of how the State agency plans to coordinate program operations with other services or programs that may benefit participants in, or applicants for, the program.
(9) The State agency’s nutrition education goals and action plans to include:
(i) A description of the methods that will be used to provide drug and other harmful substance abuse information, to promote and support breastfeeding, and to meet the special nutrition education needs of migrant farmworkers and their families, Indians, and homeless persons.
(ii) State agencies have the option to provide nutrition education materials to institutions participating in the CACFP at no cost, as long as a written agreement for sharing such materials is in place between the relevant WIC and CACFP entities. State agencies may initiate a sharing agreement with their State-level CACFP counterparts that would apply statewide, or may authorize their local agencies or clinics to initiate a sharing agreement at the local level with their local level CACFP counterparts.
(10) For Indian State or local agencies that wish to apply for the alternate income determination procedure in accordance with § 246.7(d)(2)(vii), documentation that the majority of Indian household members have incomes below eligibility criteria.
(11) A copy of the procedure manual developed by the State agency for guidance to local agencies in operating the Program. The manual shall include—
(i) Certification procedures, including:
(A) A list of the specific nutritional risk criteria by priority level which explains how a person’s nutritional risk is determined;
(B) Hematological data requirements including timeframes for the collection of such data;
(C) The procedures for requiring proof of pregnancy, consistent with § 246.7(c)(2)(ii), if the State agency chooses to require such proof;
(D) The State agency’s income guidelines for Program eligibility;
(E) Adjustments to the participant priority system (see § 246.7(e)(4)) to accommodate high-risk postpartum women or the addition of Priority VII; and,
(F) Alternate language for the statement of rights and responsibilities which is provided to applicants, parents, or caretakers when applying for benefits as outlined in § 246.7(i)(10) and (j)(2)(i) through (j)(2)(iii). This alternate language must be approved by FNS before it can be used in the required statement.
(ii) Methods for providing nutrition education, including breastfeeding promotion and support, to participants. Nutrition education will include information on drug abuse and other harmful substances. Participants will include homeless individuals.
(iii) Instructions concerning all food delivery operations performed at the local level, including the list of acceptable foods and their maximum monthly quantities as required by § 246.10(b)(2)(i).
(iv) Instructions for providing all records and reports which the State agency requires local agencies to maintain and submit; and
(v) Instructions on coordinating operations under the program with drug and other harmful substance abuse counseling and treatment services.
(12) A description of the State agency’s financial management system.
(13) A description of how the State agency will distribute nutrition services and administration funds, including start-up funds, to local agencies operating under the Program.
(14) A description of the food delivery system as it operates at the State agency level, including—
(i) Type of system. All food delivery systems in use within the State agency’s jurisdiction;
(ii) Vendor limiting and selection criteria. Vendor limiting criteria, if used by the State agency, and the vendor selection criteria established by the State agency consistent with the requirements in § 246.12(g)(3) and (g)(4);
(iii) A sample vendor, farmer and/or farmers’ market, if applicable, agreement. The sample vendor agreement must include the sanction schedule, the process for notification of violations in accordance with § 246.12(l)(3), and the State agency’s policies and procedures on incentive items in accordance with § 246.12(g)(3)(iv), which may be incorporated as attachments or, if the sanction schedule, the process for notification of violations, or policies on incentive items are in the State agency’s regulations, through citations to the regulations. State agencies that intend to delegate signing of vendor, farmer and/or farmers’ market agreements to local agencies must describe the State agency supervision and instruction that will be provided to ensure the uniformity and quality of local agency activities;
(iv) Vendor monitoring. The system for monitoring vendors to ensure compliance and prevent fraud, waste, and program noncompliance, and the State agency’s plans for improvement in the coming year in accordance with § 246.12(j). The State agency must also include the criteria it will use to determine which vendors will receive routine monitoring visits. State agencies that intend to delegate any aspect of vendor monitoring responsibilities to a local agency or contractor must describe the State agency supervision and instruction that will be provided to ensure the uniformity and quality of vendor monitoring;
(v) Farmer monitoring. The system for monitoring farmers and/or farmers’ markets within its jurisdiction, if applicable, for compliance with program requirements;
(vi) Options regarding trafficking convictions. The option exercised by the State agency to sanction vendors pursuant to § 246.12(l)(1)(i).
(vii) Food instruments and cash-value vouchers. A facsimile of the food instrument and cash-value voucher, if used, and a description of the system the State agency will use to account for the disposition of food instruments and cash value vouchers in accordance with § 246.12(q);
(viii) Names of contractors. The names of companies, excluding authorized vendors, with whom the State agency has contracted to participate in the operation of the food delivery system;
(ix) Nutrition services and administration funds conversion For State agencies applying for authority to convert food funds to nutrition services and administration funds under § 246.16(g), a full description of their proposed cost-cutting system or system modification;
(x) Homeless participants. If the State agency plans to adapt its food delivery system to accommodate the needs of homeless individuals, a description of such adaptations;
(xi) Infant formula cost containment. A description of any infant formula cost containment system. A State agency must submit a State Plan or Plan amendment if it is attempting to structure and justify a system that is not a single-supplier competitive bidding system for infant formula in accordance with § 246.16a(d); is requesting a waiver for an infant formula cost containment system under § 246.16a(e); or, is planning to change or modify its current system or implement a system for the first time. The amendment must be submitted at least 90 days before the proposed effective date of the system change. The plan amendment must include documentation for requests for waivers based on interference with efficient or effective program operations; a cost comparison analysis conducted under § 246.16a(d)(2); and a description of the proposed cost containment system. If FNS disputes supporting plan amendment documentation, it will deem the Plan amendment incomplete under this paragraph (a), and will provide the State agency with a statement outlining disputed issues within 15 days of receipt of the Plan amendment. The State agency may not enter into any infant formula cost containment contract until the disputed issues are resolved and FNS has given its consent. If necessary, FNS may grant a postponement of implementation of an infant formula cost containment system under § 246.16a(f). If at the end of the postponement period issues remain unresolved the State agency must proceed with a cost containment system judged by FNS to comply with the provisions of this part. If the State agency does not comply, it will be subject to the penalties set forth in § 246.16a(i);
(xii) Vendor, farmer and/or farmers’ market training. The procedures the State agency will use to train vendors (in accordance with § 246.12(i)), farmers and/or farmers’ markets (in accordance with § 246.12(v)). State agencies that intend to delegate any aspect of training to a local agency, contractor, vendor or farmer representative must describe the supervision and instructions that will be provided by the State agency to ensure the uniformity and quality of vendor, farmer and/or farmers’ market training;
(xiii) Food instrument and cash-value voucher security. A description of the State agency’s system for ensuring food instrument and cash-value voucher security in accordance with § 246.12(p);
(xiv) Participant access determination criteria. A description of the State agency’s participant access determination criteria consistent with § 246.12(l); and
(xv) Mobile stores. The special needs necessitating the authorization of mobile stores, if the State agency chooses to authorize such stores.
(xvi) Vendor cost containment. A description of the State agency’s vendor peer group system, competitive price criteria, and allowable reimbursement levels that demonstrates that the State agency is in compliance with the cost containment provisions in § 246.12(g)(4); information on non-profit above-50-percent vendors that the State agency has exempted from competitive price criteria and allowable reimbursement levels in § 246.12(g)(4)(iv); a justification and documentation supporting the State agency’s request for an exemption from the vendor peer group requirement in § 246.12(g)(4), if applicable; and, if the State agency authorizes any above-50-percent vendors, information required by FNS to determine whether the State agency’s vendor cost containment system meets the requirements in § 246.12(g)(4)(i).
(xvii) Other cost containment systems. A description of any other food cost containment systems (such as juice and cereal rebates and food item restrictions).
(xviii) List of infant formula wholesalers, distributors, and retailers. The policies and procedures for compiling and distributing to authorized WIC retail vendors, on an annual or more frequent basis, as required by § 246.12(g)(11), a list of infant formula wholesalers, distributors, and retailers licensed in the State in accordance with State law (including regulations), and infant formula manufacturers registered with the Food and Drug Administration (FDA) that provide infant formula. The vendor may provide only the authorized infant formula which the vendor has obtained from a source included on the list described in § 246.12(g)(11) to participants in exchange for food instruments specifying infant formula.
(xix) A description of how the State agency will replace lost, stolen, or damaged EBT cards and transfer the associated benefits within seven business days.
(xx) A description of the procedures established by the State agency to provide customer service during non-business hours that enable participants or proxies to report a lost, stolen, or damaged card, report other card or benefit issues, receive information on the EBT food balance and receive the current benefit end date. The procedures shall address how the State agency will respond to reports of a lost, stolen, or damaged card within one business day of the date of report.
(15) The State agency’s procedures for accepting and processing vendor applications outside of its established timeframes if the State agency determines there will otherwise be inadequate participant access to the WIC Program.
(16) The State agency’s plans to prevent and identify dual participation in accordance with § 246.7(l)(1)(i) and (l)(1)(ii). In States where the Program and the CSFP operate in the same area, or where an Indian State agency operates a Program in the same area as a geographic State agency, a copy of the written agreement between the State agencies for the detection and prevention of dual participation shall be submitted.
(17) A description of the procedures the State will use to comply with the civil rights requirements described in § 246.8, including the processing of discrimination complaints.
(18) A copy of the State agency’s fair hearing procedures for participants and the administrative appeal procedures for local agencies, food vendors, farmers and farmers’ markets.
(19) The State agency’s plan to ensure that participants receive required health and nutrition assessments when certified for a period of greater than six months.
(20) The State agency’s plan to reach and enroll migrants, and eligible women in the early months of pregnancy.
(21) The State agency’s plan to establish, to the extent practicable, that homeless facilities, and institutions if it chooses to make the Program available to them, meet the conditions established in § 246.7(n)(1)(i) of this part, if residents of such accommodations are to be eligible to receive WIC Program benefits.
(22) A plan to provide program benefits to unserved infants and children under the care of foster parents, protective services, or child welfare authorities, including infants exposed to drugs perinatally.
(23) A plan to improve access to the Program for participants and prospective applicants who are employed or who reside in rural areas, by addressing their special needs through the adoption or revision of procedures and practices to minimize the time participants and applicants must spend away from work and the distances participants and applicants must travel. The State agency shall also describe any plans for issuance of food instruments and cash-value vouchers to employed or rural participants, or to any other segment of the participant population, through means other than direct participant pick-up, pursuant to § 246.12(r)(4). Such description shall also include measures to ensure the integrity of Program services and fiscal accountability. The State agency will also describe its policy for approving transportation of participants to and from WIC clinics.
(24) Assurance that each local agency and any subgrantees of the State agency and/or local agencies are in compliance with the requirements of 2 CFR part 180, OMB Guidelines to Agencies on Government-wide Debarment and Suspension and USDA implementing regulations 2 CFR part 417 regarding nonprocurement debarment/suspension.
(25) A description of the State agency’s plans to provide and maintain a drug-free workplace in compliance with requirements in 2 CFR part 180, Government-wide Requirements for Drug-Free Workplace (Financial Assistance) and USDA implementing regulation 2 CFR part 421.
(26) A list of all organizations with which the State agency or its local agencies has executed or intends to execute a written agreement pursuant to § 246.26(h) authorizing the use and disclosure of confidential applicant and participant information for non-WIC purposes.
(27) The State agency’s policies and procedures for preventing conflicts of interest at the local agency or clinic level in a reasonable manner. At a minimum, this plan must prohibit the following WIC certification practices by local agency or clinic employees, or provide effective alternative policies and procedures when such prohibition is not possible:
(i) Certifying oneself;
(ii) Certifying relatives or close friends; or,
(iii) One employee determining eligibility for all certification criteria and issuing food instruments, cash-value vouchers or supplemental food for the same participant.
(28) The State agency’s plan for collecting and maintaining information on cases of participant and employee fraud and abuse. Such information should include the nature of the fraud detected and the associated dollar losses.
(29) The State agency’s Universal Identifier number.
(30) Plans of alternate operating procedures, commonly referred to as disaster plans, to support the continuation of WIC services during an emergency period as defined at § 246.2, supply chain disruption as defined at § 246.2, and supplemental food recall. State agencies must consider the unique and sudden nature of an emergency period, supplemental food recall, and other supply chain disruptions when developing alternate operating procedures. Alternate procedures must describe the process by which the State agency will minimize the negative impact to WIC operations and services and ensure the availability of authorized supplemental foods, especially infant formula, to the extent feasible. At a minimum, alternate operating procedures must include-
(i) A plan to address operation of specific Program areas including-
(A) Access to Program records;
(B) Alternate certification and benefit issuance
(C) Verification of Certification (VOC) issuance
(D) Food package adjustments;
(E) Vendor requirements;
(F) Benefit redemption; and
(G) Food delivery systems.
(ii) A plan to ensure continuity of WIC services and address the needs of participants with documented qualifying conditions receiving Food Package III, rural areas, Indian tribal organizations, and other priority populations in the affected area as applicable;
(iii) A designated emergency contact within the State agency for emergency periods, supplemental food recalls, and other supply chain disruptions;
(iv) A designated emergency contact within the State agency to address the needs of participants with documented qualifying conditions receiving Food Package III;
(v) A plan to establish relationships with relief agencies responsible for disaster and public health emergency planning applicable to the State agency’s jurisdiction and participants to support data-informed approaches when responding to emergency periods, supplemental food recalls, and other supply chain disruptions;
(vi) A plan to limit the disruption of infant formula benefits in the event of an emergency period, supplemental food recall, and other supply chain disruptions;
(vii) A communications plan to keep FNS, State and local agency staff, authorized WIC vendors, WIC participants, and the public informed during an emergency period supplemental food recall, and other supply chain disruptions;
(viii) A plan to report to FNS on alternate operating procedures implemented during an emergency period, supplemental food recall, and other supply chain disruptions which includes Program data and information on the impact of benefit use and delivery; and
(ix) A plan to adjust State agency specific minimum requirements for the variety and quantity of supplemental foods that a vendor applicant must stock to be authorized.
(b) Public comment. The State agency shall establish a procedure under which members of the general public are provided an opportunity to comment on the development of the State agency plan.
(c) Amendments. At any time after approval, the State agency may amend the State Plan to reflect changes. The State agency shall submit the amendments to FNS for approval. The amendments shall be signed by the State designated official responsible for ensuring that the Program is operated in accordance with the State Plan.
(d) Retention of copy. A copy of the approved State Plan or the WIC portion of the State’s composite plan of operations shall be kept on file at the State agency for public inspection.
§ 246.5 Selection of local agencies.
(a) General. This section sets forth the procedures the State agency shall perform in the selection of local agencies and the expansion, reduction, and disqualification of local agencies already in operation. In making decisions to intitiate, continue, and discontinue the participation of local agencies, the State agency shall give consideration to the need for Program benefits as delineated in the Affirmative Action Plan.
(b) Application of local agencies. The State agency shall require each agency, including subdivisions of the State agency, which desires approval as a local agency, to submit a written local agency application. After the receipt of an incomplete application, the State agency shall provide written notification to the applicant agency of the additional information needed. After the receipt of a complete application, the State agency shall notify the applicant agency in writing of the approval or disapproval of its application. When an application is disapproved, the State agency shall advise the applicant agency of the reasons for disapproval and of the right to appeal as set forth in § 246.18. When an agency submits an application and there are no funds to serve the area, the applicant agency shall be notified that there are currently no funds available for Program initiation or expansion. The applicant agency shall be notified by the State agency when funds become available.
(c) Program initiation and expansion. The State agency shall meet the following requirements concerning Program initiation and expansion:
(1) The State agency will consider the Affirmative Action Plan (see § 246.4(a)(5)) when funding local agencies and expanding existing operations, and may consider how much of the current need is being met at each priority level. The selection criteria cited in paragraph (d)(1) of this section shall be applied to each area or special population before eliminating that area from consideration and serving the next area of special population. The State agency shall consider the number of participants in each priority level being served by existing local agencies in determining when it is appropriate to move into additional areas in the Affirmative Action Plan or to expand existing operations in an area. Additionally, the State agency shall consider the total number of people potentially eligible in each area compared to the number being served.
(2) The State agency shall provide a written justification to FNS for not funding an agency to serve the highest priority area or special population. Such justification may include its inability to administer the Program, lack of interest expressed for operating the Program, or for those areas or special populations which are under consideration for expansion of an existing operation, a determination by the State agency that there is a greater need for funding an agency serving an area or special population not operating the Program. The State agency shall use the participant priority system in § 246.7 as a measurement of greater need in such determination.
(3) The State agency may fund more than one local agency to serve the same area or special population as long as more than one local agency is necessary to serve the full extent of need in that area or special population.
(d) Local agency priority system. The State agency shall establish standards for the selection of new local agencies. Such standards shall include the following considerations:
(1) The State agency shall consider the following priority system, which is based on the relative availability of health and administrative services, in the selection of local agencies:
(i) First consideration shall be given to a public or a private nonprofit health agency that will provide ongoing, routine pediatric and obstetric care and administrative services.
(ii) Second consideration shall be given to a public or a private nonprofit health or human service agency that will enter into a written agreement with another agency for either ongoing, routine pediatric and obstetric care or administrative services.
(iii) Third consideration shall be given to a public or private nonprofit health agency that will enter into a written agreement with private physicians, licensed by the State, in order to provide ongoing, routine pediatric and obstetric care to a specific category of participants (women, infants or children).
(iv) Fourth consideration shall be given to a public or private nonprofit human service agency that will enter into a written agreement with private physicians, licensed by the State, to provide ongoing, routine pediatric and obstetric care.
(v) Fifth consideration shall be given to a public or private nonprofit health or human service agency that will provide ongoing, routine pediatric and obstetric care through referral to a health provider.
(2) The State agency must, when seeking new local agencies, publish a notice in the local media (unless it has received an application from a local public or nonprofit private health agency that can provide adequate services). The notice will include a brief explanation of the Program, a description of the local agency priority system (outlined in this paragraph (d)), and a request that potential local agencies notify the State agency of their interest. In addition, the State agency will contact all potential local agencies to make sure they are aware of the opportunity to apply. If an application is not submitted within 30 days, the State agency may then select a local agency in another area. If sufficient funds are available, a State agency will give notice and consider applications outside the local area at the same time.
(e) Disqualification of local agencies. (1) The State agency may disqualify a local agency—
(i) When the State agency determines noncompliance with Program regulations;
(ii) When the State’s Program funds are insufficient to support the continued operation of all its existing local agencies at their current participation level; or
(iii) When the State agency determines, following a review of local agency credentials in accordance with paragraph (f) of this section, that another local agency can operate the Program more effectively and efficiently.
(2) The State agency may establish its own criteria for disqualification of local agencies. The State agency shall notify the local agency of any State-established criteria. In addition to any State established criteria, the State agency shall consider, at a minimum—
(i) The availability of other community resources to participants and the cost efficiency and cost effectiveness of the local agency in terms of both food and nutrition services and administration costs;
(ii) The percentages of participants in each priority level being served by the local agency and the percentage of need being met in each participant category;
(iii) The relative position of the area or special population served by the local agency in the Affirmative Action Plan;
(iv) The local agency’s place in the priority system in paragraph (d)(1) of this section; and
(v) The capability of another local agency or agencies to accept the local agency’s participants.
(3) When disqualifying a local agency under the Program, the State agency shall—
(i) Make every effort to transfer affected participants to another local agency without disruption of benefits;
(ii) Provide the affected local agency with written notice not less than 60 days in advance of the pending action which includes an explanation of the reasons for disqualification, the date of disqualification, and, except in cases of the expiration of a local agency’s agreement, the local agency’s right to appeal as set forth in § 246.18; and
(iii) Ensure that the action is not in conflict with any existing written agreements between the State and the local agency.
(f) Periodic review of local agency qualifications. The State agency may conduct periodic reviews of the qualifications of authorized local agencies under its jurisdiction. Based upon the results of such reviews the State agency may make appropriate adjustments among the participating local agencies, including the disqualification of a local agency when the State agency determines that another local agency can operate the Program more effectively and efficiently. In conducting such reviews, the State agency shall consider the factors listed in paragraph (e)(2) of this section in addition to whatever criteria it may develop. The State agency shall implement the procedures established in paragraph (e)(3) of this section when disqualifying a local agency.
§ 246.6 Agreements with local agencies.
(a) Signed written agreements. The State agency shall enter into a signed written agreement with each local agency, including subdivisions of the State agency, which sets forth the local agency’s responsibilities for Program operations as prescribed in this part. Copies of the agreement shall be kept on file at both the State and local agencies for purposes of review and audit in accordance with §§ 246.19 and 246.20. Neither the State agency nor the local agency has an obligation to renew the agreement. The expiration of an agreement is not subject to appeal. The State agency shall provide local agencies with advance written notice of the expiration of an agreement as required under §§ 246.5(e)(3)(ii) and 246.18(b)(1).
(b) Provisions of agreement. The agreement between the State agency and each local agency shall ensure that the local agency—
(1) Complies with all the fiscal and operational requirements prescribed by the State agency pursuant to debarment and suspension requirements and if applicable, the lobbying restrictions of 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR part 400, part 415, and part 417, and FNS guidelines and instructions, and provides on a timely basis to the State agency all required information regarding fiscal and Program information;
(2) Has a competent professional authority on the staff of the local agency and the capabilities necessary to perform the certification procedures;
(3) Makes available appropriate health services to participants and informs applicants of the health services which are available;
(4) Prohibits smoking in the space used to carry out the WIC Program during the time any aspect of WIC services are performed;
(5) Has a plan for continued efforts to make health services available to participants at the clinic or through written agreements with health care providers when health services are provided through referral;
(6) Provides nutrition education services, including breastfeeding promotion and support, to participants, in compliance with § 246.11 and FNS guidelines and instructions;
(7) Implements a food delivery system prescribed by the State agency pursuant to § 246.12 and approved by FNS;
(8) Maintains complete, accurate, documented and current accounting of all Program funds received and expended;
(9) Maintains on file and has available for review, audit, and evaluation all criteria used for certification, including information on the area served, income standards used, and specific criteria used to determine nutritional risk; and
(10) Does not discriminate against persons on the grounds of race, color, national origin, age, sex or handicap; and compiles data, maintains records and submits reports as required to permit effective enforcement of the nondiscrimination laws.
(c) Indian agencies. Each Indian State agency shall ensure that all local agencies under its jurisdiction serve primarily Indian populations.
(d) Health and human service agencies. When a health agency and a human service agency comprise the local agency, both agencies shall together meet all the requirements of this part and shall enter into a written agreement which outlines all Program responsibilities of each agency. The agreement shall be approved by the State agency during the application process and shall be on file at both the State and local agency. No Program funds shall be used to reimburse the health agency for the health services provided. However, costs of certification borne by the health agency may be reimbursed.
(e) Health or human service agencies and private physicians. When a health or human service agency and private physician(s) comprise the local agency, all parties shall together meet all of the requirements of this part and shall enter into a written agreement which outlines the inter-related Program responsibilities between the physician(s) and the local agency. The agreement shall be approved by the State agency during the application process and shall be on file at both agencies. The local agency shall advise the State agency on its application of the name(s) and address(es) of the private physician(s) participating and obtain State agency approval of the written agreement. A competent professional authority on the staff of the health or human service agency shall be responsible for the certification of participants. No Program funds shall be used to reimburse the private physician(s) for the health services provided. However, costs of certification data provided by the physician(s) may be reimbursed.
(f) Outreach/Certification In Hospitals. The State agency shall ensure that each local agency operating the program within a hospital and/or that has a cooperative arrangement with a hospital:
(1) Advises potentially eligible individuals that receive inpatient or outpatient prenatal, maternity, or postpartum services, or that accompany a child under the age of 5 who receives well-child services, of the availability of program services; and
(2) To the extent feasible, provides an opportunity for individuals who may be eligible to be certified within the hospital for participation in the WIC Program.
Subpart C—Participant Eligibility
§ 246.7 Certification of participants.
(a) Integration with health services. To lend administrative efficiency and participant convenience to the certification process, whenever possible, Program intake procedures shall be combined with intake procedures for other health programs or services administered by the State and local agencies. Such merging may include verification procedures, certification interviews, and income computations. Local agencies shall maintain and make available for distribution to all pregnant, postpartum, and breastfeeding women and to parents or caretakers of infants and children applying for and participating in the Program a list of local resources for drug and other harmful substance abuse counseling and treatment.
(b) Program referral and access. State and local agencies shall provide WIC Program applicants and participants or their designated proxies with information on other health-related and public assistance programs, and when appropriate, shall refer applicants and participants to such programs.
(1) The State agency shall provide each local WIC agency with materials showing the maximum income limits, according to family size, applicable to pregnant women, infants, and children up to age 5 under the medical assistance program established under Title XIX of the Social Security Act (in this section, referred to as the “Medicaid Program”). The local agency shall, in turn, provide to adult individuals applying or reapplying for the WIC Program for themselves or on behalf of others, written information about the Medicaid Program. If such individuals are not currently participating in Medicaid but appear to have family income below the applicable maximum income limits for the program, the local agency shall also refer these individuals to Medicaid, including the referral of infants and children to the appropriate entity in the area authorized to determine eligibility for early and periodic screening, diagnostic, and treatment (EPSDT) services, and, the referral of pregnant women to the appropriate entity in the area authorized to determine presumptive eligibility for the Medicaid Program, if such determinations are being offered by the State.
(2) State agencies shall provide WIC services at community and migrant health centers, Indian Health Services facilities, and other federally health care supported facilities established in medically underserved areas to the extent feasible.
(3) Local agencies may provide information about other potential sources of food assistance in the local area to adult individuals applying or reapplying in person for the WIC Program for themselves or on behalf of others, when such applicants cannot be served because the Program is operating at capacity in the local area.
(4) Each local agency that does not routinely schedule appointments shall schedule appointments for employed adult individuals seeking to apply or reapply for participation in the WIC Program for themselves or on behalf of others so as to minimize the time such individuals are absent from the workplace due to such application.
(5) Each local agency shall attempt to contact each pregnant woman who misses her first appointment to apply for participation in the Program in order to reschedule the appointment. At the time of initial contact, the local agency shall request an address and telephone number where the pregnant woman can be reached.
(c) Eligibility criteria and basic certification procedures. (1) To qualify for the Program, infants, children, and pregnant, postpartum, and breastfeeding women must:
(i) Reside within the jurisdiction of the State (except for Indian State agencies). Indian State agencies may establish a similar requirement. All State agencies may determine a service area for any local agency, and may require that an applicant reside within the service area. However, the State agency may not use length of residency as an eligibility requirement.
(ii) Meet the income criteria specified in paragraph (d) of this section.
(iii) Meet the nutritional risk criteria specified in paragraph (e) of this section.
(2)(i) At certification, the State or local agency must require each applicant to present proof of residency (i.e., location or address where the applicant routinely lives or spends the night) and proof of identity. The State or local agency must also check the identity of participants, or in the case of infants or children, the identity of the parent or guardian, or proxies when issuing food, cash-value vouchers or food instruments. The State agency may authorize the certification of applicants when no proof of residency or identity exists (such as when an applicant or an applicant’s parent is a victim of theft, loss, or disaster; a homeless individual; or a migrant farmworker). In these cases, the State or local agency must require the applicant to confirm in writing his/her residency or identity. Further, an individual residing in a remote Indian or Native village or an individual served by an Indian tribal organization and residing on a reservation or pueblo may establish proof of residency by providing the State agency their mailing address and the name of the remote Indian or Native village.
(ii) For a State agency opting to require proof of pregnancy, the State agency may issue benefits to applicants who claim to be pregnant (assuming that all other eligibility criteria are met) but whose conditions (as pregnant) are not visibly noticeable and do not have documented proof of pregnancy at the time of the certification interview and determination. The State agency should then allow a reasonable period of time, not to exceed 60 days, for the applicant to provide the requested documentation. If such documentation is not provided as requested, the woman can no longer be considered categorically eligible, and the local agency would then be justified in terminating the woman’s WIC participation in the middle of a certification period.
(3) A State, a State agency, and an Indian Tribal Organization (including, an Indian tribe, band, or group recognized by the Department of the Interior; or an intertribal council or group which is an authorized representative of Indian tribes, bands or groups recognized by the Department of the Interior and which has an ongoing relationship with such tribes, bands or groups for other purposes and has contracted with them to administer the Program) serving as a State agency, may limit WIC participation to United States citizens, nationals, and qualified aliens as these terms are defined in the Immigration and Nationality Laws (8 U.S.C. 1101 et seq.). State agencies that implement this option shall inform FNS of their intentions and provide copies of the procedures they will establish regarding the limitation of WIC services to United States citizens, nationals, and qualified aliens.
(4) The certification procedure shall be performed at no cost to the applicant.
(d) Income criteria and income eligibility determinations. The State agency shall establish, and provide local agencies with, income guidelines, definitions, and procedures to be used in determining an applicant’s income eligibility for the Program.
(1) Income eligibility guidelines. The State agency may prescribe income guidelines either equaling the income guidelines established under section 9 of the National School Lunch Act for reduced-price school meals or identical to State or local guidelines for free or reduced-price health care. However, in conforming Program income guidelines to health care guidelines, the State agency shall not establish Program guidelines which exceed the guidelines for reduced-price school meals or are less than 100 percent of the revised poverty income guidelines issued annually by the Department of Health and Human Services. Program applicants who meet the requirements established by paragraph (d)(2)(vi)(A) of this section shall not be subject to the income limits established by State agencies under this paragraph.
(i) Local agency income eligibility guidelines. Different guidelines may be prescribed for different local agencies within the State provided that the guidelines are the ones used by the local agencies for determining eligibility for free or reduced-price health care.
(ii) Annual adjustments in the income guidelines. On or before June 1 each year, FNS will announce adjustments in the income guidelines for reduced-price meals under section 9 of the National School Lunch Act, based on annual adjustments in the revised poverty income guidelines issued by the Department of Health and Human Services.
(iii) Implementation of the income guidelines. On or before July 1 each year, each State agency shall announce and transmit to each local agency the State agency’s family size income guidelines, unless changes in the poverty income guidelines issued by the Department of Health and Human Services do not necessitate changes in the State or local agency’s income guidelines. The State agency may implement revised guidelines concurrently with the implementation of income guidelines under the Medicaid program established under Title XIX of the Social Security Act (42 U.S.C. 1396 of et seq.). The State agency shall ensure that conforming adjustments are made, if necessary, in local agency income guidelines. The local agency shall implement (revised) guidelines not later than July 1 of each year for which such guidelines are issued by the State.
(2) Income eligibility determinations. The State agency shall ensure that local agencies determine income through the use of a clear and simple application form provided or approved by the State agency.
(i) Timeframes for determining income. In determining the income eligibility of an applicant, the State agency may instruct local agencies to consider the income of the family during the past 12 months and the family’s current rate of income to determine which indicator more accurately reflects the family’s status. However, persons from families with adult members who are unemployed shall be eligible based on income during the period of unemployment if the loss of income causes the current rate of income to be less than the State or local agency’s income guidelines for Program eligibility.
(ii) Definition of “Income”. If the State agency uses the National School Lunch reduced-priced meal income guidelines, as specified in paragraph (d)(1) of this section, it shall use the following definition of income: Income for the purposes of this part means gross cash income before deductions for income taxes, employees’ social security taxes, insurance premiums, bonds, etc. Income includes the following—
(A) Monetary compensation for services, including wages, salary, commissions, or fees;
(B) Net income from farm and non-farm self-employment;
(C) Social Security benefits;
(D) Dividends or interest on savings or bonds, income from estates or trusts, or net rental income;
(E) Public assistance or welfare payments;
(F) Unemployment compensation;
(G) Government civilian employee or military retirement or pensions or veterans’ payments;
(H) Private pensions or annuities;
(I) Alimony or child support payments;
(J) Regular contributions from persons not living in the household;
(K) Net royalties; and
(L) Other cash income. Other cash income includes, but is not limited to, cash amounts received or withdrawn from any source including savings, investments, trust accounts and other resources which are readily available to the family.
(iii) Use of a State or local health care definition of “Income”. If the State agency uses State or local free or reduced-price health care income guidelines, it will ensure that the definitions of income (see paragraph (d)(2)(ii) of this section), family (see § 246.2) and allowable exclusions from income (see paragraph (d)(2)(iv) of this section) are used uniformly to determine an applicant’s income eligibility. This ensures that households with a gross income in excess of 185 percent of the Federal income guidelines (see paragraph (d)(1) of this section) are not eligible for Program benefits. The exception to this requirement is persons who are also income eligible under other programs (see paragraph (d)(2)(vi) of this section).
(iv) Income exclusions. (A) In determining income eligibility, the State agency may exclude from consideration as income any:
(1) Basic allowance for housing received by military services personnel residing off military installations or in privatized housing, whether on- or off-base; and
(2) Cost-of-living allowance provided under 37 U.S.C. 405, to a member of a uniformed service who is on duty outside the contiguous states of the United States.
(B) The value of inkind housing and other inkind benefits, shall be excluded from consideration as income in determining an applicant’s eligibility for the program.
(C) Loans, not including amounts to which the applicant has constant or unlimited access.
(D) Payments or benefits provided under certain Federal programs or acts are excluded from consideration as income by legislative prohibition. The payments or benefits which must be excluded from consideration as income include, but are not limited to:
(1) Reimbursements from the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Pub. L. 91-646, sec. 216, 42 U.S.C. 4636);
(2) Any payment to volunteers under Title I (VISTA and others) and Title II (RSVP, foster grandparents, and others) of the Domestic Volunteer Service Act of 1973 (Pub. L. 93-113, sec. 404(g), 42 U.S.C. 5044(g)) to the extent excluded by that Act;
(3) Payment to volunteers under section 8(b)(1)(B) of the Small Business Act (SCORE and ACE) (Pub. L. 95-510, sec. 101, 15 U.S.C. 637(b)(1)(D));
(4) Income derived from certain submarginal land of the United States which is held in trust for certain Indian tribes (Pub. L. 94-114, sec. 6, 25 U.S.C. 459e);
(5) Payments received under the Job Training Partnership Act (Pub. L. 97-300, sec. 142(b), 29 U.S.C. 1552(b));
(6) Income derived from the disposition of funds to the Grand River Band of Ottawa Indians (Pub. L. 94-540, sec. 6);
(7) Payments received under the Alaska Native Claims Settlement Act (Pub. L. 100-241, sec. 15, 43 U.S.C. sec. 1626(c));
(8) The value of assistance to children or their families under the National School Lunch Act, as amended (Pub. L. 94-105, sec. 9(d), 42 U.S.C. sec. 1760(e)), the Child Nutrition Act of 1966 (Pub. L. 89-642, sec. 11(b), 42 U.S.C. sec. 1780(b)), and the Food and Nutrition Act of 2008 (Pub. L. 95-113, sec. 1301, 7 U.S.C. sec. 2017(b));
(9) Payments by the Indian Claims Commission to the Confederated Tribes and Bands of the Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation (Pub. L. 95-433, sec. 2, 25 U.S.C. 609c-1);
(10) Payments to the Passamaquoddy Tribe and the Penobscot Nation or any of their members received pursuant to the Maine Indian Claims Settlement Act of 1980 (Pub. L. 96-420, sec. 6, 9(c), 25 U.S.C. 1725(i), 1728(c));
(11) Payments under the Low-income Home Energy Assistance Act, as amended (Pub. L. 99-125, sec. 504(c), 42 U.S.C. sec. 8624(f));
(12) Student financial assistance received from any program funded in whole or part under Title IV of the Higher Education Act of 1965, including the Pell Grant, Supplemental Educational Opportunity Grant, State Student Incentive Grants, National Direct Student Loan, PLUS, College Work Study, and Byrd Honor Scholarship programs, which is used for costs described in section 472 (1) and (2) of that Act (Pub. L. 99-498, section 479B, 20 U.S.C. 1087uu). The specified costs set forth in section 472 (1) and (2) of the Higher Education Act are tuition and fees normally assessed a student carrying the same academic workload as determined by the institution, and including the costs for rental or purchase of any equipment, materials, or supplies required of all students in the same course of study; and an allowance for books, supplies, transportation, and miscellaneous personal expenses for a student attending the institution on at least a half-time basis, as determined by the institution. The specified costs set forth in section 472 (1) and (2) of the Act are those costs which are related to the costs of attendance at the educational institution and do not include room and board and dependent care expenses;
(13) Payments under the Disaster Relief Act of 1974, as amended by the Disaster Relief and Emergency Assistance Amendments of 1989 (Pub. L. 100-707, sec. 105(i), 42 U.S.C. sec. 5155(d));
(14) Effective July 1, 1991, payments received under the Carl D. Perkins Vocational Education Act, as amended by the Carl D. Perkins Vocational and Applied Technology Education Act Amendments of 1990 (Pub. L. 101-392, sec. 501, 20 U.S.C. sec. 2466d);
(15) Payments pursuant to the Agent Orange Compensation Exclusion Act (Pub. L. 101-201, sec. 1);
(16) Payments received for Wartime Relocation of Civilians under the Civil Liberties Act of 1988 (Pub. L. 100-383, sec. 105(f)(2), 50 App. U.S.C. sec. 1989b-4(f)(2));
(17) Value of any child care payments made under section 402(g)(1)(E) of the Social Security Act, as amended by the Family Support Act (Pub. L. 100-485, sec. 301, 42 U.S.C. sec. 602 (g)(1)(E));
(18) Value of any “at-risk” block grant child care payments made under section 5081 of Pub. L. 101-508, which amended section 402(i) of the Social Security Act;
(19) Value of any child care provided or paid for under the Child Care and Development Block Grant Act, as amended (Pub. L. 102-586, Sec. 8(b)), 42 U.S.C. 9858q);
(20) Mandatory salary reduction amount for military service personnel which is used to fund the Veteran’s Educational Assistance Act of 1984 (GI Bill), as amended (Pub. L. 99-576, sec. 303(a)(1), 38 U.S.C. sec. 1411 (b));
(21) Payments received under the Old Age Assistance Claims Settlement Act, except for per capita shares in excess of $2,000 (Pub. L. 98-500, sec. 8, 25 U.S.C. sec. 2307);
(22) Payments received under the Cranston-Gonzales National Affordable Housing Act, unless the income of the family equals or exceeds 80 percent of the median income of the area (Pub. L. 101-625, sec. 522(i)(4), 42 U.S.C. sec. 1437f nt);
(23) Payments received under the Housing and Community Development Act of 1987, unless the income of the family increases at any time to not less than 50 percent of the median income of the area (Pub. L. 100-242, sec. 126(c)(5)(A), 25 U.S.C. sec. 2307);
(24) Payments received under the Sac and Fox Indian claims agreement (Pub. L. 94-189, sec. 6);
(25) Payments received under the Judgment Award Authorization Act, as amended (Pub. L. 97-458, sec. 4, 25 U.S.C. sec. 1407 and Pub. L. 98-64, sec. 2(b), 25 U.S.C. sec. 117b(b));
(26) Payments for the relocation assistance of members of Navajo and Hopi Tribes (Pub. L. 93-531, sec. 22, 22 U.S.C. sec. 640d-21);
(27) Payments to the Turtle Mountain Band of Chippewas, Arizona (Pub. L. 97-403, sec. 9);
(28) Payments to the Blackfeet, Grosventre, and Assiniboine tribes (Montana) and the Papago (Arizona) (Pub. L. 97-408, sec. 8(d));
(29) Payments to the Assiniboine Tribe of the Fort Belknap Indian community and the Assiniboine Tribe of the Fort Peck Indian Reservation (Montana) (Pub. L. 98-124, sec. 5);
(30) Payments to the Red Lake Band of Chippewas (Pub. L. 98-123, sec. 3);
(31) Payments received under the Saginaw Chippewa Indian Tribe of Michigan Distribution of Judgment Funds Act (Pub. L. 99-346, sec. 6(b)(2));
(32) Payments to the Chippewas of Mississippi (Pub. L. 99-377, sec. 4(b));
(33) Payments received by members of the Armed Forces and their families under the Family Supplemental Subsistence Allowance from the Department of Defense (Pub. L. 109-163, sec. 608); and
(34) Payments received by property owners under the National Flood Insurance Program (Pub. L. 109-64).
(35) Combat pay received by the household member under Chapter 5 of Title 37 or as otherwise designated by the Secretary.
(v) Are applicants required to document income eligibility? (A) Adjuctively/automatically income eligible applicants. The State or local agency must require applicants determined to be adjunctively or automatically income eligible to document their eligibility for the program that makes them income eligible as set forth in paragraph (d)(2)(vi) of this section.
(B) Other applicants. The State or local agency must require all other applicants to provide documentation of family income at certification.
(C) Exceptions. The income documentation requirement does not apply to an individual for whom the necessary documentation is not available or an individual such as a homeless woman or child for whom the agency determines the income documentation requirement would present an unreasonable barrier to participation. Examples of individuals for whom the necessary documentation is not available include those with no income or no proof of income (such as an applicant or applicant’s parent who is a migrant farmworker or other individual who works for cash). These are the only exceptions that may be used. When using these exceptions, the State or local agency must require the applicant to sign a statement specifying why he/she cannot provide documentation of income. Such a statement is not required when there is no income.
(D) Verification. The State or local agency may require verification of information it determines necessary to confirm income eligibility for Program benefits.
(vi) Adjunct or automatic income eligibility. (A) The State agency shall accept as income-eligible for the Program any applicant who documents that he/she is:
(1) Certified as fully eligible to receive SNAP benefits under the Food and Nutrition Act of 2008, or certified as fully eligible, or presumptively eligible pending completion of the eligibility determination process, to receive Temporary Assistance for Needy Families (TANF) under Part A of Title IV of the Social Security Act or Medical Assistance (i.e., Medicaid) under Title XIX of the Social Security Act; or
(2) A member of a family that is certified eligible to receive assistance under TANF, or a member of a family in which a pregnant woman or an infant is certified eligible to receive assistance under Medicaid.
(B) The State agency may accept, as evidence of income within Program guidelines, documentation of the applicant’s participation in State-administered programs not specified in this paragraph that routinely require documentation of income, provided that those programs have income eligibility guidelines at or below the State agency’s Program income guidelines.
(C) Persons who are adjunctively income eligible, as set forth in paragraphs (d)(2)(vi)(A) of this section, shall not be subject to the income limits established under paragraph (d)(1) of this section.
(vii) Income eligibility of pregnant women. A pregnant woman who is ineligible for participation in the program because she does not meet income guidelines shall be considered to have satisfied the income guidelines if the guidelines would be met by increasing the number of individuals in her family by the number of embryos or fetuses in utero. The same increased family size may also be used for any of the pregnant woman’s categorically eligible family members. The State agency shall allow applicants to waive this increase in family size.
(viii) Income eligibility of Indian applicants. If an Indian State agency (or a non-Indian State agency which acts on behalf of a local agency operated by an Indian organization or the Indian Health Service) submits census data or other reliable documentation demonstrating to FNS that the majority of the Indian households in a local agency’s service area have incomes at or below the State agency’s income eligibility guidelines, FNS may authorize the State agency to approve the use of an income certification system under which the local Indian agency shall inform each Indian applicant household of the maximum family income allowed for that applicant’s family size. The local agency shall ensure that the applicant, or the applicant’s parent or caretaker, signs a statement that the applicant’s family income does not exceed the maximum. The local agency may verify the income eligibility of any Indian applicant.
(ix) Are instream migrant farmworkers and their family members required to document income eligibility? Certain instream migrant farmworkers and their family members with expired Verification of Certification cards shall be declared to satisfy the State agency’s income standard and income documentation requirements. Such cases include when income of that instream migrant farmworker is determined at least once every 12 months. Such families shall satisfy the income criteria in any State for any subsequent certification while the migrant is instream during the 12-month period following the determination. The determination can occur either in the migrant’s home base area before the migrant has entered the stream for a particular agricultural season, or in an instream area during the agricultural season.
(e) Nutritional risk. To be certified as eligible for the Program, applicants who meet the Program’s eligibility standards specified in paragraph (c) of this section must be determined to be at nutritional risk. A competent professional authority on the staff of the local agency shall determine if a person is at nutritional risk through a medical and/or nutritional assessment. This determination may be based on referral data submitted by a competent professional authority not on the staff of the local agency. Nutritional risk data shall be documented in the participant’s file and shall be used to assess an applicant’s nutritional status and risk; tailor the food package to address nutritional needs; design appropriate nutrition education, including breastfeeding promotion and support; and make referrals to health and social services for follow-up, as necessary and appropriate.
Except as stated in paragraph (e)(1)(v) of this section, at least one determination of nutritional risk must be documented at the time of certification in order for an income eligible applicant to receive WIC benefits.
(1) Determination of nutritional risk. (i) Required nutritional risk data. (A) At a minimum, height or length and weight measurements shall be performed and/or documented in the applicant’s file at the time of certification. In addition, a hematological test for anemia such as a hemoglobin, hematocrit, or free erythrocyte protoporphyrin test shall be performed and/or documented at certification for applicants with no other nutritional risk factor present. For applicants with a qualifying nutritional risk factor present at certification, such test shall be performed and/or documented within 90 days of the date of certification. However, for breastfeeding women 6-12 months postpartum, such hematological tests are not required if a test was performed after the termination of their pregnancy. In addition, such hematological tests are not required, but are permitted, for infants under nine months of age. All infants nine months of age and older (who have not already had a hematological test performed or obtained, between the ages of six and nine months), shall have a hematological test performed between nine and twelve months of age or obtained from referral sources. This hematological test does not have to occur within 90 days of the date of certification. Only one test is required for children between 12 and 24 months of age, and this test should be done 6 months after the infant test, if possible. At the State or local agency’s discretion, the hematological test is not required for children ages two and older who were determined to be within the normal range at their last certification. However, the hematological test shall be performed on such children at least once every 12 months. Hematological test data submitted by a competent professional authority not on the staff of the local agency may be used to establish nutritional risk. However, such referral hematological data must:
(1) Be reflective of a woman applicant’s category, meaning the test must have been taken for pregnant women during pregnancy and for postpartum or breastfeeding women following termination of pregnancy;
(2) Conform to the anemia screening schedule for infants and children as outlined in paragraph (e)(1)(ii)(B) of this section; and
(3) Conform to recordkeeping requirements as outlined in paragraph (i)(4) of this section.
(B) Height or length and weight measurements and, with the exceptions specified in paragraph (e)(1)(v) of this section, hematological tests, shall be obtained for all participants, including those who are determined at nutritional risk based solely on the established nutritional risk status of another person, as provided in paragraphs (e)(1)(iv) and (e)(1)(v) of this section.
(ii) Timing of nutritional risk data. (A) Weight and height or length. Weight and height or length shall be measured not more than 60 days prior to certification for program participation.
(B) Hematological test for anemia. (1) For pregnant, breastfeeding, and postpartum women, and child applicants, the hematological test for anemia shall be performed or obtained from referral sources at the time of certification or within 90 days of the date of certification. The hematological test for anemia may be deferred for up to 90 days from the time of certification for applicants who have at least one qualifying nutritional risk factor present at the time of certification. If no qualifying risk factor is identified, a hematological test for anemia must be performed or obtained from referral sources (with the exception of presumptively eligible pregnant women).
(2) Infants nine months of age and older (who have not already had a hematological test performed, between six and nine months of age, by a competent professional authority or obtained from referral sources), shall between nine and twelve months of age have a hematological test performed or obtained from referral sources. Such a test may be performed more than 90 days after the date of certification.
(3) For pregnant women, the hematological test for anemia shall be performed during their pregnancy. For persons certified as postpartum or breastfeeding women, the hematological test for anemia shall be performed after the termination of their pregnancy. For breastfeeding women who are 6-12 months postpartum, no additional blood test is necessary if a test was performed after the termination of their pregnancy. The participant or parent/guardian shall be informed of the test results when there is a finding of anemia, and notations reflecting the outcome of the tests shall be made in the participant’s file. Nutrition education, food package tailoring, and referral services shall be provided to the participant or parent/guardian, as necessary and appropriate.
(iii) Breastfeeding dyads. A breastfeeding woman may be determined to be a nutritional risk if her breastfed infant has been determined to be a nutritional risk. A breastfed infant can be certified based on the mother’s medical and/or nutritional assessment. A breastfeeding mother and her infant shall be placed in the highest priority level for which either is qualified.
(iv) Infants born to WIC mothers or women who were eligible to participate in WIC. An infant under six months of age may be determined to be at nutritional risk if the infant’s mother was a Program participant during pregnancy or of medical records document that the woman was at nutritional risk during pregnancy because of detrimental or abnormal nutritional conditions detectable by biochemical or anthropometric measurements or other documented nutritionally related medical conditions.
(v) Presumptive eligibility for pregnant women. A pregnant woman who meets the income eligibility standards may be considered presumptively eligible to participate in the program, and may be certified immediately without an evaluation of nutritional risk for a period up to 60 days. A nutritional risk evaluation of such woman shall be completed not later than 60 days after the woman is certified for participation. A hematological test for anemia is not required to be performed within the 60-day period, but rather within 90 days, unless the nutritional risk evaluation performed does not identify a qualifying risk factor. If no qualifying risk factor is identified, a hematological test for anemia must be performed or obtained from referral sources before the 60-day period elapses. Under the subsequent determination process, if the woman does not meet any qualifying nutritional risk criteria, including anemia criteria, the woman shall be determined ineligible and may not participate in the program for the reference pregnancy after the date of the determination. Said applicant may subsequently reapply for program benefits and if found to be both income eligible and at qualifying nutritional risk may participate in the program. Persons found ineligible to participate in the program under this paragraph shall be advised in writing of the ineligibility, of the reasons for the ineligibility, and of the right to a fair hearing. The reasons for the ineligibility shall be properly documented and shall be retained on file at the local agency. In addition, if the nutritional risk evaluation is not completed within the 60-day timeframe, the woman shall be determined ineligible.
(vi) Regression. A WIC participant who is reapplying for WIC benefits may be considered to be at nutritional risk in the next certification period if the competent professional authority determines that the applicant’s nutritional status may regress to the nutritional risk condition(s) certified for in the previous certification period without supplemental foods and/or WIC nutrition services, and if the nutritional risk condition(s) certified for in the previous certification period is/are appropriate to the category of the participant in the subsequent certification based on regression. However, such applicants shall not be considered at nutritional risk based on the possibility of regression for consecutive certification periods. Applicants who are certified based on the possibility of regression should be placed either in the same priority for which they were certified in the previous certification period; a priority level lower than the priority level assigned in the previous certification period, consistent with § 246.7(e)(4); or in Priority VII, if the State agency is using that priority level.
(2) Nutritional risk criteria. The following are examples of nutritional risk conditions which may be used as a basis for certification. These examples include—
(i) Detrimental or abnormal nutritional conditions detectable by biochemical or anthropometric measurements, such as anemia, underweight, overweight, abnormal patterns of weight gain in a pregnant woman, low birth weight in an infant, or stunting in an infant or child;
(ii) Other documented nutritionally related medical conditions, such as clinical signs of nutritional deficiencies, metabolic disorders, pre-eclampsia in pregnant women, failure to thrive in an infant, chronic infections in any person, alcohol or drug abuse or mental retardation in women, lead poisoning, history of high risk pregnancies or factors associated with high risk pregnancies (such as smoking; conception before 16 months postpartum; history of low birth weight, premature births, or neonatal loss; adolescent pregnancy; or current multiple pregnancy) in pregnant women, or congenital malformations in infants or children, or infants born of women with alcohol or drug abuse histories or mental retardation.
(iii) Dietary deficiencies that impair or endanger health, such as inadequate dietary patterns assessed by a 24-hour dietary recall, dietary history, or food frequency checklist; and
(iv) Conditions that predispose persons to inadequate nutritional patterns or nutritionally related medical conditions, such as homelessness or migrancy.
(3) Nutritional risk priorities. In determining nutritional risk, the State agency shall develop and include in its State Plan, specific risk conditions by priority level with indices for identifying these conditions. The criteria shall be used statewide and in accordance with the priority system as set forth in paragraph (e)(4) of this section.
(4) Nutritional risk priority system. The competent professional authority shall fill vacancies which occur after a local agency has reached its maximum participation level by applying the following participant priority system to persons on the local agency’s waiting list. Priorities I through VI shall be utilized in all States. The State agency may, at its discretion, expand the priority system to include Priority VII. The State agency may set income or other sub-priority levels within any of these seven priority levels. The State agency may expand Priority III, IV, or V to include high-risk postpartum women. The State agency may place pregnant or breastfeeding women and infants who are at nutritional risk solely because of homelessness or migrancy in Priority IV; children who are at nutritional risk solely because of homelessness or migrancy in Priority V; and postpartum women who are at nutritional risk solely because of homelessness or migrancy in Priority VI, OR, the State agency may place pregnant, breastfeeding or postpartum women, infants, and children who are at nutritional risk solely because of homelessness or migrancy in Priority VII.
(i) Priority I. Pregnant women, breastfeeding women and infants at nutritional risk as demonstrated by hematological or anthropometric measurements, or other documented nutritionally related medical conditions which demonstrate the need for supplemental foods.
(ii) Priority II. Except those infants who qualify for Priority I, infant up to six months of age of Program participants who participated during pregnancy, and infants up to six months of age born of women who were not Program participants during pregnancy but whose medical records document that they were at nutritional risk during pregnancy due to nutritional conditions detectable by biochemical or anthropometric measurements or other documented nutritionally related medical conditions which demonstrated the person’s need for supplemental foods.
(iii) Priority III. Children at nutritional risk as demonstrated by hematological or anthropometric measurements or other documented medical conditions which demonstrate the child’s need for supplemental foods.
(iv) Priority IV. Pregnant women, breastfeeding women, and infants at nutritional risk because of an inadequate dietary pattern.
(v) Priority V. Children at nutritional risk because of an inadequate dietary pattern.
(vi) Priority VI. Postpartum women at nutritional risk.
(vii) Priority VII. Individuals certified for WIC solely due to homelessness or migrancy and, at State agency option, in accordance with the provisions of paragraph (e)(1)(vi) of this section, previously certified participants who might regress in nutritional status without continued provision of supplemental foods.
(f) Processing standards. The local agencies shall process applicants within the following timeframes:
(1) Waiting lists. When the local agency is serving its maximum caseload, the local agency shall maintain a waiting list of individuals who visit the local agency to express interest in receiving Program benefits and who are likely to be served. However, in no case shall an applicant who requests placement on the waiting list be denied inclusion. State agencies may establish a policy which permits or requires local agencies to accept telephone requests for placement on the waiting list. The waiting list shall include the person’s name, address or phone number, status (e.g., pregnant, breastfeeding, age of applicant), and the date he or she was placed on the waiting list. Individuals shall be notified of their placement on a waiting list within 20 days after they visit the local agency during clinic office hours to request Program benefits. For those State agencies establishing procedures to accept telephone requests for placement on a waiting list, individuals shall be notified of their placement on a waiting list within 20 days after contacting the local agency by phone. The competent professional authority shall apply the participant priority system as specified in paragraph (e)(4) of this section to the waiting list to ensure that the highest priority persons become Program participants first when caseload slots become available.
(2) Timeframes for processing applicants. (i) When the local agency is not serving its maximum caseload, the local agency shall accept applications, make eligibility determinations, notify the applicants of the decisions made and, if the applicants are to be enrolled, issue food, cash-value vouchers or food instruments. All of these actions shall be accomplished within the timeframes set forth below.
(ii) The processing timeframes shall begin when the individual visits the local agency during clinic office hours to make an oral or written request for Program benefits. To ensure that accurate records are kept of the date of such requests, the local agency shall, at the time of each request, record the applicant’s name, address and the date. The remainder of the information necessary to determine eligibility shall be obtained by the time of certification. Medical data taken prior to certification may be used as provided in paragraph (g)(4) of this section.
(iii) The local agency shall act on applications within the following timeframes:
(A) Special nutritional risk applicants shall be notified of their eligibility or ineligibility within 10 days of the date of the first request for Program benefits; except that State agencies may provide an extension of the notification period to a maximum of 15 days for those local agencies which make written request, including a justification of the need for an extension. The State agency shall establish criteria for identifying categories of persons at special nutritional risk who require expedited services. At a minimum, however, these categories shall include pregnant women eligible as Priority I participants, and migrant farmworkers and their family members who soon plan to leave the jurisdiction of the local agency.
(B) All other applicants shall be notified of their eligibility or ineligibility within 20 days of the date of the first request for Program benefits.
(iv) Each local agency using a retail purchase system shall issue a food instrument(s) and if applicable cash-value voucher(s) to the participant at the same time as notification of certification. Such food instrument(s) and cash-value vouchers shall provide benefits for the current month or the remaining portion thereof and shall be redeemable immediately upon receipt by the participant. Local agencies may mail the initial food instrument(s) and if applicable cash-value vouchers with the notification of certification to those participants who meet the criteria for the receipt of food instruments through the mail, as provided in § 246.12(r)(4).
(v) Each local agency with a direct distribution or home delivery system shall issue the supplemental foods to the participant within 10 days of issuing the notification of certification.
(g) Certification periods. (1) Program benefits will be based upon certifications established in accordance with the following timeframes:
| A/an: | Will be certified: |
|---|---|
| (i) Pregnant woman | For the duration of her pregnancy, and up to the last day of the month in which the infant becomes six weeks old or the pregnancy ends (for example, if the infant is born June 4, six weeks after birth would be July 16, and certification would end July 31). |
| (ii) Postpartum woman | Up to the last day of the sixth month after the baby is born or the pregnancy ends (postpartum). |
| (iii) Breastfeeding woman | Approximately every six months. The State agency may permit its local agencies to certify a breastfeeding woman up to the last day of the month in which her infant turns 1 year old, or until the woman ceases breastfeeding, whichever occurs first. |
| (iv) Infant | Approximately every six months. The State agency may permit its local agencies to certify an infant under six months of age up to the last day of the month in which the infant turns 1 year old, provided the quality and accessibility of health care services are not diminished. |
| (v) Child | Approximately every six months ending with the last day of the month in which a child reaches his/her fifth birthday. The State agency may permit its local agencies to certify a child for a period of up to one year, provided the local agency ensures that the child receives the required health and nutrition assessments, as set forth in § 246.11(e)(3). |
(2) The State agency may authorize local agencies under its jurisdiction to establish shorter certification periods than outlined in paragraph (g)(1) of this section on a case-by-case basis. If the State agency exercises this option, it shall issue guidance for use by local agencies in establishing the shorter periods.
(3) In cases where there is difficulty in appointment scheduling for persons referenced in paragraphs (g)(1) (iii), (iv) and (v) of this section, the certification period may be shortened or extended by a period not to exceed 30 days.
(h) Mandatory and optional mid-certification actions. Mid-certification actions are either mandatory or optional as follows:
(1) Mandatory reassessment of income eligibility mid-certification. (i) The local agency must reassess a participant’s income eligibility during the current certification period if the local agency receives information indicating that the participant’s household income has changed. However, such assessments are not required in cases where sufficient time does not exist to effect the change. Sufficient time means 90 days or less before the expiration of the certification period.
(ii) Mandatory disqualification mid-certification for income ineligibility. The local agency must disqualify a participant and any other household members currently receiving WIC benefits who are determined ineligible based on the mid-certification income reassessment. However, adjunctively-eligible WIC participants (as defined in paragraphs (d)(2)(vi)(A) or (d)(2)(vi)(B) of this section) may not be disqualified from the WIC Program solely because they, or certain family members, no longer participate in one of the other specified programs. The State agency will ensure that such participants and other household members currently receiving WIC benefits are disqualified during a certification period only after their income eligibility has been reassessed based on the income screening procedures used for applicants who are not adjunctively eligible.
(2) Mandatory sanctions or other actions for participant violations. The local agency must impose disqualifications, or take other actions in accordance with the procedures set forth in § 246.12(u), in response to participant violations including, but not limited to, the violations listed in the definition of Participant violation in § 246.2.
(3) Optional mid-certification actions. A participant may be disqualified during a certification period for the following reasons:
(i) A State agency may allow local agencies to disqualify a participant for failure to obtain food instruments, cash-value vouchers or supplemental foods for several consecutive months. As specified by the State agency, proof of such failure includes failure to pick up supplemental foods, cash-value vouchers or food instruments, nonreceipt of food instruments or cash-value vouchers (when mailed instruments or vouchers are returned), or failure to have an electronic benefit transfer card revalidated for purchase of supplemental foods; or
(ii) If a State agency experiences funding shortages, it may be necessary to discontinue Program benefits to some certified participants. The State agency must explore alternatives (such as elimination of new certifications) before taking such action. In discontinuing benefits, the State agency will affect the least possible number of participants and those whose nutritional and health status would be least impaired by the action. When a State agency elects to discontinue benefits due to insufficient funds, it will not enroll new participants during that period. The State may discontinue benefits by:
(A) Disqualifying a group of participants; and/or,
(B) Withholding benefits from a group with the expectation of providing benefits again when funds are available.
(i) Certification forms. All certification data for each person certified shall be recorded on a form (or forms) which are provided by the State agency. The information on the forms shall include—
(1) Name and address;
(2) Date of initial visit to apply for participation;
(3) An indication of whether the applicant was physically present at certification and, if not, the reason why an exception was granted or a copy of the document(s) in the file which explains the reason for the exception;
(4) A description of the document(s) used to determine residency and identity or a copy of the document(s) used or the applicant’s written statement when no documentation exists;
(5) Information regarding income eligibility for the Program as specified in paragraph (d) of this section as follows:
(i) A description of the document(s) used to determine income eligibility or a copy of the document(s) in the file;
(ii) An indication that no documentation is available and the reason(s) why or a copy of the applicant’s written statement explaining such circumstances; or
(iii) An indication that the applicant has no income.
(6) The date of certification and the date nutritional risk data were taken if different from the date of certification;
(7) Height or length, weight, and hematological test results;
(8) The specific nutritional risk conditions which established eligibility for the supplemental foods. Documentation should include health history when appropriate to the nutritional risk condition, with the applicant’s or applicant’s parent’s or caretaker’s consent;
(9) The signature and title of the competent professional authority making the nutritional risk determination, and, if different, the signature and title of the administrative person responsible for determining income eligibility under the Program; and
(10) A statement of the rights and obligations under the Program. The statement must contain a signature space, and must be read by or to the applicant, parent, or caretaker. It must contain the following language or alternate language as approved by FNS (see § 246.4(a)(11)(i)), and be signed by the applicant, parent, or caretaker after the statement is read:
I have been advised of my rights and obligations under the Program. I certify that the information I have provided for my eligibility determination is correct, to the best of my knowledge. This certification form is being submitted in connection with the receipt of Federal assistance. Program officials may verify information on this form. I understand that intentionally making a false or misleading statement or intentionally misrepresenting, concealing, or withholding facts may result in paying the State agency, in cash, the value of the food benefits improperly issued to me and may subject me to civil or criminal prosecution under State and Federal law.
(11) If the State agency exercises the authority to use and disclose confidential applicant and participant information for non-WIC purposes pursuant to § 246.26(d)(2), a statement that:
(i) Notifies applicants that the chief State health officer (or the governing authority, in the case of an Indian State agency) may authorize the use and disclosure of information about their participation in the WIC Program for non-WIC purposes;
(ii) Must indicate that such information will be used by State and local WIC agencies and public organizations only in the administration of their programs that serve persons eligible for the WIC Program; and,
(iii) Will be added to the statement required under paragraph (i)(10) of this section. This statement must also indicate that such information can be used by the recipient organizations only for the following:
(A) To determine the eligibility of WIC applicants and participants for programs administered by such organizations;
(B) To conduct outreach for such programs;
(C) To enhance the health, education, or well-being of WIC applicants and participants currently enrolled in those programs;
(D) To streamline administrative procedures in order to minimize burdens on participants and staff; and,
(E) To assess and evaluate a State’s health system in terms of responsiveness to participants’ health care needs and health care outcomes.
(j) Notification of participant rights and responsibilities. In order to inform applicants and participants or their parents or caretakers of Program rights and responsibilities, the following information shall be provided. Where a significant number or proportion of the population eligible to be served needs the information in a language other than English, reasonable steps shall be taken to provide the information in appropriate languages to such persons, considering the scope of the Program and the size and concentration of such population.
(1) During the certification procedure, every Program applicant, parent or caretaker shall be informed of the illegality of dual participation.
(2) At the time of certification, each Program participant, parent or caretaker must read, or have read to him or her, the statement provided in paragraph (i)(10) of this section (or an alternate statement as approved by FNS). In addition, the following sentences (or alternate sentences as approved by FNS) must be read:
(i) “Standards for eligibility and participation in the WIC Program are the same for everyone, regardless of race, color, national origin, age, handicap, or sex.”
(ii) “You may appeal any decision made by the local agency regarding your eligibility for the Program.”
(iii) “The local agency will make health services, nutrition education and breastfeeding support available to you, and you are encouraged to participate in these services.”
(3) If the State agency implements the policy of disqualifying a participant for not picking up supplemental foods, cash-value vouchers or food instruments in accordance with paragraph (h)(3)(i) of this section, it shall provide notice of this policy and of the importance of regularly picking up cash-value vouchers, food instruments or supplemental foods to each participant, parent or caretaker at the time of each certification.
(4) At least during the initial certification visit, each participant, parent or caretaker shall receive an explanation of how the local food delivery system operates and shall be advised of the types of health services available, where they are located, how they may be obtained and why they may be useful.
(5) Persons found ineligible for the Program during a certification visit shall be advised in writing of the ineligibility, of the reasons for the ineligibility, and of the right to a fair hearing. The reasons for ineligibility shall be properly documented and shall be retained on file at the local agency.
(6) A person who is about to be suspended or disqualified from program participation at any time during the certification period shall be advised in writing not less than 15 days before the suspension or disqualification. Such notification shall include the reasons for this action, and the participant’s right to a fair hearing. Further, such notification need not be provided to persons who will be disqualified for not picking up cash-value vouchers, supplemental foods or food instruments in accordance with paragraph (h)(3)(i) of this section.
(7) When a State or local agency pursues collection of a claim pursuant to § 246.23(c) against an individual who has been improperly issued benefits, the person shall be advised in writing of the reason(s) for the claim, the value of the improperly issued benefits which must be repaid, and of the right to a fair hearing.
(8) Each participant, parent or caretaker shall be notified not less than 15 days before the expiration of each certification period that certification for the Program is about to expire.
(9) If a State agency must suspend or terminate benefits to any participant during the participant’s certification period due to a shortage of funds for the Program, it shall issue a notice to such participant in advance, as stipulated in paragraph (j)(6) of this section.
(10) During the certification procedure, every Program applicant, parent or caretaker shall be informed that selling or offering to sell WIC benefits, including cash value vouchers, food instruments, EBT cards, or supplemental foods in person, in print, or on-line is a participant violation.
(k) Transfer of certification. (1) Each State agency shall ensure issuance of a Verification of Certification card to every participant who is a member of a family in which there is a migrant farmworker or any other participant who is likely to be relocating during the certification period. Certifying local agencies shall ensure that Verification of Certification cards are fully completed.
(2) The State agency shall require the receiving local agency to accept Verification of Certification cards from participants, including participants who are migrant farmworkers or members of their families, who have been participating in the Program in another local agency within or outside of the jurisdiction of the State agency. A person with a valid Verification of Certification card shall not be denied participation in the receiving State because the person does not meet that State’s particular eligibility criteria.
(3) The Verification of Certification card is valid until the certification period expires, and shall be accepted as proof of eligibility for Program benefits. If the receiving local agency has waiting lists for participation, the transferring participant shall be placed on the list ahead of all waiting applicants.
(4) The Verification of Certification card shall include the name of the participant, the date the certification was performed, the date income eligibility was last determined, the nutritional risk condition of the participant, the date the certification period expires, the signature and printed or typed name of the certifying local agency official, the name and address of the certifying local agency and an identification number or some other means of accountability. The Verification of Certification card shall be uniform throughout the jurisdiction of the State agency.
(l) Dual participation. The State agency is responsible for the following:
(1) In conjunction with WIC local agencies, the prevention and identification of dual participation within each local agency and between local agencies under the State agency’s jurisdiction, including actions to identify suspected instances of dual participation at least semiannually. The State or local agency must take follow-up action within 120 days of detecting instances of suspected dual participation;
(2) In areas where a local agency serves the same population as an Indian State agency or a CSFP agency, and in areas where geographical or other factors make it likely that participants travel regularly between contiguous local service areas located across State agency borders, entering into an agreement with the other agency for the detection and prevention of dual participation. The agreement must be made in writing and included in the State Plan;
(3) Immediate termination from participation in one of the programs or clinics for participants found in violation due to dual participation; and
(4) In cases of dual participation resulting from intentional misrepresentation, the collection of improperly issued benefits in accordance with § 246.23(c)(1) and disqualification from both programs in accordance with § 246.12(u)(2).
(m) Certification of persons in homeless facilities and institutions. (1) Pregnant, breastfeeding, and postpartum women, infants or children who meet the requirements of paragraph (c) of this section, and who reside in a homeless facility, shall be considered eligible for the Program and shall be treated equally with all other eligible applicants at the local agency where they apply for WIC benefits, Provided that: the State or local agency has taken reasonable steps to:
(i) Establish, to the extent practicable, that the homeless facility meets the following conditions with respect to resident WIC participants:
(A) The homeless facility does not accrue financial or in-kind benefit from a person’s participation in the Program, e.g., by reducing its expenditures for food service because its residents are receiving WIC foods;
(B) Foods provided by the WIC Program are not subsumed into a communal food service, but are available exclusively to the WIC participant for whom they were issued;
(C) The homeless facility places no constraints on the ability of the participant to partake of the supplemental foods, nutrition education and breastfeeding support available under the Program;
(ii) Contact the homeless facility periodically to ensure continued compliance with these conditions; and
(iii) Request the homeless facility to notify the State or local agency if it ceases to meet any of these conditions.
(2) The State agency may authorize or require local agencies to make the Program available to applicants who meet the requirements of paragraph (c) of this section, but who reside in institutions which meet the conditions of paragraphs (n)(1)(i)(A)-(C) of this section with respect to resident WIC participants.
(3) The State or local agency shall attempt to establish to the best of its ability,whether a homeless facility or institution complies with the conditions of paragraphs (n)(1)(i) (A)-(C) of this section with respect to WIC participants. If caseload slots are available, full certification periods shall be provided to the following:
(i) Participants who are residents of a homeless facility or institution which has been found to be in compliance with the conditions of paragraph (n)(1)(i)(A)-(C) of this section;
(ii) Participants who are residents of a homeless facility or institution whose compliance with the conditions of paragraphs (n)(1)(i)(A)-(C) of this section has not yet been established; and
(iii) Participants for whom no other shelter alternative is available in the local agency’s service delivery area.
(4) If a homeless facility or institution has been determined to be noncompliant during the course of a participant’s initial certification period, participants applying for continued benefits may be certified again, but the State agency shall discontinue issuance of WIC foods, except infant formula, to the participant in such accommodation until the accommodation’s compliance is achieved or alternative shelter arrangements are made. If certified, such participants shall continue to be eligible to receive all other WIC benefits, such as nutrition education, including breastfeeding promotion and support, and health care referral services.
(5) The State agency shall continue to the end of their certification periods the participation of residents of a homeless facility or institution which ceases to comply with the conditions of paragraphs (n)(1)(i)(A)-(C) of this section.
(6) As soon as the State or local agency determines that a homeless facility/institution does not meet the conditions of paragraphs (n)(1)(i) (A)-(C) of this section, it shall refer all participants using such accommodation to any other accommodations in the area which meet these conditions.
(n) Drug and other harmful substance abuse screening. When a State agency determines that screening is necessary to fulfill the referral requirements in this part, the State agency must require screening for the use of drugs and other harmful substances. When such screening is required, it shall:
(1) Be limited to the extent the State agency deems necessary to fulfill the referral requirement of § 246.4(a)(8) of this part and the drug and other harmful substance abuse information requirement of § 246.11(a)(3) of this part; and
(2) Be integrated into certification process as part of the medical or nutritional assessment.
(o) Are applicants required to be physically present at certification?—(1) In general. The State or local agency must require all applicants to be physically present at each WIC certification.
(2) Exceptions—(i) Disabilities. The State or local agency must grant an exception to applicants who are qualified individuals with disabilities and are unable to be physically present at the WIC clinic because of their disabilities or applicants whose parents or caretakers are individuals with disabilities that meet this standard. Examples of such situations include:
(A) A medical condition that necessitates the use of medical equipment that is not easily transportable;
(B) A medical condition that requires confinement to bed rest; and
(C) A serious illness that may be exacerbated by coming in to the WIC clinic.
(ii) Receiving ongoing health care. The State agency may exempt from the physical presence requirement, if being physically present would pose an unreasonable barrier, an infant or child who was present at his/her initial WIC certification and is receiving ongoing health care.
(iii) Working parents or caretakers. The State agency may exempt from the physical presence requirement an infant or child who was present at his/her initial WIC certification and was present at a WIC certification or recertification determination within the 1-year period ending on the date of the most recent certification or recertification determination and is under the care of one or more working parents or one or more primary working caretakers whose working status presents a barrier to bringing the infant or child in to the WIC clinic.
(iv) Infants under 8 weeks of age. The State agency may exempt from the physical presence requirement an infant under eight (8) weeks of age who cannot be present at certification for a reason determined appropriate by the local agency, and for whom all necessary certification information is provided.
(p) Certification of qualified aliens. In those cases where a person sponsors a qualified alien, (as the term is defined in the Immigration and Nationality Laws (8 U.S.C.1101 et seq.)), i.e., signs an affidavit of support, the sponsor’s income, including the income of the sponsor’s spouse, shall not be counted in determining the income eligibility of the qualified alien except when the alien is a member of the sponsor’s family or economic unit. Sponsors of qualified aliens are not required to reimburse the State or local agency or the Federal government for WIC Program benefits provided to sponsored aliens. Further, qualified aliens are eligible for the WIC Program without regard to the length of time in the qualifying status.
§ 246.8 Nondiscrimination.
(a) Civil rights requirements. The State agency shall comply with the requirements of title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, Department of Agriculture regulations on nondiscrimination (7 CFR parts 15, 15a and 15b), and FNS instructions to ensure that no person shall, on the grounds of race, color, national origin, age, sex or handicap, be excluded from participation in, be denied benefits of, or be otherwise subjected to discrimination under the Program. Compliance with title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and regulations and instructions issued thereunder shall include, but not be limited to:
(1) Notification to the public of the nondiscrimination policy and complaint rights of participants and potentially eligible persons;
(2) Review and monitoring activity to ensure Program compliance with the nondiscrimination laws and regulations;
(3) Collection and reporting of racial and ethnic participation data as required by title VI of the Civil Rights Act of 1964, which prohibits discrimination in federally assisted programs on the basis of race, color, or national origin; and
(4) Establishment of grievance procedures for handling complaints based on sex and handicap.
(b) Complaints. Persons seeking to file discrimination complaints should write to USDA, Director, Office of Adjudication and Compliance, 1400 Independence Avenue, SW., Washington, DC 20250-9410, or call (800) 795-3272 (voice) or (202) 720-6382 (TTY). All complaints received by State or local agencies which allege discrimination based on race, color, national origin, or age shall be referred to the Secretary of Agriculture or Director, Office of Equal Opportunity. A State or local agency may process complaints which allege discrimination based on sex or handicap if grievance procedures are in place.
(c) Non-English materials. Where a significant number or proportion of the population eligible to be served needs service or information in a language other than English in order effectively to be informed of or to participate in the Program, the State agency shall take reasonable steps considering the size and concentration of such population, to provide information in appropriate languages to such persons. This requirement applies with regard to required Program information except certification forms which are used only by local agency staff. The State agency shall also ensure that all rights and responsibilities listed on the certification form are read to these applicants in the appropriate language.
§ 246.9 Fair hearing procedures for participants.
(a) Availability of hearings. The State agency shall provide a hearing procedure through which any individual may appeal a State or local agency action which results in a claim against the individual for repayment of the cash value of improperly issued benefits or results in the individual’s denial of participation or disqualification from the Program.
(b) Hearing system. The State agency shall provide for either a hearing at the State level or a hearing at the local level which permits the individual to appeal a local agency decision to the State agency. The State agency may adopt local level hearings in some areas, such as those with large caseloads, and maintain only State level hearings in other areas.
(c) Notification of appeal rights. At the time of a claim against an individual for improperly issued benefits or at the time of participation denial or of disqualification from the Program, the State or local agency shall inform each individual in writing of the right to a fair hearing, of the method by which a hearing may be requested, and that any positions or arguments on behalf of the individual may be presented personally or by a representative such as a relative, friend, legal counsel or other spokesperson. Such notification is not required at the expiration of a certification period.
(d) Request for hearing. A request for a hearing is defined as any clear expression by the individual, the individual’s parent, caretaker, or other representative, that he or she desires an opportunity to present his or her case to a higher authority. The State or local agency shall not limit or interfere with the individual’s freedom to request a hearing.
(e) Time limit for request. The State or local agency shall provide individuals a reasonable period of time to request fair hearings; provided that, such time limit is not less than 60 days from the date the agency mails or gives the applicant or participant the notice of adverse action.
(f) Denial or dismissal of request. The State and local agencies shall not deny or dismiss a request for a hearing unless—
(1) The request is not received within the time limit set by the State agency in accordance with paragraph (e) of this section;
(2) The request is withdrawn in writing by the appellant or a representative of the appellant;
(3) The appellant or representative fails, without good cause, to appear at the scheduled hearing; or
(4) The appellant has been denied participation by a previous hearing and cannot provide evidence that circumstances relevant to Program eligibility have changed in such a way as to justify a hearing.
(g) Continuation of benefits. Participants who appeal the termination of benefits within the 15 days advance adverse action notice period provided by § 246.7(j)(6) must continue to receive Program benefits until the hearing official reaches a decision or the certification period expires, whichever occurs first. This does not apply to applicants denied benefits at initial certification, participants whose certification periods have expired, or participants who become categorically ineligible for benefits. Applicants who are denied benefits at initial certification, participants whose certification periods have expired, or participants who become categorically ineligible during a certification period may appeal the denial or termination within the timeframes set by the State agency in accordance with paragraph (e) of this section, but must not receive benefits while awaiting the hearing or its results.
(h) Rules of procedure. State and local agencies shall process each request for a hearing under uniform rules of procedure and shall makes these rules of procedure available for public inspection and copying. At a minimum, such rules shall include: The time limits for requesting and conducting a hearing; all advance notice requirements; the rules of conduct at the hearing; and the rights and responsibilities of the appellant. The procedures shall not be unduly complex or legalistic.
(i) Hearing official. Hearings shall be conducted by an impartial official who does not have any personal stake or involvement in the decision and who was not directly involved in the initial determination of the action being contested. The hearing official shall—
(1) Administer oaths or affirmations if required by the State;
(2) Ensure that all relevant issues are considered;
(3) Request, receive and make part of the hearing record all evidence determined necessary to decide the issues being raised;
(4) Regulate the conduct and course of the hearing consistent with due process to ensure an orderly hearing;
(5) Order, where relevant and necessary, an independent medical assessment or professional evaluation from a source mutually satisfactory to the appellant and the State agency; and
(6) Render a hearing decision which will resolve the dispute.
(j) Conduct of the hearing. The State or lcoal agency shall ensure that the hearing is accessible to the appellant and is held within three weeks from the date the State or local agency received the request for a hearing. The State or local agency shall provide the appellant with a minimum of 10 days advance written notice of the time and place of the hearing and shall enclose an explanation of the hearing procedure with the notice. The State or local agency shall also provide the appellant or representative an opportunity to—
(1) Examine, prior to and during the hearing, the documents and records presented to support the decision under appeal;
(2) Be assisted or represented by an attorney or other persons;
(3) Bring witnesses;
(4) Advance arguments without undue interference;
(5) Question or refute any testimony or evidence, including an opportunity to confront and cross-examine adverse witnesses; and
(6) Submit evidence to establish all pertinent facts and circumstances in the case.
(k) Fair hearing decisions. (1) Decisions of the hearing official shall be based upon the application of appropriate Federal law, regulations and policy as related to the facts of the case as established in the hearing record. The verbatim transcript or recording of testimony and exhibits, or an official report containing the substance of what transpired at the hearing, together with all papers and requests filed in the proceeding, constitute the exclusive record for a final decision by hearing official. The State or local agency shall retain the hearing record in accordance with § 246.25 and make these records available, for copying and inspection, to the appellant or representative at any reasonable time.
(2) The decision by the hearing official shall summarize the facts of the case, specify the reasons for the decision, and identify the supporting evidence and the pertinent regulations or policy. The decision shall become a part of the record.
(3) Within 45 days of the receipt of the request for the hearing, the State or local agency shall notify the appellant or representative in writing of the decision and the reasons for the decision in accordance with paragraph (k)(2) of this section. If the decision is in favor of the appellant and benefits were denied or discontinued, benefits shall begin immediately. If the decision concerns disqualification and is in favor of the agency, as soon as administratively feasible, the local agency shall terminate any continued benefits, as decided by the hearing official. If the decision regarding repayment of benefits by the appellant is in favor of the agency, the State or local agency shall resume its efforts to collect the claim, even during pendency of an appeal of a local-level fair hearing decision to the State agency. The appellant may appeal a local hearing decision to the State agency, provided that the request for appeal is made within 15 days of the mailing date of the hearing decision notice. If the decision being appealed concerns disqualification from the Program, the appellant shall not continue to receive benefits while an appeal to the State agency of a decision rendered on appeal at the local level is pending. The decision of a hearing official at the local level is binding on the local agency and the State agency unless it is appealed to the State level and overturned by the State hearing official.
(4) The State and local agency shall make all hearing records and decisions available for public inspection and copying; however, the names and addresses of participants and other members of the public shall be kept confidential.
(l) Judicial review. If a State level decision upholds the agency action and the appellant expresses an interest in pursuing a higher review of the decision, the State agency shall explain any further State level review of the decision and any State level rehearing process. If these are either unavailable or have been exhausted, the State agency shall explain the right to pursue judicial review of the decision.
Subpart D—Participant Benefits
§ 246.10 Supplemental foods.
(a) General. This section prescribes the requirements for providing supplemental foods to participants. The State agency must ensure that local agencies comply with this section.
(b) State agency responsibilities. (1) State agencies may:
(i) Establish criteria in addition to the minimum Federal requirements in Table 4 of paragraph (e)(12) of this section for the supplemental foods in their States, except that the State agency may not selectively choose which eligible fruits and vegetables are available to participants. These State agency criteria could address, but not be limited to, other nutritional standards, competitive cost, State-wide availability, and participant appeal. For eligible fruits and vegetables, State agencies may restrict packaging, e.g., plastic containers, and package sizes, such as single serving, of processed fruits and vegetables available for purchase with the cash-value voucher. In addition, State agencies may identify certain processed WIC-eligible fruits and vegetables on food lists where the potential exists for vendor or participant confusion in determining authorized WIC-eligible items.
(ii) Make food package adjustments to better accommodate participants who are homeless. At the State agency’s option, these adjustments would include, but not be limited to, issuing authorized supplemental foods in individual serving-size containers to accommodate lack of food storage or preparation facilities.
(2) State agencies must:
(i) Identify the brands of foods and package sizes that are acceptable for use in the Program in their States in accordance with the requirements of this section. State agencies must also provide to local agencies, and include in the State Plan, a list of acceptable foods and their maximum monthly allowances as specified in Tables 1 through 4 of paragraphs (e)(9) through (e)(12) of this section; and
(ii) Ensure that local agencies:
(A) Make available to participants the maximum monthly allowances of authorized supplemental foods, except as noted in paragraph (c) of this section, and abide by the authorized substitution rates for WIC food substitutions as specified in Tables 1 through 3 of paragraphs (e)(9) through (e)(11) of this section;
(B) Make available to participants more than one food from each WIC food category except for the categories of peanut butter and eggs, and any of the WIC-eligible fruits and vegetables (fresh or processed) in each authorized food package as listed in paragraph (e) of this section;
(C) Authorize only a competent professional authority to prescribe the categories of authorized supplemental foods in quantities that do not exceed the regulatory maximum and are appropriate for the participant, taking into consideration the participant’s nutritional and breastfeeding needs; and
(D) Advise participants or their caretaker, when appropriate, that the supplemental foods issued are only for their personal use. However, the supplemental foods are not authorized for participant use while hospitalized on an in-patient basis. In addition, consistent with § 246.7(m)(1)(i)(B), supplemental foods are not authorized for use in the preparation of meals served in a communal food service. This restriction does not preclude the provision or use of supplemental foods for individual participants in a nonresidential setting (e.g., child care facility, family day care home, school, or other educational program); a homeless facility that meets the requirements of § 246.7(m)(1); or, at the State agency’s discretion, a residential institution (e.g., home for pregnant teens, prison, or residential drug treatment center) that meets the requirements currently set forth in § 246.7(m)(1) and (m)(2).
(c) Nutrition tailoring. The full maximum monthly allowances of all supplemental foods in all food packages must be made available to participants if medically or nutritionally warranted. Reductions in these amounts cannot be made for cost-savings, administrative convenience, caseload management, or to control vendor abuse. Reductions in these amounts cannot be made for categories, groups or subgroups of WIC participants. The provision of less than the maximum monthly allowances of supplemental foods to an individual WIC participant in all food packages is appropriate only when:
(1) Medically or nutritionally warranted (e.g., to eliminate a food due to a food allergy);
(2) A participant refuses or cannot use the maximum monthly allowances; or
(3) The quantities necessary to supplement another programs’ contribution to fill a medical prescription would be less than the maximum monthly allowances.
(d) Medical documentation—(1) Supplemental foods requiring medical documentation. Medical documentation is required for the issuance of the following supplemental foods:
(i) Any non-contract brand infant formula;
(ii) Any infant formula prescribed to an infant, child, or adult who receives Food Package III;
(iii) Any exempt infant formula;
(iv) Any WIC-eligible nutritional;
(v) Any authorized supplemental food issued to participants who receive Food Package III;
(vi) Any contract brand infant formula that does not meet the requirements in Table 4 of paragraph (e)(12) of this section.
(2) Medical documentation for other supplemental foods. (i) State agencies may authorize local agencies to issue a non-contract brand infant formula that meets the requirements in Table 4 of paragraph (e)(12) of this section without medical documentation in order to meet religious eating patterns; and
(ii) The State agency has the discretion to require medical documentation for any contract brand infant formula other than the primary contract infant formula and may decide that some contract brand infant formula may not be issued under any circumstances.
(3) Medical Determination. For purposes of this program, medical documentation means that a health care professional licensed to write medical prescriptions under State law has:
(i) Made a medical determination that the participant has a qualifying condition as described in paragraphs (e)(1) through (e)(7) of this section that dictates the use of the supplemental foods, as described in paragraph (d)(1) of this section; and
(ii) Provided the written documentation that meets the technical requirements described in paragraphs (d)(4)(ii) and (d)(4)(iii) of this section.
(4) Technical Requirements—(i) Location. All medical documentation must be kept on file (electronic or hard copy) at the local clinic. The medical documentation kept on file must include the initial telephone documentation, when received as described in paragraph (d)(4)(iii)(B) of this section.
(ii) Content. All medical documentation must include the following:
(A) The name of the authorized WIC formula (infant formula, exempt infant formula, WIC-eligible nutritional) prescribed, including amount needed per day;
(B) The authorized supplemental food(s) appropriate for the qualifying condition(s) and their prescribed amounts;
(C) Length of time the prescribed WIC formula and/or supplemental food is required by the participant;
(D) The qualifying condition(s) for issuance of the authorized supplemental food(s) requiring medical documentation, as described in paragraphs (e)(1) through (e)(7) of this section; and
(E) Signature, date and contact information (or name, date and contact information), if the initial medical documentation was received by telephone and the signed document is forthcoming, of the health care professional licensed by the State to write prescriptions in accordance with State laws.
(iii) Written confirmation—(A) General. Medical documentation must be written and may be provided as an original written document, an electronic document, by facsimile or by telephone to a competent professional authority until written confirmation is received.
(B) Medical documentation provided by telephone. Medical documentation may be provided by telephone to a competent professional authority who must promptly document the information. The collection of the required information by telephone for medical documentation purposes may only be used until written confirmation is received from a health care professional licensed to write medical prescriptions and used only when absolutely necessary on an individual participant basis. The local clinic must obtain written confirmation of the medical documentation within a reasonable amount of time (i.e., one or two week’s time) after accepting the initial medical documentation by telephone.
(5) Medical supervision requirements. Due to the nature of the health conditions of participants who are issued supplemental foods that require medical documentation, close medical supervision is essential for each participant’s dietary management. The responsibility remains with the participant’s health care provider for this medical oversight and instruction. This responsibility cannot be assumed by personnel at the WIC State or local agency. However, it would be the responsibility of the WIC competent professional authority to ensure that only the amounts of supplemental foods prescribed by the participant’s health care provider are issued in the participant’s food package.
(e) Food packages. There are seven food packages available under the Program that may be provided to participants. The authorized supplemental foods must be prescribed from food packages according to the category and nutritional needs of the participants. Breastfeeding assessment and the mother’s plans for breastfeeding serve as the basis for determining food package issuance for all breastfeeding women. The intent of the WIC Program is that all breastfeeding women be supported to exclusively breastfeed their infants and to choose the fully breastfeeding food package without infant formula. Breastfeeding mothers whose infants receive formula from WIC are to be supported to breastfeed to the maximum extent possible with minimal supplementation with infant formula. Formula amounts issued to breastfed infants are to be tailored to meet but not exceed the infant’s nutritional needs. The seven food packages are as follows:
(1) Food Package I—Infants birth through 5 months—(i) Participant category served. This food package is designed for issuance to infant participants from birth through age 5 months who do not have a condition qualifying them to receive Food Package III. The following infant feeding variations are defined for the purposes of assigning food quantities and types in Food Packages I: Fully breastfeeding (the infant doesn’t receive formula from the WIC Program); partially (mostly) breastfeeding (the infant is breastfed but also receives infant formula from WIC up to the maximum allowance described for partially (mostly) breastfed infants in Table 1 of paragraph (e)(9) of this section; and fully formula fed (the infant is not breastfed or is breastfed minimally (the infant receives infant formula from WIC in quantities that exceed those allowed for partially (mostly) breastfed infants).
(ii) Infant feeding age categories—(A) Birth to one month. Two infant food packages are available during the first month after birth—fully breastfeeding and fully formula-feeding. State agencies also have the option to make available a third food package containing not more than one can of powder infant formula in the container size that provides closest to 104 reconstituted fluid ounces to breastfed infants on a case-by-case basis. The infant receiving this food package is considered partially breastfeeding. State agencies choosing to make available a partially breastfeeding package in the first month may not standardize issuance of this food package. Infant formula may not be routinely provided during the first month after birth to breastfed infants in order to support the successful establishment of breastfeeding.
(B) One through 5 months. Three infant food packages are available from 1 months through 5 months—fully breastfeeding, partially (mostly) breastfeeding, or fully formula-fed.
(iii) Infant formula requirements. This food package provides iron-fortified infant formula that is not an exempt infant formula and that meets the requirements in Table 4 of paragraph (e)(12) of this section. The issuance of any contract brand or noncontract brand infant formula that contains less than 10 milligrams of iron per liter (at least 1.5 milligrams iron per 100 kilocalories) at standard dilution is prohibited. Except as specified in paragraph (d) of this section, local agencies must issue as the first choice of issuance the primary contract infant formula, as defined in § 246.2, with all other infant formulas issued as an alternative to the primary contract infant formula. Noncontract brand infant formula and any contract brand infant formula that does not meet the requirements in Table 4 of paragraph (e)(12) of this section may be issued in this food package only with medical documentation of the qualifying condition. A health care professional licensed by the State to write prescriptions must make a medical determination and provide medical documentation that indicates the need for the infant formula. For situations that do not require the use of an exempt infant formula, such determinations include, but are not limited to, documented formula intolerance, food allergy or inappropriate growth pattern. Medical documentation must meet the requirements described in paragraph (d) of this section.
(iv) Physical forms. Local agencies must issue all WIC formulas (WIC formulas mean all infant formula, exempt infant formula and WIC-eligible nutritionals) in concentrated liquid or powder physical forms. Ready-to-feed WIC formulas may be authorized when the competent professional authority determines and documents that:
(A) The participant’s household has an unsanitary or restricted water supply or poor refrigeration;
(B) The person caring for the participant may have difficulty in correctly diluting concentrated or powder forms; or
(C) The WIC infant formula is only available in ready-to-feed.
(v) Authorized category of supplemental foods. Infant formula is the only category of supplemental foods authorized in this food package. Exempt infant formulas and WIC-eligible nutritionals are authorized only in Food Package III. The maximum monthly allowances, allowed options and substitution rates of supplemental foods for infants in Food Packages I are stated in Table 1 of paragraph (e)(9) of this section.
(2) Food Package II—Infants 6 through 11 months—(i) Participant category served. This food package is designed for issuance to infant participants from 6 through 11 months of age who do not have a condition qualifying them to receive Food Package III.
(ii) Infant food packages. Three food packages for infants 6 through 11 months are available — fully breastfeeding, partially (mostly) breastfeeding, or fully formula fed.
(iii) Infant formula requirements. The requirements for issuance of infant formula in Food Package I, specified in paragraphs (e)(1)(iii) and (e)(1)(iv) of this section, also apply to the issuance of infant formula in Food Package II.
(iv) Authorized categories of supplemental foods. Infant formula, infant cereal, and infant foods are the categories of supplemental foods authorized in this food package. The maximum monthly allowances, allowed options and substitution rates of supplemental foods for infants in Food Packages II are stated in Table 1 of paragraph (e)(9) of this section.
(3) Food Package III—Participants with qualifying conditions—(i) Participant category served and qualifying conditions. This food package is reserved for issuance to women, infants and child participants who have a documented qualifying condition that requires the use of a WIC formula (infant formula, exempt infant formula or WIC-eligible nutritional) because the use of conventional foods is precluded, restricted, or inadequate to address their special nutritional needs. Medical documentation must meet the requirements described in paragraph (d) of this section. Participants who are eligible to receive this food package must have one or more qualifying conditions, as determined by a health care professional licensed to write medical prescriptions under State law. The qualifying conditions include but are not limited to premature birth, low birth weight, failure to thrive, inborn errors of metabolism and metabolic disorders, gastrointestinal disorders, malabsorption syndromes, immune system disorders, severe food allergies that require an elemental formula, and life threatening disorders, diseases and medical conditions that impair ingestion, digestion, absorption or the utilization of nutrients that could adversely affect the participant’s nutrition status. This food package may not be issued solely for the purpose of enhancing nutrient intake or managing body weight.
(ii) Non-authorized issuance of Food Package III. This food package is not authorized for:
(A) Infants whose only condition is:
(1) A diagnosed formula intolerance or food allergy to lactose, sucrose, milk protein or soy protein that does not require the use of an exempt infant formula; or
(2) A non-specific formula or food intolerance.
(B) Women and children who have a food intolerance to lactose or milk protein that can be successfully managed with the use of one of the other WIC food packages (i.e., Food Packages IV-VII); or
(C) Any participant solely for the purpose of enhancing nutrient intake or managing body weight without an underlying qualifying condition.
(iii) Restrictions on the issuance of WIC formulas in ready-to-feed (RTF) forms. WIC State agencies must issue WIC formulas (infant formula, exempt infant formula and WIC-eligible nutritionals) in concentrated liquid or powder physical forms unless the requirements for issuing RTF are met as described in paragraph (e)(1)(iv) of this section. In addition to those requirements, there are two additional conditions which may be used to issue RTF in Food Package III:
(A) If a ready-to-feed form better accommodates the participant’s condition; or
(B) If it improves the participant’s compliance in consuming the prescribed WIC formula.
(iv) Unauthorized WIC costs. All apparatus or devices (e.g., enteral feeding tubes, bags and pumps) designed to administer WIC formulas are not allowable WIC costs.
(v) Authorized categories of supplemental foods. The supplemental foods authorized in this food package require medical documentation for issuance and include WIC formula (infant formula, exempt infant formula, and WIC-eligible nutritionals), infant cereal, infant foods, milk, cheese, eggs, canned fish, fresh fruits and vegetables, breakfast cereal, whole wheat/whole grain bread, juice, legumes and/or peanut butter. The maximum monthly allowances, allowed options and substitution rates of supplemental foods for infants in Food Package III are stated in Table 1 of paragraph (e)(9) of this section. The maximum monthly allowances, allowed options, and substitution rates of supplemental foods for children and women in Food Package III are stated in Table 3 of paragraph (e)(11) of this section.
(vi) Coordination with medical payors and other programs that provide or reimburse for formulas. WIC State agencies must coordinate with other Federal, State or local government agencies or with private agencies that operate programs that also provide or could reimburse for exempt infant formulas and WIC-eligible nutritionals benefits to mutual participants. At a minimum, a WIC State agency must coordinate with the State Medicaid Program for the provision of exempt infant formulas and WIC-eligible nutritionals that are authorized or could be authorized under the State Medicaid Program for reimbursement and that are prescribed for WIC participants who are also Medicaid recipients. The WIC State agency is responsible for providing up to the maximum amount of exempt infant formulas and WIC-eligible nutritionals under Food Package III in situations where reimbursement is not provided by another entity.
(4) Food Package IV—Children 1 through 4 years—(i) Participant category served. This food package is designed for issuance to participants 1 through 4 years of age who do not have a condition qualifying them to receive Food Package III.
(ii) Authorized categories of supplemental foods. Milk, breakfast cereal, juice, fresh fruits and vegetables, whole wheat/whole grain bread, eggs, and legumes or peanut butter are the categories of supplemental foods authorized in this food package. The maximum monthly allowances, allowed options and substitution rates of supplemental foods for children in Food Package IV are stated in Table 2 of paragraph (e)(10) of this section.
(5) Food Package V—Pregnant and partially (mostly) breastfeeding women—(i) Participant category served. This food package is designed for issuance to women participants with singleton pregnancies who do not have a condition qualifying them to receive Food Package III. This food package is also designed for issuance to partially (mostly) breastfeeding women participants, up to 1 year postpartum, who do not have a condition qualifying them to receive Food Package III and whose partially (mostly) breastfed infants receive formula from the WIC program in amounts that do not exceed the maximum allowances described in Table 1 of paragraph (e)(9) of this section. Women participants partially (mostly) breastfeeding more than one infant from the same pregnancy, pregnant women fully or partially breastfeeding singleton infants, and women participants pregnant with two or more fetuses, are eligible to receive Food Package VII as described in paragraph (e)(7) of this section.
(ii) Authorized categories of supplemental foods. Milk, breakfast cereal, juice, fresh fruits and vegetables, whole wheat/whole grain bread, eggs, legumes and peanut butter are the categories of supplemental foods authorized in this food package. The maximum monthly allowances, allowed options and substitution rates of supplemental foods for women in Food Package V are stated in Table 2 of paragraph (e)(10) of this section.
(6) Food Package VI—Postpartum women—(i) Participant category served. This food package is designed for issuance to women up to 6 months postpartum who are not breastfeeding their infants, and to breastfeeding women up to 6 months postpartum whose participating infant receives more than the maximum amount of formula allowed for partially (mostly) breastfed infants as described in Table 1 of paragraph (e)(9) of this section, and who do not have a condition qualifying them to receive Food Package III.
(ii) Authorized categories of supplemental foods. Milk, breakfast cereal, juice, fresh fruits and vegetables, eggs, and legumes or peanut butter are the categories of supplemental foods authorized in this food package. The maximum monthly allowances, allowed options and substitution rates of supplemental foods for women in Food Package VI are stated in Table 2 of paragraph (e)(10) of this section.
(7) Food Package VII—Fully breastfeeding—(i) Participant category served. This food package is designed for issuance to breastfeeding women up to 1 year postpartum whose infants do not receive infant formula from WIC (these breastfeeding women are assumed to be exclusively breastfeeding their infants), and who do not have a condition qualifying them to receive Food Package III. This food package is also designed for issuance to women participants pregnant with two or more fetuses, women participants partially (mostly) breastfeeding multiple infants from the same pregnancy, and pregnant women who are also partially (mostly) breastfeeding singleton infants, and who do not have a condition qualifying them to receive Food Package III. Women participants fully breastfeeding multiple infants from the same pregnancy receive 1.5 times the supplemental foods provided in Food Package VII.
(ii) Authorized categories of supplemental foods. Milk, cheese, breakfast cereal, juice, fresh fruits and vegetables, whole wheat/whole grain bread, eggs, legumes, peanut butter, and canned fish are the categories of supplemental foods authorized in this food package. The maximum monthly allowances, allowed options and substitution rates of supplemental foods for women in Food Package VII are stated in Table 2 of paragraph (e)(10) of this section.
(8) Supplemental Foods—Maximum monthly allowances, options and substitution rates, and minimum requirements. Tables 1 through 3 of paragraphs (e)(9) through (e)(11) of this section specify the maximum monthly allowances of foods in WIC food packages and identify WIC food options and substitution rates. Table 4 of paragraph (e)(12) of this section describes the minimum requirements and specifications of supplemental foods in the WIC food packages.
(9) Full nutrition benefit and maximum monthly allowances, options and substitution rates of supplemental foods for infants in Food Packages I, II and III are stated in Table 1 as follows:
Table 1—Full Nutrition Benefit (FNB) and Maximum Monthly Allowances (MMA) of Supplemental Foods for Infants in Food Packages I, II and III
| Foods 1 | Fully formula fed (FF) | Partially (mostly) breastfed (BF/FF) | Fully breastfed (BF) | |||
|---|---|---|---|---|---|---|
| Food Packages I-FF & III-FF A: 0 through 3 months B: 4 through 5 months | Food Packages II-FF & III-FF 6 through 11 months | Food Packages I-BF/FF & III BF/FF (A: 0 to 1 month 2 3) B: 1 through 3 months C: 4 through 5 months | Food Packages II-BF/FF & III BF/FF 6 through 11 months | Food Package I-BF 0 through 5 months | Food Package II-BF 6 through 11 months | |
| WIC Formula 4 5 6 7 8 | A: FNB = 806 fl oz, MMA = 823 fl oz, reconstituted liquid concentrate or 832 fl. oz. RTF or 870 fl oz reconstituted powder | FNB = 624 fl oz, MMA = 630 fl oz, reconstituted liquid concentrate or 643 fl. oz RTF or 696 fl oz reconstituted powder | A: 104 fl oz reconstituted powder B: FNB = 364 fl oz, MMA = 388 fl oz, reconstituted liquid concentrate or 384 fl oz RTF or 435 fl oz reconstituted powder | FNB = 312 fl oz, MMA = 315 fl oz, reconstituted liquid concentrate or 338 fl oz RTF or 384 fl oz reconstituted powder | ||
| B: FNB = 884 fl oz, MMA = 896 fl oz, reconstituted liquid concentrate or 913 fl oz RTF or 960 fl oz reconstituted powder | ||||||
| C: FNB = 442 fl oz, MMA = 460 fl oz, reconstituted liquid concentrate or 474 fl oz RTF or 522 fl oz reconstituted powder | ||||||
| Infant Cereal 9 11 | 24 oz | 24 oz | 24 oz. | |||
| Infant food fruits and vegetables 9 10 11 12 13 | 128 oz | 128 oz | 256 oz. | |||
| Infant food meat 9 | 77.5 oz. | |||||
Table 1 footnotes: (Abbreviations in order of appearance in table): FF = fully formula fed; BF/FF = partially (mostly) breastfed; BF = fully breastfed; RTF = Ready-to-feed; N/A = the supplemental food is not authorized in the corresponding food package.
1 Table 4 of paragraph (e)(12) of this section describes the minimum requirements and specifications for the supplemental foods. The competent professional authority (CPA) is authorized to determine nutritional risk and prescribe supplemental foods as established by State agency policy in Food Packages I and II. In Food Package III, the CPA, as established by State agency policy, is authorized to determine nutritional risk and prescribe supplemental foods per medical documentation.
2 State agencies have the option to issue not more than one can of powder infant formula in the container size that provides closest to 104 reconstituted fluid ounces to breastfed infants on a case-by-case basis.
3 Liquid concentrate and ready-to-feed (RTF) may be substituted at rates that provide comparable nutritive value.
4 WIC formula means infant formula, exempt infant formula, or WIC-eligible nutritionals. Infant formula may be issued for infants in Food Packages I, II and III. Medical documentation is required for issuance of infant formula, exempt infant formula, WIC-eligible nutritionals, and other supplemental foods in Food Package III. Only infant formula may be issued for infants in Food Packages I and II.
5 The full nutrition benefit is defined as the minimum amount of reconstituted fluid ounces of liquid concentrate infant formula as specified for each infant food package category and feeding variation (e.g., Food Package IA-fully formula fed).
6 The maximum monthly allowance is specified in reconstituted fluid ounces for liquid concentrate, RTF liquid, and powder forms of infant formula and exempt infant formula. Reconstituted fluid ounce is the form prepared for consumption as directed on the container.
7 State agencies must provide at least the full nutrition benefit authorized to non-breastfed infants up to the maximum monthly allowance for the physical form of the product specified for each food package category. State agencies must issue whole containers that are all the same size of the same physical form. Infant formula amounts for breastfed infants, even those in the fully formula fed category should be individually tailored to the amounts that meet their nutritional needs.
8 State agencies may round up and disperse whole containers of infant formula over the food package timeframe to allow participants to receive the full nutrition benefit. State agencies must use the methodology described in accordance with paragraph (h)(1) of this section.
9 State agencies may round up and disperse whole containers of infant foods (infant cereal, fruits and vegetables, and meat) over the Food Package timeframe. State agencies must use the methodology described in accordance with paragraph (h)(2) of this section.
10 At State agency option, for infants 6-12 months of age, fresh banana may replace up to 16 ounces of infant food fruit at a rate of 1 pound of bananas per 8 ounces of infant food fruit. State agencies may also substitute fresh bananas at a rate of 1 banana per 4 ounces of jarred infant food fruit, up to a maximum of 16 ounces.
11 In lieu of infant foods (cereal, fruit and vegetables), infants greater than 6 months of age in Food Package III may receive infant formula, exempt infant formula or WIC-eligible nutritionals at the same maximum monthly allowance as infants ages 4 through 5 months of age of the same feeding option.
12 At State agency option, infants 9 months through 11 months in Food Packages II and III may receive a cash-value voucher to purchase fresh (only) fruits and vegetables in lieu of a portion of the infant food fruits and vegetables. Partially (mostly) breastfed infants and fully formula fed infants may receive a $4 cash-value voucher plus 64 ounces of infant food fruits and vegetables; fully breastfeeding infants may receive a $8 cash-value voucher plus 128 ounces of infant food fruit and vegetables.
13 State agencies may not categorically issue cash-value vouchers for infants 9 months through 11 months. The cash-value voucher is to be provided to the participant only after an individual nutrition assessment, as established by State agency policy, and is optional for the participant, i.e., the mother may choose to receive either the maximum allowance of jarred foods or a combination of jarred foods and a fruit and vegetable cash-value voucher for her infant. State agencies must ensure that appropriate nutrition education is provided to the caregiver addressing safe food preparation, storage techniques, and feeding practices to make certain participants are meeting their nutritional needs in a safe and effective manner.
(10) Maximum monthly allowances of supplemental foods in Food Packages IV through VII. The maximum monthly allowances, options and substitution rates of supplemental foods for children and women in Food Package IV through VII are stated in Table 2 as follows:
Table 2—Maximum Monthly Allowances of Supplemental Foods for Children and Women in Food Packages IV, V, VI and VII
| Foods 1 | Children | Women | ||
|---|---|---|---|---|
| Food Package IV: 1 through 4 years | Food Package V: Pregnant and Partially (Mostly) Breastfeeding (up to 1 year postpartum) 2 | Food Package VI: Postpartum (up to 6 months postpartum) 3 | Food Package VII: Fully Breastfeeding (up to 1 year post-partum) 4 5 | |
| Juice, single strength 6 | 128 fl oz | 144 fl oz | 96 fl oz | 144 fl oz. |
| Milk, fluid | 16 qt 7 8 9 10 11 | 22 qt 7 8 9 10 12 | 16 qt 7 8 9 10 12 | 24 qt 7 8 9 10 12. |
| Breakfast cereal 13 | 36 oz | 36 oz | 36 oz | 36 oz. |
| Cheese | N/A | N/A | N/A | 1 lb. |
| Eggs | 1 dozen | 1 dozen | 1 dozen | 2 dozen. |
| Fresh fruits and vegetables 14 15 | $8.00 in cash-value vouchers | $10.00 in cash-value vouchers | $10.00 in cash-value vouchers | $10.00 in cash-value vouchers. |
| Whole wheat or whole grain bread 16 | 2 lb | 1 lb | N/A | 1 lb. |
| Fish (canned) | N/A | N/A | N/A | 30 oz. |
| Legumes, dry 17 | 1 lb or 18 oz | 1 lb and 18 oz | 1 lb or 18 oz | 1 lb and 18 oz. |
Table 2 Footnotes: N/A = the supplemental food is not authorized in the corresponding food package.
1 Table 4 of paragraph (e)(12) of this section describes the minimum requirements and specifications for the supplemental foods. The competent professional authority (CPA) is authorized to determine nutritional risk and prescribe supplemental foods as established by State agency policy.
2 Food Package V is issued to two categories of WIC participants: Women participants with singleton pregnancies; breastfeeding women whose partially (mostly) breastfed infants receive formula from the WIC Program in amounts that do not exceed the maximum formula allowances, as appropriate for the age of the infant as described in Table 1 of paragraph (e)(9) of this section.
3 Food Package VI is issued to two categories of WIC participants: Non-breastfeeding postpartum women and breastfeeding postpartum women whose infants receive more than the maximum infant formula allowances, as appropriate for the age of the infant as described in Table 1 of paragraph (e)(9) of this section.
4 Food Package VII is issued to four categories of WIC participants: Fully breastfeeding women whose infants do not receive formula from the WIC Program; women pregnant with two or more fetuses; women partially (mostly) breastfeeding multiple infants from the same pregnancy; and pregnant women who are also fully or partially (mostly) breastfeeding singleton infants.
5 Women fully breastfeeding multiple infants from the same pregnancy are prescribed 1.5 times the maximum allowances.
6 Combinations of single-strength and concentrated juices may be issued provided that the total volume does not exceed the maximum monthly allowance for single-strength juice.
7 Whole milk is the standard milk for issuance to 1-year-old children (12 through 23 months). At State agency option, fat-reduced milks may be issued to 1-year-old children for whom overweight or obesity is a concern. The need for fat-reduced milks for 1-year-old children must be based on an individual nutritional assessment and consultation with the child’s health care provider if necessary, as established by State agency policy. Lowfat (1%) or nonfat milks are the standard milk for issuance to children ≥24 months of age and women. Reduced fat (2%) milk is authorized only for participants with certain conditions, including but not limited to, underweight and maternal weight loss during pregnancy. The need for reduced fat (2%) milk for children ≥24 months of age (Food Package IV) and women (Food Packages V-VII) must be based on an individual nutritional assessment as established by State agency policy.
8 Evaporated milk may be substituted at the rate of 16 fluid ounces of evaporated milk per 32 fluid ounces of fluid milk or a 1:2 fluid ounce substitution ratio. Dry milk may be substituted at an equal reconstituted rate to fluid milk.
9 For children and women, cheese may be substituted for milk at the rate of 1 pound of cheese per 3 quarts of milk. For children and women in Food Packages IV-VI, no more than 1 pound of cheese may be substituted. For fully breastfeeding women in Food Package VII, no more than 2 pounds of cheese may be substituted for milk. State agencies do not have the option to issue additional amounts of cheese beyond these maximums even with medical documentation. (No more than a total of 4 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for children and women in Food Packages IV-VI. No more than a total of 6 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for women in Food Package VII.)
10 For children and women, yogurt may be substituted for fluid milk at the rate of 1 quart of yogurt per 1 quart of milk; a maximum of 1 quart of milk can be substituted. Additional amounts of yogurt are not authorized. Whole yogurt is the standard yogurt for issuance to 1-year-old children (12 through 23 months). At State agency option, lowfat or nonfat yogurt may be issued to 1-year-old children for whom overweight and obesity is a concern. The need for lowfat or nonfat yogurt for 1-year-old children must be based on an individual nutritional assessment and consultation with the child’s health care provider if necessary, as established by State agency policy. Lowfat or nonfat yogurts are the only types of yogurt authorized for children ≥24 months of age and women. (No more than a total of 4 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for children and women in Food Packages IV-VI. No more than a total of 6 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for women in Food Package VII.)
11 For children, issuance of tofu and soy-based beverage as substitutes for milk must be based on an individual nutritional assessment and consultation with the participant’s health care provider if necessary, as established by State agency policy. Such determination can be made for situations that include, but are not limited to, milk allergy, lactose intolerance, and vegan diets. Soy-based beverage may be substituted for milk for children on a quart for quart basis up to the total maximum allowance of milk. Tofu may be substituted for milk for children at the rate of 1 pound of tofu per 1 quart of milk. (No more than a total of 4 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for children in Food Package IV.) Additional amounts of tofu may be substituted, up to the maximum allowance for fluid milk for lactose intolerance or other reasons, as established by State agency policy.
12 For women, soy-based beverage may be substituted for milk on a quart for quart basis up to the total maximum allowance of milk. Tofu may be substituted for milk at the rate of 1 pound of tofu per 1 quart of milk. (No more than a total of 4 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for women in Food Packages V and VI. No more than a total of 6 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for women in Food Package VII.). Additional amounts of tofu may be substituted, up to the maximum allowances for fluid milk, for lactose intolerance or other reasons, as established by State agency policy.
13 At least one-half of the total number of breakfast cereals on the State agency’s authorized food list must have whole grain as the primary ingredient and meet labeling requirements for making a health claim as a “whole grain food with moderate fat content” as defined in Table 4 of paragraph (e)(12) of this section.
14 Both fresh fruits and fresh vegetables must be authorized by State agencies. Processed fruits and vegetables, i.e., canned (shelf-stable), frozen, and/or dried fruits and vegetables may also be authorized to offer a wider variety and choice for participants. State agencies may choose to authorize one or more of the following processed fruits and vegetables: canned fruit, canned vegetables, frozen fruit, frozen vegetables, dried fruit, and/or dried vegetables. The cash-value voucher may be redeemed for any eligible fruit and vegetable (refer to Table 4 of paragraph (e)(12) of this section and its footnotes). Except as authorized in paragraph (b)(1)(i) of this section, State agencies may not selectively choose which fruits and vegetables are available to participants. For example, if a State agency chooses to offer dried fruits, it must authorize all WIC-eligible dried fruits.
15 The monthly value of the fruit/vegetable cash-value vouchers will be adjusted annually for inflation as described in § 246.16(j).
16 Whole wheat and/or whole grain bread must be authorized. State agencies have the option to also authorize brown rice, bulgur, oatmeal, whole-grain barley, whole wheat macaroni products, or soft corn or whole wheat tortillas on an equal weight basis.
17 Canned legumes may be substituted for dry legumes at the rate of 64 oz. (e.g., four 16-oz cans) of canned beans for 1 pound dry beans. In Food Packages V and VII, both beans and peanut butter must be provided. However, when individually tailoring Food Packages V or VII for nutritional reasons (e.g., food allergy, underweight, participant preference), State agencies have the option to authorize the following substitutions: 1 pound dry and 64 oz. canned beans/peas (and no peanut butter); or 2 pounds dry or 128 oz. canned beans/peas (and no peanut butter); or 36 oz. peanut butter (and no beans).
(11) Maximum monthly allowances of supplemental foods for children and women with qualifying conditions in Food Package III. The maximum monthly allowances, options and substitution rates of supplemental foods for participants with qualifying conditions in Food Package III are stated in Table 3 as follows:
Table 3—Maximum Monthly Allowances (MMA) of Supplemental Foods for Children and Women With Qualifying Conditions in Food Package III
| Foods 1 | Children | Women | ||
|---|---|---|---|---|
| 1 through 4 years | Pregnant and partially breastfeeding (up to 1 year postpartum) 2 | Postpartum (up to 6 months postpartum) 3 | Fully breastfeeding, (up to 1 year post-partum) 4 5 | |
| Juice, single strength 6 | 128 fl oz | 144 fl oz | 96 fl oz | 144 fl oz. |
| WIC Formula 7 8 | 455 fl oz liquid concentrate | 455 fl oz liquid concentrate | 455 fl oz liquid concentrate | 455 fl oz liquid concentrate. |
| Milk | 16 qt 9 10 11 12 13 | 22 qt 9 10 11 12 14 | 16 qt 9 10 11 12 14 | 24 qt 9 10 11 12 14. |
| Breakfast cereal 15 16 | 36 oz | 36 oz | 36 oz | 36 oz. |
| Cheese | N/A | N/A | N/A | 1 lb. |
| Eggs | 1 dozen | 1 dozen | 1 dozen | 2 dozen. |
| Fruits and vegetables 17 18 19 | $8.00 in cash-value vouchers | $10.00 in cash-value vouchers | $10.00 in cash-value vouchers | $10.00 in cash-value vouchers. |
| Whole wheat or whole grain bread 20 | 2 lb | 1 lb | N/A | 1 lb. |
| Fish (canned) | N/A | N/A | N/A | 30 oz. |
| Legumes, dry 21 | 1 lb or 18 oz | 1 lb and 18 oz | 1 lb or 18 oz | 1 lb and 18 oz. |
Table 3 Footnotes: N/A = the supplemental food is not authorized in the corresponding food package.
1 Table 4 of paragraph (e)(12) of this section describes the minimum requirements and specifications for the supplemental foods. The competent professional authority (CPA), as established by State agency policy, is authorized to determine nutritional risk and prescribe supplemental foods per medical documentation.
2 This food package is issued to two categories of WIC participants: Women participants with singleton pregnancies and breastfeeding women whose partially (mostly) breastfed infants receive formula from the WIC Program in amounts that do not exceed the maximum formula allowances as appropriate for the age of the infant as described in Table 1 of paragraph (e)(9) of this section.
3 This food package is issued to two categories of WIC participants: Non-breastfeeding postpartum women and breastfeeding postpartum women whose breastfed infants receive more than the maximum infant formula allowances as appropriate for the age of the infant as described in Table 1 of paragraph (e)(9) of this section.
4 This food package is issued to four categories of WIC participants: Fully breastfeeding women whose infants do not receive formula from the WIC Program; women pregnant with two or more fetuses; women partially (mostly) breastfeeding multiple infants from the same pregnancy, and pregnant women who are also partially (mostly) breastfeeding singleton infants.
5 Women fully breastfeeding multiple infants from the same pregnancy are prescribed 1.5 times the maximum allowances.
6 Combinations of single-strength and concentrated juices may be issued provided that the total volume does not exceed the maximum monthly allowance for single-strength juice.
7 WIC formula means infant formula, exempt infant formula, or WIC-eligible nutritionals.
8 Powder and ready-to-feed may be substituted at rates that provide comparable nutritive value.
9 Whole milk is the standard milk for issuance to 1-year-old children (12 through 23 months). Fat-reduced milks may be issued to 1-year old children as determined appropriate by the health care provider per medical documentation. Lowfat (1%) or nonfat milks are the standard milks for issuance for children ≥24 months of age and women. Whole milk or reduced fat (2%) milk may be substituted for lowfat (1%) or nonfat milk for children ≥24 months of age and women as determined appropriate by the health care provider per medical documentation.
10 Evaporated milk may be substituted at the rate of 16 fluid ounces of evaporated milk per 32 fluid ounces of fluid milk or a 1:2 fluid ounce substitution ratio. Dry milk may be substituted at an equal reconstituted rate to fluid milk.
11 For children and women, cheese may be substituted for milk at the rate of 1 pound of cheese per 3 quarts of milk. For children and women in the pregnant, partially breastfeeding and postpartum food packages, no more than 1 pound of cheese may be substituted. For women in the fully breastfeeding food package, no more than 2 pounds of cheese may be substituted for milk. State agencies do not have the option to issue additional amounts of cheese beyond these maximums even with medical documentation. (No more than a total of 4 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for children and women in the pregnant, partially breastfeeding and postpartum food packages. No more than a total of 6 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for women in the fully breastfeeding food package.)
12 For children and women, yogurt may be substituted for fluid milk at the rate of 1 quart of yogurt per 1 quart of milk; a maximum of 1 quart of milk can be substituted. Additional amounts of yogurt are not authorized. Whole yogurt is the standard yogurt for issuance to 1-year-old children (12 through 23 months). Lowfat or nonfat yogurt may be issued to 1-year-old children (12 months to 23 months) as determined appropriate by the health care provider per medical documentation. Lowfat or nonfat yogurts are the standard yogurt for issuance to children ≥24 months of age and women. Whole yogurt may be substituted for lowfat or nonfat yogurt for children ≥24 months of age and women as determined appropriate by the health care provider per medical documentation. (No more than a total of 4 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for children and women in the pregnant, partially breastfeeding and postpartum food packages. No more than a total of 6 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for women in the fully breastfeeding food package.)
13 For children, soy-based beverage and tofu may be substituted for milk as determined appropriate by the health care provider per medical documentation. Soy-based beverage may be substituted for milk on a quart for quart basis up to the total maximum allowance of milk. Tofu may be substituted for milk for children at the rate of 1 pound of tofu per 1 quart of milk. (No more than a total of 4 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for children.) Additional amounts of tofu may be substituted, up to the maximum allowance for fluid milk for children, as determined appropriate by the health care provider per medical documentation.
14 For women, soy-based beverage may be substituted for milk on a quart for quart basis up to the total maximum monthly allowance of milk. Tofu may be substituted for milk at the rate of 1 pound of tofu per 1 quart of milk. (No more than a total of 4 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for women in the pregnant, partially breastfeeding and postpartum food packages. No more than a total of 6 quarts of milk may be substituted for a combination of cheese, yogurt or tofu for women in the fully breastfeeding food package.) Additional amounts of tofu may be substituted, up to the maximum allowances for fluid milk, as determined appropriate by the health care provider per medical documentation.
15 32 dry ounces of infant cereal may be substituted for 36 ounces of breakfast cereal as determined appropriate by the health care provider per medical documentation.
16 At least one half of the total number of breakfast cereals on the State agency’s authorized food list must have whole grain as the primary ingredient and meet labeling requirements for making a health claim as a “whole grain food with moderate fat content” as defined in Table 4 of paragraph (e)(12) of this section.
17 Both fresh fruits and fresh vegetables must be authorized by State agencies. Processed fruits and vegetables, i.e., canned (shelf-stable), frozen, and/or dried fruits and vegetables may also be authorized to offer a wider variety and choice for participants. State agencies may choose to authorize one or more of the following processed fruits and vegetables: canned fruit, canned vegetables, frozen fruit, frozen vegetables, dried fruit, and/or dried vegetables. The cash-value voucher may be redeemed for any eligible fruit and vegetable (refer to Table 4 of paragraph (e)(12) of this section and its footnotes). Except as authorized in paragraph (b)(1)(i) of this section, State agencies may not selectively choose which fruits and vegetables are available to participants. For example, if a State agency chooses to offer dried fruits, it must authorize all WIC-eligible dried fruits.
18 Children and women whose special dietary needs require the use of pureed foods may receive commercial jarred infant food fruits and vegetables in lieu of the cash-value voucher. Children may receive 128 oz of commercial jarred infant food fruits and vegetables and women may receive 160 oz of commercial jarred infant food fruits and vegetables in lieu of the cash-value voucher. Infant food fruits and vegetables may be substituted for the cash-value voucher as determined appropriate by the health care provider per medical documentation.
19 The monthly value of the fruit/vegetable cash-value vouchers will be adjusted annually for inflation as described in § 246.16(j).
20 Whole wheat and/or whole grain bread must be authorized. State agencies have the option to also authorize brown rice, bulgur, oatmeal, whole-grain barley, whole wheat macaroni products, or soft corn or whole wheat tortillas on an equal weight basis.
21 Canned legumes may be substituted for dry legumes at the rate of 64 oz. (e.g., four 16-oz cans) of canned beans for 1 pound dry beans. In Food Packages V and VII, both beans and peanut butter must be provided. However, when individually tailoring Food Packages V or VII for nutritional reasons (e.g., food allergy, underweight, participant preference), State agencies have the option to authorize the following substitutions: 1 pound dry and 64 oz. canned beans/peas (and no peanut butter); or 2 pounds dry or 128 oz. canned beans/peas (and no peanut butter); or 36 oz. peanut butter (and no beans).
(12) Minimum requirements and specifications for supplemental foods. Table 4 describes the minimum requirements and specifications for supplemental foods in all food packages:
Table 4—Minimum Requirements and Specifications for Supplemental Foods
| Categories/foods | Minimum requirements and specifications |
|---|---|
| WIC FORMULA: | |
| Infant formula | All authorized infant formulas must: (1) Meet the definition for an infant formula in section 201(z) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(z)) and meet the requirements for an infant formula under section 412 of the Federal Food, Drug and Cosmetic Act, as amended (21 U.S.C. 350a) and the regulations at 21 CFR parts 106 and 107; (2) Be designed for enteral digestion via an oral or tube feeding; (3) Provide at least 10 mg iron per liter (at least 1.5 mg iron/100 kilocalories) at standard dilution; (4) Provide at least 67 kilocalories per 100 milliliters (approximately 20 kilocalories per fluid ounce) at standard dilution. (5) Not require the addition of any ingredients other than water prior to being served in a liquid state. |
| Exempt infant formula | All authorized exempt infant formula must: (1) Meet the definition and requirements for an exempt infant formula under section 412(h) of the Federal Food, Drug, and Cosmetic Act as amended (21 U.S.C. 350a(h)) and the regulations at 21 CFR parts 106 and 107; and (2) Be designed for enteral digestion via an oral or tube feeding. |
| WIC-eligible nutritionals. 1 | Certain enteral products that are specifically formulated to provide nutritional support for individuals with a qualifying condition, when the use of conventional foods is precluded, restricted, or inadequate. Such WIC-eligible nutritionals must serve the purpose of a food, meal or diet (may be nutritionally complete or incomplete) and provide a source of calories and one or more nutrients; be designed for enteral digestion via an oral or tube feeding; and may not be a conventional food, drug, flavoring, or enzyme. |
| MILK AND MILK ALTERNATIVES: | |
| Cow’s milk 2 | Must conform to FDA standard of identity for whole, reduced fat, lowfat, or nonfat milks (21 CFR 131.110). Must be pasteurized. May be flavored or unflavored. May be fluid, shelf-stable, evaporated (21 CFR 131.130), or dry. Dry whole milk must conform to FDA standard of identity (21 CFR 131.147). Nonfat dry milk must conform to FDA standard of identity (21 CFR 131.127). Cultured milks must conform to FDA standard of identity for cultured milk, e.g. cultured buttermilk, kefir cultured milk, acidophilus cultured milk (21 CFR 131.112). Acidified milk must conform to FDA standard of identity for acidified milk, e.g., acidified kefir milk, acidified acidophilus milk or acidified buttermilk (21 CFR 131.111). All reduced fat, lowfat, and nonfat cow’s milk types and varieties must contain at least 400 IU of vitamin D per quart (100 IU per cup) and 2000 IU of vitamin A per quart (500 IU per cup). |
| Goat’s milk | Must be pasteurized. May be flavored or unflavored. May be fluid, shelf-stable, evaporated or dry (i.e., powdered). All reduced fat, lowfat, and nonfat goat’s milk must contain at least 400 IU of vitamin D per quart (100 IU per cup) and 2000 IU of vitamin A per quart (500 IU per cup). |
| Cheese | Domestic cheese made from 100 percent pasteurized milk. Must conform to FDA standard of identity (21 CFR part 133); Monterey Jack, Colby, natural Cheddar, Swiss, Brick, Muenster, Provolone, part-skim or whole Mozzarella, pasteurized process American, or blends of any of these cheeses are authorized. Cheeses that are labeled low, free, reduced, less or light in sodium, fat or cholesterol are WIC eligible. |
| Yogurt (cow’s milk) | Yogurt must be pasteurized and conform to FDA standard of identity for whole fat (21 CFR 131.200), lowfat (21 CFR 131.203), or nonfat (21 CFR 131.206); plain or flavored with ≤40 g of total sugars per 1 cup yogurt. Yogurts that are fortified with vitamin A and D and other nutrients may be allowed at the State agency’s option. Yogurts sold with accompanying mix-in ingredients such as granola, candy pieces, honey, nuts and similar ingredients are not authorized. Drinkable yogurts are not authorized. |
| Tofu | Calcium-set tofu prepared with calcium salts (e.g., calcium sulfate). May not contain added fats, sugars, oils, or sodium. Tofu must be calcium-set, i.e., contain calcium salts, but may also contain other coagulants, i.e., magnesium chloride. |
| Soy-based beverage | Must be fortified to meet the following nutrient levels: 276 mg calcium per cup, 8 g protein per cup, 500 IU vitamin A per cup, 100 IU vitamin D per cup, 24 mg magnesium per cup, 222 mg phosphorus per cup, 349 mg potassium per cup, 0.44 mg riboflavin per cup, and 1.1 mcg vitamin B12 per cup, in accordance with fortification guidelines issued by FDA. May be flavored or unflavored. |
| JUICE | Must be pasteurized 100% unsweetened fruit juice. Must contain at least 30 mg of vitamin C per 100 mL of juice. Must conform to FDA standard of identity as appropriate (21 CFR part 146) or vegetable juice must conform to FDA standard of identity as appropriate (21 CFR part 156). With the exception of 100% citrus juices, State agencies must verify the vitamin C content of all State-approved juices. Juices that are fortified with other nutrients may be allowed at the State agency’s option. Juice may be fresh, from concentrate, frozen, canned, or shelf-stable. Blends of authorized juices are allowed. Vegetable juice may be regular or lower in sodium. |
| EGGS | Fresh shell domestic hens’ eggs or dried eggs mix (must conform to FDA standard of identity in 21 CFR 160.105) or pasteurized liquid whole eggs (must conform to FDA standard of identity in 21 CFR 160.115). Hard boiled eggs, where readily available for purchase in small quantities, may be provided for homeless participants. |
| BREAKFAST CEREAL (READY-TO-EAT AND INSTANT AND REGULAR HOT CEREALS) | Must contain a minimum of 28 mg iron per 100 g dry cereal. Must contain ≤21.2 g sucrose and other sugars per 100 g dry cereal (≤6 g per dry oz). At least half of the cereals authorized on a State agency’s food list must have whole grain as the primary ingredient by weight AND meet labeling requirements for making a health claim as a “whole grain food with moderate fat content”. 3 |
| FRUITS AND VEGETABLES (FRESH AND PROCESSED) 4 5 6 8 9 | Any variety of fresh (as defined by 21 CFR 101.95) whole or cut fruit without added sugars. Any variety of fresh (as defined by 21 CFR 101.95) whole or cut vegetable, except white potatoes, without added sugars, fats, or oils (orange yams and sweet potatoes are allowed). Any variety of canned fruits (must conform to FDA standard of identity as appropriate (21 CFR part 145)); including applesauce, juice pack or water pack without added sugars, fats, oils, or salt (i.e., sodium). The fruit must be listed as the first ingredient. Any variety of frozen fruits without added sugars, fats, oils, or salt (i.e., sodium). Any variety of canned or frozen vegetables, except white potatoes (orange yams and sweet potatoes are allowed); without added sugars, fats, or oils. Vegetable must be listed as the first ingredient. May be regular or lower in sodium. Must conform to FDA standard of identity as appropriate (21 CFR part 155). |
| Any type of dried fruits or dried vegetable, except white potatoes (orange yams and sweet potatoes are allowed); without added sugars, fats, oils, or salt (i.e., sodium). Any type of immature beans, peas, or lentils, fresh or in canned 5 forms. Any type of frozen beans (immature or mature). Beans purchased with the CVV may contain added vegetables and fruits, but may not contain added sugars, fats, oils, or meat as purchased. Canned beans, peas, or lentils may be regular or lower in sodium content. State agencies must allow organic forms of WIC-eligible fruits and vegetables. | |
| WHOLE WHEAT BREAD, WHOLE GRAIN BREAD, AND WHOLE GRAIN OPTIONS: | |
| Bread | |
| OR AND Whole grain must be the primary ingredient by weight in all whole grain bread products. AND Must meet FDA labeling requirements for making a health claim as a “whole grain food with moderate fat content”. 3 | |
| Whole Grain Options | Brown rice, bulgur, oats, and whole-grain barley without added sugars, fats, oils, or salt (i.e., sodium). May be instant-, quick-, or regular-cooking. Soft corn or whole wheat tortillas. Soft corn tortillas made from ground masa flour (corn flour) using traditional processing methods are WIC-eligible, e.g., whole corn, corn (masa), whole ground corn, corn masa flour, masa harina, and white corn flour. For whole wheat tortillas, “whole wheat flour” must be the only flour listed in the ingredient list. Whole wheat macaroni products. Must conform to FDA standard of identity (21 CFR 139.138) and have no added sugars, fats, oils, or salt (i.e., sodium). “Whole wheat flour” and/or “whole durum wheat flour” must be the only flours listed in the ingredient list. Other shapes and sizes that otherwise meet the FDA standard of identity for whole wheat macaroni (pasta) products (139.138), and have no added sugars, fats, oils, or salt (i.e., sodium), are also authorized (e.g., whole wheat rotini, and whole wheat penne). |
| FISH (CANNED) 5 | Canned only: Light tuna (must conform to FDA standard of identity (21 CFR 161.190)); Salmon (Pacific salmon must conform to FDA standard of identity (21 CFR 161.170)); Sardines; and Mackerel (N. Atlantic 10 May be packed in water or oil. Pack may include bones or skin. Added sauces and flavorings, e.g., tomato sauce, mustard, lemon, are authorized at the State agency’s option. May be regular or lower in sodium content. |
| MATURE LEGUMES (DRY BEANS AND PEAS) 7 | Any type of mature dry beans, peas, or lentils in dry-packaged or canned 5 forms. Examples include but are not limited to black beans, black-eyed peas, garbanzo beans (chickpeas), great northern beans, white beans (navy and pea beans), kidney beans, mature lima (“butter beans”), fava and mung beans, pinto beans, soybeans/edamame, split peas, lentils, and refried beans. All categories exclude soups. May not contain added sugars, fats, oils, vegetables, fruits or meat as purchased. Canned legumes may be regular or lower in sodium content. 11 Baked beans may only be provided for participants with limited cooking facilities. 11 |
| PEANUT BUTTER | Peanut butter and reduced fat peanut butter (must conform to FDA Standard of Identity (21 CFR 164.150)); creamy or chunky, regular or reduced fat, salted or unsalted forms are allowed. Peanut butters with added marshmallows, honey, jelly, chocolate or similar ingredients are not authorized. |
| INFANT FOODS: | |
| Infant Cereal | Infant cereal must contain a minimum of 45 mg of iron per 100 g of dry cereal. 12 |
| Infant Fruits | Any variety of single ingredient commercial infant food fruit without added sugars, starches, or salt (i.e., sodium). Texture may range from strained through diced. The fruit must be listed as the first ingredient. 13 |
| Infant Vegetables | Any variety of single ingredient commercial infant food vegetables without added sugars, starches, or salt (i.e., sodium). Texture may range from strained through diced. The vegetable must be listed as the first ingredient. 14 |
| Infant Meat | Any variety of commercial infant food meat or poultry, as a single major ingredient, with added broth or gravy. Added sugars or salt (i.e. sodium) are not allowed. Texture may range from pureed through diced. 15 |
Table 4 Footnotes: FDA = Food and Drug Administration of the U.S. Department of Health and Human Services.
1 The following are not considered a WIC-eligible nutritional: Formulas used solely for the purpose of enhancing nutrient intake, managing body weight, addressing picky eaters or used for a condition other than a qualifying condition (e.g., vitamin pills, weight control products, etc.); medicines or drugs, as defined by the Food, Drug and Cosmetic Act (21 U.S.C. 350a) as amended; enzymes, herbs, or botanicals; oral rehydration fluids or electrolyte solutions; flavoring or thickening agents; and feeding utensils or devices (e.g., feeding tubes, bags, pumps) designed to administer a WIC-eligible formula.
2 All authorized milks must conform to FDA standards of identity for milks as defined by 21 CFR part 131 and meet WIC’s requirements for vitamin fortification as specified in Table 4 of paragraph (e)(12) of this section. Additional authorized milks include, but are not limited to: calcium-fortified, lactose-reduced and lactose-free, organic and UHT pasteurized milks. Other milks are permitted at the State agency’s discretion provided that the State agency determines that the milk meets the minimum requirements for authorized milk.
3 FDA
4 Processed refers to frozen, canned,
5 or dried.
5 “Canned” refers to processed food items in cans or other shelf-stable containers, e.g., jars, pouches.
6 The following are not authorized: herbs and spices; creamed vegetables or vegetables with added sauces; mixed vegetables containing noodles, nuts or sauce packets, vegetable-grain (pasta or rice) mixtures; fruit-nut mixtures; breaded vegetables; fruits and vegetables for purchase on salad bars; peanuts or other nuts; ornamental and decorative fruits and vegetables such as chili peppers on a string; garlic on a string; gourds; painted pumpkins; fruit baskets and party vegetable trays; decorative blossoms and flowers, and foods containing fruits such as blueberry muffins and other baked goods. Home-canned and home-preserved fruits and vegetables are not authorized.
7 Mature legumes in dry-packed or canned forms may be purchased with the WIC food instrument only. Immature varieties of fresh or canned beans and frozen beans of any type (immature or mature) may be purchased with the cash-value voucher only. Juices are provided as separate food WIC categories and are not authorized under the fruit and vegetable category.
8 Excludes white potatoes, mixed vegetables containing white potatoes, dried white potatoes; catsup or other condiments; pickled vegetables; olives; soups; juices; and fruit leathers and fruit roll-ups. Canned tomato sauce, tomato paste, salsa and spaghetti sauce without added sugar, fats, or oils are authorized.
9 State agencies have the option to allow only lower sodium canned vegetables for purchase with the cash-value voucher.
10 FDA defines jack mackerel as any of the following six species: Trachurus declivis, trachurus japonicas, trachurur symmetricus, trachurus murphyi, trachurus novaezelandiae, and trachurus lathami in The Seafood List at
11 The following are not authorized in the mature legume category: soups; immature varieties of legumes, such as those used in canned green peas, green beans, snap beans, yellow beans, and wax beans; baked beans with meat, e.g., beans and franks; and beans containing added sugars (with the exception of baked beans), fats, oils, meats, fruits or vegetables.
12 Infant cereals containing infant formula, milk, fruit, or other non-cereal ingredients are not allowed.
13 Mixtures with cereal or infant food desserts (e.g., peach cobbler) are not authorized; however, combinations of single ingredients (e.g., apple-banana) and combinations of single ingredients of fruits and/or vegetables (e.g., apples and squash) are allowed.
14 Combinations of single ingredients (e.g., peas and carrots) and combinations of single ingredients of fruits and/or vegetables (e.g., apples and squash) are allowed. Mixed vegetables with white potato as an ingredient (e.g., mixed vegetables) are authorized. Infant foods containing white potatoes as the primary ingredient are not authorized.
15 No infant food combinations (e.g., meat and vegetables) or dinners (e.g., spaghetti and meatballs) are allowed.
(f) USDA purchase of commodity foods. (1) At the request of a State agency, FNS may purchase commodity foods for the State agency using funds allocated to the State agency. The commodity foods purchased and made available to the State agency must be equivalent to the foods specified in Table 4 of paragraph (e)(12) of this section.
(2) The State agency must:
(i) Distribute the commodity foods to its local agencies or participants; and
(ii) Ensure satisfactory storage facilities and conditions for the commodity foods, including documentation of proper insurance.
(g) Infant formula manufacturer registration. Infant formula manufacturers supplying formula to the WIC Program must be registered with the Secretary of Health and Human Services under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.). Such manufacturers wishing to bid for a State contract to supply infant formula to the program must certify with the State health department that their formulas comply with the Federal Food, Drug, and Cosmetic Act and regulations issued pursuant to the Act.
(h) Rounding up. State agencies may round up to the next whole container for either infant formula or infant foods (infant cereal, fruits, vegetables and meat). State agencies that use the rounding up option must calculate the amount of infant formula or infant foods provided according to the requirements and methodology as described in this section.
(1) Infant Formula. State agencies must use the maximum monthly allowance of reconstituted fluid ounces of liquid concentrate infant formula as specified in Table 1 of paragraph (e)(9) of this section as the full nutritional benefit (FNB) provided by infant formula for each food package category and infant feeding option (e.g., Food Package I A fully formula fed, IA-FF).
(i) For State agencies that use rounding up of infant formula, the FNB is determined over the timeframe (the number of months) that the participant receives the food package. In any given month of the timeframe, the monthly issuance of reconstituted fluid ounces of infant formula may exceed the maximum monthly allowance or fall below the FNB; however, the cumulative average over the timeframe may not fall below the FNB. In addition, the State agency must:
(A) Use the methodology described in paragraph (h)(1)(ii) of this section for calculating and dispersing the rounding up option;
(B) Issue infant formula in whole containers that are all the same size; and
(C) Disperse the number of whole containers as evenly as possible over the timeframe with the largest monthly issuances given in the beginning of the timeframe.
(ii) The methodology to calculate rounding up and dispersing infant formula to the next whole container over the food package timeframe is as follows:
(A) Multiply the FNB amount for the appropriate food package and feeding option (e.g. Food Package I A fully formula fed, IA-FF) by the timeframe the participant will receive the food package to determine the total amount of infant formula to be provided.
(B) Divide the total amount of infant formula to be provided by the yield of the container (in reconstituted fluid ounces) issued by the State agency to determine the total number of containers to be issued during the timeframe that the food package is prescribed.
(C) If the number of containers to be issued does not result in a whole number of containers, the State agency must round up to the next whole container in order to issue whole containers.
(2) Infant foods. (i) State agencies may use the rounding up option to the next whole container of infant food (infant cereal, fruits, vegetables and meats) when the maximum monthly allowance cannot be issued due to varying container sizes of authorized infant foods.
(ii) State agencies that use the rounding up option for infant foods must:
(A) Use the methodology described in paragraph (h)(2)(iii) of this section for calculating and dispersing the rounding up option;
(B) Issue infant foods in whole containers; and
(C) Disperse the number of whole containers as evenly as possible over the timeframe (the number of months the participant will receive the food package).
(iii) The methodology to round up and disperse infant food is as follows:
(A) Multiply the maximum monthly allowance for the infant food by the timeframe the participant will receive the food package to determine the total amount of food to be provided.
(B) Divide the total amount of food provided by the container size issued by the State agency (e.g., ounces) to determine the total number of food containers to be issued during the timeframe that the food package is prescribed.
(C) If the number of containers to be issued does not result in a whole number of containers, the State agency must round up to the next whole container in order to issue whole containers.
(i) Plans for substitutions. (1) The State agency may submit to FNS a plan for substitution of food(s) acceptable for use in the Program to allow for different cultural eating patterns. The plan shall provide the State agency’s justification, including a specific explanation of the cultural eating pattern and other information necessary for FNS to evaluate the plan as specified in paragraph (i)(2) of this section.
(2) FNS will evaluate a State agency’s plan for substitution of foods for different cultural eating patterns based on the following criteria:
(i) Any proposed substitute food must be nutritionally equivalent or superior to the food it is intended to replace.
(ii) The proposed substitute food must be widely available to participants in the areas where the substitute is intended to be used.
(iii) The cost of the substitute food must be equivalent to or less than the cost of the food it is intended to replace.
(3) FNS will make a determination on the proposed plan based on the evaluation criteria specified in paragraph (i)(2) of this section, as appropriate. The State agency shall substitute foods only after receiving the written approval of FNS.
§ 246.11 Nutrition education.
(a) General. (1) Nutrition education including breastfeeding promotion and support, shall be considered a benefit of the Program, and shall be made available at no cost to the participant. Nutrition education including breastfeeding promotion and support, shall be designed to be easily understood by participants, and it shall bear a practical relationship to participant nutritional needs, household situations, and cultural preferences including information on how to select food for themselves and their families. Nutrition education including breastfeeding promotion and support, shall be thoroughly integrated into participant health care plans, the delivery of supplemental foods, and other Program operations.
(2) The State agency shall ensure that nutrition education, including breastfeeding promotion and support, as appropriate, is made available to all participants. Nutrition education may be provided through the local agencies directly, or through arrangements made with other agencies. At the time of certification, the local agency shall stress the positive, long-term benefits of nutrition education and encourage the participant to attend and participate in nutrition education activities. However, individual participants shall not be denied supplemental foods for failure to attend or participate in nutrition education activities.
(3) As an integral part of nutrition education, the State agency shall ensure that local agencies provide drug and other harmful substance abuse information to all pregnant, postpartum, and breastfeeding women and to parents or caretakers of infants and children participating in the program. Drug and other harmful substance abuse information may also be provided to pregnant, postpartum, and breastfeeding women and to parents or caretakers of infants and children participating in local agency services other than the Program.
(b) Goals. Nutrition education including breastfeeding promotion and support, shall be designed to achieve the following two broad goals:
(1) Emphasize the relationship between nutrition, physical activity and health with special emphasis on the nutritional needs of pregnant, postpartum, and breastfeeding women, infants and children under five years of age, and raise awareness about the dangers of using drugs and other harmful substances during pregnancy and while breastfeeding.
(2) Assist the individual who is at nutritional risk in improving health status and achieving a positive change in dietary and physical activity habits, and in the prevention of nutrition-related problems through optimal use of the supplemental foods and other nutritious foods. This is to be taught in the context of the ethnic, cultural and geographic preferences of the participants and with consideration for educational and environmental limitations experienced by the participants.
(c) State agency responsibilities. The State agency shall perform the following activities in carrying out nutrition education responsibilities, including breastfeeding promotion and support,:
(1) Develop and coordinate the nutrition education component of Program operations with consideration of local agency plans, needs and available nutrition education resources.
(2) Provide in-service training and technical assistance for professional and para-professional personnel involved in providing nutrition education to participants at local agencies. The State agency shall also provide training on the promotion and management of breastfeeding to staff at local agencies who will provide information and assistance on this subject to participants.
(3) Identify or develop resources and educational materials for use in local agencies, including breastfeeding promotion and instruction materials, taking reasonable steps to include materials in languages other than English in areas where a significant number or proportion of the population needs the information in a language other than English, considering the size and concentration of such population and, where possible, the reading level of participants.
(4) Develop and implement procedures to ensure that nutrition education is offered to all adult participants and to parents and guardians of infant or child participants, as well as child participants, whenever possible.
(5) Monitor local agency activities to ensure compliance with provisions set forth in paragraphs (c)(7), (d), and (e) of this section.
(6) Establish standards for participant contacts that ensure adequate nutrition education in accordance with paragraph (e) of this section.
(7) Establish standards for breastfeeding promotion and support which include, at a minimum, the following:
(i) A policy that creates a positive clinic environment which endorses breastfeeding as the preferred method of infant feeding;
(ii) A requirement that each local agency designate a staff person to coordinate breastfeeding promotion and support activities;
(iii) A requirement that each local agency incorporate task-appropriate breastfeeding promotion and support training into orientation programs for new staff involved in direct contact with WIC clients; and
(iv) A plan to ensure that women have access to breastfeeding promotion and support activities during the prenatal and postpartum periods.
(8) Determine if local agencies or clinics can share nutrition educational materials with institutions participating in the Child and Adult Care Food Program established under section 17 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1766) at no cost to that program, if a written materials sharing agreement exists between the relevant agencies.
(d) Local agency responsibilities. Local agencies shall perform the following activities in carrying out their nutrition education responsibilities, including breastfeeding promotion and support,:
(1) Make nutrition education, including breastfeeding promotion and support, available or enter into an agreement with another agency to make nutrition education available to all adult participants, and to parents or caretakers of infant and child participants, and whenever possible and appropriate, to child participants. Nutrition education may be provided through the use of individual or group sessions. Educational materials designed for Program participants may be utilized to provide education to pregnant, postpartum, and breastfeeding women and to parents or caretakers of infants and children participating in local agency services other than the program.
(2) Develop an annual local agency nutrition education plan, including breastfeeding promotion and support, consistent with the State agency’s nutrition education component of Program operations and in accordance with this part and FNS guidelines. The local agency shall submit its nutrition education plan to the State agency by a date specified by the State agency.
(e) Participant contacts. (1) The nutrition education including breastfeeding promotion and support, contacts shall be made available through individual or group sessions which are appropriate to the individual participant’s nutritional needs. All pregnant participants shall be encouraged to breastfeed unless contraindicated for health reasons.
(2) During each six-month certification period, at least two nutrition contacts shall be made available to all adult participants and the parents or caretakers of infant and child participants, and wherever possible, the child participants themselves.
(3) Nutrition education contacts shall be made available at a quarterly rate to parents or caretakers of infant and child participants certified for a period in excess of six months. Nutrition education contacts shall be scheduled on a periodic basis by the local agency, but such contacts do not necessarily need to take place in each quarter of the certification period.
(4) The local agency shall document in each participant’s certification file that nutrition education has been given to the participant in accordance with State agency standards, except that the second or any subsequent nutrition education contact during a certification period that is provided to a participant in a group setting may be documented in a masterfile. Should a participant miss a nutrition education appointment, the local agency shall, for purposes of monitoring and further education efforts, document this fact in the participant’s file, or, at the local agency’s discretion, in the case of a second or subsequent missed contact where the nutrition education was offered in a group setting, document this fact in a master file.
(5) An individual care plan shall be provided for a participant based on the need for such plan as determined by the competent professional authority, except that any participant, parent, or caretaker shall receive such plan upon request.
(6) Contacts shall be designed to meet different cultural and language needs of Program participants.
Subpart E—State Agency Provisions
§ 246.12 Food delivery methods.
(a) General. This section sets forth design and operational requirements for food delivery systems. In recognition of emergent electronic benefit transfer (EBT) technology, FNS may, on a case-by-case basis, modify regulatory provisions to the extent FNS determines the particular EBT system provides adequate safeguards that serve the purpose of the provisions being modified. By October 1, 2020, each State agency shall implement EBT statewide, unless granted an exemption under paragraph (w)(2) of this section.
(1) Management. The State agency is responsible for the fiscal management of, and accountability for, food delivery systems under its jurisdiction. The State agency may permit only authorized vendors, farmers and farmers’ markets, home food delivery contractors, and direct distribution sites to accept food instruments and cash-value vouchers.
(2) Design. The State agency must design all food delivery systems to be used by its local agencies.
(3) FNS oversight. FNS may, for a stated cause and by written notice, require revision of a proposed or operating food delivery system and will allow a reasonable time for the State agency to effect such a revision.
(4) 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR part 400 and part 415. All contracts or agreements entered into by the State or local agency for the management or operation of food delivery systems must conform to the requirements of 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR part 400 and part 415.
(b) Uniform food delivery systems. The State agency may operate up to four types of food delivery systems under its jurisdiction—retail, home delivery, direct distribution, or EBT. Each system must be procedurally uniform throughout the jurisdiction of the State agency and must ensure adequate participant access to supplemental foods. When used, food instruments must be uniform within each type of system.
(c) No charge for authorized supplemental foods. The State agency must ensure that participants receive their authorized supplemental foods free of charge.
(d) Compatibility of food delivery system. The State agency must ensure that the food delivery system(s) selected is compatible with the delivery of health and nutrition education, and breastfeeding counseling services to participants.
(e) Retail food delivery systems: General. Retail food delivery systems are systems in which participants, parents or caretakers of infant and child participants, and proxies obtain authorized supplemental foods by submitting a food instrument or cash-value voucher to an authorized vendor.
(f) Retail food delivery systems: Food instrument and cash-value voucher requirements—(1) General. State agencies using retail food delivery systems must use food instruments and cash-value vouchers that comply with the requirements of paragraph (f)(2) of this section.
(2) Printed food instruments and cash-value vouchers. Each printed food instrument and cash-value voucher must clearly bear on its face the following information:
(i) Authorized supplemental foods. The supplemental foods authorized to be obtained with the food instrument or cash-value voucher;
(ii) First date of use. The first date on which the food instrument or cash-value voucher may be used to obtain supplemental foods;
(iii) Last date of use. The last date on which the food instrument or cash-value vouchers may be used to obtain authorized supplemental foods. This date must be a minimum of 30 days from the first date on which it may be used or in the month of February, 28 or 29 days, except for the participant’s first month of issuance, when it may be the end of the month or cycle for which the food instrument or cash-value voucher is valid. Rather than entering a specific last date of use on each instrument or cash-value voucher, all instruments or cash-value vouchers may be printed with a notice that the participant must transact them within a specified number of days after the first date on which the food instrument or cash-value voucher may be used;
(iv) Redemption period. The date by which the vendor must submit the food instrument or cash-value voucher for redemption. This date must be no more than 60 days from the first date on which the food instrument or cash-value voucher may be used. If the date is fewer than 60 days, then the State agency must ensure that the allotted time provides the vendor sufficient time to submit the food instrument or cash-value voucher for redemption without undue burden;
(v) Serial number. A unique and sequential serial number;
(vi) Purchase price. A space for the purchase price to be entered. At the discretion of the State agency, a maximum price may be printed on the food instrument that is higher than the expected purchase price of the authorized supplemental foods for which it will be used, but that is low enough to protect against potential loss of funds. When a maximum price is printed on the food instrument, the space for the purchase price must be clearly distinguishable from the maximum price. For example, the words “purchase price” or “actual amount of sale” could be printed larger and in a different area of the food instrument than the maximum price; and
(vii) Signature space. A space where participants, parents or caretakers of infant or child participants, or proxies must sign.
(3) Vendor identification. The State agency must implement procedures to ensure each food instrument and cash-value voucher submitted for redemption can be identified by the vendor or farmer that submitted the food instrument or cash-value voucher. Each vendor operated by a single business entity must be identified separately. The State agency may identify vendors by requiring that all authorized vendors stamp their names and/or enter a vendor identification number on all food instruments or cash-value vouchers prior to submitting them for redemption.
(4) Split tender transactions. The State agency must implement procedures that allow the participant, authorized representative or proxy to pay the difference when a fruit and vegetable purchase exceeds the value of the cash-value vouchers.
(g) Retail food delivery systems: Vendor authorization—(1) General. The State agency must authorize an appropriate number and distribution of vendors in order to ensure the lowest practicable food prices consistent with adequate participant access to supplemental foods and to ensure effective State agency management, oversight, and review of its authorized vendors.
(2) Vendor limiting criteria. The State agency may establish criteria to limit the number of stores it authorizes. The State agency must apply its limiting criteria consistently throughout its jurisdiction. Any vendor limiting criteria used by the State agency must be included in the State Plan in accordance with § 246.4(a)(14)(ii).
(3) Vendor selection criteria. The State agency must develop and implement criteria to select stores for authorization. The State agency must apply its selection criteria consistently throughout its jurisdiction. The State agency may reassess any authorized vendor at any time during the vendor’s agreement period using the vendor selection criteria in effect at the time of the reassessment and must terminate the agreements with those vendors that fail to meet them. The vendor selection criteria must include the following categories and requirements and must be included in the State Plan in accordance with § 246.4(a)(14)(ii).
(i) Minimum variety and quantity of supplemental foods. The State agency must establish minimum requirements for the variety and quantity of supplemental foods that a vendor applicant must stock to be authorized. These requirements include that the vendor stock at least two different fruits, two different vegetables, and at least one whole grain cereal authorized by the State agency. The State agency may not authorize a vendor applicant unless it determines that the vendor applicant meets these minimums. The State agency may establish different minimums for different vendor peer groups. The State agency may not authorize a vendor applicant unless it determines that the vendor applicant obtains infant formula only from sources included on the State agency’s list described in paragraph (g)(11) of this section.
(ii) Business integrity. The State agency must consider the business integrity of a vendor applicant. In determining the business integrity of a vendor applicant, the State agency may rely solely on facts already known to it and representations made by the vendor applicant on its vendor application. The State agency is not required to establish a formal system of background checks for vendor applicants. Unless denying authorization of a vendor applicant would result in inadequate participant access, the State agency may not authorize a vendor applicant if during the last six years the vendor applicant or any of the vendor applicant’s current owners, officers, or managers have been convicted of or had a civil judgment entered against them for any activity indicating a lack of business integrity. Activities indicating a lack of business integrity include fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, and obstruction of justice. The State agency may add other types of convictions or civil judgments to this list.
(iii) Current SNAP disqualification or civil money penalty for hardship. Unless denying authorization of a vendor applicant would result in inadequate participant access, the State agency may not authorize a vendor applicant that is currently disqualified from SNAP or that has been assessed a SNAP civil money penalty for hardship and the disqualification period that would otherwise have been imposed has not expired.
(iv) Provision of incentive items. The State agency may not authorize or continue the authorization of an above-50-percent vendor, or make payments to an above-50-percent vendor, which provides or indicates an intention to provide prohibited incentive items to customers. Evidence of such intent includes, but is not necessarily limited to, advertising the availability of prohibited incentive items.
(A) The State agency may approve any of the following incentive items to be provided by above-50-percent vendors to customers, at the discretion of the State agency:
(1) Food, merchandise, or services obtained at no cost to the vendor, subject to documentation;
(2) Food, merchandise, or services of nominal value, i.e., having a per item cost of less than $2, subject to documentation;
(3) Food sales and specials which involve no cost or less than $2 in cost to the vendor for the food items involved, subject to documentation, and do not result in a charge to a WIC food instrument for foods in excess of the foods listed on the food instrument;
(4) Minimal customary courtesies of the retail food trade, such as helping the customer to obtain an item from a shelf or from behind a counter, bagging food for the customer, and assisting the customer with loading the food into a vehicle.
(B) The following incentive items are prohibited for above-50-percent vendors to provide to customers:
(1) Services which result in a conflict of interest or the appearance of such conflict for the above-50-percent vendor, such as assistance with applying for WIC benefits;
(2) Lottery tickets provided to customers at no charge or below face value;
(3) Cash gifts in any amount for any reason;
(4) Anything made available in a public area as a complimentary gift which may be consumed or taken without charge;
(5) An allowable incentive item provided more than once per customer per shopping visit, regardless of the number of customers or food instruments involved, unless the incentive items had been obtained by the vendor at no cost or the total value of multiple incentive items provided during one shopping visit would not exceed the less-than-$2 nominal value limit;
(6) Food, merchandise or services of greater than nominal value provided to the customer;
(7) Food, merchandise sold to customers below cost, or services purchased by customers below fair market value;
(8) Any kind of incentive item which incurs a liability for the WIC Program;
(9) Any kind of incentive item which violates any Federal, State, or local law or regulations.
(C) For-profit goods or services offered by the above-50-percent vendor to WIC participants at a fair market value based on comparable for-profit goods or services of other businesses are not incentive items subject to approval or prohibition, except that such goods or services must not constitute a conflict of interest or result in a liability for the WIC Program.
(4) Vendor selection criteria: competitive price. The State agency must establish a vendor peer group system and distinct competitive price criteria and allowable reimbursement levels for each peer group. The State agency must use the competitive price criteria to evaluate the prices a vendor applicant charges for supplemental foods as compared to the prices charged by other vendor applicants and authorized vendors, and must authorize vendors selected from among those that offer the program the most competitive prices. The State agency must consider a vendor applicant’s shelf prices or the prices it bids for supplemental foods, which may not exceed its shelf prices. In establishing competitive price criteria and allowable reimbursement levels, the State agency must consider participant access by geographic area. The State agency must inform all vendors of the criteria for peer groups, and must inform each individual vendor of its peer group assignment.
(i) Vendors that meet the above-50-percent criterion. Vendors that derive more than 50 percent of their annual food sales revenue from WIC food instruments, and new vendor applicants expected to meet this criterion under guidelines approved by FNS, are defined as above-50-percent vendors. Each State agency annually must implement procedures approved by FNS to identify authorized vendors and vendor applicants as either above-50-percent vendors or regular vendors, in accordance with paragraphs (g)(4)(i)(E) and (g)(4)(i)(F) of this section. The State agency must receive FNS certification of its vendor cost containment system under section 246.12(g)(4)(vi) prior to authorizing any above-50-percent vendors. The State agency that chooses to authorize any above-50-percent vendors:
(A) Must distinguish these vendors from other authorized vendors in its peer group system or its alternative cost containment system approved by FNS by establishing separate peer groups for above-50-percent vendors or by placing above-50-percent vendors in peer groups with other vendors and establishing distinct competitive price selection criteria and allowable reimbursement levels for the above-50-percent vendors;
(B) Must reassess the status of new vendors within six months after authorization to determine whether or not the vendors are above-50-percent vendors, and must take necessary follow-up action, such as terminating vendor agreements or reassigning vendors to the appropriate peer group;
(C) Must compare above-50-percent vendors’ prices against the prices of vendors that do not meet the above-50-percent criterion in determining whether the above-50-percent vendors have competitive prices and in establishing allowable reimbursement levels for such vendors; and
(D) Must ensure that the prices of above-50-percent vendors do not inflate the competitive price criteria and allowable reimbursement levels for the peer groups or result in higher total food costs if program participants transact their food instruments at above-50-percent vendors rather than at other vendors that do not meet the above-50-percent criterion. To comply with this requirement, the State agency must compare the average cost of each type of food instrument redeemed by above-50-percent vendors against the average cost of the same type of food instrument redeemed by regular vendors. The average cost per food instrument may be weighted to reflect the relative proportion of food instruments redeemed by each category of vendors in the peer group system. The State agency must compute statewide average costs per food instrument at least quarterly to monitor compliance with this requirement. If average payments per food instrument for above-50-percent vendors exceed average payments per food instrument to regular vendors, then the State agency must take necessary action to ensure compliance, such as adjusting payment levels. Where EBT systems are in use, it may be more appropriate to compare prices of individual WIC food items to ensure that average payments to above-50-percent vendors do not exceed average payments for the same food item to comparable vendors. If FNS determines that a State agency has failed to ensure that above-50-percent vendors do not result in higher costs to the program than if participants transact their food instruments at regular vendors, FNS will establish a claim against the State agency to recover excess food funds expended and will require remedial action. A State agency may exclude partially-redeemed food instruments from a quarterly cost neutrality assessment based on an empirical methodology approved by FNS. A State agency may not exclude food instruments from the quarterly cost neutrality assessment based on a rate of partially-redeemed food instruments.
(E) Must determine whether vendor applicants are expected to be above-50-percent vendors. The State agency must ask vendor applicants whether they expect to derive more than 50 percent of their annual revenue from the sale of food items from transactions involving WIC food instruments. This question applies whether or not the State agency chooses to authorize above-50-percent vendors. A vendor who answers in the affirmative must be treated as an above-50-percent vendor. The State agency must further assess a vendor who answers in the negative, by first calculating WIC redemptions as a percent of total food sales in existing WIC-authorized stores owned by the vendor applicant. Second, the State agency must calculate or request from the vendor applicant the percentage of anticipated food sales by type of payment, i.e., cash, Supplemental Nutrition Assistance Program, WIC, and credit/debit card. Third, the State agency must review either the inventory invoices for food items, or the actual food items present at the preauthorization visit required by paragraph (g)(5) of this section, or both. Fourth, the State agency must determine whether WIC authorization is required in order for the store to open for business. If the vendor would be expected to be an above-50-percent vendor under any of these criteria, then the vendor must be treated as an above-50-percent vendor. State agencies may use additional data sources and methodologies, if approved by FNS.
(F) Must determine whether a currently authorized vendor meets the above-50-percent criterion, based on the State agency’s calculation of WIC redemptions as a percent of the vendor’s total foods sales for the same period. If WIC redemptions are more than 50 percent of the total food sales, the vendor must be deemed to be an above-50-percent vendor. As an initial step in identifying above-50-percent vendors, the State agency may compare each vendor’s WIC redemptions to Supplemental Nutrition Assistance Program redemptions for the same period. If more than one WIC State agency authorizes a particular vendor, then each State agency must obtain and add the WIC redemptions for each State agency that authorizes the vendor to derive the total WIC redemptions. If Supplemental Nutrition Assistance Program redemptions exceed WIC redemptions, no further assessment is required since the vendor would not be an above-50-percent vendor. For vendors whose WIC redemptions exceed their Supplemental Nutrition Assistance Program redemptions, or if this comparison of redemptions was not made, the State agency must obtain from these vendors a statement of the total amount of revenue derived from the sale of foods that could be purchased using Supplemental Nutrition Assistance Program benefits. The State agency must also obtain from these vendors documentation (such as tax documents or other verifiable documentation) to support the amount of food sales claimed by the vendor. After evaluating the documentation received from the vendor, the State agency must calculate WIC redemptions as a percent of total food sales and classify the vendor as meeting or not meeting the above-50- percent criterion. State agencies may use additional methods, if approved by FNS.
(ii) Implementing effective peer groups. The State agency’s methodology for establishing a vendor peer group system must include the following:
(A) At least two criteria for establishing peer groups, one of which must be a measure of geography, such as metropolitan or other statistical areas that form distinct labor and products markets, unless the State agency receives FNS approval to use a single criterion;
(B) Routine collection of vendor shelf prices at least every six months following authorization to monitor vendor compliance with paragraphs (g)(4)(i)(C), (g)(4)(ii)(C), and (g)(4)(iii) of this section and to ensure State agency policies and procedures dependent on shelf price data are efficient and effective. FNS may grant an exemption from this shelf price collection requirement if the State agency demonstrates to FNSs’ satisfaction that an alternative methodology for monitoring vendor compliance with paragraphs (g)(4)(i)(C), (g)(4)(ii)(C), and (g)(4)(iii) of this section is efficient and effective and other State agency policies and procedures are not dependent on frequent collection of shelf price data. Such exemption would remain in effect until the State agency no longer meets the conditions on which the exemption was based, until FNS revokes the exemption, or for three years, whichever occurs first;
(C) Assessment of the effectiveness of the peer groupings and competitive price criteria at least every three years and modification, as necessary, to enhance system performance. The State agency may change a vendor’s peer group whenever the State agency determines that placement in an alternate peer group is warranted.
(iii) Subsequent price increases. The State agency must establish procedures to ensure that a vendor selected for participation in the program does not, subsequent to selection, increase prices to levels that would make the vendor ineligible for authorization.
(iv) Exceptions to competitive price criteria. The State agency may except from the competitive price criteria and allowable reimbursement levels pharmacy vendors that supply only exempt infant formula and/or WIC-eligible nutritionals, and non-profit vendors for which more than 50 percent of their annual revenue from food sales consists of revenue derived from WIC food instruments. A State agency that elects to exempt non-profit vendors from competitive price criteria and/or allowable reimbursements levels must notify FNS, in writing, at least 30 days prior to the effective date of the exemption. The State agency’s notification must indicate the reason for the exemption, including whether the vendor is needed to ensure participant access, why other vendors that are subject to competitive price criteria and allowable reimbursement levels cannot provide the required supplemental foods, the benefits to the program of exempting the non-profit vendor from the competitive price criteria and/or allowable reimbursement levels, the criteria the State agency used to assess the competitiveness of the non-profit vendor’s prices, and how the State agency will determine the reimbursement level for the non-profit vendor. This notification requirement does not apply to State agency contracts and agreements with non-profit health and/or human service agencies or organizations.
(v) Exemptions from the vendor peer group system requirement. With prior written approval from FNS, a State agency may use a vendor cost containment approach other than a peer group system if it meets certain conditions. A State agency that obtains an exemption from the peer group requirement still must establish competitive pricing criteria for vendor selection and allowable reimbursement levels. An exemption from the peer group requirement would remain in effect until the State agency no longer meets the conditions on which the exemption was based, until FNS revokes the exemption, or for three years, whichever occurs first. During the period of the exemption, the State agency must provide annually to FNS documentation that it either authorizes no above-50-percent vendors, or that such vendors’ redemptions continue to represent less than five percent of total WIC redemptions, depending on the terms of the exemption. The conditions for obtaining an exemption from the vendor peer group system are as follows:
(A) The State agency chooses not to authorize any vendors that derive more than 50 percent of their revenue from food sales from WIC food instruments, and the State agency demonstrates to FNS that establishing a vendor peer group system would be inconsistent with efficient and effective operation of the program, or that its alternative cost containment system would be as effective as a peer group system; or
(B) The State agency determines that food instruments redeemed by vendors that meet the above-50-percent criterion comprise less than five percent of the total WIC redemptions in the State in the fiscal year prior to a fiscal year in which the exemption is effective; and the State agency demonstrates to FNS that its alternative vendor cost containment system would be as effective as a vendor peer group system and would not result in higher costs if program participants redeem food instruments at vendors that meet the above-50-percent criterion rather than at vendors that do not meet this criterion.
(vi) Cost containment certification. If a State agency elects to authorize any above-50-percent vendors, the State agency must submit information, in accordance with guidance provided by FNS, to demonstrate that its competitive price criteria and allowable reimbursement levels do not result in average payments per food instrument to these vendors that are higher than average payments per food instrument to comparable vendors that are not above-50-percent vendors. To calculate average payments per food instrument, the State agency must include either all food instruments redeemed by all authorized vendors or a representative sample of the redeemed food instruments. The State agency must add the redemption amounts for all redeemed food instruments of the same type and divide the sum by the number of food instruments of that type. If the State agency does not designate food instruments by type, it must calculate the average payment for each distinct combination of foods prescribed on the food instrument. The State agency may calculate average payments per food instrument type for groups of vendors that meet the above-50-percent criterion and comparable vendors, or the State agency may calculate average payments for each food instrument type for each vendor. State agencies with EBT systems must compare the average cost of each WIC food purchased by participants at above-50-percent vendors with the average cost of each food purchased from comparable vendors. If FNS determines, based on its review of the information provided by the State agency and any other relevant data, that the requirements in this paragraph have been met, FNS will certify that the State agency’s competitive price criteria and allowable reimbursement levels established for above-50-percent vendors do not result in higher average payments per food instrument (or higher costs for each WIC food item in EBT systems). If the State agency’s methodology for establishing competitive price criteria and allowable reimbursement levels fails to meet the requirement of this section regarding average food instrument payments to above-50-percent vendors, FNS will disapprove the State agency’s request to authorize above-50-percent vendors. At least every three years following initial certification, the State agency must submit information which demonstrates that it continues to meet the requirements of this section relative to average payments to above-50-percent vendors. FNS may require annual updates of selected food instrument redemption data.
(vii) Limitation on private rights of action. The competitive pricing provisions of this paragraph do not create a private right of action.
(5) On-site preauthorization visit. The State agency must conduct an on-site visit prior to or at the time of a vendor’s initial authorization.
(6) Sale of store to circumvent WIC sanction. The State agency may not authorize a vendor applicant if the State agency determines the store has been sold by its previous owner in an attempt to circumvent a WIC sanction. The State agency may consider such factors as whether the store was sold to a relative by blood or marriage of the previous owner(s) or sold to any individual or organization for less than its fair market value.
(7) Impact on small businesses. The State agency is encouraged to consider the impact of authorization decisions on small businesses.
(8) Application periods. The State agency may limit the periods during which applications for vendor authorization will be accepted and processed, except that applications must be accepted and processed at least once every three years. The State agency must develop procedures for processing vendor applications outside of its timeframes when it determines there will be inadequate participant access unless additional vendors are authorized.
(9) Data collection at authorization. At the time of application, the State agency must collect the vendor applicant’s SNAP authorization number if the vendor applicant is authorized in that program. In addition, the State agency must collect the vendor applicant’s current shelf prices for supplemental foods.
(10) List of infant formula wholesalers, distributors, and retailers licensed under State law or regulations, and infant formula manufacturers registered with the Food and Drug Administration (FDA). The State agency must provide a list in writing or by other effective means to all authorized WIC retail vendors of the names and addresses of infant formula wholesalers, distributors, and retailers licensed in the State in accordance with State law (including regulations), and infant formula manufacturers registered with the Food and Drug Administration (FDA) that provide infant formula, on at least an annual basis.
(i) Notification to vendors. The State agency is required to notify vendors that they must purchase infant formula only from a source included on the State agency’s list, or from a source on another State agency’s list if the vendor’s State agency permits this, and must only provide such infant formula to participants in exchange for food instruments specifying infant formula. For the purposes of paragraph (g)(11) of this section, “infant formula” means Infant formula, Contract brand infant formula and Non-contract brand infant formula as defined in § 246.2, and infant formula covered by a waiver granted under § 246.16a(e).
(ii) Type of license. If more than one type of license applies, the State agency may choose which one to use.
(iii) Exclusions from list. The State agency may not exclude a State-licensed entity from the list except when:
(A) Specifically required or authorized by State law or regulations; or
(B) The entity does not carry infant formula.
(h) Retail food delivery systems: Vendor agreements—(1) General—(i) Entering into agreements. The State agency must enter into written agreements with all authorized vendors. The agreements must be for a period not to exceed three years. The agreement must be signed by a representative who has legal authority to obligate the vendor and a representative of the State agency. When the vendor representative is obligating more than one vendor, the agreement must specify all vendors covered by the agreement. When more than one vendor is specified in the agreement, the State agency may add or delete an individual vendor without affecting the remaining vendors. The State agency must require vendors to reapply at the expiration of their agreements and must provide vendors with not less than 15 days advance written notice of the expiration of their agreements.
(ii) Delegation to local agencies. The State agency may delegate to its local agencies the authority to sign vendor agreements if the State agency indicates its intention to do so in its State Plan in accordance with § 246.4(a)(14)(iii). In such cases, the State agency must provide supervision and instruction to ensure the uniformity and quality of local agency activities.
(2) Standard vendor agreement. The State agency must use a standard vendor agreement throughout its jurisdiction, although the State agency may make exceptions to meet unique circumstances provided that it documents the reasons for such exceptions.
(3) Vendor agreement provisions. The vendor agreement must contain the following specifications, although the State agency may determine the exact wording to be used:
(i) Acceptance of food instruments and cash value vouchers. The vendor may accept food instruments and cash-value vouchers only from participants, parents or caretakers of infant and child participants, or proxies.
(ii) No substitutions, cash, credit, refunds, or exchanges. The vendor may provide only the authorized supplemental foods listed on the food instrument and cash-value voucher.
(A) The vendor may not provide unauthorized food items, nonfood items, cash, or credit (including rain checks) in exchange for food instruments or cash-value vouchers. The vendor may not provide refunds or permit exchanges for authorized supplemental foods obtained with food instruments or cash-value vouchers, except for exchanges of an identical authorized supplemental food item when the original authorized supplemental food item is defective, spoiled, or has exceeded its “sell by,” “best if used by,” or other date limiting the sale or use of the food item. An identical authorized supplemental food item means the exact brand and size as the original authorized supplemental food item obtained and returned by the participant.
(B) The vendor may provide only the authorized infant formula which the vendor has obtained from sources included on the list described in paragraph (g)(11) of this section to participants in exchange for food instruments specifying infant formula.
(iii) Treatment of participants, parents/caretakers, and proxies. The vendor must offer program participants, parents or caretakers of infant of child participants, and proxies the same courtesies offered to other customers.
(iv) Time periods for transacting food instruments and cash-value vouchers. The vendor may accept a food instrument or cash-value voucher only within the specified time period.
(v) Purchase price on food instruments and cash-value vouchers. The vendor must ensure that the purchase price is entered on food instruments and cash-value vouchers in accordance with the procedures described in the vendor agreement. The State agency has the discretion to determine whether the vendor or the participant enters the purchase price. The purchase price must include only the authorized supplemental food items actually provided and must be entered on the food instrument or cash-value voucher before it is signed.
(vi) Signature on food instruments and cash-value vouchers. For printed food instruments and cash-value vouchers, the vendor must ensure the participant, parent or caretaker of an infant or child participant, or proxy signs the food instrument or cash-value voucher in the presence of the cashier. In EBT systems, a Personal Identification Number (PIN) may be used in lieu of a signature.
(vii) Sales tax prohibition. The vendor may not collect sales tax on authorized supplemental foods obtained with food instruments, or cash-value vouchers.
(viii) Food instrument and cash-value voucher redemption. The vendor must submit food instruments and cash-value vouchers for redemption in accordance with the redemption procedures described in the vendor agreement. The vendor may redeem a food instrument or cash-value voucher only within the specified time period. As part of the redemption procedures, the State agency may make price adjustments to the purchase price on food instruments submitted by the vendor for redemption to ensure compliance with the price limitations applicable to the vendor. As part of the redemption procedures, the State agency must establish and apply limits on the amount of reimbursement allowed for food instruments based on a vendor’s peer group and competitive price criteria. In setting allowable reimbursement levels, the State agency must consider participant access in a geographic area and may include a factor to reflect fluctuations in wholesale prices. In establishing allowable reimbursement levels for above-50-percent vendors the State agency must ensure that reimbursements do not result in higher food costs than if participants transacted their food instruments at vendors that are not above-50-percent vendors, or in higher average payments per food instrument to above-50-percent vendors than average payments to comparable vendors. The State agency may make price adjustments to the purchase price on food instruments submitted by the vendor for redemption to ensure compliance with the allowable reimbursement level applicable to the vendor. A vendor’s failure to remain price competitive is cause for termination of the vendor agreement, even if actual payments to the vendor are within the maximum reimbursement amount. The State agency may exempt vendors that supply only exempt infant formula and/or WIC-eligible nutritionals and non-profit above-50-percent vendors from the allowable reimbursement limits.
(ix) Vendor claims. When the State agency determines the vendor has committed a vendor violation that affects the payment to the vendor, the State agency will delay payment or establish a claim. The State agency may delay payment or establish a claim in the amount of the full purchase price of each food instrument or cash-value voucher that contained the vendor overcharge or other error. The State agency will provide the vendor with an opportunity to justify or correct a vendor overcharge or other error. The vendor must pay any claim assessed by the State agency. In collecting a claim, the State agency may offset the claim against current and subsequent amounts to be paid to the vendor. In addition to denying payment or assessing a claim, the State agency may sanction the vendor for vendor overcharges or other errors in accordance with the State agency’s sanction schedule.
(x) No charge for authorized supplemental foods or restitution from participants. The vendor may not charge participants, parents or caretakers of infant and child participants, or proxies for authorized supplemental foods obtained with food instruments or cash-value vouchers. In addition, the vendor may not seek restitution from these individuals for food instruments or cash-value vouchers not paid or partially paid by the State agency.
(xi) Split tender for cash-value vouchers. The vendor must allow the participant, authorized representative or proxy to pay the difference when a fruit and vegetable purchase exceeds the value of the cash-value vouchers (also known as a split tender transaction).
(xii) Training. At least one representative of the vendor must participate in training annually. Annual vendor training may be provided by the State agency in a variety of formats, including newsletters, videos, and interactive training. The State agency will have sole discretion to designate the date, time, and location of all interactive training, except that the State agency will provide the vendor with at least one alternative date on which to attend such training.
(xiii) Vendor training of staff. The vendor must inform and train cashiers and other staff on program requirements.
(xiv) Accountability for owners, officers, managers, and employees. The vendor is accountable for its owners, officers, managers, agents, and employees who commit vendor violations.
(xv) Monitoring. The vendor may be monitored for compliance with program requirements.
(xvi) Recordkeeping. The vendor must maintain inventory records used for Federal tax reporting purposes and other records the State agency may require for the period of time specified by the State agency in the vendor agreement. Upon request, the vendor must make available to representatives of the State agency, the Department, and the Comptroller General of the United States, at any reasonable time and place for inspection and audit, all food instruments and cash-value vouchers in the vendor’s possession and all program-related records.
(xvii) Termination. The State agency will immediately terminate the agreement if it determines that the vendor has provided false information in connection with its application for authorization. Either the State agency or the vendor may terminate the agreement for cause after providing advance written notice of a period of not less than 15 days to be specified by the State agency.
(xviii) Change in ownership or location or cessation of operations. The vendor must provide the State agency advance written notification of any change in vendor ownership, store location, or cessation of operations. In such instances, the State agency will terminate the vendor agreement, except that the State agency may permit vendors to move short distances without terminating the agreement. The State agency has the discretion to determine the length of advance notice required for vendors reporting changes under this provision, whether a change in location qualifies as a short distance, and whether a change in business structure constitutes a change in ownership.
(xix) Sanctions. In addition to claims collection, the vendor may be sanctioned for vendor violations in accordance with the State agency’s sanction schedule. Sanctions may include administrative fines, disqualification, and civil money penalties in lieu of disqualification. The State agency must notify a vendor in writing when an investigation reveals an initial incidence of a violation for which a pattern of incidences must be established in order to impose a sanction, before another such incidence is documented, unless the State agency determines, in its discretion, on a case-by-case basis, that notifying the vendor would compromise an investigation.
(xx) Conflict of interest. The State agency will terminate the agreement if the State agency identifies a conflict of interest, as defined by applicable State laws, regulations, and policies, between the vendor and the State agency or its local agencies.
(xxi) Criminal penalties. A vendor who commits fraud or abuse in the Program is liable to prosecution under applicable Federal, State or local laws. Those who have willfully misapplied, stolen or fraudulently obtained program funds will be subject to a fine of not more than $25,000 or imprisonment for not more than five years or both, if the value of the funds is $100 or more. If the value is less than $100, the penalties are a fine of not more than $1,000 or imprisonment for not more than one year or both.
(xxii) Not a license/property interest. The vendor agreement does not constitute a license or a property interest. If the vendor wishes to continue to be authorized beyond the period of its current agreement, the vendor must reapply for authorization. If a vendor is disqualified, the State agency will terminate the vendor’s agreement, and the vendor will have to reapply in order to be authorized after the disqualification period is over. In all cases, the vendor’s new application will be subject to the State agency’s vendor selection criteria and any vendor limiting criteria in effect at the time of the reapplication.
(xxiii) Compliance with vendor agreement, statutes, regulations, policies, and procedures. The vendor must comply with the vendor agreement and Federal and State statutes, regulations, policies, and procedures governing the Program, including any changes made during the agreement period.
(xxiv) Nondiscrimination regulations. The vendor must comply with the nondiscrimination provisions of Departmental regulations (parts 15, 15a and 15b of this title).
(xxv) Compliance with vendor selection criteria. The vendor must comply with the vendor selection criteria throughout the agreement period, including any changes to the criteria. Using the current vendor selection criteria, the State agency may reassess the vendor at any time during the agreement period. The State agency will terminate the vendor agreement if the vendor fails to meet the current vendor selection criteria.
(xxvi) Reciprocal SNAP disqualification for WIC Program disqualifications. Disqualification from the WIC Program may result in disqualification as a retailer in SNAP. Such disqualification may not be subject to administrative or judicial review under SNAP.
(xxvii) EBT minimum lane coverage. Point of Sale (POS) terminals used to support the WIC Program shall be deployed in accordance with the minimum lane coverage provisions of § 246.12(z)(2). The State agency may remove excess terminals if actual redemption activity warrants a reduction consistent with the redemption levels outlined in § 246.12(z)(2)(i) and (z)(2)(ii).
(xxviii) EBT third-party processing costs and fees. The vendor shall not charge to the State agency any third-party commercial processing costs and fees incurred by the vendor from EBT multi-function equipment. Commercial transaction processing costs and fees imposed by a third-party processor that the vendor elects to use to connect to the EBT system of the State shall be borne by the vendor.
(xxix) EBT interchange fees. The State agency shall not pay or reimburse the vendor for interchange fees related to WIC EBT transactions.
(xxx) EBT ongoing maintenance and operational costs. The State agency shall not pay for ongoing maintenance, processing fees or operational costs for vendor systems and equipment used to support WIC EBT after the State agency has implemented WIC EBT statewide, unless the equipment is used solely for the WIC Program or the State agency determines the vendor using multi-function equipment is necessary for participant access. This provision also applies to authorized farmers and farmers’ markets. Costs shared by a WIC State agency will be proportional to the usage for the WIC Program.
(xxxi) Compliance with EBT operating rules, standards and technical requirements. The vendor must comply with the Operating rules, standards and technical requirements established by the State agency.
(4) Purchase price and redemption procedures. The State agency must describe in the vendor agreement its purchase price and redemption procedures. The redemption procedures must ensure that the State agency does not pay a vendor more than the price limitations applicable to the vendor.
(5) Sanction schedule. The State agency must include its sanction schedule in the vendor agreement or as an attachment to it. The sanction schedule must include all mandatory and State agency vendor sanctions and must be consistent with paragraph (l) of this section. If the sanction schedule is in State law or regulations or in a document provided to the vendor at the time of authorization, the State agency instead may include an appropriate cross-reference in the vendor agreement.
(6) Actions subject to administrative review and review procedures. The State agency must include the adverse actions a vendor may appeal and those adverse actions that are not subject to administrative review. The State agency also must include a copy of the State agency’s administrative review procedures in the vendor agreement or as an attachment to it or must include a statement that the review procedures are available upon request and the applicable review procedures will be provided along with an adverse action subject to administrative review. These items must be consistent with § 246.18. If these items are in State law or regulations or in a document provided to the vendor at the time of authorization, the State agency instead may include an appropriate cross-reference in the vendor agreement.
(7) Notification of program changes. The State agency must notify vendors of changes to Federal or State statutes, regulations, policies, or procedures governing the Program before the changes are implemented. The State agency should give as much advance notice as possible.
(8) Allowable and prohibited incentive items for above-50-percent vendors. The vendor agreement for an above-50-percent vendor, or another document provided to the vendor and cross-referenced in the agreement, must include the State agency’s policies and procedures for allowing and prohibiting incentive items to be provided by an above-50-percent vendor to customers, consistent with paragraph (g)(3)(iv) of this section.
(i) The State agency must provide written approval or disapproval (including by electronic means such as electronic mail or facsimile) of requests from above-50-percent vendors for permission to provide allowable incentive items to customers;
(ii) The State agency must maintain documentation for the approval process, including invoices or similar documents showing that the cost of each item is either less than the $2 nominal value limit, or obtained at no cost, unless the State agency provides the vendor with a list of pre-approved incentive items at the time of authorization; and
(iii) The State agency must define prohibited incentive items.
(i) Retail food delivery systems: Vendor training—(1) General requirements. The State agency must provide training annually to at least one representative of each vendor. Prior to or at the time of a vendor’s initial authorization, and at least once every three years thereafter, the training must be in an interactive format that includes a contemporaneous opportunity for questions and answers. The State agency must designate the date, time, and location of the interactive training and the audience (e.g., managers, cashiers, etc.) to which the training is directed. The State agency must provide vendors with at least one alternative date on which to attend interactive training. Examples of acceptable vendor training include on-site cashier training, off-site classroom-style train-the-trainer or manager training, a training video, and a training newsletter. All vendor training must be designed to prevent program errors and noncompliance and improve program service.
(2) Content. The annual training must include instruction on the purpose of the Program, the supplemental foods authorized by the State agency, the minimum varieties and quantities of authorized supplemental foods that must be stocked by vendors, the requirement that vendors obtain infant formula only from sources included on a list provided by the State agency, the procedures for transacting and redeeming food instruments and cash-value vouchers, the vendor sanction system, the vendor complaint process, the claims procedures, the State agency’s policies and procedures regarding the use of incentive items, and any changes to program requirements since the last training.
(3) Delegation. The State agency may delegate vendor training to a local agency, a contractor, or a vendor representative if the State agency indicates its intention to do so in its State Plan in accordance with § 246.4(a)(14)(xi). In such cases, the State agency must provide supervision and instruction to ensure the uniformity and quality of vendor training.
(4) Documentation. The State agency must document the content of and vendor participation in vendor training.
(j) Retail food delivery systems: Monitoring vendors and identifying high-risk vendors—(1) General requirements. The State agency must design and implement a system for monitoring its vendors for compliance with program requirements. The State agency may delegate vendor monitoring to a local agency or contractor if the State agency indicates its intention to do so in its State Plan in accordance with § 246.4(a)(14)(iv). In such cases, the State agency must provide supervision and instruction to ensure the uniformity and quality of vendor monitoring.
(2) Routine monitoring. The State agency must conduct routine monitoring visits on a minimum of five percent of the number of vendors authorized by the State agency as of October 1 of each fiscal year in order to survey the types and levels of abuse and errors among authorized vendors and to take corrective actions, as appropriate. The State agency must develop criteria to determine which vendors will receive routine monitoring visits and must include such criteria in its State Plan in accordance with § 246.4(a)(14)(iv).
(3) Identifying high-risk vendors. The State agency must identify high-risk vendors at least once a year using criteria developed by FNS and/or other statistically-based criteria developed by the State agency. FNS will not change its criteria more frequently than once every two years and will provide adequate advance notification of changes prior to implementation. The State agency may develop and implement additional criteria. All State agency-developed criteria must be approved by FNS.
(4) Compliance investigations. (i) High-risk vendors. The State agency must conduct compliance investigations of a minimum of five percent of the number of vendors authorized by the State agency as of October 1 of each fiscal year. The State agency must conduct compliance investigations on all high-risk vendors up to the five percent minimum. The State agency may count toward this requirement a compliance investigation of a high-risk vendor conducted by a Federal, State, or local law enforcement agency. The State agency also may count toward this requirement a compliance investigation conducted by another WIC State agency provided that the State agency implements the option to establish State agency sanctions based on mandatory sanctions imposed by the other WIC State agency, as specified in paragraph (l)(2)(iii) of this section. A compliance investigation of a high-risk vendor may be considered complete when the State agency determines that a sufficient number of compliance buys have been conducted to provide evidence of program noncompliance, when two compliance buys have been conducted in which no program violations are found, or when an inventory audit has been completed.
(ii) Randomly selected vendors. If fewer than five percent of the State agency’s authorized vendors are identified as high-risk, the State agency must randomly select additional vendors on which to conduct compliance investigations sufficient to meet the five-percent requirement. A compliance investigation of a randomly selected vendor may be considered complete when the State agency determines that a sufficient number of compliance buys have been conducted to provide evidence of program noncompliance, when two compliance buys are conducted in which no program violations are found, or when an inventory audit has been completed.
(iii) Prioritization. If more than five percent of the State agency’s vendors are identified as high-risk, the State agency must prioritize such vendors so as to perform compliance investigations of those determined to have the greatest potential for program noncompliance and/or loss of funds.
(5) Monitoring report. For each fiscal year, the State agency must send FNS a summary of the results of its vendor monitoring containing information stipulated by FNS. The report must be sent by February 1 of the following fiscal year. Plans for improvement in the coming year must be included in the State Plan in accordance with § 246.4(a)(14)(iv).
(6) Documentation—(i) Monitoring visits. The State agency must document the following information for all monitoring visits, including routine monitoring visits, inventory audits, and compliance buys:
(A) the date of the monitoring visit, inventory audit, or compliance buy;
(B) the name(s) and signature(s) of the reviewer(s); and
(C) the nature of any problem(s) detected.
(ii) Compliance buys. For compliance buys, the State agency must also document:
(A) the date of the buy;
(B) a description of the cashier involved in each transaction;
(C) the types and quantities of items purchased, current shelf prices or prices charged other customers, and price charged for each item purchased, if available. Price information may be obtained prior to, during, or subsequent to the compliance buy; and
(D) the final disposition of all items as destroyed, donated, provided to other authorities, or kept as evidence.
(k) Retail food delivery systems: Vendor claims—(1) System to review food instruments and cash-value vouchers for vendor claims. The State agency must design and implement a system to review food instruments and cash-value vouchers submitted by vendors for redemption to ensure compliance with the applicable price limitations and to detect questionable food instruments or cash-value vouchers, suspected vendor overcharges, and other errors. This review must examine either all or a representative sample of the food instruments and cash-value vouchers and may be done either before or after the State agency makes payments on the food instruments or cash-value vouchers. The review of food instruments must include a price comparison or other edit designed to ensure compliance with the applicable price limitations and to assist in detecting vendor overcharges. For printed food instruments and cash-value vouchers the system also must detect the following errors—purchase price missing; participant, parent/caretaker, or proxy signature missing; vendor identification missing; food instruments or cash-value vouchers transacted or redeemed after the specified time periods; and, as appropriate, altered purchase price. The State agency must take follow-up action within 120 days of detecting any questionable food instruments or cash-value vouchers, suspected vendor overcharges, and other errors and must implement procedures to reduce the number of errors when possible.
(2) Delaying payment and establishing a claim. When the State agency determines the vendor has committed a vendor violation that affects the payment to the vendor, the State agency must delay payment or establish a claim. Such vendor violations may be detected through compliance investigations, food instrument or cash-value voucher reviews, or other reviews or investigations of a vendor’s operations. The State agency may delay payment or establish a claim in the amount of the full purchase price of each food instrument or cash-value voucher that contained the vendor overcharge or other error.
(3) Opportunity to justify or correct. When payment for a food instrument or cash-value voucher is delayed or a claim is established, the State agency must provide the vendor with an opportunity to justify or correct the vendor overcharge or other error. If satisfied with the justification or correction, the State agency must provide payment or adjust the proposed claim accordingly.
(4) Timeframe and offset. The State agency must deny payment or initiate claims collection action within 90 days of either the date of detection of the vendor violation or the completion of the review or investigation giving rise to the claim, whichever is later. Claims collection action may include offset against current and subsequent amounts owed to the vendor.
(5) Food instruments and cash-value vouchers redeemed after the specified period. With justification and documentation, the State agency may pay vendors for food instruments and cash-value vouchers submitted for redemption after the specified period for redemption. If the total value of such food instruments or cash-value vouchers submitted at one time exceeds $500.00, the State agency must obtain the approval of the FNS Regional Office before payment.
(l) Retail food delivery systems: Vendor sanctions—(1) Mandatory vendor sanctions—(i) Permanent disqualification. The State agency must permanently disqualify a vendor convicted of trafficking in food instruments or cash-value vouchers or selling firearms, ammunition, explosives, or controlled substances (as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802)) in exchange for food instruments or cash-value vouchers. A vendor is not entitled to receive any compensation for revenues lost as a result of such violation. If reflected in its State Plan, the State agency may impose a civil money penalty in lieu of a disqualification for this violation when it determines, in its sole discretion, and documents that:
(A) Disqualification of the vendor would result in inadequate participant access; or
(B) The vendor had, at the time of the violation, an effective policy and program in effect to prevent trafficking; and the ownership of the vendor was not aware of, did not approve of, and was not involved in the conduct of the violation.
(ii) Six-year disqualification. The State agency must disqualify a vendor for six years for:
(A) One incidence of buying or selling food instruments, or cash-value vouchers, for cash (trafficking); or
(B) One incidence of selling firearms, ammunition, explosives, or controlled substances as defined in 21 U.S.C. 802, in exchange for food instruments or cash-value vouchers.
(iii) Three-year disqualification. The State agency must disqualify a vendor for three years for:
(A) One incidence of the sale of alcohol or alcoholic beverages or tobacco products in exchange for food instruments or cash-value vouchers;
(B) A pattern of claiming reimbursement for the sale of an amount of a specific supplemental food item which exceeds the store’s documented inventory of that supplemental food item for a specific period of time;
(C) A pattern of vendor overcharges;
(D) A pattern of receiving, transacting and/or redeeming food instruments or cash-value vouchers outside of authorized channels, including the use of an unauthorized vendor and/or an unauthorized person;
(E) A pattern of charging for supplemental food not received by the participant; or
(F) A pattern of providing credit or non-food items, other than alcohol, alcoholic beverages, tobacco products, cash, firearms, ammunition, explosives, or controlled substances as defined in 21 U.S.C. 802, in exchange for food instruments or cash-value vouchers.
(iv) One-year disqualification. The State agency must disqualify a vendor for one year for:
(A) A pattern of providing unauthorized food items in exchange for food instruments or cash-value vouchers, including charging for supplemental foods provided in excess of those listed on the food instrument; or
(B) A pattern of an above-50-percent vendor providing prohibited incentive items to customers as set forth in paragraph (g)(3)(iv) of this section, in accordance with the State agency’s policies and procedures required by paragraph (h)(8) of this section.
(v) Second mandatory sanction. When a vendor, who previously has been assessed a sanction for any of the violations in paragraphs (l)(1)(ii) through (l)(1)(iv) of this section, receives another sanction for any of these violations, the State agency must double the second sanction. Civil money penalties may only be doubled up to the limits allowed under paragraph (l)(1)(x)(C) of this section.
(vi) Third or subsequent mandatory sanction. When a vendor, who previously has been assessed two or more sanctions for any of the violations listed in paragraphs (l)(1)(ii) through (l)(1)(iv) of this section, receives another sanction for any of these violations, the State agency must double the third sanction and all subsequent sanctions. The State agency may not impose civil money penalties in lieu of disqualification for third or subsequent sanctions for violations listed in paragraphs (l)(1)(ii) through (l)(1)(iv) of this section.
(vii) Disqualification based on a SNAP disqualification. The State agency must disqualify a vendor who has been disqualified from SNAP. The disqualification must be for the same length of time as SNAP disqualification, may begin at a later date than SNAP disqualification, and is not subject to administrative or judicial review under the WIC Program.
(viii) Voluntary withdrawal or nonrenewal of agreement. The State agency may not accept voluntary withdrawal of the vendor from the Program as an alternative to disqualification for the violations listed in paragraphs (l)(1)(i) through (l)(1)(iv) of this section, but must enter the disqualification on the record. In addition, the State agency may not use nonrenewal of the vendor agreement as an alternative to disqualification.
(ix) Participant access determinations. Prior to disqualifying a vendor for a SNAP disqualification pursuant to paragraph (l)(1)(vii) of this section or for any of the violations listed in paragraphs (l)(1)(ii) through (l)(1)(iv) of this section, the State agency must determine if disqualification of the vendor would result in inadequate participant access. The State agency must make the participant access determination in accordance with paragraph (l)(8) of this section. If the State agency determines that disqualification of the vendor would result in inadequate participant access, the State agency must impose a civil money penalty in lieu of disqualification. However, as provided in paragraph (l)(1)(vi) of this section, the State agency may not impose a civil money penalty in lieu of disqualification for third or subsequent sanctions for violations in paragraphs (l)(1)(ii) through (l)(1)(iv) of this section. The State agency must include documentation of its participant access determination and any supporting documentation in the file of each vendor who is disqualified or receives a civil money penalty in lieu of disqualification.
(x) Civil money penalty formula. For each violation subject to a mandatory sanction, the State agency must use the following formula to calculate a civil money penalty imposed in lieu of disqualification:
(A) Determine the vendor’s average monthly redemptions for at least the 6-month period ending with the month immediately preceding the month during which the notice of adverse action is dated;
(B) Multiply the average monthly redemptions figure by 10 percent (.10);
(C) Multiply the product from paragraph (l)(1)(x)(B) of this section by the number of months for which the store would have been disqualified. This is the amount of the civil money penalty, provided that the civil money penalty shall not exceed the maximum amount specified in § 3.91(b)(3)(v) of this title for each violation. For a violation that warrants permanent disqualification, the amount of the civil money penalty shall be the maximum amount specified in § 3.91(b)(3)(v) of this title for each violation. When during the course of a single investigation the State agency determines a vendor has committed multiple violations, the State agency must impose a CMP for each violation. The total amount of civil money penalties imposed for violations investigated as part of a single investigation may not exceed the amount specified in § 3.91(b)(3)(v) of this title as the maximum penalty for violations occurring during a single investigation.
(xi) Notification to FNS. The State agency must provide the appropriate FNS office with a copy of the notice of adverse action and information on vendors it has either disqualified or imposed a civil money penalty in lieu of disqualification for any of the violations listed in paragraphs (l)(1)(i) through (l)(1)(iv) of this section. This information must include the name of the vendor, address, identification number, the type of violation(s), and the length of disqualification or the length of the disqualification corresponding to the violation for which the civil money penalty was assessed, and must be provided within 15 days after the vendor’s opportunity to file for a WIC administrative review has expired or all of the vendor’s WIC administrative reviews have been completed.
(xii) Multiple violations during a single investigation. When during the course of a single investigation the State agency determines a vendor has committed multiple violations (which may include violations subject to State agency sanctions), the State agency must disqualify the vendor for the period corresponding to the most serious mandatory violation. However, the State agency must include all violations in the notice of administration action. If a mandatory sanction is not upheld on appeal, then the State agency may impose a State agency-established sanction.
(2) State agency vendor sanctions. (i) General requirements. The State agency may impose sanctions for vendor violations that are not specified in paragraphs (l)(1)(i) through (l)(1)(iv) of this section as long as such vendor violations and sanctions are included in the State agency’s sanction schedule. State agency sanctions may include disqualifications, civil money penalties assessed in lieu of disqualification, and administrative fines. The total period of disqualification imposed for State agency violations investigated as part of a single investigation may not exceed one year. A civil money penalty or fine may not exceed a maximum amount specified in § 3.91(b)(3)(v) of this title for each violation. The total amount of civil money penalties and administrative fines imposed for violations investigated as part of a single investigation may not exceed an amount specified in § 3.91(b)(3)(v) of this title as the maximum penalty for violations occurring during a single investigation. A State agency vendor sanction must be based on a pattern of violative incidences.
(ii) SNAP civil money penalty for hardship. The State agency may disqualify a vendor that has been assessed a civil money penalty for hardship in SNAP, as provided under § 278.6 of this chapter. The length of such disqualification must correspond to the period for which the vendor would otherwise have been disqualified in SNAP. If a State agency decides to exercise this option, the State agency must:
(A) Include notification that it will take such disqualification action in its sanction schedule; and
(B) Determine if disqualification of the vendor would result in inadequate participant access in accordance with paragraph (l)(8) of this section. If the State agency determines that disqualification of the vendor would result in inadequate participant access, the State agency may not disqualify the vendor or impose a civil money penalty in lieu of disqualification. The State agency must include documentation of its participant access determination and any supporting documentation in each vendor’s file.
(iii) A mandatory sanction by another WIC State agency. The State agency may disqualify a vendor that has been disqualified or assessed a civil money penalty in lieu of disqualification by another WIC State agency for a mandatory vendor sanction. The length of the disqualification must be for the same length of time as the disqualification by the other WIC State agency or, in the case of a civil money penalty in lieu of disqualification assessed by the other WIC State agency, for the same length of time for which the vendor would otherwise have been disqualified. The disqualification may begin at a later date than the sanction imposed by the other WIC State agency. If a State agency decides to exercise this option, the State agency must:
(A) Include notification that it will take such action in its sanction schedule; and
(B) Determine if disqualification of the vendor would result in inadequate participant access in accordance with paragraph (l)(8) of this section. If the State agency determines that disqualification of the vendor would result in inadequate participant access, the State agency must impose a civil money penalty in lieu of disqualification, except that the State agency may not impose a civil money penalty in situations in which the vendor has been assessed a civil money penalty in lieu of disqualification by the other WIC State agency. Any civil money penalty in lieu of disqualification must be calculated in accordance with paragraph (l)(2)(x) of this section. The State agency must include documentation of its participant access determination and any supporting documentation in each vendor’s file.
(3) Notification of violations. The State agency must notify a vendor in writing when an investigation reveals an initial incidence of a violation for which a pattern of incidences must be established in order to impose a sanction, before another such incidence is documented, unless the State agency determines, in its discretion, on a case-by-case basis, that notifying the vendor would compromise an investigation. This notification requirement applies to the violations set forth in paragraphs (l)(1)(iii)(C) through (l)(1)(iii)(F), (l)(1)(iv), and (l)(2)(i) of this section.
(i) Prior to imposing a sanction for a pattern of violative incidences, the State agency must either provide such notice to the vendor, or document in the vendor file the reason(s) for determining that such notice would compromise an investigation.
(ii) The State agency may use the same method of notification which the State agency uses to provide a vendor with adequate advance notice of the time and place of an administrative review in accordance with § 246.18(b)(3).
(iii) If notification is provided, the State agency may continue its investigation after the notice of violation is received by the vendor, or presumed to be received by the vendor, consistent with the State agency’s procedures for providing such notice.
(iv) All of the incidences of a violation occurring during the first compliance buy visit must constitute only one incidence of that violation for the purpose of establishing a pattern of incidences.
(v) A single violative incidence may only be used to establish the violations set forth in paragraphs (l)(1)(ii)(A), (l)(1)(ii)(B), and (l)(1)(iii)(A) of this section.
(4) Administrative reviews. The State agency must provide administrative reviews of sanctions to the extent required by § 246.18.
(5) Installment plans. The State agency may use installment plans for the collection of civil money penalties and administrative fines.
(6) Failure to pay a civil money penalty. If a vendor does not pay, only partially pays, or fails to timely pay a civil money penalty assessed in lieu of disqualification, the State agency must disqualify the vendor for the length of the disqualification corresponding to the violation for which the civil money penalty was assessed (for a period corresponding to the most serious violation in cases where a mandatory sanction included the imposition of multiple civil money penalties as a result of a single investigation).
(7) Actions in addition to sanctions. Vendors may be subject to actions in addition to the sanctions in this section, such as claims pursuant to paragraph (k) of this section and the penalties set forth in § 246.23(c) in the case of deliberate fraud.
(8) Participant access determination criteria. The State agency must develop participant access criteria. When making participant access determinations, the State agency must consider the availability of other authorized vendors in the same area as the violative vendor and any geographic barriers to using such vendors.
(9) Termination of agreement. When the State agency disqualifies a vendor, the State agency must also terminate the vendor agreement.
(m) Home food delivery systems. Home food delivery systems are systems in which authorized supplemental foods are delivered to the participant’s home. Home food delivery systems must provide for:
(1) Procurement. Procurement of supplemental foods in accordance with § 246.24, which may entail measures such as the purchase of food in bulk lots by the State agency and the use of discounts that are available to States.
(2) Accountability. The accountable delivery of authorized supplemental foods to participants. The State agency must ensure that:
(i) Home food delivery contractors are paid only after the delivery of authorized supplemental foods to participants;
(ii) A routine procedure exists to verify the correct delivery of authorized supplemental foods to participants, and, at a minimum, such verification occurs at least once a month after delivery; and
(iii) Records of delivery of supplemental foods and bills sent or payments received for such supplemental foods are retained for at least three years. Federal, State, and local authorities must have access to such records.
(n) Direct distribution food delivery systems. Direct distribution food delivery systems are systems in which participants, parents or caretakers of infant or child participants, or proxies pick up authorized supplemental foods from storage facilities operated by the State agency or its local agencies. Direct distribution food delivery systems must provide for:
(1) Storage and insurance. Adequate storage and insurance coverage that minimizes the danger of loss due to theft, infestation, fire, spoilage, or other causes;
(2) Inventory. Adequate inventory control of supplemental foods received, in stock, and issued;
(3) Procurement. Procurement of supplemental foods in accordance with § 246.24, which may entail measures such as purchase of food in bulk lots by the State agency and the use of discounts that are available to States;
(4) Availability. The availability of program benefits to participants and potential participants who live at great distance from storage facilities; and
(5) Accountability. The accountable delivery of authorized supplemental foods to participants.
(o) Participant parent/caretaker, proxy, vendor, farmer, farmers’ market, and home food delivery contractor complaints. The State agency must have procedures to document the handling of complaints by participants, parents or caretakers of infant or child participants, proxies, vendors, farmers, farmers’ markets, home food delivery contractors, and direct distribution contractors. Complaints of civil rights discrimination must be handled in accordance with § 246.8(b).
(p) Food instrument and cash-value voucher security. The State agency must develop standards for ensuring the security of food instruments and cash-value vouchers from the time the food instruments and cash-value vouchers are created to the time they are issued to participants, parents/caretakers, or proxies. For pre-printed food instruments or cash-value vouchers, these standards must include maintenance of perpetual inventory records of food instruments or cash-value vouchers throughout the State agency’s jurisdiction; monthly physical inventory of food instruments or cash-value vouchers on hand throughout the State agency’s jurisdiction; reconciliation of perpetual and physical inventories of food instruments and cash-value vouchers; and maintenance of all food instruments and cash-value vouchers under lock and key, except for supplies needed for immediate use. For EBT and print-on-demand food instruments and cash-value vouchers, the standards must provide for the accountability and security of the means to manufacture and issue such food instruments and cash-value vouchers.
(q) Food instrument and cash-value voucher disposition. The State agency must account for the disposition of all food instruments and cash-value vouchers as either issued or voided, and as either redeemed or unredeemed. Redeemed food instruments and cash-value vouchers must be identified as validly issued, lost, stolen, expired, duplicate, or not matching valid enrollment and issuance records. In an EBT system, evidence of matching redeemed food instruments to valid enrollment and issuance records may be satisfied through the linking of the Primary Account Number (PAN) associated with the electronic transaction to valid enrollment and issuance records. This process must be performed within 120 days of the first valid date for participant use of the food instruments and must be conducted in accordance with the financial management requirements of § 246.13. The State agency will be subject to claims as outlined in § 246.23(a)(4) for redeemed food instruments or cash-value vouchers that do not meet the conditions established in paragraph (q) of this section.
(r) Issuance of food instruments, cash-value vouchers and authorized supplemental foods. The State agency must:
(1) Parents/caretakers and proxies. Establish uniform procedures that allow parents and caretakers of infant and child participants and proxies to obtain and transact food instruments and cash-value vouchers or obtain authorized supplemental foods on behalf of a participant. In determining whether a particular participant or parent/caretaker should be allowed to designate a proxy or proxies, the State agency must require the local agency or clinic to consider whether adequate measures can be implemented to provide nutrition education and health care referrals to that participant or, in the case of an infant or child participant, to the participant’s parent or caretaker;
(2) Signature requirement. Ensure that the participant, parent or caretaker of an infant or child participant, or proxy signs for receipt of food instruments, cash-value vouchers or authorized supplemental foods, except as provided in paragraph (r)(4) of this section;
(3) Instructions. Ensure that participants, parents or caretakers of infant and child participants, and proxies receive instructions on the proper use of food instruments and cash-value vouchers, or on the procedures for obtaining authorized supplemental foods when food instruments or cash-value vouchers are not used. The State agency must also ensure that participants, parents or caretakers of infant and child participants, and proxies are notified that they have the right to complain about improper vendor, farmer, farmers’ markets, and home food delivery contractor practices with regard to program responsibilities;
(4) Food instrument and cash-value voucher pick up. Require participants, parents and caretakers of infant and child participants, and proxies to pick up food instruments and cash-value vouchers in person when scheduled for nutrition education or for an appointment to determine whether participants are eligible for a second or subsequent certification period. However, in all other circumstances the State agency may provide for issuance through an alternative means such as EBT or mailing, unless FNS determines that such actions would jeopardize the integrity of program services or program accountability. If a State agency opts to mail food instruments and cash-value vouchers, it must provide justification, as part of its alternative issuance system in its State Plan, as required in § 246.4(a)(21), for mailing food instruments and cash-value voucher to areas where SNAP benefits are not mailed. State agencies that opt to mail food instruments and cash-value vouchers must establish and implement a system that ensures the return of food instruments and cash-value vouchers to the State or local agency if a participant no longer resides or receives mail at the address to which the food instruments and cash-value vouchers were mailed; and
(5) Maximum issuance of food instruments and cash-value voucher. Ensure that no more than a three-month supply of food instruments and cash-value vouchers or a one-month supply of authorized supplemental foods is issued at any one time to any participant, parent or caretaker of an infant or child participant, or proxy.
(6) Any authorized vendor. Each State agency shall allow participants to receive supplemental foods from any vendor authorized by the State agency under retail delivery systems.
(s) Payment to vendors, farmers and home food delivery contractors. The State agency must ensure that vendors, farmers and home food delivery contractors are paid promptly. Payment must be made within 60 days after valid food instruments or cash-value vouchers are submitted for redemption. Actual payment to vendors, farmers and home food delivery contractors may be made by local agencies.
(t) Conflict of interest. The State agency must ensure that no conflict of interest exists, as defined by applicable State laws, regulations, and policies, between the State agency and any vendor, farmer, farmers’ markets, or home food delivery contractor, or between any local agency and any vendor, farmer, farmers’ markets, or home food delivery contractor under its jurisdiction.
(u) Participant violations and sanctions—(1) General requirements. The State agency must establish procedures designed to control participant violations. The State agency also must establish sanctions for participant violations. Participant sanctions may include disqualification from the Program for a period of up to one year.
(2) Mandatory disqualification. (i) General. Except as provided in paragraphs (u)(2)(ii) and (u)(2)(iii) of this section, whenever the State agency assesses a claim of $100 or more, assesses a claim for dual participation, or assess a second or subsequent claim of any amount, the State agency must disqualify the participant for one year.
(ii) Exceptions to mandatory disqualification. The State agency may decide not to impose a mandatory disqualification if, within 30 days of receipt of the letter demanding repayment, full restitution is made or a repayment schedule is agreed on, or, in the case of a participant who is an infant, child, or under age 18, the State or local agency approves the designation of a proxy.
(iii) Terminating a mandatory disqualification. The State agency may permit a participant to reapply for the Program before the end of a mandatory disqualification period if full restitution is made or a repayment schedule is agreed upon or, in the case of a participant who is an infant, child, or under age 18, the State or local agency approves the designation of a proxy.
(3) Warnings before sanctions. The State agency may provide warnings before imposing participant sanctions.
(4) Fair hearings. At the time the State agency notifies a participant of a disqualification, the State agency must advise the participant of the procedures to follow to obtain a fair hearing pursuant to § 246.9.
(5) Referral to law enforcement authorities. When appropriate, the State agency must refer vendors, home food delivery contractors, farmers, farmers’ markets and participants who violate program requirements to Federal, State, or local authorities for prosecution under applicable statutes.
(v) Farmers and farmers’ markets. The State agency may authorize farmers, farmers’ markets, and/or roadside stands to accept the cash-value voucher for eligible fruits and vegetables. The State agency must enter into written agreements with all authorized farmers and/or farmers’ markets. The agreement must be signed by a representative who has legal authority to obligate the farmer or farmers’ market and a representative of the State agency. The agreement must be for a period not to exceed 3 years. Only farmers or farmers’ markets authorized by the State agency may redeem the fruit and vegetable cash-value voucher. The State agency must require farmers or farmers’ markets to reapply at the expiration of their agreements and must provide farmers or farmers markets with not less than 15 days advance written notice of the expiration of the agreement.
(1) The agreement must include the following provisions, although the State agency may determine the exact wording. The farmer or farmers’ market must:
(i) Assure that the cash-value voucher is redeemed only for eligible fruits and vegetables as defined by the State agency;
(ii) Provide eligible fruits and vegetables at the current price or less than the current price charged to other customers;
(iii) Accept the cash-value voucher within the dates of their validity and submit such vouchers for payment within the allowable time period established by the State agency;
(iv) Redeem the cash-value voucher in accordance with a procedure established by the State agency. Such procedure must include a requirement for the farmer or farmers’ market to allow the participant, authorized representative or proxy to pay the difference when the purchase of fruits and vegetables exceeds the value of the cash-value vouchers (also known as a split tender transaction);
(v) Accept training on cash-value voucher procedures and provide training to any employees with cash-value voucher responsibilities on such procedures;
(vi) Agree to be monitored for compliance with program requirements, including both overt and covert monitoring;
(vii) Be accountable for actions of employees in the provision of authorized foods and related activities;
(viii) Pay the State agency for any cash-value vouchers transacted in violation of this agreement;
(ix) Offer WIC participants, parent or caretakers of child participants or proxies the same courtesies as other customers;
(x) Comply with the nondiscrimination provisions of USDA regulations as provided in § 248.7; and
(xi) Notify the State agency if any farmers’ market ceases operation prior to the end of the authorization period.
(2) The farmer or farmers’ market must not:
(i) Collect sales tax on cash-value voucher purchases;
(ii) Seek restitution from WIC participants, parent or caretakers of child participants or proxies for cash-value vouchers not paid or partially paid by the State agency;
(iii) Issue cash change for purchases that are in an amount less than the value of the cash-value voucher;
(3) Neither the State agency nor the farmer or farmers’ market has an obligation to renew the agreement. The State agency, the farmer, or farmers’ market may terminate the agreement for cause after providing advance written notification.
(4) Farmer agreements for State agencies that do not authorize farmers. Those State agencies which authorize farmers’ markets but not individual farmers shall require authorized farmers’ markets to enter into a written agreement with each farmer within the market that is authorized to accept cash-value vouchers. The State agency shall set forth the required terms for the written agreement as defined in § 246.12(v)(1) and (v)(2), and provide a sample agreement for use by the farmers’ market.
(5) The State agency may deny payment to the farmer or farmers’ market for improperly redeemed cash-value vouchers and may demand refunds for payments already made on improperly redeemed vouchers.
(6) The State agency may disqualify a farmer or farmers’ market for WIC Program abuse. The farmer or farmers’ market has the right to appeal a denial of an application to participate, a disqualification, or a program sanction by the State agency. Expiration of an agreement with a farmer or farmers’ market and claims actions under § 246.23, are not appealable.
(7) A farmer or farmers’ market which commits fraud or engages in other illegal activity is liable to prosecution under applicable Federal, State or local laws.
(8) Monitoring farmers and farmers’ markets. (i) The State agency must design and implement a system for monitoring its authorized farmers and farmers’ markets for compliance with program requirements. The State agency must document, at a minimum, the following information for all monitoring visits: name(s) of the farmer, farmers market, or roadside stand; name(s) and signature(s) of the reviewer(s); date of review; and nature of problem(s) detected.
(ii) Compliance buys. For compliance buys, the State agency must also document:
(A) The date of the buy;
(B) A description of the farmer (and farmers’ market, as appropriate) involved in each transaction;
(C) The types and quantities of items purchased, current retail prices or prices charged other customers, and price charged for each item purchased, if available. Price information may be obtained prior to, during, or subsequent to the compliance buy; and
(D) The final disposition of all items as destroyed, donated, provided to other authorities, or kept as evidence.
(w) EBT—(1) General. All State agencies shall implement EBT statewide in accordance with paragraph (a) of this section.
(2) EBT exemptions. The Secretary may grant an exemption to the October 1, 2020 statewide implementation requirement. To be eligible for an exemption, a State agency shall demonstrate to the satisfaction of the Secretary one or more of the following:
(i) There are unusual technological barriers to implementation;
(ii) Operational costs are not affordable within the nutrition services and administration grant of the State agency; or
(iii) It is in the best interest of the program to grant the exemption.
(3) Implementation date. If the Secretary grants a State agency an exemption, such exemption will remain in effect until: The State agency no longer meets the conditions on which the exemption was based; the Secretary revokes the exemption or for three years from the date the exemption was granted, whichever occurs first.
(x) Electronic benefit requirements—(1) General. State agencies using EBT shall issue an electronic benefit that complies with the requirements of paragraph (x)(2) of this section.
(2) Electronic benefits. Each electronic benefit must contain the following information:
(i) Authorized supplemental foods. The supplemental foods authorized by food category, subcategory and benefit quantity, to include the cash-value benefit;
(ii) First date of use. The first date of use on which the electronic benefit may be used to obtain authorized supplemental foods;
(iii) Last date of use. The last date on which the electronic benefit may be used to obtain authorized supplemental foods. This date must be a minimum of 30 days, or in the month of February 28 or 29 days, from the first date on which it may be used to obtain authorized supplemental foods except for the participant’s first month of issuance when it may be the end of the month or cycle for which the electronic benefit is valid; and
(iv) Benefit issuance identifier. A unique and sequential number. This number enables the identification of each benefit change (addition, subtraction or update) made to the participant account.
(3) Vendor identification. The State agency shall ensure each EBT purchase submitted for electronic payment is matched to an authorized vendor, farmer, or farmers’ market prior to authorizing payment. Each vendor operated by a single business entity must be identified separately.
(y) EBT management and reporting. (1) The State agency shall follow the Department Advance Planning Document (APD) requirements and submit Planning and Implementation APD’s and appropriate updates, for Department approval for planning, development and implementation of initial and subsequent EBT systems.
(2) If a State agency plans to incorporate additional programs in the EBT system of the State, the State agency shall consult with State agency officials responsible for administering the programs prior to submitting the Planning APD (PAPD) document and include the outcome of those discussions in the PAPD submission to the Department for approval.
(3) Each State agency shall have an active EBT project by August 1, 2016. Active EBT project is defined as a formal process of planning, implementation, or statewide implementation of WIC EBT.
(4) Annually as part of the State plan, the State agency shall submit EBT project status reports. At a minimum, the annual status report shall contain:
(i) Until operating EBT statewide, an outline of the EBT implementation goals and objectives as part of the goals and objectives in § 246.4(a)(1), to demonstrate the State agency’s progress toward statewide EBT implementation;
(ii) If operating EBT statewide, any information on future EBT changes and procurement updates affecting present operations; and
(iii) Such other information the Secretary may require.
(5) The State agency shall be responsible for EBT coordination and management.
(z) EBT food delivery methods: Vendor requirements—(1) General. State agencies using EBT for delivering benefits shall comply with the vendor requirements in paragraphs (g) through (l) of this section. In addition, State agencies shall comply with requirements that are detailed throughout this paragraph (z).
(2) Minimum lane coverage. The Point-of-Sale (POS) terminals, whether single-function equipment or multi-function equipment, shall be deployed as follows:
(i) Superstores and supermarkets. There will be one POS terminal for every $11,000 in monthly WIC redemption up to a total of four POS terminals, or the number of lanes in the location, whichever is less. At a minimum, terminals shall be installed for monthly WIC redemption threshold increments as follows: one terminal for $0 to $11,000; two terminals for $11,001 to $22,000; three terminals for $22,001 to $33,000; and four terminals for $33,001 and above. A State agency may utilize an alternative installation formula with Department approval. The monthly redemption levels used for the installation formula shall be the average redemptions based on a period of up to 12 months of prior redemption;
(ii) All other vendors. One POS terminal for every $8,000 in monthly redemption up to a total of four POS terminals, or the number of lanes in the location; whichever is less. At a minimum, terminals shall be installed for monthly WIC redemption thresholds as follows: one terminal for $0 to $8,000; two terminals for $8,001 to $16,000; three terminals for $16,001 to $24,000; and four terminals for $24,001 and above. A State agency may utilize an alternative installation formula with Department approval. The monthly redemption levels used for the installation formula shall be the average redemptions based on a period of up to 12 months of prior redemption;
(iii) The State agency shall determine the number of appropriate POS terminals for authorized farmers and farmers’ markets;
(iv) For newly authorized WIC vendors deemed necessary for participant access by the State agency, the vendor shall be provided one POS terminal unless the State agency determines other factors in this location warrant additional terminals;
(v) Any authorized vendor who has been equipped with a POS terminal by the State agency may submit evidence additional terminals are necessary after the initial POS terminals are installed;
(vi) The State agency may provide authorized vendors with additional POS terminals above the minimum number required by this paragraph in order to permit WIC participants to obtain a shopping list or benefit balance, as long as the number of terminals provided does not exceed the number of lanes in the vendor location;
(vii) The State agency may remove excess POS terminals if actual redemption activity warrants a reduction consistent with the redemption levels outlined in paragraphs (z)(2)(i) through (ii) of this section.
(3) Payment to vendors, farmers and farmers’ markets. The State agency shall ensure that vendors, farmers and farmers’ markets are paid promptly. Payment must be made in accordance with the established Operating Rules and technical requirements after the vendor, farmer or farmers’ market has submitted a valid electronic claim for payment.
(aa) Imposition of costs on vendors, farmers and farmers’ markets—(1) Cost prohibition. Except as otherwise provided in this section, a State agency shall not impose the costs of any single-function equipment or system required for EBT on any authorized vendor, farmers or farmers’ markets in order to transact EBT.
(2) Cost sharing. If WIC Program equipment is multi-function equipment, the State agency shall develop cost sharing criteria with authorized WIC vendors, farmers and farmers’ markets for costs associated with such equipment in accordance with Federal cost principles. Any cost sharing agreements shall be developed between a State agency and its vendors, farmers, or farmers’ markets depending on the type, scope and capabilities of shared equipment. The State agency must furnish its allocation and/or cost sharing methodology to the Department as part of the Advanced Planning Document for review and approval before incurring costs.
(3) Fees—(i) Third-party processor costs and fees. The State agency shall not pay or reimburse vendors, farmers or farmers’ markets for third-party processing costs and fees for vendors, farmers, or farmers’ markets that elect to accept EBT using multi-function equipment. The State agency or its agent shall not charge any fees to authorized vendors for use of single-function equipment.
(ii) Interchange fees. The State agency shall not pay or reimburse the vendor, farmer or farmers’ markets for interchange fees on WIC EBT transactions.
(4) Statewide operations. After completion of statewide EBT implementation, the State agency shall not:
(i) Pay ongoing maintenance, processing fees or operational costs for any vendor, farmer or farmers’ market utilizing multi-function systems and equipment, unless the State agency determines that the vendor is necessary for participant access. The State agency shall continue to pay ongoing maintenance, processing fees and operational costs of single-function equipment;
(ii) Authorize a vendor, farmer, or farmers’ market that cannot successfully demonstrate EBT capability in accordance with State agency requirements, unless the State agency determines the vendor is necessary for participant access.
(bb) EBT Technical standards and requirements. (1) Each State agency, contractor and authorized vendor participating in the program shall follow and demonstrate compliance with:
(i) Operating rules, standards and technical requirements as established by the Secretary; and
(ii) Other industry standards identified by the Secretary.
(2) The State agency shall establish policy permitting the replacement of EBT cards and the transfer of participant benefit balances within no more than seven business days following notice by the participant or proxy to the State agency.
(3) The State agency shall establish procedures to provide customer service during non-business hours that enable participants or proxies to report a lost, stolen, or damaged card, report other card or benefit issues, receive information on the EBT food balance and receive the current benefit end date. The State agency shall respond to any report of a lost, stolen, or damaged card within one business day of the date of report. If a State agency seeks to implement alternatives to the minimum service requirements, the agency must submit the plan to FNS for approval.
(cc) National universal product codes (UPC) database. The national UPC database is to be used by all State agencies using EBT to deliver WIC food benefits.
§ 246.13 Financial management system.
(a) Disclosure of expenditures. The State agency shall maintain a financial management system which provides accurate, current and complete disclosure of the financial status of the Program. This shall include an accounting for all property and other assets and all Program funds received and expended each fiscal year.
(b) Internal control. The State agency shall maintain effective control over and accountability for all Program grants and funds. The State agency must have effective internal controls to ensure that expenditures financed with Program funds are authorized and properly chargeable to the Program.
(c) Record of expenditures. The State agency shall maintain records which adequately identify the source and use of funds expended for Program activities. These records shall contain, but are not limited to, information pertaining to authorization, receipt of funds, obligations, unobligated balances, assets, liabilities, outlays, and income.
(d) Payment of costs. The State shall implement procedures which ensure prompt and accurate payment of allowable costs, and ensure the allowability and allocability of costs in accordance with the cost principles and standard provisions of this part, 2 CFR part 200, subpart D, USDA implementing regulations 2 CFR part 400 and part 415, and FNS guidelines and instructions.
(e) Identification of obligated funds. The State agency shall implement procedures which accurately identify obligated Program funds at the time the obligations are made.
(f) Resolution of audit findings. The State agency shall implement procedures which ensure timely and appropriate resolution of claims and other matters resulting from audit findings and recommendations.
(g) Use of minority- and women-owned banks. Consistent with the national goals of expanding opportunities for minority business enterprises, State and local agencies are encouraged to use minority- and women-owned banks.
(h) Adjustment of expenditures. The State agency must adjust projected expenditures to account for redeemed food instruments and for other changes as appropriate.
(i) Transfer of cash. The State agency shall have controls to minimize the time elapsing between receipt of Federal funds from the U.S. Department of Treasury and the disbursements of these funds for Program costs. In the Letter of Credit system, the State agency shall make drawdowns from the U.S. Department of Treasury’s Regional Disbursing Office as close as possible to the actual date that disbursement of funds is made. Advances made by the State agency to local agencies shall also conform to these same standards.
(j) Local agency financial management. The State agency shall ensure that all local agencies develop and implement a financial management system consistent with requirements prescribed by FNS and the State agency pursuant to the requirements of this section.
§ 246.14 Program costs.
(a) General. (1) The two kinds of allowable costs under the Program are “food costs” and “nutrition services and administration costs.” In general, costs necessary to the fulfillment of Program objectives are to be considered allowable costs. The two types of nutrition services and administration costs are:
(i) Direct costs. Those direct costs that are allowable under 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415.
(ii) Indirect costs. Those indirect costs that are allowable under 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415. When computing indirect costs, food costs may not be used in the base to which the indirect cost rate is applied. In accordance with the provisions of 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415, a claim for indirect costs shall be supported by an approved allocation plan for the determination of allowable indirect costs.
(2) Program funds may not be used to pay for retroactive benefits. Except as provided in paragraph (e) of this section and §§ 246.16(g) and 246.16(h) of this part, funds allocated by FNS for food purchases may not be used to pay nutrition services and administration costs. However, nutrition services and administration funds may be used to pay for food costs.
(b) What costs may I charge to the food grant? (1) The State agency may use food funds for costs of:
(i) Acquiring supplemental foods provided to State or local agencies or participants, whichever receives the supplemental food first;
(ii) Warehousing supplemental foods; and
(iii) Purchasing and renting breast pumps.
(2) For costs to be allowable, the State agency must ensure that food costs do not exceed the customary sales price charged by the vendor, home food delivery contractor, or supplier in a direct distribution food delivery system. In addition, food costs may not exceed the price limitations applicable to the vendor.
(c) Specified allowable nutrition services and administration costs. Allowable nutrition services and administration (NSA) costs include the following:
(1) The cost of nutrition education and breastfeeding promotion and support which meets the requirements of § 246.11. During each fiscal year, each State agency shall expend, for nutrition education activities and breastfeeding promotion and support activities, an aggregate amount that is not less than the sum of one-sixth of the amount expended by the State agency for costs of NSA and an amount equal to its proportionate share of the national minimum expenditure for breastfeeding promotion and support activities. The amount to be spent on nutrition education shall be computed by taking one-sixth of the total fiscal year NSA expenditures. The amount to be spent by a State agency on breastfeeding promotion and support activities shall be an amount that is equal to at least its proportionate share of the national minimum breastfeeding promotion expenditure as specified in paragraph (c)(1) of this section. The national minimum expenditure for breastfeeding promotion and support activities shall be equal to $21 multiplied by the number of pregnant and breastfeeding women in the Program, based on the average of the last three months for which the Department has final data. On October 1, 1996 and each October 1 thereafter, the $21 will be adjusted annually using the same inflation percentage used to determine the national administrative grant per person. If the State agency’s total reported nutrition education and breastfeeding promotion and support expenditures are less than the required amount of expenditures, FNS will issue a claim for the difference. The State agency may request prior written permission from FNS to spend less than the required portions of its NSA grant for either nutrition education or for breastfeeding promotion and support activities. FNS will grant such permission if the State agency has sufficiently documented that other resources, including in-kind resources, will be used to conduct these activities at a level commensurate with the requirements of this paragraph (c)(1). However, food costs used to purchase or rent breast pumps may not be used for this purpose. Nutrition education, including breastfeeding promotion and support, costs are limited to activities which are distinct and separate efforts to help participants understand the importance of nutrition to health. The cost of dietary assessments for the purpose of certification, the cost of prescribing and issuing supplemental foods, the cost of screening for drug and other harmful substance use and making referrals to drug and other harmful substance abuse services, and the cost of other health-related screening shall not be applied to the expenditure requirement for nutrition education and breastfeeding promotion and support activities. The Department shall advise State agencies regarding methods for minimizing documentation of the nutrition education and breastfeeding promotion and support expenditure requirement. Costs to be applied to the one-sixth minimum amount required to be spent on nutrition education and the target share of funds required to be spent on breastfeeding promotion and support include, but need not be limited to—
(i) Salary and other costs for time spent on nutrition education and breastfeeding promotion and support consultations whether with an individual or group;
(ii) The cost of procuring and producing nutrition education and breastfeeding promotion and support materials including handouts, flip charts, filmstrips, projectors, food models or other teaching aids, and the cost of mailing nutrition education or breastfeeding promotion and support materials to participants;
(iii) The cost of training nutrition or breastfeeding promotion and support educators, including costs related to conducting training sessions and purchasing and producing training materials;
(iv) The cost of conducting evaluations of nutrition education or breastfeeding promotion and support activities, including evaluations conducted by contractors;
(v) Salary and other costs incurred in developing the nutrition education and breastfeeding promotion and support portion of the State Plan and local agency nutrition education and breastfeeding promotion and support plans; and
(vi) The cost of monitoring nutrition education and breastfeeding promotion and support activities.
(2) The cost of Program certification, nutrition assessment and procedures and equipment used to determine nutritional risk, including the following:
(i) Laboratory fees incurred for up to two hematological tests for anemia per individual per certification period. The first test shall be to determine anemia status. The second test may be performed only in follow up to a finding of anemia when deemed necessary for health monitoring as determined by the WIC State agency;
(ii) Expendable medical supplies;
(iii) Medical equipment used for taking anthropometric measurements, such as scales, measuring boards, and skin fold calipers; and for blood analysis to detect anemia, such as spectrophotometers, hematofluorometers and centrifuges; and
(iv) Salary and other costs for time spent on nutrition assessment and certification.
(3) The cost of outreach services.
(4) The cost of administering the food delivery system, including the cost of transporting food.
(5) The cost of translators for materials and interpreters.
(6) The cost of fair hearings, including the cost of an independent medical assessment of the appellant, if necessary.
(7) The cost of transporting participants to clinics when prior approval for using Program funds to provide transportation has been granted by the State agency and documentation that such service is considered essential to assure Program access has been filed at the State agency. Direct reimbursement to participants for transportation cost is not an allowable cost.
(8) The cost of monitoring and reviewing Program operations.
(9) The cost, exclusive of laboratory tests, of screening for drug and other harmful substance use and making referrals for counseling and treatment services.
(10) The cost of breastfeeding aids which directly support the initiation and continuation of breastfeeding.
(d) Costs allowable with approval. The costs of capital expenditures exceeding the dollar threshold established in Agency policy and guidance are allowable only with the approval of FNS prior to the capital investment. These expenditures include the costs of facilities, equipment (including medical equipment), automated data processing (ADP) projects, other capital assets, and any repairs that materially increase the value or useful life of such assets.
(e) Use of funds recovered from vendors, participants, or local agencies. (1) The State agency may keep funds collected through the recovery of claims assessed against vendors, participants, or local agencies. Recovered funds include those withheld from a vendor as a result of reviews of food instruments prior to payment. Recovered funds may be used for either food or NSA costs.
(2) These recovered funds may be used in the fiscal year:
(i) In which the initial obligation was made;
(ii) In which the claim arose;
(iii) In which the funds are collected; or
(iv) after the funds are collected.
(3) The State agency may not credit any recoveries until:
(i) In the case of a vendor claim, the vendor has had the opportunity to correct or justify the error or apparent overcharge in accordance with § 246.12(k)(3);
(ii) In the case of a participant, any administrative hearing requested in accordance with § 246.9 has been completed; or
(iii) In the case of a local agency claim, any administrative review requested in accordance with the local agency agreement has been completed.
(4) The State agency must report vendor, participant, and local agency recoveries to FNS through the normal reporting process;
(5) The State agency must keep documentation supporting the amount and use of these vendor, participant, and local agency recoveries.
(f) Use of funds received as rebates from manufacturers. The State agency must credit and report rebate payments received from manufacturers in the month in which the payments are received.
§ 246.15 Program income other than grants.
(a) Interest earned on advances. Interest earned on advances of Program funds at the State and local levels shall be treated in accordance with the provisions of 31 CFR part 205, which implement the requirements of the Cash Management Improvement Act of 1990. However, State agencies will not incur an interest liability to the Federal government on rebate funds for infant formula or other foods, provided that all interest earned on such funds is used for program purposes.
(b) Other Program income. The State agency may use current program income (applied in accordance with the addition method described in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415) for costs incurred in the current fiscal year and, with the approval of FNS, for costs incurred in previous years or subsequent fiscal years. Provided that the costs supported by the income further the broad objectives of the Program, they need not be a kind that would be permissible as charges to Federal funds. Money received by the State agency as a result of civil money penalties or fines assessed against a vendor and any interest charged in the collection of these penalties and fines shall be considered as program income.
§ 246.16 Distribution of funds.
(a) General. This paragraph describes the timeframes for distribution of appropriated funds by the Department to participating State agencies and the authority for the Secretary to use appropriated funds for evaluation studies and demonstration projects.
(1) Authorized appropriations to carry out the provisions of this section may be made not more than 1 year in advance of the beginning of the fiscal year in which the funds shall become available for disbursement to the State agencies. The funds shall remain available for the purposes for which appropriated until expended.
(2) In the case of appropriations legislation providing funds through the end of a fiscal year, the Secretary shall issue to State agencies an initial allocation of funds provided under such legislation not later than the expiration of the 15-day period beginning on the date of the enactment and subsequent allocation of funds shall be issued not later than the beginning of each of the second, third and fourth quarters of the fiscal year.
(3) Allocations of funds pursuant to paragraph (a)(2) of this section shall be made as follows: The initial allocation of funds to State agencies shall include not less than
(4) In the case of legislation providing funds for a period that ends prior to the end of a fiscal year, the Secretary shall issue to State agencies an initial allocation of funds not later than the expiration of the 10-day period beginning on the date of enactment. In the case of legislation providing appropriations for a period of not more than 4 months, all funds must be allocated to State agencies except those reserved by the Secretary to carry out paragraph (a)(6) of this section.
(5) In any fiscal year unused amounts from a prior fiscal year that are identified by the end of the first quarter of the fiscal year shall be recovered and reallocated not later than the beginning of the second quarter of the fiscal year. Unused amounts from a prior fiscal year that are identified after the end of the first quarter of the fiscal year shall be recovered and reallocated on a timely basis.
(6) Up to one-half of one percent of the sums appropriated for each fiscal year, not to exceed $5,000,000, shall be available to the Secretary for the purpose of evaluating Program performance, evaluating health benefits, providing technical assistance to improve State agency administrative systems, preparing reports on program participant characteristics, and administering pilot projects, including projects designed to meet the special needs of migrants, Indians, rural populations, and to carry out technical assistance and research evaluation projects for the WIC Farmers’ Market Nutrition Program.
(b) Distribution and application of grant funds to State agencies. Notwithstanding any other provision of law, funds made available to the State agencies for the Program in any fiscal year will be managed and distributed as follows:
(1) The State agency shall ensure that all Program funds are used only for Program purposes. As a prerequisite to the receipt of funds, the State agency shall have executed an agreement with the Department and shall have received approval of its State Plan.
(2) Notwithstanding any other provision of law, all funds not made available to the Secretary in accordance with paragraph (a)(6) of this section shall be distributed to State agencies on the basis of funding formulas which allocate funds to all State agencies for food costs and NSA costs incurred during the fiscal year for which the funds had been made available to the Department. Final State agency grant levels as determined by the funding formula and State agency breastfeeding promotion and support expenditure targets will be issued in a timely manner.
(3) When may I transfer funds from one fiscal year to another?—(i) Back spend authority. The State agency may back spend into the prior fiscal year up to an amount equal to one percent of its current year food grant and one percent of its current year NSA grant. Food funds spent back may be used only for food costs incurred during the prior fiscal year. NSA funds spent back may be used for either food or NSA costs incurred during the prior fiscal year. With prior FNS approval, the State agency may also back spend food funds up to an amount equal to three percent of its current year food grant in a fiscal year for food costs incurred in the prior fiscal year. FNS will approve such a request only if FNS determines there has been a significant reduction in infant formula cost containment savings that affected the State agency’s ability to maintain its participation level.
(ii) Spend forward authority. (A) The State agency may spend forward NSA funds up to an amount equal to three (3) percent of its total grant (NSA plus food grants) in any fiscal year. These NSA funds spent forward may be used only for NSA costs incurred in the next fiscal year. Any food funds that the State agency converts to NSA funds pursuant to paragraph (f) of this section (based on projected or actual participation increases during a fiscal year) may not be spent forward into the next fiscal year. With prior FNS approval, the State agency may spend forward additional NSA funds up to an amount equal to one-half of one percent of its total grant. These funds are to be used in the next fiscal year for the development of a management information system, including an electronic benefit transfer system.
(B) Funds spent forward will not affect the amount of funds allocated to the State agency for any fiscal year. Funds spent forward must be the first funds expended by the State agency for costs incurred in the next fiscal year.
(iii) Reporting requirements. In addition to obtaining prior FNS approval for certain spend forward/back spending options, the State agency must report to FNS the amount of all funds it already has or intends to back spend and spend forward. The spending options must be reported at closeout.
(c) Allocation formula. State agencies shall receive grant allocations according to the formulas described in this paragraph. To accomplish the distribution of funds under the allocation formulas, State agencies shall furnish the Department with any necessary financial and Program data.
(1) Use of participation data in the formula. Wherever the formula set forth in paragraphs (c)(2) and (c)(3) of this section require the use of participation data, the Department shall use participation data reported by State agencies according to § 246.25(b).
(2) How is the amount of NSA funds determined? The funds available for allocation to State agencies for NSA for each fiscal year must be sufficient to guarantee a national average per participant NSA grant, adjusted for inflation. The amount of the national average per participant grant for NSA for any fiscal year will be an amount equal to the national average per participant grant for NSA issued for the preceding fiscal year, adjusted for inflation. The inflation adjustment will be equal to the percentage change between two values. The first is the value of the index for State and local government purchases, as published by the Bureau of Economic Analysis of the Department of Commerce, for the 12-month period ending June 30 of the second preceding fiscal year. The second is the best estimate that is available at the start of the fiscal year of the value of such index for the 12-month period ending June 30 of the previous fiscal year. Funds for NSA costs will be allocated according to the following procedure:
(i) Fair share target funding level determination. For each State agency, FNS will establish, using all available NSA funds, an NSA fair share target funding level which is based on each State agency’s average monthly participation level for the fiscal year for which grants are being calculated, as projected by FNS. Each State agency receives an adjustment to account for the higher per participant costs associated with small participation levels and differential salary levels relative to a national average salary level. The formula shall be adjusted to account for these cost factors in the following manner: 90 percent of available funds shall provide compensation based on rates which are proportionately higher for the first 15,000 or fewer participants, as projected by FNS, and 10 percent of available funds shall provide compensation based on differential salary levels, as determined by FNS.
(ii) Base funding level. To the extent funds are available and subject to the provisions of paragraph (c)(2)(iv) of this section, each State agency shall receive an amount equal to 100 percent of the final formula-calculated NSA grant of the preceding fiscal year, prior to any operational adjustment funding allocations made under paragraph (c)(2)(iv) of this section. If funds are not available to provide all State agencies with their base funding level, all State agencies shall have their base funding level reduced by a pro-rata share as required by the shortfall of available funds.
(iii) Fair share allocation. Any funds remaining available for allocation for NSA after the base funding level required by paragraph (c)(2)(ii) of this section has been completed and subject to the provisions of paragraph (c)(2)(iv) of this section shall be allocated to bring each State agency closer to its NSA fair share target funding level. FNS shall make fair share allocation funds available to each State agency based on the difference between the NSA fair share target funding level and the base funding level, which are determined in accordance with paragraphs (c)(2)(i) and (c)(2)(ii) of this section, respectively. Each State agency’s difference shall be divided by the sum of the differences for all State agencies, to determine the percent share of the available fair share allocation funds each State agency shall receive.
(iv) Operational adjustment funds. Each State agency’s final NSA grant shall be reduced by up to 10 percent, and these funds shall be aggregated for all State agencies within each FNS region to form an operational adjustment fund. The Regions shall allocate these funds to State agencies according to national guidelines and shall consider the varying needs of State agencies within the region.
(v) Operational level. The sum of each State agency’s stability, residual and operational adjustment funds shall constitute the State agency’s operational level. This operational level shall remain unchanged for such year even if the number of Federally-supported participants in the program at such State agency is lower than the Federally-projected participation level. However, if the provisions of paragraph (e)(2)(ii) of this section are applicable, a State agency will have its operational level for NSA reduced in the immediately succeeding fiscal year.
(3) Allocation of food benefit funds. In any fiscal year, any amounts remaining from amounts appropriated for such fiscal year and amounts appropriated from the preceding fiscal year after making allocations under paragraph (a)(6) of this section and allocations for nutrition services and administration (NSA) as required by paragraph (c)(2) of this section shall be made available for food costs. Allocations to State agencies for food costs will be determined according to the following procedure:
(i) Fair share target funding level determination. (A) For each State agency, FNS will establish a fair share target funding level which shall be an amount of funds proportionate to the State agency’s share of the national aggregate population of persons who are income eligible to participate in the Program based on the 185 percent of poverty criterion. The Department will determine each State agency’s population of persons categorically eligible for WIC which are at or below 185% of poverty, through the best available, nationally uniform, indicators as determined by the Department. If the Commodity Supplemental Food Program (CSFP) also operates in the area served by the WIC State agency, the number of participants in such area participating in the CSFP but otherwise eligible to participate in the WIC Program, as determined by FNS, shall be deducted from the WIC State agency’s population of income eligible persons. If the State agency chooses to exercise the option in § 246.7(c)(2) to limit program participation to U.S. citizens, nationals, and qualified aliens, FNS will reduce the State agency’s population of income eligible persons to reflect the number of aliens the State agency declares no longer eligible.
(B) The Department may adjust the respective amounts of food funds that would be allocated to a State agency which is outside the 48 contiguous states and the District of Columbia when the State agency can document that economic conditions result in higher food costs for the State agency. Prior to any such adjustment, the State agency must demonstrate that it has successfully implemented voluntary cost containment measures, such as improved vendor management practices, participation in multi-state agency infant formula rebate contracts or other cost containment efforts. The Department may use the Thrifty Food Plan amounts used in SNAP, or other available data, to formulate adjustment factors for such State agencies.
(ii) Prior year grant level allocation. To the extent funds are available, each State agency shall receive a prior year grant allocation equal to its final authorized grant level as of September 30 of the prior fiscal year. If funds are not available to provide all State agencies with their full prior year grant level allocation, all State agencies shall have their full prior year grant level allocation reduced by a pro-rata share as required by the shortfall of available funds.
(iii) Inflation/fair share allocation. (A) If funds remain available after the allocation of funds under paragraph (c)(3)(ii) of this section, the funds shall be allocated as provided in this paragraph (c)(3)(iii). First, FNS will calculate a target inflation allowance by applying the anticipated rate of food cost inflation, as determined by the Department, to the prior year grant funding level. Second, FNS will allocate 80 percent of the available funds to all State agencies in proportionate shares to meet the target inflation allowance. Third, FNS will allocate 20 percent of the available funds to each State agency which has a prior year grant level allocation, as determined in paragraph (c)(3)(ii) of this section and adjusted for inflation as determined in this paragraph (c)(3)(iii), which is still less than its fair share target funding level. The amount of funds allocated to each State agency shall be based on the difference between its prior year grant level allocation plus target inflation funds and the fair share funding target level. Each State agency’s difference shall be divided by the sum of the differences for all such State agencies, to determine the percentage share of the 20 percent of available funds each State agency shall receive. In the event a State agency declines any of its allocation under either this paragraph (c)(3)(iii) or paragraph (c)(3)(ii) of this section, the declined funds shall be reallocated in the percentages and manner described in this paragraph (c)(3)(iii). Once all State agencies receive allocations equal to their full target inflation allowance, any remaining funds shall be allocated or reallocated, in the manner described in this paragraph (c)(3)(iii), to those State agencies still under their fair share target funding level.
(B) In the event funds still remain after completing the distribution in paragraph (c)(3)(iii)(A) of this section, these funds shall be allocated to all State agencies including those with a stability allocation at, or greater than, their fair share allocation. Each State agency which can document the need for additional funds shall receive additional funds based on the difference between its prior year grant level and its fair share allocation. State agencies closest to their fair share allocation shall receive first consideration.
(iv) Migrant services. At least
(v) Special provisions for Indian State agencies. The Department may choose to adjust the allocations and/or eligibles data among Indian State agencies, or among Indian State agencies and the geographic State agencies in which they are located when eligibles data for the State agencies’ population is determined to not fairly represent the population to be served. Such allocations may be redistributed from one State agency to another, based on negotiated agreements among the affected State agencies approved by FNS.
(4) Adjustment for new State agencies. Whenever a State agency that had not previously administered the program enters into an agreement with the Department to do so during a fiscal year, the Department shall make any adjustments to the requirements of this section that are deemed necessary to establish an appropriate initial funding level for such State agency.
(d) Distribution of funds to local agencies. The State agency shall provide to local agencies all funds made available by the Department, except those funds necessary for allowable State agency NSA costs and food costs paid directly by the State agency. The State agency shall distribute the funds based on claims submitted at least quarterly by the local agency. Where the State agency advances funds to local agencies, the State agency shall ensure that each local agency has funds to cover immediate disbursement needs, and the State agency shall offset the advances made against incoming claims as they are submitted to ensure that funding levels reflect the actual expenditures reported by the local agency. Upon receipt of Program funds from the Department, the State agency shall take the following actions:
(1) Distribute funds to cover expected food cost expenditures and/or distribute caseload targets to each local agency which are used to project food cost expenditures.
(2) Allocate funds to cover expected local agency NSA costs in a manner which takes into consideration each local agency’s needs. For the allocation of NSA funds, the State agency shall develop an NSA funding procedure, in cooperation with representative local agencies, which takes into account the varying needs of the local agencies. The State agency shall consider the views of local agencies, but the final decision as to the funding procedure remains with the State agency. The State agency shall take into account factors it deems appropriate to further proper, efficient and effective administration of the program, such as local agency staffing needs, density of population, number of persons served, and availability of administrative support from other sources.
(3) The State agency may provide in advance to any local agency any amount of funds for NSA deemed necessary for the successful commencement or significant expansion of program operations during a reasonable period following approval of a new local agency, a new cost containment measure, or a significant change in an existing cost containment measure.
(e) Recovery and reallocation of funds. (1) Funds may be recovered from a State agency at any time the Department determines, based on State agency reports of expenditures and operations, that the State agency is not expending funds at a rate commensurate with the amount of funds distributed or provided for expenditures under the Program. Recovery of funds may be either voluntary or involuntary in nature. Such funds shall be reallocated by the Department through application of appropriate formulas set forth in paragraph (c) of this section.
(2) Performance standards. The following standards shall govern expenditure performance.
(i) The amount allocated to any State agency for food benefits in the current fiscal year shall be reduced if such State agency’s food expenditures for the preceding fiscal year do not equal or exceed 97 percent of the amount allocated to the State agency for such costs. Such reduction shall equal the difference between the State agency’s preceding year food expenditures and the performance expenditure standard amount. For purposes of determining the amount of such reduction, the amount allocated to the State agency for food benefits for the preceding fiscal year shall not include food funds expended for food costs incurred under the spendback provision in paragraph (b)(3)(i) of this section or conversion authority in paragraph (g) of this section. Temporary waivers of the performance standard may be granted at the discretion of the Department.
(ii) Reduction of NSA grant. FNS will reduce the State agency’s NSA grant for the next fiscal year if the State agency’s current fiscal year per participant NSA expenditure is more than 10 percent higher than its per participant NSA grant. To avoid a reduction to its NSA grant level, the State agency may submit a “good cause” justification explaining why it exceeded the applicable limit on excess NSA expenditures. This justification must be submitted at the same time as the close-out report for the applicable fiscal year. Good cause may include dramatic and unforeseen increases in food costs, which would prevent a State agency from meeting its projected participation level.
(iii) Spend forward funds. If any State agency notifies the Department of its intent to spend forward a specific amount of funds for expenditure in the subsequent fiscal year, in accordance with paragraph (b)(3)(ii) of this section, such funds shall not be subject to recovery by the Department.
(f) How do I qualify to convert food funds to NSA funds based on increased participation?—(1) Requirements. The State agency qualifies to convert food funds to NSA funds based on increased participation in any fiscal year in two ways:
(i) Approved plan. A State agency may submit a plan to FNS to reduce average food costs per participant and to increase participation above the FNS-projected level for the State agency. If approved, the State agency may use funds allocated for food costs to pay NSA costs.
(ii) Participation increases achieved. The State agency may also convert food funds to NSA funds in any fiscal year if it achieves, through acceptable measures, increases in participation in excess of the FNS-projected level for the State agency. Acceptable measures include use of cost containment measures, curtailment of vendor abuse, and breastfeeding promotional activities. FNS will disallow the State agency’s conversion of food funds to NSA funds in accordance with paragraph (h) of this section if:
(A) The State agency increases its participation level through measures that are not in the nutritional interests of participants; or
(B) It is not otherwise allowable under program regulations.
(2) Limitation. The State agency may convert food funds only to the extent that the conversion is necessary—
(i) To cover NSA expenditures in the current fiscal year that exceed the State agency’s NSA grant for the current fiscal year and any NSA funds which the State agency has spent forward into the current fiscal year; and
(ii) To ensure that the State agency maintains the level established for the per participant NSA grant for the current fiscal year.
(3) Maximum amount. The maximum amount the State agency may convert equals the State agency’s conversion rate times the projected or actual participation increase, as applicable. The conversion rate is the same as the per participant NSA grant and is determined by dividing the State agency’s NSA grant by the FNS-projected participation level. The NSA grant used in the calculation equals the initial allocation of current year funds plus the operational adjustment funding allocated to the State agency for that fiscal year.
(g) How do I qualify to convert food funds to NSA funds for service to remote Indian or Native villages?—(1) Eligible State agencies. Only State agencies located in noncontiguous States containing a significant number of remote Indian or Native villages qualify to convert food funds to NSA funds under this paragraph (g) in any fiscal year.
(2) Limitation. In the current fiscal year, food funds may be converted only to the extent necessary to cover expenditures incurred:
(i) In providing services (including the full cost of air transportation and other transportation) to remote Indian or Native villages; and
(ii) To provide breastfeeding support in those areas that exceed the State agency’s NSA grant for the current fiscal year and any NSA funds which the State agency has spent forward into the current fiscal year.
(h) What happens at the end of the fiscal year in which food funds are converted? At the end of the fiscal year, the Department will determine the amount of food funds which the State agency was entitled to convert to NSA funds under paragraphs (f) and (g) of this section. In the event that the State agency has converted more than the permitted amount of funds, the Department will disallow the amount of excess conversion.
(i) How do converted funds affect the calculation of my prior year food grant and base NSA grant? For purposes of establishing a State agency’s prior year food grant and base NSA grant under paragraphs (c)(2)(i) and (c)(3)(i) of this section, respectively, amounts converted from food funds to NSA funds under paragraphs (f) and (g) of this section and § 246.14(e) during the preceding fiscal year will be treated as though no conversion had taken place.
(j) Inflation adjustment of the fruit and vegetable voucher. The monthly cash value of the fruit and vegetable voucher shall be adjusted annually for inflation. Adjustments are effective the first day of each fiscal year beginning on or after October 1, 2008. The inflation-adjusted value of the voucher shall be equal to a base value increased by a factor based on the Consumer Price Index for fresh fruits and vegetables, as provided in this section.
(1) Adjustment year. The adjustment year is the fiscal year that begins October 1 of the current calendar year.
(2) Base value of the fruit and vegetable voucher. The base year for calculation of the value of the fruit and vegetable voucher is fiscal year 2008. The base value to be used equals:
(i) $8 for children; and
(ii) $10 for women.
(3) Adjusted value of the fruit and vegetable voucher. The adjusted value of the fruit and vegetable voucher is the cash value of the voucher for adjustment years beginning on or after October 1, 2008. The adjusted value is the base value increased by an amount equal to the base value of the fruit and vegetable voucher:
(i) Multiplied by the inflation adjustment described in paragraph (j)(4) of this section; and
(ii) Subject to rounding as described in paragraph (j)(5) of this section.
(4) Inflation adjustment. The inflation adjustment of the fruit and vegetable voucher shall equal the percentage (if any) by which the annual average value of the Consumer Price Index for fresh fruits and vegetables, computed from monthly values published by the Bureau of Labor Statistics, for the twelve months ending on March 31 of the fiscal year immediately prior to the adjustment year, exceeds the average of the monthly values of that index for the twelve months ending on March 31, 2007.
(5) Rounding. If any increase in the cash value of the voucher determined under paragraph (j)(3) of this section is not a multiple of $1, such increase shall be rounded to the next lowest multiple of $1. However, if the adjusted value of the voucher for the adjustment year, as determined under paragraph (j)(3) of this section, is lower than the adjusted value for the fiscal year immediately prior to the adjustment year, then the adjusted value of the voucher will remain unchanged from that immediate prior fiscal year.
(a) Who must use cost containment procedures for infant formula? All State agencies must continuously operate a cost containment system for infant formula that is implemented in accordance with this section except:
(1) State agencies with home delivery or direct distribution food delivery systems;
(2) Indian State agencies with 1,000 or fewer participants in April of any fiscal year, which are exempt for the following fiscal year;
(3) State agencies granted a waiver under paragraph (e) of this section; and
(4) State agencies granted a postponement under paragraph (f) of this section.
(b) What cost containment procedures must be used? State agencies must use either a single-supplier competitive system as outlined in paragraph (c) of this section, or an alternative cost containment system as outlined in paragraph (d) of this section.
(c) What is the single-supplier competitive system? (1) Under the single-supplier competitive system, a State agency solicits sealed bids from infant formula manufacturers to supply and provide a rebate for infant formulas. The State agency must conduct the procurement in a manner that maximizes full and open competition consistent with the requirements of this section. A State agency must:
(i) Provide a minimum of 30 days between the publication of the solicitation and the date on which the bids are due, unless exempted by the Secretary; and
(ii) Publicly open and read all bids aloud on the day the bids are due.
(2) How must a State agency structure the bid solicitation? (i) Single solicitation. Under the single solicitation system, the State agency’s bid solicitation must require the winning bidder to supply and provide a rebate on all infant formulas it produces that the State agency chooses to issue, except exempt infant formulas. Rebates must also be paid on any new infant formulas that are introduced after the contract is awarded. The solicitation must require bidders that do not produce a soy-based infant formula to subcontract with another manufacturer to supply a soy-based infant formula under the contract. In this case, the bid solicitation must require that the winning bidder pay the State agency a rebate on the soy-based infant formula supplied by the subcontractor that is issued by the State agency. The bid solicitation must require all rebates (including those for soy-based infant formula supplied by a subcontractor) to be calculated in accordance with paragraph (c)(6) of this section. All of these infant formulas are called contract brand infant formulas.
(ii) Separate solicitations. Under the separate solicitation system, a State agency issues two bid solicitations. Any State agency or alliance that served a monthly average of more than 100,000 infants during the preceding 12-month period shall issue separate bid solicitations for milk-based and soy-based infant formula. The first solicitation must require the winning bidder to supply and provide a rebate on all milk-based infant formulas it produces that the State agency chooses to issue, except exempt infant formulas. Rebates must also be paid on any new milk-based infant formulas that are introduced by the manufacturer after the contract is awarded. These infant formulas are considered to be contract brand infant formulas. The second bid solicitation must require the winning bidder to supply and provide a rebate on all soy-based infant formulas it produces that the State agency chooses to issue. Rebates must also be paid on any new soy-based infant formulas that are introduced by the manufacturer after the contract is awarded. These infant formulas are also considered to be contract brand infant formulas.
(3) What is the size limitation for a State alliance? A State alliance may exist among State agencies if the total number of infants served by States participating in the alliance as of October 1, 2003, or such subsequent date determined by the Secretary for which data is available, does not exceed 100,000. However, a State alliance that existed as of July 1, 2004, and serves over 100,000 infants may exceed this limit to include any State agency that served less than 5,000 infants as of October 1, 2003, or such subsequent date determined by the Secretary for which data is available, and/or any Indian State agency. The bid solicitation must identify the composition of the State alliances for the purpose of a cost containment measure, and verify that no additional State shall be added to the State alliance between the date of the bid solicitation and the end of the contract. The Secretary may waive these requirements not earlier than 30 days after submitting to the Committee on Education and the Workforce of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a written report that describes the cost-containment and competitive benefits of the proposed waiver.
(4) On what types and physical forms of infant formula must bids be solicited? The bid solicitation must require bidders to specify a rebate for each of the types and physical forms of infant formulas specified in the following chart. These rebates apply proportionally to other infant formulas produced by the winning bidder(s) (see paragraph (c)(6) of this section).
| Type of infant formula | Physical forms of infant formula | Infant formula requirements |
|---|---|---|
| (i) For a single solicitation, the solicitation must require bidders to specify a rebate amount for the following: | ||
| A single milk-based infant formula (primary contract infant formula); bidders must specify the brand name of the milk-based infant formula for which the rebate is being specified | Concentrated liquid, powdered, and ready-to-feed | Meets requirements under § 246.10(e)(1)(iii) and § 246.10(e)(2)(iii) and suitable for routine issuance to the majority of generally healthy, full-term infants. |
| (ii) For separate solicitations, the solicitation must require bidders to specify a rebate amount for the following: | ||
| (A) A single milk-based infant formula (primary milk-based contract brand infant formula); bidders must specify the brand name of the milk-based infant formula for which the rebate is being specified | Concentrated liquid, powdered, and ready-to-feed | Meets requirements under § 246.10(e)(1)(iii) and § 246.10(e)(2)(iii) and suitable for routine issuance to the majority of generally healthy, full-term infants. |
| (B) A single soy-based infant formula (primary soy-based contract brand infant formula); bidders must specify the brand name of the soy-based infant formula for which the rebate is being specified | Concentrated liquid, powdered, and ready-to-feed | Meets requirements under § 246.10(e)(1)(iii) and § 246.10(e)(2)(iii). |
(5) A State agency must award the contract(s) to the responsive bidder(s) offering the lowest total monthly net price for infant formula or the highest monthly rebate (subject to paragraph(c)(4)(ii) of this section) for a standardized number of units of infant formula. To be responsive, a bidder must submit a bid by the deadline set by the State agency that conforms to the solicitation and must meet requirements at 246.16a and set forth in the bid solicitation. The State agency must calculate the lowest net price using the lowest national wholesale cost per unit for a full truckload of the infant formula on the date of the bid opening.
(6) What data must be provided to bidders? The State agency must provide as part of the bid solicitation the participation and infant formula usage data and the standardized number of ounces by physical form of infant formula to be used in evaluating bids as described in paragraph (c)(4) of this section. The State agency must notify bidders that the participation and infant formula usage data does not necessarily reflect the actual issuance and redemption that will occur under the contract.
(7) How is the rebate to be calculated on all other contract brand infant formulas? All bids must specify the rebates offered by each bidder for the primary contract infant formula(s). After the contract is awarded, the State agency must calculate the percentage discount for all other contract brand infant formulas (i.e., all other infant formulas produced by the bidder other than exempt infant formulas) approved for issuance by the State agency. The State agency must use the following method in calculating the rebates:
(i) Calculation of percentage discounts. Rebates for contract brand infant formulas, other than the primary contract infant formula(s) for which bids were received, must be calculated by first determining the percentage discount for each physical form (e.g., concentrated liquid, powdered, and ready-to-feed) of the primary contract infant formula(s). The percentage discount must be calculated by dividing the rebate for the primary contract infant formula by the manufacturer’s lowest national wholesale price per unit, as of the date of the bid opening, for a full truckload of the primary contract infant formula. The percentage discounts must be used to determine the rebate for all other contract brand infant formulas approved for issuance by the State agency.
(ii) Calculation of rebate amount. The rebate for each type and form of all other contract brand infant formulas must be calculated by multiplying the percentage discount by the manufacturer’s lowest national wholesale price per unit, as of the date of the bid opening, for a full truckload of the other contract brand infant formula. The percentage discount used for each of the other contract brand infant formulas depends on the physical form of the infant formula. For example, if the percentage discount provided for the primary contract brand powdered infant formula is 80 percent of its wholesale price, the same percentage discount must be applied to all other contract brand powdered infant formulas. The rebate for any types or forms of contract brand infant formulas that are introduced during the contract period must be calculated using the wholesale prices of these new contract brand infant formulas at the time the infant formulas are approved for issuance by the State agency.
(iii) Calculation of rebates during contract term. The rebates resulting from the application of the percentage discount must remain the same throughout the contract period except for the cent-for-cent rebate adjustments required in paragraph (c)(6)(iv) of this section.
(iv) Cent-for-cent rebate adjustments. Bid solicitations must require the manufacturer to adjust rebates for price changes subsequent to the bid opening. Price adjustments must reflect any increase and decrease, on a cent-for-cent basis, in the manufacturer’s lowest national wholesale prices for a full truckload of infant formula.
(8) What is the first choice of issuance for infant formula? The State agency must use the primary contract infant formula(s) as the first choice of issuance (by physical form), with all other infant formulas issued as an alternative (see § 246.10(e)(1)(iii)).
(9) Under what circumstances may the State agency issue other contract brand formulas? Except as required in paragraph (c)(7) of this section, the State agency may choose to approve for issuance some, none, or all of the winning bidder’s other infant formula(s). In addition, the State agency may require medical documentation before issuing any contract brand infant formula, except as provided in paragraph (c)(7) of this section (see § 246.10(c)(1)(i)) and must require medical documentation before issuing any WIC formula covered by § 246.10(c)(1)(iii).
(d) What is an alternative cost containment system? Under an alternative cost containment system, a State agency elects to implement an infant formula cost containment system of its choice. The State agency may only implement an alternative system if such a system provides a savings equal to or greater than a single-supplier competitive system. A State agency must conduct a cost comparison demonstrating such savings as described in paragraphs (d)(1) and (d)(2) of this section.
(1) How must the State agency structure the bid solicitation? The State agency must solicit bids simultaneously using the single-supplier competitive system described in paragraph (c) of this section and the alternative cost containment system(s) the State agency has selected. The State agency may prescribe standards of its choice for the alternative cost containment system(s), provided that conditions established for each system addressed in the bid solicitation include identical bid specifications for the contract period length and the types and forms of infant formula(s) to be included in the systems. In addition, the alternative cost containment system must cover the types and forms of infant formulas routinely issued to the majority of generally healthy, full-term infants. The State agency must use the procedure outlined in paragraph (d)(2) of this section in conducting a cost comparison to determine which system offers the greatest savings over the entire contract period specified in the bid solicitation.
(2) How does the State agency conduct the cost comparison? (i) Establishing infant formula cost containment savings. (A) Savings under the single-supplier competitive system. The State agency must project food cost savings in the single-supplier competitive system based on the lowest monthly net price or highest monthly rebate, as described in paragraph (c)(4) of this section.
(B) Savings under an alternative cost containment system. The State agency must project food cost savings under alternative cost containment systems based on the lowest monthly net cost or highest monthly rebate, as described in paragraph (c)(4) of this section. Food cost savings must be based on the standardized amount of infant formula expected to be issued as calculated for a single-supplier competitive system, prorated by the percentage of anticipated total infant formula purchases attributable to each manufacturer. The State agency must use the aggregate market share of the manufacturers submitting bids in calculating its cost savings estimate.
(C) General. In establishing the potential food cost savings under each system, the State agency must take into consideration in its estimate of savings any inflation factors which would affect the amount of savings over the life of the contract. Further, the State agency must not subtract any loss of payments which would occur under the terms of a current contract as a result of any State agency action to be effective after expiration of the contract.
(ii) Nutrition services and administration cost adjustment. The State agency must deduct from the food cost savings projected for each system under this paragraph (d) the nutrition services and administration costs associated with developing and implementing—but not operating—each cost containment system. This includes any anticipated costs for modifying its automated data processing system or components of its food delivery system(s), and of training participants, local agencies, vendors, and licensed health care professionals on the purpose and procedures of the new system. For contracts of two years or less, such costs must be proportionately distributed over at least a two year period. The State agency must not deduct any costs associated with procurement. The State agency must itemize and justify all nutrition services and administration cost adjustments as necessary and reasonable for the development and implementation of each system.
(iii) Final cost comparison. The State agency must calculate the food costs savings and deduct the appropriate nutrition services and administration costs for each system for which bids were received. The State agency must implement the single-supplier competitive system, unless its comparative cost analysis shows that, over the length of the contract stipulated in the bid solicitation, an alternative cost containment system offers savings at least equal to, or greater than, those under the competitive single-supplier system. If the comparative cost analysis permits selection of the alternative cost containment system and the State agency wishes to implement that system, it must first submit a State Plan amendment with the calculations and supporting documentation for this cost analysis to FNS for approval. Only after the calculations are approved by FNS may the State agency award the contract or contracts under the alternative cost containment system.
(e) How does a State agency request a waiver of the requirement for a single-supplier competitive system? A State agency which, after completing the cost comparison in paragraphs (d)(2)(i) through (d)(2)(iii) of this section, is required to implement the single-supplier competitive cost containment system for infant formula procurement, may request a waiver from FNS to permit it to implement an alternative system. State agencies must support all waiver requests with documentation in the form of a State Plan amendment as required under § 246.4(a)(14)(x) and may submit such requests only in either of the following circumstances:
(1) The difference between the single-supplier competitive system and the alternative cost containment system is less than 3 percent of the savings anticipated under the latter system and not more than $100,000 per annum.
(2) The single-supplier competitive system would be inconsistent with the efficient or effective operation of the program. Examples of justifications FNS will not accept for a waiver, include, but are not limited to: preservation of participant preference for otherwise nutritionally equivalent infant formulas; maintenance of health care professionals’ prerogatives to prescribe otherwise nutritionally equivalent infant formulas for non-medical reasons; potential loss of free or otherwise discounted materials to WIC clinics and other health care facilities; potential inability of a manufacturer selected in accordance with applicable State procurement procedures to supply contractually-specified amounts of infant formula; and the possibility of interrupted infant formula supplies to retail outlets as a consequence of entering into a contract with a single manufacturer.
(f) How does a State agency request a postponement of the requirement for a continuously operated cost containment system for infant formula? A State agency may request a postponement of the requirement to continuously operate a cost containment system for infant formula that has been implemented in accordance with this section. However, a State agency may only request a postponement when it has taken timely and responsible action to implement a cost containment system before its current system expires but has been unable to do so due to procurement delays, disputes with FNS concerning cost containment issues during the State Plan approval process or other circumstances beyond its control. The written postponement request must be submitted to FNS before the expiration of the current system. The postponement period may be no longer than 120 days. If a postponement is granted, the State agency may extend, renew or otherwise continue an existing system during the period of the postponement.
(g) May a State agency implement cost containment systems for other supplemental foods? Yes, when a State agency finds that it is practicable and feasible to implement a cost containment system for any WIC food other than infant formula. The State agency must:
(1) Provide notification to FNS by means of the State agency’s State Plan.
(2) Comply with paragraphs (c)(2) and (k) of this section.
(3) Provide a minimum of 30 days between the publication of the solicitation and the date on which the bids are due, unless exempted by the Secretary. The State must publicly open and read all bids aloud on the day the bids are due.
(4) Issue separate solicitations for authorized foods if any alliance served a monthly average of more than 100,000 infants during the preceding 12-month period.
(h) What are the implementation time frames for Indian State agencies that lose their exemption from the infant formula cost containment requirement? If an Indian State agency operating a retail food delivery system expands its program participation above 1000 and thereby loses its exemption from the requirements of paragraph (a) of this section regarding the method of cost containment for infant formula, then the Indian State agency must begin compliance with paragraph (a) of this section in accordance with time frames established by FNS.
(i) What are the penalties for failure to comply with the cost containment requirements? Any State agency that FNS determines to be out of compliance with the cost containment requirements of this part must not draw down on or obligate any Program grant funds, nor will FNS make any further Program funds available to such State agency, until it is in compliance with these requirements.
(j) What provisions are prohibited to be included in cost containment contracts? A State agency may not issue bid solicitations or enter into contracts which:
(1) Prescribe conditions that would void, reduce the savings under or otherwise limit the original contract if the State agency solicited or secured bids for, or entered into, a subsequent cost containment contract to take effect after the expiration of the original contract;
(2) Does not include the registration and certification requirements in § 246.10(g);
(3) Require infant formula manufacturers to submit bids on more than one of the systems specified in the invitation for bids; or
(4) Require infant formula manufacturers to provide gratis infant formula or other items.
(k) What are the requirements for infant formula and authorized food rebate invoices? A State agency must have a system in place that ensures infant formula and authorized food rebate invoices, under competitive bidding, provide a reasonable estimate or an actual count of the number of units purchased by participants in the program.
(l) What are the requirements for the national cost containment bid solicitation and selection for infant formula? FNS will solicit and select bids for infant formula rebates on behalf of State agencies with retail food delivery systems based on the following guidelines:
(1) FNS will solicit bids and select the winning bidder(s) for infant formula cost containment contracts only if two or more State agencies with retail food delivery systems request FNS to conduct bid solicitation and selection on their behalf. FNS will conduct the bid solicitation and selection process only and will not award or enter into any infant formula cost containment contract on behalf of the individual State agencies. Each State agency will individually award and enter into infant formula cost containment contract(s) with the winning bidder(s). State agencies must obtain the rebates directly from the infant formula manufacturer(s). FNS will conduct the bid solicitation in accordance with this paragraph (l) and the competitive bidding procurement procedures of the State agency with the highest infant participation in the bid group on whose behalf bids are being solicited. Any bid protests and contractual disputes are the responsibility of the individual State agencies to resolve.
(2) FNS will make a written offer to all State agencies to conduct bid solicitation and selection on their behalf at least once every 12 months. FNS will send State agencies a copy of the draft Request for Rebates when making the offer to State agencies. Only State agencies that provide the information required by this paragraph (l)(2) in writing, signed by a responsible State agency official, by certified mail, return receipt requested or by hand delivery with evidence of receipt within 15 days of receipt of the offer will be included in the national bid solicitation and selection process. Each interested State agency must provide:
(i) A statement that the State agency requests FNS to conduct bid solicitation and selection on its behalf;
(ii) A statement of the State agency’s minimum procurement procedures applicable to competitive bidding (as defined in § 246.2) for infant formula cost containment contracts and supporting documentation;
(iii) A statement of any limitation on the duration of infant formula cost containment contracts and supporting documentation;
(iv) A statement of any contractual provisions required to be included in infant formula cost containment contracts by the State agency;
(v) The most recent available average monthly number of infant participants less those infant participants who are exclusively breastfed and those who are issued exempt infant formula. The average monthly participation level must be based on at least 6 months of participation data.
(vi) Infant formula usage rates by type (e.g., milk-based or soy-based), form (e.g., concentrated, powdered, ready-to-feed), container size, and supporting documentation;
(vii) A statement of the termination date of the State agency’s current infant formula cost containment contract; and
(viii) Any other related information that FNS may request.
(3) If FNS determines that the number of State agencies making the request provided for in paragraph (l)(2) of this section does not comply with the requirements of paragraph (c)(2) of this section, FNS shall, in consultation with such State agencies, divide such State agencies into more than one group and solicit bids for each group. These groups of State agencies are referred to as “bid groups.” In determining the size and composition of the bid groups, FNS will, to the extent practicable, take into account the need to maximize the number of potential bidders so as to increase competition among infant formula manufacturers and the similarities in the State agencies’ procurement and contract requirements (as provided by the State agencies in accordance with paragraphs (l)(2)(ii), (l)(2)(iii), and (l)(2)(iv) of this section). FNS reserves the right to exclude a State agency from the national bid solicitation and selection process if FNS determines that the State agency’s procurement requirements or contractual requirements are so dissimilar from those of the other State agencies in any bid group that the State agency’s inclusion in the bid group could adversely affect the bids.
(4) For each bid group formed pursuant to paragraphs (l)(2) and (l)(3) of this section, FNS will use for soliciting bids the competitive bidding procurement procedures of the State agency in the group with the highest infant participation. To the extent not inconsistent with the requirements of this paragraph (l), FNS will use that set of procedures in soliciting the bids for that bid group of State agencies. FNS will notify each State agency in the bid group of the choice and provide them each a copy of the procurement procedures of the chosen State agency. Each State agency must provide FNS a written statement, signed by a responsible State agency official, by certified mail, return receipt requested or by hand delivery with evidence of receipt stating whether that State agency is legally authorized to award an infant formula cost containment contract pursuant to that set of procedures within 10 days of the receipt of the notification. If the State agency determines it is not legally authorized to award an infant formula cost containment contract pursuant to those procedures, that State agency may not continue in that round of the national bid solicitation and selection.
(5) At a minimum, in soliciting bids FNS will address the following:
(i) Unless FNS determines that doing so would not be in the best interest of the Program, bids will be solicited for either:
(A) A single contract for each State agency under which the winning bidder will be required to supply and provide rebates on all infant formulas produced by that manufacturer (except exempt infant formulas) that are issued by the State agency. If that manufacturer does not produce a soy-based infant formula, the winning bidder will be required to subcontract with another manufacturer for a soy-based infant formula and the winning bidder will be required to pay a rebate on the soy-based infant formula; or
(B) Two separate contracts for each State agency. Under the first contract, the winning bidder will supply and provide a rebate on all the milk-based infant formulas the winning bidder produces (except exempt infant formulas) that are issued by the State agency and under the second contract the winning bidder will supply and provide a rebate on all the soy-based infant formulas the winning bidder produces (except exempt infant formulas) that are issued by the State agency.
(ii) The infant formula cost containment contract(s) to be entered into by the State agencies and infant formula manufacturers must provide for a constant net price for infant formula for the full term of the infant formula cost containment contract(s).
(iii) The duration of the infant formula cost containment contracts for each bid group will be determined by FNS in consultation with the State agencies. The term will be for a period of not less than 2 years, unless the law applicable to a State agency regarding the duration of infant formula cost containment contracts is more restrictive than this paragraph (l)(5)(iii). In such cases, the term of the contract for only that State agency will be for one year, with the option provided to the State agency to extend the contract for a specified number of additional years (to be determined by FNS in consultation with the State agency). The date on which the individual State agencies’ current infant formula cost containment contracts terminate may vary, so the infant formula cost containment contracts awarded by the State agencies within a bid group may begin on different dates.
(iv) FNS will not prescribe conditions that are prohibited under paragraph (j) of this section.
(v) FNS will solicit bids for rebates only from infant formula manufacturers. FNS may limit advertising to contacting in writing each infant formula manufacturer which has registered with the Secretary of Health and Human Services under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321 et seq.).
(6) FNS will select the winning bidder(s). The winning bidder(s) will be the responsive and responsible bidder(s) meeting the specifications and all bid terms and conditions which offers the lowest net price weighted to take into account infant formula usage rates and infant participation. In all instances the winning bidder(s) will be those which singly or in combination yield the greatest aggregate savings based on the net price weighted to take into account the infant formula usage rates. To break a tie between 2 equally low bids, FNS will select the bidder to be awarded the infant formula cost containment contract by a drawing by lot limited to the bidders which submitted those bids.
(7) Once FNS has conducted bid selection, a State agency may decline to award the infant formula cost containment contract(s) only if the State agency determines that awarding the contract(s) would not be in the best interests of its Program, taking into account whether the national bid solicitation and selection would achieve a lower aggregate savings.
(8) As soon as practicable after selecting the winning bid(s), FNS will notify the affected State agencies in writing of the bid results, including the name(s) of the winning bidder(s). If a State agency chooses to request approval to decline to award the infant formula cost containment contract(s) in accordance with paragraph (l)(7) of this section, it must notify FNS in writing, signed by a responsible State agency official, together with supporting documentation, by certified mail, return receipt requested or by hand delivery with evidence of receipt within 10 days of the State agency’s receipt of this notification of bid results.
(9) If FNS approves any State agency’s request to decline to award the infant formula cost containment contract(s) in accordance with paragraphs (l)(7) and (l)(8) of this section, FNS will notify the bidders of the decision. If two or more State agencies remain in the group, FNS will require the bidders to indicate in writing whether they wish to withdraw or modify their bids within 5 days of receipt of this notification. FNS will again permit State agencies to decline to award the infant formula cost containment contract(s) in accordance with paragraphs (l)(7) and (l)(8) of this section. If FNS approves these additional State agency requests to decline contract awards, FNS may conduct a resolicitation of bids in accordance with this paragraph (l).
(m) What are the penalties for disclosing the amount of the bid or discount practices prior to the time bids are opened? Any person, company, corporation, or other legal entity that submits a bid in response to a bid solicitation and discloses the amount of the bid, or the rebate or discount practices of such entities, in advance of the time the bids are opened by the Secretary or the State agency, shall be ineligible to submit bids to supply infant formula to the program for the bidding in progress for up to 2 years from the date the bids are opened. In addition, any person, company, corporation, or other legal entity shall be subject to a civil money penalty as specified in § 3.91(b)(3)(iv) of this title, as determined by the Secretary to provide restitution to the program for harm done to the program.
(n) What minimum recall-related provisions must be included in infant formula cost containment contracts? A State agency must include remedies in the event of a recall in their infant formula cost containment contract to protect against disruption in infant formula supply to participants. The State agency will determine when remedies take effect and remain in effect, in accordance with applicable Program requirements and the infant formula cost containment contract. At minimum, recall remedies in the State agency’s infant formula cost containment contract must:
(1) Allow infant formula to be issued in all unit sizes that may exceed the maximum monthly allowance. The State agency and contracted infant formula manufacturer must prioritize unit sizes that most closely provide the maximum monthly allowance;
(2) Allow the issuance of non-contract brand infant formulas without medical documentation, with the exception of participants receiving Food Package III as defined in section 246.10(e)(3) of this Part; and
(3) When any contract brand infant formula of the contracted manufacturer is the subject of a recall, require the contracted infant formula manufacturer to:
(i) Provide the State agency with an action plan, within a timeline established within the contract, which includes supply data, to meet infant formula demand and limit disruption to Program participants in the affected jurisdiction(s); and
(ii) Pay rebates on competitive, non-contract brand infant formula that meets the definition of infant formula at 7 CFR 246.2.
§ 246.17 Closeout procedures.
(a) General. State agencies shall submit preliminary and final closeout reports for each fiscal year. All obligations shall be liquidated before closure of a fiscal year grant. Obligations shall be reported for the fiscal year in which they occur.
(b) Fiscal year closeout reports. State agencies—
(1) Shall submit to FNS, within 30 days after the end of the fiscal year, preliminary financial reports which show cumulative actual expenditures and obligations for the fiscal year, or part thereof, for which Program funds were made available;
(2) Shall submit to FNS, within 120 days after the end of the fiscal year, final fiscal year closeout reports;
(3) May submit revised closeout reports. FNS will reimburse State agencies for additional costs claimed in a revised closeout report up to the State’s original grant level, if costs are properly justified and if funds are available for the fiscal year pertaining to the request. FNS will not be responsible for reimbursing State agencies for unreported expenditures later than one year after the end of the fiscal year in which they were incurred.
(c) Grant closeout procedures. When grants to State agencies are terminated, the following procedures shall be performed in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(1) FNS may disqualify a State agency’s participation under the Program, in whole or in part, or take such remedies as may be legal and appropriate, whenever FNS determines that the State agency failed to comply with the conditions prescribed in this part, in its Federal-State Agreement, or in FNS guidelines and instructions. FNS will promptly notify the State agency in writing of the disqualification together with the effective date. A State agency shall disqualify a local agency by written notice whenever it is determined by FNS or the State agency that the local agency has failed to comply with the requirements of the Program.
(2) FNS or the State agency may disqualify the State agency or restrict its participation in the Program when both parties agree that continuation under the Program would not produce beneficial results commensurate with the further expenditure of funds. The State agency or the local agency may disqualify the local agency or restrict its participation in the Program under the same conditions. The two parties shall agree upon the conditions of disqualification, including the effective date thereof, and, in the case of partial disqualification, the portion to be disqualified.
(3) Upon termination of a grant, the affected agency shall not incur new obligations for the disqualified portion after the effective date, and shall cancel as many outstanding obligations as possible. FNS will allow full credit to the State agency for the Federal share of the noncancellable obligations properly incurred by the State agency prior to disqualification, and the State agency shall do the same for the local agency.
(4) A grant closeout shall not affect the retention period for, or Federal rights of access to, grant records as specified in § 246.25. The closeout of a grant does not affect the State or local agency’s responsibilities regarding property or with respect to any Program income for which the State or local agency is still accountable.
(5) A final audit is not a required part of the grant closeout and should not be needed unless there are problems with the grant that require attention. If FNS considers a final audit to be necessary, it shall so inform OIG. OIG will be responsible for ensuring that necessary final audits are performed and for any necessary coordination with other Federal cognizant audit agencies or the State or local auditors. Audits performed in accordance with § 246.20 may serve as final audits providing such audits meet the needs of requesting agencies. If the grant is closed out without the audit, FNS reserves the right to disallow and recover an appropriate amount after fully considering any recommended disallowances resulting from an audit which may be conducted later.
§ 246.18 Administrative review of State agency actions.
(a) Adverse actions subject to administrative reviews—(1) Vendor appeals—(i) Adverse actions subject to full administrative reviews. Except as provided elsewhere in paragraph (a)(1) of this section, the State agency must provide full administrative reviews to vendors that appeal the following adverse actions:
(A) Denial of authorization based on the application of the vendor selection criteria for minimum variety and quantity of authorized supplemental foods (§ 246.12(g)(3)(i)), or on a determination that the vendor is attempting to circumvent a sanction (§ 246.12(g)(6));
(B) Termination of an agreement for cause;
(C) Disqualification; and
(D) Imposition of a fine or a civil money penalty in lieu of disqualification.
(ii) Adverse actions subject to abbreviated administrative reviews. The State agency must provide abbreviated administrative reviews to vendors that appeal the following adverse actions, unless the State agency decides to provide full administrative reviews for any of these types of adverse actions:
(A) Denial of authorization based on the vendor selection criteria for business integrity or for a current SNAP disqualification or civil money penalty for hardship (§ 246.12(g)(3)(ii) and (g)(3)(iii));
(B) Denial of authorization based on the application of the vendor selection criteria for competitive price (§ 246.12(g)(4));
(C) The application of the State agency’s vendor peer group criteria and the criteria used to identify vendors that are above-50-percent vendors or comparable to above-50-percent vendors;
(D) Denial of authorization based on a State agency-established vendor selection criterion if the basis of the denial is a WIC vendor sanction or a SNAP withdrawal of authorization or disqualification;
(E) Denial of authorization based on the State agency’s vendor limiting criteria (§ 246.12(g)(2));
(F) Denial of authorization because a vendor submitted its application outside the timeframes during which applications are being accepted and processed as established by the State agency under § 246.12(g)(8);
(G) Termination of an agreement because of a change in ownership or location or cessation of operations (§ 246.12(h)(3)(xvii));
(H) Disqualification based on a trafficking conviction (§ 246.12(l)(1)(i));
(I) Disqualification based on the imposition of a SNAP civil money penalty for hardship (§ 246.12(l)(2)(ii)); and
(J) Disqualification or a civil money penalty imposed in lieu of disqualification based on a mandatory sanction imposed by another WIC State agency (§ 246.12(l)(2)(iii)).
(K) A civil money penalty imposed in lieu of disqualification based on a SNAP disqualification under § 246.12(l)(1)(vii) and,
(L) Denial of an application based on a determination of whether an applicant vendor is currently authorized by SNAP.
(iii) Actions not subject to administrative reviews. The State agency may not provide administrative reviews pursuant to this section to vendors that appeal the following actions:
(A) The validity or appropriateness of the State agency’s vendor limiting criteria (§ 246.12(g)(2)) or vendor selection criteria for minimum variety and quantity of supplemental foods, business integrity, and current Supplemental Nutrition Assistance Program disqualification or civil money penalty for hardship (§ 246.12(g)(3));
(B) The validity or appropriateness of the State agency’s selection criteria for competitive price (§ 246.12(g)(4)), including, but not limited to, vendor peer group criteria and the criteria used to identify vendors that are above-50-percent vendors or comparable to above-50-percent vendors;
(C) The validity or appropriateness of the State agency’s participant access criteria and the State agency’s participant access determinations;
(D) The State agency’s determination to include or exclude an infant formula manufacturer, wholesaler, distributor, or retailer from the list required pursuant to § 246.12(g)(11);
(E) The validity or appropriateness of the State agency’s prohibition of incentive items and the State agency’s denial of an above-50-percent vendor’s request to provide an incentive item to customers pursuant to § 246.12(h)(8);
(F) The State agency’s determination whether to notify a vendor in writing when an investigation reveals an initial violation for which a pattern of violations must be established in order to impose a sanction, pursuant to § 246.12(l)(3);
(G) The State agency’s determination whether a vendor had an effective policy and program in effect to prevent trafficking and that the ownership of the vendor was not aware of, did not approve of, and was not involved in the conduct of the violation (§ 246.12(l)(1)(i)(B));
(H) Denial of authorization if the State agency’s vendor authorization is subject to the procurement procedures applicable to the State agency;
(I) The expiration of a vendor’s agreement;
(J) Disputes regarding food instrument or cash-value voucher payments and vendor claims (other than the opportunity to justify or correct a vendor overcharge or other error, as permitted by § 246.12(k)(3); and
(K) Disqualification of a vendor as a result of disqualification from SNAP (§ 246.12(l)(1)(vii)).
(2) Effective date of adverse actions against vendors. The State agency must make denials of authorization and disqualifications imposed under § 246.12(l)(1)(i) effective on the date of receipt of the notice of adverse action. The State agency must make all other adverse actions effective no earlier than 15 days after the date of the notice of the adverse action and no later than 90 days after the date of the notice of adverse action or, in the case of an adverse action that is subject to administrative review, no later than the date the vendor receives the review decision.
(3) Local agency appeals—(i) Adverse actions subject to full administrative reviews. Except as provided in paragraph (a)(3)(ii) of this section, the State agency must provide full administrative reviews to local agencies that appeal the following adverse actions:
(A) Denial of a local agency’s application;
(B) Disqualification of a local agency; and
(C) Any other adverse action that affects a local agency’s participation.
(ii) Actions not subject to administrative reviews. The State agency may not provide administrative reviews pursuant to this section to local agencies that appeal the following actions:
(A) Expiration of the local agency’s agreement; and
(B) Denial of a local agency’s application if the State agency’s local agency selection is subject to the procurement procedures applicable to the State agency;
(iii) Effective date of adverse actions against local agencies. The State agency must make denials of local agency applications effective immediately. The State agency must make all other adverse actions effective no earlier than 60 days after the date of the notice of the adverse action and no later than 90 days after the date of the notice of adverse action or, in the case of an adverse action that is subject to administrative review, no later than the date the local agency receives the review decision.
(4) Farmer or farmers’ market appeals—(i) Adverse actions. The State agency shall provide a hearing procedure whereby farmers or farmers’ markets adversely affected by certain actions of the State agency may appeal those actions. A farmer or farmers’ market may appeal an action of the State agency denying its application to participate, imposing a sanction, or disqualifying it from participation in the program. Expiration of an agreement is not subject to appeal.
(ii) Effective date of adverse actions against farmers or farmers’ markets. The State agency must make denials of authorization and disqualifications effective on the date of receipt of the notice of adverse action. The State agency must make all other adverse actions effective no earlier than 15 days after the date of the notice of the adverse action and no later than 90 days after the date of the notice of adverse action or, in the case of an adverse action that is subject to administrative review, no later than the date the farmer receives the review decision. The State agency must make all other adverse actions effective no earlier than 15 days after the date of the notice of adverse action and no later than 90 days after the date of the notice of adverse action or, in the case of an adverse action that is subject to an administrative review, no later than the date the farmer or farmers’ market receives the review decision.
(b) Full administrative review procedures. The State agency must develop procedures for a full administrative review of the adverse actions listed in paragraphs (a)(1)(i), (a)(3) and (a)(4) of this section. At a minimum, these procedures must provide the vendor, farmer or farmers’ market or local agency with the following:
(1) Written notification of the adverse action, the procedures to follow to obtain a full administrative review and the cause(s) for and the effective date of the action. When a vendor is disqualified due in whole or in part to violations in § 246.12(l)(1), such notification must include the following statement: “This disqualification from WIC may result in disqualification as a retailer in SNAP. Such disqualification is not subject to administrative or judicial review under SNAP.”
(2) The opportunity to appeal the adverse action within a time period specified by the State agency in its notification of adverse action.
(3) Adequate advance notice of the time and place of the administrative review to provide all parties involved sufficient time to prepare for the review.
(4) The opportunity to present its case and at least one opportunity to reschedule the administrative review date upon specific request. The State agency may set standards on how many review dates can be scheduled, provided that a minimum of two review dates is allowed.
(5) The opportunity to cross-examine adverse witnesses. When necessary to protect the identity of WIC Program investigators, such examination may be conducted behind a protective screen or other device (also referred to as an “in camera” examination).
(6) The opportunity to be represented by counsel.
(7) The opportunity to examine prior to the review the evidence upon which the State agency’s action is based.
(8) An impartial decision-maker, whose determination is based solely on whether the State agency has correctly applied Federal and State statutes, regulations, policies, and procedures governing the Program, according to the evidence presented at the review. The State agency may appoint a reviewing official, such as a chief hearing officer or judicial officer, to review appeal decisions to ensure that they conform to approved policies and procedures.
(9) Written notification of the review decision, including the basis for the decision, within 90 days from the date of receipt of the request for an administrative review from a vendor, farmer, or farmer’s market, and within 60 days from the date of receipt of a local agency’s request for an administrative review. These timeframes are only administrative requirements for the State agency and do not provide a basis for overturning the State agency’s adverse action if a decision is not made within the specified timeframe.
(c) Abbreviated administrative review procedures. Except when the State agency decides to provide full administrative reviews for the adverse actions listed in paragraph (a)(1)(ii) of this section, the State agency must develop procedures for an abbreviated administrative review of the adverse actions listed in paragraph (a)(1)(ii) of this section. At a minimum, these procedures must provide the vendor, farmer, or farmers’ market with the following:
(1) Written notification of the adverse action, the procedures to follow to obtain an abbreviated administrative review, the cause(s) for and the effective date of the action, and an opportunity to provide a written response; and
(2) A decision-maker who is someone other than the person who rendered the initial decision on the action and whose determination is based solely on whether the State agency has correctly applied Federal and State statutes, regulations, policies, and procedures governing the Program, according to the information provided to the vendor, farmer, or farmers’ market concerning the cause(s) for the adverse action and the response from the vendor, farmer, or farmers’ market.
(3) Written notification of the review decision, including the basis for the decision, within 90 days of the date of receipt of the request for an administrative review. This timeframe is only an administrative requirement for the State agency and does not provide a basis for overturning the State agency’s adverse action if a decision is not made within the specified timeframe.
(d) Continuing responsibilities. Appealing an action does not relieve a local agency, farmer or farmers’ market or vendor that is permitted to continue program operations while its appeal is in process from the responsibility of continued compliance with the terms of any written agreement with the State agency.
(e) Finality and effective date of decisions. The State agency procedures must provide that review decisions rendered under both the full and abbreviated review procedures are the final State agency action. If the adverse action under review has not already taken effect, the State agency must make the action effective on the date of receipt of the review decision by the vendor, farmer or farmers’ market or local agency.
(f) Judicial review. If the review decision upholds the adverse action against the vendor, farmer or farmers’ market or local agency, the State agency must inform the vendor, farmer or farmers’ market or local agency that it may be able to pursue judicial review of the decision.
Subpart F—Monitoring and Review
§ 246.19 Management evaluation and monitoring reviews.
(a) Management evaluations and reviews. (1) FNS and each State agency shall establish a management evaluation system in order to assess the accomplishment of Program objectives as provided under this part, FNS guidelines, instructions, and the Federal-State agreement with the Department. FNS will provide assistance to States in discharging this responsibility, establish standards and procedures to determine how well the objectives of this part are being accomplished, and implement sanction procedures as warranted by State Program performance.
(2) The State agency must submit a corrective action plan, including implementation timeframes, within 60 days of receipt of an FNS management evaluation report containing a finding that the State agency did not comply with program requirements. If FNS determines through a management evaluation or other means that during a fiscal year the State agency has failed, without good cause, to demonstrate efficient and effective administration of its program, or has failed to comply with its corrective action plan, or any other requirements contained in this part or the State Plan, FNS may withhold an amount up to 100 percent of the State agency’s nutrition services and administration funds for that year.
(3) Sanctions imposed upon a State agency by FNS in accordance with this section (but not claims for repayment assessed against a State agency) may be appealed in accordance with the procedures established in § 246.22. Before carrying out any sanction against a State agency, the following procedures will be followed:
(i) FNS will notify the Chief State Health Officer or equivalent in writing of the deficiencies found and of FNS’ intention to withhold nutrition services and administration funds unless an acceptable corrective action plan is submitted by the State agency to FNS within 60 days after mailing of notification.
(ii) The State agency shall develop a corrective action plan with a schedule according to which the State agency shall accomplish various actions to correct the deficiencies and prevent their future recurrence.
(iii) If the corrective action plan is acceptable, FNS will notify the Chief State Health Officer or equivalent in writing within 30 days of receipt of the plan. The letter approving the corrective action plan will describe the technical assistance that is available to the State agency to correct the deficiencies. The letter will also advise the Chief State Health Officer or equivalent of the sanctions to be imposed if the corrective action plan is not implemented according to the schedule set forth in the approved plan.
(iv) Upon notification from the State agency that corrective action as been taken, FNS will assess such action, and, if necessary, will perform a follow-up review to determine if the noted deficiencies have been corrected. FNS will then advise the State agency of whether the actions taken are in compliance with the corrective action plan, and whether the deficiency is resolved or further corrective action is needed.
(v) If an acceptable corrective action plan is not submitted within 60 days, or if corrective action is not completed according to the schedule established in the corrective action plan, FNS may withhold nutrition services and administration funds through a reduction of the State agency Letter of Credit or by assessing a claim against the State agency. FNS will notify the Chief State Health Officer or equivalent of this action.
(vi) If compliance is achieved before the end of the fiscal year in which the nutrition services and administration funds are withheld, the funds withheld shall be restored to the State agency’s Letter of Credit. FNS is not required to restore funds withheld if compliance is not achieved until the subsequent fiscal year. If the 60-day warning period ends in the fourth quarter of a fiscal year, FNS may elect not to withhold funds until the next fiscal year.
(b) State agency responsibilities. (1) The State agency shall establish an on-going management evaluation system which includes at least the monitoring of local agency operations, the review of local agency financial and participation reports, the development of corrective action plans to resolve Program deficiencies, the monitoring of the implementation of corrective action plans, and on-site visits. The results of such actions shall be documented.
(2) Monitoring of local agencies must encompass evaluation of management, certification, nutrition education, breastfeeding promotion and support, participant services, civil rights compliance, accountability, financial management systems, and food delivery systems. If the State agency delegates the signing of vendor agreements, vendor training, or vendor monitoring to a local agency, it must evaluate the local agency’s effectiveness in carrying out these responsibilities.
(3) The State agency shall conduct monitoring reviews of each local agency at least once every two years. Such reviews shall include on-site reviews of a minimum of 20 percent of the clinics in each local agency or one clinic, whichever is greater. The State agency may conduct such additional on-site reviews as the State agency determines to be necessary in the interest of the efficiency and effectiveness of the program.
(4) The State agency must promptly notify a local agency of any finding in a monitoring review that the local agency did not comply with program requirements. The State agency must require the local agency to submit a corrective action plan, including implementation timeframes, within 60 days of receipt of a State agency report of a monitoring review containing a finding of program noncompliance. The State agency must monitor local agency implementation of corrective action plans.
(5) As part of the regular monitoring reviews, FNS may require the State agency to conduct in-depth reviews of specified areas of local agency operations, to implement a standard form or protocol for such reviews, and to report the results to FNS. No more than two such areas will be stipulated by FNS for any fiscal year and the areas will not be added or changed more often than once every two fiscal years. These areas will be announced by FNS at least six months before the beginning of the fiscal year.
(6) The State agency shall require local agencies to establish management evaluation systems to review their operations and those of associated clinics or contractors.
§ 246.20 Audits.
(a) Federal audit responsibilities. (1) OIG reserves the right to perform audits of State and local agencies and other organizations involved in the Program as determined by OIG to be necessary. In performing such audits, OIG will rely to the extent feasible on audit work performed by other Federal and non-Federal auditors.
(2) The State agency may take exception to particular audit findings and recommendations. The State agency shall submit a response or statement to FNS as to the action taken or a proposed corrective action plan regarding the findings. A proposed corrective action plan developed and submitted by the State agency shall include specific timeframes for its implementation and for completion of correction of deficiencies and their causes.
(3) FNS will determine whether Program deficiencies have been adequately corrected. If additional corrective action is necessary, FNS shall schedule a follow-up review, allowing a reasonable time for such corrective action to be taken.
(b) State audit responsibilities. (1) State agencies must obtain annual audits in accordance with 2 CFR part 200, subpart F, and appendix XI, Compliance Supplement, and USDA implanting regulations 2 CFR parts 400 and 415. In addition, States must require local agencies under their jurisdiction to obtain audits in accordance with 2 CFR part 200, subpart F, and appendix XI, Compliance Supplement, and USDA implementing regulations 2 CFR parts 400 and 415.
(2) Each State agency shall make all State or local agency sponsored audit reports of Program operations under its jurisdiction available for the Department’s review upon request. The cost of these audits shall be considered a part of nutrition services and administration costs and may be funded from the State or local agency nutrition services and administration funds, as appropriate. For purposes of determining the Program’s pro rata share of indirect costs associated with organization-wide audits, the cost of food shall not be considered in the total dollar amount of the Program.
§ 246.21 Investigations.
(a) Authority. The Department may make an investigation of any allegation of noncompliance with this part and FNS guidelines and instructions. The investigation may include, where appropriate, a review of pertinent practices and policies of any State or local agency, the circumstances under which the possible noncompliance with this part occurred, and other factors relevant to a determination as to whether the State or local agency has failed to comply with the requirements of this part.
(b) Confidentiality. No State or local agency, participant, or other person shall intimidate, threaten, coerce, or discriminate against any individual for the purpose of interfering with any right or privilege under this part because that person has made a complaint or formal allegation, or has testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this part. The identity of every complainant shall be kept confidential except to the extent necessary to carry out the purposes of this part, including the conducting of any investigation, hearing, or judicial proceeding.
Subpart G—Miscellaneous Provisions
§ 246.22 Administrative appeal of FNS decisions.
(a) Right to appeal. When FNS asserts a sanction against a State agency under the provisions of § 246.19, the State agency may appeal and must be afforded a hearing or review by an FNS Administrative Review Officer. The right of appeal shall not apply to claims for repayment assessed by FNS against the State agency under § 246.23(a). A State agency shall have the option of requesting a hearing to present its position or a review of pertinent documents and records including any additional written submission prepared by the State agency.
(1) FNS will send a written notice by Certified Mail-Return Receipt Requested to the state agency or otherwise ensure receipt of such notice by the agency when asserting a sanction against a State agency as specified in § 246.19(a).
(2) A State agency aggrieved by a sanction asserted against it may file a written request with the Director, Administrative Review Division, U.S. Department of Agriculture, Food and Nutrition Service, 3101 Park Center Drive, Alexandria, Va. 22302, for a hearing or a review of the record. Such request shall be sent by Certified Mail-Return Receipt Requested and postmarked within 30 days of the date of receipt of the sanction notice. The envelope containing the request shall be prominently marked “REQUEST FOR REVIEW OR HEARING.” The request shall clearly identify the specific FNS sanction(s) being appealed and shall include a photocopy of the FNS notice of sanction. If the State agency does not request a review of hearing within 30 days of receipt of the notice, the administrative decision on the sanctions will be considered final.
(b) Acknowledgment of request. Within 15 days of receipt by the Director of the Administrative Review Division of a request for review or hearing, the Director will provide the State agency with a written acknowledgment of the request.
(1) The acknowledgment will include the name and address of the FNS Administrative Review Officer to review the sanction;
(2) The acknowledgment will also notify the State agency that within 30 days of the receipt of the acknowledgment, the State agency shall submit three sets of the following information to the Administrative Review Officer—
(i) A clear, concise identification of the issue(s) in dispute;
(ii) The State agency’s position with respect to the issue(s) in dispute;
(iii) The pertinent facts and reasons in support of the State agency’s position with respect to the issue(s) in dispute and a copy of the specific sanction notice provided by FNS;
(iv) All pertinent documents, correspondence and records which the State agency believes are relevant and helpful toward a more thorough understanding of the issue(s) in dispute;
(v) The relief sought by the State agency;
(vi) The identity of the person(s) presenting the State agency’s position when a hearing is involved; and
(vii) A list of prospective State agency witnesses when a hearing is involved.
(c) FNS action. (1) When a hearing is requested pursuant to this section, the Administrative Review Officer will, within 60 days after receipt of the State agency’s information, schedule and conduct the hearing. The State agency will be advised of the time, date and location of the hearing at least 10 days in advance.
(2) When a hearing is requested, the FNS Administrative Review Officer will make a final determination within 30 days after the hearing, and the final determination will take effect upon delivery of the written notice of this final decision to the State agency.
(3) When a review is requested, the FNS Administrative Review Officer will review information presented by a State agency and will make a final determination within 30 days after receipt of that information. The final determination will take effect upon delivery of the written notice of this final decision to the State agency.
§ 246.23 Claims and penalties.
(a) Claims against State agencies. (1) If FNS determines through a review of the State agency’s reports, program or financial analysis, monitoring, audit, or otherwise, that any Program funds provided to a State agency for supplemental foods or nutrition services and administration purposes were, through State or local agency negligence or fraud, misused or otherwise diverted from Program purposes, a formal claim will be assessed by FNS against the State agency. The State agency shall pay promptly to FNS a sum equal to the amount of the nutrition services and administration funds or the value of supplemental foods food instruments, or cash-value vouchers so misused or diverted.
(2) If FNS determines that any part of the Program funds received by a State agency; or supplemental foods, either purchased or donated commodities; or food instruments or cash-value vouchers, were lost as a result of thefts, embezzlements, or unexplained causes, the State agency shall, on demand by FNS, pay to FNS a sum equal to the amount of the money or the value of the supplemental foods, food instruments, or cash-value vouchers so lost.
(3) The State agency shall have full opportunity to submit evidence, explanation or information concerning alleged instances of noncompliance or diversion before a final determination is made in such cases.
(4) FNS will establish a claim against any State agency that has not accounted for the disposition of all redeemed food instruments and cash-value vouchers and taken appropriate follow-up action on all redeemed food instruments and cash-value vouchers that cannot be matched against valid enrollment and issuance records, including cases that may involve fraud, unless the State agency has demonstrated to the satisfaction of FNS that it has:
(i) Made every reasonable effort to comply with this requirement;
(ii) Identified the reasons for its inability to account for the disposition of each redeemed food instrument or cash-value voucher; and
(iii) Provided assurances that, to the extent considered necessary by FNS, it will take appropriate actions to improve its procedures.
(b) Interest charge on claims against State agencies. If an agreement cannot be reached with the State agency for payment of its debts or for offset of debts on its current Letter of Credit within 30 days from the date of the first demand letter from FNS, FNS will assess an interest (late) charge against the State agency. Interest accrual shall begin on the 31st day after the date of the first demand letter, bill or claim, and shall be computed monthly on any unpaid balance as long as the debt exists. From a source other than the Program, the State agency shall provide the funds necessary to maintain Program operations at the grant level authorized by FNS.
(c) Claims—(1) Claims against participants. (i) Procedures. If the State agency determines that program benefits have been obtained or disposed of improperly as the result of a participant violation, the State agency must establish a claim against the participant for the full value of such benefits. For all claims, the State agency must issue a letter demanding repayment. If full restitution is not made or a repayment schedule is not agreed on within 30 days of receipt of the letter, the State agency must take additional collection actions until restitution is made or a repayment schedule is agreed on, unless the State agency determines that further collection actions would not be cost-effective. The State agency must establish standards, based on a cost benefit analysis, for determining when collection actions are no longer cost-effective. At the time the State agency issues the demand letter, the State agency must advise the participant of the procedures to follow to obtain a fair hearing pursuant to § 246.9 and that failure to pay the claim may result in disqualification. In addition to establishing a claim, the State agency must determine whether disqualification is required by § 246.12(u)(2).
(ii) Types of restitution. In lieu of financial restitution, the State agency may allow participants or parents or caretakers of infant or child participants for whom financial restitution would cause undue hardship to provide restitution by performing in-kind services determined by the State agency. Restitution may not include offsetting the claim against future program benefits, even if agreed to by the participant or the parent or caretaker of an infant or child participant.
(iii) Disposition of claims. The State agency must document the disposition of all participant claims.
(2) Claims against the State agency. FNS will assert a claim against the State agency for losses resulting from program funds improperly spent as a result of dual participation, if FNS determines that the State agency has not complied with the requirements in § 246.7(l)(1).
(3) Delegation of claims responsibility. The State agency may delegate to its local agencies the responsibility for collecting participant claims.
(d) Penalties. In accordance with section 12(g) of the National School Lunch Act, whoever embezzles, willfully misapplies, steals or obtains by fraud any funds, assets or property provided under section 17 of the Child Nutrition Act of 1966, as amended, whether received directly or indirectly from USDA, or whoever receives, conceals or retains such funds, assets or property for his or her own interest, knowing such funds, assets or property have been embezzled, willfully misapplied, stolen, or obtained by fraud shall, if such funds, assets or property are of the value of $100 or more, be fined not more than $25,000 or imprisoned not more than five years, or both, or if such funds, assets or property are of a value of less than $100, shall be fined not more than $1,000 or imprisoned for not more than one year, or both.
§ 246.24 Procurement and property management.
(a) Requirements. State and local agencies shall ensure that subgrantees comply with the requirements for the nonprocurement debarment/suspension requirements and, if applicable, the lobbying restrictions as required in 2 CFR part 180, OMB Guidelines to Agencies on Government-wide Debarment and Suspension, 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400, part 415, and part 417 concerning the procurement and allowability of food in bulk lots, supplies, equipment and other services with Program funds. These requirements are adopted to ensure that such materials and services are obtained for the Program in an effective manner and in compliance with the provisions of applicable law and executive orders.
(b) Contractual responsibilities. The standards contained in A-130 and 2 CFR part 200, subpart D and Appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards and USDA implementing regulations 2 CFR part 400 and part 415 do not relieve the State or local agency of the responsibilities arising under its contracts. The State agency is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the Program. This includes, but is not limited to, disputes, claims, protests of award, source evaluation, or other matters of a contractual nature. Matters concerning violation of law are to be referred to such local, State or Federal authority as may have proper jurisdiction.
(c) State regulations. The State or local agency may use its own procurement regulations which reflect applicable State and local regulations, provided that procurements made with Program funds adhere to the standards set forth in A-130 and 2 CFR part 200, subpart D and Appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards and USDA implementing regulations 2 CFR part 400 and part 415.
(d) Property acquired with Program funds. State and local agencies shall observe the standards prescribed in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 in their utilization and disposition of real property and equipment, including automated data processing equipment, acquired in whole or in part with Program funds.
§ 246.25 Records and reports.
(a) Recordkeeping requirements. Each State and local agency shall maintain full and complete records concerning Program operations. Such records shall comply with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 and the following requirements:
(1) Records shall include, but not be limited to, information pertaining to financial operations, food delivery systems, food instrument issuance and redemption, equipment purchases and inventory, certification, nutrition education, including breastfeeding promotion and support, civil rights and fair hearing procedures.
(2) All records shall be retained for a minimum of three years following the date of submission of the final expenditure report for the period to which the report pertains. If any litigation, claim, negotiation, audit or other action involving the records has been started before the end of the three-year period, the records shall be kept until all issues are resolved, or until the end of the regular three-year period, whichever is later. If FNS deems any of the Program records to be of historical interest, it may require the State or local agency to forward such records to FNS whenever either agency is disposing of them.
(3) Records for nonexpendable property acquired in whole or in part with Program funds shall be retained for three years after its final disposition.
(4) All records shall be available during normal business hours for representatives of the Department and the Comptroller General of the United States to inspect, audit, and copy. Any reports or other documents resulting from the examination of such records that are publicly released may not include confidential applicant or participant information.
(b) Financial and participation reports—(1) Monthly reports. (i) State agencies must submit financial and program performance data on a monthly basis, as specified by FNS, to support program management and funding decisions. Such information must include, but may not be limited to:
(A) Actual and projected participation;
(B) Actual and projected food funds expenditures;
(C) Actual and projected rebate payments received from manufacturers.
(D) A listing by source year of food and NSA funds available for expenditure; and,
(E) NSA expenditures and unliquidated obligations.
(ii) State agencies must require local agencies to report such financial and participation information as is necessary for the efficient management of food and NSA funds expenditures.
(2) Annual reports. (i) Every year, State agencies must report to FNS the average number of migrant farmworker household members participating in the Program during a 12-month period of time specified by FNS.
(ii) State agencies must submit itemized NSA expenditure reports annually as an addendum to their WIC Program closeout reports, as required by § 246.17(b)(2).
(iii) The State agency must submit local agency breastfeeding participation data on an annual basis to FNS.
(3) Biennial reports. (i) Participant characteristics report. State and local agencies must provide such information as may be required by FNS to provide a biennial participant characteristics report. This includes, at a minimum, information on income and nutritional risk characteristics of participants, information on breastfeeding incidence and duration, and participation in the Program by category (i.e., pregnant, breastfeeding and postpartum women, infants and children) within each priority level (as established in § 246.7(e)(4)) and by migrant farmworker households.
(ii) Civil rights report. Racial and ethnic participation data contained in the biennial participant characteristics report will also be used to fulfill civil rights reporting requirements.
(c) Other reports. State agencies must submit reports to reflect additions and deletions of local agencies administering the WIC Program and local agency address changes as these events occur.
(d) Source documentation. To be acceptable for audit purposes, all financial and Program performance reports shall be traceable to source documentation.
(e) Certification of reports. Financial and Program reports shall be certified as to their completeness and accuracy by the person given that responsibility by the State agency.
(f) Use of reports. FNS will use State agency reports to measure progress in achieving objectives set forth in the State Plan, and this part, or other State agency performance plans. If it is determined, through review of State agency reports, Program or financial analysis, or an audit, that a State agency is not meeting the objectives set forth in its State Plan, FNS may request additional information including, but not limited to, reasons for failure to achieve its objectives.
(g) Extension of reporting deadline. FNS may extend the due date for any Financial and Participation Report upon receiving a justified request from the State agency. The State agency should not wait until the due date if an extension is to be requested, but should submit the request as soon as the need is known. Failure by a State agency to submit a report by its due date may result in appropriate enforcement actions by FNS in accordance with § 246.19(a)(2), including withholding of further grant payments, suspension or termination of the grant.
§ 246.26 Other provisions.
(a) No aid reduction. The value of benefits or assistance available under the Program shall not be considered as income or resources of participants or their families for any purpose under Federal, State, or local laws, including, but not limited to, laws relating to taxation, welfare and public assistance programs.
(b) Statistical information. FNS reserves the right to use information obtained under the Program in a summary, statistical or other form which does not identify particular individuals.
(c) Medical information. FNS may require the State or local agencies to supply medical data and other information collected under the Program in a form that does not identify particular individuals, to enable the Secretary or the State agencies to evaluate the effect of food intervention upon low-income individuals determined to be at nutritional risk.
(d) Confidentiality of applicant and participant information—(1) WIC purposes. (i) Confidential applicant and participant information is any information about an applicant or participant, whether it is obtained from the applicant or participant, another source, or generated as a result of WIC application, certification, or participation, that individually identifies an applicant or participant and/or family member(s). Applicant or participant information is confidential, regardless of the original source and exclusive of previously applicable confidentiality provided in accordance with other Federal, State or local law.
(ii) Except as otherwise permitted by this section, the State agency must restrict the use and disclosure of confidential applicant and participant information to persons directly connected with the administration or enforcement of the WIC Program whom the State agency determine have a need to know the information for WIC Program purposes. These persons may include, but are not limited to: personnel from its local agencies and other WIC State or local agencies; persons under contract with the State agency to perform research regarding the WIC Program, and persons investigating or prosecuting WIC Program violations under Federal, State or local law.
(2) Non-WIC purposes. (i) Use by WIC State and local agencies. Any WIC State or local agency may use confidential applicant and participant information in the administration of its other programs that serve persons eligible for the WIC Program in accordance with paragraph (h) of this section.
(ii) Disclosure to public organizations. The State agency and its local agencies may disclose confidential applicant and participant information to public organizations for use in the administration of their programs that serve persons eligible for the WIC Program in accordance with paragraph (h) of this section.
(3) Child abuse and neglect reporting. Staff of the State agency and its local agencies who are required by State law to report known or suspected child abuse or neglect may disclose confidential applicant and participant information without the consent of the participant or applicant to the extent necessary to comply with such law.
(4) Release forms. Except in the case of subpoenas or search warrants (see paragraph (i) of this section), the State agency and its local agencies may disclose confidential applicant and participant information to individuals or entities not listed in this section only if the affected applicant or participant signs a release form authorizing the disclosure and specifying the parties to which the information may be disclosed. The State or local agency must permit applicants and participants to refuse to sign the release form and must notify the applicants and participants that signing the form is not a condition of eligibility and refusing to sign the form will not affect the applicant’s or participant’s application or participation in the WIC Program. Release forms authorizing disclosure to private physicians or other health care providers may be included as part of the WIC application or certification process. All other requests for applicants or participants to sign voluntary release forms must occur after the application and certification process is completed.
(5) Access to information by applicants and participants. The State or local agency must provide applicants and participants access to all information they have provided to the WIC Program. In the case of an applicant or participant who is an infant or child, the access may be provided to the parent or guardian of the infant or child, assuming that any issues regarding custody or guardianship have been settled. However, the State or local agency need not provide the applicant or participant (or the parent or guardian of an infant or child) access to any other information in the file or record such as documentation of income provided by third parties and staff assessments of the participant’s condition or behavior, unless required by Federal, State, or local law or policy or unless the information supports a State or local agency decision being appealed pursuant to § 246.9.
(e) Confidentiality of vendor information. Confidential vendor information is any information about a vendor (whether it is obtained from the vendor or another source) that individually identifies the vendor, except for vendor’s name, address, telephone number, Web site/e-mail address, store type, and authorization status. Except as otherwise permitted by this section, the State agency must restrict the use or disclosure of confidential vendor information to:
(1) Persons directly connected with the administration or enforcement of the WIC Program or SNAP who the State agency determines have a need to know the information for purposes of these programs. These persons may include personnel from its local agencies and other WIC State and local agencies and persons investigating or prosecuting WIC or SNAP violations under Federal, State, or local law;
(2) Persons directly connected with the administration or enforcement of any Federal or State law or local law or ordinance. Prior to releasing the information to one of these parties (other than a Federal agency), the State agency must enter into a written agreement with the requesting party specifying that such information may not be used or redisclosed except for purposes directly connected to the administration or enforcement of a Federal, or State law; and
(3) A vendor that is subject to an adverse action, including a claim, to the extent that the confidential information concerns the vendor subject to the adverse action and is related to the adverse action.
(4) At the discretion of the State agency, all authorized vendors and vendor applicants regarding vendor sanctions which have been imposed, identifying only the vendor’s name, address, length of the disqualification or amount of the civil money penalty, and a summary of the reason(s) for such sanction provided in the notice of adverse action. Such information may be disclosed only following the exhaustion of all administrative and judicial review, in which the State agency has prevailed, regarding the sanction imposed on the subject vendor, or the time period for requesting such review has expired.
(f) Confidentiality of SNAP retailer information. Except as otherwise provided in this section, the State agency must restrict the use or disclosure of information about SNAP retailers obtained from SNAP, including information provided pursuant to Section 9(c) of the Food and Nutrition Act of 2008 (7 U.S.C. 2018(c)) and § 278.1(q) of this chapter, to persons directly connected with the administration or enforcement of the WIC Program.
(g) USDA and the Comptroller General. The State agency must provide the Department and the Comptroller General of the United States access to all WIC Program records, including confidential vendor, applicant and participant information, pursuant to § 246.25(a)(4).
(h) Requirements for use and disclosure of confidential applicant and participant information for non-WIC purposes. The State or local agency must take the following steps before using or disclosing confidential applicant or participant information for non-WIC purposes pursuant to paragraph (d)(2) of this section.
(1) Designation by chief State health officer. The chief State health officer (or, in the case of an Indian State agency, the governing authority) must designate in writing the permitted non-WIC uses of the information and the names of the organizations to which such information may be disclosed.
(2) Notice to applicants and participants. The applicant or participant must be notified either at the time of application (in accordance with § 246.7(i)(11)) or through a subsequent notice that the chief State health officer (or, in the case of an Indian State agency, the governing authority) may authorize the use and disclosure of information about their participation in the WIC Program for non-WIC purposes. This statement must also indicate that such information will be used by State and local WIC agencies and public organizations only in the administration of their programs that serve persons eligible for the WIC Program.
(3) Written agreement and State plan. The State or local agency disclosing the information must enter into a written agreement with the other public organization or, in the case of a non-WIC use by a State or local WIC agency, the unit of the State or local agency that will be using the information. The State agency must also include in its State plan, as specified in § 246.4(a)(24), a list of all organizations (including units of the State agency or local agencies) with which the State agency or its local agencies has executed or intends to execute a written agreement. The written agreement must:
(i) Specify that the receiving organization may use the confidential applicant and participant information only for:
(A) Establishing the eligibility of WIC applicants or participants for the programs that the organization administers;
(B) Conducting outreach to WIC applicants and participants for such programs;
(C) Enhancing the health, education, or well-being of WIC applicants or participants who are currently enrolled in such programs, including the reporting of known or suspected child abuse or neglect that is not otherwise required by State law;
(D) Streamlining administrative procedures in order to minimize burdens on staff, applicants, or participants in either the receiving program or the WIC Program; and/or
(E) Assessing and evaluating the responsiveness of a State’s health system to participants’ health care needs and health care outcomes; and
(ii) Contain the receiving organization’s assurance that it will not use the information for any other purpose or disclose the information to a third party.
(i) Subpoenas and search warrants. The State agency may disclose confidential applicant, participant, or vendor information pursuant to a valid subpoena or search warrant in accordance with the following procedures:
(1) Subpoena procedures. In determining how to respond to a subpoena duces tecum (i.e., a subpoena for documents) or other subpoena for confidential information, the State or local agency must use the following procedures:
(i) Upon receiving the subpoena, immediately notify its State agency;
(ii) Consult with legal counsel for the State or local agency and determine whether the information requested is in fact confidential and prohibited by this section from being used or disclosed as stated in the subpoena;
(iii) If the State or local agency determines that the information is confidential and prohibited from being used or disclosed as stated in the subpoena, attempt to quash the subpoena unless the State or local agency determines that disclosing the confidential information is in the best interest of the Program. The determination to disclose confidential information without attempting to quash the subpoena should be made only infrequently; and,
(iv) If the State or local agency seeks to quash the subpoena or decides that disclosing the confidential information is in the best interest of the Program, inform the court or the receiving party that this information is confidential and seek to limit the disclosure by:
(A) Providing only the specific information requested in the subpoena and no other information; and,
(B) Limiting to the greatest extent possible the public access to the confidential information disclosed.
(2) Search warrant procedures. In responding to a search warrant for confidential information, the State or local agency must use the following procedures:
(i) Upon receiving the search warrant, immediately notify its State agency;
(ii) Immediately notify legal counsel for the State or local agency;
(iii) Comply with the search warrant; and,
(iv) Inform the individual(s) serving the search warrant that the information being sought is confidential and seek to limit the disclosure by:
(A) Providing only the specific information requested in the search warrant and no other information; and
(B) Limiting to the greatest extent possible the public access to the confidential information disclosed.
(j) Data collection related to local agencies. (1) Each State agency must collect data related to local agencies that have an agreement with the State agency to participate in the program for each of Federal fiscal years 2006 through 2009, including those local agencies that participated only for part of the fiscal year. Such data shall include:
(i) The name of each local agency;
(ii) The city in which each local agency was headquartered and the name of the state;
(iii) The amount of funds provided to the participating organization, i.e., the amount of federal funds provided for nutrition services and administration to each participating local agency; and
(iv) The type of participating organization, e.g., government agency, educational institution, non-profit organization/secular, non-profit organization/faith-based, and “other.”
(2) On or before August 31, 2007, and each subsequent year through 2010, State agencies must report to FNS data as specified in paragraph (j)(1) of this section for the prior Federal fiscal year. State agencies must submit this data in a format designated by FNS.
(k) Program evaluations. State and local WIC agencies and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department, related to programs authorized under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966 (42 U.S.C. 1786).
§ 246.27 Program information.
Any person who wishes information, assistance, records or other public material shall request such information from the State agency, or from the FNS Regional Office serving the appropriate State as listed below:
(a) Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, Vermont: U.S. Department of Agriculture, FNS, Northeast Region, 10 Causeway Street, room 501, Boston, Massachusetts 02222-1066.
(b) Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Puerto Rico, Virginia, Virgin Islands, West Virginia: U.S. Department of Agriculture, FNS, Mid-Atlantic Region, Mercer Corporate Park, 300 Corporate Boulevard, Robbinsville, New Jersey 08691-1598.
(c) Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee: U.S. Department of Agriculture, FNS, Southeast Region, 61 Forsyth Street, SW., room 8T36, Atlanta, Georgia 30303.
(d) Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin: U.S. Department of Agriculture, FNS, Midwest Region, 77 West Jackson Boulevard—20th Floor, Chicago, Illinois 60604-3507.
(e) Arkansas, Louisiana, New Mexico, Oklahoma, Texas: U.S. Department of Agriculture, FNS, Southwest Region, 1100 Commerce Street, room 5-C-30, Dallas, Texas 75242.
(f) Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah, Wyoming: U.S. Department of Agriculture, FNS, Mountain Plains Region, 1244 Speer Boulevard, suite 903, Denver, Colorado 80204.
(g) Alaska, American Samoa, Arizona, California, the Commonwealth of the Northern Mariana Islands, Guam, Hawaii, Idaho, Nevada, Oregon, Washington: U.S. Department of Agriculture, FNS, Western Region,90 Seventh Street, Suite #10-100, San Francisco, California 94103.
§ 246.28 OMB control numbers.
The following control numbers have been assigned to the information collection requirements in 7 CFR part 246 by the Office of Management and Budget pursuant to the Paperwork Reduction Act of 1980, Pub. L. 96-511.
| 7 CFR part 246 section where requirements are described | Current OMB control no. |
|---|---|
| .4(a) (8), (9), (11) | 0584-0386 |
| .5 | 0584-0043 |
| .6 | 0584-0043 |
| .7(a) | 0584-0386 |
| .7(e), (h), (j) | 0584-0043 |
| .7(n) | 0584-0386 |
| .7(i) | 0584-A536 |
| .10 | 0584-A536 |
| .11(a)(3) | 0584-0386 |
| .11(d) | 0584-0043 |
| .12(f), (i), (i)(3), (j) | 0584-0043 |
| .14(d)(1) | 0584-0043 |
| .16(c) | 0584-0043 |
| .17(c)(1) | 0584-0043 |
| .19 | 0584-0043 |
| .20(a) | 0584-0043 |
| .25(a), (b) | 0584-0043, 0584-0347 |
§ 246.29 Waivers of program requirements.
(a) Required conditions. The Secretary may waive or modify any qualified administrative requirement for one or more State agencies during an emergency period or supply chain disruption. Waivers or modifications may be issued following a State agency request or at the discretion of the Secretary. To be considered, a waiver or modification issued under this Section must meet the following requirements:
(1) The qualified administrative requirement cannot be implemented during any part of the emergency period or supply chain disruption.
(2) The waiver or modification is necessary to serve participants and does not substantially weaken the nutritional quality of supplemental foods.
(3) The waiver or modification would not result in material impairment of any statutory or regulatory rights of participants or potential participants as set forth at 7 CFR 246.8 or 7 CFR parts 15, 15a and 15b.
(4) The waiver or modification would not create a barrier to participation.
(5) The waiver or modification would not create additional eligibility requirements for participation.
(6) The waiver or modification would comply with 7 CFR 246.13(b).
(7) The waiver or modification must offer substitution options with similar nutritional quality, that most closely provide the maximum monthly allowance of supplemental foods, and that do not create new supplemental food categories as set forth in 7 CFR 246.10(e)(12) Table 4.
(8) A State agency that requests a waiver or modification meets additional requirements for the request and approval as determined necessary by FNS.
(b) Timeframes for waiver request and use. (1) Waiver starts. A waiver or modification may be granted any time during an emergency period or supply chain disruption.
(2) Waiver duration.
(i) A waiver or modification established during an emergency period may be available for the emergency period and up to 60 days after the end of the emergency period.
(ii) A waiver or modification established during a supply chain disruption may be available for:
(A) a period of up to 45 days from the date of waiver issuance and renewed with at least 15 days’ notice provided by the Secretary; and
(B) no more than 60 days after the supply chain disruption declaration ceases to exist.
(c) State agency waiver requests. State agencies shall submit requests for a modification or waiver for USDA approval. Requests shall include but not necessarily be limited to:
(1) The qualified administrative requirement the State agency is requesting to modify or waive (including the statutory or regulatory citation) and an explanation for why it cannot be met;
(2) Justification for why the waiver is necessary to continue WIC services;
(3) An explanation that the waiver meets the conditions set forth in 7 CFR 246.29(a);
(4) The emergency period or supply chain disruption under which the request is being made;
(5) The period for which the flexibility is being requested.
PART 247—COMMODITY SUPPLEMENTAL FOOD PROGRAM
§ 247.1 Definitions.
Following is a list of definitions that apply to the Commodity Supplemental Food Program (CSFP).
2 CFR part 200, means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by OMB. The part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F). (NOTE: Pre-Federal Award Requirements and Contents of Federal Awards (subpart C) does not apply to the National School Lunch Program).
Applicant means any person who applies to receive program benefits. Applicants include program participants applying for recertification.
Caseload means the number of persons the State agency may serve on an average monthly basis over the course of the caseload cycle.
Caseload cycle means the period from January 1 through the following December 31.
Certification means the use of procedures to determine an applicant’s eligibility for the program.
Certification period means the period during which a CSFP participant may continue to receive benefits under CSFP without a formal review of eligibility.
Commodities means nutritious foods purchased by USDA to supplement the diets of CSFP participants.
CSFP means the Commodity Supplemental Food Program.
Department means the U.S. Department of Agriculture.
Disqualification means the act of ending Program participation of a participant as a punitive sanction.
Dual participation means the simultaneous participation by an individual in CSFP at more than one distribution site.
Elderly persons means persons at least 60 years of age.
Fiscal year means the period from October 1 through the following September 30.
FNS means the Food and Nutrition Service.
Local agency means a public or private nonprofit agency, including an Indian tribal organization, which enters into an agreement with the State agency to administer CSFP at the local level.
Nonprofit agency means a private agency or organization with tax-exempt status under the Internal Revenue Code, or that has applied for tax-exempt status with the Internal Revenue Service.
Proxy means any person designated by a participant, or by the participant’s adult parent or caretaker, to obtain supplemental foods on behalf of the participant.
7 CFR part 250 means the Department’s regulations pertaining to the donation of foods for use in USDA food distribution programs.
State means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands.
State agency means the agency designated by the State to administer CSFP at the State level; an Indian tribe or tribal organization recognized by the Department of the Interior that administers the program for a specified tribe or tribes; or, the appropriate area office of the Indian Health Service of the Department of Health and Human Services.
State Plan means the document that describes the manner in which the State agency intends to administer the program in the State.
Subdistributing agency means an agency or organization that has entered into an agreement with the State agency to perform functions normally performed by the State, such as entering into agreements with eligible recipient agencies under which commodities are made available, ordering commodities and/or making arrangements for the storage and delivery of such commodities on behalf of eligible recipient agencies.
USDA implementing regulations include the following: 2 CFR part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; 2 CFR part 415, General Program Administrative Regulations; 2 CFR part 416, General Program Administrative Regulations for Grants and Cooperative Agreements to State and Local Governments; and 2 CFR part 418, New Restrictions on Lobbying.
§ 247.2 The purpose and scope of CSFP.
(a) How does CSFP help participants? Through CSFP, the Department provides nutritious commodities to help State and local agencies meet the nutritional needs of low-income elderly persons. CSFP also helps State and local agencies meet the nutritional needs of women, infants, and children who were certified and receiving CSFP benefits as of February 6, 2014. Food packages include such nutritious foods as canned fruits and vegetables, canned meat, poultry and other protein items, and grain products such as pasta, as well as other foods. Participants are offered the opportunity to receive nutrition education.
(b) How many persons may be served in CSFP? State agencies may serve eligible persons up to the caseload limit assigned to them by FNS. Caseload is the number of persons that may be served on an average monthly basis over the course of the caseload cycle, which extends from January 1 through the following December 31.
§ 247.3 Administering agencies.
(a) What agencies are responsible for administering CSFP? CSFP is administered at the Federal level by the Department’s Food and Nutrition Service (FNS), which provides commodities, assigns caseload, and allocates administrative funds to State agencies. State agencies are responsible for administering the program at the State level. The State agency may select local agencies to administer the program in local areas of the State. The State agency must provide guidance to local agencies on all aspects of program operations. The State agency may also select subdistributing agencies (e.g., another State agency, a local governmental agency, or a nonprofit organization) to distribute or store commodities, or to perform other program functions on behalf of the State agency. Local or subdistributing agencies may also select other agencies to perform specific program functions (e.g., food distribution or storage), with the State agency’s approval. Although the State agency may select other organizations to perform specific activities, the State agency is ultimately responsible for all aspects of program administration.
(b) Are there specific functions that the State agency cannot delegate to another agency? Yes. The State agency may not delegate the performance of the following functions to another agency:
(1) Establishing eligibility requirements, in accordance with the options provided to the State agency under § 247.9; or
(2) Establishing a management review system and conducting reviews of local agencies, in accordance with § 247.34.
(c) What Federal requirements must State, subdistributing, and local agencies follow in administering CSFP? State, subdistributing, and local agencies must administer the program in accordance with the provisions of this part, and with the provisions contained in part 250 of this chapter, unless they are inconsistent with the provisions of this part.
§ 247.4 Agreements.
(a) What agreements are necessary for agencies to administer CSFP? The following agreements are necessary for agencies to administer CSFP:
(1) Agreements between FNS and State agencies. Each State agency must enter into an agreement with FNS (Form FNS-74, the Federal-State Agreement) prior to receiving commodities or administrative funds;
(2) Agreements between State agencies and local or subdistributing agencies. The State agency must enter into written agreements with local or subdistributing agencies prior to making commodities or administrative funds available to them. The agreements must contain the information specified in paragraph (b) of this section. Agreements between State and local agencies must also contain the information specified in paragraph (c) of this section. Copies of all agreements must be kept on file by the parties to the agreements; and
(3) Agreements between local and subdistributing agencies and other agencies. The State agency must ensure that local and subdistributing agencies enter into written agreements with other agencies prior to making commodities or administrative funds available to these other agencies. The agreements must contain the information specified in paragraph (b) of this section. Copies of all agreements must be kept on file by the parties to the agreements.
(b) What are the required contents of agreements? All agreements described under paragraphs (a)(2) and (a)(3) of this section must contain the following:
(1) An assurance that each agency will administer the program in accordance with the provisions of this part and with the provisions of part 250 of this chapter, unless they are inconsistent with the provisions of this part;
(2) An assurance that each agency will maintain accurate and complete records for a period of three years from the close of the fiscal year to which they pertain, or longer if the records are related to unresolved claims actions, audits, or investigations;
(3) A statement that each agency receiving commodities for distribution is responsible for any loss resulting from improper distribution, or improper storage, care, or handling of commodities;
(4) A statement that each agency receiving program funds is responsible for any misuse of program funds;
(5) A description of the specific functions that the State, subdistributing, or local agency is delegating to another agency; and
(6) A statement specifying:
(i) That either party may terminate the agreement by written notice to the other; and
(ii) The minimum number of days of advance notice that must be given. (The advance notification period must be at least 30 days.)
(c) What other assurances or information must be included in agreements between State and local agencies? In addition to the requirements under paragraph (b) of this section, agreements between State and local agencies must contain the following:
(1) An assurance that the local agency will provide, or cause to be provided, nutrition education to participants, as required in § 247.18;
(2) An assurance that the local agency will provide information to participants on other health, nutrition, and public assistance programs, and make referrals as appropriate, as required in § 247.14;
(3) An assurance that the local agency will distribute commodities in accordance with the approved food package guide rate;
(4) An assurance that the local agency will take steps to prevent and detect dual participation, as required in § 247.19;
(5) The names and addresses of all certification, distribution, and storage sites under the jurisdiction of the local agency; and
(6) An assurance that the local agency will not subject any person to discrimination under the program on the grounds of race, color, national origin, age, sex, or disability.
(d) What is the duration of required agreements? Agreements between FNS and State agencies are considered permanent, but may be amended at the initiation of State agencies or at the request of FNS. All amendments must be approved by FNS. The State agency establishes the duration of agreements it signs with local agencies or subdistributing agencies. The State agency may establish, or permit the local or subdistributing agency to establish, the duration of agreements between local or subdistributing agencies and other agencies. However, State and local agencies must comply with the requirements in § 250.4 of this chapter when entering into agreements with other entities.
§ 247.5 State and local agency responsibilities.
State and local agencies are responsible for administering the program in accordance with the provisions of this part, and with the provisions of part 250 of this chapter, as applicable. Although the State agency may delegate some responsibilities to another agency, the State agency is ultimately responsible for all aspects of program administration. The following is an outline of the major responsibilities of State and local agencies; it is not intended to be all-inclusive.
(a) What are the major responsibilities shared by State and local agencies? The major responsibilities shared by State and local agencies include:
(1) Entering into required agreements;
(2) Ordering commodities for distribution;
(3) Storing and distributing commodities;
(4) Establishing procedures for resolving complaints about commodities;
(5) Complying with civil rights requirements;
(6) Maintaining accurate and complete records; and
(7) Conducting program outreach.
(b) What are the major State agency responsibilities? The major responsibilities of State agencies include:
(1) Completing and submitting the State Plan;
(2) Selecting local agencies to administer the program in local areas of the State;
(3) Determining caseload needs, and submitting caseload requests to FNS;
(4) Assigning caseload, and allocating administrative funds, to local agencies;
(5) Establishing eligibility requirements, in accordance with the options provided to the State agency under § 247.9. (This function may not be delegated to another agency.);
(6) Establishing nutritional risk criteria and a residency requirement for participants, if such criteria are to be used;
(7) Establishing a financial management system that effectively accounts for funds received for program administration;
(8) Developing a plan for the detection and prevention of dual participation, in coordination with CSFP local agencies;
(9) Developing a plan for providing nutrition education to participants;
(10) Establishing appeals and fair hearing procedures for local agencies and program participants;
(11) Developing a management review system and conducting reviews of local agencies. (This function may not be delegated to another agency.);
(12) Determining and pursuing claims, and establishing standards for pursuit of claims against participants;
(13) Ensuring compliance with Federal audit requirements;
(14) Providing guidance to local agencies, as needed; and
(15) Ensuring that program participation does not exceed the State agency’s caseload allocation on an average monthly basis.
(c) What are the major local agency responsibilities? The major local agency responsibilities include:
(1) Determining eligibility of applicants in accordance with eligibility criteria established by the State agency;
(2) Complying with fiscal and operational requirements established by the State agency;
(3) Ensuring that participation does not exceed the caseload assigned by the State agency;
(4) Issuing foods to participants in accordance with the established food package guide rates;
(5) Providing nutrition education and information on the availability of other nutrition and health assistance programs to participants;
(6) Informing applicants of their rights and responsibilities in the program;
(7) Meeting the special needs of the homebound elderly, to the extent possible; and
(8) Pursuing claims against participants.
§ 247.6 State Plan.
(a) What is the State Plan? The State Plan is a document that describes how the State agency will operate CSFP and the caseload needed to serve eligible applicants. The State agency must submit the State Plan to FNS for approval. Once submitted and approved, the State Plan is considered permanent, with amendments submitted at the State agency’s initiative, or at FNS request. All amendments are subject to FNS approval. The State Plan may be submitted in the format provided in FNS guidance, in an alternate format, or in combination with other documents required by Federal regulations. The State Plan must be signed by the State agency official responsible for program administration. A copy of the State Plan must be kept on file at the State agency for public inspection.
(b) When must the State Plan be submitted? The State Plan must be submitted by August 15 to take effect for the fiscal year beginning in the following October. FNS will provide notification of the approval or disapproval of the State Plan within 30 days of receipt, and will notify the State agency within 15 days of receipt if additional information is needed. Disapproval of the Plan will include a reason for the disapproval. Approval of the Plan is a prerequisite to the assignment of caseload and allocation of administrative funds, but does not ensure that caseload and funds will be provided.
(c) What must be included in the State Plan? The State Plan must include:
(1) The names and addresses of all local agencies and subdistributing agencies with which the State agency has entered into agreement;
(2) The income eligibility standards and the options to be used relating to income or other eligibility requirements, as provided under § 247.9;
(3) The nutritional risk criteria to be used, if the State chooses to establish such criteria;
(4) A description of plans for serving participants and the caseload needed to serve them;
(5) A description of plans for conducting outreach to the elderly;
(6) A description of the system for storing and distributing commodities;
(7) A description of plans for providing nutrition education to participants;
(8) A description of the means by which the State agency will detect and prevent dual participation;
(9) A description of the standards the State agency will use in determining if the pursuit of a claim against a participant is cost-effective;
(10) A description of the means by which the State will meet the needs of the homebound elderly; and
(11) Copies of all agreements entered into by the State agency.
(12) The length of the State agency’s certification period.
(d) When must the State agency submit amendments to the State Plan? The State agency must submit amendments to FNS to reflect any changes in program operations or administration described in the State Plan, and to request additional caseload for the following caseload cycle. FNS may also require that the State Plan be amended to reflect changes in Federal law or policy. The State agency may submit amendments to the State Plan at any time during the fiscal year, for FNS approval. The amendments will take effect immediately upon approval, unless otherwise specified by FNS. If a State agency would like to receive additional caseload for the caseload cycle beginning the following January 1, it must submit an amendment to the Plan which conveys the request for additional caseload by November 5. The State agency must also describe in this submission any plans for serving participants at new sites. FNS action on the State agency’s request for additional caseload is part of the caseload assignment process, as described under § 247.21.
§ 247.7 Selection of local agencies.
(a) How does a local agency apply to participate in CSFP? Local agencies wishing to participate in CSFP must submit a written application to the State agency. The application must describe how the local agency will operate the program and, for nonprofit agencies, must include the agency’s tax-exempt status. To be eligible to participate in CSFP, a nonprofit agency must have tax-exempt status under the Internal Revenue Code (IRC), or have applied for tax-exempt status with the Internal Revenue Service (IRS), and be moving towards such status. Nonprofit agencies organized or operated exclusively for religious purposes are automatically tax-exempt under the IRC. Nonprofit agencies required to obtain tax-exempt status must provide documentation from the IRS that they have obtained such status, or have applied for it.
(b) On what basis does the State agency make a decision on the local agency’s application? The State agency must approve or disapprove the local agency’s application based on, at minimum, the following criteria:
(1) The ability of the local agency to operate the program in accordance with Federal and State requirements;
(2) The need for the program in the projected service area of the local agency;
(3) The resources available (caseload and funds) for initiating a program in the local area; and
(4) For nonprofit agencies, the tax-exempt status, with appropriate documentation.
(c) What must the State agency do if a nonprofit agency approved for CSFP is subsequently denied tax-exempt status by the IRS, or does not obtain this status within a certain period of time? In accordance with paragraph (a) of this section, the State agency may approve a nonprofit agency that has applied to the IRS for tax-exempt status, and is moving toward compliance with the requirements for recognition of tax-exempt status. However, if the IRS subsequently denies a participating agency’s application for recognition of tax-exempt status, the agency must immediately notify the State agency of the denial. The State agency must terminate the agency’s agreement and participation immediately upon notification. If documentation of recognition of tax-exempt status is not received within 180 days of the effective date of the agency’s approval to participate in CSFP, the State agency must terminate the agency’s participation until such time as recognition of tax-exempt status is obtained. However, the State agency may grant an extension of 90 days if the agency demonstrates that its inability to obtain tax-exempt status in the 180-day period is due to circumstances beyond its control.
(d) How much time does the State agency have to make a decision on the local agency’s application? The State agency must inform the local agency of approval or denial of the application within 60 days of its receipt. If the application is denied, the State agency must provide a written explanation for the denial, along with notification of the local agency’s right to appeal the decision, in accordance with § 247.35. If the application is approved, the State and local agency must enter into an agreement in accordance with the requirements of § 247.4.
§ 247.8 Individuals applying to participate in CSFP.
(a) What information must individuals applying to participate in CSFP provide? To apply for or to be recertified for CSFP benefits, the applicant or caretaker of the applicant must provide the following information on the application:
(1) Name and address, including some form of identification for each applicant;
(2) Household income;
(3) Household size; and
(4) Other information related to eligibility, such as age
(b) What else is required on the application form? The application form must include a nondiscrimination statement that informs the applicant that program standards are applied without discrimination by race, color, national origin, age, sex, or disability. After informing the applicant or caretaker of the applicant of his or her rights and responsibilities, in accordance with § 247.12, the local agency must ensure that the applicant or caretaker signs the application form beneath the following pre-printed statement. The statement must be read by, or to, the applicant or caretaker before signing.
“This application is being completed in connection with the receipt of Federal assistance. Program officials may verify information on this form. I am aware that deliberate misrepresentation may subject me to prosecution under applicable State and Federal statutes. I am also aware that I may not receive CSFP benefits at more than one CSFP site at the same time. Furthermore, I am aware that the information provided may be shared with other organizations to detect and prevent dual participation. I have been advised of my rights and obligations under the program. I certify that the information I have provided for my eligibility determination is correct to the best of my knowledge.
I authorize the release of information provided on this application form to other organizations administering assistance programs for use in determining my eligibility for participation in other public assistance programs and for program outreach purposes. (Please indicate decision by placing a checkmark in the appropriate box.)
§ 247.9 Eligibility requirements.
(a) Who is eligible for CSFP? To be eligible for CSFP, individuals must be at least 60 years of age and meet the income eligibility requirements outlined in paragraph (b) of this section.
(b) What are the income eligibility requirements for CSFP applicants? The State agency must use a household income limit at or below 130 percent of the Federal Poverty Income Guidelines. Elderly persons in households with income at or below this level must be considered eligible for CSFP benefits (assuming they meet other requirements contained in this part). However, elderly persons certified before September 17, 1986 (i.e., under the three elderly pilot projects) must remain subject to the eligibility criteria in effect at the time of their certification.
(c) When must the State agency revise the CSFP income guidelines to reflect the annual adjustments of the Federal Poverty Income Guidelines? Each year, FNS will notify State agencies, by memorandum, of adjusted income guidelines by household size at 130 percent and 100 percent of the Federal Poverty Income Guidelines. The memorandum will reflect the annual adjustments to the Federal Poverty Income Guidelines issued by the Department of Health and Human Services. The State agency must implement the adjusted guidelines immediately upon receipt of the memorandum.
(d) How is income defined and considered as it relates to CSFP eligibility? (1) Income means gross income before deductions for such items as income taxes, employees’ social security taxes, insurance premiums, and bonds.
(2) The State agency may exclude from consideration the following sources of income listed under the regulations for the Special Supplemental Nutrition Program for Women, Infants, and Children at § 246.7(d)(2)(iv) of this chapter:
(i) Any basic allowance for housing received by military services personnel residing off military installations; and
(ii) The value of inkind housing and other inkind benefits.
(3) The State agency must exclude from consideration all income sources excluded by legislation, which are listed in § 246.7(d)(2)(iv)(D) of this chapter. FNS will notify State agencies of any new forms of income excluded by statute through program policy memoranda.
(4) The State agency may authorize local agencies to consider the household’s average income during the previous 12 months and current household income to determine which more accurately reflects the household’s status. In instances in which the State makes the decision to authorize local agencies to determine a household’s income in this manner, all local agencies must comply with the State’s decision and apply this method of income determination in situations in which it is warranted.
(e) What other options does the State agency have in establishing eligibility requirements for CSFP? (1) The State agency may require that an individual be at nutritional risk, as determined by a physician or by local agency staff.
(2) The State agency may require that an individual reside within the service area of the local agency at the time of application for CSFP benefits. However, the State agency may not require that an individual reside within the area for any fixed period of time.
§ 247.10 Distribution and use of CSFP commodities.
(a) What are the requirements for distributing CSFP commodities to participants? The local agency must distribute a package of commodities to participants each month, or a two-month supply of commodities to participants every other month, in accordance with the food package guide rates established by FNS.
(b) What must the local agency do to ensure that commodities are distributed only to CSFP participants? The local agency must require each participant, or participant’s proxy, to present some form of identification before distributing commodities to that person.
(c) What restrictions apply to State and local agencies in the distribution of CSFP commodities? State and local agencies must not require, or request, that participants make any payments, or provide any materials or services, in connection with the receipt of CSFP commodities. State and local agencies must not use the distribution of CSFP commodities as a means of furthering the political interests of any person or party.
(d) What are the restrictions for the use of CSFP commodities? CSFP commodities may not be used for outreach, refreshments, or for any purposes other than distribution to, and nutrition education for, CSFP participants.
§ 247.11 Applicants exceed caseload levels.
(a) What must the local agency do if the number of applicants exceeds the local agency’s caseload level? If all caseload has been filled, the local agency must maintain a waiting list of individuals who apply for the program. In establishing the waiting list, the local agency must include the date of application and information necessary to allow the local agency to contact the applicant when caseload space becomes available. Unless they have been determined ineligible, applicants must be notified of their placement on a waiting list within 10 days of their request for benefits in accordance with § 247.15.
(b) What are the requirements for serving individuals on the waiting list once caseload slots become available? The local agency must certify eligible individuals from the waiting list consistent with civil rights requirements at § 247.37. For example, a local agency may certify eligible individuals from the waiting list based on the date the application was received on a first-come, first-served basis.
§ 247.12 Rights and responsibilities.
(a) What information regarding an individual’s rights in CSFP must the local agency provide to the applicant? The local agency is responsible for informing the applicant, orally or in writing, of the following:
(1) The local agency will provide notification of a decision to deny or terminate CSFP benefits, and of an individual’s right to appeal this decision by requesting a fair hearing, in accordance with § 247.33(a);
(2) The local agency will make nutrition education available to all participants and will encourage them to participate; and
(3) The local agency will provide information on other nutrition, health, or assistance programs, and make referrals as appropriate.
(b) What information regarding an individual’s responsibilities in CSFP must the local agency provide to the applicant? In addition to the written statement required by § 247.8(b), the local agency is responsible for informing the applicant, orally or in writing, of the following:
(1) Improper use or receipt of CSFP benefits as a result of dual participation or other program violations may lead to a claim against the individual to recover the value of the benefits, and may lead to disqualification from CSFP; and
(2) Participants must report changes in household income or composition within 10 days after the change becomes known to the household.
§ 247.13 Provisions for non-English or limited-English speakers.
(a) What must State and local agencies do to ensure that non-English or limited-English speaking persons are aware of their rights and responsibilities in the program? If a significant proportion of the population in an area is comprised of non-English or limited-English speaking persons with a common language, the State agency must ensure that local agencies inform such persons of their rights and responsibilities in the program, as listed under § 247.12, in an appropriate language. State and local agencies must ensure that bilingual staff members or interpreters are available to serve these persons.
(b) What must State and local agencies do to ensure that non-English or limited-English speaking persons are aware of other program information? If a significant proportion of the population in an area is comprised of non-English or limited-English speaking persons with a common language, the State agency must ensure that local agencies provide other program information, except application forms, to such persons in their appropriate language.
§ 247.14 Other public assistance programs.
(a) What information on other public assistance programs must the local agency provide to applicants? The local agency must provide applicants with written information on the following programs, and make referrals, as appropriate:
(1) Supplemental security income benefits provided under Title XVI of the Social Security Act (42 U.S.C. 1381 et seq.);
(2) Medical assistance provided under Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.), including medical assistance provided to a qualified Medicare beneficiary (42 U.S.C. 1395(p) and 1396d(5)); and
(3) The Supplemental Nutrition Assistance Program (7 U.S.C. 2011 et seq.).
(b) Is the value of CSFP benefits counted as income or resources for any other public assistance programs? No. The value of benefits received in CSFP may not be considered as income or resources of participants or their families for any purpose under Federal, State, or local laws, including laws relating to taxation and public assistance programs.
§ 247.15 Notification of eligibility or ineligibility of applicant.
(a) What is the timeframe for notifying an applicant of eligibility or ineligibility for CSFP benefits? Local agencies must notify applicants of their eligibility or ineligibility for CSFP benefits, or their placement on a waiting list, within 10 days from the date of application.
(b) What must be included in the notification of eligibility or ineligibility? The notification of eligibility must include information on the time, location, and means of food distribution, and the length of the certification period. Notification of ineligibility must be in writing, and must include the reason the applicant is not eligible, a statement of the individual’s right to a fair hearing to appeal the decision, and a statement that informs the applicant that program standards are applied without discrimination by race, color, national origin, age, sex, or disability.
§ 247.16 Certification period.
(a) How long is the certification period—(1) Minimum certification period. The State agency must establish certification periods that are not less than one year but not more than three years in duration. If the State agency chooses to establish a certification period that exceeds one year, the State must first receive approval from FNS by submitting a State Plan amendment. FNS shall approve State requests for a certification period exceeding one year on the condition that, on an annual basis, local agencies do the following:
(i) Verify the address and continued interest of the participant; and
(ii) Have sufficient reason to determine that the participant still meets the income eligibility standards, which may include a determination that the participant has a fixed income.
(2) Temporary certification. An eligible CSFP applicant, including individuals on waiting lists, may be provided with a temporary monthly certification to fill any caseload slot resulting from nonparticipation by certified participants.
(3) Recertification. Participants must be recertified following the application procedures outlined at § 247.8 in order to continue receiving program benefits beyond the expiration of their certification period.
(b) On what day of the final month does the certification period end? The certification period extends to the final day of the month in which eligibility expires.
(c) Does the certification period end when a participant moves from the local area in which he or she was receiving benefits? No. The State agency must ensure that local agencies serve a CSFP participant who moves from another area to an area served by CSFP and whose certification period has not expired. The participant must be given the opportunity to continue to receive CSFP benefits for the duration of the certification period. If the local agency has a waiting list, the participant must be placed on its waiting list ahead of all other waiting applicants. The local agency that determined the participant’s eligibility must provide verification of the expiration date of the certification period to the participant upon request.
(d) What must the local agency do to ensure that participants are aware of the expiration of the certification period? The local agency must notify program participants in writing at least 15 days before the expiration date that eligibility for the program is about to expire. The local agency must include a statement in the written notification that informs the applicant that program standards are applied without discrimination by race, color, national origin, age, sex, or disability.
§ 247.17 Notification of discontinuance of participant.
(a) What must a local agency do if it has evidence that a participant is no longer eligible for CSFP benefits during the certification period? If a local agency has evidence that a participant is no longer eligible for CSFP benefits during the certification period, it must provide the participant with a written notification of discontinuance at least 15 days before the effective date of discontinuance.
(b) What must a local agency do if it has to discontinue a participant from participation in the program prior to the end of the certification period due to the lack of resources necessary to continue providing benefits to the participant? If a local agency does not have sufficient resources, such as a sufficient number of caseload slots, to continue providing benefits to the participant(s) for the entire certification period, it must provide the participant(s) with a written notification of discontinuance at least 15 days before the effective date of discontinuance.
(c) What must be included in the notification of discontinuance? The notification of discontinuance must include the effective date of discontinuance, the reason for the participant’s discontinuance, a statement of the individual’s right to appeal the discontinuance through the fair hearing process, in accordance with § 247.33(a), and a statement that informs the applicant that program standards are applied without discrimination by race, color, national origin, age, sex, or disability.
§ 247.18 Nutrition education.
(a) What are the State agency’s responsibilities in ensuring that nutrition education is provided? The State agency must establish an overall nutrition education plan and must ensure that local agencies provide nutrition education to participants in accordance with the plan. The State agency may allow local agencies to share personnel and educational resources with other programs in order to provide the best nutrition education possible to participants. The State agency must establish an evaluation procedure to ensure that the nutrition education provided is effective. The evaluation procedure must include participant input and must be directed by a nutritionist or other qualified professional. The evaluation may be conducted by the State or local agency, or by another agency under agreement with the State or local agency.
(b) What type of nutrition education must the local agency provide? The local agency must provide nutrition education that can be easily understood by participants and is related to their nutritional needs and household situations. The local agency must provide nutrition education that includes the following information, which should account for specific ethnic and cultural characteristics whenever possible:
(1) The nutritional value of CSFP foods, and their relationship to the overall dietary needs of the population groups served;
(2) Nutritious ways to use CSFP foods;
(3) Special nutritional needs of participants and how these needs may be met;
(4) The importance of health care, and the role nutrition plays in maintaining good health; and
(5) The importance of the use of the foods by the participant to whom they are distributed, and not by another person.
(c) To whom must local agencies provide nutrition education? The local agency must make nutrition education available to all participants.
(d) May CSFP foods be used in cooking demonstrations? Yes. The State or local agency, or another agency with which it has signed an agreement, may use CSFP foods to conduct cooking demonstrations as part of the nutrition education provided to program participants, but not for other purposes.
§ 247.19 Dual participation.
(a) What must State and local agencies do to prevent and detect dual participation? The State agency must work with local agencies to prevent and detect dual participation. The State agency must work with local agencies to prevent and detect dual participation. In accordance with § 247.8(a)(1), the local agency must check the identification of all applicants when they are certified or recertified. In accordance with § 247.8(b), the local agency must ensure that the applicant or caretaker of the applicant signs an application form which includes a statement advising the applicant that he or she may not receive CSFP benefits at more than one CSFP site at the same time.
(b) What must the local agency do if a CSFP participant is found to be committing dual participation? A participant found to be committing dual participation must be discontinued from participation at more than one CSFP site. In accordance with § 247.20(b), if the dual participation resulted from the participant or caretaker of the participant making false or misleading statements, or intentionally withholding information, the local agency must disqualify the participant from CSFP, unless the local agency determines that disqualification would result in a serious health risk. The local agency must also initiate a claim against the participant to recover the value of CSFP benefits improperly received, in accordance with § 247.30(c). Whenever an individual’s participation in CSFP is discontinued, the local agency must notify the individual of the discontinuance, in accordance with § 247.17. The individual may appeal the discontinuance through the fair hearing process, in accordance with § 247.33(a).
§ 247.20 Program violations.
(a) What are program violations in CSFP? Program violations are actions taken by CSFP applicants or participants, or caretakers of applicants or participants, to obtain or use CSFP benefits improperly. Program violations include the following actions:
(1) Intentionally making false or misleading statements, orally or in writing;
(2) Intentionally withholding information pertaining to eligibility in CSFP;
(3) Selling commodities obtained in the program, or exchanging them for non-food items;
(4) Physical abuse, or threat of physical abuse, of program staff; or
(5) Committing dual participation.
(b) What are the penalties for committing program violations? If applicants or participants, or caretakers of applicants or participants, commit program violations, the State agency may require local agencies to disqualify the applicants or participants for a period of up to one year. However, if the local agency determines that disqualification would result in a serious health risk, the disqualification may be waived. For program violations that involve fraud, the State agency must require local agencies to disqualify the participant from CSFP for a period of up to one year, unless the local agency determines that disqualification would result in a serious health risk. The State agency must require local agencies to permanently disqualify a participant who commits three program violations that involve fraud. For purposes of this program, fraud includes:
(1) Intentionally making false or misleading statements to obtain CSFP commodities;
(2) Intentionally withholding information to obtain CSFP commodities; or
(3) Selling CSFP commodities, or exchanging them for non-food items.
(c) What must the local agency do to notify the individual of disqualification from CSFP? The local agency must provide the individual with written notification of disqualification from CSFP at least 15 days before the effective date of disqualification. The notification must include the effective date and period of disqualification, the reason for the disqualification, and a statement that the individual may appeal the disqualification through the fair hearing process, in accordance with § 247.33(a).
§ 247.21 Caseload assignment.
(a) How does FNS assign caseload to State agencies? Each year, FNS assigns a caseload to each State agency to allow persons meeting the eligibility criteria listed under § 247.9 to participate in the program, up to the caseload limit. To the extent that resources are available, FNS assigns caseload to State agencies in the following order:
(1) Base caseload. The State agency may not receive base caseload in excess of its total caseload assigned for the previous caseload cycle. Base caseload is determined in the following manner:
(i) Each State agency entering its second year of program participation receives base caseload equal to the amount assigned to it in its first year of participation; and
(ii) A State agency that has participated in two or more caseload cycles receives base caseload equal to the highest of:
(A) Average monthly participation for the previous fiscal year; or
(B) Average monthly participation for the last quarter of the previous fiscal year; or
(C) Participation during September of the previous fiscal year, but only if:
(1) The full-year appropriation for the preceding fiscal year was enacted on or after February 15; and
(2) The State agency received additional caseload equal to or greater than 10 percent of its base caseload in the previous caseload cycle; and
(3) October participation in the current fiscal year was equal to or greater than 95 percent of September participation in the previous fiscal year.
(2) Additional caseload. Each participating State agency may request additional caseload to increase program participation. Eligibility for and assignment of additional caseload are determined in the following manner:
(i) A State agency entering its second year of program participation qualifies to receive additional caseload if the State achieved a participation level which was equal to or greater than 95 percent of assigned caseload for the previous caseload cycle, based on the highest of:
(A) Average monthly participation for the previous fiscal year; or
(B) Average monthly participation for the last quarter of the previous fiscal year; or
(C) Participation during September of the previous fiscal year, but only if:
(1) The full-year appropriation for the preceding fiscal year was enacted on or after February 15; and
(2) October participation in the current fiscal year was equal to or greater than 95 percent of September participation in the previous fiscal year.
(ii) A State agency that has participated in two or more caseload cycles qualifies to receive additional caseload if the State achieved a participation level which was equal to or greater than 95 percent of assigned caseload for the previous caseload cycle, based on the highest of:
(A) Average monthly participation for the previous fiscal year; or
(B) Average monthly participation for the last quarter of the previous fiscal year; or
(C) Participation during September of the previous fiscal year, but only if:
(1) The full-year appropriation for the preceding fiscal year was enacted on or after February 15; and
(2) The State agency received additional caseload equal to or greater than 10 percent of its base caseload in the previous caseload cycle; and
(3) October participation in the current fiscal year was equal to or greater than 95 percent of September participation in the previous fiscal year.
(iii) Of each eligible State agency’s request for additional caseload, FNS assigns an amount that it determines the State needs and can efficiently utilize. In making this determination, FNS considers the factors listed below, in descending order of importance. If all reasonable requests for additional caseload cannot be met, FNS assigns it to those States that are most likely to utilize it. The factors are:
(A) The percentage of caseload utilized by the State in the previous fiscal year;
(B) Program participation trends in the State in previous fiscal years; and
(C) Other information provided by the State agency in support of the request.
(3) New caseload. Each State agency requesting to begin participation in the program, and with an approved State Plan, may receive caseload to serve the elderly, as requested in the State Plan. Of the State agency’s caseload request, FNS assigns caseload in an amount that it determines the State needs and can efficiently utilize. This determination is made based on information contained in the State Plan and on other relevant information. However, if all caseload requests cannot be met, FNS will assign caseload to those States that are most likely to utilize it.
(b) When does FNS assign caseload to State agencies? FNS must assign caseload to State agencies by December 31 of each year, or within 30 days after enactment of appropriations legislation covering the full fiscal year, whichever comes later. Caseload assignments for the previous caseload cycle will remain in effect, subject to the availability of sufficient funding, until caseload assignments are made for the current caseload cycle.
(c) How do State agencies request additional caseload for the next caseload cycle? In accordance with § 247.6(d), a State agency that would like additional caseload for the next caseload cycle (beginning the following January 1) must submit a request for additional caseload by November 5, as an amendment to the State Plan. The State agency must also describe plans for serving participants at new sites in this submission.
§ 247.22 Allocation and disbursement of administrative funds to State agencies.
(a) What must State agencies do to be eligible to receive administrative funds? In order to receive administrative funds, the State agency must have signed an agreement with FNS to operate the program, in accordance with § 247.4(a)(1), and must have an approved State Plan.
(b) How does FNS allocate administrative funds to State agencies? (1) As required by law, each fiscal year FNS allocates to each State agency an administrative grant per assigned caseload slot, adjusted each year for inflation.
(2) For fiscal year 2003, the amount of the grant per assigned caseload slot was equal to the per-caseload slot amount provided in fiscal year 2001, adjusted by the percentage change between:
(i) The value of the State and local government price index, as published by the Bureau of Economic Analysis of the Department of Commerce, for the 12-month period ending June 30, 2001; and
(ii) The value of that index for the 12-month period ending June 30, 2002.
(3) For subsequent fiscal years, the amount of the grant per assigned caseload slot is equal to the amount of the grant per assigned caseload slot for the preceding fiscal year, adjusted by the percentage change between:
(i) The value of the State and local government price index, as published by the Bureau of Economic Analysis of the Department of Commerce, for the 12-month period ending June 30 of the second preceding fiscal year; and
(ii) The value of that index for the 12-month period ending June 30 of the preceding fiscal year.
(c) How do State agencies access administrative funds? FNS provides administrative funds to State agencies on a quarterly basis. Such funds are provided by means of a Letter of Credit, unless other funding arrangements have been made with FNS. The State agency obtains the funds by electronically accessing its Letter of Credit account.
§ 247.23 State provision of administrative funds to local agencies.
(a) How much of the administrative funds must State agencies provide to local agencies for their use? The State agency must provide to local agencies for their use all administrative funds it receives, except that the State agency may retain for its own use the amount determined by the following formula:
(1) 15 percent of the first $50,000 received;
(2) 10 percent of the next $100,000 received;
(3) 5 percent of the next $250,000 received; and
(4) A maximum of $30,000, if the administrative grant exceeds $400,000.
(b) May a State agency request to retain more than the amount determined by the above formula in the event of special needs? Yes, the State agency may request approval from FNS to retain a larger amount than is allowed under the formula prescribed in paragraph (a) of this section. However, in making its request, the State agency must provide justification of the need for the larger amount at the State level, and must ensure that local agencies will not suffer undue hardship as a result of a reduction in administrative funds.
(c) How must the State agency distribute funds among local agencies? The State agency must distribute funds among local agencies on the basis of their respective needs, and in a manner that ensures the funds will be used to achieve program objectives.
§ 247.24 Recovery and redistribution of caseload and administrative funds.
(a) May FNS recover and redistribute caseload and administrative funds assigned to a State agency? Yes. FNS may recover and redistribute caseload and administrative funds assigned to a State agency during the fiscal year. FNS will redistribute these resources to other State agencies in accordance with the provisions of §§ 247.21(a) and 247.22(b). In reassigning caseload, FNS will use the most up-to-date data on participation and the extent to which caseload is being utilized, as well as other information provided by State agencies. In accordance with § 247.21(a)(2), in instances in which FNS recovers caseload slots, the State agency must use 95 percent of its original caseload allocation to be eligible for additional caseload. However, the State agency must not exceed its reduced caseload allocation on an average monthly basis.
(b) Is there a limit on the amount of caseload slots or administrative funds that FNS may recover? Yes. FNS will not unilaterally recover caseload that would result in the recovery of more than 50 percent of the State’s administrative funds. However, in instances in which the State agency requests that FNS recover any portion of its assigned caseload, the 50-percent limitation will not apply.
§ 247.25 Allowable uses of administrative funds and other funds.
(a) What are allowable uses of administrative funds provided to State and local agencies? Administrative funds may be used for costs that are necessary to ensure the efficient and effective administration of the program, in accordance with 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415, which set out the principles for determining whether specific costs are allowable. Some examples of allowable costs in CSFP include:
(1) Storing, transporting, and distributing foods;
(2) Determining the eligibility of program applicants;
(3) Program outreach;
(4) Nutrition education;
(5) Audits and fair hearings;
(6) Monitoring and review of program operations; and
(7) Transportation of participants to and from the local agency, if necessary.
(b) What are unallowable uses of administrative funds? In addition to those costs determined to be unallowable by the principles contained in the OMB circulars referenced in paragraph (a) of this section, specific examples of unallowable uses of administrative funds in CSFP include:
(1) The cost of alteration of facilities not required specifically for the program; and
(2) Actual losses which could have been covered by permissible insurance (through an approved self-insurance program or by other means).
(c) What costs are allowable only with prior approval of FNS? Capital expenditures, which include the acquisition of facilities or equipment, or enhancements to such capital assets, with a cost per unit of at least $5,000, are allowable only with prior approval of FNS. Examples of equipment include automated information systems, automated data processing equipment, and other computer hardware and software.
(d) What procedures must State and local agencies use in procuring property, equipment, or services with program funds, and disposing of such property or equipment? The procedures that State and local agencies must follow in procuring property, equipment, or services with program funds, or disposing of such property or equipment, are contained in 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415, which set out the principles for determining whether specific costs are allowable. State, local, and Indian tribal governments must comply with 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415, while nonprofit subgrantees must comply with 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415. State and local agencies may use procurement procedures established by State and local regulations as long as these procedures do not conflict with Federal regulations. Federal regulations do not relieve State or local agencies from responsibilities established in contracts relating to procurement of property, equipment, or services. The State agency is the responsible authority regarding the settlement of all contractual and administrative issues arising out of procurements for the program.
(e) What is program income and how must State and local agencies use it? Program income is income directly generated from program activities. It includes, for example, income from the sale of packing containers or pallets, and the salvage of commodities. Program income does not include interest earned from administrative funds. State and local agencies must use program income for allowable program costs, in accordance with 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415.
(f) How must State and local agencies use funds recovered as a result of claims actions? The State agency must use funds recovered as a result of claims actions against subdistributing or local agencies in accordance with the provisions of § 250.17(c) of this chapter. The State agency must use funds recovered as a result of claims actions against participants for allowable program costs. The State agency may authorize local agencies to use such funds for allowable program costs incurred at the local level.
§ 247.26 Return of administrative funds.
(a) Must State agencies return administrative funds that they do not use at the end of the fiscal year? Yes. If, by the end of the fiscal year, a State agency has not obligated all of its allocated administrative funds, the unobligated funds must be returned to FNS.
(b) What happens to administrative funds that are returned by State agencies at the end of the fiscal year? If, in the following fiscal year, OMB reapportions the returned administrative funds, the funds are used to support the program. Such funds are not returned to State agencies in the form of administrative funds in addition to the legislatively mandated grant per assigned caseload slot.
§ 247.27 Financial management.
(a) What are the Federal requirements for State and local agencies with regard to financial management? State and local public agencies, as well as nonprofit organizations, must maintain a financial management system that complies with the Federal regulations contained in 2 CFR part 200, subparts D and E, and USDA implementing regulations 2 CFR parts 400 and 415. The State agency’s financial management system must provide accurate, current, and complete disclosure of the financial status of the program, including an accounting of all program funds received and expended each fiscal year. The State agency must ensure that local agencies develop and implement a financial management system that allows them to meet Federal requirements.
(b) What are some of the major components of the State agency’s financial management system? In addition to other requirements, the State agency’s financial management system must provide for:
(1) Prompt and accurate payment of allowable costs;
(2) Timely disbursement of funds to local agencies;
(3) Timely and appropriate resolution of claims and audit findings; and
(4) Maintenance of records identifying the receipt and use of administrative funds, funds recovered as a result of claims actions, program income (as defined under § 247.25(e)), and property and other assets procured with program funds.
§ 247.28 Storage and inventory of commodities.
(a) What are the requirements for storage of commodities? State and local agencies must provide for storage of commodities that protects them from theft, spoilage, damage or destruction, or other loss. State and local agencies may contract with commercial facilities to store and distribute commodities. The required standards for warehousing and distribution systems, and for contracts with storage facilities, are included in § 250.12 and § 250.14 of this chapter.
(b) What are the requirements for the inventory of commodities? A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.
§ 247.29 Reports and recordkeeping.
(a) What recordkeeping requirements must State and local agencies meet? State and local agencies must maintain accurate and complete records relating to the receipt, disposal, and inventory of commodities, the receipt and disbursement of administrative funds and other funds, eligibility determinations, fair hearings, and other program activities. State and local agencies must also maintain records pertaining to liability for any improper distribution of, use of, loss of, or damage to commodities, and the results obtained from the pursuit of claims arising in favor of the State or local agency. All records must be retained for a period of three years from the end of the fiscal year to which they pertain, or, if they are related to unresolved claims actions, audits, or investigations, until those activities have been resolved. All records must be available during normal business hours for use in management reviews, audits, investigations, or reports of the General Accounting Office.
(b) What reports must State and local agencies submit to FNS? State agencies must submit the following reports to FNS:
(1) SF-425, Federal Financial Report. The State agency must submit the SF-425, Federal Financial Report, to report the financial status of the program at the close of the fiscal year. This report must be submitted within 90 days after the end of the fiscal year. Obligations must be reported for the fiscal year in which they occur. Revised reports may be submitted at a later date, but FNS will not be responsible for reimbursing unpaid obligations later than one year after the end of the fiscal year in which they were incurred.
(2) FNS-153, Monthly Report of the Commodity Supplemental Food Program and Quarterly Administrative Financial Status Report. The State agency must submit the FNS-153 on a monthly basis. FNS may permit the data contained in the report to be submitted less frequently, or in another format. The report must be submitted within 30 days after the end of the reporting period. On the FNS-153, the State agency reports:
(i) The number of program participants;
(ii) The receipt and distribution of commodities, and beginning and ending inventories, as well as other commodity data; and
(iii) On a quarterly basis, the cumulative amount of administrative funds expended and obligated, and the amount remaining unobligated.
(3) FNS-191, Racial/Ethnic Group Participation. Local agencies must submit a report of racial/ethnic participation each year, using the FNS-191.
(c) Is there any other information that State and local agencies must provide to FNS? FNS may require State and local agencies to provide data collected in the program to aid in the evaluation of the effect of program benefits on the low-income populations served. Any such requests for data will not include identification of particular individuals.
§ 247.30 Claims.
(a) What happens if a State or local agency misuses program funds? If FNS determines that a State or local agency has misused program funds through negligence, fraud, theft, embezzlement, or other causes, FNS must initiate and pursue a claim against the State agency to repay the amount of the misused funds. The State agency will be given the opportunity to contest the claim. The State agency is responsible for initiating and pursuing claims against subdistributing and local agencies if they misuse program funds.
(b) What happens if a State or local agency misuses program commodities? If a State or local agency misuses program commodities, FNS must initiate a claim against the State agency to recover the value of the misused commodities. The procedures for pursuing claims resulting from misuse of commodities are detailed in § 250.16(a) of this chapter. Misused commodities include commodities improperly distributed or lost, spoiled, stolen, or damaged as a result of improper storage, care, or handling. The State agency is responsible for initiating and pursuing claims against subdistributing agencies, local agencies, or other agencies or organizations if they misuse program commodities. The State agency must use funds recovered as a result of claims for commodity losses in accordance with § 250.17(c) of this chapter.
(c) What happens if a participant improperly receives or uses CSFP benefits through fraud? The State agency must ensure that a local agency initiates a claim against a participant to recover the value of CSFP commodities improperly received or used if the local agency determines that the participant or caretaker of the participant fraudulently received or used the commodities. For purposes of this program, fraud includes intentionally making false or misleading statements, or intentionally withholding information, to obtain CSFP commodities, or the selling or exchange of CSFP commodities for non-food items. The local agency must advise the participant of the opportunity to appeal the claim through the fair hearing process, in accordance with § 247.33(a). The local agency must also disqualify the participant from CSFP for a period of up to one year, unless the local agency determines that disqualification would result in a serious health risk, in accordance with the requirements of § 247.20(b).
(d) What procedures must be used in pursuing claims against participants? The State agency must establish standards, based on a cost-benefit review, for determining when the pursuit of a claim is cost-effective, and must ensure that local agencies use these standards in determining if a claim is to be pursued. In pursuing a claim against a participant, the local agency must:
(1) Issue a letter demanding repayment for the value of the commodities improperly received or used;
(2) If repayment is not made in a timely manner, take additional collection actions that are cost-effective, in accordance with the standards established by the State agency; and
(3) Maintain all records regarding claims actions taken against participants, in accordance with § 247.29.
§ 247.31 Audits and investigations.
(a) What is the purpose of an audit? The purpose of an audit is to ensure that:
(1) Financial operations are properly conducted;
(2) Financial reports are fairly presented;
(3) Proper inventory controls are maintained; and
(4) Applicable laws, regulations, and administrative requirements are followed.
(b) When may the Department conduct an audit or investigation of the program? The Department may conduct an audit of the program at the State or local agency level at its discretion, or may investigate an allegation that the State or local agency has not complied with Federal requirements. An investigation may include a review of any State or local agency policies or practices related to the specific area of concern.
(c) What are the responsibilities of the State agency in responding to an audit by the Department? In responding to an audit by the Department, the State agency must:
(1) Provide access to any records or documents compiled by the State or local agencies, or contractors; and
(2) Submit a response or statement to FNS describing the actions planned or taken in response to audit findings or recommendations. The corrective action plan must include time frames for implementation and completion of actions. FNS will determine if actions or planned actions adequately respond to the program deficiencies identified in the audit. If additional actions are needed, FNS will schedule a follow-up review and allow sufficient time for further corrective actions. The State agency may also take exception to particular audit findings or recommendations.
(d) When is a State or local agency audit required? State and local agency audits must be conducted in accordance with part 3052 of this title, which contains the Department’s regulations pertaining to audits of States, local governments, and nonprofit organizations. The value of CSFP commodities distributed by the agency or organization must be considered part of the Federal award.
(e) What are the requirements for State or local agency audits? State and local agency audits must be conducted in accordance with the requirements of part 3052 of this title, which contains the Department’s regulations pertaining to audits of States, local governments, and nonprofit organizations. The State agency must ensure that local agencies meet the audit requirements. The State agency must ensure that all State or local agency audit reports are available for FNS review.
§ 247.32 Termination of agency participation.
(a) When may a State agency’s participation in CSFP be terminated? While paragraphs (a)(1), (a)(2), and (a)(3) of this section, as applicable, describe the circumstances and basic procedures for terminating State agency programs, specific actions and procedures relating to program termination are more fully described in 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR parts 400 and 415.
(1) Termination by FNS. FNS may terminate a State agency’s participation in CSFP, in whole or in part, if the State agency does not comply with the requirements of this part. FNS must provide written notification to the State agency of termination, including the reasons for the action, and the effective date.
(2) Termination by State agency. The State agency may terminate the program, in whole or in part, upon written notification to FNS, stating the reasons and effective date of the action. In accordance with § 247.4(b)(6), which relates to the termination of agreements, either party must provide, at minimum, 30 days’ written notice.
(3) Termination by mutual agreement. The State agency’s program may also be terminated, in whole or in part, if both parties agree the action would be in the best interest of the program. The two parties must agree upon the conditions of the termination, including the effective date.
(b) When may a local agency’s participation in CSFP be terminated? While paragraphs (b)(1), (b)(2), and (b)(3) of this section, as applicable, describe the circumstances and basic procedures in termination of local agency programs, specific actions and procedures relating to program termination are more fully described in 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR parts 400 and 415.
(1) Termination by State agency. The State agency may terminate a local agency’s participation in CSFP, or may be required to terminate a local agency’s participation, in whole or in part, if the local agency does not comply with the requirements of this part. The State agency must notify the local agency in writing of the termination, the reasons for the action, and the effective date, and must provide the local agency with an opportunity to appeal, in accordance with § 247.35. (The local agency may appeal the termination in accordance with § 247.35.)
(2) Termination by local agency. The local agency may terminate the program, in whole or in part, upon written notification to the State agency, stating the reasons and effective date of the action. In accordance with § 247.4(b)(6), which relates to the termination of agreements, either party must provide, at minimum, 30 days’ written notice.
(3) Termination by mutual agreement. The local agency’s program may also be terminated, in whole or in part, if both the State and local agency agree that the action would be in the best interest of the program. The two parties must agree upon the conditions of the termination, including the effective date.
§ 247.33 Fair hearings.
(a) What is a fair hearing? A fair hearing is a process that allows a CSFP applicant or participant to appeal an adverse action, which may include the denial or discontinuance of program benefits, disqualification from the program, or a claim to repay the value of commodities received as a result of fraud. State and local agencies must ensure that CSFP applicants and participants understand their right to appeal an adverse action through the fair hearing process, which includes providing written notification of the individual’s right to a fair hearing along with notification of the adverse action. Such notification is not required at the expiration of a certification period.
(b) What are the basic requirements the State agency must follow in establishing procedures to be used in fair hearings? The State agency must establish simple, clear, uniform rules of procedure to be used in fair hearings, including, at a minimum, the procedures outlined in this section. The State agency may use alternate procedures if approved by FNS. The rules of procedure must be available for public inspection and copying.
(c) How may an individual request a fair hearing? An individual or an individual’s caretaker may request a fair hearing by making a clear expression, verbal or written, to a State or local agency official that an appeal of the adverse action is desired.
(d) How much time does an individual have to request a fair hearing? The State or local agency must allow an individual at least 60 days from the date the agency mails or gives the individual the notification of adverse action to request a fair hearing.
(e) When may a State or local agency deny a request for a fair hearing? The State or local agency may deny a request for a fair hearing when:
(1) The request is not received within the time limit established in paragraph (d) of this section;
(2) The request is withdrawn in writing by the individual requesting the hearing or by an authorized representative of the individual; or
(3) The individual fails to appear, without good cause, for the scheduled hearing.
(f) Does the request for a fair hearing have any effect on the receipt of CSFP benefits? Participants who appeal the discontinuance of program benefits within the 15-day advance notification period required under §§ 247.17 and 247.20 must be permitted to continue to receive benefits until a decision on the appeal is made by the hearing official, or until the end of the participant’s certification period, whichever occurs first. However, if the hearing decision finds that a participant received program benefits fraudulently, the local agency must include the value of benefits received during the time that the hearing was pending, as well as for any previous period, in its initiation and pursuit of a claim against the participant.
(g) What notification must the State or local agency provide an individual in scheduling the hearing? The State or local agency must provide an individual with at least 10 days’ advance written notice of the time and place of the hearing, and must include the rules of procedure for the hearing.
(h) What are the individual’s rights in the actual conduct of the hearing? The individual must have the opportunity to:
(1) Examine documents supporting the State or local agency’s decision before and during the hearing;
(2) Be assisted or represented by an attorney or other persons;
(3) Bring witnesses;
(4) Present arguments;
(5) Question or refute testimony or evidence, including an opportunity to confront and cross-examine others at the hearing; and,
(6) Submit evidence to help establish facts and circumstances.
(i) Who is responsible for conducting the fair hearing, and what are the specific responsibilities of that person? The fair hearing must be conducted by an impartial official who does not have any personal stake or involvement in the decision and who was not directly involved in the initial adverse action that resulted in the hearing. The hearing official is responsible for:
(1) Administering oaths or affirmations, as required by the State;
(2) Ensuring that all relevant issues are considered;
(3) Ensuring that all evidence necessary for a decision to be made is presented at the hearing, and included in the record of the hearing;
(4) Ensuring that the hearing is conducted in an orderly manner, in accordance with due process; and
(5) Making a hearing decision.
(j) How is a hearing decision made? The hearing official must make a decision that complies with Federal laws and regulations, and is based on the facts in the hearing record. In making the decision, the hearing official must summarize the facts of the case, specify the reasons for the decision, and identify the evidence supporting the decision and the laws or regulations that the decision upholds. The decision made by the hearing official is binding on the State or local agency.
(k) What is the time limit for making a hearing decision and notifying the individual of the decision? A hearing decision must be made, and the individual notified of the decision, in writing, within 45 days of the request for the hearing. The notification must include the reasons for the decision.
(l) How does the hearing decision affect the individual’s receipt of CSFP benefits? If a hearing decision is in favor of an applicant who was denied CSFP benefits, the receipt of benefits must begin within 45 days from the date that the hearing was requested, if the applicant is still eligible for the program. If the hearing decision is against a participant, the State or local agency must discontinue benefits as soon as possible, or at a date determined by the hearing official.
(m) What must be included in the hearing record? In addition to the hearing decision, the hearing record must include a transcript or recording of testimony, or an official report of all that transpired at the hearing, along with all exhibits, papers, and requests made. The record must be maintained in accordance with § 247.29(a). The record of the hearing must be available for public inspection and copying, in accordance with the confidentiality requirements under § 247.36(b).
(n) What further steps may an individual take if a hearing decision is not in his or her favor? If a hearing decision upholds the State or local agency’s action, and a State-level review or rehearing process is available, the State or local agency must describe to the individual any State-level review or rehearing process. The State or local agency must also inform the individual of the right of the individual to pursue judicial review of the decision.
§ 247.34 Management reviews.
(a) What must the State agency do to ensure that local agencies meet program requirements and objectives? The State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.
(b) What must the State agency do if it finds that a local agency is deficient in a particular area of program administration? The State agency must record all deficiencies identified during the review and institute follow-up procedures to ensure that local agencies and subdistributing agencies correct all deficiencies within a reasonable period of time. To ensure improved program performance in the future, the State agency may require that local agencies adopt specific review procedures for use in reviewing their own operations and those of subsidiaries or contractors. The State agency must provide copies of review reports to FNS upon request.
§ 247.35 Local agency appeals of State agency actions.
(a) What recourse must the State agency provide local agencies to appeal a decision that adversely affects their participation in CSFP? The State agency must establish a hearing procedure to allow local agencies to appeal a decision that adversely affects their participation in CSFP—e.g., the termination of a local agency’s participation in the program. The adverse action must be postponed until a decision on the appeal is made.
(b) What must the State agency include in the hearing procedure to ensure that the local agency has a fair chance to present its case? The hearing procedure must provide the local agency:
(1) Adequate advance notice of the time and place of the hearing;
(2) An opportunity to review the record before the hearing, and to present evidence at the hearing;
(3) An opportunity to confront and cross-examine witnesses; and
(4) An opportunity to be represented by counsel, if desired.
(c) Who conducts the hearing and how is a decision on the appeal made? The hearing must be conducted by an impartial person who must make a decision on the appeal that is based solely on the evidence presented at the hearing, and on program legislation and regulations. A decision must be made within 60 days from the date of the request for a hearing, and must be provided in writing to the local agency.
§ 247.36 Confidentiality of applicants or participants.
(a) Can the State or local agency disclose information obtained from applicants or participants to other agencies or individuals? State and local agencies must restrict the use or disclosure of information obtained from CSFP applicants or participants to persons directly connected with the administration or enforcement of the program, including persons investigating or prosecuting program violations. The State or local agency may exchange participant information with other health or welfare programs for the purpose of preventing dual participation. In addition, with the consent of the participant, as indicated on the application form, the State or local agency may share information obtained with other health or welfare programs for use in determining eligibility for those programs, or for program outreach. However, the State agency must sign an agreement with the administering agencies for these programs to ensure that the information will be used only for the specified purposes, and that agencies receiving such information will not further share it.
(b) Can the State or local agency disclose the identity of persons making a complaint or allegation against another individual participating in or administering the program? The State or local agency must protect the confidentiality, and other rights, of any person making allegations or complaints against another individual participating in, or administering CSFP, except as necessary to conduct an investigation, hearing, or judicial proceeding.
§ 247.37 Civil rights requirements.
(a) What are the civil rights requirements that apply to CSFP? State and local agencies must comply with the requirements of Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), Title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), and titles II and III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.). State and local agencies must also comply with the Department’s regulations on nondiscrimination (parts 15, 15a, and 15b of this title), and with the provisions of FNS Instruction 113-2, including the collection of racial/ethnic participation data and public notification of nondiscrimination policy. State and local agencies must ensure that no person shall, on the grounds of race, color, national origin, age, sex, or disability, be subjected to discrimination under the program.
(b) How does an applicant or participant file a complaint of discrimination? CSFP applicants or participants who believe they have been discriminated against should file a discrimination complaint with the USDA Director, Office of Civil Rights, Room 326W, Whitten Building, 1400 Independence Avenue, SW., Washington, DC 20250-9410, or telephone (202) 720-5964.
PART 248—WIC FARMERS’ MARKET NUTRITION PROGRAM (FMNP)
Subpart A—General
§ 248.1 General purpose and scope.
This part announces regulations under which the Secretary of Agriculture shall carry out the WIC Farmers’ Market Nutrition Program. The dual purposes of the FMNP are:
(a) To provide resources in the form of fresh, nutritious, unprepared foods (fruits and vegetables) from farmers’ markets to women, infants, and children who are nutritionally at risk and who are participating in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) or are on the waiting list for the WIC Program; and
(b) To expand the awareness, use of and sales at farmers’ markets.
This will be accomplished through payment of cash grants to approved State agencies which administer the FMNP and deliver benefits at no cost to eligible persons. The FMNP shall be supplementary to the food stamp program carried out under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) and to any other Federal or State program under which foods are distributed to needy families in lieu of food stamps.
§ 248.2 Definitions.
For the purpose of this part and all contracts, guidelines, instructions, forms and other documents related hereto, the term:
Administrative costs means those direct and indirect costs, exclusive of food costs, as defined in § 248.12(b), which State agencies determine to be necessary to support FMNP operations. Administrative costs include, but are not limited to, the costs of administration, start-up, training, monitoring, auditing, the development of and accountability for coupon and market management, nutrition education, outreach, eligibility determination, and developing, printing, and distributing coupons.
Compliance buy means a covert, on-site investigation in which a FMNP representative poses as a FMNP participant and transacts one or more FMNP food coupons.
Coupon means a coupon, voucher, or other negotiable financial instrument by which benefits under the FMNP are transferred to recipients.
Days means calendar days.
Demonstration project means the Farmers’ Market Coupon Demonstration Project authorized by section 17(m) of the Child Nutrition Act of 1966 (CNA), (42 U.S.C. 1786(m)), as amended by section 501 of the Hunger Prevention Act of 1988 (Pub. L. 100-435), enacted September 19, 1988. Public Law 102-314 authorized the Secretary to competitively award, subject to the availability of funds, a 3-year grant (which was subsequently extended for an additional year by Public Law 102-142) to up to 10 States that submitted applications that were approved for the establishment of demonstration projects designed to provide WIC participants with coupons that could be exchanged for fresh, nutritious, unprepared foods at farmers’ markets. Those States are: Connecticut, Iowa, Maryland, Massachusetts, Michigan, New York, Pennsylvania, Texas, Vermont, and Washington.
Department means the U.S. Department of Agriculture.
Eligible foods means fresh, nutritious, unprepared, locally grown fruits, vegetables and herbs for human consumption. Eligible foods may not be processed or prepared beyond their natural state except for usual harvesting and cleaning processes. Honey, maple syrup, cider, nuts, seeds, eggs, meat, cheese and seafood are examples of foods not eligible for purposes of the FMNP. State agencies shall consider locally grown to mean produce grown only within State borders but may also define it to include areas in neighboring States adjacent to its borders. Under no circumstances can produce grown outside of the United States and its territories be considered eligible foods.
Farmer means an individual authorized to sell produce at participating farmers’ markets and/or roadside stands. Individuals who exclusively sell produce grown by someone else, such as wholesale distributors, cannot be authorized to participate in the FMNP. For purposes of this part, the term “farmer” shall mean “producer” as that term is used in section 17(m)(6)(D) of the CNA (42 U.S.C. 1786(m)(6)(D)). A participating State agency has the option to authorize individual farmers, farmers’ markets and/or roadside stands.
Farmers’ market means an association of local farmers who assemble at a defined location for the purpose of selling their produce directly to consumers.
Fiscal year means the period of 12 calendar months beginning October 1 of any calendar year and ending September 30 of the following calendar year.
FMNP funds means Federal grant funds provided for the FMNP, plus the required matching funds.
FNS means the Food and Nutrition Service of the U.S. Department of Agriculture.
Food costs means the cost of eligible supplemental foods.
Household has the same definition as that of “family” defined in § 246.2 of this chapter. Each such family shall constitute a separate household for FMNP benefit issuance purposes.
In-kind contributions means property or services which benefit the FMNP and which are contributed by non-Federal parties without charge to the FMNP.
Local agency means any nonprofit entity or local government agency which issues FMNP coupons, and provides nutrition education and/or information on operational aspects of the FMNP to FMNP recipients.
Matching requirement means State, local or private funds, or program income, equal to not less than 30 percent of the administrative FMNP cost for the fiscal year. The Secretary may negotiate with an Indian State agency a lower percentage of matching funds, but not less than 10 percent of the administrative cost of the program, if the Indian State agency demonstrates to the Secretary financial hardship for the affected Indian tribe, band, group, or council. The match may be satisfied through expenditures for similar farmers’ market programs which operate during the same period as the FMNP. Similar programs include other farmers’ market programs which serve low-income women, infants and children (who may or may not be WIC participants or on the waiting list for WIC services), as well as other categories of low-income recipients, such as, but not limited to, low-income elderly persons.
Nonprofit agency means a private agency which is exempt from income tax under the Internal Revenue Code of 1986, as amended, (26 U.S.C. 1 et. seq.).
Nutrition education means individual or group education sessions and the provision of information and educational materials designed to improve health status, achieve positive change in dietary habits, and emphasize relationships between nutrition and health, all in keeping with the individual’s personal, cultural, and socioeconomic preferences.
OIG means the Department’s Office of the Inspector General.
Program or FMNP means the WIC Farmers’ Market Nutrition Program authorized by section 17(m) of the Child Nutrition Act of 1966 (CNA) (42 U.S.C. 1786(m)), as amended. The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) is authorized by section 17 of the CNA, as amended. Within section 17, section 17(m) authorizes the FMNP.
Recipient means a person chosen by the State agency to receive FMNP benefits. Such person must be a woman, infant over 4 months of age, or child, who receives benefits under the WIC Program or is on the waiting list to receive benefits under the WIC Program.
Roadside stand means a location at which an individual farmer sells his/her produce directly to consumers. This is in contrast to a group or association of farmers selling their produce at a farmers’ market.
SFPD means the Supplemental Food Programs Division of the Food and Nutrition Service of the U.S. Department of Agriculture.
Similar programs means other farmers’ market projects or programs which serve low-income women, infants and children, or other categories of recipients, such as, but not limited to, elderly persons.
State means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Marianas Islands.
State agency means the agriculture department, the health department or any other agency approved by the chief executive officer of the State; an Indian tribe, band or group recognized by the Department of the Interior; an intertribal council or group which is an authorized representative of Indian tribes, bands or groups recognized by the Department of the Interior and which has an ongoing relationship with such tribes, bands or groups for other purposes and has contracted with them to administer the Program; or the appropriate area office of the Indian Health Service (IHS), an agency of the Department of Health and Human Services.
State Plan means a plan of FMNP operation and administration that describes the manner in which the State agency intends to implement, operate and administer all aspects of the FMNP within its jurisdiction in accordance with § 248.4.
Total FMNP funds means the sum of the Federal funds provided to the State agency and non-Federal contributions provided by the State agency for FMNP purposes.
WIC means the Special Supplemental Nutrition Program for Women, Infants and Children authorized by section 17 of the Child Nutrition Act of 1966, as amended (42 U.S.C. 1771 et. seq.).
§ 248.3 Administration.
(a) Delegation to FNS. Within the Department, FNS shall act on behalf of the Department in the administration of the FMNP. Within FNS, SFPD and the FNS Regional Offices are responsible for FMNP administration. FNS shall provide assistance to State agencies and evaluate all levels of FMNP operations to ensure that the goals of the FMNP are achieved in the most effective and efficient manner possible.
(b) Delegation to State agency. The State agency is responsible for the effective and efficient administration of the FMNP in accordance with the requirements of this part; the requirements of the Department’s regulations governing nondiscrimination (7 CFR parts 15, 15a and 15b), administration of grants (2 CFR part 200, subparts A, B, D, E and F and USDA implementing regulations 2 CFR part 400 and part 415), nonprocurement debarment/suspension (2 CFR part 180, OMB Guidelines to Agencies on Government-wide Debarment and Suspension and USDA implementing regulations 2 CFR part 417), drug-free workplace (2 CFR part 182, Government-wide Requirements for Drug-Free Workplace), and lobbying (2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400, part 415 and part 418); and, Office of Management and Budget Circular A-130, FNS guidelines, and Instructions issued under the FNS Directives Management System. The State agency shall provide guidance to cooperating WIC State and local agencies on all aspects of FMNP operations. Pursuant to section 17(m)(2) of the CNA, State agencies may operate the FMNP locally through nonprofit organizations or local government entities and must ensure coordination among the appropriate agencies and organizations.
(c) Agreement and State Plan. (1) Each State agency desiring to administer the FMNP shall annually submit a State Plan and enter into a written agreement with the Department for administration of the Program in the jurisdiction of the State agency in accordance with the provisions of this part.
(2) The written agreement must include a statement that supports full use of Federal funds provided to State agencies for the administration of the FMNP, and excludes such funds from State budget restrictions or limitations, including hiring freezes, work furloughs, and travel restrictions.
(d) State agency ineligibility. A State agency shall be ineligible to participate in the FMNP if State or local sales tax is collected on Program food purchases in the area in which it administers the Program, except that, if sales tax is collected on Program food purchases by sovereign Indian entities which are not State agencies, the State agency shall remain eligible so long as any farmers’ markets collecting such tax are disqualified.
(e) Coordination with WIC agency. The Chief Executive Officer of the State shall ensure coordination between the designated administering State agency and the WIC State agency, if different, by ensuring that the two agencies enter into a written agreement. Such coordination between agencies is necessary for the successful operation of the FMNP, because WIC participants or persons on the waiting list for WIC services are the only persons eligible to receive Federal benefits under the FMNP. The written agreement shall delineate the responsibilities of each agency, describe any compensation for services, and shall be signed by the designated representative of each agency. This agreement shall be submitted each year along with the State Plan.
(f) State staffing standards. Each State agency shall ensure that sufficient staff is available to efficiently and effectively administer the FMNP. This shall include, but not be limited to, sufficient staff to provide nutrition education in coordination with the WIC Program, coupon and market management, fiscal reporting, monitoring, and training. The State agency shall provide an outline of administrative staff and job descriptions for staff whose salaries will be paid from program funds in their State Plans.
Subpart B—State Agency Eligibility
§ 248.4 State Plan.
(a) Requirements. By November 15 of each year, each applying or participating State agency shall submit to FNS for approval a State Plan for the following year as a prerequisite to receiving funds under this section. The State Plan shall be signed by the State designated official responsible for ensuring that the Program is operated in accordance with the State Plan. FNS will provide written approval or denial of a completed State Plan or amendment within 30 days. Portions of the State Plan which do not change annually need not be resubmitted. However, the State agency shall provide the title of the sections that remain unchanged, as well as the year of the last Plan in which the sections were submitted. At a minimum, the Plan must address the following areas in sufficient detail to demonstrate the State agency’s ability to meet the requirements of the FMNP:
(1) A copy of the agreement between the designated administering State agency and the WIC State agency, if different, for services such as nutrition education, and documentation of coordinated efforts as required in § 248.3(e), as well as copies of agreements with agencies other than the WIC State agency.
(2) Estimated number of recipients for the fiscal year, and proposed months of operation.
(3) Estimated cost of the FMNP, including a minimum amount necessary to operate the FMNP.
(4) Description of how the Program will achieve its dual purposes of providing a nutritional benefit to WIC (or waiting list) participants and expanding the awareness and use of farmers’ markets.
(5) Outline of administrative staff and job descriptions.
(6) Detailed description of the recordkeeping system including, but not limited to, the system for maintaining records pertaining to financial operations, coupon issuance and redemption, and FMNP participation.
(7) Detailed description of the financial management system, including, but not limited to documentation of how the State will meet the matching requirement and procedures for obligating funds.
(8) Detailed description of the service area including:
(i) The number and addresses of participating markets, roadside stands and area WIC clinics including a map outlining the service area and proximity of markets/roadside stands to clinics; and
(ii) Estimated number of WIC participants and persons on the WIC waiting list that will receive FMNP coupons.
(9) Description of the coupon issuance system including:
(i) How the State agency will target areas with highest concentrations of eligible persons and greatest access to farmers’ markets within the broadest possible geographic area;
(ii) Annual benefit amount per recipient;
(iii) Method for instructing recipients on the proper use of FMNP coupons and the purpose of the FMNP; and
(iv) Method for ensuring that FMNP coupons are only issued to eligible recipients.
(10) Detailed description of the coupon and farmers’ market management system including:
(i) Criteria for authorizing farmers’ markets and/or roadside stands;
(ii) Procedures for training farmers and market managers, at authorization, and annually thereafter;
(iii) Procedures for monitoring farmers, farmers’ markets and/or roadside stands;
(iv) Description of system for identifying high risk farmers, farmers’ markets and/or roadside stands and procedures for sanctioning farmers, farmers’ markets and/or roadside stands;
(v) Facsimile of the FMNP coupon;
(vi) Identification of the fresh, nutritious, unprepared fruits, vegetables, and herbs which are eligible for purchase under the Program;
(vii) Description of FMNP coupon replacement policy;
(viii) Procedures for handling recipient and farmer/farmers’ market complaints.
(11) Detailed description of the FMNP coupon redemption process including:
(i) Procedures for ensuring the secure transportation and storage of FMNP coupons;
(ii) System for identifying and reconciling FMNP coupons;
(iii) Timeframes for FMNP coupon redemption by recipients; submission for payment by markets, and payment by the State agency;
(12) System for ensuring that FMNP coupons are redeemed only by authorized farmers, farmers’ markets and/or roadside stands and only for eligible foods.
(13) System for identifying FMNP coupons which are redeemed or submitted for payment outside valid dates or by unauthorized farmers, farmers’ markets and/or roadside stands.
(14) A copy of the written agreement to be used between the State agency and authorized farmers, farmers’ markets and/or roadside stands. In those States which authorize farmers’ markets, but not individual farmers, this agreement shall specify in detail the role of and procedures to be used by farmers’ markets for monitoring and sanctioning farmers, and the appropriate procedures to be used by a farmer to appeal a sanction or disqualification imposed by a farmers’ market.
(15) If available, information on the change in consumption of fresh fruits and vegetables by recipients. This information shall be submitted as an addendum to the State Plan and shall be submitted at such a date specified by the Secretary.
(16) If available, information on the effects of the program on farmers’ markets. This information shall be submitted as an addendum to the State Plan and shall be submitted at such a date specified by the Secretary.
(17) A description of the procedures the State agency will use to comply with the civil rights requirements described in § 248.7(a), including the processing of discrimination complaints.
(18) State agencies which have not previously participated in the FMNP, shall provide the following additional information:
(i) A statement assuring that if the State agency receives Federal funds, as specified under § 248.14 to operate the FMNP, and applies those funds to similar programs operated in the previous fiscal year with State or local funds, the amount of State and local funds that were available to similar programs in the fiscal year preceding the first year of operation shall not be reduced. The State agency shall include data in the State Plan showing that it did not reduce the amount of State and local funds available to the similar program in the preceding fiscal year.
(ii) A capability statement which includes a summary description of any prior experience with farmers’ market projects or programs, including information and data describing the attributes of such projects or programs.
(19) For States making expansion requests, documentation which demonstrates:
(i) The need for an increase in funding;
(ii) That the use of the increased funding will be consistent with serving WIC participants, or persons on a waiting list for WIC benefits, by expanding benefits to more persons, by enhancing current benefits, or a combination of both, and expanding the awareness and use of farmers’ markets;
(iii) The ability to satisfactorily operate the existing FMNP;
(iv) The management capabilities of the State agency to expand; and
(v) Whether, in the case of a State agency that intends to use the funding to increase the value of the Federal share of the benefits received by a recipient, the funding provided will increase the rate of coupon redemption.
(20) For those State agencies requesting the extra 2 percent administrative rate for market development or technical assistance to promote such development in disadvantaged areas or remote rural areas, an explanation of their justification and plans for the use of such funds.
(b) Amendments. At any time after approval, the State agency may amend the State Plan to reflect changes. The State agency shall submit the amendments to FNS for approval. The amendments shall be signed by the State designated official responsible for ensuring that the FMNP is operated in accordance with the State Plan.
(c) Retention of copy. A copy of the approved State Plan shall be kept on file at the State agency for public inspection.
§ 248.5 Selection of new State agencies.
In selecting new State agencies, the Department will use objective criteria to rank and approve State plans submitted in accordance with § 248.4. In making this ranking, the Department will consider the amount of funds necessary to successfully operate the FMNP in the State compared with other States and with the total amount of funds available to the FMNP. Approval of a State Plan does not equate to an obligation on the part of the Department to fund the FMNP within that State agency.
Subpart C—Recipient Eligibility
§ 248.6 Recipient eligibility.
(a) Eligibility for certification. Individuals who are eligible to receive Federal benefits under the FMNP are those, excluding infants 4 months of age or younger, who are currently receiving benefits under WIC or who are on the waiting list to receive benefits from WIC.
(b) Limitations on certification. If necessary to limit the number of recipients, State agencies may impose additional eligibility requirements, such as limiting participant certification to certain geographic areas, or to high priority WIC participants such as pregnant and breastfeeding women. States may also preclude groups of low priority persons, such as persons on the waiting list for WIC. Each State agency must specifically identify these limitations on certification in its State Plan.
(c) Recipient or household benefit allocation. On a Statewide basis, State agencies shall elect to allocate and issue benefits either to recipients or households. A State agency allocating benefits on a household basis shall not issue more benefits to a household than it otherwise would if benefits were allocated to individual recipients within the household. For those State agencies issuing FMNP benefits on a household basis, each family as defined in § 246.2 of this chapter shall constitute a separate household. Foods provided, regardless of method of issuance, are intended for the sole benefit of FMNP recipients and are not intended to be shared with other non-participating household members. If a State agency issues benefits on a household basis, data concerning number and type of recipients must still be provided as required by § 248.23(b). Recipients shall receive FMNP benefits free of charge.
§ 248.7 Nondiscrimination.
(a) Civil rights requirements. The State agency shall comply with the requirements of title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, Department of Agriculture regulations on nondiscrimination (7 CFR parts 15, 15a and 15b), and applicable FNS Instructions to ensure that no person shall, on the grounds of race, color, national origin, age, sex or handicap, be excluded from participation, be denied benefits, or be otherwise subjected to discrimination, under the FMNP. Because racial and ethnic participation data (as required by title VI of the Civil Rights Act of 1964) are collected at the time women, infants, and children are certified for participation in the WIC Program, the Department has determined that the WIC data collection effort is sufficient to fulfill the racial/ethnic data collection requirement for the FMNP. Therefore, no additional data collection is required. Compliance with title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and regulations and instructions issued thereunder shall include, but not be limited to:
(1) Notification to the public of the nondiscrimination policy and complaint rights of recipients and potentially eligible persons, which may be satisfied through the Department’s required nondiscrimination statement on brochures and publications;
(2) Review and monitoring activity to ensure FMNP compliance with the nondiscrimination laws and regulations;
(3) Establishment of grievance procedures for handling recipient complaints based on sex and handicap.
(b) Complaints. Persons seeking to file discrimination complaints may file them either with the Secretary of Agriculture, or the Director, USDA, Office of Adjudication and Compliance, Room 326-W, Whitten Building, 14th and Independence Avenue, SW., Washington, DC 20250-9410 (or call (800) 795-3272 (voice) or (202) 720-6382 (TTY)), or with the office established by the State agency to handle discrimination grievances or complaints. All complaints received by State agencies which allege discrimination based on race, color, national origin, or age shall be referred to the Secretary of Agriculture or the Director of the Office of Equal Opportunity, USDA. A State agency may process complaints which allege discrimination based on sex or handicap if grievance procedures are in place.
Subpart D—Recipient Benefits
§ 248.8 Level of benefits and eligible foods.
(a) General. State agencies shall identify in the State Plan the fresh, nutritious, unprepared, locally grown fruits, vegetables and herbs which are eligible for purchase under the FMNP. Ineligible foods for the purpose of the FMNP include, but are not limited to: honey, maple syrup, cider, nuts and seeds, eggs, cheese, meat and seafood. Locally grown shall mean produce grown only within a State’s borders but may be defined to include border areas in adjacent States. Under no circumstances can produce grown outside of the United States and its territories be considered eligible foods.
(b) The value of the Federal benefits received. The value of the Federal FMNP benefit received by each recipient, or by each family within a household in those States which elect to issue benefits on a household basis under § 248.6(c) may not be less than $10 per year nor more than $30 per year.
§ 248.9 Nutrition education.
(a) Goals. Nutrition education shall emphasize the relationship of proper nutrition to the total concept of good health, including the importance of consuming fresh fruits and vegetables.
(b) Requirement. The State agency shall integrate nutrition education into FMNP operations and may satisfy nutrition education requirements through coordination with other agencies within the State. Such other agencies may include the WIC Program which routinely offers nutrition education to participants and which may wish to use the opportunity of the FMNP to reinforce nutrition messages. State agencies wishing to coordinate nutrition education with WIC shall enter into a written cooperative agreement with WIC agencies to offer nutrition education relevant to the use and nutritional value of foods available to FMNP recipients. In cases where relevant WIC nutrition education sessions are used to meet this requirement, reimbursement to the WIC local agency shall not be permitted. In cases where FMNP recipients are not receiving relevant nutrition education from the WIC Program, the State agency shall arrange alternative methods for the provision of such nutrition education which is an allowable cost under the FMNP.
Subpart E—State Agency Provisions
§ 248.10 Coupon and market management.
(a) General. This section sets forth State agency responsibilities regarding the authorization of farmers, farmers’ markets, and roadside stands. The State agency is responsible for the fiscal management of, and accountability for, FMNP-related activities for farmers, farmers’ markets and roadside stands. Each State agency may decide whether to authorize farmers individually, farmers’ markets, roadside stands, or all of the above. All contracts or agreements entered into by the State agency for the management or operation of farmers, farmers’ markets and roadside stands shall conform with the requirements of 2 CFR part 200, subpart D and Appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards and USDA implementing regulations 2 CFR part 400 and 415.
(1) Only farmers, farmers’ markets and roadside stands authorized by the State agency may redeem FMNP coupons. Only farmers authorized by the State agency or that have a valid agreement with an authorized farmers’ market may redeem coupons.
(2) The State agency shall establish criteria for the authorization of individual farmers, farmers’ markets and roadside stands. Any authorized farmer, farmers’ market and roadside stand must agree to sell recipients only those foods identified as eligible by the State agency, in exchange for FMNP coupons. Individuals who exclusively sell produce grown by someone else, such as wholesale distributors, cannot be authorized to participate in the FMNP, except individuals employed by a farmer otherwise qualified under these regulations, or individuals hired by a nonprofit organization to sell produce at farmers’ markets or roadside stands on behalf of local farmers.
(3) The State agency shall ensure that an appropriate number of farmers, farmers’ markets and/or roadside stands are authorized for adequate recipient access in the area(s) proposed to be served and for effective management of the farmers, farmers’ markets and/or roadside stands by the State agency. The State agency may establish criteria to limit the number of authorized farmers, farmers’ markets and/or roadside stands.
(4) The State agency shall ensure that face-to-face training is conducted prior to start up of the first year of FMNP participation of a farmers’ market and individual farmer. The face-to-face training shall include at a minimum those items listed in paragraph (d) of this section.
(5) Authorized farmers shall display a sign stating that they are authorized to redeem FMNP coupons.
(6) Authorized farmers, farmers’ markets and roadside stands shall comply with the requirements of Title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, Department of Agriculture regulations on non-discrimination (7 CFR parts 15, 15a and 15b), and FNS Instructions as outlined in § 248.7.
(7) The State agency shall ensure that there is no conflict of interest between the State or local agency and any participating farmer, farmers’ market and roadside stand.
(b) Farmers’ market agreements. The State agency shall ensure that all participating farmers’ markets enter into written agreements with the State agency. The agreement shall be signed by a representative who has legal authority to obligate the farmer, farmers’ market and/or roadside stand. The agreement shall be signed by a representative who has legal authority to obligate the farmers/farmers’ market. Agreements shall include a description of sanctions for noncompliance with FMNP requirements and shall contain at a minimum, the following specifications, although the State agency may determine the exact wording to be used:
(1) The farmer, farmers’ market and roadside stand shall:
(i) Provide such information as the State agency may require for its periodic reports to FNS;
(ii) Assure that FMNP coupons are redeemed only for eligible foods;
(iii) Provide eligible foods at the current price or less than the current price charged to other customers;
(iv) Accept FMNP coupons within the dates of their validity and submit such coupons for payment within the allowable time period established by the State agency;
(v) In accordance with a procedure established by the State agency, mark each transacted coupon with a farmer identifier. In those cases where the agreement is between the State agency and the farmer, each transacted FMNP coupon shall contain a farmer identifier and shall be batched for reimbursement under that identifier. In those cases where the agreement is between the State agency and the farmers’ market, each transacted FMNP coupon shall contain a farmer identifier and be batched for reimbursement under a farmers’ market identifier.
(vi) Accept training on FMNP procedures and provide training to farmers and any employees with FMNP responsibilities on such procedures;
(vii) Agree to be monitored for compliance with FMNP requirements, including both overt and covert monitoring;
(viii) Be accountable for actions of farmers or employees in the provision of foods and related activities;
(ix) Pay the State agency for any coupons transacted in violation of this agreement;
(x) Offer FMNP recipients the same courtesies as other customers;
(xi) Comply with the nondiscrimination provisions of USDA regulations as provided in § 248.7; and
(xii) Notify the State agency if any farmer, farmers’ market and/or roadside stand ceases operation prior to the end of the authorization period.
(2) The farmer, farmers’ market and roadside stand shall not:
(i) Collect sales tax on FMNP coupon purchases;
(ii) Seek restitution from FMNP recipients for coupons not paid by the State agency;
(iii) Issue cash change for purchases that are in an amount less than the value of the FMNP coupon(s).
(3) Neither the State agency nor the farmer, farmers’ market nor a roadside stand has an obligation to renew the agreement. Either the State agency or the farmer, farmers’ market or a roadside stand may terminate the agreement for cause after providing advance written notification.
(4) The State agency may deny payment to the farmer, farmers’ market or roadside stand for improperly redeemed FMNP coupons and may demand refunds for payments already made on improperly redeemed coupons.
(5) The State agency may disqualify a farmer, farmers’ market or roadside stand for FMNP abuse. The farmer, farmers’ market and/or roadside stand has the right to appeal a denial of an application to participate, a disqualification, or a FMNP sanction by the State agency. Expiration of a contract or agreement with a farmer, farmers’ market or roadside stand, and claims actions under § 248.20, are not appealable.
(6) A farmer, farmers’ market or a roadside stand which commits fraud or engages in other illegal activity is liable to prosecution under applicable Federal, State or local laws.
(7) Agreements may not exceed 3 years.
(c) Farmer agreements for State agencies which do not authorize farmers. Those State agencies which authorize farmers’ markets but not individual farmers shall require authorized farmers’ markets to enter into a written agreement with each farmer within the market that is participating in FMNP. The State agency shall set forth the required terms for the agreement and provide a sample agreement which may be used.
(d) Annual training for farmers/farmers’ market managers. State agencies shall conduct annual training for farmers/farmers’ market managers participating in the FMNP. The State agency shall conduct a face-to-face training for all farmers and farmers’ market managers who have never previously participated in the program prior to their commencing participation in the FMNP. After a farmer/farmers’ market manager’s first year of FMNP operation, State agencies have discretion in determining the method used for annual training purposes. At a minimum, annual training shall include instruction emphasizing:
(1) Eligible food choices;
(2) Proper FMNP coupon redemption procedures, including deadlines for submission of coupons for payment;
(3) Equitable treatment of FMNP recipients, including the availability of produce to FMNP recipients that is of the same quality and cost as that sold to other customers;
(4) Civil rights compliance and guidelines;
(5) Guidelines for storing FMNP coupons safely; and
(6) Guidelines for cancelling FMNP coupons, such as punching holes or rubber stamping.
(e) Monitoring and review of farmers, farmers’ markets, roadside stands and local agencies. The State agency shall be responsible for the monitoring of farmers, farmers’ markets, roadside stands and local agencies within its jurisdiction. This shall include developing a system for identifying high risk farmers, farmers’ markets, and roadside stands and ensuring on-site monitoring, conducting further investigation, and sanctioning of such farmers, farmers’ markets, or roadside stands as appropriate.
(1) Where coupon reimbursement responsibilities are delegated to farmers’ market managers, farmers’ market associations, or nonprofit organizations, the State agency may establish bonding requirements for these entities. Costs of such bonding are not reimbursable administrative expenses.
(2) Each State agency shall rank participating farmers, farmers’ markets and roadside stands by risk factors, and shall conduct annual, on-site monitoring of at least 10 percent of farmers, 10 percent of farmers’ markets and 10 percent of roadside stands which shall include those farmers, farmers’ markets and roadside stands identified as being the highest risk.Mandatory high-risk indicators are a proportionately high volume of FMNP coupons redeemed by a farmer as compared to other farmers within the farmers’ market and within the State, recipient complaints, and farmers and farmers’ markets in their first year of FMNP operation. States are encouraged to formally establish other high risk indicators for identifying potential problems. If additional high risk indicators are established, they shall be set forth in the farmers/farmers’ market agreement and in the State Plan. If application of the high-risk indicators results in fewer than 10 percent of farmers and farmers’ markets as high-risk, the State agency shall randomly select additional farmers and farmers’ markets to be monitored in order to meet the 10 percent minimum. The high-risk indicators listed above generally apply to a State agency already participating in the FMNP. A State agency participating in the FMNP for the first time shall, in lieu of applying the high-risk indicators, randomly select 10 percent of its participating farmers, 10 percent of its participating farmers’ markets, and 10 percent of its participating roadside stands for monitoring visits.
(3) The following shall be documented for all on-site farmers, farmers’ markets, and roadside stands monitoring visits. At a minimum, documentation must include the names of the farmer, farmers’ market or roadside stand and the reviewer; date of review; nature of problem(s) detected or the observation that the farmer, farmers’ market or roadside stand appears to be in compliance with FMNP requirements; a record of interviews with recipients, market managers and/or farmers; and the signature of the reviewer. The State agency shall do so after a reasonable delay when necessary to protect the identity of the reviewer(s) or the integrity of the investigation. After the farmer/farmers’ market has been informed of any deficiencies detected by the monitoring visit, and instances where the farmer/farmers’ market will be permitted to continue participation, the farmer/farmers’ market shall provide plans as to how the deficiencies will be corrected.
(4) At least every 2 years, the State agency shall review all local agencies within its jurisdiction. WIC State agency reviews of WIC local agencies, which include reviews of FMNP practices, may contribute to meeting the requirement that all local agencies be reviewed once every 2 years.
(f) Control of FMNP coupons. (1) The State agency shall control and provide accountability for the receipt and issuance of FMNP coupons.
(2) The State agency shall ensure that there is secure transportation and storage of unissued FMNP coupons.
(3) The State agency shall design and implement a system of review of FMNP coupons to detect errors. At a minimum, the errors the system must detect are a missing recipient signature, a missing farmer and/or market identification, and redemption by a farmer outside of the valid date. The State agency shall implement procedures to reduce the number of errors in transactions, where possible.
(g) Payment to farmers/farmers’ markets. The State agency shall ensure that farmers/ farmers’ markets are promptly paid for food costs.
(h) Reconciliation of FMNP coupons. The State agency shall identify the disposition of all FMNP coupons as validly redeemed, lost or stolen, expired, or not matching issuance records. Validly redeemed FMNP coupons are those that are issued to a valid recipient and redeemed by an authorized farmers/farmers’ market within valid dates. FMNP coupons that were redeemed but cannot be traced to a valid recipient or authorized farmer/farmers’ market shall be subject to claims action in accordance with § 248.20. (1) If the State agency elects to replace lost, stolen or damaged FMNP coupons, it must describe its system for doing so in the State Plan.
(2) The State agency shall use uniform FMNP coupons within its jurisdiction.
(3) FMNP coupons must include, at a minimum, the following information:
(i) The last date by which the recipient may use the coupon. This date shall be no later than November 30 of each year.
(ii) A date by which the farmer or farmers’ market must submit the coupon for payment. When establishing this date, State agencies shall take into consideration the date financial statements are due to the FNS, and allow time for the corresponding coupon reconciliation that must be done by the State agency prior to submission of financial statements. Currently, financial statements are due to FNS by January 30.
(iii) A unique and sequential serial number.
(iv) A denomination (dollar amount).
(v) A farmer identifier for the redeeming farmer when agreements are between the State agency and the farmer.
(vi) In those instances where State agencies have agreements with farmers’ markets, there must be a farmer identifier on each coupon and a market identifier on the cover of coupons which are batched by the market manager for reimbursement.
(i) Instructions to recipients. Each recipient shall receive instructions on the proper use and redemption of the FMNP coupons, including, but not limited to:
(1) A list of names and addresses of authorized farmers, farmers’ markets and roadside stands at which FMNP coupons may be redeemed.
(2) A description of eligible foods and the prohibition against cash change.
(3) An explanation of their right to complain about improper farmer/farmers’ market practices with regard to FMNP responsibilities and the process for doing so.
(j) Recipients and farmer/farmers’ market complaints. The State agency shall have procedures which document the handling of complaints by recipients and farmers/farmers’ markets. Complaints of civil rights discrimination shall be handled in accordance with § 248.7(b).
(k) Recipients and farmer/farmers’ market sanctions. The State agency shall establish policies which determine the type and level of sanctions to be applied against recipients and farmers/farmers’ markets, based upon the severity and nature of the FMNP violations observed, and such other factors as the State agency determines appropriate, such as whether repeated offenses have occurred over a period of time. Farmers/farmers’ markets may be sanctioned, disqualified, or both, when appropriate. Sanctions may include fines for improper FMNP coupon redemption procedures and the penalties outlined in § 248.20, in case of deliberate fraud. In those instances where compliance purchases are conducted, the results of covert compliance purchases can be a basis for farmer/farmers’ market sanctions. A farmer/farmers’ market committing fraud or other unlawful activities is liable to prosecution under applicable Federal, State or local laws. State agency policies shall ensure that a farmer that is disqualified from the FMNP at one market or roadside stand shall not participate in the FMNP at any other farmers’ market or roadside stand in the State’s jurisdiction during the disqualification period.
§ 248.11 Financial management system.
(a) Disclosure of expenditures. The State agency shall maintain a financial management system which provides accurate, current and complete disclosure of the financial status of the FMNP. This shall include an accounting for all property and other assets and all FMNP funds received and expended each fiscal year.
(b) Internal controls. The State agency shall maintain effective controls over and accountability for all FMNP funds. The State agency must have effective internal controls to ensure that expenditures financed with FMNP funds are authorized and properly chargeable to the FMNP.
(c) Record of expenditures. The State agency shall maintain records which adequately identify the source and use of funds expended for FMNP activities. These records shall contain, but are not limited to, information pertaining to authorization, receipt of funds, obligations, unobligated balances, assets, liabilities, outlays, and income.
(d) Payment of costs. The State agency shall implement procedures which ensure prompt and accurate payment of allowable costs, and ensure the allowability and allocability of costs in accordance with the cost principles and standard provisions of this part, 2 CFR part 200, subparts D and E and USDA implementing regulations 2 CFR part 400 and part 415, and FNS guidelines and Instructions.
(e) Identification of obligated funds. The State agency shall implement procedures which accurately identify obligated FMNP funds at the time the obligations are made.
(f) Resolution of audit findings. The State agency shall implement procedures which ensure timely and appropriate resolution of claims and other matters resulting from audit findings and recommendations.
(g) Reconciliation of food instruments. The State agency shall reconcile FMNP coupons in accordance with § 248.10(h).
(h) Transfer of cash. The State agency shall establish the timing and amounts of its cash draws against its Letter of Credit in accordance with 31 CFR part 205.
§ 248.12 FMNP costs.
(a) General—(1) Composition of allowable costs. In general, a cost item will be deemed allowable if it is reasonable and necessary for FMNP purposes and otherwise satisfies allowability criteria set forth in 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415 and this part. FMNP purposes include the administration and operation of the FMNP. Program costs supported by State matching contributions must meet the same criteria for allowability as costs supported by Federal funds. Allowable FMNP costs may be classified as follows:
(i) Food costs and administrative costs. Food costs are the costs of food benefits provided to FMNP recipients. Administrative costs are the costs associated with providing FMNP benefits and services to recipients and generally administering the FMNP. Specific examples of allowable administrative costs are listed in paragraph (b) of this section. Except as provided in § 248.14(g) of this part, a State agency’s administrative costs under the FMNP may not exceed 17 percent of its total FMNP costs. Any costs incurred for food and/or administration above the Federal grant level will be the State agency’s responsibility.
(ii) Market development or technical assistance costs. Market development or technical assistance costs are those costs under § 248.14(h) incurred to promote the development of farmers’ markets in socially or economically disadvantaged areas, or remote rural areas, where individuals eligible for participation in the program have limited access to locally grown fruits and vegetables. Subject to a determination by the Secretary under § 248.14(h), a State agency may, during any fiscal year, use not more than 2 percent of total program funds for such market development or technical assistance.
(iii) Direct and indirect costs. Direct costs are food and administrative costs incurred specifically for the FMNP. Indirect costs are administrative costs that benefit multiple programs or activities, and cannot be identified to any one without effort disproportionate to the results achieved. In accordance with the provisions of 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415, a claim for reimbursement of indirect costs shall be supported by an approved allocation plan for the determination of such costs. An indirect cost rate developed through such an allocation plan may not be applied to a base that includes food costs.
(2) Costs allowable with prior approval. A State or local agency must obtain prior approval in accordance with 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415 before charging to the FMNP any capital expenditures and other cost items designated by 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415 as requiring such approval.
(3) Unallowable costs. Costs that are not reasonable and necessary for FMNP purposes, or that do not otherwise satisfy the cost principles of 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415, are unallowable. Notwithstanding any other provision of 2 CFR part 200, subparts D and E, and USDA implementing regulations 2 CFR parts 400 and 415, the cost of constructing or operating a farmers’ market is unallowable. Unallowable costs may never be claimed for Federal reimbursement or counted toward the State matching requirement.
(b) Specified allowable administrative costs. Allowable administrative costs include the following:
(1) The costs associated with the provision of nutrition education which meets the requirements of § 248.9 of this part.
(2) The costs of FMNP coupon issuance, or recipient education covering proper coupon redemption procedures.
(3) The cost of outreach services.
(4) The costs associated with the food delivery process, such as printing FMNP coupons, processing redeemed coupons, and training market managers on the food delivery system.
(5) The cost of monitoring and reviewing Program operations.
(6) The cost of FMNP training.
(7) The cost of required reporting and recordkeeping.
(8) The cost of determining which local WIC sites will be utilized.
(9) The cost of recruiting and authorizing farmers/farmers’ markets to participate in the FMNP.
(10) The cost of preparing contracts for farmers/farmers’ markets and local WIC providers.
(11) The cost of developing a data processing system for redemption and reconciliation of FMNP coupons.
(12) The cost of designing program training and informational materials.
(13) The cost of coordinating FMNP implementation responsibilities between designated administering agencies.
§ 248.13 FMNP income.
Program income means gross income the State agency earns from grant supported activities. It includes fees for services performed and receipts from the use or rental of real or personal property acquired with Federal grant funds, but does not include proceeds from the disposition of such property. The State agency shall retain Program income earned during the agreement period and use it for Program purposes in accordance with the addition method described in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415. Fines, penalties or assessments paid by local agencies or farmers/farmers’ markets are also deemed to be FMNP income. The State agency shall ensure that the sources and applications of Program income are fully documented.
§ 248.14 Distribution of funds.
(a) Conditions for receipt of Federal funds—(1) Matching of funds—(i) Match amount. As a prerequisite to the receipt of Federal funds, a State agency must agree to contribute State, local or private funds, or program income, equal to not less than 30 percent of the total administrative FMNP cost. The Secretary may negotiate a lower percentage of matching funds, but not lower than 10 percent of the administrative cost of the program, in the case of an Indian State agency that demonstrates to the Secretary financial hardship for the affected Indian tribe, band, group, or council. The State agency may contribute more than the minimum amount. State, local or private funds for similar programs as defined in § 248.2 may satisfy the State matching requirement.
(ii) Sources of matching contributions. A State agency may count any form of contribution authorized by 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 toward the State matching requirement including in-kind contributions.
(iii) Failure to match. A State agency’s failure to meet the State matching requirement will result in the establishment of a claim for the amount of Federal grant funds not matched. The matching requirement will be considered satisfied if State or other non-Federal matching contributions reported on the final closeout report (required by § 248.15(a)) amount to at least 30 percent of the administrative costs. This match amount may be lower for those Indian State agencies that have demonstrated to the Secretary financial hardship as set forth in paragraph (a)(1)(i) of this section.
(2) State Plan and agreement. A State agency shall have its State Plan approved and shall execute an agreement with the Department in accordance with § 248.3(c) of this part.
(b) Distribution of FMNP funds to previously participating State agencies. Provided that sufficient FMNP funds are available, each State agency that participated in the FMNP in any prior fiscal year, shall receive not less than the amount of funds the State agency received in the most recent fiscal year in which it received funding, if it otherwise complies with the requirements established in this part.
(c) Ratable reduction. If amounts appropriated for any fiscal year for grants under the FMNP are not sufficient to pay to each previously participating State agency at least an amount as identified in paragraph (b) of this section, each State agency’s grant shall be ratably reduced, except that, to the extent permitted by available funds, each State agency shall receive at least $75,000 or the amount that the State agency received for the most recent prior fiscal year in which the State participated, if that amount is less than $75,000.
(d) Expansion of participating State agencies and establishment of new State agencies. Any FMNP funds remaining for allocation after meeting the requirements of paragraph (b) of this section shall be allocated in the following manner:
(1) Of the remaining funds, 75 percent shall be made available to State agencies already participating in the FMNP that wish to serve additional recipients. If this amount is greater than that necessary to satisfy all State plans approved for additional recipients, the unallocated amount shall be applied toward satisfying any unmet need in paragraph (d)(2) of this section.
(2) Of the remaining funds, 25 percent shall be made available to State agencies that have not participated in the FMNP in any prior fiscal year. If this amount is greater than that necessary to satisfy the approved State Plans for new States, the unallocated amount shall be applied toward satisfying any unmet need in paragraph (d)(1) of this section. The Department reserves the right not to fund every State agency with an approved State Plan.
(3) In any fiscal year, any FMNP funds that remain unallocated after satisfying the requirements of paragraphs (d)(1) and (d)(2) of this section, shall be reallocated in accordance with paragraph (k) of this section.
(e) Expansion for current State agencies. In providing funds to State agencies that participated in the FMNP in the previous fiscal year, the Department shall consider on a case-by-case basis, the following:
(1) Whether the State agency utilized at least 80 percent of its prior year food grant. States that did not spend at least 80 percent of their prior year food grant may still be eligible for expansion funding if, in the judgment of the Department, good cause existed which was beyond the management control of the State, such as severe weather conditions, or unanticipated decreases in participant caseload in the WIC Program.
(2) Documentation supporting the funds expansion request as outlined in § 248.4(a)(19).
(f) Funding of new State agencies. Funds will be awarded to new State agencies in accordance with § 248.5.
(g) Administrative funding. A State agency shall have available for administrative costs an amount not greater than 17 percent of total FMNP funds. The 17 percent administrative cost limitation shall not apply to any funds that a State agency may contribute in excess of its minimum matching requirement. A State agency may use any non-Federal contributions in excess of the 30 percent (or the negotiated percentage for those Indian State agencies that received a lower amount) matching requirement for food and/or administrative costs.
(h) Market development. A State agency shall be permitted to use not more than 2 percent of total program funds for market development or technical assistance to farmers’ markets if the Secretary determines that the State intends to promote the development of farmers’ markets in socially or economically disadvantaged areas, or remote rural areas, where individuals eligible for participation in the program have limited access to locally grown fruits and vegetables.
(i) Transfer of funds. A State agency may use not more than 5 percent of the Federal FMNP funds made available for the fiscal year to reimburse expenses incurred by the FMNP during a preceding fiscal year. The State agency shall provide such justification for its request to spend back funds under this paragraph as FNS may require.
(j) Recovery of unused funds. State agencies shall return to FNS any unexpended funds made available for a fiscal year by February 1 of the following fiscal year.
(k) Reallocation of funds. Any funds recovered under paragraphs (d)(3) and (j) of this section will be reallocated in accordance with the appropriate method determined by FNS.
§ 248.15 Closeout procedures.
(a) General. State agencies shall submit to FNS a final closeout report for the fiscal year on a form prescribed by FNS on a date specified by FNS.
(b) Grant closeout procedures. When grants to State agencies are terminated, the following procedures shall be performed in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(1) FNS may disqualify a State agency’s participation under the FMNP, in whole or in part, or take such remedies as may be appropriate, whenever FNS determines that the State agency failed to comply with the conditions prescribed in this part, in its Federal-State Agreement, or in FNS guidelines and instructions. FNS will promptly notify the State agency in writing of the disqualification together with the effective date.
(2) FNS may disqualify the State agency or restrict its participation in the FMNP when both parties agree that continuation under the FMNP would not produce beneficial results commensurate with the further expenditure of funds.
(3) Upon termination of a grant, the affected agency shall not incur new obligations after the effective date of the disqualification, and shall cancel as many outstanding obligations as possible. FNS will allow full credit to the State agency for the Federal share of the noncancellable obligations properly incurred by the State agency prior to disqualification, and the State agency shall do the same for farmers/farmers’ markets.
(4) A grant closeout shall not affect the retention period for, or Federal rights of access to, FMNP records as specified in § 248.24(b) and (c). The closeout of a grant does not affect the responsibilities of the State agency regarding property or with respect to any FMNP income for which the State agency is still accountable.
(5) A final audit is not a required part of the grant closeout and should not be needed unless there are problems with the grant that require attention. If FNS considers a final audit to be necessary, it shall so inform OIG. OIG will be responsible for ensuring that necessary final audits are performed and for any necessary coordination with other Federal cognizant audit agencies or State or local auditors. Audits performed in accordance with § 248.18 may serve as final audits providing such audits meet the needs of requesting agencies. If the grant is closed out without an audit, FNS reserves the right to disallow and recover an appropriate amount after fully considering any recommended disallowances resulting from an audit which may be conducted later.
§ 248.16 Administrative appeal of State agency decisions.
(a) Requirements. The State agency shall provide a hearing procedure whereby recipients, local agencies and farmers/farmers’ markets adversely affected by certain actions of the State agency may appeal those actions. A recipient may appeal disqualification/suspension of FMNP benefits. A local agency may appeal an action of the State agency disqualifying it from participating in the FMNP. A farmer/farmers’ market may appeal an action of the State agency denying its application to participate, imposing a sanction, or disqualifying it from participating in the FMNP. Expiration of a contract or agreement shall not be subject to appeal.
(b) Postponement pending decision. An adverse action may, at the State agency’s option, be postponed until a decision in the appeal is rendered.
(1) In a case where an adverse action affects a local agency or farmer/farmers’ market, a postponement is appropriate where the State agency finds that recipients would be unduly inconvenienced by the adverse action. In addition, the State agency may determine other relevant criteria to be considered in deciding whether or not to postpone an adverse action.
(2) In a case where a recipient appeals the termination of benefits, that recipient shall continue to receive FMNP benefits until the hearing official reaches a decision or the expiration of the current FMNP season, whichever occurs first. Applicants who are denied benefits may appeal the denial, but shall not receive benefits while awaiting the decision.
(c) Procedure. The State agency hearing procedure shall at a minimum provide the recipient, local agency or farmer/farmers’ market with the following:
(1) Written notification of the adverse action, the cause(s) for the action, and the effective date of the action, including the State agency’s determination of whether the action shall be postponed under paragraph (b) of this section if it is appealed, and the opportunity for a hearing. Such notification shall be provided within a reasonable timeframe established by the State agency and in advance of the effective date of the action.
(2) The opportunity to appeal the action within the time specified by the State agency in its notification of adverse action.
(3) Adequate advance notice of the time and place of the hearing to provide all parties involved sufficient time to prepare for the hearing.
(4) The opportunity to present its case and at least one opportunity to reschedule the hearing date upon specific request. The State agency may set standards on how many hearing dates can be scheduled, provided that a minimum of two hearing dates is allowed.
(5) The opportunity to confront and cross-examine adverse witnesses.
(6) The opportunity to be represented by counsel, or in the case of a recipient appeal, by a representative designated by the recipient, if desired.
(7) The opportunity to review the case record prior to the hearing.
(8) An impartial decision maker, whose decision as to the validity of the State agency’s action shall rest solely on the evidence presented at the hearing and the statutory and regulatory provisions governing the FMNP. The basis for the decision shall be stated in writing, although it need not amount to a full opinion or contain formal findings of fact and conclusions of law.
(9) Written notification of the decision in the appeal, within 60 days from the date of receipt of the request for a hearing by the State agency.
(d) Continuing responsibilities. Appealing an adverse action does not relieve a farmer/farmers’ market or local agency permitted to continue in the FMNP while its appeal is pending, from responsibility for continued compliance with the terms of the written agreement or contract with the State agency.
(e) Judicial review. If a State level decision is rendered against the recipient, local agency or farmer/farmers’ market and the appellant expresses an interest in pursuing a further review of the decision, the State agency shall explain any further State level review of the decision and any available State level rehearing process. If neither is available or both have been exhausted, the State agency shall explain the right to pursue judicial review of the decision.
(f) Additional appeals procedures for State agencies which authorize farmers’ markets and not individual farmers. A State agency which authorizes farmers’ markets and not individual farmers shall ensure that procedures are in place to be used when a farmer seeks to appeal an action of a farmers’ market or association denying the farmer’s application to participate, or sanctioning or disqualifying the farmer. The procedures shall be set forth in the State Plan and in the agreements entered by the State agency and the farmers’ market and the farmers’ market and the farmer.
Subpart F—Monitoring and Review of State Agencies
§ 248.17 Management evaluations and reviews.
(a) General. FNS and each State agency shall establish a management evaluation system in order to assess the accomplishment of FMNP objectives as provided under these regulations, the State Plan, and the written agreement with the Department. FNS will provide assistance to State agencies in discharging this responsibility, and will establish standards and procedures to determine how well the objectives of this part are being accomplished, and implement sanction procedures as warranted by State FMNP performance.
(b) Responsibilities of FNS. FNS shall establish evaluation procedures to determine whether State agencies carry out the purposes and provisions of this part, the State Plan, and the written agreement with the Department. As a part of the evaluation procedure, FNS shall review audits to ensure that the FMNP has been included in audit examinations at a reasonable frequency. These evaluations shall also include reviews of selected local agencies, and on-site reviews of selected farmers, farmers’ markets and roadside stands. These evaluations will measure the State agency’s progress toward meeting the objectives outlined in its State Plan and the State agency’s compliance with these regulations.
(1) If FNS determines that the State agency has failed, without good cause, to demonstrate efficient and effective administration of its FMNP or has failed to comply with the requirements contained in this section or the State Plan, FNS may withhold an amount up to 100 percent of the State agency’s administrative grant.
(2) Sanctions imposed upon a State agency by FNS in accordance with this section (but not claims for repayment assessed against a State agency) may be appealed in accordance with the procedures established in § 248.20. Before carrying out any sanction against a State agency, the following procedures will be followed:
(i) FNS will notify the chief departmental officer of the administering agency in writing of the deficiencies found and of FNS’ intention to withhold administrative funds unless an acceptable corrective action plan is submitted by the State agency to FNS within 45 days after mailing of notification.
(ii) The State agency shall develop a corrective action plan, including timeframes for implementation to address the deficiencies and prevent their future recurrence.
(iii) If the corrective action plan is acceptable, FNS will notify the chief departmental officer of the administering agency in writing within 30 days of receipt of the plan. The letter will advise the State agency of the sanctions to be imposed if the corrective action plan is not implemented according to the schedule set forth in the approved plan.
(iv) Upon notification from the State agency that corrective action has been taken, FNS will assess such action, and if necessary, perform a follow-up review to determine if the noted deficiencies have been corrected. FNS will then advise the State agency of whether the actions taken are in compliance with the corrective action plan, and whether the deficiency is resolved or further corrective action is needed. Compliance buys can be required if, during FNS management evaluations by regional offices, a State agency is found to be out of compliance with its responsibility to monitor and review farmers, farmers’ markets and roadside stands.
(v) If an acceptable corrective action plan is not submitted within 45 days, or if corrective action is not completed according to the schedule established in the corrective action plan, FNS may withhold the award of FMNP administrative funds. If the 45-day warning period ends in the fourth quarter of a fiscal year, FNS may elect not to withhold funds until the next fiscal year. FNS will notify the chief departmental officer of the administering State agency.
(vi) If compliance is achieved before the end of the fiscal year in which the FMNP administrative funds are withheld, the funds withheld may be restored to the State agency. FNS is not required to restore funds withheld beyond the end of the fiscal year for which the funds were initially awarded.
(c) Responsibilities of State agencies. The State agency is responsible for meeting the following requirements:
(1) The State agency shall establish evaluation and review procedures and document the results of such procedures. The procedures shall include, but are not limited to:
(i) Annual monitoring reviews of participating farmers, farmers’ markets and roadside stands, including on-site reviews of a minimum of 10 percent of farmers, 10 percent of farmers’ markets, and 10 percent of roadside stands, which includes those farmers, farmers’ markets, and roadside stands identified as being the highest risk. First year of operation in the FMNP shall be considered a high-risk indicator. More frequent reviews may be performed as the State agency deems necessary.
(ii) Conducting monitoring reviews of all local agencies within the State agency’s jurisdiction at least once every 2 years. Monitoring of local agencies shall encompass, but not be limited to, evaluation of management, accountability, certification, nutrition education, financial management systems, and coupon management systems. WIC State agency reviews of local agencies conducted for the WIC Program may contribute to meeting the FMNP requirement that all local agencies be reviewed once every two years if the reviews include reviews of FMNP practices. When the WIC State agency conducts a review of the local agency outside of the FMNP season, a review of documents and procedural plans of the FMNP, rather than actual FMNP activities, is acceptable.
(iii) Instituting the necessary follow-up procedures to correct identified problem areas.
(2) On its own initiative or when required by FNS, the State agency shall provide special reports on FMNP activities, and take positive action to correct deficiencies in FMNP operations.
§ 248.18 Audits.
(a) Federal access to information. The Secretary, the Comptroller General of the United States, or any of their duly authorized representatives, or duly authorized State auditors shall have access to any books, documents, papers, and records of the State agency and their contractors, for the purpose of making surveys, audits, examinations, excerpts, and transcripts.
(b) State agency response. The State agency may take exception to particular audit findings and recommendations. The State agency shall submit a response or statement to FNS as to the action taken or planned regarding the findings. A proposed corrective action plan developed and submitted by the State agency shall include specific time frames for its implementation and for completion of the correction of deficiencies and problems leading to the deficiencies.
(c) Corrective action. FNS shall determine whether FMNP deficiencies identified in an audit have been adequately corrected. If additional corrective action is necessary, FNS shall schedule a follow-up review, allowing a reasonable time for such corrective action to be taken.
(d) State sponsored audits. State and local agencies shall conduct independent audits in accordance with 2 CFR part 200, subpart F and Appendix XI Compliance Supplement and USDA implementing regulations 2 CFR part 400 and part 415, as applicable. A State or local agency may elect to obtain either an organization-wide audit or an audit of the Program if it qualifies to make such an election under applicable regulations.
§ 248.19 Investigations.
(a) Authority. The Department may make an investigation of any allegation of noncompliance with this part and FNS guidelines and instructions. The investigation may include, where appropriate, a review of pertinent practices and policies of any State and local agency, the circumstances under which the possible noncompliance with this part occurred, and other factors relevant to a determination as to whether the State and local agency has failed to comply with the requirements of this part.
(b) Confidentiality. No State or local agency, recipient, or other person shall intimidate, threaten, coerce, or discriminate against any individual for the purpose of interfering with any right or privilege under this part because that person has made a complaint or formal allegation, or has testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this part. The identity of every complainant shall be kept confidential except to the extent necessary to carry out the purposes of this part, including the conducting of any investigation, hearing, or judicial proceeding.
Subpart G—Miscellaneous Provisions
§ 248.20 Claims and penalties.
(a) Claims against State agencies. (1) If FNS determines through a review of the State agency’s reports, program or financial analysis, monitoring, audit, or otherwise, that any FMNP funds provided to a State agency for food or administrative purposes were, through State agency negligence or fraud, misused or otherwise diverted from FMNP purposes, a formal claim will be assessed by FNS against the State agency. The State agency shall pay promptly to FNS a sum equal to the amount of the administrative funds or the value of coupons so misused or diverted.
(2) If FNS determines that any part of the FMNP funds received by a State agency; or coupons, were lost as a result of theft, embezzlement, or unexplained causes, the State agency shall, on demand by FNS, pay to FNS a sum equal to the amount of the money or the value of the FMNP coupons so lost.
(3) The State agency shall have full opportunity to submit evidence, explanation or information concerning alleged instances of noncompliance or diversion before a final determination is made in such cases.
(4) FNS is authorized to establish claims against a State agency for unreconciled FMNP coupons. When a State agency can demonstrate that all reasonable management efforts have been devoted to reconciliation and 99 percent or more of the FMNP coupons issued have been accounted for by the reconciliation process, FNS may determine that the reconciliation process has been completed to satisfaction.
(b) Interest charge on claims against State agencies. If an agreement cannot be reached with the State agency for payment of its debts or for offset of debts on its current Letter of Credit within 30 days from the date of the first demand letter from FNS, FNS will assess an interest (late) charge against the State agency. Interest accrual shall begin on the 31st day after the date of the first demand letter, bill or claim, and shall be computed monthly on any unpaid balance as long as the debt exists. From a source other than the FMNP, the State agency shall provide the funds necessary to maintain FMNP operations at the grant level authorized by FNS.
(c) Penalties. In accordance with section 12(g) of the National School Lunch Act, whoever embezzles, willfully misapplies, steals or obtains by fraud any funds, assets or property provided under section 17 of the Child Nutrition Act of 1966, as amended, whether received directly or indirectly from USDA, or whoever receives, conceals or retains such funds, assets or property for his or her own interest, knowing such funds, assets or property have been embezzled, willfully misapplied, stolen, or obtained by fraud shall, if such funds, assets or property are of the value of $100 or more, be fined not more than $10,000 or imprisoned not more than five years, or both, or if such funds, assets or property are of a value of less than $100, shall be fined not more than $1,000 or imprisoned for not more than one year, or both.
§ 248.21 Procurement and property management.
(a) Requirements. State agencies shall comply with the requirements of 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 for procurement of supplies, equipment and other services with FMNP funds. These requirements are adopted by FNS to ensure that such materials and services are obtained for the FMNP in an effective manner and in compliance with the provisions of applicable law and executive orders.
(b) Contractual responsibilities. The standards contained in 2 CFR part 200, subpart D and Appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards and USDA implementing regulations 2 CFR part 400 and part 415 do not relieve the State agency of the responsibilities arising under its contracts. The State agency is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the FMNP. This includes, but is not limited to, disputes, claims, protests of award, source evaluation, or other matters of a contractual nature. Matters concerning violation of law are to be referred to such local, State or Federal authority as may have proper jurisdiction.
(c) State regulations. The State agency may use its own procurement regulations which reflect applicable State and local regulations, provided that procurements made with FMNP funds adhere to the standards set forth in 2 CFR part 200, subpart D and Appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards and USDA implementing regulations 2 CFR part 400 and part 415.
(d) Property acquired with program funds. State and local agencies shall observe the standards prescribed in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 in their utilization and disposition of real property and equipment acquired in whole or in part with FMNP funds.
§ 248.22 Nonprocurement debarment/suspension, drug-free workplace, and lobbying restrictions.
The State agency shall ensure compliance with the requirements of the Department’s regulations governing nonprocurement debarment/suspension (2 CFR part 180, OMB Guidelines to Agencies on Government-wide Debarment and Suspension and USDA implementing regulations 2 CFR part 417), drug-free workplace (2 CFR part 182, Government-wide Requirements for Drug-Free Workplace), and the Department’s regulations governing restrictions on lobbying (2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400, part 415 and part 418), where applicable.
§ 248.23 Records and reports.
(a) Recordkeeping requirements. Each State agency shall maintain full and complete records concerning FMNP operations. Such records shall comply with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 and the following requirements:
(1) Records shall include, but not be limited to, information pertaining to financial operations, FMNP coupon issuance and redemption, equipment purchases and inventory, nutrition education, and civil rights procedures.
(2) All records shall be retained for a minimum of 3 years following the date of submission of the final expenditure report for the period to which the report pertains. If any litigation, claim, negotiation, audit or other action involving the records has been started before the end of the 3-year period, the records shall be kept until all issues are resolved, or until the end of the regular 3-year period, whichever is later. If FNS deems any of the FMNP records to be of historical interest, it may require the State agency to forward such records to FNS whenever the State agency is disposing of them.
(3) Records for nonexpendable property acquired in whole or in part with FMNP funds shall be retained for three years after its final disposition.
(4) All records shall be available during normal business hours for representatives of the Department of the Comptroller General of the United States to inspect, audit, and copy. Any reports resulting from such examinations shall not divulge names of individuals.
(b) Financial and recipient reports. State agencies shall submit financial and FMNP performance data on a yearly basis as specified by FNS and required by section 17(m)(8) of the CNA. Such information shall include, but shall not be limited to:
(1) Number and type of recipients (Federal and non-Federal).
(2) Value of coupons issued.
(3) Value of coupons redeemed.
(c) Source documentation. To be acceptable for audit purposes, all financial and FMNP performance reports shall be traceable to source documentation.
(d) Certification of reports. Financial and FMNP reports shall be certified as to their completeness and accuracy by the person given that responsibility by the State agency.
(e) Use of reports. FNS will use State agency reports to measure progress in achieving objectives set forth in the State Plan, and this part, or other State agency performance plans. If it is determined, through review of State agency reports, FMNP or financial analysis, or an audit, that a State agency is not meeting the objectives set forth in its State Plan, FNS may request additional information including, but not limited to, reasons for failure to achieve these objectives.
§ 248.24 Other provisions.
(a) No aid reduction. The value of benefits or assistance available under the FMNP shall not be considered as income or resources of recipients or their families for any purpose under Federal, State, or local laws, including, but not limited to, laws relating to taxation, welfare and public assistance programs. Section 17(m)(7)(B) of the CNA provides that any programs for which a grant is received under this subsection shall be supplementary to the food stamp program carried out under the Food Stamp Act of 1977 as amended (7 U.S.C. 2011 et seq.) and to any other Federal or State program under which foods are distributed to needy families in lieu of food stamps.
(b) Statistical information. FNS reserves the right to use information obtained under the FMNP in a summary, statistical or other form which does not identify particular individuals.
(c) Confidentiality. The State agency shall restrict the use or disclosure of information obtained from FMNP applicants and recipients to persons directly connected with the administration or enforcement of the WIC Program or the FMNP, including persons investigating or prosecuting violations in the WIC Program or FMNP under Federal, State or local authority.
(d) Program evaluations. State and local FMNP agencies and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department, related to programs authorized under the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966 (42 U.S.C. 1786).
§ 248.25 FMNP information.
Any person who wishes information, assistance, records or other public material shall request such information from the State agency, or from the FNS Regional Office serving the appropriate State as listed below:
(a) Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, Vermont: U.S. Department of Agriculture, FNS, Northeast Region, 10 Causeway Street, Room 501, Boston, Massachusetts 02222-1066.
(b) Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Puerto Rico, Virginia, Virgin Islands, West Virginia: U.S. Department of Agriculture, FNS, Mid-Atlantic Region, Mercer Corporate Park, 300 Corporate Boulevard, Robbinsville, New Jersey, 08691-1598.
(c) Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee: U.S. Department of Agriculture, FNS, Southeast Region, 61 Forsyth Street, SW., Room 8T36, Atlanta, Georgia 30303.
(d) Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin: U.S. Department of Agriculture, FNS, Midwest Region, 77 West Jackson Boulevard—20th floor, Chicago, Illinois 60604-3507.
(e) Arkansas, Louisiana, New Mexico, Oklahoma, Texas: U.S. Department of Agriculture, FNS, Southwest Region, 1100 Commerce Street, room 5-C-30, Dallas, Texas 75242.
(f) Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah, Wyoming: U.S. Department of Agriculture, FNS, Mountain Plains Region, 1244 Speer Boulevard, suite 903, Denver, Colorado 80204.
(g) Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, Trust Territory of the Pacific Islands, the Northern Mariana Islands, Washington: U.S. Department of Agriculture, FNS, Western Region, 90 Seventh Street, Suite #10-100, San Francisco, California 94103.
§ 248.26 OMB control number.
The collecting of information requirements for part 248 have been approved by the Office of Management and Budget and assigned OMB control number 0584-0477.
PART 249—SENIOR FARMERS’ MARKET NUTRITION PROGRAM (SFMNP)
Subpart A—General
§ 249.1 General purpose and scope.
(a) This part announces regulations under which the Secretary of Agriculture shall carry out the Senior Farmers’ Market Nutrition Program (SFMNP). The purposes of the SFMNP are to:
(1) Provide resources in the form of fresh, nutritious, unprepared, locally grown fruits, vegetables, honey, and herbs from farmers’ markets, roadside stands, and community supported agriculture (CSA) programs to low-income seniors;
(2) Increase the domestic consumption of agricultural commodities by expanding or aiding in the expansion of domestic farmers’ markets, roadside stands, and CSAs; and
(3) Develop or aid in the development of new and additional farmers’ markets, roadside stands, and CSAs.
(b) These goals will be accomplished through payment of cash grants to approved State agencies. The SFMNP shall be supplementary to the food stamp program carried out under the Food Stamp Act of 1977 (7 U.S.C. 2011, et seq.), and to any other Federal or State food or nutrition assistance program under which foods are distributed to needy families in lieu of food stamps.
§ 249.2 Definitions.
For the purpose of this part and all contracts, guidelines, instructions, forms and other documents related hereto, the term:
Administrative costs means those direct and indirect costs (as defined in—249.12(a)(1)(ii)), exclusive of food costs, which State agencies determine to be necessary to support SFMNP operations. Administrative costs include, but are not limited to, the costs associated with administration and start-up; the provision of nutrition education; SFMNP coupon issuance; participant education covering coupon redemption procedures; eligibility determinations; outreach services; printing SFMNP coupons, processing redeemed coupons, and training farmers, market managers, and/or farmers who operate CSA programs on the food delivery system; monitoring and reviewing program operations; required reporting and recordkeeping; determining which local sites will be utilized; recruiting and authorizing farmers, farmers’ markets, roadside stands, and/or CSA programs to participate in the SFMNP; preparing contracts for farmers, farmers’ markets, roadside stands, and/or CSA programs; developing a data processing system for redemption and reconciliation of coupons; designing program training and informational materials; and coordinating SFMNP implementation responsibilities between designated administering agencies.
Bulk purchase means a program model in which bulk quantities of certain produce items, such as apples or sweet potatoes, are purchased directly from authorized farmers by the State agency, and are then equitably divided among and distributed directly to eligible SFMNP participants, either at a central distribution point (such as a local senior center) or through some type of home delivery network.
Community supported agriculture (CSA) program means a program under which a farmer or group of farmers grows food for a group of shareholders (or subscribers) who pledge to buy a portion of the farmer’s crop(s) for that season. State agencies may purchase shares or subscribe to a community supported agriculture program on behalf of individual SFMNP participants.
Compliance buy means a covert, on-site investigation in which a SFMNP representative poses as a SFMNP participant or authorized representative and attempts to transact one or more SFMNP coupons, or, in the case of CSA programs, attempts to obtain eligible foods purchased with SFMNP funds at a distribution site.
Coupon means a check or other negotiable financial instrument by which benefits under the program are transferred to program participants.
Days means calendar days.
Department means the U.S. Department of Agriculture.
Distribution site means the location where packages of eligible foods are assembled for and/or distributed to SFMNP participants who are shareholders in CSA programs.
Eligible foods means fresh, nutritious, unprepared, locally grown fruits, vegetables, honey, and herbs for human consumption. Eligible foods may not be processed or prepared beyond their natural state except for usual harvesting and cleaning processes. Dried fruits or vegetables, such as prunes (dried plums), raisins (dried grapes), sun-dried tomatoes, or dried chili peppers are not considered eligible foods. Potted fruit or vegetable plants, potted or dried herbs, wild rice, nuts of any kind (even raw), maple syrup, cider, seeds, eggs, meat, cheese and seafood are also not eligible foods for purposes of the SFMNP.
Farmer means an individual authorized to sell eligible foods at participating farmers’ markets and/or roadside stands, and through CSAs. Individuals who exclusively sell produce grown by someone else, such as wholesale distributors, cannot be authorized to participate in the SFMNP. A participating State agency has the option to authorize individual farmers or farmers’ markets, roadside stands, and/or CSA programs.
Farmers’ market means an association of local farmers who assemble at a defined location for the purpose of selling their produce directly to consumers.
Federally recognized Indian tribal government means the same as the definition of that term found at 2 CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, subpart A, Acronyms and Definitions and USDA implementing regulations 2 CFR part 400 and part 415, i.e., the governing body or a governmental agency of any Indian tribe, band, organization, or other organized group or community (including any Native village as defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat. 688) certified by the Secretary of the Interior as eligible for the special programs and services provided by the Secretary through the Bureau of Indian Affairs.
Fiscal year means the period of 12 calendar months beginning October 1 of any calendar year and ending September 30 of the following calendar year.
FNS means the Food and Nutrition Service of the U.S. Department of Agriculture.
Food costs means the cost of eligible foods purchased at authorized farmers’ markets, roadside stands, and/or through bulk purchases or CSA programs.
Household means a group of related or nonrelated individuals who are living together as one economic unit.
Local agency means any nonprofit entity or local government agency that certifies eligible participants, issues SFMNP coupons, arranges for distribution of eligible foods through CSA programs, and/or provides nutrition education or information on operational aspects of the Program to SFMNP participants.
Locally grown means grown within State borders. If the State agency chooses, locally grown may also mean grown in areas of States adjacent to that State, as long as such areas are part of the United States.
Nonprofit agency means a private agency that is exempt from the payment of Federal income tax under the Internal Revenue Code of 1986, as amended (26 U.S.C. 1, et seq.).
Nutrition education means:
(1) Individual or group sessions; and
(2) The provision of relevant materials, in keeping with the individual’s personal, cultural, and socioeconomic preferences and the Dietary Guidelines for Americans, that:
(i) Emphasize relationships between nutrition and health; and
(ii) Encourage participants to build healthful eating patterns, and to take action for good health.
OIG means FNS’ Office of Inspector General.
Participant means a person or household who meets the eligibility requirements of the SFMNP and to whom coupons or equivalent benefits have been issued.
Program or SFMNP means the Senior Farmers’ Market Nutrition Program authorized by Section 4402 of the Farm Security and Rural Investment Act of 2002, 7 U.S.C. 3007.
Proxy means an individual authorized by an eligible senior to act on the senior’s behalf, including application for certification, receipt of SFMNP coupons or other benefits, use of SFMNP coupons at authorized outlets, and/or acceptance of SFMNP foods provided through a CSA program, as long as the SFMNP benefits are ultimately received by the eligible senior. The terms proxy and authorized representative may be used interchangeably for purposes of this program.
Roadside stand means a location at which an individual farmer sells his/her produce directly to consumers. This is in contrast to a group or association of farmers selling their produce at a farmers’ market or through a CSA program. The term roadside stand may be used interchangeably with the term farmstand as defined in § 248.2 of this chapter.
Senior means an individual 60 years of age or older, or as defined in § 249.6(a)(1).
SFPD means the Supplemental Food Programs Division of the Food and Nutrition Service of the U.S. Department of Agriculture.
Shareholder means a SFMNP participant for whom a full or partial share in a community supported agriculture program has been purchased by the State agency, and who receives SFMNP benefits in the form of actual eligible foods rather than coupons that must be exchanged for eligible foods at farmers’ markets and/or roadside stands.
State means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and as applicable, American Samoa or the Commonwealth of the Northern Marianas.
State agency means the agriculture, aging, or health department, or any other agency approved by the Chief Executive Officer of the State that has administrative responsibility for the SFMNP; an intertribal council or group that is an authorized representative of Indian tribes, bands, or groups recognized by FNS of the Interior and that has an ongoing relationship with such tribes, bands, or groups for other purposes and has contracted with them to administer the Program; or the appropriate area office of the Indian Health Service, a division of FNS of Health and Human Services.
State Plan means a plan of SFMNP operation and administration that describes the manner in which the State agency intends to implement, operate and administer all aspects of the SFMNP within its jurisdiction in accordance with § 249.4.
WIC means the Special Supplemental Nutrition Program for Women, Infants and Children authorized by Section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786).
WIC Farmers’ Market Nutrition Program (FMNP) means the nutrition assistance program authorized by Section 17(m) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(m)), to provide resources to women, infants, and children who are nutritionally at risk, in the form of fresh, nutritious, unprepared foods (such as fruits and vegetables) from farmers’ markets; to expand the awareness and use of farmers’ markets; and to increase sales at such markets.
§ 249.3 Administration.
(a) Delegation to FNS. Within FNS, FNS shall act on behalf of the Department in the administration of the SFMNP. Within FNS, SFPD and the FNS Regional Offices are responsible for SFMNP administration. FNS shall provide assistance to State agencies and evaluate all levels of SFMNP operations to ensure that the goals of the SFMNP are achieved in the most effective and efficient manner possible.
(b) Delegation to State agency. The State agency is responsible for the effective and efficient administration of the SFMNP in accordance with the requirements of this Part; the requirements of FNS’ regulations governing nondiscrimination (parts 15, 15a and 15b of this title), administration of grants (2 CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and USDA implementing regulations 2 CFR part 400 and part 415), nonprocurement debarment/suspension (2 CFR part 180, OMB Guidelines to Agencies on Government-wide Debarment and Suspension and USDA implementing regulations 2 CFR part 417), drug-free workplace (2 CFR part 182, Government-wide Requirements for Drug-Free Workplace), and lobbying (2 CFR part 200, subpart E, Cost Principles; and USDA implementing regulations 2 CFR part 400, part 415, and part 418); FNS guidelines; FNS Instructions issued under the FNS Directives Management System; and Office of Management and Budget Circular A-130 (For availability of OMB Circulars referenced in this section, see 5 CFR 1310.3). The State agency shall provide guidance to cooperating State and local agencies on all aspects of SFMNP operations. State agencies may operate the SFMNP locally through nonprofit organizations or local government entities and must ensure coordination among the appropriate agencies and organizations.
(c) Agreement and State Plan. Each State agency desiring to administer the SFMNP shall annually submit a State Plan of Operations and enter into a written agreement with FNS for administration of the Program in the jurisdiction of the State agency in accordance with the provisions of this Part. If the State agency administers both the SFMNP and the WIC Farmers’ Market Nutrition Program (FMNP), one consolidated State Plan may be submitted for both programs, in accordance with guidance provided by FNS.
(d) Coordination with other agencies. The Chief Executive Officer of the State shall ensure coordination between the designated administering State agency and any other State, local, or nonprofit agencies or entities involved in administering any aspect of the SFMNP by ensuring that the agencies enter into a written agreement or letter/memorandum of understanding. The written agreement or letter/memorandum of understanding must delineate the responsibilities of each agency, describe any compensation for services, and must be signed by the designated representative of each agency. This agreement must be submitted each year along with the State Plan.
(e) State staffing standards. Each State agency shall ensure that sufficient staff is available to administer the SFMNP efficiently and effectively. This shall include, but not be limited to, sufficient staff to identify and certify eligible SFMNP participants, provide program information and nutrition education to participants, and oversee coupon, market, and/or CSA program management, fiscal reporting, monitoring, and training. The State agency shall provide in its State Plan an outline of administrative staff and job descriptions for staff whose salaries will be paid from program funds.
Subpart B—State Agency Eligibility
§ 249.4 State Plan.
(a) Requirements. By November 15 of each year, each applying or participating State agency shall submit to FNS for approval a State Plan for the following year as a prerequisite to receiving funds under this section. If the State agency administers both the SFMNP and the FMNP, one consolidated State Plan may be submitted for both programs, in accordance with guidance provided by FNS. The State Plan must be signed by the State-designated official responsible for ensuring that the Program is operated in accordance with the State Plan. FNS will provide written approval or denial of a completed State Plan or amendment within 30 days of receipt. Portions of the State Plan that do not change annually need not be resubmitted. However, the State agency shall provide the title of the sections that remain unchanged, as well as the year of the last Plan in which the sections were submitted. At a minimum, the Plan must include the following items, which must include sufficient detail to demonstrate the State agency’s ability to meet the requirements of the SFMNP:
(1) A copy of the agreement between the designated administering State agency and any other cooperating State, local, or nonprofit agencies or organizations for services such as certification of eligible participants, issuance of SFMNP coupons or benefits, and/or nutrition education, as required in § 249.3(d).
(2) A description of the State agency’s procedures for identifying and certifying eligible SFMNP participants, including the specific age and income criteria that will be used to determine SFMNP eligibility.
(3) An estimated number of participants for the fiscal year, and proposed months of operation.
(4) A detailed budget for the SFMNP, including:
(i) The minimum amount necessary to operate the SFMNP;
(ii) A description of the Federal and non-Federal funds that will be used to operate the Program; and
(iii) An assurance that no more than 50 percent of the Federal SFMNP grant will be used to support a CSA program model for the delivery of SFMNP benefits.
(5) An outline of administrative staff and job descriptions.
(6) A detailed description of the SFMNP recordkeeping system including, but not limited to, the system for maintaining separate records for SFMNP funds pertaining to financial operations, coupon issuance and redemption, authorization of farmers, markets, and/or CSA programs, distribution of eligible foods through CSA programs, and SFMNP participation.
(7) A detailed description of the State agency’s financial management system, including how the system will provide accurate, current and complete disclosure of the program’s financial status and required reports.
(8) A detailed description of the service area, including:
(i) The number and addresses of authorized farmers, farmers’ markets, roadside stands, and community supported agriculture programs that participated in the SFMNP during the prior year; and
(ii) SFMNP certification/issuance sites (such as senior centers or senior housing facilities), including a map outlining the service area and proximity of markets, roadside stands, and/or community supported agriculture programs to certification/issuance or distribution sites that participated in the SFMNP during the prior year.
(9) A description of the coupon issuance system including:
(i) A description of how the State agency will target areas with the highest concentrations of eligible persons and greatest access to farmers’ markets and/or roadside stands;
(ii) The benefit level per participant, or household if benefits are issued on a household basis, including:
(A) How coupons will be issued;
(B) The value of benefits provided to each participant or household at each issuance during the year;
(C) The frequency of coupon issuance; and
(D) The total amount of SFMNP benefits issued to each participant or household during the year.
(iii) A method for instructing participants on the proper use of SFMNP coupons and the purpose of the SFMNP;
(iv) A method for ensuring that SFMNP coupons are issued only to eligible participants; and
(v) A method for preventing and identifying dual participation, in accordance with § 249.6(d)(1).
(10) If the agency is using a “paperless” system, i.e., a system that does not issue actual coupons, a complete description of how such a system will be operated in a manner that ensures the integrity of SFMNP funds and benefits.
(11) A detailed description of the SFMNP coupon redemption process including:
(i) The procedures for ensuring the secure transportation and storage of SFMNP coupons;
(ii) A system for identifying and reconciling SFMNP coupons; and
(iii) The timeframes for SFMNP coupon redemption by participants, submission for payment by farmers or authorized outlets (farmers’ markets and/or roadside stands), and payment by the State agency.
(12) A description of the State agency’s CSA program, if applicable, including:
(i) How the State agency will target and select community supported agriculture programs designed to provide SFMNP benefits to eligible participants;
(ii) The annual benefit amount per participant or household, if benefits are issued on a household basis;
(iii) How CSA program contracts are developed, negotiated, and executed by the State agency;
(iv) How CSA program shares are allocated to eligible SFMNP participants;
(v) A method for instructing participants and farmers participating in the CSA program on the purpose of the SFMNP, and the procedures for delivery and distribution of eligible foods provided for the SFMNP through the CSA;
(vi) A system to ensure receipt by eligible participants of eligible foods provided through a CSA program. Such a system should include a written receipt or distribution log, with the participant’s signature (or that of the eligible participant’s proxy, if proxies are allowed) and the date of each distribution;
(vii) The payment procedures for the CSA program(s) used by the State agency;
(viii) How the State agency ensures that the full value of eligible foods for which it has contracted is provided regularly throughout the SFMNP season;
(ix) A listing of delivery dates and distribution sites for CSA program-provided eligible foods; and
(x) A system for ensuring that each SFMNP shareholder receives an equitable amount of eligible foods at each delivery, and that the total value of the eligible foods provided under the SFMNP falls within the minimum and maximum Federal SFMNP benefit levels, as specified in § 249.8(b).
(13) A complete description of age- and circumstance-appropriate nutrition education to be provided to SFMNP participants, including:
(i) The agencies that will provide the nutrition education;
(ii) The format(s) in which the nutrition education will be provided; and
(iii) The locations where nutrition education is likely to be provided.
(14) A detailed description of the State agency’s system for managing its coupon, market, and CSA program management systems, including:
(i) The criteria for authorizing farmers’ markets, roadside stands, and/or community supported agriculture programs, including the agency responsible for authorization;
(ii) The procedures for training farmers, market managers, and/or CSA program farmers at authorization, and annually thereafter;
(iii) The procedures for monitoring farmers’ markets, roadside stands, and/or community supported agriculture programs;
(iv) A description of the State agency’s system for identifying high-risk farmers and farmers’ markets, roadside stands, and/or community supported agriculture programs, as set forth at § 249.10(e)(2)(ii);
(v) The procedures for sanctioning farmers, farmers’ markets, roadside stands, and/or community supported agriculture programs;
(vi) A facsimile of the SFMNP coupon, including the denominations of coupons that will be issued, and a clear indication of where the participant/proxy and (if applicable) farmer are required to sign, stamp, or otherwise endorse the coupon before it can be redeemed;
(vii) A complete listing of the fresh, nutritious, unprepared fruits, vegetables, honey, and herbs eligible for purchase under the SFMNP;
(viii) A description of SFMNP coupon replacement policy or statement that coupons will not be replaced; and
(ix) The State agency’s procedures for handling participant and farmer/farmers’ market, roadside stands, and CSA program complaints.
(15) A system for ensuring that SFMNP coupons are redeemed only by authorized farmers/farmers’ markets/roadside stands, and only for eligible foods.
(16) A system for identifying SFMNP coupons that are redeemed or submitted for payment outside valid dates or by unauthorized farmers/farmers’ markets/roadside stands.
(17) A copy of the written agreement to be used between the State agency and authorized farmers/farmers’ markets, roadside stands, and/or CSA programs. In those States that authorize farmers’ markets, but not individual farmers, this agreement shall specify in detail the role of and procedures to be used by farmers’ markets for monitoring and sanctioning farmers, and the appropriate procedures to be used by a farmer to appeal a sanction or disqualification imposed by a farmers’ market.
(18) If available, information on the change in consumption of fresh fruits, vegetables, honey, and herbs by SFMNP participants. This information shall be submitted as an addendum to the State Plan and shall be submitted at a date specified by the Secretary.
(19) If available, information on the effects of the program on farmers’ markets, roadside stands, and/or CSA programs. This information shall be submitted as an addendum to the State Plan and shall be submitted at a date specified by the Secretary.
(20) A description of the procedures the State agency will use to comply with the civil rights requirements described in § 249.7(a), including the processing of discrimination complaints.
(21) A copy of the State agency’s fair hearing procedures for SFMNP participants and the administrative appeal procedures for local agencies, farmers, farmers’ markets, roadside stands, and/or CSA programs.
(22) State agencies that have not previously participated in the SFMNP must provide:
(i) A description of the need for the SFMNP in that State agency;
(ii) The specific goals and objectives of the SFMNP, designed to fulfill the purpose of the Program as set forth in § 249.1; and
(iii) A capability statement that includes a summary description of any prior experience with farmers’ market projects or programs, including information and data describing the attributes of such projects or programs.
(23) For State agencies making expansion requests, documentation that demonstrates:
(i) The need for an increase in funding;
(ii) That the use of the increased funding will be consistent with serving eligible SFMNP participants by expanding benefits to more persons, by enhancing current benefits, or a combination of both, and expanding the awareness and use of farmers’ markets, roadside stands, and CSA programs;
(iii) The ability of the State agency to operate the existing SFMNP satisfactorily;
(iv) The management capabilities of the State agency to expand; and
(v) Whether, in the case of a State agency that intends to use the funding to increase the value of the Federal benefits received by a participant, the funding provided will increase the rate of coupon redemption.
(b) Amendments. At any time after approval, the State agency may amend the State Plan to reflect changes. The State agency shall submit such amendments to FNS for approval. The proposed amendments shall be signed by the State-designated official responsible for ensuring that the SFMNP is operated in accordance with the State Plan. The amendments must be approved by FNS prior to implementation.
(c) Retention of copy. A copy of the approved State Plan shall be kept on file at the State agency for public inspection.
§ 249.5 Selection of new State agencies.
In selecting new State agencies, FNS will use objective criteria to rank and approve State plans submitted in accordance with § 249.4. In making this ranking, FNS will consider the amount of funds necessary to operate the SFMNP successfully in the State compared with other States and with the total amount of funds available to the SFMNP, the number of participants estimated to be served, and the projected benefit level. Approval of a State Plan does not equate to an obligation on the part of FNS to fund the SFMNP within that State.
Subpart C—Participant Eligibility
§ 249.6 Participant eligibility.
(a) Eligibility for certification. Individuals who are eligible to receive Federal benefits under the SFMNP are those who meet the following criteria:
(1) Categorical eligibility. Participants must be not less than 60 years of age, except that State agencies may exercise the option to deem Native Americans who are 55 years of age or older as categorically eligible for SFMNP benefits. State agencies may, at their discretion, also deem disabled individuals less than 60 years of age who are currently living in housing facilities occupied primarily by older individuals where congregate nutrition services are provided, as categorically eligible to receive SFMNP benefits.
(2) Residency requirement. The State agency may establish a residency requirement for SFMNP applicants. The State agency may determine a service area for any local agency, and may require that an applicant be residing within the service area at the time of application to be eligible for the Program. However, the State agency may not impose any durational or fixed residency requirements.
(3) Income eligibility. The State agency must ensure that local agencies determine income eligibility through the use of a clear and simple application process approved by the State agency. Participants must have a maximum household income of not more than 185 percent of the annual poverty income guidelines, or be determined automatically income eligible based on current participation/eligibility to receive benefits in another means-tested program, as designated by the State agency, for which income eligibility is set at or below 185 percent of the poverty income guidelines and for which documentation of family income is required. FNS will announce the income poverty guidelines annually.
(b) Documentation of income eligibility—(1) Automatically income eligible applicants. The State or local agency must require applicants determined to be automatically income eligible to provide documentation of their eligibility to participate in another means-tested assistance program, as designated by the State agency.
(2) Other applicants. (i) The State or local agency must require all other applicants to provide, at a minimum, a signed statement affirming that their household size and income does not exceed the maximum income eligibility standard in use by the State agency.
(ii) If the State agency offers a benefit of more than $50 per participant through a CSA program, it must require documentation of household size and income from all participants receiving the higher benefit level.
(iii) The State agency has the option to require all applicants to provide documentation of family income at certification, and/or to require verification of the information provided by the applicant.
(c) Certification periods. Participants may be certified only for the current fiscal year’s SFMNP period of operation. Eligibility must be determined at the beginning of each period of operation. Prior fiscal year certifications may not be carried over into subsequent fiscal years, but the State agency may make use of its participant enrollment listings from the prior fiscal year in its outreach efforts for the current fiscal year.
(d) Participant rights and responsibilities. Where a significant number or proportion of the population eligible to be served needs information regarding participation in the SFMNP in a language other than English, reasonable steps must be taken to provide this information in the appropriate language(s) to such persons, considering the scope of the Program and the size and concentration of such population(s). In order to inform applicants and participants or their authorized representatives/proxies of SFMNP rights and responsibilities, State/local agencies must provide the following information:
(1) During the certification process, every program applicant or authorized representative must be informed of the illegality of dual participation, i.e., obtaining SFMNP benefits from more than one service delivery area or from more than one SFMNP program model (coupon system and CSA program) within the same service delivery area.
(2) At the time of certification, each SFMNP applicant or authorized representative must read or have read to him or her the following statements or similar statements:
I have been advised of my rights and obligations under the SFMNP. I certify that the information I have provided for my eligibility determination is correct, to the best of my knowledge. This certification form is being submitted in connection with the receipt of Federal assistance. Program officials may verify information on this form. I understand that intentionally making a false or misleading statement or intentionally misrepresenting, concealing, or withholding facts may result in paying the State agency, in cash, the value of the food benefits improperly issued to me and may subject me to civil or criminal prosecution under State and Federal law.
Standards for eligibility and participation in the SFMNP are the same for everyone, regardless of race, color, national origin, age, disability, or sex.
I understand that I may appeal any decision made by the local agency regarding my eligibility for the SFMNP.
(3) During the certification visit, each participant or authorized representative must:
(i) Receive an explanation of how to use his/her SFMNP coupons at farmers’ markets and roadside stands, and/or how SFMNP foods will be provided under the CSA program in that service delivery area; and
(ii) Be advised of the other types of services that are available to SFMNP participants, where such services are located, how they may be obtained, and why they may be useful.
(4) Persons found ineligible for the SFMNP during a certification visit must be advised in writing of their ineligibility, of the reasons for their ineligibility, and of their right to a fair hearing. The reasons for ineligibility must be properly documented and must be retained on file at the local agency. Such notice is not required when participation is denied solely because of lack of sufficient funding to provide SFMNP benefits to all eligible applicants.
(5) When a State or local agency pursues collection of a claim pursuant to § 249.20(c) against an individual who has been issued SFMNP benefits for which she/he is not eligible, the person must be advised in writing of the reason(s) for the claim, the value of the improperly issued benefits that must be repaid, and of his/her right to a fair hearing.
(e) Certification without charge. Certification for the SFMNP must be performed at no cost to the applicant or the authorized representative.
(f) Use of proxies or authorized representatives. At the State agency’s discretion, a senior may designate an authorized representative (proxy) to apply for certification, shop at the farmers’ market or roadside stands, and/or pick up their eligible foods from CSA program distribution sites on his/her behalf if the senior is unable to perform these actions. The State agency must obtain a signed statement from the eligible senior designating another individual as his/her authorized representative. A senior who has been certified to receive SFMNP benefits may designate an authorized representative at any point during the program’s period of operation.
(g) Processing standards. (1) Applicants for the SFMNP must be notified of their eligibility or ineligibility for benefits, or of their placement on a waiting list, as described in paragraph (g)(2) of this section, within 15 days from the date of application.
(2) When all available program benefits have been allocated to eligible participants, and there is a reasonable expectation that additional funds may become available to provide further SFMNP benefits to eligible seniors, the local agency must maintain a waiting list of individuals who contact the local agency to apply for the Program. Individuals must be notified of their placement on a waiting list within 15 days after they contact the local agency to request Program benefits. To enable the local agency to contact these individuals when caseload space becomes available, the waiting list must include the name of the applicant, the date placed on the waiting list, and an address or phone number of the applicant.
(h) Limitations on certification. If necessary to limit the number of participants, State agencies may impose additional eligibility requirements, such as limiting participant certification to certain geographic areas. Each State agency must specifically identify these limitations on certification in its State Plan.
§ 249.7 Nondiscrimination.
(a) Civil rights requirements. (1) The State agency must comply with the following requirements to ensure that no person shall, on the grounds of race, color, national origin, age, sex or disability, be excluded from participation, be denied benefits, or be otherwise subjected to discrimination, under the SFMNP:
(i) Title VI of the Civil Rights Act of 1964;
(ii) Title IX of the Education Amendments of 1972;
(iii) Section 504 of the Rehabilitation Act of 1973;
(iv) The Age Discrimination Act of 1975;
(v) Department of Agriculture regulations on nondiscrimination (parts 15, 15a and 15b of this title); and
(vi) Applicable FNS Instructions, including requirements for racial and ethnic participation data collection, public notification of the nondiscrimination policy, and annual reviews of each local agency’s racial and ethnic participation data (as required by title VI of the Civil Rights Act of 1964).
(2) Compliance with Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and regulations and instructions issued thereunder shall include, but not be limited to:
(i) Notification to the public of the nondiscrimination policy and complaint rights of participants and potentially eligible persons, which may be satisfied through FNS’ required nondiscrimination statement on brochures and publications;
(ii) Review and monitoring activity to ensure SFMNP compliance with the nondiscrimination laws and regulations; and
(iii) Establishment of grievance procedures for handling participant complaints based on sex and handicap.
(b) Complaints. Persons seeking to file discrimination complaints may file them either with the Secretary of Agriculture, or the Director, Office of Civil Rights, USDA, Washington, DC 20250 or with the office established by the State agency to handle discrimination grievances or complaints. All complaints received by State agencies that allege discrimination based on race, color, national origin, or age shall be referred to the Secretary of Agriculture or the Director of the Office of Civil Rights, USDA. A State agency may process complaints that allege discrimination based on sex or disability if grievance procedures are in place.
Subpart D—Participant Benefits
§ 249.8 Level of benefits and eligible foods.
(a) General. State agencies must identify in the State Plan the fresh, nutritious, unprepared, locally grown fruits, vegetables, honey, and herbs that are eligible for purchase under the SFMNP. Eligible foods may not be processed or prepared beyond their natural state except for usual harvesting and cleaning processes. Dried fruits or vegetables, such as prunes (dried plums), raisins (dried grapes), sun-dried tomatoes, or dried chili peppers are not considered eligible foods in the SFMNP. Potted fruit or vegetable plants, potted or dried herbs, wild rice, nuts of any kind (even raw), maple syrup, cider, seeds, eggs, meat, cheese, and seafood are also not eligible for purposes of the SFMNP. “Locally grown” means produce grown only within a State’s borders but may be defined by State agencies to include border areas in adjacent States. Under no circumstances may produce grown outside of the United States and its territories be considered eligible food.
(b) The value of the Federal benefits received. (1) The Federal SFMNP benefit level received by each participant, whether individual or household, may not be less than $20 per year or more than $50 per year, except that:
(i) A State agency that operated the SFMNP in FY 2006 may continue to issue the same level of benefits that was provided to participants in FY 2006, even if the benefit level was less than $20;
(ii) Participants served by a State agency that operated the SFMNP through a CSA program model in FY 2006 may, at the State agency’s discretion, continue to receive the same CSA benefit levels that were provided to such participants in FY 2006, subject to the conditions set forth at § 249.14(e)(3), Distribution of Funds; and
(iii) Participants who are participating in the SFMNP through a CSA program may receive a higher total benefit level than participants participating in a check or coupon program model, as long as that level is consistent for all Senior CSA program participants and does not exceed the $50 annual maximum per individual or household, except as provided in paragraph (b)(1) of this section.
(2) The total value of SFMNP benefits provided in a combination of program models, such as coupons/checks and bulk purchase, may not exceed the $50 maximum benefit level set forth in paragraph 249.8(b)(1).
(c) Participant or household benefit allocation. (1) All SFMNP participants living in the areas served by the State agency must be offered the same amount of SFMNP benefits, regardless of the program model(s) used by that State agency.
(2) Benefits may be allocated on an individual or on a household basis.
(3) Foods provided are intended for the sole benefit of SFMNP participants and are not meant to be shared with other non-participating household members.
(4) Participants must receive SFMNP benefits free of charge.
§ 249.9 Nutrition education.
(a) Goal. Nutrition education shall emphasize the relationship of proper nutrition to good health, including the importance of consuming fruits and vegetables.
(b) Requirement. The State agency shall integrate nutrition education into SFMNP operations and may satisfy nutrition education requirements through coordination with other agencies within the State. State agencies wishing to coordinate nutrition education with another State agency or organization must enter into a written cooperative agreement with such agencies to offer nutrition education relevant to the use and nutritional value of foods available to SFMNP participants. In cases where SFMNP participants are receiving relevant nutrition education from an agency other than the administering State agency, the provision of nutrition education is an allowable administrative cost under the SFMNP.
Subpart E—State Agency Provisions
§ 249.10 Coupon, market, and CSA program management.
(a) General. This section sets forth State agency responsibilities regarding the authorization of farmers, farmers’ markets, roadside stands, and/or CSA programs. The State agency is responsible for the fiscal management of and accountability for SFMNP-related activities for farmers, farmers’ markets, roadside stands, and CSA programs. Each State agency may decide whether to authorize individual farmers and farmers’ markets separately, or to authorize only farmers’ markets. In addition, each State agency may decide whether to authorize roadside stands and/or CSA programs. The State agency may authorize a farmer for participation in a farmers’ market, a roadside stand, and/or CSA program simultaneously. All contracts or agreements entered into by the State agency for the management or operation of farmers, farmers’ markets, roadside stands, and/or CSA programs shall conform to the requirements of 2 CFR part 200 and USDA implementing regulations 2 CFR part 400 and part 415.
(1) Only farmers, farmers’ markets, and/or roadside stands authorized by the State agency may redeem SFMNP coupons. Only farmers authorized by the State agency, or having a valid agreement with an authorized farmers’ market, may redeem coupons. Only CSA programs authorized by the State agency may receive payment from the State agency at the beginning of the planting season, in order to provide eligible foods to senior participants who are shareholders.
(2) The State agency must establish criteria for the authorization of individual farmers and/or farmers’ markets, roadside stands, and/or CSA programs. Any authorized farmer, farmers’ market, roadside stand and/or CSA program must agree to sell participants only those foods identified as eligible by the State agency. State agencies may determine farmers, farmers’ markets and/or roadside stands as automatically authorized to participate in the SFMNP based on current authorization to operate in the FMNP under part 248 of this chapter. Individuals who exclusively sell produce grown by someone else, such as wholesale distributors, cannot be authorized to participate in the SFMNP, except individuals employed by a farmer otherwise qualified under these regulations, or individuals hired by a nonprofit organization to sell produce at roadside stands on behalf of local farmers.
(3) The State agency must ensure that an appropriate number of farmers, farmers’ markets, roadside stands, and/or CSA programs are authorized for adequate participant access in the area(s) proposed to be served and for effective management of the farmers, farmers’ markets, roadside stands, and/or CSA programs by the State agency.
(4) The State agency may establish criteria to limit the number of authorized farmers, farmers’ markets, and/or roadside stands.
(5) The State agency must limit the value of shares awarded to CSA programs to no more than 50 percent of their total Federal SFMNP food grant, except in the case of a State agency that has grandfathered a CSA program model into the permanent SFMNP that uses more than 50 percent of the total Federal SFMNP food grant for the CSA program. The State agency shall make efforts to select the CSA program(s) that provides the greatest variety of eligible foods.
(6) The State agency may purchase bulk quantities of eligible foods directly from authorized farmers. Such foods must then be equitably divided among and distributed directly to eligible SFMNP participants. SFMNP participants who have received checks or coupons to purchase eligible foods earlier in the season may also receive foods through the bulk purchase option as long as the total combined value of the benefits provided to each SFMNP participant does not exceed $50, as stipulated in § 249.8(b).
(7) The State agency shall ensure that training is conducted prior to start up of the first year of SFMNP participation of an individual farmer, farmers’ market, roadside stand, and/or CSA program. The training shall include at a minimum those items listed in paragraph (d) of this section, and may be delivered in a variety of methods, including but not limited to classroom settings, telephone conferences, videoconferences, and web-based training modules.
(8) Authorized farmers shall display a sign stating that they are authorized to redeem SFMNP coupons.
(9) Authorized farmers, farmers’ markets, roadside stands, and/or CSA programs shall comply with the requirements of Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, Department of Agriculture regulations on nondiscrimination (parts 15, 15a and 15b of this title), and FNS Instructions as outlined in § 249.7.
(10) The State agency shall ensure that there is no conflict of interest between the State or local agency and any participating farmer, farmers’ market, roadside stand and/or CSA program.
(b) Farmer, farmers’ market, roadside stand, and/or CSA program agreements. The State agency shall ensure that all participating farmers’ markets, roadside stands, and/or CSA programs enter into written agreements with the State agency. State agencies that authorize individual farmers shall also enter into written agreements with the individual farmers. The agreement must be signed by a representative who has legal authority to obligate the farmer, farmers’ market, roadside stand, and/or CSA program. Agreements must include a description of sanctions for noncompliance with SFMNP requirements and shall contain, at a minimum, the following specifications, although the State agency may determine the exact wording to be used:
(1) The farmer, farmers’ market and/or roadside stand shall:
(i) Provide such information as the State agency may require for its periodic reports to FNS;
(ii) Assure that SFMNP coupons are redeemed only for eligible foods;
(iii) Provide eligible foods at or less than the price charged to other customers;
(iv) Accept SFMNP coupons within the dates of their validity and submit such coupons for payment within the allowable time period established by the State agency;
(v) In accordance with a procedure established by the State agency, mark each transacted coupon with a farmer identifier. In those cases where the agreement is between the State agency and the farmer and/or roadside stand, each transacted SFMNP coupon shall contain a farmer identifier and shall be batched for reimbursement under that identifier. In those cases where the agreement is between the State agency and the farmers’ market, each transacted SFMNP coupon shall contain a farmer identifier and be batched for reimbursement under a farmers’ market identifier.
(vi) Accept training on SFMNP procedures and provide training to farmers and any employees with SFMNP responsibilities on such procedures;
(vii) Agree to be monitored for compliance with SFMNP requirements, including both overt and covert monitoring;
(viii) Be accountable for actions of farmers or employees in the provision of eligible foods and related activities;
(ix) Pay the State agency for any coupons transacted in violation of this agreement;
(x) Offer SFMNP participants the same courtesies as other customers;
(xi) Comply with the nondiscrimination provisions of USDA regulations as provided in § 249.7; and
(xii) Notify the State agency if any farmer, farmers’ market or roadside stand ceases operation prior to the end of the authorization period.
(2) The farmer, farmers’ market and/or roadside stand shall neither:
(i) Seek restitution from SFMNP participants for coupons not paid by the State agency; nor
(ii) Issue cash change for purchases that are in an amount less than the value of the SFMNP coupon(s); nor
(iii) Collect tax on SFMNP coupon purchases.
(3) The CSA program shall:
(i) Provide such information as the State agency may require for its periodic reports to FNS;
(ii) Assure that SFMNP participants receive only eligible foods;
(iii) Provide eligible foods to their SFMNP shareholders at or less than the price charged to other customers;
(iv) Assure that the shareholder receives eligible foods that are of equitable value and quantity to their share;
(v) Assure that all funds from the State agency are used for planting of crops for SFMNP shareholders;
(vi) Provide to the State agency access to a tracking system that determines the value of the eligible foods provided and the remaining value owed to each SFMNP shareholder;
(vii) Assure that SFMNP shareholders/authorized representatives provide written acknowledgement of receipt of eligible foods;
(viii) Accept training on SFMNP procedures and provide training to farmers and any employees with SFMNP responsibilities for such procedures;
(ix) Agree to be monitored for compliance with SFMNP requirements, including both overt and covert monitoring;
(x) Be accountable for actions of farmers or employees in the provision of eligible foods and related activities;
(xi) Offer SFMNP shareholders the same courtesies as other customers;
(xii) Notify the State agency immediately when the CSA program is experiencing a problem with its crops, and may be unable to provide SFMNP shareholders with the complete amount of eligible foods agreed upon between the CSA program and the State agency;
(xiii) Comply with the nondiscrimination provisions of USDA regulations as provided in § 249.7; and
(xiv) Notify the State agency if any CSA program ceases operation prior to the end of the authorization period.
(4) The CSA program shall not substitute ineligible produce when eligible foods are not available.
(5) Neither the State agency nor the farmer, farmers’ market, roadside stand, and/or CSA program has an obligation to renew the agreement. The State agency or the farmer, farmers’ market, roadside stand and/or CSA program may terminate the agreement for cause after providing advance written notification.
(6) The State agency may deny payment to the farmer, farmers’ market and/or roadside stand for improperly redeemed SFMNP coupons and may demand refunds for payments already made on improperly redeemed coupons.
(7) The State agency may demand a refund from any CSA program that fails to provide the full benefit to all SFMNP shareholders as specified in its contract, or that provides ineligible foods as substitutes for eligible foods.
(8) The State agency may disqualify a farmer, farmers’ market, roadside stand, and/or CSA program for SFMNP violations. The farmer, farmers’ market, roadside stand, and/or CSA program has the right to appeal a denial of an application to participate, a disqualification, or a SFMNP sanction by the State agency. Expiration of a contract or agreement with a farmer, farmers’ market, roadside stand, and/or CSA program, and claims actions under § 249.20, are not appealable.
(9) A farmer, farmers’ market, roadside stand, and/or CSA program, which commits fraud or engages in other illegal activity is liable to prosecution under applicable Federal, State or local laws.
(10) Agreements may not exceed 3 years.
(c) Agreements with farmers’ markets that do not authorize individual farmers. Those State agencies that authorize farmers’ markets but not individual farmers shall require authorized farmers’ markets to enter into a written agreement with each farmer within the market that is participating in SFMNP. The State agency must set forth the required terms for the agreement and provide a sample agreement that may be used.
(d) Annual training for farmers, farmers’ market managers and/or farmers that operate a roadside stand or CSA program. State agencies shall conduct annual training for farmers, farmers’ market managers, and/or farmers who operate a CSA program in the SFMNP. The State agency must conduct interactive training for all farmers and farmers’ market managers who have never previously participated in the SFMNP. After a farmer/farmers’ market manager’s first year of SFMNP operation, State agencies have discretion in determining the method used for annual training purposes. At a minimum, annual training shall include instruction emphasizing:
(1) Eligible food choices;
(2) Proper SFMNP coupon redemption procedures, including deadlines for submission of coupons for payment, and/or receipt of payment for CSA programs’ distribution of eligible foods;
(3) Equitable treatment of SFMNP participants, including the availability of eligible foods to SFMNP participants that are of the same quality and cost as that sold to other customers;
(4) Civil rights compliance and guidelines;
(5) Guidelines for storing SFMNP coupons safely; and
(6) Guidelines for cancelling SFMNP coupons, such as punching holes or rubber-stamping.
(e) Monitoring and review of farmers, farmers’ markets, roadside stands, CSA programs and local agencies. The State agency shall be responsible for the monitoring of farmers, farmers’ markets, roadside stands, CSA programs and local agencies within its jurisdiction. This shall include developing a system for identifying high risk farmers, farmers’ markets, roadside stands, and/or CSA programs, and ensuring on-site monitoring, conducting further investigation, and sanctioning of such farmers, farmers’ markets, roadside stands, and/or CSA programs as appropriate. In States where both the SFMNP and the FMNP are in operation, these monitoring/review requirements may be coordinated to avoid duplication. If the same farmers, farmers’ markets, and/or roadside stands are authorized for both programs, a review conducted by one program may be counted toward the requirement for the other program.
(1) Where coupon reimbursement responsibilities are delegated to farmers’ market managers, farmers’ market associations, or nonprofit organizations, the State agency may establish bonding requirements for these entities. Costs of such bonding are not reimbursable administrative expenses.
(2)(i) Each State agency shall rank participating farmers, farmers’ markets, roadside stands, and/or CSA programs by risk factors, and shall conduct annual, on-site monitoring of at least 10 percent of farmers, 10 percent of farmers’ markets, 10 percent of roadside stands, and 10 percent of the CSA programs or one of each program model, whichever is greater, which shall include those farmers, farmers’ markets, roadside stands, and/or CSA programs identified as being the highest-risk.
(ii) Mandatory high-risk indicators include:
(A) A proportionately high volume of SFMNP coupons redeemed by a farmer within a farmers’ market or at a single roadside stand (as compared to other farmers within the farmers’ market or within the State);
(B) Participant complaints;
(C) In the case of CSA programs, an extended or ongoing inability to provide the full SFMNP benefit to each shareholder as contracted; and
(D) Farmers, farmers’ markets, roadside stands, and/or CSA programs in their first year of SFMNP operation. States are encouraged to formally establish other high-risk indicators for identifying potential problems.
(iii) If additional high-risk indicators are established, they must be set forth in the farmers, farmers’ market, roadside stand, and/or CSA program agreement and in the State Plan. If application of the high-risk indicators results in fewer than 10 percent of farmers, farmers’ markets, roadside stands, and/or CSA programs being designated as high-risk, the State agency shall randomly select additional farmers, farmers’ markets, roadside stands, and/or CSA programs to be monitored in order to meet the 10 percent minimum. The high-risk indicators listed above generally apply to a State agency already participating in the SFMNP. A State agency participating in the SFMNP for the first time shall, in lieu of applying the high-risk indicators, randomly select 10 percent of its participating farmers, 10 percent of its participating farmers’ markets, 10 percent of its participating roadside stands, and 10 percent of its participating CSA programs or at least one farmers’ market, roadside stand, and/or CSA program, whichever is greater, for monitoring visits.
(3)(i) The following shall be documented for all on-site monitoring visits to farmers, farmers’ markets, roadside stands, and/or CSA programs, at a minimum:
(A) Names of both the farmer, farmers’ market, roadside stand, and/or CSA program and the reviewer;
(B) Date of review;
(C) Nature of problem(s) detected or the observation that the farmer, farmers’ market, roadside stand, and/or CSA program appears to be in compliance with SFMNP requirements;
(D) Record of interviews with participants, market managers, farmers, and/or farmers who operate a CSA program; and
(E) Signature of the reviewer.
(ii) Reviewers are not required to notify the farmer, farmers’ market, roadside stand, and/or CSA program of the monitoring visit before, during, or immediately after the visit. The State agency shall do so after a reasonable delay when necessary to protect the identity of the reviewer(s) or the integrity of the investigation.
(iii) In instances where the farmer, farmers’ market, roadside stand, and/or CSA program will be permitted to continue participating in the SFMNP after being informed of any deficiencies detected by the monitoring visit, the farmer, farmers’ market, roadside stand, and/or CSA program shall provide plans as to how the deficiencies will be corrected.
(4) At least every 2 years, the State agency must review all local agencies within its jurisdiction.
(f) Control of SFMNP coupons. The State agency must:
(1) Control and provide accountability for the receipt and issuance of SFMNP coupons;
(2) Ensure that there is secure transportation and storage of unissued SFMNP coupons; and
(3) Design and implement a system of review of SFMNP coupons to detect errors. At a minimum, the errors the system must detect are a missing participant signature (if such signature is required by the State agency), a missing farmer and/or market identification, and redemption by a farmer outside of the valid date. The State agency must have procedures in place to reduce the number of errors in transactions.
(g) Payment to farmers, farmers’ markets, roadside stands, and/or CSA programs. The State agency must ensure that farmers, farmers’ markets, roadside stands, and/or CSA programs are promptly paid for food costs.
(h) Reconciliation of SFMNP coupons. The State agency shall identify the disposition of all SFMNP coupons as validly redeemed, lost or stolen, expired, or not matching issuance records. Validly redeemed SFMNP coupons are those that are issued to a valid participant and redeemed by an authorized farmer, farmers’ market, and/or roadside stand within valid dates. SFMNP coupons that were redeemed but cannot be traced to a valid participant or authorized farmer, farmers’ market, and/or roadside stand shall be subject to claims action in accordance with § 249.20.
(1) If the State agency elects to replace lost, stolen or damaged SFMNP coupons, it must describe its system for doing so in the State Plan.
(2) The State agency must use uniform SFMNP coupons within its jurisdiction.
(3) SFMNP coupons must include, at a minimum, the following information:
(i) The last date by which the participant may use the coupon. This date shall be no later than November 30 of each year.
(ii) A date by which the farmer or farmers’ market must submit the coupon for payment. When establishing this date, State agencies shall take into consideration the date financial statements are due to the FNS, and allow time for the corresponding coupon reconciliation that must be done by the State agency prior to submission of financial statements. Financial statements are due to FNS by January 30.
(iii) A unique and sequential serial number.
(iv) A denomination (dollar amount).
(v) A farmer identifier for the redeeming farmer when agreements are between the State agency and the farmer.
(vi) In those instances where State agencies have agreements with farmers’ markets, there must be a farmer identifier on each coupon and a market identifier on the cover of coupons that are batched by the market manager for reimbursement.
(i) Instructions to participants. Each participant must receive instruction on the redemption of the SFMNP coupons, or participation in a CSA program (where applicable), including, but not limited to:
(1) A list of names and addresses of authorized farmers, farmers’ markets, and/or roadside stands at which SFMNP coupons may be redeemed, or procedures on the home-delivery process;
(2) Procedures to designate a proxy;
(3) The name and address of the authorized farmer of the CSA program, and locations of distribution sites;
(4) A description of eligible foods and the prohibition against cash change for SFMNP purchases of eligible foods;
(5) A description of eligible foods that will be provided through the CSA program;
(6) A schedule outlining a timeframe for distribution of the eligible foods from the CSA program; and
(7) An explanation of his/her right to complain about improper farmer, farmers’ market, roadside stand, and/or CSA program practices with regard to SFMNP responsibilities and the process for doing so.
(j) Participant and farmer, farmers’ market, roadside stand, and/or CSA program complaints. The State agency must have procedures that document the handling of complaints from participants and farmers/farmers’ markets, roadside stands, and/or CSA programs. Complaints of civil rights discrimination shall be handled in accordance with § 249.7(b).
(k) Participant and farmer, farmers’ market, roadside stand, and/or CSA program sanctions. (1) The State agency must establish policies which determine the type and level of sanctions to be applied against participants and farmers, farmers’ markets, roadside stands, and/or CSA programs based upon the severity and nature of the SFMNP violations observed, and such other factors as the State agency determines appropriate, such as whether repeated offenses have occurred over a period of time. Farmers, farmers’ markets, roadside stands, and/or CSA programs may be sanctioned, disqualified, or both, when appropriate. Sanctions may include fines for improper SFMNP coupon redemption and the penalties outlined in § 249.20, in the case of deliberate fraud.
(2) In those instances where compliance purchases are conducted, the results of covert compliance purchases can be a basis for farmer, farmers’ market, and/or roadside stand sanctions.
(3) A farmer, farmers’ market, roadside stand, and/or CSA program committing fraud or other unlawful activities are liable to prosecution under applicable Federal, State or local laws.
(4) State agency policies must ensure that a farmer that is disqualified from the SFMNP at one market, roadside stand, or CSA program shall not participate in the SFMNP at any other farmers’ market, roadside stand or CSA program in the State’s jurisdiction during the disqualification period.
(5) State agency policies must ensure that a farmer, farmers’ market, roadside stand, and/or CSA program that is disqualified from participating in the WIC Farmers’ Market Nutrition Program is also disqualified from participating in the SFMNP in the State’s jurisdiction during the disqualification period.
§ 249.11 Financial management system.
(a) Disclosure of expenditures. The State agency must maintain a financial management system that provides accurate, current and complete disclosure of the financial status of the SFMNP. This must include an accounting for all property and other assets and all SFMNP funds received and expended each fiscal year.
(b) Internal controls. The State agency shall maintain effective controls over and accountability for all SFMNP funds. The State agency must have effective internal controls to ensure that expenditures financed with SFMNP funds are authorized and properly chargeable to the SFMNP.
(c) Record of expenditures. The State agency must maintain records that adequately identify the source and use of funds expended for SFMNP activities. These records must contain, but are not limited to, information pertaining to authorization, receipt of funds, obligations, unobligated balances, assets, liabilities, outlays, and income.
(d) Payment of costs. The State agency must implement procedures that ensure prompt and accurate payment of allowable costs, and ensure the allowability and allocability of costs in accordance with the cost principles and standard provisions of this part, 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415, and FNS guidelines and Instructions.
(e) Identification of obligated funds. The State agency must implement procedures that accurately identify obligated SFMNP funds at the time the obligations are made.
(f) Resolution of audit findings. The State agency shall implement procedures that ensure timely and appropriate resolution of claims and other matters resulting from audit findings and recommendations.
(g) Reconciliation of food instruments. The State agency must reconcile SFMNP coupons in accordance with § 249.10(h).
(h) Transfer of cash. The State agency must establish the timing and amounts of its cash draws against its Letter of Credit in accordance with 31 CFR part 205.
§ 249.12 SFMNP costs.
(a) General—(1) Composition of allowable costs. In general, a cost item will be deemed allowable if it is reasonable and necessary for SFMNP purposes and otherwise satisfies allowability criteria set forth in 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415. SFMNP purposes include the administration and operation of the SFMNP. Allowable SFMNP costs may be classified as follows:
(i) Food costs and administrative costs. Food costs are the costs of eligible foods provided to SFMNP participants. Administrative costs are the costs associated with providing SFMNP benefits and services to participants and generally administering the SFMNP. Specific examples of allowable administrative costs are listed in paragraph (b) of this section. A State agency may use up to 10 percent of its total Federal SFMNP grant to cover administrative costs. Any costs incurred for food and/or administration above the Federal grant level will be the State agency’s responsibility.
(ii) Direct and indirect costs. Direct costs are food and administrative costs incurred specifically for the SFMNP. Indirect costs are administrative costs that benefit multiple programs or activities, and cannot be identified to any one program or activity without effort disproportionate to the results achieved. In accordance with the provisions of 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415, a claim for reimbursement of indirect costs shall be supported by an approved allocation plan for the determination of such costs. An indirect cost rate developed through such an allocation plan may not be applied to a base that includes food costs.
(2) Costs allowable with prior approval. A State or local agency must obtain prior approval in accordance with 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415 before charging to the SFMNP any capital expenditures and other cost items designated by 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415 as requiring such approval.
(3) Unallowable costs. Costs that are not reasonable and necessary for SFMNP purposes, or that do not otherwise satisfy the cost principles of 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415, are unallowable. Notwithstanding any other provision of 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415, the cost of constructing or operating a farmers’ market is unallowable. The use of SFMNP funds to supplement congregate meal programs is prohibited. Unallowable costs may never be claimed for Federal reimbursement.
(b) Specified allowable administrative costs. Allowable administrative costs include the following:
(1) The costs associated with administration and start-up;
(2) The costs associated with the provision of nutrition education that meets the requirements of § 249.9;
(3) The costs of SFMNP coupon issuance, or participant education covering proper coupon redemption procedures;
(4) The cost of eligibility determinations and outreach services;
(5) The costs associated with the coupon and market management process, such as printing SFMNP coupons, processing redeemed coupons, purchasing bags or other containers to be used in home-delivery and bulk purchase operations, and training farmers, market managers, and/or farmers who operate CSA programs on SFMNP operations;
(6) The cost of monitoring and reviewing Program operations;
(7) The cost of SFMNP training;
(8) The cost of required reporting and recordkeeping;
(9) The cost of determining which local sites will be utilized;
(10) The cost of recruiting and authorizing farmers, farmers’ markets, roadside stands, and/or CSA programs to participate in the SFMNP;
(11) The cost of preparing contracts for farmers, farmers’ markets, roadside stands, and/or CSA programs;
(12) The cost of developing a data processing system for redemption and reconciliation of SFMNP coupons;
(13) The cost of designing program training and informational materials; and
(14) The cost of coordinating SFMNP responsibilities between designated administering agencies.
§ 249.13 Program income.
Program income means gross income the State agency earns from grant supported activities. It includes fees for services performed and receipts from the use or rental of real or personal property acquired with Federal grant funds, but does not include proceeds from the disposition of such property. The State agency must retain Program income earned during the agreement period and use it for Program purposes in accordance with the addition method described in 2 CFR part 200, subpart D, Post Federal Award Requirements and USDA implementing regulations 2 CFR part 400 and part 415. Fines, penalties or assessments paid by local agencies or farmers, farmers’ markets, roadside stands, and/or CSA program are also deemed to be Program income. The State agency must ensure that the sources and applications of Program income are fully documented.
§ 249.14 Distribution of funds to State agencies.
(a) State Plan and agreement. As a prerequisite to the receipt of Federal funds, a State agency must have its State Plan approved and must execute an agreement with FNS in accordance with § 249.3(c).
(b) Distribution of SFMNP funds to previously participating State agencies. Provided that sufficient SFMNP funds are available, each State agency that participated in the SFMNP in any prior fiscal year shall receive not less than the amount of funds the State agency received in the most recent fiscal year in which it received funding, if it otherwise complies with the requirements established in this Part.
(c) Ratable reduction. If amounts appropriated for any fiscal year for grants under the SFMNP are not sufficient to pay to each previously participating State agency at least an amount as identified in paragraph (b) of this section, each State agency’s grant must be ratably reduced. However, to the extent permitted by available funds, each State agency shall receive at least $75,000 or the amount that the State agency received for the most recent prior fiscal year in which the State participated, if that amount is less than $75,000.
(d) Expansion of participating State agencies and establishment of new State agencies. Any SFMNP funds remaining for allocation after meeting the requirements of paragraph (b) of this section shall be allocated in the following manner:
(1) Of the remaining funds, 75 percent shall be made available to State agencies already participating in the SFMNP that wish to serve additional participants or increase the current benefit level. If this amount is greater than that necessary to satisfy all State Plans approved for expansion, the unallocated amount shall be applied toward satisfying any unmet need in paragraph (d)(2) of this section.
(2) Of the remaining funds, 25 percent shall be made available to State agencies that have not participated in the SFMNP in any prior fiscal year. If this amount is greater than that necessary to satisfy the approved State Plans for new States, the unallocated amount shall be applied toward satisfying any unmet need in paragraph (d)(1) of this section. FNS reserves the right not to fund every State agency with an approved State Plan.
(e) Expansion for current State agencies. In providing funds to State agencies that participated in the SFMNP in the previous fiscal year, FNS must consider on a case-by-case basis the following factors:
(1) Whether the State agency utilized at least 80 percent of its prior year food grant. States that did not spend at least 80 percent of their prior year food grant may still be eligible for expansion funding if, in the judgment of FNS, good cause existed which was beyond the management control of the State, such as severe weather conditions or unanticipated decreases in participant caseload;
(2) Documentation supporting the funds expansion request as outlined in § 249.4(a)(23); and
(3) Whether the State agency currently issues a participant benefit greater than $50. Such State agencies will not be eligible to receive additional SFMNP funds for expansion until the maximum participant benefit no longer exceeds $50.
(f) Funding of new State agencies. Funds will be awarded to new SFMNP State agencies in accordance with § 249.5.
(g) Administrative funding. A State agency will have available for administrative costs an amount not greater than 10 percent of the total SFMNP funds it receives.
(h) Recovery of unused funds. State agencies must return to FNS any unexpended funds made available for a given fiscal year by February 1 of the following fiscal year.
§ 249.15 Closeout procedures.
(a) General. State agencies must submit to FNS a final closeout report for the fiscal year on a form prescribed by FNS and on a date specified by FNS.
(b) Grant closeout procedures. When grants to State agencies are terminated, the following procedures shall be followed in accordance with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(1) FNS may disqualify a State agency’s participation under the SFMNP, in whole or in part, or take such remedies as may be appropriate, whenever FNS determines that the State agency failed to comply with the conditions prescribed in this part, in its Federal-State Agreement, or in FNS guidelines and Instructions. FNS will promptly notify the State agency in writing of the disqualification together with the effective date.
(2) FNS may terminate a grant when both parties agree that continuation under the SFMNP would not produce beneficial results commensurate with the further expenditure of funds.
(3) Upon termination of a grant, the affected agency may not incur new obligations after the effective date of the disqualification, and must cancel as many outstanding obligations as possible. FNS will allow full credit to the State agency for the Federal share of the noncancellable obligations properly incurred by the State agency prior to disqualification, and the State agency shall do the same for farmers, farmers’ markets, roadside stands, and/or CSA programs.
(4) A grant closeout shall not affect the retention period for, or Federal rights of access to, SFMNP records as specified in § 249.23(a). The closeout of a grant does not affect the responsibilities of the State agency regarding property or with respect to any SFMNP income for which the State agency is still accountable.
(5) A final audit is not a required part of the grant closeout and should not be needed unless there are problems with the grant that require attention. If FNS considers a final audit to be necessary, it shall so inform OIG. OIG will be responsible for ensuring that necessary final audits are performed and for any necessary coordination with other Federal cognizant audit agencies or State or local auditors. Audits performed in accordance with § 249.18 may serve as final audits providing such audits meet the needs of requesting agencies. If the grant is closed out without an audit, FNS reserves the right to disallow and recover an appropriate amount after fully considering any recommended disallowances resulting from an audit which may be conducted later.
§ 249.16 Administrative appeal of State agency decisions.
(a) Requirements. The State agency shall provide a hearing procedure whereby applicants, participants, local agencies and farmers, farmers’ markets, roadside stands, and/or CSA programs adversely affected by certain actions of the State agency may appeal those actions.
(1) What may be appealed. (i) An applicant may appeal denial of certification of SFMNP benefits, except that no appeal is available if certification is denied solely because of the lack of sufficient funding to provide SFMNP benefits to all eligible applicants.
(ii) A participant may appeal disqualification/suspension of SFMNP benefits.
(iii) A local agency may appeal an action of the State agency disqualifying it from participating in the SFMNP.
(iv) A farmer, farmers’ market, roadside stand, and/or CSA program may appeal an action of the State agency denying its application to participate, imposing a sanction, or disqualifying it from participating in the SFMNP.
(2) What may not be appealed. Expiration of a contract or agreement shall not be subject to appeal.
(b) Time limit for request. The State or local agency must provide individuals, local agencies, farmers, farmers’ markets, roadside stands, and/or CSA programs a reasonable period of time to request a fair hearing. Such time limit must not be less than 30 days from the date the agency mails or otherwise issues the notice of adverse action.
(c) Postponement pending decision. An adverse action may, at the State agency’s option, be postponed until a decision in the appeal is rendered.
(1) In a case where an adverse action affects a local agency or farmer, farmers’ market, roadside stand, and/or CSA program, a postponement is appropriate where the State agency finds that participants would be unduly inconvenienced by the adverse action. In addition, the State agency may determine other relevant criteria to be considered in deciding whether or not to postpone an adverse action.
(2) Applicants who are denied benefits at initial certification may appeal the denial, but must not receive SFMNP benefits while awaiting the hearing. Participants who appeal the termination of benefits within the period of time provided under paragraph (b) of this section must continue to receive Program benefits until the hearing official reaches a decision or the certification period expires, whichever occurs first. This does not apply to participants whose certification period has already expired or who become otherwise ineligible for SFMNP benefits. Participants who become ineligible during a certification, or whose certification period expires, may appeal the termination, but must not receive benefits while awaiting the hearing.
(d) Procedure. The State agency hearing procedure shall at a minimum provide the participant, local agency or farmer, farmers’ market, roadside stand, and/or CSA program with the following:
(1) Written notification of the adverse action, the cause(s) for the action, and the effective date of the action, including the State agency’s determination of whether the action shall be postponed under paragraph (c) of this section if it is appealed, and the opportunity for a hearing. Such notification shall be provided within a reasonable timeframe established by the State agency and in advance of the effective date of the action.
(2) The opportunity to appeal the action within the time specified by the State agency in its notification of adverse action.
(3) Adequate advance notice of the time and place of the hearing to provide all parties involved sufficient time to prepare for the hearing.
(4) The opportunity to present its case and at least one opportunity to reschedule the hearing date upon specific request. The State agency may set standards on how many hearing dates can be scheduled, provided that a minimum of two hearing dates is allowed.
(5) The opportunity to confront and cross-examine adverse witnesses.
(6) The opportunity to be represented by counsel or, in the case of a participant appeal, by a representative designated by the participant, if desired.
(7) The opportunity to review the case record prior to the hearing.
(8) An impartial decision maker, whose decision as to the validity of the State agency’s action shall rest solely on the evidence presented at the hearing and the statutory and regulatory provisions governing the SFMNP. The basis for the decision shall be stated in writing, although it need not amount to a full opinion or contain formal findings of fact and conclusions of law.
(9) Written notification of the decision in the appeal, within 60 days from the date of receipt of the request for a hearing by the State agency.
(e) Continuing responsibilities. When a farmer, farmers’ market, roadside stand, CSA program, and/or local agency appeals an adverse action (and is permitted to continue in the SFMNP while its appeal is pending), it continues to be responsible for compliance with the terms of the written agreement or contract with the State agency.
(f) Judicial review. If a State level decision is rendered against the participant, local agency, farmer, farmers’ market, roadside stand, and/or CSA program and the appellant expresses an interest in pursuing a further review of the decision, the State agency shall explain any further State level review of the decision and any available State level rehearing process. If neither is available or both have been exhausted, the State agency shall explain the right to pursue judicial review of the decision.
(g) Additional appeals procedures for State agencies that authorize farmers’ markets and not individual farmers. A State agency that authorizes farmers’ markets and not individual farmers shall ensure that procedures are in place to be used when a farmer seeks to appeal an action of a farmers’ market or association denying the farmer’s application to participate, or sanctioning or disqualifying the farmer. The procedures shall be set forth in the State Plan and in the agreements entered into by the State agency and the farmers’ market and the farmers’ market and the farmer.
Subpart F—Monitoring and Review of State Agencies
§ 249.17 Management evaluations and reviews.
(a) General. FNS and each State agency shall establish a management evaluation system in order to assess the accomplishment of SFMNP objectives as provided under these regulations, the State Plan, and the written agreement with FNS. FNS will:
(1) Provide assistance to State agencies in discharging this responsibility;
(2) Establish standards and procedures to determine how well the objectives of this part are being accomplished; and
(3) Implement sanction procedures as warranted by State SFMNP performance.
(b) Responsibilities of FNS. FNS will establish evaluation procedures to determine whether State agencies carry out the purposes and provisions of this part, the State Plan, and the written agreement with FNS. As a part of the evaluation procedure, FNS will review audits to ensure that the SFMNP has been included in audit examinations at a reasonable frequency. These evaluations shall also include reviews of selected local agencies, and on-site reviews of selected farmers, farmers’ markets, roadside stands, and community supported agriculture programs. These evaluations will measure the State agency’s progress toward meeting the objectives outlined in its State Plan and the State agency’s compliance with these regulations.
(1) FNS may withhold up to 10 percent of the State agency’s total SFMNP grant if FNS determines that the State agency has:
(i) Failed, without good cause, to demonstrate efficient and effective administration of its SFMNP; or
(ii) Failed to comply with the requirements contained in this section or the State Plan.
(2) Sanctions imposed upon a State agency by FNS in accordance with this section (but not claims for repayment assessed against a State agency) may be appealed in accordance with the procedures established in § 249.20(a). Before carrying out any sanction against a State agency, the following procedures will be followed:
(i) FNS will notify the chief departmental officer of the administering agency in writing of the deficiencies found and of FNS’ intention to withhold administrative funds unless an acceptable corrective action plan is submitted by the State agency to FNS within 45 days after mailing of notification.
(ii) The State agency shall develop a corrective action plan, including timeframes for implementation to address the deficiencies and prevent their future recurrence.
(iii) If the corrective action plan is acceptable, FNS will notify the chief departmental officer of the administering agency in writing within 30 days of receipt of the plan. The letter will advise the State agency of the sanctions to be imposed if the corrective action plan is not implemented according to the schedule set forth in the approved plan.
(iv) Upon notification from the State agency that corrective action has been taken, FNS will assess such action and, if necessary, perform a follow-up review to determine if the noted deficiencies have been corrected. FNS will then advise the State agency of whether the actions taken are in compliance with the corrective action plan, and whether the deficiency is resolved or further corrective action is needed. Compliance buys can be required if, during FNS management evaluations by regional offices, a State agency is found to be out of compliance with its responsibility to monitor and review farmers, farmers’ markets, roadside stands, and community supported agriculture programs.
(v) If an acceptable corrective action plan is not submitted within 45 days, or if corrective action is not completed according to the schedule established in the corrective action plan, FNS may withhold the award of SFMNP administrative funds. If the 45-day warning period ends in the fourth quarter of a fiscal year, FNS may elect not to withhold funds until the next fiscal year. In such an event, FNS will notify the chief departmental officer of the administering State agency.
(vi) If compliance is achieved before the end of the fiscal year in which the SFMNP administrative funds are withheld, the funds withheld may be restored to the State agency. FNS is not required to restore funds withheld beyond the end of the fiscal year for which the funds were initially awarded.
(c) Responsibilities of State agencies. The State agency is responsible for meeting the following requirements:
(1) The State agency must establish evaluation and review procedures and document the results of such procedures. The procedures must include, but are not limited to:
(i) Conducting annual monitoring reviews of participating farmers’ markets, roadside stands, and community supported agriculture programs. This includes on-site reviews of a minimum of 10 percent of farmers and 10 percent of each type of authorized outlet (farmers’ markets, roadside stands, and community supported agriculture programs), and includes those farmers and authorized outlets identified as being at the highest risk. The first year of operation in the SFMNP shall be considered a high-risk indicator. More frequent reviews may be performed, as the State agency deems necessary. In States where both the SFMNP and the WIC Farmers’ Market Nutrition Program are in operation, these reviews may be coordinated to avoid duplication. A review by one program may be counted by the other program toward the monitoring requirement, provided that appropriate sanction action is taken for all violations found.
(ii) Conducting monitoring reviews of all local agencies within the State agency’s jurisdiction at least once every 2 years. Monitoring of local agencies shall encompass, but not be limited to, evaluation of management, accountability, certification, nutrition education, financial management systems, and coupon and/or CSA program management systems. When the State agency conducts a local agency review outside of the SFMNP season, a review of documents and procedural plans of the SFMNP, rather than actual SFMNP activities, is acceptable.
(iii) Instituting the necessary follow-up procedures to correct identified problem areas.
(2) On its own initiative or when required by FNS, the State agency must provide special reports on SFMNP activities, and take positive action to correct deficiencies in SFMNP operations.
§ 249.18 Audits.
(a) Federal access to information. The Secretary of the U.S. Department of Agriculture, the Comptroller General of the United States, or any of their duly authorized representatives, or duly authorized State auditors shall have access to any books, documents, papers, and records of the State agency and their contractors, for the purpose of making surveys, audits, examinations, excerpts, and transcripts.
(b) State agency response. The State agency may take exception to particular audit findings and recommendations. The State agency shall submit a response or statement to FNS as to the action taken or planned regarding the findings. A proposed corrective action plan developed and submitted by the State agency must include specific time frames for its implementation and for completion of the correction of deficiencies and problems leading to the deficiencies.
(c) Corrective action. FNS will determine whether SFMNP deficiencies identified in an audit have been adequately corrected. If additional corrective action is necessary, FNS shall schedule a follow-up review, allowing a reasonable time for such corrective action to be taken.
(d) State sponsored audits. State and local agencies must conduct independent audits in accordance with 2 CFR part 200, subpart F, Audit Requirements and USDA implementing regulations 2 CFR part 400 and part 415, as applicable. A State or local agency may elect to obtain either an organization-wide audit or an audit of the Program if it qualifies to make such an election under applicable regulations.
§ 249.19 Investigations.
(a) Authority. FNS may make an investigation of any allegation of noncompliance with this part and FNS guidelines and instructions. The investigation may include, where appropriate, a review of pertinent practices and policies of any State and local agency, the circumstances under which the possible noncompliance with this part occurred, and other factors relevant to a determination as to whether the State and local agency has failed to comply with the requirements of this Part.
(b) Confidentiality. No State or local agency, participant, or other person shall intimidate, threaten, coerce, or discriminate against any individual for the purpose of interfering with any right or privilege under this Part because that person has made a complaint or formal allegation, or has testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this Part. The identity of every complainant shall be kept confidential except to the extent necessary to carry out the purposes of this Part, including the conducting of any investigation, hearing, or judicial proceeding.
Subpart G—Miscellaneous Provisions
§ 249.20 Claims and penalties.
(a) Claims against State agencies. (1) If FNS determines through a review of the State agency’s reports, program or financial analysis, monitoring, audit, or otherwise, that any SFMNP funds provided to a State agency for food or administrative purposes were, through State agency negligence or fraud, misused or otherwise diverted from SFMNP purposes, a formal claim will be assessed by FNS against the State agency. The State agency must pay promptly to FNS a sum equal to the amount of the administrative funds or the value of coupons and/or eligible foods so misused or diverted.
(2) If FNS determines that any part of the SFMNP funds received, coupons printed, and/or eligible foods otherwise lost by a State agency were lost as a result of theft, embezzlement, or unexplained causes, the State agency must, on demand by FNS, pay to FNS a sum equal to the amount of the money or the value of the SFMNP funds or coupons/eligible foods so lost.
(3) The State agency will have full opportunity to submit evidence, explanation or information concerning alleged instances of noncompliance or diversion before a final determination is made in such cases.
(4) FNS is authorized to establish claims against a State agency for unreconciled SFMNP coupons, and/or for failure to comply with the terms of duly executed CSA program contracts or agreements. When a State agency can demonstrate that all reasonable management efforts have been devoted to reconciliation and 99 percent or more of the SFMNP coupons issued, or of the eligible foods contracted for delivery by the CSA program, have been accounted for by the reconciliation process, FNS may determine that the reconciliation process has been completed to satisfaction.
(b) Interest charge on claims against State agencies. If an agreement cannot be reached with the State agency for payment of its debts or for offset of debts on its current Letter of Credit within 30 days from the date of the first demand letter from FNS, FNS will assess an interest (late) charge against the State agency. Interest accrual shall begin on the 31st day after the date of the first demand letter, bill or claim, and shall be computed monthly on any unpaid balance as long as the debt exists. From a source other than the SFMNP, the State agency shall provide the funds necessary to maintain SFMNP operations at the grant level authorized by FNS.
§ 249.21 Procurement and property management.
(a) Requirements. State agencies must comply with the requirements of 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR parts 400 and 415 for procurement of supplies, equipment and other services with SFMNP funds. These requirements are adopted for use by FNS to ensure that such materials and services are obtained for the SFMNP in an effective manner and in compliance with the provisions of applicable laws and executive orders.
(b) Contractual responsibilities. The standards contained in 2 CFR part 200, subpart D; Appendix II Contract Provisions for Non-Federal Entity Contracts Under Federal Awards; and USDA implementing regulations 2 CFR part 400 and part 415 do not relieve the State agency of the responsibilities arising under its contracts. The State agency is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the SFMNP. This includes, but is not limited to, disputes, claims, protests of award, source evaluation, or other matters of a contractual nature. Matters concerning violation of law are to be referred to such local, State or Federal authority as may have proper jurisdiction.
(c) State regulations. The State agency may use its own procurement regulations provided that:
(1) Such regulations reflect applicable State and local regulations; and
(2) Any procurements made with SFMNP funds adhere to the standards set forth in 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR parts 400 and 415.
(d) Property acquired with program funds. State and local agencies shall observe the standards prescribed in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 in their utilization and disposition of real property and equipment acquired in whole or in part with SFMNP funds.
§ 249.22 Nonprocurement debarment/suspension, drug-free workplace, and lobbying restrictions.
The State agency must ensure compliance with the requirements of FNS’ regulations governing nonprocurement debarment/suspension (2 CFR part 180, OMB Guidelines to Agencies on Government-wide Debarment and Suspension and USDA implementing regulations 2 CFR part 417) and drug-free workplace (2 CFR part 182, Government-wide Requirements for Drug-Free Workplace), as well as FNS’ regulations governing restrictions on lobbying (2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400, part 415, and part 418), where applicable.
§ 249.23 Records and reports.
(a) Recordkeeping requirements. Each State agency must maintain full and complete records concerning SFMNP operations. Such records must comply with 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 and the following requirements:
(1) Records must include, but not be limited to, information pertaining to certification, financial operations, SFMNP coupon issuance and redemption, authorized outlet (farmers, farmers’ markets, and CSA program) agreements, authorized outlet monitoring, CSA program agreements, invoices, delivery receipts, equipment purchases and inventory, nutrition education, fair hearings, and civil rights procedures.
(2) All records must be retained for a minimum of 3 years following the date of submission of the final expenditure report for the period to which the report pertains. If any litigation, claim, negotiation, audit or other action involving the records has been started before the end of the 3-year period, the records must be kept until all issues are resolved, or until the end of the regular 3-year period, whichever is later. If FNS deems any of the SFMNP records to be of historical interest, it may require the State agency to forward such records to FNS whenever the State agency is disposing of them.
(3) Records for nonexpendable property acquired in whole or in part with SFMNP funds must be retained for three years after its final disposition.
(4) All records must be available during normal business hours for representatives of FNS of the Comptroller General of the United States to inspect, audit, and copy. Any reports resulting from such examinations shall not divulge names of individuals.
(b) Financial and participant reports. State agencies must submit financial and SFMNP performance data on a yearly basis as specified by FNS. Such information must include, but shall not be limited to:
(1) Number of participants served with Federal SFMNP funds;
(2) Value of coupons issued and/or eligible foods ordered under CSA programs;
(3) Value of coupons redeemed and/or eligible foods provided to participants under CSA programs; and
(4) Number of authorized outlets by type; i.e., farmers, farmers’ markets, roadside stands, and CSA programs.
(c) Source documentation. To be acceptable for audit purposes, all financial and SFMNP performance reports must be traceable to source documentation.
(d) Certification of reports. Financial and SFMNP reports must be certified as to their completeness and accuracy by the person given that responsibility by the State agency.
(e) Use of reports. FNS will use State agency reports to measure progress in achieving objectives set forth in the State Plan, and this part, or other State agency performance plans. If it is determined, through review of State agency reports, SFMNP or financial analysis, or an audit, that a State agency is not meeting the objectives set forth in its State Plan, FNS may request additional information including, but not limited to, reasons for failure to achieve these objectives.
§ 249.24 Data safeguarding procedures.
FNS and SFMNP State agencies will take reasonable steps to keep applicant and participant information/records private to the extent provided by law. Such steps include a requirement for each State agency to restrict the use or disclosure of information obtained from SFMNP applicants and participants to:
(a) Persons directly connected with the administration or enforcement of the SFMNP, including persons investigating or prosecuting violations in the SFMNP under Federal, State or local authority;
(b) Representatives of public organizations designated by the chief State agency officer (or, in the case of Indian Tribal governments acting as SFMNP State agencies, the governing authority) that administer food, nutrition, or other assistance programs that serve persons categorically eligible for the SFMNP. The State agency must execute a written agreement with each such designated organization:
(1) Specifying that the receiving organization may employ SFMNP information only for the purpose of establishing the eligibility of SFMNP applicants and participants for food, nutrition, or other assistance programs that it administers and conducts outreach to SFMNP applicants and participants for such programs; and
(2) Containing the receiving organization’s assurance that it will not, in turn, disclose the information to a third party.
(c) The Comptroller General of the United States for audit and examination authorized by law.
§ 249.25 Other provisions.
(a) No aid reduction. Any programs for which a grant is received under this part shall be supplementary to the food stamp program carried out under the Food Stamp Act of 1977 as amended (7 U.S.C. 2011, et seq.) and to any other Federal or State food or nutrition assistance program.
(b) Statistical information. FNS reserves the right to use information obtained under the SFMNP in a summary, statistical or other form that does not identify particular individuals.
(c) Exclusion of benefits in determining eligibility for other programs. The value of any benefit provided to any eligible SFMNP recipient shall not be considered to be income or resources for any purposes under any Federal, State or local law.
§ 249.26 SFMNP information.
(a) Any person who wishes information, assistance, records or other public material must request such information from the State agency, or from the FNS Regional Office serving the appropriate State as listed below:
(1) Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, Vermont: U.S. Department of Agriculture, FNS, Northeast Region, 10 Causeway Street, Room 501, Boston, Massachusetts 02222-1066.
(2) Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Puerto Rico, Virginia, Virgin Islands, West Virginia: U.S. Department of Agriculture, FNS, Mid-Atlantic Region, Mercer Corporate Park, 300 Corporate Boulevard, Robbinsville, New Jersey, 08691-1598.
(3) Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee: U.S. Department of Agriculture, FNS, Southeast Region, 61 Forsyth Street, SW., Room 8T36, Atlanta, Georgia 30303.
(4) Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin: U.S. Department of Agriculture, FNS, Midwest Region, 77 West Jackson Boulevard—20th floor, Chicago, Illinois 60604-3507.
(5) Arkansas, Louisiana, New Mexico, Oklahoma, Texas: U.S. Department of Agriculture, FNS, Southwest Region, 1100 Commerce Street, Room 555, Dallas, Texas 75242.
(6) Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah, Wyoming: U.S. Department of Agriculture, FNS, Mountain Plains Region, 1244 Speer Boulevard, Suite 903, Denver, Colorado 80204.
(7) Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, Trust Territory of the Pacific Islands, the Northern Mariana Islands, Washington: U.S. Department of Agriculture, FNS, Western Region, 550 Kearny Street, Room 400, San Francisco, California 94108.
(b) Inquiries pertaining to the SFMNP administered by a federally recognized Indian tribal organization (ITO) should be addressed to the FNS Regional Office responsible for the geographic State in which that ITO is located.
§ 249.27 OMB Control Number.
The information collection requirements for part 249 have been reviewed and approved by the Office of Management and Budget (OMB). The OMB approval number is 0584-0541.
SUBCHAPTER B—GENERAL REGULATIONS AND POLICIES—FOOD DISTRIBUTION
PART 250—DONATION OF FOODS FOR USE IN THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS AND AREAS UNDER ITS JURISDICTION
Subpart A—General Purpose and Administration
§ 250.1 Purpose and use of donated foods.
(a) Purpose. The Department purchases foods and donates them to State distributing agencies for further distribution and use in food assistance programs, or to provide assistance to eligible persons, in accordance with legislation:
(1) Authorizing donated food assistance in specific programs (e.g., the Richard B. Russell National School Lunch Act for the National School Lunch Program (NSLP)); or
(2) Authorizing the removal of surplus foods from the market or the support of food prices (i.e., in accordance with Section 32, Section 416, and Section 709, as defined in § 250.2).
(b) Use of donated foods. Donated foods must be used in accordance with the requirements of this part and with other Federal regulations applicable to specific food assistance programs (e.g., 7 CFR part 251 includes requirements for the use of donated foods in The Emergency Food Assistance Program (TEFAP)). Such use may include activities designed to demonstrate or test the effective use of donated foods (e.g., in nutrition classes or cooking demonstrations) in any programs. However, donated foods may not be:
(1) Sold or exchanged, or otherwise disposed of, unless approved by FNS, or specifically permitted elsewhere in this part or in other Federal regulations (e.g., donated foods may be used in meals sold in NSLP);
(2) Used to require recipients to make any payments or perform any services in exchange for their receipt, unless approved by FNS, or specifically permitted elsewhere in this part or in other Federal regulations; or
(3) Used to solicit voluntary contributions in connection with their receipt, except for donated foods provided in the Nutrition Services Incentive Program (NSIP).
(c) Legislative sanctions. In accordance with the Richard B. Russell National School Lunch Act (42 U.S.C. 1760) and the Agriculture and Consumer Protection Act of 1973 (7 U.S.C. 612c note), any person who embezzles, willfully misapplies, steals, or obtains by fraud any donated foods (or funds, assets, or property deriving from such donated foods) will be subject to Federal criminal prosecution and other penalties. Any person who receives, conceals, or retains such donated foods or funds, assets, or property deriving from such foods, with the knowledge that they were embezzled, willfully misapplied, stolen, or obtained by fraud, will also be subject to Federal criminal prosecution and other penalties. The distributing agency, or other parties, as applicable, must immediately notify FNS of any such violations.
§ 250.2 Definitions.
2 CFR part 200 means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by OMB. The Part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F). (NOTE: Pre-Federal Award Requirements and Contents of Federal Awards (subpart C) do not apply to the National School Lunch Program).
ACL means the Administration for Community Living, which is the DHHS agency that administers NSIP.
Administering agency means a State agency that has been approved by the Department to administer a food assistance program. If such agency is also responsible for the distribution of donated foods, it is referred to as the distributing agency in this part.
Adult care institution means a nonresidential adult day care center that participates independently in CACFP, or that participates as a sponsoring organization, and that may receive donated foods or cash-in-lieu of donated foods, in accordance with an agreement with the distributing agency.
Backhauling means the delivery of donated foods to a processor for processing from a distributing or recipient agency’s storage facility.
Bonus foods means Section 32, Section 416, and Section 709 donated foods, as defined in this section, which are purchased under surplus removal or price support authority, and provided to distributing agencies in addition to legislatively authorized levels of assistance.
CACFP means the Child and Adult Care Food Program.
Carrier means a commercial enterprise that transports donated foods from one location to another, but does not store such foods.
Charitable institutions means public institutions or private nonprofit organizations that provide a meal service on a regular basis to predominantly eligible persons in the same place without marked changes. Some types of charitable institutions are included in
§ 250.67.
Child care institution means a nonresidential child care center that participates independently in CACFP, or that participates as a sponsoring organization, in accordance with an agreement with the distributing agency.
Child nutrition program means NSLP, CACFP, SFSP, or SBP.
Commingling means the storage of donated foods together with commercially purchased foods.
Commodity offer value means the minimum value of donated foods that the distributing agency must offer to a school food authority participating in NSLP each school year. The commodity offer value is equal to the national per-meal value of donated food assistance multiplied by the number of reimbursable lunches served by the school food authority in the previous school year.
Commodity school means a school that operates a nonprofit food service, in accordance with 7 CFR part 210, but that receives additional donated food assistance rather than the cash assistance available to it under Section 4 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1753).
Consignee means an entity (e.g., the distributing or recipient agency, a commercial storage facility, or a processor) that receives a shipment of donated foods from a vendor or Federal storage facility.
Contract value of the donated foods means the price assigned by the Department to a donated food which must reflect the Department’s current acquisition price. This may alternatively be referred to as the USDA purchase price.
CSFP means the Commodity Supplemental Food Program.
Department means the United States Department of Agriculture (USDA).
DHHS means the United States Department of Health and Human Services.
Disaster means a Presidentially declared disaster or emergency, in accordance with Section 412 or 413 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5179-5180), in which Federal assistance, including donated food assistance, may be provided to persons in need of such assistance as a result of the disaster or emergency.
Disaster organization means an organization authorized by FNS or a distributing agency, when appropriate, to provide assistance to survivors of a disaster or a situation of distress.
Distributing agency means a State agency selected by the Governor of the State or the State legislature to distribute donated foods in the State, in accordance with an agreement with FNS, and with the requirements in this part and other Federal regulations, as applicable (e.g., a State agency distributing donated foods in CSFP must comply with requirements in 7 CFR part 247). Indian Tribal Organizations may act as a distributing agency in the distribution of donated foods on, or near, Indian reservations, as provided for in applicable Federal regulations (e.g., 7 CFR part 253 or 254 for FDPIR). A distributing agency may also be referred to as a State distributing agency.
Distribution charge means the cumulative charge imposed by distributing agencies on school food authorities to help meet the costs of storing and distributing donated foods, and administrative costs related to such activities.
Distributor means a commercial food purveyor or handler who is independent of a processor and charges and bills for the handling of donated foods, and/or sells and bills for the end products delivered to recipient agencies.
Donated foods means foods purchased by USDA for donation in food assistance programs, or for donation to entities assisting eligible persons, in accordance with legislation authorizing such purchase and donation. Donated foods are also referred to as USDA Foods.
Elderly nutrition project means a recipient agency selected by the State Unit on Aging to receive assistance in NSIP, which may include donated food assistance.
Eligible persons means persons in need of food assistance as a result of their:
(1) Economic status;
(2) Eligibility for a specific food assistance program; or
(3) Eligibility as survivors of a disaster or a situation of distress.
End product means a food product that contains processed donated foods.
End product data schedule means a processor’s description of its processing of donated food into a finished end product, including the processing yield of donated food.
Entitlement means the value of donated foods a distributing agency is authorized to receive in a specific program, in accordance with program legislation.
Entitlement foods means donated foods that USDA purchases and provides in accordance with levels of assistance mandated by program legislation.
FDPIR means the Food Distribution Program on Indian Reservations and the Food Distribution Program for Indian Households in Oklahoma.
Federal acceptance service means the acceptance service provided by:
(1) The applicable grading branches of the Department’s Agricultural Marketing Service (AMS);
(2) The Department’s Federal Grain Inspection Service; and
(3) The National Marine Fisheries Service of the U.S. Department of Commerce.
Fiscal year means the period of 12 months beginning October 1 of any calendar year and ending September 30 of the following calendar year.
FNS means the Food and Nutrition Service of the Department of Agriculture.
Food recall means an action to remove food products from commerce when there is reason to believe the products may be unsafe, adulterated, or mislabeled. The action is taken to protect the public from products that may cause health problems or possible death.
Food service management company means a commercial enterprise, nonprofit organization, or public institution that is, or may be, contracted with by a recipient agency to manage any aspect of a recipient agency’s food service, in accordance with 7 CFR part 210, 225, or 226, or, with respect to charitable institutions, in accordance with this part. To the extent that such management includes the use of donated foods, the food service management company is subject to the applicable requirements in this part. However, a school food authority participating in NSLP that performs such functions is not considered a food service management company. Also, a commercial enterprise that uses donated foods to prepare meals at a commercial facility, or to perform other activities that meet the definition of processing in this section, is considered a processor in this part, and is subject to the requirements in subpart C, and not subpart D, of this part.
Household means any of the following individuals or groups of individuals, exclusive of boarders or residents of an institution:
(1) An individual living alone;
(2) An individual living with others, but customarily purchasing food and preparing meals for home consumption separate and apart from the others;
(3) A group of individuals living together who customarily purchase and prepare meals in common for home consumption; and
(4) Other individuals or groups of individuals, as provided in FNS regulations specific to particular food assistance programs.
Household programs means CSFP, FDPIR, and TEFAP.
In-kind replacement means the replacement of a loss of donated food with the same type of food of U.S. origin, of equal or better quality as the donated food, and at least equal in value to the lost donated food.
In-State processing agreement means a distributing agency’s agreement with an in-State processor to process donated foods into finished end products for sale to eligible recipient agencies or for sale to the distributing agency.
In-State processor means a processor that has entered into agreements with distributing or recipient agencies that are located only in the State in which all of the processor’s processing facilities are located.
Multi-food shipment means a shipment from a Federal storage facility that usually includes more than one type of donated food.
Multi-State processor means a processor that has entered into agreements with distributing or recipient agencies in more than one State, or that has entered into one or more agreements with distributing or recipient agencies that are located in a State other than the State in which the processor’s processing facilities or business office is located.
National per-meal value means the value of donated foods provided for each reimbursable lunch served in NSLP in the previous school year, and for each reimbursable lunch and supper served in CACFP in the previous school year, as established in sections 6(c) and 17(h)(1)(B) of the Richard B. Russell National School Lunch Act ((42 U.S.C. 1755(c) and 1766(h)(1)(B)).
National processing agreement means an agreement between FNS and a multi-State processor to process donated foods into end products for sale to distributing or recipient agencies.
Nonprofit organization means a private organization with tax-exempt status under the Internal Revenue Code. Nonprofit organizations operated exclusively for religious purposes are automatically tax-exempt under the Internal Revenue Code.
Nonprofit school food service means all food service operations conducted by the school food authority principally for the benefit of schoolchildren, all of the revenue from which is used solely for the operation or improvement of such food services.
NSIP means the Nutrition Services Incentive Program administered by the DHHS ACL.
NSLP means the National School Lunch Program.
Out-of-condition donated foods means donated foods that are no longer fit for human consumption as a result of spoilage, contamination, infestation, adulteration, or damage.
Performance supply and surety bond means a written instrument issued by a surety company which guarantees performance and supply of end products by a processor under the terms of a processing contract.
Processing means a commercial enterprise’s use of a commercial facility to:
(1) Convert donated foods into an end product;
(2) Repackage donated foods; or
(3) Use donated foods in the preparation of meals.
Processor means a commercial enterprise that processes donated foods at a commercial facility.
Recipient agencies means agencies or organizations that receive donated foods for distribution to eligible persons or for use in meals provided to eligible persons, in accordance with agreements with a distributing or subdistributing agency, or with another recipient agency. Local agencies in CSFP, and Indian Tribal Organizations distributing donated foods to eligible persons through FDPIR in a State in which the State government administers FDPIR, are considered recipient agencies in this part.
Recipients means persons receiving donated foods, or a meal containing donated foods, provided by recipient agencies.
Recipient agency processing agreement means a recipient agency’s agreement with a processor to process donated foods and to purchase the finished end products.
Reimbursable meals means meals that meet the nutritional standards established in Federal regulations pertaining to NSLP, SFSP, or CACFP, and that are served to eligible recipients.
Replacement value means the price assigned by the Department to a donated food which must reflect the current price in the market to ensure compensation for donated foods lost in processing or other activities. The replacement value may be changed by the Department at any time.
SAE funds means Federal funds provided to State agencies for State administrative expenses, in accordance with 7 CFR part 235.
SBP means the School Breakfast Program.
School food authority means the governing body responsible for the administration of one or more schools, and that has the legal authority to operate NSLP or be otherwise approved by FNS to operate NSLP.
School year means the period of 12 months beginning July 1 of any calendar year and ending June 30 of the following calendar year.
Section 4(a) means section 4(a) of the Agriculture and Consumer Protection Act of 1973 (7 U.S.C. 612c note), which authorizes the Department to purchase donated foods to maintain the traditional level of assistance for food assistance programs authorized by law, including, but not limited to, CSFP, FDPIR, and disaster assistance.
Section 6 means section 6 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1755), which authorizes the Department to provide a specified value of donated food assistance in NSLP.
Section 14 means section 14 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1762a), which authorizes the Department to use Section 32 or Section 416 funds to maintain the annually programmed levels of donated food assistance in child nutrition programs.
Section 27 means section 27 of the Food and Nutrition Act of 2008 (7 U.S.C. 2036), which authorizes the purchase of donated foods for distribution in TEFAP.
Section 32 means section 32 of Public Law 74-320 (7 U.S.C. 612c), which authorizes the Department to purchase primarily perishable foods to remove market surpluses, and to donate them for use in domestic food assistance programs or by charitable institutions.
Section 311 means section 311 of the Older Americans Act of 1965 (42 U.S.C. 3030a), which permits State Units on Aging to receive all or part of their NSIP grant as USDA donated foods.
Section 416 means section 416 of the Agricultural Act of 1949 (7 U.S.C. 1431), which authorizes the Department to purchase nonperishable foods to support market prices, and to donate them for use in domestic food assistance programs or by charitable institutions.
Section 709 means section 709 of the Food and Agricultural Act of 1965 (7 U.S.C. 1446a-1), which authorizes the Department to purchase dairy products to meet authorized levels of assistance in domestic food assistance programs when such assistance cannot be met by Section 416 food purchases.
Service institution means recipient agencies that participate in SFSP.
SFSP means the Summer Food Service Program.
Similar replacement means the replacement of a loss of donated food with another type of food from the same food category (e.g., dairy, grain, meat/meat alternate, vegetable, fruit, etc.) that is of U.S. origin, of equal or better quality than that type of donated food, and at least equal in value to the lost donated food.
Single inventory management means the commingling in storage of donated foods and foods from other sources, and the maintenance of a single inventory record of such commingled foods.
Situation of distress means a natural catastrophe or other event that does not meet the definition of disaster in this section, but that, in the determination of the distributing agency, or of FNS, as applicable, warrants the use of donated foods to assist survivors of such catastrophe or other event. A situation of distress may include, for example, a hurricane, flood, snowstorm, or explosion.
SNAP means the Supplemental Nutrition Assistance Program.
Split shipment means a shipment of donated foods from a vendor that is split between two or more distributing or recipient agencies, and that usually includes more than one stop-off or delivery location.
State means any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, and American Samoa.
State Participation Agreement means a distributing agency’s agreement with a multi-State processor to permit the sale of finished end products produced under the processor’s National Processing Agreement to eligible recipient agencies in the State or to directly purchase such finished end products.
State Unit on Aging means:
(1) The State agency that has been approved by DHHS to administer NSIP; or
(2) The Indian Tribal Organization that has been approved by DHHS to administer NSIP.
Storage facility means a publicly-owned or nonprofit facility or a commercial enterprise that stores donated foods or end products, and that may also transport such foods to another location.
Subdistributing agency means a State agency, a public agency, or a nonprofit organization selected by the distributing agency to perform one or more activities required of the distributing agency in this part, in accordance with a written agreement between the parties. A subdistributing agency may also be a recipient agency.
Substitution means:
(1) The replacement of donated foods with like quantities of domestically produced commercial foods of the same generic identity and of equal or better quality.
(2) A processor can substitute commercial product for donated food, as described in paragraph (1) of this definition, without restrictions under full substitution. The processor must return to the contracting agency, in finished end products, the same number of pounds of donated food that the processor originally received for processing under full substitution. This is the 100-percent yield requirement.
(3) A processor can substitute commercial product for donated foods, as described in paragraph (1) of this definition, with some restrictions under limited substitution. Restrictions include, but are not limited to, the prohibition against substituting for backhauled poultry product. FNS may also prohibit substitution of certain types of the same generic food. (For example, FNS may decide to permit substitution for bulk chicken but not for canned chicken.)
Summer camp means a nonprofit or public camp for children aged 18 and under.
TEFAP means The Emergency Food Assistance Program.
USDA Foods means donated foods.
USDA implementing regulations mean the following: 2 CFR part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; 2 CFR part 415, General Program Administrative Regulations; 2 CFR part 416, General Program Administrative Regulations for Grants and Cooperative Agreements to State and Local Governments; and 2 CFR part 418, New Restrictions on Lobbying.
Vendor means a commercial food company from which the Department purchases foods for donation.
§ 250.3 Administration at the Federal level.
(a) Food and Nutrition Service. Within the Department, Food and Nutrition Service (FNS) must act on behalf of the Department to administer the distribution of donated foods to distributing agencies for further distribution and use at the State level, in accordance with the requirements of this part.
(b) Audits or inspections. The Department, the Comptroller General of the United States, or any of their authorized representatives, may conduct audits or inspections of distributing, subdistributing, or recipient agencies, or the commercial enterprises with which they have contracts or agreements, in order to determine compliance with the requirements of this part, or with other applicable Federal regulations.
(c) Suspension or termination. Whenever it is determined that a distributing agency has materially failed to comply with the provisions of this part, or with other applicable Federal regulations, FNS may suspend or terminate the distribution of donated foods, or the provision of administrative funds, to the distributing agency. FNS must provide written notification of such suspension or termination of assistance, including the reasons for the action and the effective date. The distributing agency may appeal a suspension or termination of assistance if such appeal is provided for in Federal regulations applicable to a specific food assistance program (e.g., as provided for in § 253.5(l) of this chapter for FDPIR). FNS may also take other actions, as appropriate, including prosecution under applicable Federal statutes.
§ 250.4 Administration at the State level.
(a) Distributing agency. The distributing agency, as defined in § 250.2, is responsible for ensuring compliance with the requirements in this part, and in other Federal regulations referenced in this part, in the distribution and control of donated foods. In order to receive, store, and distribute donated foods, the distributing agency must enter into a written agreement with FNS (the Federal-State Agreement, form FNS-74) for the distribution of donated foods in accordance with the provisions of this part and other applicable Federal regulations. The Federal-State agreement is permanent, but may be amended with the concurrence of both parties. FNS may terminate the Federal-State agreement if the distributing agency fails to meet its obligations, in accordance with § 250.3(c). Each distributing agency must also provide adequate personnel to administer the program in accordance with this part. The distributing agency may impose additional requirements related to the distribution and control of donated foods in the State, as long as such requirements are not inconsistent with the requirements in this part or other Federal regulations referenced in this part.
(b) Subdistributing agency. The distributing agency may enter into a written agreement with a subdistributing agency, as defined in § 250.2, to perform specific activities required of the distributing agency in this part. However, the distributing agency may not assign its overall responsibility for donated food distribution and control to a subdistributing agency or to any other organization, and may not delegate its responsibility to ensure compliance with the performance standards in § 250.22. The agreement entered into with the subdistributing agency must include the provisions in paragraph (c) of this section, and must indicate the specific activities for which the subdistributing agency is responsible.
(c) Recipient agencies. The distributing agency must select recipient agencies, as defined in § 250.2, to receive donated foods for distribution to eligible persons, or for use in meals provided to eligible persons, in accordance with eligibility criteria for specific programs or outlets, and must enter into a written agreement with a recipient agency prior to distribution of donated foods to it. However, for child nutrition programs, the distributing agency must enter into agreements with those recipient agencies selected by the State administering agency to participate in such programs, prior to distribution of donated foods to such recipient agencies. The distributing agency must confirm such recipient agencies’ approval for participation in the appropriate child nutrition program with the State administering agency. For household programs, distributing agencies must consider the past performance of recipient agencies when approving applications for participation. Agreements with recipient agencies must include the provisions in this paragraph (c), as well as provisions required in Federal regulations applicable to specific programs (e.g., agreements with local agencies in CSFP must include the provisions in § 247.4(b) of this chapter). The agreements with recipient agencies and subdistributing agencies must:
(1) Ensure compliance with the applicable requirements in this part, with other Federal regulations referenced in this part, and with the distributing agency’s written agreement with FNS;
(2) Ensure compliance with all requirements relating to food safety and food recalls;
(3) Establish the duration of the agreement. The duration of the agreement may be established as permanent, but may be amended at the initiation of distributing agencies;
(4) Permit termination of the agreement by the distributing agency for failure of the recipient agency (or subdistributing agency, as applicable) to comply with its provisions or applicable requirements, upon written notification to the applicable party; and
(5) Permit termination of the agreement by either party, upon written notification to the other party, at least 60 days prior to the effective date of termination.
(d) Procurement of services of commercial enterprises. The distributing agency, or a recipient agency, must ensure compliance with procurement requirements in 2 CFR part 200, subpart D, and USDA implementing regulations at 2 CFR parts 400 and 416, as applicable, to obtain the services of a commercial enterprise to conduct activities relating to donated foods. The distributing agency, or a recipient agency, must also ensure compliance with other applicable Departmental regulations in such procurements—for example, a school food authority must ensure compliance with requirements in §§ 210.16 and 210.21 of this chapter, and in subpart D of this part, in procuring the services of a food service management company.
§ 250.5 Civil rights.
Distributing agencies, subdistributing agencies and recipient agencies must comply with the Department’s nondiscrimination regulations (7 CFR parts 15, 15a, and 15b) and the FNS civil rights instructions to ensure that in the operation of the program no person is discriminated against on protected bases as such bases apply to each program.
Subpart B—Delivery, Distribution, and Control of Donated Foods
§ 250.10 Availability and ordering of donated foods.
(a) Ordering donated foods. The distributing agency must utilize a request-driven ordering system in submitting orders for donated foods to FNS. As part of such system, the distributing agency must provide recipient agencies with the opportunity to submit input, on at least an annual basis, in determining the donated foods from the full list that are made available to them for ordering. Based on the input received, the distributing agency must ensure that the types and forms of donated foods that recipient agencies may best utilize are made available to them for ordering. The distributing agency must also ensure that donated foods are ordered and distributed only in amounts that may be utilized efficiently and without waste.
(b) Provision of information on donated foods. The distributing agency must provide recipient agencies, at their request, information that will assist them in ordering or utilization of donated foods, including information provided by USDA. Information provided to recipient agencies must include:
(1) The types and quantities of donated foods that they may order;
(2) Donated food specifications and nutritional value; and
(3) Procedures for the disposition of donated foods that are out-of-condition or that are subject to a food recall.
(c) Normal food expenditures. Section 416 donated foods must not be distributed to any recipient agencies or recipients whose normal food expenditures are reduced because of the receipt of donated foods.
§ 250.11 Delivery and receipt of donated food shipments.
(a) Delivery. The Department arranges for delivery of donated foods from the vendor or Federal storage facility to the distributing agency’s storage facility, or to a processor with which the distributing agency has entered into a contract or agreement. The Department may also deliver donated foods directly to a recipient agency, or to a storage facility or processor with which the recipient agency has entered into a contract or agreement, with the approval of the distributing agency. The Department will make every reasonable effort to arrange deliveries of donated foods based on information obtained from distributing agencies, to the extent feasible. In accordance with § 250.2, an entity that receives a shipment of donated foods directly from a USDA vendor or a Federal storage facility is referred to as the consignee. Consignees must provide a delivery address, and other information as required by FNS, as well as update this information as necessary, to ensure foods are delivered to the correct location.
(b) Receipt of shipments. The distributing or recipient agency, or other consignee, must comply with all applicable Federal requirements in receiving shipments of donated foods, including procedures for the disposition of any donated foods in a shipment that are out-of-condition (as this term is defined in § 250.2), or are not in accordance with ordered amounts. The distributing or recipient agency, or other consignee, must provide notification of the receipt of donated food shipments to FNS, through electronic means, and must maintain an electronic record of receipt of all donated food shipments.
(c) Replacement of donated foods. The vendor is responsible for the replacement of donated foods that are delivered out-of-condition. Such responsibility extends until expiration of the vendor warranty period included in the vendor contract with USDA. In all cases, responsibility for replacement is contingent on the determination that the foods were out-of-condition at the time of delivery. Replacement must be in-kind, unless FNS approves similar replacement (the terms in-kind and similar replacement are defined in § 250.2). If FNS determines that physical replacement of donated foods is not cost-effective or efficient, FNS may:
(1) Approve payment by the vendor to the distributing or recipient agency, as appropriate, for the value of the donated foods at time of delivery (or at another value determined by FNS); or
(2) Credit the distributing agency’s entitlement, as feasible.
(d) Payment of costs relating to shipments. The Department is responsible for payment of processing, transportation, handling, or other costs incurred up to the time of delivery of donated foods to a distributing or recipient agency, or other consignee, as the Department deems in its best interest. However, the distributing or recipient agency, or other consignee, is responsible for payment of any delivery charges that accrue as a result of such consignee’s failure to comply with procedures in FNS instructions—e.g., failure to provide for the unloading of a shipment of donated foods within a designated time period.
(e) Transfer of title. In general, title to donated foods transfers to the distributing agency or recipient agency, as appropriate, upon acceptance of the donated foods at the time and place of delivery. Title to donated foods provided to a multi-State processor, in accordance with its National Processing Agreement, transfers to the distributing agency or recipient agency, as appropriate, upon acceptance of the finished end products at the time and place of delivery. However, when a recipient agency has contracted with a distributor to act as an authorized agent, title to finished end products containing donated foods transfers to the recipient agency upon delivery and acceptance by the contracted distributor. Notwithstanding transfer of title, distributing and recipient agencies must ensure compliance with the requirements of this part in the distribution, control, and use of donated foods.
§ 250.12 Storage and inventory management at the distributing agency level.
(a) Safe storage and control. The distributing agency or subdistributing agency (which may include commercial storage facilities under contract with either the distributing agency or subdistributing agency, as applicable), must provide facilities for the storage and control of donated foods that protect against theft, spoilage, damage, or other loss. Accordingly, such storage facilities must maintain donated foods in sanitary conditions, at the proper temperature and humidity, and with adequate air circulation. The distributing agency must ensure that storage facilities comply with all Federal, State, or local requirements relative to food safety and health and procedures for responding to a food recall, as applicable, and obtain all required health inspections.
(b) Inventory management. The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods. The distributing agency must report donated food losses to FNS, and ensure that restitution is made for such losses.
(c) Inventory limitations. The distributing agency is subject to the following limitations in the amount of donated food inventories on-hand, unless FNS approval is obtained to maintain larger inventories:
(1) For TEFAP, NSLP and other child nutrition programs, inventories of each category of donated food may not exceed an amount needed for a six-month period, based on an average amount of donated foods utilized in that period; and
(2) For CSFP and FDPIR, inventories of each category of donated food in the food package may not exceed an amount needed for a three-month period, based on an average amount of donated food that the distributing agency can reasonably utilize in that period to meet CSFP caseload or FDPIR average participation.
(d) Inventory protection. The distributing agency must obtain insurance to protect the value of donated foods at its storage facilities. The amount of such insurance must be at least equal to the average monthly value of donated food inventories at such facilities in the previous fiscal year. The distributing agency must also ensure that the following entities obtain insurance to protect the value of their donated food inventories, in the same amount required of the distributing agency in this paragraph (d):
(1) Subdistributing agencies;
(2) Recipient agencies in household programs that have an agreement with the distributing agency or subdistributing agency to store and distribute foods (except those recipient agencies which maintain inventories with a value of donated foods that do not exceed a defined threshold, as determined in FNS policy); and
(3) Commercial storage facilities under contract with the distributing agency or with an agency identified in paragraph (d)(1) or (2) of this section.
(e) Transfer of donated foods. The distributing agency may transfer donated foods from its inventories to another distributing agency, or to another program, in order to ensure that such foods may be utilized in a timely manner and in optimal condition, in accordance with this part. However, the distributing agency must request FNS approval. FNS may also require a distributing agency to transfer donated foods at the distributing agency’s storage facilities or at a processor’s facility, if inventories of donated foods are excessive or may not be efficiently utilized. If there is a question of food safety, or if directed by FNS, the distributing agency must obtain an inspection of donated foods by State or local health authorities, as necessary, to ensure that the donated foods are still safe and not out-of-condition before transferring them. The distributing agency is responsible for meeting any transportation or inspection costs incurred, unless it is determined by FNS that the transfer is not the result of negligence or improper action on the part of the distributing agency. The distributing agency must maintain a record of all transfers from its inventories, and of any inspections related to such transfers.
(f) Commercial storage facilities or carriers. The distributing agency may obtain the services of a commercial storage facility to store and distribute donated foods, or a carrier to transport donated foods, but must do so in compliance with procurement requirements in 2 CFR part 200, subpart D, and USDA implementing regulations at 2 CFR parts 400 and 416. The distributing agency must enter into a written contract with a commercial storage facility or carrier, which may not exceed five years in duration, including any extensions or renewals. The contract must include applicable provisions required by Federal statutes and executive orders listed in 2 CFR part 200, appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards, and USDA implementing regulations at 2 CFR parts 400 and 416. The contract must also include, as applicable to a storage facility or carrier, provisions that:
(1) Assure storage, management, and transportation of donated foods in a manner that properly safeguards them against theft, spoilage, damage, or other loss, in accordance with the requirements in this part;
(2) Assure compliance with all Federal, State, or local requirements relative to food safety and health, including required health inspections, and procedures for responding to a food recall;
(3) Assure storage of donated foods in a manner that distinguishes them from other foods, and assure separate inventory recordkeeping of donated foods;
(4) Assure distribution of donated foods to eligible recipient agencies in a timely manner, in optimal condition, and in amounts for which such recipient agencies are eligible;
(5) Include the amount of insurance coverage obtained to protect the value of donated foods;
(6) Permit the performance of on-site reviews of the storage facility by the distributing agency, the Comptroller General, the Department of Agriculture, or any of its duly authorized representatives, in order to determine compliance with requirements in this part;
(7) Establish the duration of the contract, and provide for extension or renewal of the contract only upon fulfillment of all contract provisions;
(8) Provide for expeditious termination of the contract by the distributing agency for noncompliance with its provisions; and
(9) Provide for termination of the contract by either party for other cause, after written notification of such intent at least 60 days prior to the effective date of such action.
§ 250.13 Efficient and cost-effective distribution of donated foods.
(a) Direct shipments. The distributing agency must ensure that the distribution of donated foods is conducted in the most efficient and cost-effective manner, and, to the extent practical, in accordance with the specific needs and preferences of recipient agencies. In meeting this requirement, the distributing agency must, to the extent practical, provide for:
(1) Shipments of donated foods directly from USDA vendors to recipient agencies, including two or more recipient agencies acting as a collective unit (such as a school co-op), or to the commercial storage facilities of such agencies;
(2) Shipments of donated foods directly from USDA vendors to processors for processing of donated foods and sale of end products to recipient agencies, in accordance with subpart C of this part; and
(3) The use of split shipments, as defined in § 250.2, in arranging for delivery of donated foods to recipient agencies that cannot accept a full truckload.
(b) Distributing agency storage and distribution charge. (1) If a distributing agency determines that direct shipments of donated foods, as described in paragraph (a) of this section, are impractical, it must provide for the storage of donated foods at the distributing agency level, and subsequent distribution to recipient agencies, in the most efficient and cost-effective manner possible. The distributing agency must use a commercial storage facility, in accordance with § 250.12(f), if the use of such system is determined to be more efficient and cost-effective than other available methods.
(2) The distributing agency must utilize State Administrative Expense (SAE) funds in child nutrition programs, as available, to meet the costs of storing and distributing donated foods for school food authorities or other recipient agencies in child nutrition programs, and administrative costs related to such activities, in accordance with 7 CFR part 235. If SAE funds, or any other Federal or State funds received for such purpose, are insufficient to fully meet the distributing agency’s costs of storing and distributing donated foods, and related administrative costs (e.g., salaries of employees engaged in such activities), the distributing agency may require school food authorities or other recipient agencies in child nutrition programs to pay a distribution charge, as defined in § 250.2, to help meet such costs. The distribution charge may cover only allowable costs, in accordance with 2 CFR part 200, subpart E, and USDA implementing regulations at 2 CFR part 400. The distributing agency must maintain a record of costs incurred in storing and distributing donated foods and related administrative costs, and the source of funds used to pay such costs.
(c) FNS approval of amount of State distributing agency distribution charge to school food authorities and other recipient agencies in child nutrition programs. In determining the amount of a new distribution charge, or in increasing the amount (except for normal inflationary adjustments) or reducing the level of service provided once a distribution charge is established, the distributing agency must request FNS approval prior to implementation. Such requirement also applies to the distribution charge imposed by a commercial storage facility under contract with the distributing agency. The request for approval must be submitted to FNS at least 90 days in advance of its projected implementation, and must include justification of the newly established amount, or any increased charge or reduction in the level of service provided under an established distribution charge, and the specific costs covered under the distribution charge (e.g., storage, delivery, or administrative costs).
(d) FNS review authority. FNS may reject the distributing agency’s proposed new, or changes to an existing, distribution charge for school food authorities and other recipient agencies in child nutrition programs if FNS determines that the charge would not provide for distribution of donated foods in the most efficient and cost-effective manner, or may otherwise impact recipient agencies negatively. In such case, the distributing agency would be required to adjust the proposed amount or the level of service provided in its distribution charge, or consider other distribution options. FNS may also require the distributing agency to submit documentation to justify the efficiency and cost-effectiveness of its storage and distribution system at other times, and may require the distributing agency to re-evaluate such system in order to ensure compliance with the requirements in this part.
§ 250.14 Storage and inventory management at the recipient agency level.
(a) Safe storage and control. Recipient agencies must provide facilities for the storage and control of donated foods that protect against theft, spoilage, damage, or other loss. Accordingly, such storage facilities must maintain donated foods in sanitary conditions, at the proper temperature and humidity, and with adequate air circulation. Recipient agencies must ensure that storage facilities comply with all Federal, State, or local requirements relative to food safety and health and procedures for responding to a food recall, as applicable, and obtain all required health inspections.
(b) Inventory management—household programs. Recipient agencies in household programs must store donated foods in a manner that permits them to be distinguished from other foods in storage, and must maintain a separate inventory record of donated foods. Such recipient agencies’ system of inventory management must ensure that donated foods are distributed to recipients in a timely manner that permits use of such foods while still in optimal condition. Such recipient agencies must notify the distributing agency of donated food losses and take further actions with respect to such food losses, as directed by the distributing agency.
(c) Inventory management—child nutrition programs and charitable institutions. Recipient agencies in child nutrition programs, and those receiving donated foods as charitable institutions, in accordance with § 250.67, are not required to store donated foods in a manner that distinguishes them from purchased foods or other foods, or to maintain a separate inventory record of donated foods—i.e., they may utilize single inventory management, as defined in § 250.2. For such recipient agencies, donated foods are subject to the same safeguards and effective management practices as other foods. Accordingly, recipient agencies in child nutrition programs and those receiving donated foods as charitable institutions (regardless of the inventory management system utilized), are not required to separately monitor and report donated food use, distribution, or loss to the distributing agency, unless there is evidence indicating that donated food loss has occurred as a result of theft or fraud.
(d) Transfer of donated foods to another recipient agency. A recipient agency operating a household program must request approval from the distributing agency to transfer donated foods at its storage facilities to another recipient agency. The distributing agency may approve such transfer to another recipient agency in the same household program (e.g., the transfer of TEFAP foods from one food pantry to another) without FNS approval. However, the distributing agency must receive FNS approval to permit a recipient agency in a household program to transfer donated foods to a recipient agency in a different program (e.g., the transfer of TEFAP foods from a food pantry to a CSFP local agency), even if the same recipient agency administers both programs. A recipient agency operating a child nutrition program, or receiving donated foods as a charitable institution, in accordance with § 250.67, may transfer donated foods to another recipient agency or charitable organization without approval from the distributing agency or FNS. However, the recipient agency must still maintain records of donated food inventories.
(e) Commercial storage facilities. Recipient agencies may obtain the services of commercial storage facilities to store and distribute donated foods, but must do so in compliance with procurement requirements in 2 CFR part 200, subpart D, and USDA implementing regulations at 2 CFR parts 400 and 416, as applicable. Recipient agencies must ensure that commercial storage facilities comply with all of the applicable requirements in this section regarding the storage and inventory management of donated foods.
§ 250.15 Out-of-condition donated foods, food recalls, and complaints.
(a) Out-of-condition donated foods at the distributing agency level. The distributing agency must ensure that donated foods that are out-of-condition, as defined in § 250.2, at any of its storage facilities are removed, destroyed, or otherwise disposed of, in accordance with FNS instruction and State or local requirements pertaining to food safety and health. The distributing agency must obtain an inspection of donated foods by State or local health authorities to determine their safety and condition, as necessary, or as directed by FNS. Out-of-condition donated foods may be sold (e.g., to a salvage company), if permitted by FNS and State or local laws or regulations.
(b) Out-of-condition donated foods at the recipient agency level. Recipient agencies in household programs must report out-of-condition donated foods at their storage facilities to the distributing agency, in accordance with § 250.14(b), and must ensure that such donated foods are removed, destroyed, or otherwise disposed of, in accordance with FNS instruction and State or local requirements pertaining to food safety and health. The distributing agency must ensure that such recipient agencies obtain an inspection of donated foods by State or local health authorities to determine their safety and condition, as necessary, or as directed by FNS. For charitable institutions, in accordance with § 250.67, and recipient agencies in child nutrition programs, donated foods must be treated as other foods when safety is in question. Consequently, such recipient agencies must comply with State or local requirements in determining the safety of foods (including donated foods), and in their destruction or other disposition. However, they are not required to report such actions to the distributing agency.
(c) Food recalls. The distributing or recipient agency, as appropriate, must follow all applicable Federal, State or local requirements for donated foods subject to a food recall, as this term is defined in § 250.2. Further, in the event of a recall, Departmental guidance is provided, including procedures or instructions for all parties in responding to a food recall, replacement of recalled donated foods, and reimbursement of specific costs incurred as a result of such actions.
(d) Complaints relating to donated foods. The distributing agency must inform recipient agencies of the preferred method of receiving complaints regarding donated foods. Complaints received from recipients, recipient agencies, or other entities relating to donated foods must be resolved in an expeditious manner, and in accordance with applicable requirements in this part. However, the distributing agency may not dispose of any donated food that is the subject of a complaint prior to guidance and authorization from FNS. Any complaints regarding product quality or specifications, or suggested product improvements, must be submitted to FNS through the established FNS donated foods complaint system for tracking purposes. If complaints may not be resolved at the State level, the distributing agency must provide information regarding the complaint to FNS. The distributing agency must maintain a record of its investigations and other actions with respect to complaints relating to donated foods.
§ 250.16 Claims and restitution for donated food losses.
(a) Distributing agency responsibilities. The distributing agency must ensure that restitution is made for the loss of donated foods, or for the loss or improper use of funds provided for, or obtained as an incident of, the distribution of donated foods. The distributing agency must identify, and seek restitution from, parties responsible for the loss, and implement corrective actions to prevent future losses.
(b) FNS claim actions. FNS may initiate and pursue claims against the distributing agency or other entities for the loss of donated foods, or for the loss or improper use of funds provided for, or obtained as an incident of, the distribution of donated foods. FNS may also initiate and pursue claims against the distributing agency for failure to take required claim actions against other parties. FNS may, on behalf of the Department, compromise, forgive, suspend, or waive a claim. FNS may, at its option, require assignment to it of any claim arising from the distribution of donated foods.
§ 250.17 Use of funds obtained incidental to donated food distribution.
(a) Distribution charge. The distributing agency must use funds obtained from the distribution charge imposed on recipient agencies in child nutrition programs, in accordance with § 250.13(b), to meet the costs of storing and distributing donated foods or related administrative costs, consistent with the limitations on the use of funds provided under a Federal grant in 2 CFR part 200, subparts D and E, and USDA implementing regulations at 2 CFR parts 400 and 416. The distributing agency must maintain such funds in an operating account, separate from other funds obtained incidental to donated food distribution. The amount of funds maintained at any time in the operating account may not exceed the distributing agency’s highest expenditure from that account over any three-month period in the previous school or fiscal year, unless the distributing agency receives FNS approval to maintain a larger amount of funds in such account. Unless such approval is granted, funds in excess of the established limit must be used to reduce the distribution charge imposed on recipient agencies, or to provide appropriate reimbursement to such agencies. The distributing agency may not use funds obtained from the distribution charge to purchase foods to replace donated food losses or to pay claims to make restitution for donated food losses.
(b) Processing and food service management company contracts. School food authorities must use funds obtained from processors in processing of donated foods into end products (e.g., through rebates for the value of such donated foods), or from food service management companies in crediting for the value of donated foods received, in support of the nonprofit school food service, in accordance with § 210.14 of this chapter. Other recipient agencies must use such funds in accordance with the requirements in paragraph (c) of this section.
(c) Claims and other sources. The distributing agency must ensure that funds collected in payment of claims for donated food losses are used only for the payment of expenses of the food distribution program. The first priority for the use of funds collected in a claim for the loss of donated foods is the purchase of replacement foods for use in the program in which the loss occurred. If the purchase of replacement foods is not feasible, funds collected in a claim for the loss of donated foods must be used to pay allowable administrative costs incurred in the storage and distribution of donated foods. The distributing agency, or recipient agency, must use funds obtained from sources incidental to donated food distribution (except as otherwise indicated in this section) to pay administrative costs incurred in the storage and distribution of donated foods, consistent with the limitations on the use of funds provided under a Federal grant in 2 CFR part 200, subparts D and E, and USDA implementing regulations at 2 CFR parts 400 and 416. The distributing agency must maintain funds obtained from claims and other sources included in this paragraph (c) in a donated food account (separate from the operating account maintained in accordance with paragraph (a) of this section), and must obtain FNS prior approval for any single deposit into, or expenditure from, such account in excess of $25,000. Distributing and recipient agencies must maintain records of funds obtained and expended in accordance with this paragraph (c). Examples of funds applicable to the provisions in this paragraph (c) include funds accrued from:
(1) The salvage of out-of-condition donated foods.
(2) The sale of donated food containers, pallets, or packing materials.
(3) Payments by processors for failure to meet processing yields or other cause.
(d) Prohibitions. The distributing agency may not use funds obtained incidental to donated food distribution to meet State matching requirements for Federal administrative funds provided in household programs, or in place of State Administrative Expense (SAE) funds provided in accordance with 7 CFR part 235.
(e) Buy American. When funds obtained in accordance with this section are used to purchase foods in the commercial market, a distributing or recipient agency in the continental United States, and in Hawaii, must, to the maximum extent practical, purchase only domestic foods or food products. Such requirement is also applicable to food purchases made with the cash-in-lieu-of-donated foods provided in NSLP and CACFP, in accordance with §§ 250.56(e) and 250.61(c). For the purposes of this section, domestic foods or food products are:
(1) Agricultural commodities that are produced in the United States; or
(2) Food products that are processed in the United States substantially using agricultural commodities that are produced in the United States.
§ 250.18 Reporting requirements.
(a) Inventory and distribution of donated foods. The distributing agency must submit to FNS reports relating to the inventory and distribution of donated foods in this paragraph (a) or in other regulations applicable to specific programs. Such reports must be submitted in accordance with the timeframes established for each respective form. For donated foods received in FDPIR, the distributing agency must submit form FNS-152, Monthly Distribution of Donated Foods to Family Units. For donated foods received in TEFAP, NSLP, or other child nutrition programs, the distributing agency must submit form FNS-155, the Inventory Management Register.
(b) Processor performance. Processors must submit performance reports and other supporting documentation, as required by the distributing agency or by FNS, in accordance with § 250.37(a), to ensure compliance with requirements in this part.
(c) Disasters and situations of distress. The distributing agency must submit to FNS a report of the types and amounts of donated foods used from distributing or recipient agency storage facilities in disasters and situations of distress, and a request for replacement of such foods, using electronic form FNS-292A, Report of Commodity Distribution for Disaster Relief, in accordance with §§ 250.69 and 250.70. The report must be submitted within 45 days of the termination of such assistance.
(d) Other information. The distributing agency must submit other information, as requested by FNS, in order to ensure compliance with requirements in this part. For example, FNS may require the distributing agency to submit information with respect to its assessment of the distribution charge, or to justify the efficiency and cost-effectiveness of its distribution system, in accordance with § 250.13(c) and (d).
§ 250.19 Recordkeeping requirements.
(a) Required records. Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required in this part or in other Departmental regulations, as applicable. In addition, distributing agencies must keep a record of the value of donated foods each of its school food authorities receives, in accordance with § 250.58(e), and records to demonstrate compliance with the professional standards for distributing agency directors established in § 235.11(g) of this chapter. Processors must also maintain records documenting the sale of end products to recipient agencies, including the sale of such end products by distributors, and must submit monthly performance reports, in accordance with subpart C of this part and with any other recordkeeping requirements included in their agreements. Specific recordkeeping requirements relating to the use of donated foods in contracts with food service management companies are included in § 250.54. Failure of the distributing agency, recipient agency, processor, or other entity to comply with recordkeeping requirements must be considered prima facie evidence of improper distribution or loss of donated foods and may result in a claim against such party for the loss or misuse of donated foods, in accordance with § 250.16, or in other sanctions or corrective actions.
(b) Retention of records. Records relating to requirements for donated foods must be retained for a period of three years from the close of the fiscal or school year to which they pertain. However, records pertaining to claims or audits that remain unresolved in this period of time must be retained until such actions have been resolved.
§ 250.20 Audit requirements.
(a) Requirements for distributing and recipient agencies. Audit requirements for State or local government agencies and nonprofit organizations that receive Federal awards or grants (including distributing and recipient agencies under this part) are included in 2 CFR part 200, subpart F and appendix XI, Compliance Supplement, and USDA implementing regulations at 2 CFR part 400. In accordance with such regulations, the value of Federal grants or awards expended in a fiscal year determine if the distributing or recipient agency is required to obtain an audit in that year. The value of donated foods must be considered as part of the Federal grants or awards in determining if an audit is required. FNS provides guidance for distributing and recipient agencies in valuing donated foods for audit purposes, and in determining whether an audit must be obtained.
(b) Requirements for processors. In-State processors must obtain an independent certified public accountant (CPA) audit in the first year that they receive donated foods for processing, while multi-State processors must obtain such an audit in each of the first two years that they receive donated foods for processing. After this initial requirement period, in-State and multi-State processors must obtain an independent CPA audit at a frequency determined by the average value of donated foods received for processing per year, as indicated in this paragraph (b). The value of donated foods used in determining if an audit is required must be the contract value of the donated foods, as defined in § 250.2. The audit must determine that the processor’s performance is in compliance with the requirements in this part, and must be conducted in accordance with procedures in the FNS Audit Guide for Processors. All processors must pay for audits required in this paragraph (b). An in-State or multi-State processor must obtain an audit:
(1) Annually, if it receives, on average, more than $5,000,000 in donated foods for processing per year;
(2) Every two years, if it receives, on average, between $1,000,000 and $5,000,000 in donated foods for processing per year; or
(3) Every three years, if it receives, on average, less than $1,000,000 in donated foods for processing per year.
(c) Post-audit actions required of processors. In-State processors must submit a copy of the audit to the distributing agency for review by December 31st of each year in which an audit is required. The distributing agency must ensure that in-State processors provide a corrective action plan with timelines for correcting deficiencies identified in the audit, and must ensure that such deficiencies are corrected. Multi-State processors must submit a copy of the audit, and a corrective action plan with timelines for correcting deficiencies identified in the audit, as appropriate, to FNS for review by December 31st of each year in which an audit is required. FNS may conduct an audit or investigation of a processor to ensure correction of deficiencies, in accordance with § 250.3(b).
(d) Failure to meet audit requirements. If a distributing agency or recipient agency fails to obtain the required audit, or fails to correct deficiencies identified in the audit, FNS may withhold, suspend, or terminate the Federal award. If an in-State processor fails to obtain the required audit, or fails to correct deficiencies identified in the audit, a distributing or recipient agency may terminate the processing agreement, and may not extend or renew such an agreement. Additionally, FNS may prohibit the further distribution of donated foods to such processor. If a multi-State processor fails to obtain a required audit, or fails to correct deficiencies identified in the audit, FNS may terminate the processing agreement. Additionally, FNS may prohibit the further distribution of donated foods to such processor.
§ 250.21 Distributing agency reviews.
(a) Scope of review requirements. The distributing agency must ensure that subdistributing agencies, recipient agencies, and other entities comply with applicable requirements in this part, and in other Federal regulations, through the on-site reviews required in paragraph (b) of this section, and the review of required reports or audits. However, the distributing agency is not responsible for the review of school food authorities and other recipient agencies in child nutrition programs. The State administering agency is responsible for the review of such recipient agencies, in accordance with review requirements of part 210 of this chapter.
(b) On-site reviews. The distributing agency must conduct an on-site review of:
(1) Charitable institutions, whenever the distributing agency identifies actual or probable deficiencies in the use of donated foods by such institutions, through audits, investigations, complaints, or any other information;
(2) Storage facilities at the distributing agency level (including commercial storage facilities under contract with the distributing or subdistributing agency), on an annual basis; and
(3) Subdistributing and recipient agencies in CSFP, TEFAP, and FDPIR, in accordance with 7 CFR parts 247, 251, and 253, respectively.
(c) Identification and correction of deficiencies. The distributing agency must inform each subdistributing agency, recipient agency, or other entity of any deficiencies identified in its reviews, and recommend specific actions to correct such deficiencies. The distributing agency must ensure that such agencies or entities implement corrective actions to correct deficiencies in a timely manner.
§ 250.22 Distributing agency performance standards.
(a) Performance standards. The distributing agency must meet the basic performance standards included in this paragraph (a) in the ordering, distribution, processing, if applicable, and control of donated foods. Some of the performance standards apply only to distributing agencies that distribute donated foods in NSLP or other child nutrition programs, as indicated. However, the identification of specific performance standards does not diminish the responsibility of the distributing agency to meet other requirements in this part. In meeting basic performance standards, the distributing agency must:
(1) Provide recipient agencies with information on donated food availability, assistance levels, values, product specifications, and processing options, as requested;
(2) Implement a request-driven ordering system, in accordance with § 250.10(a), and, for child nutrition programs, § 250.58(a);
(3) Offer school food authorities in NSLP, at a minimum, the commodity offer value of donated foods, in accordance with § 250.58;
(4) Provide for the storage, distribution, and control of donated foods in accordance with all Federal, State, or local requirements relating to food safety and health;
(5) Provide for the distribution of donated foods in the most efficient and cost-effective manner, including, to the extent practical, direct shipments from vendors to recipient agencies or processors, and the use of split shipments;
(6) Use SAE funds, or other Federal or State funds, as available, in paying State storage and distribution costs for child nutrition programs, and impose a distribution charge on recipient agencies in child nutrition programs only to the extent that such funds are insufficient to meet applicable costs;
(7) Provide for the processing of donated foods, at the request of school food authorities, in accordance with subpart C of this part, including the testing of end products with school food authorities, and the solicitation of acceptability input, when procuring end products on behalf of school food authorities or otherwise limiting the procurement of end products; and
(8) Provide recipient agencies information regarding the preferred method for submission of donated foods complaints to the distributing agency and act expeditiously to resolve submitted complaints.
(b) Corrective action plan. The distributing agency must submit a corrective action plan to FNS whenever it is found to be substantially out of compliance with the performance standards in paragraph (a) of this section, or with other requirements in this part. The plan must identify the corrective actions to be taken, and the timeframe for completion of such actions. The plan must be submitted to FNS within 60 days after the distributing agency receives notification from FNS of a deficiency.
(c) Termination or suspension. FNS may terminate or suspend all, or part, of the distributing agency’s participation in the distribution of donated foods, or in a food distribution program, for failure to comply with requirements in this part, with other applicable Federal regulations, or with its written agreement with FNS. FNS may also take other actions, as appropriate, including prosecution under applicable Federal statutes.
Subpart C—Processing of Donated Foods
§ 250.30 Processing of donated foods into end products.
(a) Purpose of processing donated foods. Donated foods are most commonly provided to processors to process into approved end products for use in school lunch programs or other food services provided by recipient agencies. The ability to divert donated foods for processing provides recipient agencies with more options for using donated foods in their programs. For example, donated foods such as whole chickens or chicken parts may be processed into precooked grilled chicken strips for use in the National School Lunch Program. In some cases, donated foods are provided to processors to prepare meals or for repackaging. Use of a commercial facility to repackage donated foods, or to use donated foods in the preparation of meals, is considered processing in this part.
(b) Agreement requirement. The processing of donated foods must be performed in accordance with an agreement between the processor and FNS, between the processor and the distributing agency, or, if allowed by the distributing agency, between the processor and a recipient agency or subdistributing agency. However, a processing agreement will not obligate any party to provide donated foods to a processor for processing. The agreements described below are required in addition to, not in lieu of, competitively procured contracts required in accordance with § 250.31. The processing agreement must be signed by an authorized individual for the processor. The different types of processing agreements are described in this section.
(c) National Processing Agreement. A multi-State processor must enter into a National Processing Agreement with FNS in order to process donated foods into end products in accordance with end product data schedules approved by FNS. FNS also holds and manages such processor’s performance bond or letter of credit under its National Processing Agreement, in accordance with § 250.32. FNS does not itself procure or purchase end products under a National Processing Agreement. A multi-State processor must also enter into a State Participation Agreement with the distributing agency in order to sell nationally approved end products in the State, in accordance with paragraph (d) of this section.
(d) State Participation Agreement. The distributing agency must enter into a State Participation Agreement with a multi-State processor to permit the sale of end products produced under the processor’s National Processing Agreement to eligible recipient agencies in the State or to directly purchase such end products. The distributing agency may include other State-specific processing requirements in its State Participation Agreement, such as the methods of end product sales permitted, in accordance with § 250.36, or the use of labels attesting to fulfillment of meal pattern requirements in child nutrition programs. The distributing agency must utilize the following criteria in its selection of processors with which it enters into agreements. These criteria will be reviewed by the appropriate FNS Regional Office during the management evaluation review of the distributing agency.
(1) The nutritional contribution provided by end products;
(2) The marketability or acceptability of end products;
(3) The means by which end products will be distributed;
(4) Price competitiveness of end products and processing yields of donated foods;
(5) Any applicable labeling requirements; and
(6) The processor’s record of ethics and integrity, and capacity to meet regulatory requirements.
(e) In-State Processing Agreement. A distributing agency must enter into an In-State Processing Agreement with an in-State processor to process donated foods into finished end products, unless it permits recipient agencies to enter into Recipient Agency Processing Agreements for such purpose, in accordance with paragraph (f) of this section. Under an In-State Processing Agreement, the distributing agency approves end product data schedules (except red meat and poultry) submitted by the processor, holds and manages the processor’s performance bond or letter of credit, in accordance with § 250.32, and assures compliance with other processing requirements. The distributing agency may also purchase the finished end products for distribution to eligible recipient agencies in the State under an In-State Processing Agreement, or may permit recipient agencies to purchase such end products, in accordance with applicable procurement requirements. In the latter case, the In-State Processing Agreement is often called a “master agreement.” A distributing agency that procures end products on behalf of recipient agencies, or that limits recipient agencies’ access to the procurement of specific end products through its master agreements, must utilize the following criteria in its selection of processors with which it enters into agreements. These criteria will be reviewed by the appropriate FNS Regional Office during the management evaluation review of the distributing agency.
(1) The nutritional contribution provided by end products;
(2) The marketability or acceptability of end products;
(3) The means by which end products will be distributed;
(4) Price competitiveness of end products and processing yields of donated foods;
(5) Any applicable labeling requirements; and
(6) The processor’s record of ethics and integrity, and capacity to meet regulatory requirements.
(f) Recipient Agency Processing Agreement. The distributing agency may permit a recipient agency to enter into an agreement with an in-State processor to process donated foods and to purchase the finished end products in accordance with a Recipient Agency Processing Agreement. A recipient agency may also enter into a Recipient Agency Processing Agreement on behalf of other recipient agencies, in accordance with an agreement between the parties. The distributing agency may also delegate a recipient agency to approve end product data schedules or select nationally approved end product data schedules, review in-State processor performance reports, manage the performance bond or letter of credit of an in-State processor, and monitor other processing activities under a Recipient Agency Processing Agreement. All such activities must be performed in accordance with the requirements of this part. All Recipient Agency Processing Agreements must be reviewed and approved by the distributing agency. All recipient agencies must utilize the following criteria in its selection of processors with which it enters into agreements:
(1) The nutritional contribution provided by end products;
(2) The marketability or acceptability of end products;
(3) The means by which end products will be distributed;
(4) Price competitiveness of end products and processing yields of donated foods;
(5) Any applicable labeling requirements; and
(6) The processor’s record of ethics and integrity, and capacity to meet regulatory requirements.
(g) Ensuring acceptability of end products. A distributing agency that procures end products on behalf of recipient agencies, or that otherwise limits recipient agencies’ access to the procurement of specific end products, must provide for testing of end products to ensure their acceptability by recipient agencies, prior to entering into processing agreements. End products that have previously been tested, or that are otherwise determined to be acceptable, need not be tested. However, such a distributing agency must monitor product acceptability on an ongoing basis.
(h) Prohibition against subcontracting. A processor may not assign any processing activities under its processing agreement or subcontract to another entity to perform any aspect of processing, without the specific written consent of the other party to the agreement (i.e., distributing or recipient agency, or FNS, as appropriate). The distributing agency may, for example, provide the required consent as part of its State Participation Agreement or In-State Processing Agreement with the processor.
(i) Agreements between processors and distributors. A processor providing end products containing donated foods to a distributor must enter into a written agreement with the distributor. The agreement must reference, at a minimum, the financial liability (i.e., who must pay) for the replacement value of donated foods, not less than monthly end product sales reporting frequency, requirements under § 250.11, and the applicable value pass through system to ensure that the value of donated foods and finished end products are properly credited to recipient agencies. Distributing agencies can set additional requirements.
(j) Duration of agreements. In-State Processing Agreements and Recipient Agency Processing Agreements may be up to five years in duration. State Participation Agreements may be permanent. National Processing Agreements are permanent. Amendments to any agreements may be made, as needed, with the concurrence of both parties to the agreement. Such amendments will be effective for the duration of the agreement, unless otherwise indicated.
§ 250.31 Procurement requirements.
(a) Applicability of Federal procurement requirements. Distributing and recipient agencies must comply with the requirements in 2 CFR part 200 and part 400, as applicable, in purchasing end products, distribution, or other processing services from processors. Distributing and recipient agencies may use procurement procedures that conform to applicable State or local laws and regulations, but must ensure compliance with the procurement requirements in 2 CFR part 200 and part 400, as applicable.
(b) Required information in procurement documents. In all procurements of processed end products containing USDA donated foods, procurement documents must include the following information:
(1) The price to be charged for the end product or other processing service;
(2) The method of end product sales that will be utilized and assurance that crediting for donated foods will be performed in accordance with the applicable requirements for such method of sales in § 250.36;
(3) The value of the donated food in the end products; and
(4) The location for the delivery of the end products.
§ 250.32 Protection of donated food value.
(a) Performance bond or irrevocable letter of credit. The processor must obtain a performance bond or an irrevocable letter of credit to protect the value of donated foods to be received for processing prior to the delivery of the donated foods to the processor. The processor must provide the performance bond or letter of credit to the distributing or recipient agency, in accordance with its In-State or Recipient Agency Processing Agreement. However, a multi-State processor must provide the performance bond or letter of credit to FNS, in accordance with its National Processing Agreement. For multi-State processors, the minimum amount of the performance bond or letter of credit must be sufficient to cover at least 75 percent of the value of donated foods in the processor’s physical or book inventory, as determined annually and at the discretion of FNS for processors under National Processing Agreements. For multi-state processors in their first year of participation in the processing program, the amount of the performance bond or letter of credit must be sufficient to cover 100 percent of the value of donated foods, as determined annually, and at the discretion of FNS. The surety company from which a bond is obtained must be listed in the most current Department of Treasury’s Listing of Approved Sureties (Department Circular 570).
(b) Calling in the performance bond or letter of credit. The distributing or recipient agency must call in the performance bond or letter of credit whenever a processor’s lack of compliance with this part, or with the terms of the In-State or Recipient Agency Processing Agreement, results in a loss of donated foods to a distributing or recipient agency and the processor fails to make restitution or respond to a claim action initiated to recover the loss. Similarly, FNS will call in the performance bond or letter of credit in the same circumstances, in accordance with National Processing Agreements, and will ensure that any monies recovered are reimbursed to distributing agencies for losses of entitlement foods.
§ 250.33 Ensuring processing yields of donated foods.
(a) End product data schedules. The processor must submit an end product data schedule, in a standard electronic format dictated by FNS, for approval before it may process donated foods into end products. For In-State Processing Agreements, the end product data schedule must be approved by the distributing agency and, for products containing donated red meat and poultry, the end product data schedule must also be approved by the Department. For National Processing Agreements, the end product data schedule must be approved by the Department. An end product data schedule must be submitted, and approved, for each new end product that a processor wishes to provide or for a previously approved end product in which the ingredients (or other pertinent information) have been altered. On the end product data schedule, the processor must describe its processing of donated food into an end product, including the following information:
(1) A description of the end product;
(2) The types and quantities of donated foods included;
(3) The types and quantities of other ingredients included;
(4) The quantity of end product produced; and
(5) The processing yield of donated food, which may be expressed as the quantity (pounds or cases) of donated food needed to produce a specific quantity of end product or as the percentage of raw donated food versus the quantity returned in the finished end product.
(b) Processing yields of donated foods. All end products must have a processing yield of donated foods associated with its production and this processing yield must be indicated on its end product data schedule. The processing yield options are limited to 100 percent yield, guaranteed yield, and standard yield.
(1) Under 100 percent yield, the processor must ensure that 100 percent of the raw donated food is returned in the finished end product. The processor must replace any processing loss of donated food with commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food. The processor must demonstrate such replacement by reporting reductions in donated food inventories on performance reports by the amount of donated food contained in the finished end product rather than the amount that went into production. The Department may approve an exception if a processor experiences a significant manufacturing loss.
(2) Under guaranteed yield, the processor must ensure that a specific quantity of end product (i.e., number of cases) will be produced from a specific quantity of donated food (i.e., pounds), as determined by the parties to the processing agreement, and, for In-State Processing Agreements, approved by the Department. If necessary, the processor must use commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food to provide the guaranteed number of cases of end product to the distributing or recipient agency, as appropriate. The guaranteed yield must be indicated on the end product data schedule.
(3) Under standard yield, the processor must ensure that a specific quantity of end product (i.e., number of cases), as determined by the Department, will be produced from a specific quantity of donated food. The established standard yield is higher than the yield the processor could achieve under normal commercial production and serves to reward those processors that can process donated foods most efficiently. If necessary, the processor must use commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food to provide the number of cases required to meet the standard yield to the distributing or recipient agency, as appropriate. The standard yield must be indicated on the end product data schedule.
(c) Compensation for loss of donated foods. The processor must compensate the distributing or recipient agency, as appropriate, for the loss of donated foods, or for the loss of commercially purchased foods substituted for donated foods. Such loss may occur, for example, if the processor fails to meet the required processing yield of donated food or fails to produce end products that meet required specifications, if donated foods are spoiled, damaged, or otherwise adulterated at a processing facility, or if end products are improperly distributed. To compensate for such loss, the processor must:
(1) Replace the lost donated food or commercial substitute with commercially purchased food of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food; or
(2) Return end products that are wholesome but do not meet required specifications to production for processing into the requisite quantity of end products that meet the required specifications (commonly called rework products); or
(3) If the purchase of replacement foods or the reprocessing of products that do not meet the required specifications is not feasible, the processor may, with FNS, distributing agency, or recipient agency approval, dependent on which entity maintains the agreement with the processor, pay the distributing or recipient agency, as appropriate, for the replacement value of the donated food or commercial substitute.
(d) Credit for sale of by-products. The processor must credit the distributing or recipient agency, as appropriate, for the sale of any by-products produced in the processing of donated foods. The processor must credit for the net value of such sale, or the market value of the by-products, after subtraction of any documented expenses incurred in preparing the by-product for sale. Crediting must be achieved through invoice reduction or by another means of crediting.
(e) Labeling requirements. The processor must ensure that all end product labels meet Federal labeling requirements. A processor that claims end products fulfill meal pattern requirements in child nutrition programs must comply with the procedures required for approval of labels of such end products.
§ 250.34 Substitution of donated foods.
(a) Substitution of commercially purchased foods for donated foods. Unless its agreement specifically stipulates that the donated foods must be used in processing, the processor may substitute commercially purchased foods for donated foods that are delivered to it from a USDA vendor. The commercially purchased food must be of the same generic identity, of U.S. origin, and equal or better in all USDA procurement specifications than the donated food. Commercially purchased beef, pork, or poultry must meet the same specifications as donated product, including inspection, grading, testing, and humane handling standards and must be approved by the Department in advance of substitution. The processor may choose to make the substitution before the actual receipt of the donated food. However, the processor assumes all risk and liability if, due to changing market conditions or other reasons, the Department’s purchase of donated foods and their delivery to the processor is not feasible. Commercially purchased food substituted for donated food must meet the same processing yield requirements in § 250.33 that would be required for the donated food.
(b) Prohibition against substitution and other requirements for backhauled donated foods. The processor may not substitute or commingle donated foods that are backhauled to it from a distributing or recipient agency’s storage facility. The processor must process backhauled donated foods into end products for sale and delivery to the distributing or recipient agency that provided them and not to any other agency. Distributing or recipient agencies must purchase end products utilizing donated foods backhauled to their contracted processor. The processor may not provide payment for backhauled donated foods in lieu of processing.
(c) Grading requirements. The processing of donated beef, pork, and poultry must occur under Federal Quality Assessment Division grading, which is conducted by the Department’s Agricultural Marketing Service. Federal Quality Assessment Division grading ensures that processing is conducted in compliance with substitution and yield requirements and in conformance with the end product data schedule. The processor is responsible for paying the cost of acceptance service grading. The processor must maintain grading certificates and other records necessary to document compliance with requirements for substitution of donated foods and with other requirements of this subpart.
(d) Waiver of grading requirements. The distributing agency may waive the grading requirement for donated beef, pork or poultry in accordance with one of the conditions listed in this paragraph (d). However, grading may only be waived on a case by case basis (e.g., for a particular production run); the distributing agency may not approve a blanket waiver of the requirement. Additionally, a waiver may only be granted if a processor’s past performance indicates that the quality of the end product will not be adversely affected. The conditions for granting a waiver include:
(1) That even with ample notification time, the processor cannot secure the services of a grader;
(2) The cost of the grader’s service in relation to the value of donated beef, pork or poultry being processed would be excessive; or
(3) The distributing or recipient agency’s urgent need for the product leaves insufficient time to secure the services of a grader.
(e) Use of substituted donated foods. The processor may use donated foods that have been substituted with commercially purchased foods in other processing activities conducted at its facilities.
§ 250.35 Storage, food safety, quality control, and inventory management.
(a) Storage and quality control. The processor must ensure the safe and effective storage of donated foods, including compliance with the general storage requirements in § 250.12, and must maintain an effective quality control system at its processing facilities. The processor must maintain documentation to verify the effectiveness of its quality control system and must provide such documentation upon request.
(b) Food safety requirements. The processor must ensure that all processing of donated foods is conducted in compliance with all Federal, State, and local requirements relative to food safety.
(c) Commingling of donated foods and commercially purchased foods. The processor may commingle donated foods and commercially purchased foods, unless the processing agreement specifically stipulates that the donated foods must be used in processing, and not substituted, or the donated foods have been backhauled from a recipient agency. However, such commingling must be performed in a manner that ensures the safe and efficient use of donated foods, as well as compliance with substitution requirements in § 250.34 and with reporting of donated food inventories on performance reports, as required in § 250.37. The processor must also ensure that commingling of processed end products and other food products, either at its facility or at the facility of a commercial distributor, ensures the sale and delivery of end products that meet the processing requirements in this subpart—e.g., by affixing the applicable USDA certification stamp to the exterior shipping containers of such end products.
(d) Limitation on donated food inventories. Inventories of donated food at processors may not be in excess of a six-month supply, based on an average amount of donated foods utilized, unless a higher level has been specifically approved by the distributing agency on the basis of a written justification submitted by the processor. Distributing agencies are not permitted to submit food orders for processors reporting no sales activity during the prior year’s contract period unless documentation is submitted by the processor which outlines specific plans for donated food drawdown, product promotion, or sales expansion. When inventories are determined to be excessive for a State or processor, e.g., more than six months or exceeding the established protection, FNS may require the transfer of inventory and/or entitlement to another State or processor to ensure utilization prior to the end of the school year.
(e) Reconciliation of excess donated food inventories. If, at the end of the school year, the processor has donated food inventories in excess of a six-month supply, the distributing agency may, in accordance with paragraph (d) of this section, permit the processor to carry over such excess inventory into the next year of its agreement, if it determines that the processor may efficiently store and process such quantity of donated foods. The distributing agency may also direct the processor to transfer such donated foods to other recipient agencies, or to transfer them to other distributing agencies, in accordance with § 250.12(e). However, if these actions are not practical, the distributing agency must require the processor to pay it for the donated foods held in excess of allowed levels at the replacement value of the donated foods.
(f) Disposition of donated food inventories upon agreement termination. When an agreement terminates, and is not extended or renewed, the processor must take one of the actions indicated in this paragraph (f) with respect to remaining donated food inventories, as directed by the distributing agency or recipient agency, as appropriate. The processor must pay the cost of transporting any donated foods when the agreement is terminated at the processor’s request or as a result of the processor’s failure to comply with the requirements of this part. The processor must:
(1) Return the donated foods, or commercially purchased foods that meet the substitution requirements in § 250.34, to the distributing or recipient agency, as appropriate; or
(2) Transfer the donated foods, or commercially purchased foods that meet the substitution requirements in § 250.34, to another distributing or recipient agency with which it has a processing agreement; or
(3) If returning or transferring the donated foods, or commercially purchased foods that meet the substitution requirements in § 250.34, is not feasible, the processor may, with FNS approval, pay the distributing or recipient agency, as appropriate, for the donated foods, at the contract value or replacement value of the donated foods, whichever is higher.
§ 250.36 End product sales and crediting for the value of donated foods.
(a) Methods of end product sales. To ensure that the distributing or recipient agency, as appropriate, receives credit for the value of donated foods contained in end products, the sale of end products must be performed using one of the methods of end product sales, also known as value pass through systems, described in this section. All systems of sales utilized must provide clear documentation of crediting for the value of the donated foods contained in the end products.
(b) Refund or rebate. Under this system, the processor sells end products to the distributing or recipient agency, as appropriate, at the commercial, or gross, price and must provide a refund or rebate for the value of the donated food contained in the end products. The processor may also deliver end products to a commercial distributor for sale to distributing or recipient agencies under this system. In both cases, the processor must provide a refund to the appropriate agency within 30 days of receiving a request for a refund from that agency. The refund request must be in writing, which may be transmitted via email or other electronic submission.
(c) Direct discount. Under this system, the processor must sell end products to the distributing or recipient agency, as appropriate, at a net price that incorporates a discount from the commercial case price for the value of donated food contained in the end products.
(d) Indirect discount. Under this system, also known as net off invoice, the processor delivers end products to a commercial distributor, which must sell the end products to an eligible distributing or recipient agency, as appropriate, at a net price that incorporates a discount from the commercial case price for the value of donated food contained in the end products. The processor must require the distributor to notify it of such sales, at least on a monthly basis, through automated sales reports or other electronic or written submission. The processor then compensates the distributor for the discount provided for the value of the donated food in its sale of end products. Recipient agencies should closely monitor invoices to ensure correct discounts are applied.
(e) Fee-for-service. (1) Under this system, the processor must sell end products to the distributing or recipient agency, as appropriate, at a fee-for-service, which includes all costs to produce the end products not including the value of the donated food used in production. Three basic types of fee-for-service are used:
(i) Direct shipment and invoicing from the processor to the recipient agency;
(ii) Fee-for-service through a distributor, where the processor ships multiple pallets of product to a distributor with a breakout of who owns what products; and
(iii) What is commonly known as Modified Fee-for-service, when the recipient agency has an authorized agent bill them for the total case price.
(2) The processor must identify any charge for delivery of end products separately from the fee-for-service on its invoice. If the processor provides end products sold under fee-for-service to a distributor for delivery to the distributing or recipient agency, the processor must identify the distributor’s delivery charge separately from the fee-for-service on its invoice to the appropriate agency or may permit the distributor to bill the agency separately for the delivery of end products. The processor must require that the distributor notify it of such sales, at least on a monthly basis, through automated sales reports, email, or other electronic or written submission. When the recipient agency procures storage and distribution of processed end products separately from the processing of donated foods, the recipient agency may provide the distributor written approval to act as the recipient agency’s authorized agent for the total case price (i.e., including the fee-for-service and the delivery charge), in accordance with § 250.11(e).
(f) Approved alternative method. The processor or distributor may sell end products under an alternative method approved by FNS and the distributing agency that ensures crediting for the value of donated foods contained in the end products.
(g) Donated food value used in crediting. In crediting for the value of donated foods in end product sales, the contract value of the donated foods, as defined in § 250.2, must be used.
(h) Ensuring sale and delivery of end products to eligible recipient agencies. In order to ensure the sale of end products to eligible recipient agencies, the distributing agency must provide the processor with a list of recipient agencies eligible to purchase end products, along with the quantity of raw donated food that is to be delivered to the processor for processing on behalf of each recipient agency. In order to ensure that the distributor sells end products only to eligible recipient agencies, the processor must provide the distributor with a list of eligible recipient agencies and either:
(1) The quantities of approved end products that each recipient agency is eligible to receive; or
(2) The quantity of donated food allocated to each recipient agency and the raw donated food (pounds or cases) needed per case of each approved end product.
§ 250.37 Reports, records, and reviews of processor performance.
(a) Performance reports. The processor must submit a performance report to the distributing agency (or to the recipient agency, in accordance with a Recipient Agency Processing Agreement) on a monthly basis, which must include the information listed in this paragraph (a). Performance reports must be submitted not later than 30 days after the end of the reporting period. The performance report must include the following information for the reporting period, with year-to-date totals:
(1) A list of all recipient agencies purchasing end products;
(2) The quantity of donated foods in inventory at the beginning of the reporting period;
(3) The quantity of donated foods received;
(4) The quantity of donated foods transferred to the processor from another entity, or transferred by the processor to another entity;
(5) The quantity of donated foods losses;
(6) The quantity of end products delivered to each eligible recipient agency;
(7) The quantity of donated foods remaining at the end of the reporting period;
(8) A certification statement that sufficient donated foods are in inventory or on order to account for the quantities needed for production of end products;
(9) Grading certificates, as applicable; and
(10) Other supporting documentation, as required by the distributing agency or recipient agency.
(b) Reporting reductions in donated food inventories. The processor must report reductions in donated food inventories on performance reports only after sales of end products have been made, or after sales of end products through distributors have been documented. However, when a recipient agency has contracted with a distributor to act as an authorized agent, the processor may report reductions in donated food inventories upon delivery and acceptance by the contracted distributor, in accordance with § 250.11(e). Documentation of distributor sales must be through the distributing or recipient agency’s request for a refund (under a refund or rebate system) or through receipt of the distributor’s automated sales reports or other electronic or written reports submitted to the processor (under an indirect discount system or under a fee-for-service system).
(c) Summary performance report. Along with the submission of performance reports to the distributing agency, a multi-State processor must submit a summary performance report to FNS, on a monthly basis and in a format established by FNS, in accordance with its National Processing Agreement. The summary report must include an accounting of the processor’s national inventory of donated foods, including the information listed in this paragraph (c). The report must be submitted not later than 30 days after the end of the reporting period; however, the final performance report must be submitted within 60 days of the end of the reporting period. The summary performance report must include the following information for the reporting period:
(1) The total donated food inventory by State and the national total at the beginning of the reporting period;
(2) The total quantity of donated food received by State, with year-to-date totals, and the national total of donated food received;
(3) The total quantity of donated food reduced from inventory by State, with year-to-date totals, and the national total of donated foods reduced from inventory; and
(4) The total quantity of donated foods remaining in inventory by State, and the national total, at the end of the reporting period.
(d) Recordkeeping requirements for processors. The processor must maintain the following records relating to the processing of donated foods:
(1) End product data schedules and summary end product data schedules, as applicable;
(2) Receipt of donated foods shipments;
(3) Production, sale, and delivery of end products, including sales through distributors;
(4) All agreements with distributors;
(5) Remittance of refunds, invoices, or other records that assure crediting for donated foods in end products and for sale of byproducts;
(6) Documentation of Federal or State inspection of processing facilities, as appropriate, and of the maintenance of an effective quality control system;
(7) Documentation of substitution of commercial foods for donated foods, including grading certificates, as applicable;
(8) Waivers of grading requirements, as applicable; and
(9) Required reports.
(e) Recordkeeping requirements for the distributing agency. The distributing agency must maintain the following records relating to the processing of donated foods:
(1) In-State Processing Agreements and State Participation Agreements;
(2) End product data schedules or summary end product data schedules, as applicable;
(3) Performance reports;
(4) Grading certificates, as applicable;
(5) Documentation that supports information on the performance report, as required by the distributing agency (e.g., sales invoices or copies of refund payments);
(6) Copies of audits of in-State processors and documentation of the correction of any deficiencies identified in such audits;
(7) The receipt of end products, as applicable; and
(8) Procurement documents, as applicable.
(f) Recordkeeping requirements for the recipient agency. The recipient agency must maintain the following records relating to the processing of donated foods:
(1) The receipt of end products purchased from processors or distributors;
(2) Crediting for the value of donated foods contained in end products;
(3) Recipient Agency Processing Agreements, as applicable, and, in accordance with such agreements, other records included in paragraph (e) of this section, if not retained by the distributing agency; and
(4) Procurement documents, as applicable.
(g) Review requirements for the distributing agency. The distributing agency must review performance reports and other records that it must maintain, in accordance with the requirements in paragraph (e) of this section, to ensure that the processor:
(1) Receives donated food shipments;
(2) Delivers end products to eligible recipient agencies, in the types and quantities for which they are eligible;
(3) Meets the required processing yields for donated foods; and
(4) Accurately reports donated food inventory activity and maintains inventories within approved levels.
§ 250.38 Provisions of agreements.
(a) National Processing Agreement. A National Processing Agreement includes provisions to ensure that a multi-State processor complies with all of the applicable requirements in this part relating to the processing of donated foods.
(b) Required provisions for State Participation Agreement. A State Participation Agreement with a multi-State processor must include the following provisions:
(1) Contact information for all appropriate parties to the agreement;
(2) The effective dates of the agreement;
(3) A list of recipient agencies eligible to receive end products;
(4) Summary end product data schedules, with end products that may be sold in the State;
(5) Assurance that the processor will not substitute or commingle backhauled donated foods and will provide end products processed from such donated foods only to the distributing or recipient agency from which the foods were received;
(6) Any applicable labeling requirements;
(7) Other processing requirements implemented by the distributing agency, such as the specific method(s) of end product sales permitted;
(8) A statement that the agreement may be terminated by either party upon 30 days’ written notice;
(9) A statement that the agreement may be terminated immediately if the processor has not complied with its terms and conditions; and
(10) A statement requiring the processor to enter into an agreement with any and all distributors delivering processed end products to recipient agencies that ensures adequate data sharing, reporting, and crediting of donated foods, in accordance with § 250.30(i).
(c) Required provisions of the In-State Processing Agreement. An In-State Processing Agreement must include the following provisions or attachments:
(1) Contact information for all appropriate parties to the agreement;
(2) The effective dates of the agreement;
(3) A list of recipient agencies eligible to receive end products, as applicable;
(4) In the event that subcontracting is allowed, the specific activities that will be performed under subcontracts;
(5) Assurance that the processor will provide a performance bond or irrevocable letter of credit to protect the value of donated foods it is expected to maintain in inventory, in accordance with § 250.32;
(6) End product data schedules for all end products, with all required information, in accordance with § 250.33(a);
(7) Assurance that the processor will meet processing yields for donated foods, in accordance with § 250.33;
(8) Assurance that the processor will compensate the distributing or recipient agency, as appropriate, for any loss of donated foods, in accordance with § 250.33(c);
(9) Any applicable labeling requirements;
(10) Assurance that the processor will meet requirements for the substitution of commercially purchased foods for donated foods, including grading requirements, in accordance with § 250.34;
(11) Assurance that the processor will not substitute or commingle backhauled donated foods and will provide end products processed from such donated foods only to the recipient agency from which the foods were received, as applicable;
(12) Assurance that the processor will provide for the safe and effective storage of donated foods, meet inspection requirements, and maintain an effective quality control system at its processing facilities;
(13) Assurance that the processor will report donated food inventory activity and maintain inventories within approved levels;
(14) Assurance that the processor will return, transfer, or pay for, donated food inventories remaining upon termination of the agreement, in accordance with § 250.35(f);
(15) The specific method(s) of end product sales permitted, in accordance with § 250.36;
(16) Assurance that the processor will credit recipient agencies for the value of all donated foods, in accordance with § 250.36;
(17) Assurance that the processor will submit performance reports and meet other reporting and recordkeeping requirements, in accordance with § 250.37;
(18) Assurance that the processor will obtain independent CPA audits and will correct any deficiencies identified in such audits, in accordance with § 250.20;
(19) A statement that the distributing agency, subdistributing agency, or recipient agency, the Comptroller General, the Department of Agriculture, or their duly authorized representatives, may perform on-site reviews of the processor’s operation to ensure that all activities relating to donated foods are performed in accordance with the requirements in 7 CFR part 250;
(20) A statement that the agreement may be terminated by either party upon 30 days’ written notice;
(21) A statement that the agreement may be terminated immediately if the processor has not complied with its terms and conditions;
(22) A statement that extensions or renewals of the agreement, if applicable, are contingent upon the fulfillment of all agreement provisions; and
(23) A statement requiring the processor to enter into an agreement with any and all distributors delivering processed end products to recipient agencies that ensures adequate data sharing, reporting, and crediting of donated foods, in accordance with § 250.30(i).
(d) Required provisions for Recipient Agency Processing Agreement. The Recipient Agency Processing Agreement must contain the same provisions as an In-State Processing Agreement, to the extent that the distributing agency permits the recipient agency to perform activities normally performed by the distributing agency under an In-State Processing Agreement (e.g., approval of end product data schedules, review of performance reports, or management of the performance bond). However, a list of recipient agencies eligible to receive end products need not be included unless the Recipient Agency Processing Agreement represents more than one (e.g., a cooperative) recipient agency.
(e) Noncompliance with processing requirements. If the processor has not complied with processing requirements, the distributing or recipient agency, as appropriate, may choose to not extend or renew the agreement and may immediately terminate it.
§ 250.39 Miscellaneous provisions.
(a) Waiver of processing requirements. The Food and Nutrition Service may waive any of the requirements contained in this part for the purpose of conducting demonstration projects to test program changes designed to improve the processing of donated foods.
(b) Processing activity guidance. Distributing agencies must develop and provide a processing manual or similar procedural material for guidance to contracting agencies, recipient agencies, and processors. Distributing agencies must revise these materials as necessary to reflect policy and regulatory changes. This guidance material must be provided to contracting agencies, recipient agencies, and processors at the time of the approval of the initial agreement by the distributing agency, when there have been regulatory or policy changes which necessitate changes in the guidance materials, and upon request. The manual must include, at a minimum, statements of the distributing agency’s policies and procedures regarding:
(1) Contract approval;
(2) Monitoring and review of processing activities;
(3) Recordkeeping and reporting requirements;
(4) Inventory controls; and
(5) Refund applications.
(c) Guidance or information. Guidance or information relating to the processing of donated foods is included on the FNS website or may otherwise be obtained from FNS.
Subpart D—Donated Foods in Contracts With Food Service Management Companies
§ 250.50 Contract requirements and procurement.
(a) Contract requirements. Prior to donated foods being made available to a food service management company, the recipient agency must enter into a contract with the food service management company. The contract must ensure that all donated foods received for use by the recipient agency in the school or fiscal year, as applicable, are used in the recipient agency’s food service, or that commercially purchased foods are used in place of such donated foods only in accordance with the requirements in § 250.51(d). Contracts between recipient agencies in child nutrition programs and food service management companies must also ensure compliance with other requirements in this subpart relating to donated foods, as well as other Federal requirements in 7 CFR parts 210, 220, 225, or 226, as applicable. Contracts between other recipient agencies—i.e., charitable institutions and recipient agencies utilizing TEFAP foods—and food service management companies are not subject to the other requirements in this subpart.
(b) Types of contracts. Recipient agencies may enter into a fixed-price or a cost-reimbursable contract with a food service management company, except that recipient agencies in CACFP are prohibited from entering into cost-reimbursable contracts, in accordance with 7 CFR part 226. Under a fixed-price contract, the recipient agency pays a fixed cost per meal provided or a fixed cost for a certain time period. Under a cost-reimbursable contract, the food service management company charges the recipient agency for food service operating costs, and also charges fixed fees for management or services.
(c) Procurement requirements. The recipient agency must meet Departmental procurement requirements in 7 2 CFR part 200, subpart D, and USDA implementing regulations at 2 CFR parts 400 and 416, as applicable, in obtaining the services of a food service management company, as well as applicable requirements in 7 CFR parts 210, 220, 225, or 226. The recipient agency must ensure that procurement documents, as well as contract provisions, include any donated food activities that a food service management company is to perform, such as those activities listed in paragraph (d) of this section. The procurement and contract must also specify the method used to determine the donated food values to be used in crediting, or the actual values assigned, in accordance with § 250.51. The method used to determine the donated food values may not be established through a post-award negotiation, or by any other method that may directly or indirectly alter the terms and conditions of the procurement or contract.
(d) Activities relating to donated foods. A food service management company may perform specific activities relating to donated foods, such as those listed in this paragraph (d), in accordance with procurement documents and its contract with the recipient agency. Such activities may also include the procurement of processed end products on behalf of the recipient agency. Such procurement must ensure compliance with the requirements in subpart C of this part and with the provisions of the distributing or recipient agency’s processing agreements, and must ensure crediting of the recipient agency for the value of donated foods contained in such end products at the processing agreement value. Although the food service management company may procure processed end products on behalf of the recipient agency, it may not itself enter into the processing agreement with the processor required in subpart C of this part. Other donated food activities that the food service management company may perform include:
(1) Preparing and serving meals;
(2) Ordering or selection of donated foods, in coordination with the recipient agency, and in accordance with § 250.58(a);
(3) Storage and inventory management of donated foods, in accordance with § 250.52; and
(4) Payment of processing fees or submittal of refund requests to a processor on behalf of the recipient agency, or remittance of refunds for the value of donated foods in processed end products to the recipient agency, in accordance with the requirements in subpart C of this part.
§ 250.51 Crediting for, and use of, donated foods.
(a) Crediting for donated foods. In both fixed-price and cost-reimbursable contracts, the food service management company must credit the recipient agency for the value of all donated foods received for use in the recipient agency’s meal service in a school year or fiscal year (including both entitlement and bonus foods). Such requirement includes crediting for the value of donated foods contained in processed end products if the food service management company’s contract requires it to:
(1) Procure processed end products on behalf of the recipient agency; or
(2) Act as an intermediary in passing the donated food value in processed end products on to the recipient agency.
(b) Method and frequency of crediting. The recipient agency may permit crediting for the value of donated foods through invoice reductions, refunds, discounts, or other means. However, all forms of crediting must provide clear documentation of the value received from the donated foods—e.g., by separate line item entries on invoices. If provided for in a fixed-price contract, the recipient agency may permit a food service management company to pre-credit for donated foods. In pre-crediting, a deduction for the value of donated foods is included in the established fixed price per meal. However, the recipient agency must ensure that the food service management company provides an additional credit for any donated foods not accounted for in the fixed price per meal—e.g., for donated foods that are not made available until later in the year. In cost-reimbursable contracts, crediting may be performed by disclosure; i.e., the food service management company credits the recipient agency for the value of donated foods by disclosing, in its billing for food costs submitted to the recipient agency, the savings resulting from the receipt of donated foods for the billing period. In all cases, the recipient agency must require crediting to be performed not less frequently than annually, and must ensure that the specified method of valuation of donated foods permits crediting to be achieved in the required time period. A school food authority must also ensure that the method, and timing, of crediting does not cause its cash resources to exceed the limits established in 7 CFR 210.9(b)(2).
(c) Donated food values required in crediting. The recipient agency must ensure that, in crediting it for the value of donated foods, the food service management company uses the donated food values determined by the distributing agency, in accordance with § 250.58(e), or, if approved by the distributing agency, donated food values determined by an alternate means of the recipient agency’s choosing. For example, the recipient agency may, with the approval of the distributing agency, specify that the value will be the average price per pound for a food, or for a group or category of foods (e.g., all frozen foods or cereal products), as listed in market journals over a specified period of time. However, the method of determining the donated food values to be used in crediting must be included in procurement documents and in the contract, and must result in the determination of actual values; e.g., the average USDA purchase price for the period of the contract with the food vendor, or the average price per pound listed in market journals over a specified period of time. Negotiation of such values is not permitted. Additionally, the method of valuation must ensure that crediting may be achieved in accordance with paragraph (b) of this section, and at the specific frequency established in procurement documents and in the contract.
(d) Use of donated foods. The food service management company must use all donated beef, pork, and all processed end products, in the recipient agency’s food service, and must use all other donated foods, or commercially purchased foods of the same generic identity, of U.S. origin, and of equal or better quality than the donated foods, in the recipient agency’s food service (unless the contract specifically stipulates that the donated foods, and not such commercial substitutes, be used).
§ 250.52 Storage and inventory management of donated foods.
(a) General requirements. The food service management company must meet the requirements for the safe storage and control of donated foods in § 250.14(a).
(b) Storage and inventory with commercially purchased foods. The food service management company may store and inventory donated foods together with foods it has purchased commercially for the school food authority’s use (unless specifically prohibited in the contract). It may store and inventory such foods together with other commercially purchased foods only to the extent that such a system ensures compliance with the requirements for the use of donated foods in § 250.51(d)—i.e., use all donated beef and pork, and all end products in the food service, and use all other donated foods or commercially purchased foods of the same generic identity, of U.S. origin, and of equal or better quality than the donated foods, in the food service. Additionally, under cost-reimbursable contracts, the food service management company must ensure that its system of inventory management does not result in the recipient agency being charged for donated foods.
(c) Disposition of donated foods and credit reconciliation upon termination of the contract. When a contract terminates, and is not extended or renewed, the food service management company must return all unused donated beef, pork, and processed end products, and must, at the recipient agency’s discretion, return other unused donated foods. The recipient agency must ensure that the food service management company has credited it for the value of all donated foods received for use in the recipient agency’s meal service in a school year or fiscal year, as applicable.
§ 250.53 Contract provisions.
(a) Required contract provisions in fixed-price contracts. The following provisions relating to the use of donated foods must be included, as applicable, in a recipient agency’s fixed-price contract with a food service management company. Such provisions must also be included in procurement documents. The required provisions are:
(1) A statement that the food service management company must credit the recipient agency for the value of all donated foods received for use in the recipient agency’s meal service in the school year or fiscal year (including both entitlement and bonus foods), and including the value of donated foods contained in processed end products, in accordance with the contingencies in § 250.51(a);
(2) The method and frequency by which crediting will occur, and the means of documentation to be utilized to verify that the value of all donated foods has been credited;
(3) The method of determining the donated food values to be used in crediting, in accordance with § 250.51(c), or the actual donated food values;
(4) Any activities relating to donated foods that the food service management company will be responsible for, in accordance with § 250.50(d), and assurance that such activities will be performed in accordance with the applicable requirements in 7 CFR part 250;
(5) A statement that the food service management company will use all donated beef and pork products, and all processed end products, in the recipient agency’s food service;
(6) A statement that the food service management company will use all other donated foods, or will use commercially purchased foods of the same generic identity, of U.S. origin, and of equal of better quality than the donated foods, in the recipient agency’s food service;
(7) Assurance that the procurement of processed end products on behalf of the recipient agency, as applicable, will ensure compliance with the requirements in subpart C of 7 CFR part 250 and with the provisions of distributing or recipient agency processing agreements, and will ensure crediting of the recipient agency for the value of donated foods contained in such end products at the processing agreement value;
(8) Assurance that the food service management company will not itself enter into the processing agreement with the processor required in subpart C of 7 CFR part 250;
(9) Assurance that the food service management company will comply with the storage and inventory requirements for donated foods;
(10) A statement that the distributing agency, subdistributing agency, or recipient agency, the Comptroller General, the Department of Agriculture, or their duly authorized representatives, may perform onsite reviews of the food service management company’s food service operation, including the review of records, to ensure compliance with requirements for the management and use of donated foods;
(11) A statement that the food service management company will maintain records to document its compliance with requirements relating to donated foods, in accordance with § 250.54(b); and
(12) A statement that extensions or renewals of the contract, if applicable, are contingent upon the fulfillment of all contract provisions relating to donated foods.
(b) Required contract provisions in cost-reimbursable contracts. A cost-reimbursable contract must include the same provisions as those required for a fixed-price contract in paragraph (a) of this section. Such provisions must also be included in procurement documents. However, a cost-reimbursable contract must also contain a statement that the food service management company will ensure that its system of inventory management will not result in the recipient agency being charged for donated foods.
§ 250.54 Recordkeeping and reviews.
(a) Recordkeeping requirements for the recipient agency. The recipient agency must maintain the following records relating to the use of donated foods in its contract with the food service management company:
(1) The donated foods and processed end products received and provided to the food service management company for use in the recipient agency’s food service;
(2) Documentation that the food service management company has credited it for the value of all donated foods received for use in the recipient agency’s food service in the school or fiscal year, including, in accordance with the requirements in § 250.51(a), the value of donated foods contained in processed end products; and
(3) The actual donated food values used in crediting.
(b) Recordkeeping requirements for the food service management company. The food service management company must maintain the following records relating to the use of donated foods in its contract with the recipient agency:
(1) The donated foods and processed end products received from, or on behalf of, the recipient agency, for use in the recipient agency’s food service;
(2) Documentation that it has credited the recipient agency for the value of all donated foods received for use in the recipient agency’s food service in the school or fiscal year, including, in accordance with the requirements in § 250.51(a), the value of donated foods contained in processed end products; and
(3) Documentation of its procurement of processed end products on behalf of the recipient agency, as applicable.
(c) Review requirements for the recipient agency. The recipient agency must ensure that the food service management company is in compliance with the requirements of this part through its monitoring of the food service operation, as required in 7 CFR parts 210, 225, or 226, as applicable. The recipient agency must also conduct a reconciliation at least annually (and upon termination of the contract) to ensure that the food service management company has credited it for the value of all donated foods received for use in the recipient agency’s food service in the school or fiscal year, including, in accordance with the requirements in § 250.51(a), the value of donated foods contained in processed end products.
(d) Departmental reviews of food service management companies. The Department may conduct reviews of food service management company operations, as necessary, to ensure compliance with the requirements of this part with respect to the use and management of donated foods.
Subpart E—National School Lunch Program (NSLP) and Other Child Nutrition Programs
§ 250.56 Provision of donated foods in NSLP.
(a) Distribution of donated foods in NSLP. The Department provides donated foods in NSLP to distributing agencies. Distributing agencies provide donated foods to school food authorities that participate in NSLP for use in serving nutritious lunches or other meals to schoolchildren in their nonprofit school food service. The distributing agency must confirm the participation of school food authorities in NSLP with the State administering agency (if different from the distributing agency). In addition to requirements in this part relating to donated foods, distributing agencies and school food authorities in NSLP must adhere to Federal regulations in 7 CFR part 210, as applicable.
(b) Types of donated foods distributed. The Department purchases a wide variety of foods for distribution in NSLP each school year. A list of available foods is posted on the FNS Web site, for access by distributing agencies and school food authorities. In addition to Section 6 foods (42 U.S.C. 1755) as described in paragraph (c) of this section, the distributing agency may also receive Section 14 donated foods (42 U.S.C. 1762(a)), and donated foods under Section 32 (7 U.S.C. 612c), Section 416 (7 U.S.C. 1431), or Section 709 (7 U.S.C. 1446a-1), as available.
(c) National per-meal value of donated foods. For each school year, the distributing agency receives, at a minimum, the national per-meal value of donated foods, as established by Section 6(c) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1755(c)), multiplied by the number of reimbursable lunches served in the State in the previous school year. The donated foods provided in this manner are referred to as Section 6 foods, or entitlement foods. The national per-meal value is adjusted each year to reflect changes in the Bureau of Labor Statistic’s Producer Price Index for Foods Used in Schools and Institutions, in accordance with the Richard B. Russell National School Lunch Act. The adjusted value is published in a notice in the
(d) Donated food values used to credit distributing agency entitlement levels. FNS uses the average price (cost per pound) for USDA purchases of donated food made in a contract period to credit distributing agency entitlement levels.
(e) Cash in lieu of donated foods. States that phased out their food distribution facilities prior to July 1, 1974, are permitted to choose to receive cash in lieu of the donated foods to which they would be entitled in NSLP, in accordance with the Richard B. Russell National School Lunch Act (42 U.S.C. 1765) and with 7 CFR part 240.
§ 250.57 Commodity schools.
(a) Categorization of commodity schools. Commodity schools are schools that operate a nonprofit school food service in accordance with 7 CFR part 210, but receive additional donated food assistance rather than the general cash payment available to them under Section 4 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1753). In addition to requirements in this part relating to donated foods, commodity schools must adhere to Federal regulations in 7 CFR part 210, as applicable.
(b) Value of donated foods for commodity schools. For participating commodity schools, the distributing agency receives donated foods valued at the sum of the national per-meal value and the value of the general cash payment available to it under Section 4 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1753), multiplied by the number of reimbursable lunches served by commodity schools in the previous school year. From the total value of donated food assistance for which it is eligible, a commodity school may elect to receive up to 5 cents per meal in cash to cover processing and handling expenses related to the use of donated foods. In addition to Section 6 and Section 14 foods under the Richard B. Russell National School Lunch Act (42 U.S.C. 1755 and 1762(a)), the distributing agency may also receive donated foods under Section 32 (7 U.S.C. 612c), Section 416 (7 U.S.C. 1431), or Section 709 (7 U.S.C. 1446a-1), as available, for commodity schools.
(a) Ordering and distribution of donated foods. The distributing agency must ensure that school food authorities are able to submit donated food orders through the FNS electronic donated foods ordering system, or through a comparable electronic food ordering system. The distributing agency must ensure that all school food authorities have the opportunity to provide input at least annually in determining the donated foods from the full list that are made available to them for ordering in the FNS electronic donated foods ordering system or other comparable electronic ordering system. The distributing agency must ensure distribution to school food authorities of all such ordered donated foods that may be distributed to them in a cost-effective manner (including the use of split shipments, as necessary), and that they may utilize efficiently and without waste.
(b) Value of donated foods offered to school food authorities. In accordance with Section 6(c) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1755(c)), the distributing agency must offer the school food authority, at a minimum, the national per-meal value of donated food assistance multiplied by the number of reimbursable lunches served by the school food authority in the previous school year. This is referred to as the commodity offer value. For a commodity school, the distributing agency must offer the sum of the national per-meal value of donated foods and the value of the general cash payment available to it under Section 4 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1753), multiplied by the number of reimbursable lunches served by the school in the previous school year. The school food authority may also receive bonus foods, as available, in addition to the Section 6 foods.
(c) Receipt of less donated foods than the commodity offer value. In certain cases, the school food authority may receive less donated foods than the commodity offer value in a school year. This “adjusted” value of donated foods is referred to as the adjusted assistance level. For example, the school food authority may receive an adjusted assistance level if:
(1) The distributing agency, in consultation with the school food authority, determines that the school food authority cannot efficiently utilize the commodity offer value of donated foods; or
(2) The school food authority does not order, or select, donated foods equal to the commodity offer value that can be cost-effectively distributed to it.
(d) Receipt of more donated foods than the commodity offer value. The school food authority may receive more donated foods than the commodity offer value if the distributing agency, in consultation with the school food authority, determines that the school food authority may efficiently utilize more donated foods than the commodity offer value, and more donated foods are available for distribution. This may occur, for example, if other school food authorities receive less than the commodity offer value of donated foods for one of the reasons described in paragraph (c) of this section.
(e) Donated food value in crediting. In meeting the commodity offer value of donated foods for the school food authority, the distributing agency must use the cost-per-pound donated food prices posted annually by USDA, the most recently published cost-per-pound price in the USDA donated foods catalog, and/or a rolling average of the USDA prices (average cost per pound). The distributing agency must credit the school food authority using the USDA purchase price (cost-per-pound), and update the price at least semi-annually to reflect the most recent USDA purchase price.
§ 250.59 Storage, control, and use of donated foods.
(a) Storage and inventory management. The distributing agency must ensure compliance with requirements in §§ 250.12 and 250.13 in order to ensure the safe and effective storage and inventory management of donated foods, and their efficient and cost-effective distribution to school food authorities. The school food authority must ensure compliance with requirements in § 210.13 of this chapter and §§ 250.13 and 250.14 to ensure the safe and sanitary storage, inventory management, and use of donated foods and purchased foods. In accordance with § 250.14(c), the school food authority may commingle donated foods and purchased foods in storage and maintain a single inventory record of such commingled foods, in a single inventory management system.
(b) Use of donated foods in the nonprofit school food service. The school food authority must use donated foods, as much as is practical, in the lunches served to schoolchildren, for which they receive an established per-meal value of donated food assistance each school year. However, the school food authority may also use donated foods in other activities of the nonprofit school food service. Revenues received from such activities must accrue to the school food authority’s nonprofit school food service account, in accordance with § 210.14 of this chapter. Some examples of such activities in which donated foods may be used include:
(1) School breakfasts or other meals served in child nutrition programs;
(2) A la carte foods sold to schoolchildren;
(3) Meals served to adults directly involved in the operation and administration of the nonprofit school food service, and to other school staff; and
(4) Training in nutrition, health, food service, or general home economics instruction for students.
(c) Use of donated foods outside of the nonprofit school food service. The school food authority should not use donated foods in meals or other activities that do not benefit primarily schoolchildren, such as banquets or catered events. However, as their use in such activities may not always be avoided (e.g., if donated foods are commingled with purchased foods in a single inventory management system), the school food authority must ensure reimbursement to the nonprofit school food service for the value of donated foods used in such activities. When such reimbursement may not be based on actual usage of donated foods (e.g., in a single inventory management system), the school food authority must establish an alternate method of reimbursement—e.g., by including the current per-meal value of donated food assistance in the price charged for the meal or other activity.
(d) Use of donated foods in a contract with a food service management company. When the school food authority contracts with a food service management company to conduct the food service, in accordance with § 210.16 of this chapter, it must ensure compliance with requirements in subpart D of this part, which address the treatment of donated foods under such contract. The school food authority must also ensure compliance with the use of donated foods in paragraphs (b) and (c) of this section under its contract with a food service management company.
(e) School food authorities acting as a collective unit. Two or more school food authorities may conduct activities of the nonprofit school food service as a collective unit (e.g., in a school co-op or consortium), including activities relating to donated foods. Such activities must be conducted in accordance with a written agreement or contract between the parties. The school food authority collective unit is subject to the same requirements as a single school food authority in conducting such activities. For example, the school food authority collective unit may use a single inventory management system in its storage and control of purchased and donated foods.
§ 250.60 Child and Adult Care Food Program (CACFP).
(a) Distribution of donated foods in CACFP. The Department provides donated foods in CACFP to distributing agencies, which provide them to child care and adult care institutions participating in CACFP for use in serving nutritious lunches and suppers to eligible recipients. Distributing agencies and child care and adult care institutions must also adhere to Federal regulations in 7 CFR part 226, as applicable.
(b) Types and quantities of donated foods distributed. For each school year, the distributing agency receives, at a minimum, the national per-meal value of donated food assistance (or cash in lieu of donated foods) multiplied by the number of reimbursable lunches and suppers served in the State in the previous school year, as established in Section 6(c) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1755(c)). The national per-meal value is adjusted each year to reflect changes in the Bureau of Labor Statistic’s Producer Price Index for Foods Used in Schools and Institutions. The adjusted per-meal value is published in a notice in the
(c) Cash in lieu of donated foods. In accordance with the Richard B. Russell National School Lunch Act, and with 7 CFR part 226, the State administering agency must determine whether child care and adult care institutions participating in CACFP wish to receive donated foods or cash in lieu of donated foods, and ensure that they receive the preferred form of assistance. The State administering agency must inform the distributing agency (if a different agency) which institutions wish to receive donated foods and must ensure that such foods are provided to them. However, if the State administering agency, in consultation with the distributing agency, determines that distribution of such foods would not be cost-effective, it may, with the concurrence of FNS, provide cash payments to the applicable institutions instead.
(d) Use of donated foods in a contract with a food service management company. A child care or adult care institution may use donated foods in a contract with a food service management company to conduct its food service. The contract must meet the requirements in subpart D of this part with respect to donated foods, and must also meet requirements in 7 CFR part 226, 2 CFR part 200, subpart D and appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards, and USDA implementing regulations at 2 CFR parts 400 and 416, as applicable, with respect to the formation of such contracts.
(e) Applicability of other requirements in this subpart to CACFP. The requirements in this subpart relating to the ordering, storage and inventory management, and use of donated foods in NSLP, also apply to CACFP. However, in accordance with 7 CFR part 226, a child care or adult care institution that uses donated foods to prepare and provide meals to other such institutions is considered a food service management company.
§ 250.61 Summer Food Service Program (SFSP).
(a) Distribution of donated foods in SFSP. The Department provides donated foods in SFSP to distributing agencies, which provide them to eligible service institutions participating in SFSP for use in serving nutritious meals to needy children primarily in the summer months, in their nonprofit food service programs. Distributing agencies and service institutions in SFSP must also adhere to Federal regulations in 7 CFR part 225, as applicable.
(b) Types and quantities of donated foods distributed. The distributing agency receives donated foods available under Section 6 and Section 14 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1755 and 1762), and may also receive donated foods under Section 32 (7 U.S.C. 612c), Section 416 (7 U.S.C. 1431), or Section 709 (7 U.S.C. 1446a-1), as available, for distribution to eligible service institutions participating in SFSP. Section 6 donated foods are provided to distributing agencies in accordance with the number of meals served in the State in the previous school year that are eligible for donated food support, in accordance with 7 CFR part 225.
(c) Distribution of donated foods to service institutions in SFSP. The distributing agency provides donated food assistance to eligible service institutions participating in SFSP based on the number of meals served that are eligible for donated food support, in accordance with 7 CFR part 225.
(d) Use of donated foods in a contract with a food service management company. A service institution may use donated foods in a contract with a food service management company to conduct the food service. The contract must meet the requirements in subpart D of this part with respect to donated foods, and must also meet requirements in 7 CFR part 225, 2 CFR part 200, subpart D and appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards, and USDA implementing regulations at 2 CFR parts 400 and 416, as applicable, with respect to the formation of such contracts.
(e) Applicability of other requirements in this subpart to SFSP. The requirements in this subpart relating to the ordering, storage and inventory management, and use of donated foods in NSLP, also apply to SFSP.
Subpart F—Household Programs
§ 250.63 Commodity Supplemental Food Program (CSFP).
(a) Distribution of donated foods in CSFP. The Department provides donated foods in CSFP to the distributing agency (i.e., the State agency, in accordance with 7 CFR part 247) for further distribution in the State, in accordance with 7 CFR part 247. State agencies and recipient agencies (i.e., local agencies in 7 CFR part 247) must comply with the requirements of this part in the distribution, control, and use of donated foods in CSFP, to the extent that such requirements are not inconsistent with the requirements in 7 CFR part 247.
(b) Types of donated foods distributed. Donated foods distributed in CSFP include Section 4(a) foods, and donated foods provided under Section 32, Section 416, or Section 709, as available.
§ 250.64 The Emergency Food Assistance Program (TEFAP).
(a) Distribution of donated foods in TEFAP. The Department provides donated foods in TEFAP to the distributing agency (i.e., the State agency, in accordance with 7 CFR part 251) for further distribution in the State, in accordance with 7 CFR part 251. State agencies and recipient agencies must comply with the requirements of this part in the distribution, control, and use of donated foods, to the extent that such requirements are not inconsistent with the requirements in 7 CFR part 251.
(b) Types of donated foods distributed. Donated foods distributed in TEFAP include Section 27 foods, and donated foods provided under Section 32, Section 416, or Section 709, as available.
§ 250.65 Food Distribution Program on Indian Reservations (FDPIR).
(a) Distribution of donated foods in FDPIR. The Department provides donated foods in FDPIR to the distributing agency (i.e., the State agency, in accordance with 7 CFR parts 253 and 254, which may be an Indian Tribal Organization) for further distribution, in accordance with 7 CFR parts 253 and 254. The State agency must comply with the requirements of this part in the distribution, control, and use of donated foods, to the extent that such requirements are not inconsistent with the requirements in 7 CFR parts 253 and 254.
(b) Types of donated foods distributed. Donated foods distributed in FDPIR include Section 4(a) foods, and donated foods provided under Section 32, Section 416, or Section 709, as available.
§ 250.66 [Reserved]
Subpart G—Additional Provisions
§ 250.67 Charitable institutions.
(a) Distribution to charitable institutions. The Department provides donated foods to distributing agencies for distribution to charitable institutions, as defined in this part. A charitable institution must have a signed agreement with the distributing agency in order to receive donated foods, in accordance with § 250.12(b). However, the following organizations may not receive donated foods as charitable institutions:
(1) Schools, summer camps, service institutions, and child and adult care institutions that participate in child nutrition programs or as commodity schools; and
(2) Adult correctional institutions that do not conduct rehabilitation programs for a majority of inmates.
(b) Types of charitable institutions. Some types of charitable institutions that may receive donated foods, if they meet the requirements of this section, include:
(1) Hospitals or retirement homes;
(2) Emergency shelters, soup kitchens, or emergency kitchens;
(3) Elderly nutrition projects or adult day care centers;
(4) Schools, summer camps, service institutions, and child care institutions that do not participate in child nutrition programs; and
(5) Adult correctional institutions that conduct rehabilitation programs for a majority of inmates.
(c) Determining service to predominantly needy persons. To determine if a charitable institution serves predominantly needy persons, the distributing agency must use:
(1) Socioeconomic data of the area in which the organization is located, or of the clientele served by the organization;
(2) Data from other public or private social service agencies, or from State advisory boards, such as those established in accordance with 7 CFR 251.4(h)(4); or
(3) Other similar data.
(d) Types and quantities of donated foods distributed. A charitable institution may receive donated foods under Section 4(a), Section 32, Section 416, or Section 709, as available. The distributing agency must distribute donated foods to charitable institutions based on the quantities that each may effectively utilize without waste, and the total quantities available for distribution to such institutions.
(e) Contracts with food service management companies. A charitable institution may use donated foods in a contract with a food service management company. The contract must ensure that all donated foods received for use by the charitable institution in a fiscal year are used in the charitable institution’s food service. However, the charitable institution is not subject to the other requirements in subpart D of this part relating to the use of donated foods under such contracts.
§ 250.68 Nutrition Services Incentive Program (NSIP).
(a) Distribution of donated foods in NSIP. The Department provides donated foods in NSIP to State Units on Aging and their selected elderly nutrition projects for use in providing meals to elderly persons. NSIP is administered at the Federal level by DHHS’ Administration for Community Living (ACL), which provides an NSIP grant each year to State Units on Aging. The State agencies may choose to receive all, or part, of the grant as donated foods, on behalf of its elderly nutrition projects. The Department is responsible for the purchase of the donated foods and their delivery to State Units on Aging. ACL is responsible for transferring funds to the Department for the cost of donated food purchases and for expenses related to such purchases.
(b) Types and quantities of donated foods distributed. Each State Unit on Aging, and its elderly nutrition projects, may receive any types of donated foods available in food distribution or child nutrition programs, to the extent that such foods may be distributed cost-effectively. Each State Unit on Aging may receive donated foods with a value equal to its NSIP grant. Each State Unit on Aging and elderly nutrition project may also receive donated foods under Section 32, Section 416, and Section 709, as available, and under Section 14 (42 U.S.C. 1762(a)).
(c) Role of distributing agency. The Department delivers NSIP donated foods to distributing agencies, which distribute them to elderly nutrition projects selected by each State Unit on Aging. The distributing agency may only distribute donated foods to elderly nutrition projects with which they have signed agreements. The agreements must contain provisions that describe the roles of each party in ensuring that the desired donated foods are ordered, stored, and distributed in an effective manner.
(d) Donated food values used in crediting a State Unit on Aging’s NSIP grant. FNS uses the average price (cost per pound) for USDA purchases of a donated food made in a contract period in crediting a State Unit on Aging’s NSIP grant.
(e) Coordination between FNS and ACL. FNS and ACL coordinate their respective roles in NSIP through the execution of annual agreements. The agreement ensures that ACL transfers funds to FNS sufficient to purchase the donated foods requested by State Units on Aging, and to meet expenses related to such purchases. The agreement also authorizes FNS to carry over any such funds that are not used in the current fiscal year to make purchases of donated foods for the appropriate State Units on Aging in the following fiscal year.
§ 250.69 Disasters.
(a) Use of donated foods to provide congregate meals. The distributing agency may provide donated foods from current inventories, either at the distributing or recipient agency level, to a disaster organization (as defined in § 250.2), for use in providing congregate meals to persons in need of food assistance as a result of a Presidentially declared disaster or emergency (hereinafter referred to collectively as a “disaster”). FNS approval is not required for such use. However, the distributing agency must notify FNS that such assistance is to be provided, and the period of time that it is expected to be needed. The distributing agency may extend such period of assistance as needs dictate, but must notify FNS of such extension.
(b) Use of donated foods for distribution to households. Subject to FNS approval, the distributing agency may provide donated foods from current inventories, either at the distributing or recipient agency level, to a disaster organization, for distribution to households in need of food assistance because of a disaster. Such distribution may continue for the period that FNS has determined to be necessary to meet the needs of such households. However, households receiving disaster SNAP (D-SNAP) benefits are not eligible to receive such donated food assistance.
(c) Approval of disaster organization. Before distribution of donated foods to a disaster organization, the distributing agency must review and approve such organization’s application in accordance with applicable FNS guidance, which must be submitted to the distributing agency either electronically or in written form. The distributing agency must also submit such application to FNS for review and approval before permitting distribution of donated foods to households.
(1) The disaster organization’s application must, to the extent possible, include the following information:
(i) A description of the disaster situation;
(ii) The number of people requiring assistance;
(iii) The period of time for which donated foods are requested;
(iv) The quantity and types of food needed; and
(v) The number and location of sites where donated foods are to be used, to the extent that such information is known.
(2) In addition to the information required in paragraph (c)(1) of this section, disaster organizations applying to distribute donated foods to households must include the following information in their application:
(i) An explanation as to why such distribution is needed;
(ii) The method(s) of distribution available; and
(iii) A statement assuring that D-SNAP benefits and donated food assistance will not be provided simultaneously to individual households, and a description of the system that will be implemented to prevent such dual participation.
(d) Information from households. If the issuance of D-SNAP benefits has been approved, the distributing agency must ensure that the disaster organization obtains the following information from households receiving donated foods, and reports such information to the distributing agency:
(1) The name and address of the household members applying for assistance;
(2) The number of household members; and
(3) A statement from the head of the household certifying that the household is in need of food assistance, is not receiving D-SNAP benefits, and understands that the sale or exchange of donated foods is prohibited.
(e) Eligibility of emergency relief workers for congregate meals. The disaster organization may use donated foods to provide meals to any emergency relief workers at the congregate feeding site who are directly engaged in providing relief assistance.
(f) Reporting and recordkeeping requirements. The distributing agency must report to FNS the number and location of sites where donated foods are used in congregate meals or household distribution as these sites are established. The distributing agency must also report the types and amounts of donated foods from distributing or recipient agency storage facilities used in disaster assistance, utilizing form FNS-292A, Report of Commodity Distribution for Disaster Relief, which must be submitted electronically, within 45 days from the termination of disaster assistance. This form must also be used to request replacement of donated foods, in accordance with paragraph (g) of this section. The distributing agency must maintain records of reports and other information relating to disasters.
(g) Replacement of donated foods. In order to ensure replacement of donated foods used in disasters, the distributing agency must submit to FNS a request for such replacement, utilizing form FNS-292A, Report of Commodity Distribution for Disaster Relief, within 45 days following the termination of disaster assistance. The distributing agency may request replacement of foods used from inventories in which donated foods are commingled with other foods (i.e., at storage facilities of recipient agencies utilizing single inventory management), if the recipient agency received donated foods of the same type as the foods used during the year preceding the onset of the disaster assistance. FNS will replace such foods in the amounts used, or in the amount of like donated foods received during the preceding year, whichever is less.
(h) Reimbursement of transportation costs. In order to receive reimbursement for any costs incurred in transporting donated foods within the State, or from one State to another, for use in disasters, the distributing agency must submit a public voucher to FNS with documentation of such costs. FNS will review the request and reimburse the distributing agency.
§ 250.70 Situations of distress.
(a) Use of donated foods to provide congregate meals. The distributing agency may provide donated foods from current inventories, either at the distributing or recipient agency level, to a disaster organization, for use in providing congregate meals to persons in need of food assistance because of a situation of distress, as this term is defined in § 250.2. If the situation of distress results from a natural event (e.g., a hurricane, flood, or snowstorm), such donated food assistance may be provided for a period not to exceed 30 days, without the need for FNS approval. However, the distributing agency must notify FNS that such assistance is to be provided. FNS approval must be obtained to permit such donated food assistance for a period exceeding 30 days. If the situation of distress results from other than a natural event (e.g., an explosion), FNS approval is required to permit donated food assistance for use in providing congregate meals for any period of time.
(b) Use of donated foods for distribution to households. The distributing agency must receive FNS approval to provide donated foods from current inventories, either at the distributing or recipient agency level, to a disaster organization for distribution to households in need of food assistance because of a situation of distress. Such distribution may continue for the period of time that FNS determines necessary to meet the needs of such households. However, households receiving D-SNAP benefits are not eligible to receive such donated food assistance.
(c) Approval of disaster organizations. Before distribution of donated foods to a disaster organization, the distributing agency must review and approve such organization’s application in accordance with applicable FNS guidance, which must be submitted to the distributing agency either electronically or in written form. The distributing agency must also submit such application to FNS for review and approval before permitting distribution of donated foods in a situation of distress that is not the result of a natural event, or for any distribution of donated foods to households. The disaster organization’s application must, to the extent possible, include the information required in § 250.69(c).
(d) Information from households. If the issuance of D-SNAP benefits has been approved, the distributing agency must ensure that the disaster organization obtains the information in § 250.69(d) from households receiving donated foods, and reports such information to the distributing agency.
(e) Eligibility of emergency relief workers for congregate meals. The disaster organization may use donated foods to provide meals to any emergency relief workers at the congregate feeding site that are directly engaged in providing relief assistance.
(f) Reporting and recordkeeping requirements. The distributing agency must report to FNS the number and location of sites where donated foods are used in congregate meals or household distribution as these sites are established. The distributing agency must also report the types and amounts of donated foods from distributing or recipient agency storage facilities used in the situation of distress, utilizing form FNS-292A, Report of Commodity Distribution for Disaster Relief, which must be submitted electronically, within 45 days from the termination of assistance. This form must also be used to request replacement of donated foods, in accordance with paragraph (g) of this section. The distributing agency must maintain records of reports and other information relating to situations of distress.
(g) Replacement of donated foods. FNS will replace donated foods used in a situation of distress only to the extent that funds to provide for such replacement are available. The distributing agency must submit to FNS a request for replacement of such foods, utilizing form FNS-292A, Report of Commodity Distribution for Disaster Relief, which must be submitted electronically, within 45 days from the termination of assistance. The distributing agency may request replacement of foods used from inventories in which donated foods are commingled with other foods (i.e., at storage facilities of recipient agencies utilizing single inventory management), if the recipient agency received donated foods of the same type as the foods used during the year preceding the onset of the situation of distress. Subject to the availability of funds, FNS will replace such foods in the amounts used, or in the amount of like donated foods received during the preceding year, whichever is less.
(h) Reimbursement of transportation costs. In order to receive reimbursement for any costs incurred in transporting donated foods within the State, or from one State to another, for use in a situation of distress, the distributing agency must submit a public voucher to FNS with documentation of such costs. FNS will review the request and reimburse the distributing agency to the extent that funds are available.
§ 250.71 OMB control numbers.
Unless as otherwise specified in the table in this section, the information collection reporting and recordkeeping requirements in 7 CFR part 250 are accounted for in OMB control number 0584-0293.
| CFR Cite | OMB Control No. |
|---|---|
| § 250.4(a) | 0584-0067 |
| § 250.19(a) | 0584-0067, 0584-0293 |
| §§ 250.69(f) and (g) and 250.70(f) and (g) | 0584-0067, 0584-0293 |
PART 251—THE EMERGENCY FOOD ASSISTANCE PROGRAM
§ 251.1 General purpose and scope.
This part announces the policies and prescribes the regulations necessary to carry out certain provisions of the Emergency Food Assistance Act of 1983, (7 U.S.C. 612c note).
§ 251.2 Administration.
(a) Food and Nutrition Service. Within the United States Department of Agriculture (the “Department”), the Food and Nutrition Service (FNS) shall have responsibility for the distribution of food commodities and allocation of funds under the part.
(b) State agencies. Within the States, distribution to eligible recipient agencies and receipt of payments for storage and distribution shall be the responsibility of the State agency which has: (1) Been designated for such responsibility by the Governor or other appropriate State executive authority; and (2) entered into an agreement with the Department for such distribution and receipt in accordance with paragraph (c) of this section.
(c) Agreements—(1) Agreements between Department and States. Each State agency that distributes donated foods to eligible recipient agencies or receives payments for storage and distribution costs in accordance with § 251.8 must perform those functions pursuant to an agreement entered into with the Department. This agreement will be considered permanent, with amendments initiated by State agencies, or submitted by them at the Department’s request, all of which will be subject to approval by the Department.
(2) Agreements between State agencies and eligible recipient agencies, and between eligible recipient agencies. Prior to making donated foods or administrative funds available, State agencies must enter into a written agreement with eligible recipient agencies to which they plan to distribute donated foods and/or administrative funds. State agencies must ensure that eligible recipient agencies in turn enter into a written agreement with any eligible recipient agencies to which they plan to distribute donated foods and/or administrative funds before donated foods or administrative funds are transferred between any two eligible recipient agencies. All agreements entered into must contain the information specified in paragraph (d) of this section, and be considered permanent, with amendments to be made as necessary, except that agreements must specify that they may be terminated by either party upon 30 days’ written notice. State agencies must ensure that eligible recipient agencies provide, on a timely basis, by amendment to the agreement, or other written documents incorporated into the agreement by reference if permitted under paragraph (d) of this section, any information on changes in program administration, including any changes resulting from amendments to Federal regulations or policy.
(d) Contents of agreements between State agencies and eligible recipient agencies and between eligible recipient agencies. (1) Agreements between State agencies and eligible recipient agencies and between eligible recipient agencies must provide:
(i) That eligible recipient agencies agree to operate the program in accordance with the requirements of this part, and, as applicable, part 250 of this chapter; and
(ii) The name and address of the eligible recipient agency receiving commodities and/or administrative funds under the agreement.
(2) The following information must also be identified, either in the agreement or other written documents incorporated by reference in the agreement:
(i) If the State agency delegates the responsibility for any aspect of the program to an eligible recipient agency, each function for which the eligible recipient agency will be held responsible; except that in no case may State agencies delegate responsibility for establishing eligibility criteria for organizations in accordance with § 251.5(a), establishing eligibility criteria for recipients in accordance with § 251.5(b), or conducting reviews of eligible recipient agencies in accordance with § 251.10(e);
(ii) If the receiving eligible recipient agency is to be allowed to further distribute TEFAP commodities and/or administrative funds to other eligible recipient agencies, the specific terms and conditions for doing so, including, if applicable, a list of specific organizations or types of organizations eligible to receive commodities or administrative funds;
(iii) If the use of administrative funds is restricted to certain types of expenses pursuant to § 251.8(e)(2), the specific types of administrative expenses eligible recipient agencies are permitted to incur;
(iv) Any other conditions set forth by the State agency.
§ 251.3 Definitions.
(a) The terms used in this part that are defined in part 250 of this chapter have the meanings ascribed to them therein, unless a different meaning for such a term is defined herein.
(b) Charitable institution (which is defined differently in this part than in part 250 of this chapter) means an organization which—
(1) Is public, or
(2) Is private, possessing tax exempt status pursuant to § 251.5(a)(3); and
(3) Is not a penal institution (this exclusion also applies to correctional institutions which conduct rehabilitation programs); and
(4) Provides food assistance to needy persons.
(c) Distribution site means a location where the eligible recipient agency actually distributes commodities to needy persons for household consumption or serves prepared meals to needy persons under this part.
(d) Eligible recipient agency means an organization which—
(1) Is public, or
(2) Is private, possessing tax exempt status pursuant to § 251.5(a)(3); and
(3) Is not a penal institution; and
(4) Provides food assistance—
(i) Exclusively to needy persons for household consumption, pursuant to a means test established pursuant to § 251.5 (b), or
(ii) Predominantly to needy persons in the form of prepared meals pursuant to § 251.5(a)(2); and
(5) Has entered into an agreement with the designated State agency pursuant to § 251.2(c) for the receipt of commodities or administrative funds, or receives commodities or administrative funds under an agreement with another eligible recipient agency which has signed such an agreement with the State agency or another eligible recipient agency within the State pursuant to § 251.2(c); and
(6) Falls into one of the following categories:
(i) Emergency feeding organizations (including food banks, food pantries and soup kitchens);
(ii) Charitable institutions (including hospitals and retirement homes);
(iii) Summer camps for children, or child nutrition programs providing food service;
(iv) Nutrition projects operating under the Older Americans Act of 1965 (Nutrition Program for the Elderly), including projects that operate congregate Nutrition sites and projects that provide home-delivered meals; and
(v) Disaster relief programs.
(e) Emergency feeding organization means an eligible recipient agency which provides nutrition assistance to relieve situations of emergency and distress through the provision of food to needy persons, including low-income and unemployed persons. Emergency feeding organizations have priority over other eligible recipient agencies in the distribution of TEFAP commodities pursuant to § 251.4(h).
(f) Food bank means a public or charitable institution that maintains an established operation involving the provision of food or edible commodities, or the products of food or edible commodities, to food pantries, soup kitchens, hunger relief centers, or other food or feeding centers that, as an integral part of their normal activities, provide meals or food to feed needy persons on a regular basis.
(g) Food pantry means a public or private nonprofit organization that distributes food to low-income and unemployed households, including food from sources other than the Department of Agriculture, to relieve situations of emergency and distress.
(h) Formula means the formula used by the Department to allocate among States the commodities and funding available under this part. The amount of such commodities and funds to be provided to each State will be based on each State’s population of low-income and unemployed persons, as compared to national statistics. Each State’s share of commodities and funds shall be based 60 percent on the number of persons in households within the State having incomes below the poverty level and 40 percent on the number of unemployed persons within the State. The surplus commodities will be allocated to States on the basis of their weight (pounds), and the commodities purchased under section 214 of the Emergency Food Assistance Act of 1983 will be allocated on the basis of their value (dollars). In instances in which a State determines that it will not accept the full amount of its allocation of commodities purchased under section 214 of the Emergency Food Assistance Act of 1983, the Department will reallocate the commodities to other States on the basis of the same formula used for the initial allocation.
(i) State agency means the State government unit designated by the Governor or other appropriate State executive authority which has entered into an agreement with the United States Department of Agriculture under § 251.2(c).
(j) Soup kitchen means a public or charitable institution that, as an integral part of the normal activities of the institution, maintains an established feeding operation to provide food to needy homeless persons on a regular basis.
(k) Value of commodities distributed means the Department’s cost of acquiring commodities for distribution under this part.
§ 251.4 Availability of commodities.
(a) General. The Department shall make commodities available for distribution and use in accordance with the provisions of this part and also in accordance with the terms and conditions of part 250 of this chapter to the extent that the part 250 terms and conditions are not inconsistent with this part.
(b) Displacement. State agencies shall require that eligible recipient agencies receiving commodities under this part shall not diminish their normal expenditures for food because of receipt of commodities. Additionally, the Secretary shall withhold commodities from distribution if it is determined that the commodities would substitute for the same or a similar product that would otherwise be purchased in the market.
(c) Allocations. (1) Allocations of commodities shall be made to State agencies on the basis of the formula defined in § 251.3(h).
(2) FNS shall promptly notify State agencies regarding their allocation of commodities to be made available under this part.
(3) State agencies shall notify the appropriate FNSRO of the amount of the commodities they will accept not later than 30 days prior to the beginning of the shipping period.
(4) FNS will make allocations of donated commodity or food funding available to State agencies for two fiscal years. States will be allowed to carry over unexpended balances of donated food funding from one fiscal year into the next fiscal year.
(5) A State’s donated food funding allocation remaining at the end of the fiscal year after the fiscal year in which it was initially appropriated will expire and will be unavailable to the State.
(d) Quantities requested. State agencies shall:
(1) Request commodities only in quantities which can be utilized without waste in providing food assistance to needy persons under this part;
(2) Ensure that no eligible recipient agency receives commodities in excess of anticipated use, based on inventory records and controls, or in excess of its ability to accept and store such commodities; and
(e) Initial processing and packaging. The Department will furnish commodities to be distributed to institutions and to needy persons in households in forms and units suitable for institutional and home use.
(f) Bulk processing by States. Commodities may be made available to a State agency or, at the direction of the State agency, directly to private companies for processing bulk commodities for use by eligible recipient agencies.
(1) The Department will reimburse the State agency at the current flat rate for such processing.
(2) Minimum yields and product specifications established by the Department shall be met by the processor.
(3) The State shall require the processor to meet State and local health standards.
(4) Processors and State agencies shall also meet the basic minimum requirements of § 250.30.
(g) Distribution and control of donated commodities. The State agency must ensure that the distribution, control, and use of donated commodities are in accordance with the requirements in this part, and with the requirements in 7 CFR part 250, to the extent that requirements in 7 CFR part 250 are not inconsistent with the requirements in this part. Transfers of donated commodities must comply with requirements in §§ 250.12(e) and 250.14(d), as applicable. In accordance with § 250.16, the State agency must ensure that restitution is made for the loss of donated commodities, or for the loss or improper use of funds provided for, or obtained as an incidence of, the distribution of donated commodities. The State agency is also subject to claims for such losses for which it is responsible, or for its failure to initiate or pursue claims against other parties responsible for such losses.
(h) Distribution to eligible recipient agencies—priority system and advisory boards. (1) State agencies must distribute commodities made available under this part to eligible recipient agencies in accordance with the following priorities:
(i) First priority. When a State agency cannot meet all eligible recipient agencies’ requests for TEFAP commodities, the State agency must give priority in the distribution of such commodities to emergency feeding organizations as defined under § 251.3(e). A State agency may, at its discretion, concentrate commodity resources upon a certain type or types of such organizations, to the exclusion of others.
(ii) Second priority. After a State agency has distributed TEFAP commodities sufficient to meet the needs of all emergency feeding organizations, the State agency must distribute any remaining program commodities to other eligible recipient agencies which serve needy people, but do not relieve situations of emergency and distress. A State agency may, at its discretion, concentrate commodity resources upon a certain type or types of such organizations, to the exclusion of others.
(2) Delegation. When a State agency has delegated to an eligible recipient agency the authority to select other eligible recipient agencies, the eligible recipient agency exercising this authority must ensure that any TEFAP commodities are distributed in accordance with the priority system set forth in paragraphs (h)(1)(i) and (h)(1)(ii) of this section. State agencies and eligible recipient agencies will be deemed to be in compliance with the priority system when eligible recipient agencies distribute TEFAP commodities to meet the needs of all emergency feeding organizations under their jurisdiction prior to making commodities available to eligible recipient agencies which are not emergency feeding organizations.
(3) Existing networks. Subject to the constraints of paragraphs (h)(1)(i) and (h)(1)(ii) of this section, State agencies may give priority in the distribution of TEFAP commodities to existing food bank networks and other organizations whose ongoing primary function is to facilitate the distribution of food to low-income households, including food from sources other than the Department.
(4) State advisory boards. Each State agency receiving TEFAP commodities is encouraged to establish a State advisory board representing all types of entities in the State, both public and private, interested in the distribution of such commodities. Such advisory boards can provide valuable advice on how resources should be allocated among various eligible outlet types, what areas have the greatest need for food assistance, and other important issues that will help States to use their program resources in the most efficient and effective manner possible. A State agency may expend TEFAP administrative funds to support the activities of an advisory board in accordance with § 251.8 of this part.
(i) Distribution of non-USDA foods. Eligible recipient agencies may incorporate the distribution of foods which have been donated by charitable organizations or other entities with the distribution of USDA-donated commodities or distribute them separately.
(j) Interstate cooperation. State agencies may enter into interagency cooperative agreements to provide jointly or to transfer commodities to an eligible recipient agency that has signed an agreement with the respective State agencies when such organization serves needy persons in a contiguous area which crosses States’ borders.
(k) Distribution in rural areas. State agencies shall encourage eligible recipient agencies to implement or expand commodity distribution activities to relieve situations of emergency and distress through the provision of commodities to needy households in rural areas of the State.
§ 251.5 Eligibility determinations.
(a) Criteria for determining eligibility of organizations. Prior to making commodities or administrative funds available, State agencies, or eligible recipient agencies to which the State agency has delegated responsibility for the distribution of TEFAP commodities or administrative funds, must ensure that an organization applying for participation in the program meets the definition of an “eligible recipient agency” under § 251.3(d). In addition, applicant organizations must meet the following criteria:
(1) Agencies distributing to households. Organizations distributing commodities to households for home consumption must limit the distribution of commodities provided under this part to those households which meet the eligibility criteria established by the State agency in accordance with paragraph (b) of this section.
(2) Agencies providing prepared meals. Organizations providing prepared meals must demonstrate, to the satisfaction of the State agency, or eligible recipient agency to which they have applied for the receipt of commodities or administrative funds, that they serve predominantly needy persons. State agencies may establish a higher standard than “predominantly” and may determine whether organizations meet the applicable standard by considering socioeconomic data of the area in which the organization is located, or from which it draws its clientele. State agencies may not, however, require organizations to employ a means test to determine that recipients are needy, or to keep records solely for the purpose of demonstrating that its recipients are needy.
(3) Tax-exempt status. Private organizations must—
(i) Be currently operating another Federal program requiring tax-exempt status under the Internal Revenue Code (IRC), or
(ii) Possess documentation from the Internal Revenue Service (IRS) recognizing tax-exempt status under the IRC, or
(iii) If not in possession of such documentation, be automatically tax exempt as “organized or operated exclusively for religious purposes” under the IRC, or
(iv) If not in possession of such documentation, but required to file an application under the IRC to obtain tax-exempt status, have made application for recognition of such status and be moving toward compliance with the requirements for recognition of tax-exempt status. If the IRS denies a participating organization’s application for recognition of tax-exempt status, the organization must immediately notify the State agency or the eligible recipient agency, whichever is appropriate, of such denial, and that agency will terminate the organization’s agreement and participation immediately upon receipt of such notification. If documentation of IRS recognition of tax-exempt status has not been obtained and forwarded to the appropriate agency within 180 days of the effective date of the organization’s approval for participation in TEFAP, the State agency or eligible recipient agency must terminate the organization’s participation until such time as recognition of tax-exempt status is actually obtained, except that the State agency or eligible recipient agency may grant a single extension not to exceed 90 days if the organization can demonstrate, to the State agency’s or eligible recipient agency’s satisfaction, that its inability to obtain tax-exempt status within the 180 day period is due to circumstances beyond its control. It is the responsibility of the organization to document that it has complied with all IRS requirements and has provided all information requested by IRS in a timely manner.
(b) Criteria for determining recipient eligibility. Each State agency must establish uniform Statewide criteria for determining the eligibility of households to receive commodities provided under this part for home consumption. The criteria must:
(1) Enable the State agency to ensure that only households which are in need of food assistance because of inadequate household income receive TEFAP commodities;
(2) Include income-based standards and the methods by which households may demonstrate eligibility under such standards; and
(3) Include a requirement that the household reside in the geographic location served by the State agency at the time of applying for assistance, but length of residency shall not be used as an eligibility criterion.
(c) Delegation of authority. A State agency may delegate to one or more eligible recipient agencies with which the State agency enters into an agreement the responsibility for the distribution of commodities and administrative funds made available under this part. State agencies may also delegate the authority for selecting eligible recipient agencies and for determining the eligibility of such organizations to receive commodities and administrative funds. However, responsibility for establishing eligibility criteria for organizations in accordance with paragraph (a) of this section, and for establishing recipient eligibility criteria in accordance with paragraph (b) of this section, may not be delegated. In instances in which State agencies delegate authority to eligible recipient agencies to determine the eligibility of organizations to receive commodities and administrative funds, eligibility must be determined in accordance with the provisions contained in this part and the State plan. State agencies will remain responsible for ensuring that commodities and administrative funds are distributed in accordance with the provisions contained in this part.
§ 251.6 Distribution plan.
(a) Contents of the plan. The State agency must submit for approval by the appropriate FNS Regional Office a plan which contains:
(1) A designation of the State agency responsible for distributing commodities and administrative funds provided under this part, and the address of such agency;
(2) A plan of operation and administration to expeditiously distribute commodities received under this part;
(3) A description of the standards of eligibility for recipient agencies, including any subpriorities within the two-tier priority system;
(4) A description of the criteria established in accordance with § 251.5(b) which must be used by eligible recipient agencies in determining the eligibility of households to receive the Emergency Food Assistance Program (TEFAP) commodities for home consumption;
(5) At the option of the State agency, a plan of operation for one or more projects in partnership with one or more emergency feeding organizations located in the State to harvest, process, package, or transport donated commodities received under section 203D(d) of the Emergency Food Assistance Act of 1983. The plan must include all items listed in paragraphs (a)(5)(i) through (iv) of this section:
(i) A list of emergency feeding organizations within the State that will operate the project in partnership with the State agency.
(ii) A list of any State agencies that will operate the project as a part of a cooperative agreement.
(iii) A description of the purpose of the Farm to Food Bank Project that includes how the Project will:
(A) Reduce food waste at the agricultural production, processing, or distribution level through the donation of food;
(B) Provide food to individuals in need; and
(C) Build relationships between agricultural producers, processors, and distributors and emergency feeding organizations through the donation of food.
(iv) The fiscal year in which the Project will begin operating; and
(6) A plan, which may include the use of a State advisory board established under § 251.4(h)(4), that provides emergency feeding organizations or eligible recipient agencies within the State an opportunity to provide input on the commodity preferences and needs of the emergency feeding organization or eligible recipient agency.
(b) Plan submission and amendments. Once approved, State plans are permanent. State agencies must submit amendments to the distribution plan when necessary to reflect any changes in program operations or administration as described in the plan, or at the request of FNS, to the appropriate FNS Regional Office.
(c) Amendments. State agencies must submit amendments to the distribution plan to the extent that such amendments are necessary to reflect any changes in program operations or administration as described in the plan, or at the request of FNS, to the appropriate FNS Regional Office.
§ 251.7 Formula adjustments.
§ 251.7 Formula adjustments.
(a) Commodity adjustments. The Department will make annual adjustments to the commodity allocation for each State, based on updated unemployment statistics. These adjusted allocations will be effective for the entire fiscal year, subject to reallocation or transfer in accordance with this part.
(b) Funds adjustments. The Department will make annual adjustments of the funds allocation for each State based on updated unemployment statistics. These adjusted allocations will be effective for the entire fiscal year unless funds are recovered, withheld, or reallocated by FNS in accordance with § 251.8(f).
§ 251.8 Payment of funds for administrative costs.
(a) Availability and allocation of funds. Funds made available to the Department for State and local costs associated with the distribution of commodities under this part shall, in any fiscal year, be distributed to each State agency on the basis of the funding formula defined in § 251.3(h).
(b) Uniform Federal Assistance regulations. Funds provided under this section shall be subject to the regulations issued under 2 CFR part 200, and USDA implementing regulations at 2 CFR parts 400 and 416, as applicable.
(c) Payment to States. (1) Funds under this section shall be made available by means of letters of credit in favor of the State agency. The State agency shall use any funds received without delay in accordance with paragraph (d) of this section.
(2) Upon notification by the FNS Regional Office that an agreement has been entered into in accordance with § 251.2(c) of this part, FNS shall issue a grant award pursuant to procedures established by FNS, and promptly make funds available to each State agency within the State’s allocation through issuance of a letter of credit. To the extent funds are available and subject to the provisions of paragraph (f) of this section, funds will be made available to State agencies on an advance basis.
(3) Each State agency shall return to FNS any funds made available under this section either through the original allocation or through subsequent reallocations which are unobligated as of the end of the fiscal year for which they were made available. Such return shall be made as soon as practicable but in no event later than 30 days following demand made by FNS.
(d) Priority for eligible recipient agencies distributing USDA commodities. State agencies and eligible recipient agencies distributing administrative funds must ensure that the administrative funding needs of eligible recipient agencies which receive USDA commodities are met, relative to both USDA commodities and any non-USDA commodities they may receive, before such funding is made available to eligible recipient agencies which distribute only non-USDA commodities.
(e) Use of funds—(1) Allowable administrative costs. State agencies and eligible recipient agencies may use funds made available under this part to pay the direct expenses associated with the distribution of USDA commodities and commodities secured from other sources to the extent that the commodities are ultimately distributed by eligible recipient agencies which have entered into agreements in accordance with § 251.2. Direct expenses include the following, regardless of whether they are charged to TEFAP as direct or indirect costs:
(i) The intrastate and interstate transport, storing, handling, repackaging, processing, and distribution of commodities (including donated wild game); except that for interstate expenditures to be allowable, the commodities must have been specifically earmarked for the particular State or eligible recipient agency which incurs the cost;
(ii) Costs associated with determinations of eligibility, verification, and documentation;
(iii) Costs of providing information to persons receiving USDA commodities concerning the appropriate storage and preparation of such commodities;
(iv) Costs involved in publishing announcements of times and locations of distribution; and
(v) Costs of recordkeeping, auditing, and other administrative procedures required for program participation.
(2) State restriction of administrative costs. A State agency may restrict the use of TEFAP administrative funds by eligible recipient agencies by disallowing one or more types of expenses expressly allowed in paragraph (e)(1) of this section. If a State agency so restricts the use of administrative funds, the specific types of expenses the State will allow eligible recipient agencies to incur must be identified in the State agency’s agreements with its eligible recipient agencies, or set forth by other written notification, incorporated into such agreements by reference.
(3) Agreements. In order to be eligible for funds under paragraph (e)(1) of this section, eligible recipient agencies must have entered into an agreement with the State agency or another eligible recipient agency pursuant to § 251.2(c).
(4) Pass-through requirement-local support to emergency feeding organizations. (i) Not less than 40 percent of the Federal Emergency Food Assistance Program administrative funds allocated to the State agency in accordance with paragraph (a) of this section must be:
(A) Provided by the State agency to emergency feeding organizations that have signed an agreement with the State agency as either reimbursement or advance payment for administrative costs incurred by emergency feeding organizations in accordance with paragraph (e)(1) of this section, except that such emergency feeding organizations may retain advance payments only to the extent that they actually incur such costs; or
(B) Directly expended by the State agency to cover administrative costs incurred by, or on behalf of, emergency feeding organizations in accordance with paragraph (e)(1) of this section.
(ii) Any funds allocated to or expended by the State agency to cover costs incurred by eligible recipient agencies which are not emergency feeding organizations shall not count toward meeting the pass-through requirement.
(iii) State agencies must not charge for commodities made available under this part to eligible recipient agencies.
(f) Recovery and reallocation. If, during the course of the fiscal year, the Department determines that a State agency is unable to use all of the funds allocated to it during the fiscal year, the Department shall recover or withhold and reallocate such unused funds among other States.
§ 251.9 Matching of funds.
(a) State matching requirement. The State must provide a cash or in-kind contribution equal to the amount of TEFAP administrative funds received under § 251.8 and retained by the State agency for State-level costs or made available by the State agency directly to eligible recipient agencies that are not emergency feeding organizations as defined in § 251.3(e). The State agency will not be required to match any portion of the Federal grant passed through for administrative costs incurred by emergency feeding organizations or directly expended by the State agency for such costs in accordance with § 251.8(e)(4) of this part.
(b) Exceptions. In accordance with the provisions of 48 U.S.C. 1469a, American Samoa, Guam, the Virgin Islands and the Northern Mariana Islands shall be exempt from the matching requirements of paragraph (a) of this section if their respective matching requirements are under $200,000.
(c) Applicable contributions. States shall meet the requirements of paragraph (a) of this section through cash or in-kind contributions from sources other than Federal funds which are prohibited by law from being used to meet a Federally mandated State matching requirement. Such contributions shall meet the requirements set forth in 2 CFR part 200, subpart D, and USDA implementing regulations at 2 CFR part 400. In accordance with the aforementioned regulations, as applicable, the matching requirement shall not be met by contributions for costs supported by another Federal grant, except as provided by Federal statute. Allowable contributions are only those contributions for costs which would otherwise be allowable as State or local-level administrative costs.
(1) Cash. An allowable cash contribution is any cash outlay of the State agency for a specifically identifiable allowable State- or local-level administrative cost, including the outlay of money contributed to the State agency by other public agencies and institutions, and private organizations and individuals. Examples of cash contributions include, but are not limited to, expenditures for office supplies, storage space, transportation, loading facilities and equipment, employees’ salaries, and other goods and services specifically identifiable as State- or local-level administrative costs for which there has been a cash outlay by the State agency.
(2) In-kind. (i) Allowable in-kind contributions are any contributions, which are non-cash outlays, of real property and non-expendable personal property and the value of goods and services specifically identifiable with allowable State administrative costs or, when contributed by the State agency to an eligible recipient agency, allowable local-level administrative costs. Examples of in-kind contributions include, but are not limited to, the donation of office supplies, storage space, vehicles to transport the commodities, loading facilities and equipment such as pallets and forklifts, and other non-cash goods or services specifically identifiable with allowable State-level administrative costs or, when contributed by the State agency to an eligible recipient agency, allowable local-level administrative costs. In-kind contributions shall be valued in accordance with 2 CFR part 200, subpart D, and USDA implementing regulations at 2 CFR part 400, as applicable.
(ii) In order for a third-party in-kind contribution to qualify as a State-level administrative cost for purposes of meeting the match, all of the following criteria shall be met:
(A) In its administration of food assistance programs, the State has performed this type of function over a sustained period of time in the past;
(B) The function was not previously performed by the State on behalf of eligible recipient agencies; and
(C) The State would normally perform the function as part of its responsibility in administering TEFAP or related food assistance programs if it were not provided as an in-kind contribution.
(d) Assessment fees. States shall not assess any fees for the distribution of donated foods to eligible recipient agencies.
(e) Reporting requirements. State agencies shall identify their matching contribution on the FNS-667, Report of TEFAP Administrative Costs, in accordance with § 251.10(d).
(f) Failure to match. If, during the course of the fiscal year, the quarterly FNS-667 indicates that the State is or will be unable to meet the matching requirements in whole or in part, the Department shall suspend or disallow the unmatched portion of Federal funds subject to the provisions of paragraph (a) of this section. If, upon submission of the final FNS-667 for the fiscal year, the Department determines that the State has not met the requirements of paragraph (a) of this section in whole or in part, the unmatched portion of Federal funds subject to the requirements of paragraph (a) of this section shall be subject to disallowance by FNS.
§ 251.10 Miscellaneous provisions.
(a) Records—(1) Commodities. State agencies, subdistributing agencies (as defined in § 250.3 of this chapter), and eligible recipient agencies must maintain records to document the receipt, disposal, and inventory of commodities received under this part that they, in turn, distribute to eligible recipient agencies. Such records must be maintained in accordance with the requirements set forth in § 250.16 of this chapter. Eligible recipient agencies must sign a receipt for program commodities which they receive under this part for distribution to households or for use in preparing meals, and records of all such receipts must be maintained.
(2) Administrative funds. In addition to maintaining financial records in accordance with 2 CFR part 200, subpart D, and USDA implementing regulations at 2 CFR part 400, State agencies must maintain records to document the amount of funds received under this part and paid to eligible recipient agencies for allowable administrative costs incurred by such eligible recipient agencies. State agencies must also ensure that eligible recipient agencies maintain such records.
(3) Household information. Each distribution site must collect and maintain on record for each household receiving TEFAP commodities for home consumption, the name of the household member receiving commodities, the address of the household (to the extent practicable), the number of persons in the household, and the basis for determining that the household is eligible to receive commodities for home consumption.
(4) Record retention. All records required by this section must be retained for a period of 3 years from the close of the Federal Fiscal Year to which they pertain, or longer if related to an audit or investigation in progress. State agencies may take physical possession of such records on behalf of their eligible recipient agencies. However, such records must be reasonably accessible at all times for use during management evaluation reviews, audits or investigations.
(b) Commodities not income. In accordance with section 206 of Pub. L. 98-8, as amended, and notwithstanding any other provision of law, commodities distributed for home consumption and meals prepared from commodities distributed under this part shall not be considered income or resources for any purposes under any Federal, State, or local law.
(c) Nondiscrimination. There shall be no discrimination in the distribution of foods for home consumption or availability of meals prepared from commodities donated under this part because of race, color, national origin, sex, age, or handicap.
(d) Reports—(1) Submission of Form FNS-667. Designated State agencies must identify funds obligated and disbursed to cover the costs associated with the program at the State and local level. State and local costs must be identified separately. The data must be identified on Form FNS-667, Report of Administrative Costs (TEFAP) and submitted to the appropriate FNS Regional Office on a quarterly basis. The quarterly report must be submitted no later than 30 calendar days after the end of the quarter to which it pertains. The final report must be submitted no later than 90 calendar days after the end of the fiscal year to which it pertains.
(2) Reports of excessive inventory. Each State agency must complete and submit to the FNS Regional Office reports to ensure that excessive inventories of donated foods are not maintained, in accordance with the requirements of § 250.17(a) of this chapter.
(e) State monitoring system. (1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements. State agencies may not delegate this responsibility.
(2) Unless specific exceptions are approved in writing by FNS, the State agency monitoring system must include:
(i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency pursuant to § 251.2(c), provided that each such agency must be reviewed no less frequently than once every four years; and
(ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner.
(3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights.
(4) Upon concurrence by FNS, reviews of eligible recipient agencies which have been conducted by FNS Regional Office personnel may be incorporated into the minimum coverage required by paragraph (e)(2) of this section.
(5) If deficiencies are disclosed through the review of an eligible recipient agency, the State agency must submit a report of the review findings to the eligible recipient agency and ensure that corrective action is taken to eliminate the deficiencies identified.
(f) Limitation on unrelated activities. (1) Activities unrelated to the distribution of TEFAP foods or meal service may be conducted at distribution sites as long as:
(i) The person(s) conducting the activity makes clear that the activity is not part of TEFAP and is not endorsed by the Department (impermissible activities include information not related to TEFAP placed in or printed on bags, boxes, or other containers in which commodities are distributed). Recipes or information about commodities, dates of future distributions, hours of operations, or other Federal, State, or local government programs or services for the needy may be distributed without a clarification that the information is not endorsed by the Department;
(ii) The person(s) conducting the activity makes clear that cooperation is not a condition of the receipt of TEFAP commodities for home consumption or prepared meals containing TEFAP commodities (cooperation includes contributing money, signing petitions, or conversing with the person(s)); and
(iii) The activity is not conducted in a manner that disrupts the distribution of TEFAP commodities or meal service.
(2) Eligible recipient agencies and distribution sites shall ensure that activities unrelated to the distribution of TEFAP foods or meal service are conducted in a manner consistent with paragraph (f)(1) of this section.
(3) Termination for violation. Except as provided in paragraph (f)(4) of this section, State agencies shall immediately terminate from further participation in TEFAP operations any eligible recipient agency that distributes or permits distribution of materials in a manner inconsistent with the provisions of paragraph (f)(1) of this section.
(4) Termination exception. The State agency may withhold termination of an eligible recipient agency’s or distribution site’s TEFAP participation if the State agency cannot find another eligible recipient agency to operate the distribution in the area served by the violating organization. In such circumstances, the State agency shall monitor the violating organization to ensure that no further violations occur.
(g) Use of volunteer workers and non-USDA commodities. In the operation of the Emergency Food Assistance Program, State agencies and eligible recipient agencies shall, to the maximum extent practicable, use volunteer workers and foods which have been donated by charitable and other types of organizations.
(h) Maintenance of effort. The State may not reduce the expenditure of its own funds to provide commodities or services to organizations receiving funds or services under the Emergency Food Assistance Act of 1983 below the level of such expenditure existing in the fiscal year when the State first began administering TEFAP, or Fiscal Year 1988, which is the fiscal year in which the maintenance-of-effort requirement became effective, whichever is later.
(i) Recruitment activities related to the Supplemental Nutrition Assistance Program (SNAP). Any entity that receives donated foods identified in this section must adhere to regulations set forth under § 277.4(b)(6) of this chapter.
(j) Projects to harvest, process, package, or transport donated commodities—(1) Definition of project. These projects, also known as Farm to Food Bank Projects, are defined as the harvesting, processing, packaging, or transportation of unharvested, unprocessed, or unpackaged commodities donated by agricultural producers, processors, or distributors for use by emergency feeding organizations under section 203D of the Emergency Food Assistance Act of 1983.
(2) Availability and allocation of funds. Funds for the costs of carrying out a Farm to Food Bank Project will be allocated to States as follows:
(i) Funds made available to the Department for Farm to Food Bank Projects will be distributed to States that have submitted an approved State plan describing a plan of operation for a Farm to Food Bank Project.
(ii) Funds for Farm to Food Bank Projects will be distributed each fiscal year to State agencies with an approved State plan for a project in that fiscal year using the funding formula defined in § 251.3(h).
(iii) Funds will be available to State agencies for one year from the date of allocation.
(3) Purpose and use of funds. State agencies may only use funds made available under this paragraph (j) for the costs of carrying out a Farm to Food Bank Project.
(i) Farm to Food Bank Projects must have a purpose of:
(A) Reducing food waste at the agricultural production, processing, or distribution level through the donation of food;
(B) Providing food to individuals in need; and
(C) Building relationships between agricultural producers, processors, and distributors and emergency feeding organizations through the donation of food.
(ii) Project funds may only be used for costs associated with harvesting, processing, packaging, or transportation of unharvested, unprocessed, or unpackaged commodities donated by agricultural producers, processors, or distributors for use by emergency feeding organizations.
(iii) Project funds cannot be used to purchase foods or for agricultural production activities such as purchasing seeds or planting crops.
(4) Matching of funds—(i) State matching requirement. The State must provide a cash or in-kind contribution at least equal to the amount of funding received under this paragrpah (j) for a Farm to Food Bank Project.
(ii) Allowable contributions. States shall meet the match requirement in paragraph (a)(4) of this section by providing allowable contributions as described at § 251.9(c); contributions must only be for costs which would otherwise be allowable as a Farm to Food Bank Project cost.
(iii) Emergency feeding organization contributions. Cash or in-kind contributions from emergency feeding organizations that partner with the State agency to administer the Farm to Food Bank Project are allowable.
(iv) Food donations. Donations of foods, including the value of foods donated as a part of a Farm to Food Bank Project, cannot count toward the match requirement in paragraph (j)(4) of this section.
(5) Reallocation of funds. If, during the course of the fiscal year, the Department determines that a State will not expend all of the funds allocated to the State for a fiscal year under this paragraph (j), the Department shall reallocate the unexpended funds to other States that have an approved State Plan describing a plan of operation for a Farm to Food Bank Project during that fiscal year or the subsequent fiscal year.
(6) Reporting requirements. Each State agency to which Farm to Food Bank Project funds are allocated for a fiscal year must submit a report describing use of the funds. The data must be identified on Form SF-425, Federal Financial Report, and submitted to the appropriate FNS Regional Office on a semiannual basis. The report must be submitted no later than 30 calendar days after the end of the period to which it pertains. The final report must be submitted no later than 90 calendar days after the end of the fiscal year to which it pertains.
(7) Cooperative agreements. State agencies that carry out a Farm to Food Bank Project may enter into cooperative agreements with State agencies of other States to maximize the use of commodities donated under the project.
PART 252—NATIONAL COMMODITY PROCESSING PROGRAM
§ 252.1 Purpose and scope.
(a) Purpose. This part provides a program whereby the Food and Nutrition Service (FNS) and private processors of food may enter into agreements under which the processor will process and distribute designated donated food to eligible recipient agencies. The intent of the program is to encourage private industry, acting in cooperation with the States and FNS, to develop new markets in which donated food may be utilized. It is expected that the processors will use their marketing abilities to encourage eligible recipient agencies to participate in the program. Additionally, recipient agencies will benefit by being able to purchase processed end products at a substantially reduced price.
(b) Scope. The terms and conditions set forth in this part are those under which processors may enter into agreements with FNS for the processing of commodities designated by the Secretary of Agriculture and the minimum requirements which NCP processors must meet. Also prescribed are distributing agency and recipient agency responsibilities.
(c) Eligible recipient agencies. Recipient agencies shall be eligible to participate in the NCP Program to the extent of their eligibility to receive the food involved in the NCP Program, pursuant to § 250.8 and part 251.
§ 252.2 Definitions.
The terms used in this part that are defined in §§ 250.3 and 251.3 shall have the meanings ascribed to them therein, except as set forth in this section.
Agreement value of the donated commodity means the price assigned by the Department to a donated food which reflects the Department’s current acquisition price, transportation and, if applicable, processing costs related to the food.
Distributing agencies means State, Federal or private agencies which enter into agreements with the Department for the distribution of donated food to eligible recipient agencies and recipients; and FNS when it accepts title to commodities from the Commodity Credit Corporation (CCC) for distribution to eligible recipient agencies under the National Commodity Processing Program. A recipient agency may also be a distributing agency.
Donated food value return system means a system used by a processor or distributor to reduce the price of the end product by the agreement value of the donated commodity.
NCP Program means a program under which FNS and private processors of food may enter into agreements under which the processor will process and distribute designated donated food to eligible recipient agencies.
Recipient agency means disaster organizations, charitable institutions, nonprofit summer camps for children, school food service authorities, schools, service institutions, welfare agencies, nutrition programs for the elderly, nonresidential child care institutions and emergency feeding organizations.
Refund means (1) a credit or check issued to a distributor in an amount equal to the NCP contract value of donated foods contained in an end product sold by the distributor to a recipient agency at a discounted price or (2) a check issued to a recipient agency in an amount equal to the NCP contract value of donated foods contained in an end product sold to the recipient agency under a refund system.
Substitution means (1) the replacement of donated food with like quantities of domestically produced commercial food of the same generic identity and of equal or better quality (i.e., cheddar cheese for cheddar cheese, nonfat dry milk for nonfat dry milk, etc.); or (2) in the case of donated nonfat dry milk, substitution as defined under (1) of this paragraph or replacement with an equivalent amount, based on milk solids content, of domestically produced concentrated skim milk.
§ 252.3 Administration.
(a) Role of FNS. The Secretary will designate those commodities which will be available under the NCP Program. Only commodities made available without charge or credit under any nutrition program administered by USDA will be available under NCP. FNS will act as the distributing agency and the contracting agency under the NCP Program. The Department will pay costs for delivering donated commodities to participating NCP Program processors.
(b) Food orders. When NCP Program processors request donated food, FNS will determine whether the quantities ordered are consistent with the processor’s ability to sell end products and/or the processor’s past demonstrated performance under the Program. If the quantities are appropriate, FNS will request from CCC the donated food for transfer of title to FNS and delivery to a mutually agreed upon location for use by the NCP Program processor. The title to these commodities transfers to FNS upon their acceptance by the processor. FNS retains title to such commodities until:
(1) They are distributed to eligible recipient agencies in processed form, at which time the recipient agency takes title;
(2) They are disposed of because they are damaged or out-of-condition; or
(3) Title is transferred to the NCP Program processor upon termination of the agreement.
(c) Substituted food. When the processor substitutes commercial food for donated food in accordance with § 252.4(c)(7) of this part, title to the substituted food shall transfer to FNS upon the initiation of the processing of the end product containing the substituted food. Title to the equivalent amount of donated food shall transfer to the processor at the same time (except when the substitution is necessary to meet the 100 percent yield requirement or to otherwise replace missing or out-of-condition donated food). Once title has transferred, the processor shall use the substituted food in accordance with the terms and conditions of this part.
(d) Inventory levels. FNS will monitor the inventory of each food processor to ensure that the quantity of donated food for which a processor is accountable is at the lowest cost-efficient level. In no event shall a processor hold in inventory more than a six-month supply, based on average monthly usage under the NCP Program, unless a higher level has been specifically approved by FNS on the basis of justification submitted by the processor. Under no circumstances should the amount of donated food requested by the processor be more than the processor can accept and store at any one time. FNS will make no further distribution to a processor whose inventory exceeds these limits until such time as the inventory is reduced.
(e) Recipient agency registration. FNS will register, upon request, eligible recipient agencies. FNS will make available to food processors a listing of registered eligible recipient agencies for marketing purposes. Any processor desiring additional listings will be charged a fee for the listing which is commensurate with the Department’s policy on user fees.
§ 252.4 Application to participate and agreement.
(a) Application by processors to participate. Any food processor is eligible to apply for participation in the NCP Program. Agreement applications may be filed with FNS at any time on an FNS-approved form. FNS will accept or reject the application of each individual food processor within 30 days from the date of receipt, except that FNS may, at its discretion, extend such period if it needs more information in order to make its determination. In determining whether to accept or reject an application, FNS shall take into consideration at least the following matters: the financial responsibility of the applicant; the ability of the applicant to meet the terms and conditions of the regulations and the NCP agreement; ability to accept and store commodities in minimum truckload quantities; historical performance under the State and NCP processing programs; anticipated new markets for NCP end products; geographic areas served by the processor; the ability of the applicant to distribute processed products to eligible recipient agencies; and a satisfactory record of integrity, business ethics and performance. In addition, the processors must demonstrate their ability to sell end products under NCP by submitting supporting documentation such as written intent to purchase, bids awarded, or historical sales performance. FNS will make a final determination based on all available documentation submitted.
(b) Agreement between FNS and Participating Food Processors. Upon approval of an application for participating in the NCP Program, FNS shall enter into an agreement with the applicant food processor. All agreements under the NCP Program will terminate on the June 30th following the agreement approval date. However, FNS may extend processing contracts for two 1-year periods, provided that any changed information must be updated before any contract extension is granted, including the information in paragraphs (c)(1) and (c)(5) of this section.
(c) Processor requirements and responsibilities. In accordance with the following provisions and the NCP agreement, any processor participating in the NCP Program may sell to any eligible recipient agency nationwide a processed product containing the donated food received from FNS.
(1) The processor shall submit to FNS end product data schedules which include a description of each end product to be processed, the quantity of each donated food and any other ingredient which is needed to yield a specific number of units of each end product. FNS may permit processors to specify the total quantity of any flavorings or seasonings which may be used without identifying the ingredients which are, or may be, components of seasonings or flavorings. The end product data schedule shall provide pricing information supplied by the processor as requested by FNS and a thorough explanation of what this pricing information represents. The end product data schedule shall be made a part of the NCP agreement.
(2) When determining the value of the donated food, the processor shall use the agreement value of the donated food which shall be the price assigned by the Department to a donated food which reflects the Department’s current acquisition price, transportation and, if applicable, processing costs related to the food.
(3) The processor shall demonstrate to the satisfaction of FNS that internal controls are in place to insure that duplicate reporting of sales under the NCP Program and any other food distribution program does not occur.
(4) The processor shall use a method of selling end products to recipient agencies which ensures that the price of each case of end product is reduced by the agreement value of the donated commodity and ensures proper accountability. In line with FNS guidelines and subject to FNS approval, the processor shall select one or more of the following donated food value return systems to use during the term of the agreement. Regardless of the method used, processors shall provide pricing information summaries to recipient agencies as soon as possible after contract approval by FNS. If the pricing information changes during the contract period, processors shall provide updated pricing information to FNS and the recipient agencies 30 days prior to the effective date. Regardless of the method chosen for selling end products, the processor shall reduce his inventory only by the amount of donated food represented by the discount or refund placed on the end product.
(i) Direct sale. A direct sale is a sale by the processor directly to the eligible recipient agency. The following two methods of direct sales are allowed:
(A) Discount system. When the recipient agency pays the processor directly for an end product purchased, the processor shall invoice the recipient agency at the net case price which shall reflect the value of the discount established in the agreement.
(B) Refund system. The processor shall invoice the recipient agency for the commercial/gross price of the end product. The recipient agency shall submit a refund application to the processor within 30 days of receipt of the processed end product, except that recipient agencies may submit refund applications to a single processor on a Federal fiscal quarterly basis if the total anticipated refund due for all purchases of end product from that processor during the quarter is 25 dollars or less. The processor shall pay directly to the eligible recipient agency within 30 days of receipt of the refund application from the recipient agency, an amount equal to the established agreement value of donated food per case of end product multiplied by the number of cases delivered to and accepted by the recipient agency, except that processors may group together refund applications for a single recipient agency on a Federal fiscal quarterly basis if the total anticipated refund due that recipient agency during the quarter is 25 dollars or less. In no event shall refund applications for purchases during the period of agreement be accepted by the processor later than 60 days after the close of the agreement period.
(ii) Indirect sale. An indirect sale is a sale by the processor through a distributor to an eligible recipient agency. Indirect sales can be made with or without dual billing. Dual billing involves the processor billing the recipient agency for the end product and the distributor billing the recipient agency for the cost of services rendered in the handling and delivery of the end product. The following three methods of indirect sales are allowed:
(A) Sale through distributor with dual billing. When end products are sold to recipient agencies through a distributor under a system utilizing dual billing, the processor shall invoice the recipient agencies directly for the end products purchased at the net case price which reflects the value of the discount established in the agreement. The processor shall ensure that the distributor bills the recipient agencies only for the services rendered in the handling and delivery of the end product. The processor shall maintain delivery and/or billing invoices to substantiate the quantity of end product delivered to each recipient agency and the net case price charged by the processor which reflects the discount established by the agreement.
(B) Sale through distributor without dual billing. When end products are sold to recipient agencies through a distributor without dual billing, processors shall provide refunds to the distributor and ensure that the distributor provides discounts of equal value to recipient agencies. Under this system, the processor shall sell end products to a distributor at the processor’s commercial/gross price for the end product. The processor’s invoice shall reflect the value of commodities contained in the end product as established by the agreement. The processor shall ensure that the distributor submits a refund application to the processor within 30 days after the eligible recipient agency receives the processed end product. The processor shall ensure that the refund application includes documentation of the purchase of end products by the eligible recipient agency through substantiating invoices and that the recipient agency has purchased the end product at the net case price which reflects the value of the discount established by the agreement. Within 30 days of the receipt of the refund application, the processor shall issue payment directly to the distributor in an amount equal to the stated agreement value of the donated food contained in the purchased end products covered by the application. In no event shall refund applications for purchases during the period of agreement be accepted by the processors later than 60 days after the close of the agreement period. The processor shall verify a statistically valid sample of discount sales made by distributors without dual billing in a manner which ensures a 95 percent confidence level. All such sales reported during a quarter shall be verified at the end of that quarter. Processors shall verify that sales were made only to eligible recipient agencies and that the value of donated commodities was passed through to those recipient agencies. The processor shall report to FNS the level of invalid or inaccurate sales identified in each quarter within 60 days after the close of each quarter. At the same time such report is submitted, the processor shall submit to FNS a corrective action plan designed to correct problems identified in the verification effort. The processor shall adjust performance reports to reflect the invalid sales identified during the verification effort required by this paragraph. If, as a result of this verification, FNS determines that the value of donated food has not been passed on the recipient agencies or that end products have been improperly distributed, FNS may assert a claim against the processor.
(C) Sale through distributor with a refund. Under the refund system, processors shall sell end products to distributors at the commercial/gross price of the end product. Distributors shall sell end products to recipient agencies at the commercial/gross price of the end products. Processors shall ensure that their invoices and the invoices of distributors identify the discount established by the agreement. Recipient agencies shall submit refund applications to processors within 30 days of receipt of the processed end product. Within 30 days of the receipt of the refund application from the recipient agency certifying actual purchases of end product from substantiating invoices maintained by the recipient agency, the processor shall compute the amount and issue payment of the refund directly to the recipient agency. In no event shall refund applications for purchases during the period of the agreement be accepted by the processor later than 60 days after the close of the agreement period.
(iii) Other value pass-through systems. Processors may submit to FNS for approval any proposed value pass-through (VPT) system not identified in this section. The “other” VPT system must, in the judgment of FNS, be verifiable and easily monitored. Any VPT system approved under this part must comply with the sales verification requirements specified in paragraph (c)(4)(ii)(B) of this section or an alternative system approved by FNS. If an alternative system is approved, FNS will notify the States in which the system will be used. The Department retains the authority to inspect and review all pertinent records under all VPT systems, including the verification of a required statistically valid sample of sales. FNS may consider the paperwork and resource burden associated with alternative value pass-through systems when considering approval and reserves the right to deny approval of systems which are labor-intensive and provide no greater accountability than those systems permitted under paragraph (c)(4) of this section.
(5) The processor shall furnish to FNS prior to the ordering of any donated food for processing, a performance supply and surety bond obtained from surety companies listed in the current Department of Treasury Circular 570 or an irrevocable letter of credit to cover the amount of inventory on hand and on order.
(6) The processor shall draw down inventory only for the amount of donated food used to produce the end product. In instances in which concentrated skim milk is substituted for nonfat dry milk, the processor shall draw down donated nonfat dry milk inventory only in an amount equal to the amount of concentrated skim milk, based on milk solids content, used to produce the end product. Processors shall ensure that an amount equivalent to 100 percent of the donated food provided to the processor under the NCP Program is physically contained in end products. Additional commodities required to account for loss of donated food during production shall be obtained from non-donated food.
(7)(i) Only butter, cheese, corn grits, cornmeal, flour, macaroni, nonfat dry milk, peanut butter, peanut granules, roasted peanuts, rice, rolled oats, rolled wheat, shortening, vegetable oil, and spaghetti may be substituted as defined in § 252.2 and such other food as FNS specifically approves as substitutable under paragraph (c)(7)(i)(A) of this section (substitution of meat and poultry items shall not be permitted).
(A) Processors may request approval to substitute commercial foods for donated foods not listed in paragraph (c)(7)(i) of this section by submitting such request to FNS in writing and satisfying the requirements of paragraph (c)(7) of this section. FNS will notify the processor in writing of authorization to substitute commercial foods for donated foods not listed in paragraph (c)(7)(i) of this section and such authorization shall apply for the duration of all current contracts entered into by the processor pursuant to this section.
(B) The processor shall maintain records to substantiate that it continues to acquire on the commercial market amounts of substitutable food consistent with their levels of non-NCP Program production and to document the receipt and disposition of the donated food.
(C) FNS shall withhold deliveries of donated food from processors that FNS determines have reduced their level of non-NCP Program production because of participation in the NCP Program.
(ii) When the processor seeks FNS approval to substitute donated nonfat dry milk with concentrated skim milk under paragraph (c)(7)(i)(A) of this section, an addendum must be added to the request which states:
(A) The percent of milk solids that, at a minimum, must be contained in the concentrated skim milk;
(B) The weight ratio of concentrated skim milk to donated nonfat dry milk:
(1) The weight ratio is the weight of concentrated skim milk which equals one pound of donated nonfat dry milk, based on milk solids;
(2) In calculating this weight, nonfat dry milk shall be considered as containing 96.5 percent milk solids;
(3) If more than one concentration of concentrated skim milk is to be used, a separate weight ratio must be specified for each concentration;
(C) The processor’s method of verifying that the milk solids content in the concentrated skim milk is as stated in the request;
(D) A requirement that the concentrated skim milk shall be produced in a USDA approved plant or in a plant approved by an appropriate regulatory authority for the processing of Grade A milk products; and
(E) A requirement that the contact value of donated food for a given amount of concentrated skim milk used to produce an end product is the value of the equivalent amount of donated nonfat dry milk, based on the weight ratio of the two foods.
(iii) Substitution must not be made solely for the purpose of selling or disposing of the donated commodity in commercial channels for profit.
(8) The processor shall be liable for all donated food provided under the agreement. The processor shall immediately report to FNS any loss or damage to donated food and shall dispose of damaged or out-of-condition food in accordance with § 250.7.
(9) The processor shall submit to FNS monthly performance reports reflecting the sale and delivery of end products during the month.
(i) The processor shall ensure that the monthly performance report is postmarked no later than the last day of the month following the month being reported. The processor shall identify the month of delivery for each sale reported. The sale and delivery of end products for any prior month may be included on the monthly performance report. The processor monthly performance report shall include:
(A) The donated food inventory at the beginning of the reporting month;
(B) Amount of donated food received from the Department during the reporting month;
(C) Amount of donated food transferred to and/or from existing inventory;
(D) A list of all recipient agencies purchasing end products and the number of units of end products delivered to each during the report month;
(E) The net price paid for each unit of end product and whether the sale was made under a discount or refund system;
(F) When the sale is made through a distributor, the name of the distributor;
(G) The amount of inventory drawdown represented by reported sales; and
(H) The donated food inventory at the end of the reporting month.
(ii) In addition to reporting the information identified in paragraph (c)(9)(i) of this section, processors substituting concentrated skim milk for donated nonfat dry milk shall report the following information for the reporting period:
(A) The number of pounds of nonfat dry milk used in commercial products sold to outlets which are not recipient agencies; and
(B) The number of pounds of concentrated skim milk and the percent of milk solids contained therein, used in end products sold to recipient agencies.
(iii) At the end of each agreement period, there will be a final 90 day reconciliation period in which processors may adjust NCP sales for any month.
(10) The processor shall maintain complete and accurate records of the receipt, disposal and inventory of donated food including end products processed from donated food.
(i) The processor shall keep production records, formulae, recipes, daily or batch production records, loadout sheets, bills of lading, and other processing and shipping records to substantiate the use of the donated food and the subsequent redelivery to an eligible recipient agency.
(ii) The processor shall document that sales reported on monthly performance reports, specified in paragraph (c)(9) of this section were made only to eligible recipient agencies and that the normal wholesale price of the product was discounted or a refund payment made for the agreement value of the donated commodity.
(iii) When donated food is commingled with commercial food, the processor shall maintain records which will permit an accurate determination of the donated commodity inventory.
(iv) The processor shall make all pertinent records available for inspection and review upon request by FNS, its representatives and the General Accounting Office (GAO). All records must be retained for a period of three years from the close of the Federal fiscal year to which they pertain. Longer retention may be required for resolution of an audit or of any litigation.
(11) The processor shall obtain, upon FNS request, Federal acceptance service grading and review of processing activities and shall be bound by the terms and conditions of the grading and/or review.
(12) The processor shall indemnify and save FNS and the recipient agency free and harmless from any claims, damages, judgments, expenses, attorney’s fees, and compensation arising out of physical injury, death, and/or property damage sustained or alleged to have been sustained in whole or in part by any and all persons whatsoever as a result of or arising out of any act or omission of the processor, his/her agents or employees, or caused or resulting from any deleterious substance, including bacteria, in any of the products produced from donated food.
(13) The processor shall be liable for payment for all uncommitted food inventory remaining at agreement termination.
(i) When agreements are terminated at the request of the processor or at FNS’ request because there has been noncompliance on the part of the processor with the terms and conditions of the agreement, or if any right of FNS is threatened or jeopardized by the processor, the processor shall pay FNS an amount equal to the CCC unrestricted sales price, the cost CCC of replacement on the date the agreement is terminated, or the agreement value of donated commodities, whichever is highest, for the inventory, plus any expenses incurred by FNS.
(ii) When the agreements are terminated at FNS’ request where there has been no fault or negligence on the part of the processor, the processor shall pay FNS an amount equal to the CCC unrestricted sales price, the cost to CCC of replacement on the date the agreement is terminated, or the agreement value of the donated commodities, whichever is highest, for the inventory, unless FNS and the processor mutually agree on another value.
(14) The processor shall not assign the processing contract or delegate any aspect of processing under a subcontract or other arrangement without the written consent of FNS. The subcontractor shall be required to become a party to the processing contract and conform to all conditions contained in that contract.
(15) The processor shall comply fully with the provisions of the NCP agreement and all Federal regulations and instructions relevant to the NCP Program.
(16) The processor shall label end products in accordance with § 250.15(j) and, when end products contain vegetable protein products, in accordance with 7 CFR part 210, 225, or 226 appendix A.
(17) The processor shall return to FNS any funds received from the sale of donated food containers and the market value or the price received from the sale of any by-products of donated food or commercial food which has been substituted for donated food.
(18) For any year in which a processor receives more than $250,000 in donated food, the processor shall obtain an independent audit conducted by a Certified Public Accountant (CPA) for that year. Processors receiving $75,000 to $250,000 in donated food each year shall obtain an independent audit conducted by a CPA every two years and those receiving less than $75,000 in donated food each year shall obtain an independent audit conducted by a CPA every three years. Processors in the three year audit cycle shall move into the two year audit cycle when the value of donated food received reaches $75,000. If the Department determines that the audit is not acceptable or that the audit has disclosed serious deficiencies, the processor shall be subject to additional audits by OIG at the request of FNS.
(i) Audits shall be conducted in accordance with the auditing provisions set forth under the Standards for Audit of Government Organizations, Programs, Activities and Functions, and the FNS Audit Guide for Multi-State Processors.
(ii) The costs of the audits shall be borne by the processor.
(iii) Audit findings shall be submitted by the processors to FNS.
(iv) Noncompliance with the audit requirement contained in this part will render the processor ineligible to enter into another processing contract until the required audit has been conducted and deficiencies corrected.
§ 252.5 Recipient agency responsibilities.
(a) Registration. Recipient agencies that have approved agreements with State distributing agencies to receive donated food may register with FNS on an FNS approved form to participate in the NCP Program. Upon request, FNS will provide recipient agencies with registration forms. Recipient agencies shall notify FNS when they are no longer eligible to receive donated food under an agreement. Failure to notify FNS shall result in claim action.
(b) Recipient agency records. Each recipient agency shall maintain accurate and complete records with respect to the receipt, disposal, and inventory of donated food, including products processed from donated food, and with respect to any funds which arise from the operation of the distribution program.
(c) Refunds. A recipient agency purchasing end products under the NCP Program from a processor utilizing a refund system shall submit a refund application supplied by the processor to the processor within 30 days of receipt of the end products, except that recipient agencies may submit refund applications to a single processor on a Federal fiscal quarterly basis if the total anticipated refund due for all purchases of end product from that processor during the quarter is 25 dollars or less. Recipient agencies must insure that any funds received as a result of refund payments be designated for use by the food service department.
(d) Verification. If requested by FNS, each recipient agency shall cooperate in the verification of end product sales reported by processors under the NCP Program. The recipient agency may be requested to verify actual purchases of end products as substantiated by the recipient agency’s invoices and may also be requested to verify that the invoice correctly identifies the discount included or refund due for the value of the donated ingredient contained in the end product.
§ 252.6 Miscellaneous provisions.
(a) Improper distribution or loss of or damage to donated food. If a processor improperly distributes or uses any donated food, or causes loss of or damage to a donated food through its failure to provide proper storage, care, or handling, FNS shall require the processor to pay to the Department the value of the donated food as determined by the Department.
(b) Disposition of damaged or out-of-condition food. Donated food which is found to be damaged or out-of-condition and is declared unfit for human consumption by Federal, State, or local health officials, or by any other inspection services or persons deemed competent by the Department, shall be disposed of in accordance with instructions of the Department. This instruction shall direct that unfit donated food be sold in a manner prescribed by the Department with the net proceeds thereof remitted to the Department. Upon a finding by the Department that donated food is unfit for human consumption at the time of delivery to a recipient agency and when the Department or appropriate health officials require that such donated food be destroyed, the processor shall pay for any expenses incurred in connection with such donated food as determined by the Department. The Department may, in any event, repossess damaged or out-of-condition donated food.
(c) FNS sales verification. FNS may conduct a verification of processor reported sales utilizing a statistically valid sampling technique. If, as a result of this verification, FNS determines that the value of the donated food has not been passed on to recipient agencies or if end products have been improperly distributed, FNS may assert a claim against the processor. This claim may include a projection of the verification sample to the total NCP sales reported by the processor.
(d) Sanctions. Any processor or recipient agency which has failed to comply with the provisions of this part or any instructions or procedures issued in connection herewith, or any agreements entered into pursuant hereto, may, at the discretion of the Department, be disqualified from further participation in the NCP Program. Reinstatement may be made at the option of the Department. Disqualification shall not prevent the Department from taking other action through other available means when considered necessary, including prosecution under applicable Federal statutes.
(e) Embezzlement, misuse, theft, or obtainment by fraud of commodities and commodity related funds, assets, or property in child nutrition programs. Whoever embezzles, willfully misapplies, steals, or obtains by fraud commodities donated for use in the NCP Program, or any funds, assets, or property deriving from such donations, or whoever receives, conceals, or retains such commodities, funds, assets, or property for his own use or gain, knowing such commodities, funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud, shall be subject to Federal criminal prosecution under section 12(g) of the National School Lunch Act, as amended, or section 4(c) of the Agriculture and Consumer Protection Act of 1973, as amended. For the purpose of this paragraph “funds, assets, or property” include, but are not limited to, commodities which have been processed into different end products as provided for by this part, and the containers in which commodities have been received from the Department.
§ 252.7 OMB control number.
The information collection and reporting requirements contained in this part have been approved by the Office of Management and Budget under control number 0584-0325.
PART 253—ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR HOUSEHOLDS ON INDIAN RESERVATIONS
§ 253.1 General purpose and scope.
This part describes the terms and conditions under which: commodities (available under part 250 of this chapter) may be distributed to households on or near all or any part of any Indian reservation, the program may be administered by capable Indian tribal organizations, and funds may be obtained from the Department for the costs incurred in administering the program. This part also provides for the concurrent operation of the Food Distribution Program and the Food Stamp Program on Indian reservations when such concurrent operation is requested by an ITO.
§ 253.2 Definitions.
Disabled member means a member of a household who:
(1) Receives supplemental security income benefits under title XVI of the Social Security Act or disability or blindness payments under titles I, II, X, XIV, or XVI of the Social Security Act;
(2) Receives federally- or State-administered supplemental benefits under section 1616(a) of the Social Security Act provided that the eligibility to receive the benefits is based upon the disability or blindness criteria used under title XVI of the Social Security Act;
(3) Receives federally- or State-administered supplemental benefits under section 212(a) of Public Law 93-66;
(4) Receives disability retirement benefits from a governmental agency because of a disability considered permanent under section 221(i) of the Social Security Act;
(5) Is a veteran with a service-connected or non-service-connected disability rated by the Veteran’s Administration (VA) as total or paid as total by the VA under title 38 of the United States Code;
(6) Is a veteran considered by the VA to be in need of regular aid and attendance or permanently housebound under title 38 of the United States Code;
(7) Is a surviving spouse of a veteran and considered by the VA to be in need of regular aid and attendance or permanently housebound or a surviving child of a veteran and considered by the VA to be permanently incapable of self-support under title 38 of the United States Code;
(8) Is a surviving spouse or surviving child of a veteran and considered by the VA to be entitled to compensation for a service-connected death or pension benefits for a non-service-connected death under title 38 of the United States Code and has a disability considered permanent under section 221(i) of the Social Security Act. “Entitled” as used in this definition refers to those veterans’ surviving spouses and surviving children who are receiving the compensation or pension benefits stated or have been approved for such payments, but are not yet receiving them;
(9) Receives an annuity payment under: Section 2(a)(1)(iv) of the Railroad Retirement Act of 1974 and is determined to be eligible to receive Medicare by the Railroad Retirement Board; or section 2(a)(1)(v) of the Railroad Retirement Act of 1974 and is determined to be disabled based upon the criteria used under title XVI of the Social Security Act; or
(10) Is a recipient of interim assistance benefits pending the receipt of Supplemented Security Income, a recipient of disability related medical assistance under title XIX of the Social Security Act, or a recipient of disability-based State general assistance benefits provided that the eligibility to receive any of these benefits is based upon disability or blindness criteria established by the State agency, which are at least as stringent as those used under title XVI of the Social Security Act (as set forth at 20 CFR part 416, subpart I, Determining Disability and Blindness as defined in Title XVI).
Elderly member means a member of a household who is sixty years of age or older.
Exercises governmental jurisdiction means the active exercise of the legislative, executive or judicial powers of government by an Indian tribal organization.
Food distribution program means a food distribution program for households on Indian reservations operated pursuant to sections 4(b) and 1304(a) of Pub. L. 95-113.
Indian tribal household means a household in which at least one household member is recognized as a tribal member by any Indian tribe, as defined in paragraph (d) of this section.
Indian tribal organization (ITO) means: (1) The recognized governing body of any Indian tribe on a reservation; or (2) the tribally recognized intertribal organization which the recognized governing bodies of two or more Indian tribes on a reservation authorize to operate the Food Stamp Program or a Food Distribution Program on their behalf.
Indian tribe means (1) any Indian tribe, Band, or other organized Indian group, for example, a Rancheria, Pueblo, or colony, and including any Alaska Native village or regional or village corporation (established pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688)), and that is on a reservation and recognized as eligible for Federal programs and services provided to Indians because of their status as Indians; or (2) any Indian tribe or Band on a reservation holding a treaty with a State government.
Overissuance means the dollar value of commodities issued to a household that exceeds the dollar value of commodities it was eligible to receive.
Reservation means the geographically defined area or areas over which an ITO exercises governmental jurisdiction so long as such area or areas are legally recognized by the Federal or a State government as being set aside for the use of Indians.
State means any one of the fifty States, the District of Columbia, and the reservation of an Indian tribe whose ITO meets the requirements of the Food Stamp Act of 1977 for participation as a State agency.
State agency means:
(1) The agency of State government, including the local offices thereof, which enters into an agreement with FNS for the distribution of commodities on all or part of an Indian reservation, and
(2) The ITO of any Indian tribe, determined by the Department to be capable of effectively administering a Food Distribution Program, which enters into an agreement with FNS for the distribution of commodities on all or part of an Indian reservation.
Urban place means a town or city with a population of 10,000 or more.
§ 253.3 Availability of commodities.
(a) Conditions for distribution. In jurisdictions where the Food Stamp Program is in operation, there shall be no distribution of commodities to households under the authority of any law, except that distribution may be made (1) on a temporary basis under programs authorized by law to meet disaster relief needs, (2) for the purpose of the Commodity Supplemental Food Program, and (3) whenever a request for concurrent or separate Food Distribution Program on a reservation is made by an ITO.
(b) Concurrent or separate food program operation. Distribution of commodities, with or without the Food Stamp Program, shall be made whenever an ITO submits to FNS a completed application for the Food Distribution Program on all or part of a reservation and the application is approved by FNS.
(1) Except as provided in paragraph (b)(2) of this section, when the Food Distribution Program is operating on all or part of a reservation, all eligible households within those boundaries may participate in the Food Distribution Program, or, if the ITO has elected concurrent operation of the Food Stamp Program, may elect to participate in either program, without regard to whether the household is an Indian tribal household.
(2) FNS may determine, based on the number of non-Indian tribal households located on all or part of a reservation, that concurrent operation is necessary. When such a determination has been made all households residing in such areas may apply to participate in either the Food Stamp or the Food Distribution Program.
(c) Household distribution. Commodities acquired under section 416 of the Agricultural Act of 1949, as amended; section 32 of Pub. L. 320, 74th Congress, as amended; section 709 of the Food and Agricultural Act of 1963, as amended; and section 4(a) of the Agriculture and Consumer Protection Act of 1973, as amended, by section 1304 of the Food and Agriculture Act of 1977, may be made available under part 250 of this chapter for distribution to households in accordance with the provisions of that part and the additional provisions and requirements of this part.
(d) Food distribution program benefits. Households eligible under this part shall receive a monthly food package based on the number of household members. The food package offered to each household shall consist of a quantity and variety of commodities made available by the Department to provide eligible households with an opportunity to obtain a more nutritious diet and shall represent an acceptable nutritional alternative to Food Stamp Program benefits. The food package offered to each household by the State agency shall contain a variety of foods from each of the food groups in the Food Distribution Program on Indian Reservations Monthly Distribution Guide Rates by Household Size—Vegetables, Fruit, Bread-Cereal-Rice-Pasta, Meat-Poultry-Fish-Dry Beans-Eggs-Nuts, Milk-Yogurt-Cheese, and Fats-Oils-Sweets. FNS shall periodically notify State agencies of the kinds of commodities it proposes to make available based, insofar as practicable, on the preferences of eligible households as determined by the State agency. In the event one or more of the proposed commodities cannot be delivered, the Department shall arrange for delivery of a similar commodity within the same food group.
§ 253.4 Administration.
(a) Federal administration. Within the Department of Agriculture, the Food and Nutrition Service (FNS) shall be responsible for the Food Distribution Program. FNS shall have the power to determine the amount of any claim and to settle and adjust any claim.
(b) State agency administration. (1) If FNS determines that the ITO is capable of effective and efficient administration, the ITO shall administer the Food Distribution Program on all or part of the reservation. If FNS determines that the ITO is not capable of effective and efficient administration of the Food Distribution Program, the appropriate agency of the State government shall be responsible for the Food Distribution Program on all or part of the Indian reservation. In addition, the appropriate agency of the State government may administer the Program on behalf of an otherwise capable tribe if agreed to in writing by both parties.
(2) In the case where the Indian reservation boundaries cross State lines, the ITO and appropriate State agencies may jointly request FNS approval that a single State agency administer the Food Distribution Program on all or part of the Indian reservation.
(3) An agency of State government responsible for administering the Food Distribution Program may contract Program functions to an ITO. These functions include, but are not limited to, outreach, preparation of bilingual materials, commodity issuance, determination of food preferences of households, publicizing uses of commodities, and transportation and on-site delivery services. The State agency may also use the ITO in prescreening translations, interpretive services and other noncertification functions. The State agency shall not contract responsibility for certification activities such as interviews or eligibility determinations with an ITO that has been determined incapable of administering the Food Distribution Program. In all cases the State agency shall retain full responsibility for program administration.
(c) Qualification as a reservation. (1) The appropriate ITO of an established Indian reservation will qualify for participation under the provisions of this part, when that ITO files an application which demonstrates the status of an area as an established reservation, unless FNS determines that such area(s) does not qualify as a reservation as that term is defined in these regulations. For purposes of this part, established reservation means the geographically defined area(s) currently recognized and established by Federal or State treaty or by Federal statute whereby such geographically defined area(s) is set aside for the use of Indians. Where such established areas exist, the appropriate ITO is presumed to exercise governmental jurisdiction, unless otherwise determined by FNS.
(2) The appropriate ITO for other areas, in order to qualify as reservations for the provisions of this part, must show to FNS:
(i) That the ITO exercises governmental jurisdiction over a geographic area(s) which enjoys legal recognition from the Federal or a State government and is set aside for the use of Indians;
(ii) A clear and precise description of the boundaries of such geographic area(s).
(d) Application by an ITO. Any ITO which desires to participate in the Food Distribution Program shall file an application with the FNS Regional Office serving the State or States in which the reservation is located. The ITO shall specify if it is requesting the Food Distribution Program alone or concurrently with the Food Stamp Program. The ITO shall also specify whether it wants either or both programs on all or part of the reservation, and if on part, shall describe the geographic boundaries of the relevant part(s). Additionally, if the ITO wishes to serve areas near the reservation, the ITO shall describe the geographic boundaries of the near area(s) for FNS review and approval. Any urban place inside a reservation can be served by the Food Distribution Program. Any urban place outside reservation boundaries may not be served. However, an ITO or State agency can request the Department to change those limitations with justification. The ITO application shall also provide other information requested by FNS, including but not limited to, that the ITO serves an established reservation or a reservation otherwise qualified as described in paragraph (c) of this section. Properly addressed applications shall be acknowledged by the FNS Regional Office in writing within five working days of receipt.
(e) Tribal capability. (1) In determining whether the ITO on a given reservation is potentially capable of effectively and efficiently administering a Food Distribution Program, allowing for fulfillment of that potential through training and technical assistance, FNS shall consult with other sources, such as the BIA, and shall consider the ITO’s experience, if any, in operating other government programs and its management and fiscal capabilities. Other factors for evaluation include, but are not limited to, the ITO’s ability to:
(i) Order and properly store commodities,
(ii) Certify eligible households,
(iii) Arrange for physical issuance of commodities,
(iv) Keep appropriate records and submit required reports,
(v) Budget and account for administrative funds,
(vi) Determine the food preferences of households, and
(vii) Conduct on-site reviews of certification and distribution procedures and practices.
(2) The Food and Nutrition Service (FNS) shall make a determination of potential Indian Tribal Organization (ITO) capability within 30 days of receipt of a completed application for the Food Distribution Program. FNS shall promptly advise ITOs of the need for additional information if an incomplete application is received.
(3) FNS shall, if requested by an ITO which has been determined by FNS to be potentially capable of administering a Food Distribution Program, provide the ITO’s designees with appropriate training and technical assistance to prepare the ITO to take over program administration. In determining what training and technical assistance are necessary, FNS shall consult with the ITO and other sources, such as the BIA.
§ 253.5 State agency requirements.
(a) Plan of operation. (1) The State agency that assumes responsibility for the Food Distribution Program shall submit a plan of operation for approval by FNS. Approval of the plan shall be a prerequisite to the donation of commodities available for use by households under part 250 of this chapter. The approved plan shall be considered permanent, with amendments to be added as changes in State agency administration or management of the program, as described in the plan, are made, or at the request of FNS. No amendment to the plan of operation of any State agency shall be effective without prior approval of FNS, and FNS may require amendment of any plan as a condition of continuing approval. If the agency is not an ITO, the appropriate agency of the State government shall also:
(i) Consult in good faith with the ITO on the reservation where the appropriate agency of the State government is responsible for administering the Food Distribution Program.
(ii) A State agency which is not an ITO shall submit its plan of operation, budget and any substantive subsequent amendments to the ITO for comment at least 45 days prior to submission of the plan, budget or amendment to FNS. Comments by the ITO shall be attached to the plan, budget or amendment which is submitted to FNS. This paragraph does not apply to amendments required by FNS under § 253.7(a)(1).
(2) The plan of operation shall describe the manner in which commodities will be distributed, including, but not limited to, the storage and distribution facilities to be used, the procedures to assure ongoing consultation with the ITO where the appropriate agency of the State government administers the Program, the method by which the food preferences of households shall be determined, the manner in which the State agency plans to supervise the Food Distribution Program, and plans by which the State agency will control dual participation. The plan shall also include by reference or otherwise the following assurances:
(i) No household on any Indian reservation shall be permitted to participate simultaneously in the Food Stamp Program and the Food Distribution Program.
(ii) The value of the commodities provided to any eligible household shall not be considered income or resources for any purposes under any Federal, State, or local laws, including, but not limited to, laws relating to taxation, welfare, and public assistance programs; and no State agency shall decrease any assistance otherwise provided to a household because of the receipt of commodities.
(iii) The distribution of commodities shall not be used as a means for furthering the political interest of any individual or party.
(iv) There shall be no discrimination in the certification of applicant households or in the distribution of commodities because of sex, race, color, age, political beliefs, religion, handicap or national origin.
(v) Households shall not be required to make any payments in money, materials or services for, or in connection with, the receipt of commodities; and they shall not be solicited in connection with the receipt of commodities for voluntary cash contributions for any purpose.
(vi) Adequate personnel, including supervisory personnel, to review the Food Distribution Program shall be provided to ensure compliance with the requirements of this part.
(vii) Use of disclosure of information obtained from food distribution applicant households, exclusively for the Food Distribution Program, shall be restricted to persons directly connected with the administration or enforcement of the provisions of the Food Distribution Programs as defined in this part of this subchapter, the Food Stamp Act or regulations, or with other Federal or federally aided, means-tested assistance programs such as title IV-A (TANF), XIX (Medicaid), or XVI (SSI), or with general assistance programs that are subject to the joint processing requirements specified in § 273.2(j)(2).
(b) Operating manuals. The State agency shall maintain ongoing consultation with the ITO in developing the State agency’s written internal policies, instructions, and forms which are necessary to carry out the Food Distribution Program and shall submit them to FNS for approval prior to their use. The State agency shall file any comments or recommendations offered by the ITO, for review by FNS.
(c) Staffing. Personnel used in the certification process shall be employed in accordance with (1) the current standards for a Merit System of Personnel Administration or any standards later prescribed by the Office of Personnel Management under section 208 of the Intergovernmental Personnel Act of 1970 or (2) when appropriate, the ITO’s personnel system if it incorporates the basic elements of a merit system.
(d) Bilingual requirements. (1) The State agency shall provide bilingual staff, certification forms, including the application form and certification notices as specified in § 253.7(a)(2) and (b)(3), respectively, and any form developed by the State agency for reporting changes in household composition and income, pursuant to § 253.7(c), and outreach materials, when either an estimated 100 or more low income households or the majority of low-income households on the reservation are a single language minority. Single-language minority refers to households which speak the same non-English language and which do not contain adults(s) fluent in English as a second language. If the non-English language is spoken but not written, the State agency shall provide bilingual staff, if required, but not bilingual material.
(2) The State agency shall ensure that offices serving reservations subject to the criteria in paragraph (d)(1) of this section provide sufficient bilingual staff for the timely processing of non-English speaking applicants.
(3) The State agency shall develop estimates of the numbers of low-income, single-language minority households by using census data (including the Census Bureau’s Current Population Report: Population Estimates and Projections, Series P-25, No. 627) and knowledge of the reservation. Local Bureau of Census offices, Community Services Administration offices, Community Action agencies, Bureau of Indian Affairs, Indian Health Services, planning agencies, the ITO and school officials may be important sources of information in determining the need for bilingual services.
(e) Outreach and referral. The State agency shall inform potentially eligible households of the availability of the Food Distribution Program. The State agency shall develop and distribute printed information in the appropriate languages about the Program and eligibility requirements. Outreach material shall contain information about a household’s right to file an application on the same date it contacts the certification office. The State agency shall be sufficiently familiar with general eligibility requirements for the Supplemental Food Program for Women, Infants and Children (WIC) or the Commodity Supplemental Food Program, if available to reservation residents, the Supplemental Security Income Program (SSI), and appropriate public and general assistance programs, to identify those applicants whose households contain persons who may be eligible for these programs, to inform the applicants of their potential eligibility, and to provide the applicants with the addresses and telephone numbers for these programs. For example, the State agency should provide information on the WIC program to applicants whose households contain pregnant women, nursing or postpartum women, or children up to the fifth birthday.
(f) Training requirements. The State agency shall institute a training program for all personnel who are assigned responsibility for the certification of applicant households, for fair hearing officers, for field supervisors who review local Food Distribution Programs, for those involved in outreach and those responsible for ordering, storing, and distributing commodities.
(1) State agency training programs shall cover eligibility criteria, certification procedures, commodity ordering, storage and distribution practices, household rights and responsibilities and other job-related responsibilities. The content of the training material shall be reviewed and revised periodically to correct deficiencies in program operations or reflect changes in policy and procedures.
(2) FNS shall review the effectiveness of State agency training based on information obtained from field reviews, administrative analyses and other sources.
(g) Nutrition education. The State agency shall publicize how commodities may be used to contribute to a nutritious diet and how commodities may be properly stored by means of visual displays, and printed material. The State agency shall encourage appropriate organizations, county extension home economists, expanded Food and Nutrition Program aides, and qualified volunteers to provide food and nutrition information, menus, or cooking demonstrations, as appropriate for participating households. The State agency shall encourage the dissemination of food and nutrition information designed to improve the nutrition of households on reservations.
(h) Records and reports. The State agency shall keep records and submit reports and other information as required by FNS. Records required under this part shall be retained for a period of three years from the date of the submission of the annual financial status report, SF-425; except that, if any litigation, claim or audit is started before the expiration of the three year period, the records shall be retained until all litigation, claims or audit findings involving the records have been resolved.
(i) Monitoring. In accordance with its responsibility for efficient and effective program administration the State agency shall monitor and review its operations under this part to ensure compliance with the provisions of this part and with any applicable instructions of FNS.
(1) The State agency shall review program operations at least annually, document program deficiencies and establish and implement specific plans of corrective action for deficiencies noted.
(2) Reviews of operations shall include, but not be limited to, certification of households, determination of food preferences, distribution of commodities, fair hearing procedures, commodity inventories and timeliness and accuracy of reports to FNS.
(3) Program reviews and corrective action plans shall be available to FNS upon request.
(j) Investigations and complaints. The State agency shall promptly investigate complaints received of irregularities in the handling, distribution, receipt or use of commodities, other than use of commodities by eligible households in the preparation of meals for home consumption, and shall take appropriate action to correct any irregularities. The State agency shall also promptly investigate complaints of irregularities relating to certification procedures or the delivery of services and shall take appropriate action to correct any irregularities or noncompliance with provisions relating to certification procedures, provision of services or household rights. The State agency shall document each investigation and action in sufficient detail to allow for FNS review of all State agency actions and information. The Department shall make investigations at the request of the State agency and ITO or when the Department determines an investigation is necessary.
(k) Sanctions. If the State agency fails to comply with the provisions of this part or its plan of operation, FNS may:
(1) Take action against any State agency under § 253.11(g) with respect to administrative funds available from FNS for use by the State agency or (2) disqualify the State agency from further distribution of commodities to households. Disqualification of the State agency shall not prevent FNS or the Department from taking other actions, including prosecution under applicable Federal statutes, when deemed necessary. Reinstatement shall be contingent upon approval by FNS of the State agency’s plan for corrective action or determination by FNS that the State agency has complied with any other requirements for reinstatement which FNS may set forth. These provisions apply to all State agencies, regardless of whether the Program is administered by an agency of the State government or an ITO. If the ITO is disqualified as a State agency, an appropriate agency of State government shall administer the Food Distribution Program on the reservation. If an agency of State government is disqualified as the State agency for the Food Distribution Program on the reservation, the ITO may request in writing a capability determination for program administration in accordance with § 253.4.
(l) Appeals. (1) The agency of the State government or an ITO may appeal an initial determination by FNS on:
(i) Whether or not the reservation definition is met;
(ii) The capability of an ITO to administer the Food Distribution Program;
(iii) Sanctions taken under paragraph (k) of this section or § 253.11(g); or
(iv) The Federal matching percentage level of administrative funding made available by FNS.
(2) At the time FNS advises the State agency or ITO of its determination, FNS shall also advise the State agency or ITO of its right to appeal and, except for appeals of funding determinations, shall advise the State agency or ITO of its right to request either a meeting to present its position in person or a review of the record. On appeals of funding determinations, FNS shall advise the State agency or ITO that it may indicate if it wishes a meeting, however, FNS need schedule a meeting only if FNS determines a meeting is warranted to reach a proper adjudication of the matter. Otherwise, FNS shall review supportive information submitted by the State agency or ITO in paragraph (l)(3)(ii) of this section.
(3) Procedure—(i) Time limit. Any State agency or ITO that wants to appeal an initial FNS determination under paragraph (l) of this section must notify the Administrator of FNS, in writing, within 15 days from the date of the determination. If the appeal concerns either paragraph (l)(1) (i) or (ii) of this section, the implementation timeframes as specified in paragraph (m) of this section and the timeframe for determining an ITO’s capability as specified in § 253.4(e)(2) are suspended from the date the appeal is requested to the date of the final determination.
(ii) Acknowledgment. Within five days of receipt by the Administrator, of FNS, of a request for review, FNS shall provide the State agency or ITO with a written acknowledgment of the request by certified mail, return receipt requested. The acknowledgment shall include the name and address of the official designated by the Administrator, FNS, to review the appeal. The acknowledgment shall also notify the State agency or ITO that within ten days of receipt of the acknowledgment, the State agency or ITO shall submit written information in support of its position.
(4) Scheduling a meeting. If the Administrator, FNS, grants a meeting FNS shall advise the State agency or ITO of the time, date and location of the meeting by certified mail, return receipt requested at least ten days in advance of the meeting. FNS shall schedule and conduct the meeting and make a decision within 60 days of the receipt of the information submitted in response to paragraph (l)(3)(ii) of this section.
(5) Review. If no meeting is conducted the official designated by the Administrator, FNS, shall review information presented by a State agency or ITO which requests a review and shall make a final determination in writing within 45 days of the receipt of the State agency’s or ITO’s information submitted in response to paragraph (l)(3)(ii) of this section setting forth in full the reasons for the determination.
(6) Final decision. The official’s decision after a meeting or a review shall be final.
(m) Implementation. The State agency shall implement changes required by amendments to these regulations in accordance with schedules specified in the amendment.
(1) Amendment 2. (i) If an ITO currently participates in, but does not administer, the Food Distribution Program on Indian Reservations:
(A) FNS shall determine tribal eligibility and capability to administer the Food Distribution Program on Indian Reservations within 60 days of receipt of a completed application. If an incomplete application is received, FNS shall within 15 days, notify the ITO of what additional information is required. The processing time for the capability determination shall start from the date the additional information is received by FNS.
(B) Upon FNS’ determination that the ITO will administer the Food Distribution Program on Indian Reservations, FNS shall expeditiously plan for and provide needed training and technical assistance to facilitate timely commencement of tribal administrative responsibilities. The ITO shall have 120 days from FNS’ determination in paragraph (m)(1)(i)(A) of this section to submit and have approved a plan of operation, operating manuals, and to commence program operations under the regulations as specified in this part. Extensions may be granted by FNS to ITOs if good cause is shown.
(C) If FNS determines that an ITO is not capable of administering the Food Distribution Program on Indian Reservations, FNS shall direct the State to continue program operations and submit a new plan of operation and to commence program operations under the regulations as specified in this part within 120 days from FNS’ determination in paragraph (m)(1)(i)(A) of this section.
(ii) If an ITO currently administers the Food Distribution Program on Indian Reservations, the timeframes specified in paragraph (m)(1)(i) of this section apply except that:
(A) FNS shall determine tribal eligibility and capability to administer the Food Distribution Program on Indian Reservations within 30 days of receipt of a completed application.
(B) If FNS determines that the ITO will not administer the Food Distribution Program on Indian Reservations, FNS shall direct the ITO to continue program operations until the State government can commence program operations. The State government shall have 120 days from FNS’ determination in paragraph (m)(1)(i)(A) of this section to submit and have approved a plan of operation and to commence program operations under the regulations as specified in this part.
(iii) If an ITO does not currently participate in a Food Distribution Program on Indian Reservations, the timeframes in paragraph (m)(1)(i) of this section apply except that if FNS determines that an ITO cannot administer the program, FNS shall direct the State to submit a plan of operation and to commence program operations under the regulations as specified in this part within 180 days from the determination.
(iv) Extensions to the above implementation timeframe (except for those timeframes set forth in paragraphs (m)(1) (i)(A) and (ii)(A) of this section) may be granted by FNS to ITOs or State government agencies if there is compelling justification involving circumstances which were not reasonably foreseeable and which are not the fault of the ITO or the State agency and which circumstances present extraordinary problems that would render earlier implementation impossible.
§ 253.6 Eligibility of households.
(a) Household concept. (1) The State agency shall determine eligibility for the Food Distribution Program on a household basis. Household means any of the following individuals or groups of individuals, provided that such individuals or groups are not boarders or residents of an institution and provided that separate household or boarder status shall not be granted to a spouse of a member of the household, or to children under 18 years of age under the parental control of a member of the household.
(i) An individual living alone.
(ii) An individual living with others, but customarily purchasing food and preparing meals for home consumption separate and apart from the others.
(iii) A group of individuals living together for whom food is customarily purchased in common and for whom meals are prepared together for home consumption.
(2) Nonhousehold members. The following individuals residing with a household shall not be considered household members in determining the household’s eligibility. Nonhousehold members specified in paragraphs (a)(2) (i) and (v) who are otherwise eligible may participate in the Program as separate households.
(i) Roomers. Individuals to whom a household furnishes lodging, but not meals, for compensation.
(ii) SSI recipients in “cash-out” States. Recipients of SSI benefits who reside in a State designated by the Secretary of Health, Education, and Welfare to have specifically included the value of the coupon allotment in its State supplemental payments. These persons are not eligible for Food Distribution Program benefits.
(iii) Disqualified individuals. Individuals disqualified from the Food Stamp Program for fraud, as set forth in § 273.16.
(iv) Illegal residents. Individuals who are not legal residents of the United States. While U.S. citizenship is not required for participation in the Food Distribution Program, persons receiving food distribution benefits must be lawfully living in the United States.
(v) Others. Other individuals who share living quarters with the household but who do not customarily purchase food and prepare meals with the household. For example, if the applicant household shares living quarters with another family to save on rent, but does not purchase and prepare food together with that family, the members of the other family are not members of the applicant household.
(3) Authorized representatives. The head of the household, spouse, or any other responsible member of the household may designate an authorized representative to act on behalf of the household in making application for commodities and/or obtaining commodities as provided in § 253.7(a)(10)(i) and § 253.7(a)(10)(ii) respectively.
(b) Residency or citizenship. (1) All households residing on a reservation on which the FDPIR operates shall be eligible to apply for program benefits on that reservation regardless of whether they include an Indian member. All Indian tribal households as defined in § 253.2(c) of this part which reside in near areas established under § 253.4(d) of this part shall be eligible to apply for program benefits. The ITO or State agency shall serve all income-eligible applicant households residing on reservations who apply for benefits, and all income-eligible applicant Indian tribal households residing in near areas. The ITO or State agency administering the program in a near area shall, for purposes of determining program eligibility, accept documentation from a household member’s tribe of origin as proof of tribal membership. Residency shall not mean domicile nor shall the State agency impose any durational residency requirement. However, persons on the reservation solely for vacations shall not be considered residents. No household may participate in the Food Stamp Program or in the Food Distribution Program in more than one geographical area at the same time.
(2) No person shall participate in the Food Distribution Program on an Indian reservation unless the person is legally a resident of the United States. A further discussion of “legal residency” is provided in paragraph (a)(2)(iv) of this section.
(c) Income eligibility standards of public assistance, supplemental security income, and certain general assistance households. (1) Households in which all members are included in a federally aided public assistance or supplemental security income grant, except as provided for in paragraph (a)(2)(ii) of this section, shall, if otherwise eligible under this part, be determined to be eligible to participate in the Food Distribution Program while receiving such grants without regard to the income of the household members.
(2) If FNS determines that a State or local general assistance program applies criteria of need the same as or similar to, those applied under any of the federally aided public assistance programs, households in which all members are included in such a general assistance grant, shall, if otherwise eligible under this part, be determined to be eligible to participate in the Food Distribution Program while receiving such grants without regard to the income of household members.
(d) Income—(1) Income eligibility standards for nonassistance households. (i) The State agency shall apply uniform national income eligibility standards for the Food Distribution Program except for households in which all members are recipients of public assistance, supplemental security income except as provided for in paragraph (a)(2)(ii) of this section, paragraph (c) of this section, or certain general assistance program payments as provided in § 283.6(c). The income eligibility standards shall be the applicable SNAP net monthly income eligibility standards for the appropriate area, increased by the amount of the applicable SNAP standard deduction for that area.
(ii) The income eligibility standards for the Food Distribution Program shall be adjusted each October 1, as necessary, to reflect changes in the Food Stamp Program income eligibility limits and standard deductions.
(2) Definition of income. Household income shall mean all income from whatever source, excluding only items specified in paragraph (e)(3) of this section.
(i) Earned income shall include:
(A) All wages and salaries of an employee.
(B) The total gross income from a self-employment enterprise, including the net profit from the sale of any capital goods or equipment related to the business. Ownership of rental property shall be considered a self-employment enterprise. Payments from a roomer and returns on rental property shall be considered self-employment income.
(C) Training allowances from vocational and rehabilitative programs recognized by Federal, State or local governments, such as the Work Incentive Program, and programs authorized by the Job Training Partnership Act, to the extent they are not a reimbursement.
(ii) Unearned income shall include, but not be limited to:
(A) Assistance payments from Federal or Federally aided public assistance programs, such as Supplemental Security Income (SSI) or Temporary Assistance for Needy Families (TANF), General Assistance (GA) programs, or other assistance programs based on need.
(B) Annuities; pensions; retirement; veteran’s or disability benefits; worker’s or unemployment compensation; old-age, survivors, or social security benefits; strike benefits; foster care payments for children or adults.
(C) Support or alimony payments made directly to the household from nonhousehold members.
(D) Scholarships, education grants, fellowships, deferred payment loans for education, veteran’s education benefit and the like in excess of amounts excluded under paragraph (e)(3)(iii) of this section.
(E) Payments from Government-sponsored programs, dividends, interest, royalties, and all other direct money payments from any source which can be construed to be a gain or benefit.
(F) Per capita payments that are derived from the profits of Tribal enterprises and distributed to Tribal members on a monthly basis.
(G) The earned or unearned income of an individual disqualified from participation in the Food Stamp Program for fraud shall continue to be counted as income, less the pro rata share for the disqualified member. Procedures for calculating this pro rata share are described in § 253.7.
(iii) Income shall not include the following:
(A) Monies withheld from an assistance payment, earned income or other income source, or monies received from any income source which are voluntarily or involuntarily returned to repay a prior overpayment received from that income source.
(B) Child support payments received by TANF recipients which must be transferred to the agency administering title IV-D of the Social Security Act of 1935, as amended, to maintain TANF eligibility.
(3) Income exclusions. Only the following items shall be excluded from household income and no other income shall be disregarded:
(i) Any gain or benefit which is not in the form of money payable directly to the household, including:
(A) In-kind income. Nonmonetary or in-kind benefits, such as meals, clothing, public housing, or produce from a garden.
(B) Vendor payments. A payment made in money on behalf of a household shall be considered a vendor payment whenever a person or organization outside of the household uses its own funds to make a direct payment to either the household’s creditors or a person or organization providing a service to the household. For example, if a relative, who is not a household member, pays out of its own resources the household’s rent directly to the landlord, the payment is considered a vendor payment and is not counted as income to the household. Also, payments specified by a court order or other written support or alimony agreement to go directly to a third party rather than the household and support payments which are paid to a third party are excluded as vendor payments. Wages garnished or diverted by employers, or money deducted or otherwise diverted from a household’s public assistance grant by a State for purposes such as managing the household’s expenses, shall not be considered a vendor payment, since the person or organization making the payment is using money payable to the household rather than its own funds.
(ii) Any income in the certification period which is received too infrequently or irregularly to be reasonably anticipated, but not in excess of $30 in a quarter.
(iii) Education loans on which payment is deferred, grants scholarships, fellowships, veterans’ educational benefits, and the like to the extent that they are used for tuition and mandatory school fees. Mandatory fees are those charged to all students or those charged to all students within a certain curriculum. For example, uniforms, lab fees, or equipment charged to all students to enroll in a chemistry course would be excluded. However, transportation, supplies, and textbook expenses are not uniformly charged to all students and, therefore, would not be excluded as mandatory fees.
(iv) All loans, including loans from private individuals as well as commercial institutions, other than education loans on which repayment is deferred.
(v) Reimbursements for past or future expenses to the extent they do not exceed actual expenses. For example, reimbursements of flat allowances for job or training related expenses such as travel per diem, uniforms, and transportation to and from the job or training site are excluded as income.
(vi) Monies received and used for care and maintenance of a third party beneficiary who is not a household member.
(vii) The earned income (as defined in paragraph (e)(2)(i) of this section) of children who are members of the household, who are students at least half time and who have not attained their eighteenth birthday. The exclusion shall continue to apply during temporary interruptions in school attendance due to semester or vaction breaks, provided the child’s enrollment will resume following the break. Individuals are considered children for purposes of this provision if they are under the parental control of another household member.
(viii) Money received in the form of a nonrecurring lump sum payment, including but not limited to, income tax refunds, rebates, or credits; retroactive lump-sum social security, SSI, public assistance, railroad retirement benefits or other payments, or retroactive lump-sum insurance settlements; refunds of security deposits on rental properties or utilities or lump-sum payments arising from land interests held in trust for, or by, a tribe.
(ix) The cost of producing self-employment income. The procedures for computing the cost of producing self-employment income are described in § 253.7(b)(1)(iii).
(x) Any income that is specifically excluded by any other Federal statute from consideration as income. The following Federal statutes provide such an exclusion.
(A) Reimbursements from the Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1970 (Pub. L. 91-646, section 216).
(B) Payments received under the Alaska Native Claims Settlement Act (Pub. L. 92-203, section 21(a)).
(C) Any payment to volunteers under Title II (RSVP, foster grandparents, and others) and title III (SCORE and ACE) of the Domestic Volunteer Services Act of 1973 (Pub. L. 93-113), as amended. Payments under title I (VISTA) to volunteers shall be excluded for those individuals receiving federally donated commodities, food stamps, or public assistance at the time they joined the title I program, except that households which are receiving an income exclusion for a VISTA or other title I subsistence allowance at the time of implementation of these rules shall continue to receive an income exclusion for VISTA for the length of their volunteer contract in effect at the time of implementation of these rules. Temporary interruptions in food distribution shall not alter the exclusion once an initial determination has been made. New applicants who are not receiving federally donated commodities, food stamps or public assistance at the time they joined VISTA shall have these volunteer payments included as earned income.
(D) Income derived from certain submarginal land of the United States which is held in trust for certain Indian tribes (Pub. L. 94-114, section 6).
(E) Payments received by certain Indian tribal members under Pub. L. 94-540 regarding the Grand River Band of Ottawa Indians.
(xi) Combat pay. Combat pay is defined as additional payment that is received by or from a member of the United States Armed Forces deployed to a combat zone, if the additional pay is the result of deployment to or service in a combat zone, and was not received immediately prior to serving in a combat zone.
(xii) Per capita payments that are derived from the profits of Tribal enterprises and distributed to Tribal members less frequently than monthly (e.g., quarterly, semiannually or annually) are excluded from consideration as income.
(e) Income deductions. (1) Households with earned income, as defined in paragraph (e)(2)(i) of this section, shall be allowed a deduction of twenty percent of their earned income. Earned income excluded under paragraph (e)(3) of this section shall not be considered earned income for the purpose of computing this deduction.
(2) Households shall also receive a deduction for the actual costs for the care of a child or other dependent when necessary for a household member to accept or continue employment or attend training or pursue education which is preparatory to employment.
(3) Households will receive a deduction for legally required child support payments paid by a household member to or for a nonhousehold member, including payments made to a third party on behalf of the nonhousehold member (vendor payments). The State agency must allow a deduction for amounts paid towards overdue child support (arrearages). Alimony payments made to or for a nonhousehold member cannot be included in the child support deduction.
(4) Households must receive a medical deduction for that portion of medical expenses in excess of $35 per month, excluding special diets, incurred by any household member who is elderly or disabled as defined in § 253.2 of this chapter. Spouses or other persons receiving benefits as a dependent of a Supplemental Security Income (SSI), or disability and blindness recipient are not eligible to receive this deduction; however, persons receiving emergency SSI benefits based on presumptive eligibility are eligible for this deduction. The allowable medical costs are those permitted at 7 CFR 273.9(d)(3) for the Supplemental Nutrition Assistance Program (SNAP).
(5) Households that incur monthly shelter and utility expenses will receive a shelter/utility standard deduction, subject to the provisions below.
(i) The household must incur, on a monthly basis, at least one allowable shelter/utility expense. The allowable shelter/utility expenses are those permitted at 7 CFR 273.9(d)(6)(ii) for SNAP.
(ii) The shelter/utility standard deduction amounts are set by FNS on a regional basis. The standard deductions are adjusted annually to reflect changes to SNAP Quality Control data. FNS will advise the State agencies of the updates prior to October 1 of each year.
(iii) If eligible to receive a shelter/utility standard deduction, the applicant household may opt to receive the appropriate deduction amount for the State in which the household resides or the State in which the State agency’s central administrative office is located.
§ 253.7 Certification of households.
(a) Application processing—(1) General purpose. The application process includes filing and completing an application form, being interviewed, and having certain information verified. The State agency shall act promptly on all applications. Expedited service shall be available to household in immediate need. When the State agency is other than the ITO, the ITO, when appropriate, may receive copies of certification and/or termination notices to the extent requested or agreed upon by the household. State agencies and ITOs may develop formalized mechanisms to ensure ITO receipt of notices.
(2) Food Distribution Program application form. The State agency shall use an application form acceptable to FNS. The State agency shall consult with the ITO in developing the application form. The State agency shall make application forms readily accessible to potentially eligible households and those groups or organizations involved in outreach efforts. The State agency shall also provide an application form to anyone who requests the form. State agencies which elect joint PA or GA/Food Distribution Program procedures shall follow the requirements of paragraph (g) of this section for the application form. State agencies may also use an abbreviated recertification form.
(3) Filing an application. Households must file an application for the Food Distribution Program by submitting the form to a certification office in person, through an authorized representative or by mail. The State agency shall document the date the application was received. Each household has the right to file an application form the same day it contacts the certification office during office hours on the reservation where the household resides. The household shall be advised that it does not have to be interviewed before filing the application and may file an incomplete application form as long as the application contains the applicant’s name and address and is signed by a responsible member of the household or the household’s authorized representative.
(4) Household cooperation. To determine eligibility, the application form must be completed and signed, the household or its authorized representative must be interviewed, and certain information on the application must be verified. If the household refuses to cooperate with the State agency in completing this process, the application shall be denied upon a determination of refusal. For a determination of refusal to be made, the household must be able to cooperate, but clearly demonstrate that it will not take actions that it can take and that are required to complete the application process. For example, to be denied for refusal to cooperate, a household must refuse to be interviewed and not merely fail to appear for the interview. If there is any question as to whether the household has merely failed to cooperate, as opposed to refused to cooperate, the household shall not be denied solely for this reason. The household shall also be determined ineligible if it refuses to cooperate in any subsequent review of its eligibility. Once denied or terminated for refusal to cooperate, the household may reapply but shall not be determined eligible until it cooperates.
(5) Interviews. All applicant households, including those submitting applications by mail, shall have an interview with a qualified eligibility worker prior to initial certification and all recertifications. At State agency discretion, applicants may be interviewed by telephone or in the home. No household shall be interviewed by telephone for any two consecutive certifications without a face-to-face interview. State agencies must attempt to schedule home visits in advance. Home visits cannot extend required processing standards set forth in paragraphs (a)(7) and (a)(9) of this section. The individual interviewed may be the head of household, spouse, any other responsible member of the household or an authorized representative. The household, if it wishes, may be accompanied to the interview by anyone of its choice. The interviewer shall not only review the information that appears on the application, but shall explore and resolve with the household unclear and incomplete information. Households shall be advised of their rights and responsibilities during the interview. The interview shall be conducted as an official and confidential discussion of household circumstances. The applicant’s right to privacy shall be protected during the interview. Facilities shall be adequate to preserve the privacy and confidentiality of the interview.
(6) Verification. Verification is the use of third party information or documentation to establish the accuracy of statements on the application in order to determine eligibility or ineligibility of the household.
(i) Mandatory verification. (A) Gross non-exempt income. The State agency must obtain verification of each household’s gross non-exempt income prior to certification. Households certified under the expedited service processing standards at paragraph (a)(9) of this section are not subject to this requirement. Income does not need to be verified to the exact dollar amount unless the household’s eligibility would be affected, since Food Distribution Program benefits are not reduced as income rises. If the eligibility worker is unable to verify the household’s income, the worker must determine an amount to be used for certification purposes based on the best available information. Reasons for inability to verify income include failure of the person or organization providing the income to cooperate with the household and the State agency, or lack of other sources of verification.
(B) Legal obligation and actual child support payments. The State agency must obtain verification of the household’s legal obligation to pay child support, the amount of the obligation, and the monthly amount of child support the household actually pays. Documentation that verifies the household’s legal obligation to pay child support, such as a court order, cannot be used to verify the household’s actual monthly child support payments.
(C) Excess medical expense deduction. The State agency must obtain verification for those medical expenses that the household wishes to deduct in accordance with 7 CFR 253.6(e)(4). The allowability of services provided (e.g., whether the billing health professional is a licensed practitioner authorized by State law or other qualified health professional) must be verified, if questionable. Only out-of-pocket expenses can be deducted. Expenses reimbursed to the household by an insurer are not deductible. The eligibility of the household to qualify for the deduction (i.e., the household includes a member who is elderly or disabled) must be verified, if questionable.
(D) Standard shelter/utility deduction. A household must incur, on a monthly basis, at least one allowable shelter/utility expense in accordance with 7 CFR 253.6(e)(5)(i) to qualify for the standard shelter/utility deduction. The State agency must verify that the household incurs the expense.
(ii) Verification of questionable information. Eligibility criteria other than income, including residency on or near the reservation, shall be verified prior to certification only if they are questionable. To be considered questionable, the information on the application must be inconsistent with statements by the applicant, inconsistent with other information on the application or previous applications, or inconsistent with other information received by the State agency. However, due to the difficulty in verifying whether a group of individuals is a household, State agencies shall generally accept the household’s statement regarding food preparation and consumption.
(iii) Responsibility for obtaining verification. The household has primary responsibility for providing documentary evidence or an acceptable collateral contact to support its income statements and to resolve any questionable information. However, the State agency shall assist the household in obtaining the needed verification. The State agency shall accept any reasonable documentary evidence provided by the household and shall be primarily concerned with how adequately the verification proves the statements on the application. The State agency shall also accept verification from collateral contacts so long as the collateral contacts can provide accurate third party verification. The State agency shall rely on the household to provide the name of the collateral contact. The State agency is not required to use a collateral contact designated by the household if the collateral contact cannot be expected to provide accurate third party verification. If the collateral contact designated by the household is unacceptable to the State agency, the State agency shall ask the household to designate another collateral contact, and the State agency shall document the casefile as to the reason the collateral contact was rejected and an alternate was requested. The State agency shall use collateral contacts, rather than documentary evidence, for verification if such verification is acceptable, and would result in better service to the household. For example, the household may be able to obtain a wage stub from the employer, but the State agency could call the employer the same day to provide the verification of income. Home visits shall be used as verification only if documentary evidence and collateral contacts cannot be obtained, and the State agency attempts to schedule the visit in advance with the household.
(iv) Documentation. Casefiles must be documented to support a determination of eligibility or denial. Documentation shall be in sufficient detail to permit a reviewer to determine the reasonableness and accuracy of the determination.
(v) Verification for recertification. At recertification, the State agency shall verify a change in income if the source has changed or the amount has changed by more than $50 per month since the last time the income was verified. State agencies may verify income which is unchanged or has changed by $50 per month or less, provided verification is, at a minimum, required when information is questionable as defined in paragraph (a)(6)(ii) of this section. All other changes reported at the time of recertification shall be subject to the same verification procedures as apply at initial certification. Unchanged information, other than income, shall not be verified at recertification unless the information is questionable as defined in paragraph (a)(6)(ii) of this section.
(7) Processing standards. The State agency shall provide eligible households that complete the initial application process an opportunity to participate as soon as possible, but not later than seven calendar days excluding weekends and holidays after the application was filed. An application is filed the day the State agency receives an application containing the applicant’s name and address and which is signed by either a responsible member of the household or the household’s authorized representative.
(8) Delays in processing. If the State agency cannot determine a household’s eligibility within seven calendar days excluding weekends and holidays of the date the application was filed due to lack of verification as required in paragraph (a)(6) of this section, the State agency shall authorize the distribution of commodities to the household for one month pending verification. In order to certify the household pending verification, the information on the application form must be complete and indicate that the household will likely be eligible. No further distribution of commodities shall be made without completing the eligibility determination.
(9) Expedited service. The State agency shall provide an opportunity to obtain commodities within one calendar day excluding weekends and holidays after the date the application was filed for those households with no income in the current month and also for those households which, in the judgment of the certifying agency, would likely be eligible and would otherwise suffer a hardship. The basis for this determination shall be recorded in the casefile. State agencies shall provide same day service, if possible, to households eligible for expedited service which would likely suffer a hardship if required to return to the office the next day. Warehouses or other distribution points need not be open during all certification hours to meet this need. However, accessibility to federally donated commodities by appropriate certification or other personnel should be established for households in immediate need. When State agencies can demonstrate a need, FNS may approve other expedited timeframes based on circumstances such as distance to warehouses or other distribution points. To expedite the certification of households in immediate need the State agency shall postpone the verification required under paragraph (a)(6) of this section. However, the State agency shall verify the household’s identity and address through a collateral contact or readily available documentary evidence. If possible, the household’s income statements should be verified at the same time. The State agency shall complete the verification for households certified on an expedited basis prior to the distribution of commodities to the household for any subsequent month.
(10) Authorized representatives. The head of the household, spouse, or any other responsible member of the household may designate an authorized representative to act on behalf of the household in one or all of the following capacities:
(i) Making application for commodities. When the head of the household or the spouse cannot make application, another household member may apply or an adult nonhousehold member may be designated in writing as the authorized representative for that purpose. The head of the household or the spouse should prepare or review the application whenever possible, even though another household member or the authorized representative will actually be interviewed. Adults who are nonhousehold members may be designated as authorized representatives for certification purposes only if they are sufficiently aware of relevant household circumstances.
(ii) Obtaining commodities. An authorized representative of the household may be designated to obtain commodities. Designation shall be made at the time the application is completed except that the household may be permitted to designate an emergency authorized representative in the event that illness or other unforeseen circumstances prevent the household from otherwise obtaining commodities. Designation of an emergency authorized representative must be made in writing by a responsible member of the household. State agencies may distribute commodities to household members or authorized representatives presenting an identification card or other appropriate identification that satisfactorily identifies the member obtaining commodities.
(b) Eligibility determinations—(1) Determining income. (i) The State agency shall take into account the income already received by the household during the certification period and any anticipated income the household and the State agency are reasonably certain will be received during the remainder of the certification period. If the amount of income that is anticipated is uncertain, that portion of the household’s income that is uncertain shall not be counted by the State agency. For example, a household anticipating income from a new source, such as a new job or recently applied for public assistance benefits, may be uncertain as to the timing and amount of the initial payment. These monies shall not be anticipated by the State agency unless there is reasonable certainty concerning the month in which the payment will be received and in what amount. If the exact amount of the income is not known, that portion of it which can be anticipated with reasonable certainty shall be considered as income. In cases where the receipt of income is reasonably certain but the monthly amount may fluctuate, and the household’s income is close to the income eligibility limit the State agency may elect to average income provided that such averaging does not disadvantage the household. Such averaging shall be based on income that is anticipated to be available to the household during the certification period. The State agency shall use income received in the past 30 days as an indicator of future income during the certification period unless changes in income have occurred or can be anticipated.
(ii) Income anticipated during the certification period shall be counted as income only in the month it is expected to be received, unless the income is averaged.
(iii)(A) Self-employment income which represents a household’s annual support including the net profit from the sale of any capital goods or equipment related to the business shall be annualized over a 12-month period, even if the income is received in only a short period of time. For example, self-employment income received by farmers shall be averaged over a 12-month period if the income represents the farmer’s annual support.
(B) Self-employment income which represents only a part of a household’s annual support, including the net profit from the sale of any capital goods or equipment related to the business, shall be averaged over the period of time the income is intended to cover. For example, self-employed vendors who work only in the summer and supplement their income from other sources during the balance of the year shall have their self-employment income averaged over the summer months rather than a 12-month period.
(C) For the period of time over which self-employment income is determined, the State agency shall add all gross self-employment income, exclude the cost of producing the self-employment income and divide the net self-employment income by the number of months over which the income will be averaged. The allowable costs of producing self-employment income include but are not limited to, the identifiable costs of labor, stock, raw materials, seed and fertilizer, interest paid to purchase income producing property, insurance premiums, and taxes paid on income producing property.
(D) In determining net self-employment income, payments on the principal of the purchase price of income-producing real estate and capital assets, equipment, machinery, and other durable goods, net losses from previous periods, Federal, State, and local income taxes, money set aside for retirement purposes, and other work-related personal expenses (such as transportation to and from work) will not be allowable costs of doing business.
(iv) The monthly net self-employment income shall be added to any other earned income received by the household. The total monthly earned income, less the 20 percent earned income deduction, shall then be added to all monthly unearned income received by the household.
(v) Allowable costs for dependent care shall be subtracted from the household’s total monthly income to determine net monthly income.
(vi) The total net monthly income shall be compared to the income eligibility standard for the appropriate household size to determine the household’s eligibility.
(2) Certification periods. (i) The State agency shall establish definite periods of time within which households shall be eligible to receive benefits. Further eligibility shall be established upon a recertification based upon a newly completed application, an interview, and such verification as required by paragraph (a)(6)(v) of this section.
(ii) Certification periods shall conform to calendar months. The first month in the certification period of initial applicants shall be the month in which eligibility is determined. For example, if a household submits an application in late January and the household is determined eligible on the fifth working day which falls in February, a six-month certification period would include February through July. Upon recertification, the certification period will begin with the month following the last month of the previous certification period.
(iii) A household shall be assigned a certification period for as long a period as the household’s circumstances are expected to remain sufficiently stable such that the household is expected to continue to meet the program’s eligibility standards.
(iv) In no event may a certification period exceed 12 months, except that households in which all adult members are elderly and/or disabled may be certified for up to 24 months. Households assigned certification periods that are longer than 12 months must be contacted by the State agency at least once every 12 months to determine if the household wishes to continue to participate in the program and whether there are any changes in household circumstances that would warrant a redetermination of eligibility or a change in benefit level. The State agency may use any method it chooses for this contact, including a face-to-face interview, telephone call or a home visit. Contact with the household’s authorized representative would not satisfy this requirement; the State agency must contact a household member. The case file must document the contact with the household and include the date of contact, method of contact, name of person contacted, whether the household wishes to continue to participate, and whether changes in household circumstances would warrant a redetermination of eligibility or a change in benefit level.
(3) Certification notices—(i) Notice of eligibility. If an application is approved, the State agency shall provide the household a written notice of eligibility and the beginning and ending dates of the certification period. Households certified on an expedited basis shall be advised that the subsequent month’s eligibility will depend upon completion of the postponed verification.
(ii) Notice of denial. If the application is denied, the State agency shall provide the household written notice explaining the basis for the denial, the household’s right to request a fair hearing, and the telephone number and address of the person to contact for additional information. If there is an individual or organization available which provides free legal representation, the notice shall also advise the household of the availability of the service.
(iii) Notice of adverse action. (A) Prior to any action to reduce or terminate a household’s benefits within the certification period, except for households voluntarily switching program participation from the Food Distribution Program to the Food Stamp Program, State agencies shall provide the household timely and adequate advance notice before the adverse action is taken. The notice must be issued within 10 days of determining that an adverse action is warranted. The adverse action must take effect with the next scheduled distribution of commodities that follows the expiration of the advance notice period, unless the household requests a fair hearing.
(B) In State agencies that have elected joint public assistance or general assistance and Food Distribution processing, the notice of adverse action shall be considered timely if the advance notice period conforms to that period of time defined by the State agency as an adequate notice period for its public or general assistance caseload, provided that the period includes at least 10 days from the date the notice is mailed to the date upon which the action becomes effective. In circumstances other than joint processing, the advance notice shall be considered timely if the advance notice period includes at least 10 days from the date the notice is issued to the date upon which the action becomes effective.
(C) The notice of adverse action must include the following in easily understandable language:
(1) The reason for the adverse action;
(2) The date the adverse action will take effect;
(3) The household’s right to request a fair hearing and continue to receive benefits pending the outcome of the fair hearing;
(4) The date by which the household must request the fair hearing;
(5) The liability of the household for any overissuances received while awaiting the outcome of the fair hearing, if the fair hearing official’s decision is adverse to the household;
(6) The telephone number and address of someone to contact for additional information; and
(7) The telephone number and address of an individual or organization that provides free legal representation, if available.
(D) The State agency shall continue distribution of commodities to the household after the end of the adverse notice period if the household requests a fair hearing during the advance notice period.
(E) If the State agency determines that a household received more USDA commodities than it was entitled to receive, it must establish a claim against the household in accordance with § 253.9. The initial demand letter for repayment must be provided to the household at the same time the notice of adverse action is issued. It may be combined with the notice of adverse action.
(c) Reporting changes. (1) The State agency must develop procedures for how changes in household circumstances are reported. Changes reported over the telephone or in person must be acted on in the same manner as those reported in writing. Participating households are required to report the following changes within 10 calendar days after the change becomes known to the household:
(i) A change in household composition;
(ii) An increase in gross monthly income of more than $100;
(iii) A change in residence;
(iv) When the household no longer incurs a shelter and utility expense; or
(v) A change in the legal obligation to pay child support.
(2) If the State agency determines that the household is no longer eligible or reduces the amount of commodities due the household because the household has lost a member or members, the State agency shall provide the household with a notice of adverse action not later than ten days after the change is reported. If the reported change increases the amount of commodities due the household, the household shall be notified that the increase shall be effective not later than the month following the date the change was reported.
(d) Recertification. (1) The State agency shall develop a procedure for notifying the household prior to or shortly after the end of its certification period that the household must reapply and be recertified for continued participation. Households shall also be notified of the date upon which termination from participation will be effective should the household fail to reapply before the expiration of the certification period.
(2) The State agency shall approve or deny a household’s application for recertification and notify the household of that determination prior to the expiration of the household’s current certification period. Households applying for recertification in the last month of the current certification period must be provided an opportunity to obtain commodity distribution on an uninterrupted basis.
(3) The State agency shall continue distribution of commodities to the household denied at the point of recertification if the household timely requests a fair hearing.
(e) Controls for dual participation—(1) Prohibition on dual participation. No household shall be allowed to participate simultaneously in the Food Stamp Program and Food Distribution Program. The State agency shall inform each applicant household of this prohibition and shall develop a method to detect dual participation. The method developed by the State agency shall, at a minimum, employ lists of currently certified households provided by and provided to the appropriate food stamp agency on a monthly basis. The State agency may also employ computer checks, address checks and telephone calls to prevent dual participation. The State agency shall coordinate with the appropriate food stamp agency or agencies in developing controls for dual participation.
(2) Choice of programs. Households eligible for either the Food Stamp Program or Food Distribution Program on reservations on which both programs are available may elect to participate in either program. Such households may elect to participate in one program, and subsequently elect the other at the end of the certification period. Households may also elect to switch from one program to the other program within a certification period only by terminating their participation, and notifying the State agency of their intention to switch programs. Households certified in either the Food Distribution or Food Stamp Program on the first day of the month can only receive benefits in the program for which they are currently certified during that month. At the point the household elects to change programs the household should notify the State agency of its intent to switch programs, and should file an application for the program in which it wishes to participate. Households voluntarily withdrawing from one program with the intent of switching to the other shall have their eligibility terminated for the program in which they are currently certified on the last day of the month in which the household notifies the State agency of its intent to change programs. Entitlement in the program for which a household is now filing an application, if all eligibility criteria are met, would begin in the month following the month of termination in the previous program.
(f) Treatment of disqualified household members. (1) The following are not eligible to participate in the Food Distribution Program:
(i) Household members disqualified from the Food Distribution Program for an intentional program violation under § 253.8. These household members may participate, if otherwise eligible, in the Food Distribution Program once the period of disqualification has ended.
(ii) Household members disqualified from the Food Stamp Program for an intentional program violation under § 273.16 of this chapter. These household members may participate, if otherwise eligible, in the Food Distribution Program once the period of disqualification under the Food Stamp Program has ended. The State agency must, in cooperation with the appropriate food stamp agency, develop a procedure that ensures that these household members are identified.
(iii) Households disqualified from the Food Distribution Program for failure to pay an overissuance claim. The circumstances under which a disqualification is allowed for such failure are specified in FNS Handbook 501.
(2) During the time a household member is disqualified, the eligibility and food distribution benefits of any remaining household members will be determined as follows:
(i) Income. A pro rata share of the income of the disqualified member will be counted as income to the remaining members. This pro rata share is calculated by dividing the disqualified member’s earned (less the 20 percent earned income deduction) and unearned income evenly among all household members, including the disqualified member. All but the disqualified member’s share is counted as income to the remaining household members.
(ii) Eligibility and benefits. The disqualified member will not be included when determining the household’s size for purposes of assigning food distribution benefits to the household or for purposes of comparing the household’s net monthly income with the income eligibility standards.
(g) Joint processing PA/GA. (1) State agencies which are responsible for and administer both the Food Distribution and public assistance (PA) or general assistance (GA) programs on Indian reservations may allow a household to apply for the Food Distribution Program at the same time the household applies for PA or GA benefits. However, while PA households are categorically eligible, GA households except for those households in GA programs which have been determined by FNS to have criteria of need the same as, or similiar to those under federally aided public assistance programs as provided for in § 253.6(c)(2) shall have their eligibility for commodities based solely on Food Distribution eligibility criteria. All criteria provided in this paragraph (f), are applicable to State agencies which administer both the Food Distribution and assistance programs and which elect joint processing. Under joint processing, the State agency shall use joint application forms that contain all the information needed to determine eligibility for commodities or shall attach a form for the other needed information.
(2) The State agency shall process all applications for PA or GA as applications for the Food Distribution Program as well, unless the household clearly indicates on a space on the application that the household does not want commodities. The State agency shall conduct a single interview for PA or GA and Food Distribution Program eligibility, unless the State agency is unable to do so within the Food Distribution Program processing standards specified in paragraphs (a)(7) and (a)(9)of this section. In such cases the State agency shall provide separate certification for PA or GA and Food Distribution Program eligibility.
(3) The State agency may verify those factors of eligibility which must be verified for PA or GA, under PA or GA rules, but must follow the Food Distribution Program rules for all other factors.
(4) PA households have the same reporting requirements as any other food distribution household. PA households which report a change in circumstances to the PA worker shall be considered to have reported the change for food distribution purposes. All of the requirements pertaining to reporting changes for PA households shall be applied to GA households in project areas where GA and food distribution cases are processed jointly.
(5) The State agency must follow all Food Distribution Program timeliness rules for certification of households for the Food Distribution Program.
(h) Fair hearing—(1) Availability of hearings. The State agency shall provide a fair hearing to any household aggrieved by any action of the State agency which affects the participation of the household in the Food Distribution Program.
(2) Timely action on hearings—(i) Time frames for the State agency. The State agency must conduct the hearing, arrive at a decision, and notify the household of the decision within 60 days of receipt of a request for a fair hearing. The fair hearing decision may result in a change in the household’s eligibility or the amount of commodities issued to the household based on household size. The State agency must implement these changes to be effective for the next scheduled distribution of commodities following the date of the fair hearing decision. If the commodities are normally made available to the household within a specific period of time (for example, from the first day of the month through the tenth day of the month), the effective date of the disqualification will be the first day of that period.
(ii) Household requests for postponement. The household may request and is entitled to receive, a postponement of the scheduled hearing. The postponement shall not exceed 30 days and, the time limit for action on the decision may be extended for as many days as the hearing is postponed.
(3) Notification of right to request hearing. At the time of application, each household shall be informed of its right to a hearing, of the method by which a hearing may be requested, and that its case may be presented by a household member or a representative, such as a legal counsel, a relative, a friend or other spokesperson. If there is an individual or organization available which provides free legal representation, the household shall also be informed of the availability of that service. Hearing procedures shall be published by the State agency and made available to any interested party.
(4) Time period for requesting hearing. A household shall be allowed to request a hearing on any action by the State agency which occurred in the prior 90 days or which affects current benefits.
(5) Request for hearing. A request for a hearing is any clear expression, oral or written, by the household or its representative to the State agency that it wishes to present its case to a higher authority. The freedom to make such a request shall not be limited or interfered with in any way. Upon request, the State agency shall make available without charge the specific materials necessary for a household or its representative to determine whether a hearing should be requested or to prepare for a hearing.
(6) Denial or dismissal of request for hearing. The State agency shall not deny or dismiss a request for a hearing unless:
(i) The request is not received within the time period specified in paragraph (g)(4) of this section;
(ii) The request is withdrawn in writing by the household or its representative; or
(iii) The household or its representative fails, without good cause, to appear at the scheduled hearing.
(7) Notification of time and place of hearing. The time, date and place of the hearing shall be convenient to the household. At least 15 days prior to the hearing, advance written notice shall be provided to all parties involved to permit adequate preparation of the case. The notice shall:
(i) Advise the household or its representative of the name, address, and the phone number of the person to notify in the event it is not possible for the household to attend the scheduled hearing.
(ii) Specify that the State agency will dismiss the hearing request if the household or its representative fails to appear for the hearing without good cause.
(iii) Include the State agency hearing procedures and any other information that would provide the household with an understanding of the proceedings, and that would contribute to the effective presentation of the household’s case.
(iv) Explain that the household or representative may examine the casefile prior to the hearing.
(8) Hearing official. Hearings shall be conducted by an impartial official(s), designated by the State agency, who does not have any personal interest or involvement in the case and who was not directly involved in the initial determination of the action which is being contested. The hearing official shall:
(i) Administer oaths or affirmations if required by the State;
(ii) Ensure that all relevant issues are considered;
(iii) Request, receive and make part of the record all evidence determined necessary to decide the issues being raised;
(iv) Regulate the conduct and course of the hearing consistent with due process to ensure an orderly hearing; and
(v) Render a hearing decision in the name of the State agency, in accordance with paragraph (g)(11) of this section, which will resolve the dispute.
(9) Attendance at hearing. The hearing shall be attended by a representative of the State agency which initiated the action being contested and by the household and/or its representative. The hearing may also be attended by friends or relatives of the household upon household consent.
(10) Conduct of hearing. The household may not be familiar with the rules of order and it may be necessary to make particular efforts to arrive at the facts of the case in a manner that makes the household feel most at ease. The household or its representative must be given adequate opportunity to:
(i) Examine all documents and records to be used at the hearing at a reasonable time before the date of the hearing, as well as during the hearing. The contents of the casefile, including the application forms and documents of verification used by the State agency shall be made available, provided the confidential information is protected from release. The State agency shall provide a free copy of the relevant portions of the casefile if requested by the household or its representative. Confidential information that is protected from release and other documents or records which the household will not otherwise have an opportunity to contest or challenge shall not be introduced at the hearing or affect the hearing official’s decision.
(ii) Present the case or have it presented by a legal counsel or other person.
(iii) Bring witnesses.
(iv) Advance arguments without undue interference.
(v) Question or refute any testimony or evidence, including an opportunity to confront and cross-examine adverse witnesses.
(vi) Submit evidence to establish all pertinent facts and circumstances in the case.
(11) Hearing decisions. (i) Decisions of the hearing officials shall comply with Federal law or regulations and shall be based on the hearing record. The verbatim transcript or recording of testimony and exhibits or an official report containing the substance of what transpired at the hearing, together with all papers and requests filed in the proceeding, shall constitute the exclusive record for a final decision by the hearing official.
(ii) A decision by the hearing official shall be binding on the State agency and shall summarize the facts of the case, specify the reasons for the decision and identify the supporting evidence and the pertinent FNS regulations. The decision shall become a part of the record.
(iii) Within 10 days of the date the fair hearing decision is issued, the State agency must issue a notice to the household advising it of the decision.
(A) If the decision upheld the adverse action by the State agency, the notice must advise the household of the right to pursue judicial review.
(B) If the decision upheld a disqualification, the notice must also include the reason for the decision, the date the disqualification will take effect, and the duration of the disqualification (that is, 12 months; 24 months; or permanent). The State agency must also advise any remaining household members if the household’s benefits will change, or if the household is no longer eligible as a result of the disqualification.
(iv) The State agency must revise the demand letter for repayment issued previously to the household to include the value of all overissued commodities provided to the household during the appeal process, unless the fair hearing decision specifically requires the cancellation of the claim. The State agency must also advise the household that collection action on the claim will continue, in accordance with FNS Handbook 501, unless suspension is warranted.
(12) Agency conferences. (i) The State agency shall offer agency conferences to households which request an immediate resolution by a higher authority of a denial of eligibility for food distribution benefits. The State agency may also offer agency conferences to households adversely affected by any agency action. The State agency shall advise households that use of an agency conference is optional and that such use shall in no way delay or replace the fair hearing process. The agency conferences may be attended by the eligibility worker responsible for the agency action, and shall be attended by an eligibility supevisor and/or the agency director, as well as the household and/or its representative. An agency conference may lead to an informal resolution of the dispute. However, a fair hearing must still be held if requested by the household.
(ii) An agency conference for households requesting an immediate resolution by a higher authority of an eligibility issue shall be scheduled within four working days of the request unless the household requests that it be scheduled later or states that it does not wish to have an agency conference.
§ 253.8 Administrative disqualification procedures for intentional program violation.
(a) What is an intentional program violation? An intentional program violation is considered to have occurred when a household member knowingly, willingly, and with deceitful intent:
(1) Makes a false or misleading statement, or misrepresents, conceals, or withholds facts in order to obtain Food Distribution Program benefits which the household is not entitled to receive; or
(2) Commits any act that violates a Federal statute or regulation relating to the acquisition or use of Food Distribution Program commodities.
(b) What are the disqualification penalties for an intentional program violation? Household members determined by the State agency to have committed an intentional program violation will be ineligible to participate in the program:
(1) For a period of 12 months for the first violation;
(2) For a period of 24 months for the second violation; and
(3) Permanently for the third violation.
(c) Who can be disqualified? Only the household member determined to have committed the intentional program violation can be disqualified. However, the disqualification may affect the eligibility of the household as a whole, as addressed under paragraphs (e)(5) and (h) of this section.
(d) Can the disqualification be appealed? Household members determined by the State agency to have committed an intentional program violation may appeal the disqualification, as provided under § 253.7(h)(1).
(e) What are the State agency’s responsibilities? (1) Each State agency must implement administrative disqualification procedures for intentional program violations that conform to this section.
(2) The State agency must inform households in writing of the disqualification penalties for intentional program violations each time they apply for benefits, including recertifications. This notice must also advise households that an intentional program violation may be referred to authorities for prosecution.
(3) The State agency must attempt to substantiate all suspected cases of intentional program violation. An intentional program violation is considered to be substantiated when the State agency has clear and convincing evidence demonstrating that a household member committed one or more acts of intentional program violation, as defined in paragraph (a) of this section.
(4) Within 10 days of substantiating that a household member has committed an intentional program violation, the State agency must provide the household member with a notice of disqualification, as described in paragraph (f) of this section. A notice must still be issued in instances where the household member is not currently eligible or participating in the program.
(5) The State agency must advise any remaining household members if the household’s benefits will change or if the household will no longer be eligible as a result of the disqualification.
(6) The State agency must provide the household member to be disqualified with an opportunity to appeal the disqualification through a fair hearing, as required by § 253.7(h).
(7) The State agency must refer all substantiated cases of intentional program violations to Tribal, Federal, State, or local authorities for prosecution under applicable statutes. However, a State agency that has conferred with its legal counsel and prosecutors to determine the criteria for acceptance for possible prosecution is not required to refer cases that do not meet the prosecutors’ criteria.
(8) The State agency must establish claims, and pursue collection as appropriate, on all substantiated cases of intentional program violation in accordance with § 253.9.
(f) What are the requirements for the notice of disqualification? (1) Within 10 days of substantiating the intentional program violation, the State agency must issue to the household member a notice of disqualification. The notice must allow an advance notice period of at least 10 days. The disqualification must begin with the next scheduled distribution of commodities that follows the expiration of the advance notice period, unless the household member requests a fair hearing. A notice must still be issued in instances where the household member is not currently eligible or participating in the program.
(2) The notice must conform to the requirements of § 253.7(b)(3)(iii)(C) for notices of adverse action.
(g) What are the appeal procedures for administrative disqualifications?—(1) Appeal rights. The household member has the right to request a fair hearing to appeal the disqualification in accordance with the procedures at § 253.7(h).
(2) Notification of hearing. The State agency must provide the household member with a notification of the time and place of the fair hearing as described in § 253.7(h)(7). The notice must also include:
(i) A warning that if the household member fails to appear at the hearing, the hearing decision will be based solely on the information provided by the State agency; and
(ii) A statement that the hearing does not prevent the Tribal, Federal, State, or local government from prosecuting the household member in a civil or criminal court action, or from collecting any overissuance(s).
(h) What are the procedures for applying disqualification penalties? (1) If the household member did not request a fair hearing, the disqualification must begin with the next scheduled distribution of commodities that follows the expiration of the advance notice period of the notice of adverse action. If the commodities are normally made available to the household within a specific period of time (for example, from the first day of the month through the tenth day of the month), the effective date of the disqualification will be the first day of that period. The State agency must apply the disqualification period (that is, 12 months, 24 months, or permanent) specified in the notice of disqualification. The State agency must advise any remaining household members if the household’s benefits will change or if the household is no longer eligible as a result of the disqualification.
(2) If the household member requested a fair hearing and the disqualification was upheld by the fair hearing official, the disqualification must begin with the next scheduled distribution of commodities that follows the date the hearing decision is issued. If the commodities are normally made available to the household within a specific period of time (for example, from the first day of the month through the tenth day of the month), the effective date of the disqualification will be the first day of that period. The State agency must apply the disqualification period (that is, 12 months, 24 months, or permanent) specified in the notice of disqualification. No further administrative appeal procedure exists after an adverse fair hearing decision. The decision by a fair hearing official is binding on the State agency. The household member, however, may seek relief in a court having appropriate jurisdiction. As provided under § 253.7(h)(11)(iii)(B), the State agency must advise any remaining household members if the household’s benefits will change, or if the household is no longer eligible as a result of the disqualification.
(3) Once a disqualification has begun, it must continue uninterrupted for the duration of the penalty period (that is, 12 months; 24 months; or permanent). Changes in the eligibility of the disqualified household member’s household will not interrupt or shorten the disqualification period.
(4) The same act of intentional program violation continued over a period of time will not be separated so that more than one penalty can be imposed. For example, a household intentionally fails to report that a household member left the household, resulting in an overissuance of benefits for 5 months. Although the violation occurred over a period of 5 months, only one penalty will apply to this single act of intentional program violation.
(5) If the case was referred for Tribal, Federal, State, or local prosecution and the court of appropriate jurisdiction imposed a disqualification penalty, the State agency must follow the court order.
§ 253.9 Claims against households.
(a) What are the procedures for establishing a claim against a household for an overissuance? (1) The State agency must establish a claim against any household that has received more Food Distribution Program commodities than it was entitled to receive.
(2) The procedures for establishing and collecting claims against households are specified in FNS Handbook 501, The Food Distribution Program on Indian Reservations.
(b) Who is responsible for repaying a household overissuance claim? (1) All adult household members are jointly and separately liable for the repayment of the value of any overissuance of Food Distribution Program benefits to the household.
(2) Responsibility for repayment continues even in instances where the household becomes ineligible or is not participating in the program.
§ 253.10 Commodity control, storage and distribution.
(a) Control and accountability. The State agency shall be responsible for the issuance of commodities to households and the control of and accountability for the commodities upon its acceptance of the commodities at time and place of delivery.
(b) Commodity inventories. The State agency shall, in cooperation with the FNS Regional office, develop an appropriate procedure for determining and monitoring the level of commodity inventories at central commodity storage facilities and at each local distribution point. The State agency shall maintain the inventories at proper levels taking into consideration, among other factors, household preferences and the historical and projected volume of distribution at each site. The procedures shall provide that commodity inventories at each central storage facility and each local distribution point are not in excess, but are adequate for, an uninterrupted distribution of commodities.
(c) Storage facilities and practices. The State agency shall as a minimum ensure that:
(1) Adequate and appropriate storage facilities are maintained. The facilities shall be clean and neat and safe-guarded against theft, damage, insects, rodents and other pests.
(2) Department recommended dunnage, stacking and ventilation methods are followed.
(3) Commodities are stacked in a manner which facilitates an accurate inventory.
(4) Commodities are issued on a first-in, first-out basis.
(5) Commodities held in storage for a protracted period of time are reinspected prior to issuance.
(6) Out-of-condition commodities are disposed of in accordance with Department approved methods.
(7) Notification is provided to certified households of the location of distribution sites and days and hours of distribution.
(8) An adequate supply of commodities which are available from the Department is on hand at all distribution sites.
(9) Sufficient distribution sites, either stationary or mobile, are geographically located or routed in relation to population density of eligible households.
(10) Days and hours of distribution are sufficient for caseload size and convenience.
(11) Households are advised they may refuse any commodity not desired, even if the commodities are prepackaged by household size.
(12) Emergency issuance of commodities will be made to households certified for expedited service in accordance with the provisions of § 253.7(a)(9).
(13) Eligible households or authorized representatives are identified prior to the issuance of commodities.
(14) Authorized signatures are obtained for commodities issued and the issue date recorded.
(15) Posters are conspicuously displayed advising program participants to accept only those commodities, and in such quantities, as will be consumed by them.
(16) Complete and current records are kept of all commodities received, issued, transferred, and on hand and of any inventory overages, shortages, and losses.
(17) A list of commodities offered by the Department is displayed at distribution sites so that households may indicate preferences for future orders.
(d) Distribution. The State agency shall distribute commodities only to households eligible to receive them under this part. If the State agency uses any other agency, administration, bureau, service or similar organization to effect or assist in the certification of households or distribution of commodities, the State agency shall impose upon such organization responsibility for determining that households to whom commodities are distributed are eligible under this part. The State agency shall not delegate to any such organization its responsibilities to the Department for overall management and control of the Food Distribution Program.
(e) Improper distribution or loss of or damage of commodities. State agencies shall take action to obtain restitution in connection with claims arising in their favor for improper distribution, use or loss, or damage of commodities in accordance with §§ 250.13 and 250.15 of this chapter.
(f) Damaged or out-of-condition commodities. The State agency shall immediately notify the appropriate Food and Nutrition Service Regional Office (FNSRO) if any commodities are found to be damaged or out-of-condition at the time of arrival, or at any subsequent time, whether due to latent defects or any other reason. FNSRO shall advise the State agency of the appropriate action to be taken with regard to such commodities. If the commodities are declared unfit for human consumption in accordance with § 250.13(f) of this chapter, they shall be disposed of as provided for under that section. When out-of-condition commodities do not create a hazard to other food at the same location, they shall not be disposed of until FNSRO or the responsible commodity contractor approves. When circumstances require prior disposal of a commodity, the quantity and manner of disposition shall be reported to the appropriate FNSRO. If any damaged or out-of-condition commodities are inadvertently issued to a household and are rejected or returned by the household because the commodities were unsound at the time of issuance and not because the household failed to provide proper storage, care or handling, the State agency shall replace the damaged or out-of-condition commodities with the same or similar kind of commodities which are sound and in good condition. The State agency shall account for such replacements on its monthly inventory report.
§ 253.11 Administrative funds.
(a) Allocation of administrative funds to FNS Regional Offices. Each fiscal year, after enactment of a program appropriation for the full fiscal year and apportionment of funds by the Office of Management and Budget, administrative funds will be allocated to each FNS Regional Office for further allocation to State agencies. To the extent practicable, administrative funds will be allocated to FNS Regional Offices in the following manner:
(1) 65 percent of all administrative funds available nationally will be allocated to each FNS Regional Office in proportion to its share of the total number of participants nationally, averaged over the three previous fiscal years; and
(2) 35 percent of all administrative funds available nationally will be allocated to each FNS Regional Office in proportion to its share of the total current number of State agencies administering the program nationally.
(b) Allocation of administrative funds to State agencies. Prior to receiving administrative funds, State agencies must submit a proposed budget reflecting planned administrative costs to the appropriate FNS Regional Office for approval. Planned administrative costs must be allowable under part 277 of this chapter. To the extent that funding levels permit, the FNS Regional Office allocates to each State agency administrative funds necessary to cover no less than 80 percent of approved administrative costs.
(c) State agency matching requirement. State agencies must match administrative funds allocated to them as follows:
(1) Unless Federal administrative funding is approved at a rate higher than 80 percent of approved administrative costs, in accordance with paragraph (c)(3) of this section, each State agency must contribute 20 percent of its total approved administrative costs. Cash or non-cash contributions, including third party in-kind contributions, and the value of services rendered by volunteers, may be used to meet the State agency matching requirement. Funds provided from another Federal source may be used to meet the State agency matching requirement, provided that such use is consistent with the purpose of those funds and complies with this subsection. To use funds from another Federal source, the State agency must submit documentation for approval to the FNS Regional Office which shows the source, value, and purpose of those funds. In accordance with part 277 of this chapter, such contributions must:
(i) Be verifiable;
(ii) Be necessary and reasonable to accomplish program objectives;
(iii) Be allowable under part 277 of this chapter; and
(iv) Be included in the approved budget.
(2) Upon request from a State agency, an FNS Regional Office may approve a waiver reducing a State agency’s matching requirement below 20 percent. To request a waiver, the State agency must submit compelling justification for the waiver to the appropriate FNS Regional Office. Compelling justification is based on either financial inability to meet the match requirement or the match requirement imposing a substantial burden. The request for the match waiver must be submitted with the following and in accordance with other FNS instructions:
(i) For a waiver based on financial inability, a summary statement and recent financial documents showing that the State agency is unable to meet the 20 percent matching requirement and that additional administrative funds are necessary for the effective operation of the program; or
(ii) For a waiver based on substantial burden, a signed letter from the leadership of the State agency or, in the case of an Indian Tribal Organization, from the leadership of the Tribal agency that oversees the Food Distribution Program, describing why meeting the 20 percent matching requirement would impose a substantial burden on the State agency, and why additional administrative funds are necessary for the effective operation of the program, along with supporting documentation, as needed.
(3) The FNS Regional Office may not reduce any benefits or services to State agencies that are granted a waiver.
(d) Use of funds by State agencies. Any funds received under this section shall be used only for costs that are allowable under part 277 of this chapter, and that are incurred in operating the food distribution program. Such funds may not be used to pay costs that are, or may be, paid with funds provided from other Federal sources.
(e) Application for funds. (1) Any State agency administering a Food Distribution Program that desires to receive administrative funds under this section shall submit form SF-424, “Application for Federal Assistance,” to the appropriate FNS Regional Office at least three months prior to the beginning of a Federal fiscal year. The application shall include budget information, reflecting by category of expenditure the State agency’s best estimate of the total amount to be expended in the administration of the program during the fiscal year. FNS may require that detailed information be submitted by the State agency to support or explain the total estimated amounts shown for each budget cost category. As required by 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR part 400 and part 415, agencies of State government shall submit the application for Federal assistance to the State clearinghouse before submitting it to the FNSRO. ITOs shall not be subject to this requirement.
(2) Approval of the application by FNS shall be a prerequisite to the payment of any funds to State agencies.
(f) Availability of funds. (1) FNS shall review and evaluate the budget information submitted by the State agency in relationship to the State agency’s plan of operation and any other factors which may be relevant to FNS’ determination as to whether the estimated expenditures itemized by budget category are reasonable and justified. FNS shall give written notification to the State agency of (i) its approval or disapproval of any or all of the itemized expenditures, (ii) the amount of funds which will be made available, and (iii) the period for which funds are available.
(2) FNS shall review and evaluate applications submitted by State agencies for administrative funds available under this section in the following order of priority and shall give preference in making payments of funds under this section in the same order of priority:
(i) Applications from State agencies which desire to continue a Food Distribution Program now in operation,
(ii) Applications from State agencies, in the order received, which FNS determines are immediately capable of effectively and efficiently administering the Program, and
(iii) Applications from other States agencies, in the order received.
(g) Method of payment to State agencies. (1) Payments are made to State agencies through a Letter of Credit or an advance by Treasury check. The Letter of Credit funding method shall be used by FNS except when the advances to be made within a 12 month period are estimated to be less than $120,000. However, FNS may, at its option, reimburse a State agency by Treasury check regardless of the amount in response to a valid claim submitted by the State agency.
(2) The Letter of Credit funding method shall be done in conjunction with Treasury Department procedures, Treasury Circular No. 1075 and through an appropriate Treasury Regional Disbursing Office (RDO). The Standard Form 183, “Request for Payment on Letter of Credit and Status of Funds Report,” shall be correctly prepared and certified by a duly appointed official of the State for requesting payment from an RDO.
(3) The advance by Treasury check method shall be done by use of the Standard Form 270, “Request for Advance or Reimbursement,” and procedures associated with its use. State agencies receiving payments under this method may request payments before cash outlays are made.
(4) Any State agency receiving payment under the Letter of Credit method or the advance by Treasury check method shall have in place and in operation, a financial management system which meets the standards for fund control and accountability prescribed in part 277 of this chapter, as amended. The State agency shall demonstrate on a continuing basis its willingness and ability to have and to function within procedures that will minimize the time lapse between the transfer of funds and its disbursement to meet obligations. For any State agency which does not meet the requirement of this paragraph, the reimbursement by Treasury check method shall be the preferred method for FNS to make payments to that State agency.
(h) Accounting for funds. Each State agency which receives administrative funds under this section shall establish and maintain an effective system of fiscal control and accounting procedures. Expenditures and accountability of such funds shall be in accordance with the appropriate provisions of part 277. The accounting procedures maintained by the State agency shall be such as to accurately reflect the receipt, expenditure and current balance of funds provided by FNS and to facilitate the prompt preparation of reports required by FNS. The accounting procedures shall also provide for segregation of costs specifically identifiable to the Food Distribution Program from any other costs incurred by the State agency. Any budget revisions by a State agency which require the transfer of funds from an approved cost category to another shall be in accordance with the budget revision procedures set forth in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415, and shall be approved by FNS prior to any transfer of funds.
(i) Return, reduction, and reallocation of funds. (1) FNS may require State agencies to return, during the period of performance of their administrative grant and after receipt of administrative funds, any or all unobligated funds received under this section, and may reduce the amount it has apportioned or agreed to pay to any State agency if FNS determines that:
(i) The State agency is not administering the Food Distribution Program in accordance with its plan of operation approved by FNS and the provisions of this part, or
(ii) The amount of funds which the State agency requested from FNS is in excess of actual need, based on reports of expenditures and current projections of Program needs.
(iii) Circumstances or conditions justify the return reallocation or transfer of funds to accomplish the purpose of this part.
(2) The State agency shall return to FNS, within ninety (90) days following the close of the period of performance of each administrative grant, any funds received under this section which are unobligated at that time.
(j) Records, reports, audits. (1) The State agency shall:
(i) Keep such accounts and records as may be necessary to enable FNS to determine whether there has been compliance with this section, and
(ii) Adhere to the retention and custodial requirements for records set forth in § 277.4 of this chapter.
(2) The State agency receiving funds either through a Treasury RDO Letter of Credit system or Treasury check shall submit quarterly reports to FNS on Form SF-425, “Financial Status Report,” by the 30th day after close of the reporting quarter and shall submit such other reports as may be required by FNS.
(3) The appropriate provisions of part 277 are adaptable to this section for additional guidance.
PART 254—ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR INDIAN HOUSEHOLDS IN OKLAHOMA
§ 254.1 General purpose.
This part sets the requirement under which commodities (available under part 250 of this chapter) may be distributed to households residing in FNS service areas in Oklahoma. This part also sets the conditions for administration of the Food Distribution Program by eligible Oklahoma tribes determined capable by the Department.
§ 254.2 Definitions.
(a) Exercises governmental jurisdiction means the exercise of authorities granted to ITOs under the Oklahoma Indian Welfare Act of 1936 or by BIA regulations (25 CFR part 81 et. seq.).
(b) FNS service area means the areas over which FNS has approved the food distribution program in Oklahoma, excluding urban places unless approved by FNS under 254.5(b).
(c) Food Distribution Program means a food distribution program for households on Indian reservations administered pursuant to section 4(b) of the Food Stamp Act and 1304(a) of Pub. L. 97-98.
(d) Indian tribal household means a household in which at least one household member is recognized as a tribal member by any Indian tribe, as defined in § 253.2(d) of this title.
(e) Indian tribal organization (ITO) means (1) any Indian tribe, band, or group organized under the Oklahoma Indian Welfare Act of 1936, and which has a tribal organization approved by the Bureau of Indian Affairs; (2) a tribal organization established and approved under Federal regulations issued by the Bureau of Indian Affairs; or (3) an intertribal council authorized by eligible tribes to act in behalf of the tribes to operate the program.
(f) Overissuance means the dollar value of commodities issued to a household that exceeds the dollar value of commodities it was eligible to receive.
(g) State agency means the ITO of an Indian tribe, determined by the Department to be capable of effectively administering a Food Distribution Program, or an agency of State government, which enters into an agreement with FNS for the distribution of commodities on an Indian reservation.
(h) Urban place means a town or city with a population of 10,000 or more.
§ 254.3 Administration by an ITO.
(a) Applicability of part 253. All of the provisions of part 253 are herein incorporated and apply to part 254, except as specifically modified by part 254.
(b) Section 253.4 Administration, does not apply and is replaced by § 254.3.
(c) Federal administration. Within the Department of Agriculture, the Food and Nutrition Service (FNS), shall be responsible for the Food Distribution Program. FNS shall have the power to determine the amount of any claim and to settle and adjust any claim against an ITO.
(d) ITO administration. The ITO, acting as State agency, shall be responsible for the Food Distribution Program within the approved FNS service areas if FNS determines the ITO capable of effective and efficient administration.
(e) Qualification as an ITO. The ITO of a tribe in Oklahoma must document to the satisfaction of FNS that the ITO meets the definition of an ITO in § 254.2, is organized under the provisions of the Oklahoma Indian Welfare Act of 1936 or has a tribal organization established and approved under BIA regulations.
§ 254.4 Application by an ITO.
(a) Application to FNS Regional Office. An ITO which desires to participate in the Food Distribution Program shall file an application with the FNS Regional Office. The application shall also provide other information requested by FNS, including but not limited to, the tribe’s qualification as a reservation as described in § 254.2, paragraph (f). Properly addressed applications shall be acknowledged by the FNS Regional Office in writing within five working days of receipt. FNS shall promptly advise ITOs of the need for additional information if an incomplete application is received.
(b) Tribal capability. (1) In determining whether the ITO is potentially capable of effectively and efficiently administering a Food Distribution Program in an FNS Service area, allowing for fulfillment of that potential through training and technical assistance, FNS shall consult with other sources such as the BIA, and shall consider the ITO experience, if any, in operating other government programs, as well as its management and fiscal capabilities. Other factors for evaluation include, but are not limited to, the ITO’s ability to:
(i) Order and properly store commodities,
(ii) Certify eligible households,
(iii) Arrange for physical issuance of commodities,
(iv) Keep appropriate records and submit required reports,
(v) Budget and account for administrative funds,
(vi) Determine the food preferences of households, and
(vii) Conduct on-site reviews of certification and distribution procedures and practices.
(2) FNS shall make a determination of potential ITO capability within 60 days of receipt of a completed application for the Food Distribution Program. FNS may, however, extend the period for determination of ITO capability if FNS finds that a given ITO’s eligibility under § 254.3 is difficult to establish.
(3) FNS shall, if requested by an ITO which has been determined by FNS to be potentially capable of administering a Food Distribution Program, provide the ITO’s designees with appropriate training and technical assistance to prepare the ITO to take over program administration. In determining what training and technical assistance are necessary, FNS shall consult with the ITO and other sources, such as the BIA.
(c) Most capable tribe. In cases where two or more applicant tribe(s) have overlapping boundaries, FNS shall select the tribe most capable of administering a FDP within that service area.
§ 254.5 Household eligibility.
(a) Certification procedures. All applicant households shall be certified in accordance with the eligibility and certification provisions in §§ 253.6 and 253.7.
(b) Urban places. No household living in an urban place in Oklahoma shall be eligible for the Food Distribution Program on Indian Reservations. However, an ITO can request the Department to grant individual exemptions from this limitation upon proper justification submitted by the ITO as determined by FNS.
(c) Eligible households. Only Indian tribal households, as defined in § 254.2, may be eligible for the Food Distribution Program in FNS service areas.
SUBCHAPTER C—SUPPLEMENTAL NUTRITION ASSISTANCE AND FOOD DISTRIBUTION PROGRAM
PART 271—GENERAL INFORMATION AND DEFINITIONS
§ 271.1 General purpose and scope.
(a) Purpose of SNAP. SNAP is designed to promote the general welfare and to safeguard the health and well being of the Nation’s population by raising the levels of nutrition among low-income households. Section 2 of the Food and Nutrition Act of 2008 states, in part:
Congress hereby finds that the limited food purchasing power of low-income households contributes to hunger and malnutrition among members of such households. Congress further finds that increased utilization of food in establishing and maintaining adequate national levels of nutrition will promote the distribution in a beneficial manner of the Nation’s agricultural abundance and will strengthen the Nation’s agricultural economy, as well as result in more orderly marketing and distribution of foods. To alleviate such hunger and malnutrition, a supplemental nutrition assistance program is herein authorized which will permit low-income households to obtain a more nutritious diet through normal channels of trade by increasing food purchasing power for all eligible households who apply for participation.
(b) Scope of the regulations. Part 271 contains general information, definitions, and other material applicable to all parts of this subchapter. Part 272 sets forth policies and procedures governing State agencies which participate in the program. Part 273 describes the eligibility criteria to be applied by State agencies and related processing requirements and standards. Part 274 provides requirements for the issuance of SNAP benefits to eligible households and establishes related issuance responsibilities. Part 275 sets forth guidelines for monitoring SNAP, analyzing the results and formulating corrective action. Part 276 establishes State agency liability and certain Federal sanctions. Part 277 outlines procedures for payment of administrative costs of State agencies. Part 278 delineates the terms and conditions for the participation of retail food stores, wholesale food concerns, meal services, and insured financial institutions. Part 279 establishes the procedures for administrative and judicial reviews requested by food retailers, food wholesalers, and meal services. Part 280 explains procedures for issuing emergency benefit allotments to certain victims of disasters unable to purchase adequate amounts of food. Part 281 sets forth guidelines for designating Indian tribes as State agencies. Part 282 provides guidelines for initiation, selection, and operation of demonstration, research, and evaluation projects. Part 284 provides for a nutrition assistance program for the Commonwealth of the Northern Mariana Islands (CNMI). Part 285 describes the general terms and conditions under which grant funds are provided to the Commonwealth of Puerto Rico.
§ 271.2 Definitions.
Access device means any card, plate, code, account number, or other means of access that can be used alone, or in conjunction with another access device, to obtain payments, allotments, benefits, money, goods, or other things of value, or that can be used to initiate a transfer of funds under the Food and Nutrition Act of 2008, as amended.
Active case means a household which was certified prior to, or during, the sample month and issued SNAP benefits for the sample month.
Active case error rate means an estimate of the proportion of cases with an error in the determination of eligibility or basis of issuance. This estimate will be expressed as a percentage of the completed active quality control reviews excluding all results from cases processed by SSA personnel or participating in a demonstration project identified by FNS as having certification rules that are significantly different from standard requirements.
Adequate notice in a periodic reporting system such as monthly reporting or quarterly reporting means a written notice that includes a statement of the action the agency has taken or intends to take; the reason for the intended action; the household’s right to request a fair hearing; the name of the person to contact for additional information; the availability of continued benefits; and the liability of the household for any overissuances received while awaiting a fair hearing if the hearing official’s decision is adverse to the household. Depending on the timing of a State’s system and the timeliness of report submission by participating households, such notice may be received prior to agency action, at the time reduced benefits are received, or, if benefits are terminated, at the time benefits would have been received if they had not been terminated. In all cases, however, participants will be allowed ten days from the mailing date of the notice to contest the agency action and to have benefits restored to their previous level. If the 10-day period ends on a weekend or a holiday and a request is received the day after the weekend or holiday, the State agency shall consider the request to be timely.
Alien Status Verification Index (ASVI) means the automated database maintained by the United States Citizenship and Immigration Services (USCIS) which may be accessed by State agencies to verify immigration status.
Allotment means the total value of benefits a household is authorized to receive during each month or other time period.
Application form means: (1) The application form designed or approved by FNS, which is completed by a household member or authorized representative; or
(2) For households consisting solely of public assistance or general assistance recipients, it may also mean the application form used to apply for public assistance or general assistance, including attachments approved by FNS, which is completed by a household member or authorized represen- tative.
Assessment an in-depth evaluation of employability skills coupled with counseling on how and where to search for employment. If combined with work experience, employment search or training, an assessment of this nature could constitute part of an approvable employment and training component.
Authorization document means an intermediary document issued by the State agency and used in an issuance system to authorize a specific benefit amount for a household.
Beginning month(s) in a Monthly Reporting and Retrospective Budgeting system means either the first month for which the household is certified for SNAP benefits (where the State agency has adopted a one month accounting system) or the first month for which the household is certified for SNAP benefits and the month thereafter (where the State agency has adopted a two month accounting system). Except for beginning months in sequence as described in the preceding sentences, a beginning month cannot be any month which immediately follows a month in which a household is certified. The month following the month of termination resulting from a one-month temporary change in household circumstances shall not be considered a beginning month.
Benefit means the value of supplemental nutrition assistance provided to a household by means of an EBT system or other means of providing assistance, as determined by the Secretary.
Benefit issuer means any office of the State agency or any person, partnership, corporation, organization, political subdivision or other entity with which a State agency has contracted for, or to which it has delegated functional responsibility, in connection with the issuance of benefits to households.
Budget month in a Monthly Reporting and Retrospective Budgeting system means the fiscal or calendar month from which the State agency uses income and other circumstances of the household to calculate the household’s SNAP allotment to be provided for the corresponding issuance month.
Communal dining facility means a public or nonprofit private establishment, approved by FNS, which prepares and serves meals for elderly persons, or for supplemental security income (SSI) recipients, and their spouses, a public or private nonprofit establishment (eating or otherwise) that feeds elderly persons or SSI recipients, and their spouses, and federally subsidized housing for the elderly at which meals are prepared for and served to the residents. It also includes private establishments that contract with an appropriate State or local agency to offer meals at concessional prices to elderly persons or SSI recipients, and their spouses.
Coupon means any coupon, stamp, type of certificate, authorization card, cash or check issued in lieu of a coupon, or access device, including an electronic benefit transfer card or personal identification number issued pursuant to the provisions of the Food and Nutrition Act of 2008, as amended, for the purchase of eligible food.
Deficiency means any aspect of a State’s program operations determined to be out of compliance with the Food and Nutrition Act of 2008, FNS Regulations, or program requirements as contained in the State agency’s manual, the State agency’s approved Plan of Operation or other State agency plans.
Department means the U.S. Department of Agriculture.
Drug addiction or alcoholic treatment and rehabilitation program means any drug addiction or alcoholic treatment and rehabilitation program conducted by a private, nonprofit organization or institution, or a publicly operated community mental health center, under part B of title XIX of the Public Health Service Act (42 U.S.C. 300x et seq.). Under part B of title XIX of the Public Health Service Act is defined as meeting the criteria which would make it eligible to receive funds, even if it does not actually receive funding under part B of title XIX.
Elderly or disabled member means a member of a household who: (1) Is 60 years of age or older;
(2) Receives supplemental security income benefits under title XVI of the Social Security Act or disability or blindness payments under titles I, II, X, XIV, or XVI of the Social Security Act;
(3) Receives federally or State-administered supplemental benefits under section 1616(a) of the Social Security Act provided that the eligibility to receive the benefits is based upon the disability or blindness criteria used under title XVI of the Social Security Act;
(4) Receives federally or State-administered supplemental benefits under section 212(a) of Pub. L. 93-66;
(5) Receives disability retirement benefits from a governmental agency because of a disability considered permanent under section 221(i) of the Social Security Act.
(6) Is a veteran with a service-connected or non-service-connected disability rated by the Veteran’s Administration (VA) as total or paid as total by the VA under title 38 of the United States Code;
(7) Is a veteran considered by the VA to be in need of regular aid and attendance or permanently housebound under title 38 of the United States Code;
(8) Is a surviving spouse of a veteran and considered by the VA to be in need of regular aid and attendance or permanently housebound or a surviving child of a veteran and considered by the VA to be permanently incapable of self-support under title 38 of the United States Code;
(9) Is a surviving spouse or surviving child of a veteran and considered by the VA to be entitled to compensation for a service-connected death or pension benefits for a nonservice-connected death under title 38 of the United States Code and has a disability considered permanent under section 221(i) of the Social Security Act. “Entitled” as used in this definition refers to those veterans’ surviving spouses and surviving children who are receiving the compensation or pension benefits stated or have been approved for such payments, but are not yet receiving them; or
(10) Receives an annuity payment under: section 2(a)(1)(iv) of the Railroad Retirement Act of 1974 and is determined to be eligible to receive Medicare by the Railroad Retirement Board; or section 2(a)(1)(v) of the Railroad Retirement Act of 1974 and is determined to be disabled based upon the criteria used under title XVI of the Social Security Act.
(11) Is a recipient of interim assistance benefits pending the receipt of Supplemented Security Income, a recipient of disability related medical assistance under title XIX of the Social Security Act, or a recipient of disability-based State general assistance benefits provided that the eligibility to receive any of these benefits is based upon disability or blindness criteria established by the State agency which are at least as stringent as those used under title XVI of the Social Security Act (as set forth at 20 CFR part 416, subpart I, Determining Disability and Blindness as defined in Title XVI).
Electronic Benefit Transfer (EBT) account means a set of records containing demographic, card, benefit, transaction and balance data for an individual household within the EBT system that is maintained and managed by a State or its contractor as part of the client case record.
Electronic Benefit Transfer (EBT) card means a method to access EBT benefits issued to a household member or authorized representative through the EBT system by a benefit issuer. This method may include an on-line magnetic stripe card, an off-line smart card, a chip card, a contactless digital wallet with a stored card, or any other similar benefit access technology approved by FNS.
Electronic Benefit Transfer (EBT) contractor or vendor means an entity that is selected to perform EBT-related services for the State agency.
Electronic Benefit Transfer (EBT) system means an electronic payments system under which household benefits are issued from and stored in a central databank, maintained and managed by a State or its contractor, and uses electronic funds transfer technology for the delivery and control of food and other public assistance benefits.
Eligible foods means:
(1) Any food or food product intended for human consumption except alcoholic beverages, tobacco, and hot foods and hot food products prepared for immediate consumption and any deposit fee in excess of the amount of the State fee reimbursement (if any) required to purchase any food or food product contained in a returnable bottle, can, or other container, regardless of whether the fee is included in the shelf price posted for the food or food product;
(2) Seeds and plants to grow foods for the personal consumption of eligible households;
(3) Meals prepared and delivered by an authorized meal delivery service to households eligible to use SNAP benefits to purchase delivered meals; or meals served by an authorized communal dining facility for the elderly, for SSI households or both, to households eligible to use SNAP benefits for communal dining;
(4) Meals prepared and served by a drug addict or alcoholic treatment and rehabilitation center to narcotic addicts or alcoholics and their children who live with them;
(5) Meals prepared and served by a group living arrangement facility to residents who are blind or disabled as defined in paragraphs (2) through (11) of the definition of “Elderly or disabled member” contained in this section;
(6) Meals prepared by and served by a shelter for battered women and children to its eligible residents;
(7) In the case of certain eligible households living in areas of Alaska where access to food stores is extremely difficult and the households rely on hunting and fishing for subsistence, equipment for the purpose of procuring food for eligible households, including nets, lines, hooks, fishing rods, harpoons, knives, and other equipment necessary for subsistence hunting and fishing but not equipment for the purpose of transportation, clothing or shelter, nor firearms, ammunition or other explosives;
(8) In the case of homeless SNAP households, meals prepared for and served by an authorized public or private nonprofit establishment (e.g. soup kitchen, temporary shelter), approved by an appropriate State or local agency, that feeds homeless persons; and
(9) In the case of homeless SNAP households, meals prepared by a restaurant which contracts with an appropriate State agency to serve meals to homeless persons at concessional (low or reduced) prices.
Employment and Training (E&T) component a work experience, work training, supervised job search or other program described in section 6(d)(4)(B)(i) of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4)(B)(i)) designed to help SNAP participants move promptly into unsubsidized employment.
Employment and Training (E&T) mandatory participant a supplemental nutrition assistance program applicant or participant who is required to work register under 7 U.S.C. 2015(d)(1) or (2) and who the State determines should not be exempted from participation in an employment and training program and is required to participate in E&T.
Employment and Training (E&T) participant means an individual who meets the definition of a mandatory or voluntary E&T participant.
Employment and Training (E&T) program means a program operated by each State agency consisting of case management and one or more E&T components.
Employment and Training (E&T) voluntary participant means a supplemental nutrition assistance program applicant or participant who volunteers to participate in an employment and training (E&T) program.
Error for active cases results when a determination is made by a quality control reviewer that a household which received SNAP benefits during the sample month is ineligible or received an incorrect allotment. Thus, errors in active cases involve dollar loss to either the participant or the government. For negative cases, an “error” means that the reviewer determines that the decision to deny, suspend, or terminate a household was incorrect.
Exempted for purposes of § 273.7 excluding paragraphs (a) and (b)—this term refers to a work registered person or persons excused by the State, under the conditions in § 273.7(e) from participation in an employment and training program.
Exercises governmental jurisdiction means the active exercise of the legislative, executive or judicial powers of government by an Indian tribal organization.
Federal fiscal year means a period of 12 calendar months beginning with each October 1 and ending with September 30 of the following calendar year.
Firm. (1) Firm means:
(i) A retail food store that is authorized to accept or redeem SNAP benefits;
(ii) A retail food store that is not authorized to accept or redeem SNAP benefits; or
(iii) An entity that does not meet the definition of a retail food store.
(2) For purposes of the regulations in this subchapter and SNAP policies, the terms firm, entity, retailer, and store are used interchangeably.
Firm’s practice means the usual manner in which personnel of a firm or store accept SNAP benefits as shown by the actions of the personnel at the time of the investigation.
FNS means the Food and Nutrition Service of the U.S. Department of Agriculture.
Food and Nutrition Act of 2008 means the Food and Nutrition Act of 2008 (Pub. L. 95-113), including any subsequent amendments thereto.
General assistance (GA) means cash or another form of assistance, excluding in-kind assistance, financed by State or local funds as part of a program which provides assistance to cover living expenses or other basic needs intended to promote the health or well-being of recipients.
Group living arrangement means a public or private nonprofit residential setting that serves no more than sixteen residents that is certified by the appropriate agency or agencies of the State under regulations issued under section 1616(e) of the Social Security Act or under standards determined by the Secretary to be comparable to standards implemented by appropriate State agencies under section 1616(e) of the Social Security Act. To be eligible for SNAP benefits, a resident of such a group living arrangement must be blind or disabled as defined in paragraphs (2) through (11) of the definition of “Elderly or disabled member” contained in this section.
Homeless individual means an individual who lacks a fixed and regular nighttime residence or an individual whose primary nighttime residence is: (1) A supervised shelter designed to provide temporary accommodations (such as a welfare hotel or congregate shelter);
(2) A halfway house or similar institution that provides temporary residence for individuals intended to be institutionalized;
(3) A temporary accommodation for not more than 90 days in the residence of another individual; or
(4) A place not designed for, or ordinarily used, as a regular sleeping accommodation for human beings (a hallway, a bus station, a lobby or similar places).
Homeless meal provider means:
(1) A public or private nonprofit establishment (e.g., soup kitchens, temporary shelters) that feeds homeless persons; or
(2) A restaurant which contracts with an appropriate State agency to offer meals at concessional (low or reduced) prices to homeless persons.
House-to-house trade route means any retail food business operated from a truck, bus, pushcart, or other mobile vehicle.
Identification (ID) card means a card for the purposes of 7 CFR 278.2(j).
Indian tribe means: (1) Any Indian tribe, Band, Nation, or other organized Indian group on a reservation for example, a Rancheria, Pueblo or Colony, and including any Alaska Native Village or regional or village corporation (established pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688)), that is on a reservation and is recognized as eligible for Federal programs and services provided to Indians because of their status as Indians; or (2) any Indian tribe or Band on a reservation holding a treaty with a State government.
Indian tribal organization (ITO) means: (1) The recognized governing body of any Indian tribe on a reservation; or (2) the tribally recognized intertribal organization which the recognized governing bodies of two or more Indian tribes on a reservation authorizes to operate SNAP or a Food Distribution Program on their behalf.
Insured financial institution means a financial institution insured by the Federal Deposit Insurance Corporation (FDIC) or financial institutions which are insured under the Federal Credit Union Act and which have retail food stores or wholesale food concerns in their field of membership.
Interoperability means a system that enables program benefits issued to be redeemed outside the State that issued the benefits.
Issuance month in a Monthly Reporting and Retrospective Budgeting system means the fiscal or calendar month for which the State agency shall issue a SNAP allotment. Issuance is based upon income and circumstances in the corresponding budget month. In prospective budgeting, the budget month and issuance month are the same. In retrospective budgeting, the issuance month follows the budget month and the issuance month shall begin within 32 days after the end of the budget month.
Large project area means those project areas/management units with monthly active caseloads of more than 25,000 households based on the most current information available at the time the large project area review schedule is developed.
Low-income household means a household whose annual income does not exceed 125 percent of the Office of Management and Budget poverty guidelines.
Management Evaluation (ME) reviews means reviews conducted by States at the project area level to determine if State agencies are administering and operating SNAP in accordance with program requirements.
Management unit means an area based on a welfare district, region, or other administrative structure designated by the State agency and approved by FNS to be reviewed for ME review purposes.
Manual transaction means an EBT transaction that is processed with the use of a paper manual voucher when there is an EBT system outage.
Manual voucher means a paper document signed by the EBT cardholder that allows a retailer to redeem benefits through a manual transaction.
Master issuance file means a cumulative file containing the individual records and status of households, and the amount of benefits, if any, each household is authorized to receive.
Meal delivery service means a political subdivision, a private nonprofit organization, or a private establishment with which a State or local agency has contracted for the preparation and delivery of meals at concessional prices to elderly persons, and their spouses, and to the physically or mentally handicapped and persons otherwise disabled, and their spouses, such that they are unable to adequately prepare all of their meals.
Medicaid means medical assistance under title XIX of the Social Security Act, as amended.
Medium project area means those project areas/management units with monthly active caseloads of 5,000 to 25,000 households based on the most current information available at the time the medium project area review schedule is developed.
Minimum benefit means the minimum monthly amount of SNAP benefits that one- and two-person households receive. The amount of the minimum benefit shall be determined according to the provisions of § 273.10 of this chapter.
National performance measure means the sum of the products of each State agency’s payment error rate times that State agency’s proportion of the total value of the national allotments issued for the fiscal year using the most recent issuance data available at the time the State agency is notified of its performance error rate.
Negative case means any action taken to deny, suspend, or terminate a case.
Negative case error rate means an estimate of the proportion of denied, suspended, or terminated cases where the household was incorrectly denied, suspended, or terminated. This estimate will be expressed as a percentage of completed negative quality control reviews excluding all results from cases processed by SSA personnel or participating in a demonstration project identified by FNS as having certification rules that are significantly different from standard requirements.
Newly work registered SNAP participants work registered at the point of application.
Nonprofit cooperative food purchasing venture means any private nonprofit association of consumers whose members pool their resources to buy food.
Offset year means the calendar year during which offsets may be made to collect certain recipient claims from individuals’ Federal income tax refunds.
Overissuance means the amount by which benefits issued to a household exceeds the amount it was eligible to receive.
Overpayment error rate means the percentage of the value of all allotments issued in a fiscal year that are either: (1) Issued to households that fail to meet basic program eligibility requirements, or
(2) Overissued to eligible households.
Payment error rate means the sum of the point estimates of two component error rates: an overpayment error rate and an underpayment error rate. Each component error rate is the value of allotments either overissued or underissued expressed as a percentage of all allotments issued to completed active sample cases, excluding those cases processed by SSA personnel or participating in certain demonstration projects designated by FNS.
Personal identification number (PIN) means a numeric code selected by or assigned to a household and used to verify the identity of an EBT cardholder when performing an EBT transaction.
Point-of-Sale (POS) terminal means a range of devices deployed at authorized retail food stores for redeeming benefits by initiating electronic debits and credits of household EBT accounts and retailer bank accounts.
Primary account number (PAN) means a number embossed or printed on the EBT card and encoded onto the card to identify the State and EBT account holder.
Project area means the county or similar political subdivision designated by a State as the administrative unit for program operations. Upon prior FNS approval, a city, Indian reservation, welfare district, or any other entity with clearly defined geographic boundaries, or any combination of such entities, may be designated as a project area, or a State as a whole may be designated as a single project area.
Prospective budgeting in a Monthly Reporting and Retrospective Budgeting system means the computation of a household’s SNAP allotment for an issuance month based on an estimate of income and circumstances which will exist in that month.
Public assistance (PA) means any of the following programs authorized by the Social Security Act of 1935, as amended: Old-age assistance, Temporary Assistance for Needy Families (TANF), including TANF for children of unemployed fathers, aid to the blind, aid to the permanently and totally disabled and aid to aged, blind, or disabled.
Quality control review means a review of a statistically valid sample of active and negative cases to determine the extent to which households are receiving the SNAP allotments to which they are entitled, and to determine the extent to which decisions to deny, suspend, or terminate cases are correct.
Record-for-issuance file means a file which is created monthly from the master issuance file, which shows the amount of benefits each eligible household is to receive for the issuance month, and the amount actually issued to the household.
Regulations means the provisions of this subchapter. Regulatory citations refer to provisions of this subchapter unless otherwise specified.
Reservation means the geographically defined area or areas over which an ITO exercises governmental jurisdiction so long as such area or areas are legally recognized by the Federal or a State government as being set aside for the use of Indians.
Retail food store means:
(1) An establishment or house-to-house trade route that sells food for home preparation and consumption normally displayed in a public area, and either offers for sale qualifying staple food items on a continuous basis, evidenced by having no fewer than seven different varieties of food items in each of the four staple food categories with a minimum depth of stock of three stocking units for each qualifying staple variety, including at least one variety of perishable foods in at least three such categories, (Criterion A) as set forth in § 278.1(b)(1) of this chapter, or has more than 50 percent of its total gross retail sales in staple foods (Criterion B) as set forth in § 278.1(b)(1) of this chapter as determined by visual inspection, marketing structure, business licenses, accessibility of food items offered for sale, purchase and sales records, counting of stockkeeping units, or other accounting recordkeeping methods that are customary or reasonable in the retail food industry as set forth in § 278.1(b)(1) of this chapter. Entities that have more than 50 percent of their total gross retail sales in: Food cooked or heated on-site by the retailer before or after purchase; and hot and/or cold prepared foods not intended for home preparation and consumption, including prepared foods that are consumed on the premises or sold for carry-out are not eligible for SNAP participation as retail food stores under § 278.1(b)(1) of this chapter. Establishments that include separate businesses that operate under one roof and share the following commonalities: Ownership, sale of similar foods, and shared inventory, are considered to be a single firm when determining eligibility to participate in SNAP as retail food stores.
(2) Public or private communal dining facilities and meal delivery services; private nonprofit drug addict or alcoholic treatment and rehabilitation programs; publicly operated community mental health centers which conduct residential programs for drug addicts and/or alcoholics; public or private nonprofit group living arrangements; public or private nonprofit shelters for battered women and children; public or private nonprofit establishments, approved by an appropriate State or local agency, that feed homeless persons; or a restaurant that contracts with an appropriate State agency to provide meals at concessional (low or reduced) prices to homeless SNAP households;
(3) Any stores selling equipment for procuring food by hunting and fishing to eligible households in Alaska, as specified in the definition of eligible foods;
(4) Any private nonprofit cooperative food purchasing venture, including those whose members pay for food prior to receipt of the food; and
(5) A farmers’ market.
Retailer EBT Data Exchange (REDE) system means the FNS system that allows the automated exchange of authorized retailer demographic data between FNS and the State and/or EBT contractor for notification of changes in retailer Program participation.
Retrospective budgeting in a Monthly Reporting and Retrospective Budgeting system means the computation of a household’s SNAP allotment for an issuance month based on actual income and circumstances which existed in a previous month, the “budget month.”
Review date for quality control active cases means a day within the sample month, either the first day of the calendar or fiscal month or the day a certification action was taken to authorize the allotment, whichever is later. The “review date” for negative cases, depending on the characteristics of individual State systems, could be the date on which the eligibility worker makes the decision to suspend, deny, or terminate the case, the date on which the decision is entered into the computer system, the date of the notice to the client or the date the negative action becomes effective. For no case is the “review date” the day the quality control review is conducted.
Review period means the 12-month period from October 1 of each calendar year through September 30 of the following calendar year.
Sample frame means a list of all units from which a sample is actually selected.
Sample month means the month of the sample frame from which a case is selected (e.g., for all cases selected from a frame consisting of households participating in January, the sample month is January).
Screening an evaluation by the eligibility worker as to whether a person should or should not be referred for participation in an employment and training program. This activity would not be considered an approvable E&T component.
Secretary means the Secretary of the U.S. Department of Agriculture.
Shelter for battered women and children means a public or private nonprofit residential facility that serves battered women and their children. If such a facility serves other individuals, a portion of the facility must be set aside on a long-term basis to serve only battered women and children.
Small project area means those project areas/management units with monthly active caseloads of 4,999 households or fewer based on the most current information available at the time the small project area review schedule is developed.
SSA processed/demonstration case means a case that is participating or has been denied based upon processing by SSA personnel or is participating or has been denied/terminated based upon the rules of a demonstration project with significantly different certification rules (as identified by FNS).
Staple food means those food items intended for home preparation and consumption in each of the following four categories: Meat, poultry, or fish; bread or cereals; vegetables or fruits; and dairy products. The meat, poultry, or fish staple food category also includes up to three types of plant-based protein sources (i.e., nuts/seeds, beans, and peas) as well as varieties of plant-based meat analogues (e.g., tofu). The dairy products staple food category also includes varieties of plant-based dairy alternative staple food items such as, but not limited to, almond milk and soy yogurt. Hot foods are not eligible for purchase with SNAP benefits and, therefore, do not qualify as staple foods for the purpose of determining eligibility under § 278.1(b)(1) of this chapter. Commercially processed foods and prepared mixtures with multiple ingredients that do not represent a single staple food category shall only be counted in one staple food category. For example, foods such as cold pizza, macaroni and cheese, multi-ingredient soup, or frozen dinners, shall only be counted as one staple food item and will be included in the staple food category of the main ingredient as determined by FNS. Accessory food items include foods that are generally considered snack foods or desserts such as, but not limited to, chips, ice cream, crackers, cupcakes, cookies, popcorn, pastries, and candy, and other food items that complement or supplement meals, such as, but not limited to, coffee, tea, cocoa, carbonated and uncarbonated drinks, condiments, spices, salt, and sugar. Items shall not be classified as accessory food exclusively based on packaging size but rather based on the aforementioned definition and as determined by FNS. A food product containing an accessory food item as its main ingredient shall be considered an accessory food item. Accessory food items shall not be considered staple foods for purposes of determining the eligibility of any firm.
State means any one of the fifty States, the District of Columbia, Guam, the Virgin Islands of the United States, and the reservation of an Indian tribe whose ITO meets the requirements of the Food and Nutrition Act of 2008 for participation as a State agency.
State agency means: (1) The agency of State government, including the local offices thereof, which is responsible for the administration of the federally aided public assistance programs within the State, and in those States where such assistance programs are operated on a decentralized basis, it includes the counterpart local agencies which administer such assistance programs for the State agency, and (2) the Indian tribal organization of any Indian tribe determined by the Department to be capable of effectively administering a supplemental nutrition assistance program or a Food Distribution Program in accordance with provisions of the Food and Nutrition Act of 2008.
State Income and Eligibility Verification System (IEVS) means a system of information acquisition and exchange for purposes of income and eligibility verification which meets the requirements of section 1137 of the Social Security Act, generally referred to as the IEVS.
State Wage Information Collection Agency (SWICA) means the State agency administering the State unemployment compensation law, another agency administering a quarterly wage reporting system, or a State agency administering an alternative system which has been determined by the Secretary of Labor, in consultation with the Secretary of Agriculture and the Secretary of Health and Human Services, to be as effective and timely in providing employment related income and eligibility data as the two just mentioned agencies.
Sub-units means the physical location of an organizational entity within a project area/management unit involved in the operation of SNAP, excluding Post Offices.
Supplemental Nutrition Assistance Program (SNAP or Program) means the program operated pursuant to the Food and Nutrition Act of 2008.
Supplemental Security Income (SSI) means monthly cash payments made under the authority of: (1) Title XVI of the Social Security Act, as amended, to the aged, blind and disabled; (2) section 1616(a) of the Social Security Act; or (3) section 212(a) of Pub. L. 93-66.
Systematic Alien Verification for Entitlements (SAVE) means the INS program whereby State agencies may verify the validity of documents provided by aliens applying for SNAP benefits by obtaining information from a central data file.
Thrifty food plan means the diet required to feed a family of four persons consisting of a man and a woman 20 through 50, a child 6 through 8, and a child 9 through 11 years of age, determined in accordance with the Secretary’s calculations. The cost of such diet shall be the basis for uniform allotments for all households regardless of their actual composition. In order to develop maximum SNAP allotments, the Secretary shall make household size and other adjustments in the Thrifty Food Plan taking into account economies of scale and other adjustments as required by law.
Trafficking means:
(1) The buying, selling, stealing, or otherwise effecting an exchange of SNAP benefits issued and accessed via Electronic Benefit Transfer (EBT) cards, card numbers and personal identification numbers (PINs), or by manual voucher and signature, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone;
(2) The exchange of firearms, ammunition, explosives, or controlled substances, as defined in section 802 of title 21, United States Code, for SNAP benefits;
(3) Purchasing a product with SNAP benefits that has a container requiring a return deposit with the intent of obtaining cash by discarding the product and returning the container for the deposit amount, intentionally discarding the product, and intentionally returning the container for the deposit amount;
(4) Purchasing a product with SNAP benefits with the intent of obtaining cash or consideration other than eligible food by reselling the product, and subsequently intentionally reselling the product purchased with SNAP benefits in exchange for cash or consideration other than eligible food; or
(5) Intentionally purchasing products originally purchased with SNAP benefits in exchange for cash or consideration other than eligible food.
(6) Attempting to buy, sell, steal, or otherwise affect an exchange of SNAP benefits issued and accessed via Electronic Benefit Transfer (EBT) cards, card numbers and personal identification numbers (PINs), or by manual voucher and signatures, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone.
Underissuance means the amount by which the allotment to which the household was entitled exceeds the allotment which the household received.
Underissuance error rate. (See Underpayment error rate.)
Underpayment error rate means the ratio of the value of allotments underissued to recipient households to the total value of allotments issued in a fiscal year by a State agency.
United States Citizenship and Immigration Services (USCIS) means the U.S. Citizenship and Immigration Services, U.S. Department of Homeland Security.
Universe means all units for which information is desired.
Variance means the incorrect application of policy and/or a deviation between the information that was used to authorize the sample month issuance and the verified information that should have been used to calculate the sample month issuance.
Wholesale food concern means an establishment which sells eligible food to retail food stores or to meal services for resale to households.
§ 271.3 Delegations to FNS for administration.
(a) Delegation. Within the Department, FNS acts on behalf of the Department in the administration of SNAP with the exception of those functions, which may be delegated to other agencies within the Department. The right is reserved at any time to withdraw, modify, or amend any delegation of authority. When authority is delegated to FNS, the responsibilities may be carried out by the Administrator or by another official of FNS, or by State agencies with respect to claims against households, as designated.
(b) Claims settlement. FNS shall have the power to determine the amount of and to settle and adjust any claim arising under the provisions of the act or this subchapter, and to compromise or deny all or part of any claim.
(c) Demonstration authority. FNS is authorized to undertake demonstration projects which test new methods designed to improve program administration and benefit delivery. FNS is authorized to initiate program research and evaluation efforts for the purposes of improving and assessing program administration and effectiveness. The procedure for initiating and conducting these projects is established in part 282.
§ 271.4 Delegations to State agencies for administration.
(a) General delegation. The State agency shall be responsible for the administration of the program within the State, including, but not limited to:
(1) Certification of applicant households;
(2) Issuance, control, and accountability of SNAP benefits and EBT cards;
(3) Developing and maintaining complaint procedures;
(4) Developing, conducting, and evaluating training;
(5) Conducting performance reporting reviews;
(6) Keeping records necessary to determine whether the program is being conducted in compliance with these regulations; and
(7) Submitting accurate and timely financial and program reports.
(b) Claims delegation. FNS delegates to the State agency, subject to the standards in § 273.18, the authority to determine the amount of, and settle, adjust, compromise or deny all or part of any claim which results from fraudulent or nonfraudulent overissuances to participating households.
§ 271.5 Benefits as obligations of the United States, crimes and offenses.
(a) Benefits as obligations. Pursuant to section 15(d) of the Food and Nutrition Act of 2008, benefits are an obligation of the United States within the meaning of 18 United States Code (U.S.C.) 8. The provisions of Title 18 of the United States Code, “Crimes and Criminal Procedure,” relative to counterfeiting, misuse and alteration of obligations of the United States are applicable to benefits and EBT cards.
(b) Penalties. Any unauthorized issuance, redemption, use, transfer, acquisition, alteration, or possession of benefits, EBT cards, or other program access device may subject an individual, partnership, corporation, or other legal entity to prosecution under sections 15 (b) and (c) of the Food and Nutrition Act of 2008 or under any other applicable Federal, State or local law, regulation or ordinance.
(c) Security for benefits and EBT cards. All individuals, partnerships, corporations, or other legal entities including State agencies and their delegatees (referred to in this paragraph as “persons”) having custody, care and control of benefits and EBT cards shall, at all times, take all precautions necessary to avoid acceptance, transfer, negotiation, or use of spurious, altered, or counterfeit benefits and EBT cards and to avoid any unauthorized use, transfer, acquisition, alteration or possession of benefits and EBT cards. These persons shall safeguard benefits and EBT cards from theft, embezzlement, loss, damage, or destruction.
(d) Benefit issuers. (1) Any benefit issuer or any officer, employee or agent, thereof convicted of failing to provide the monthly reports required in § 274.5 or convicted of violating part 274 shall be subject to a fine of not more than $1,000, or imprisoned for not more than 1 year, or both.
(2) Any benefit issuer or any officer, employee or agent, thereof convicted of knowingly providing false information in the reports required under § 274.5 shall be subject to a fine of not more than $10,000, or imprisoned not more than 5 years, or both.
(e) Forfeiture and denial of property rights—(1) General. (i) Any nonfood items, moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for food benefits, authorization cards, or other program benefit instruments or access devices in any manner not authorized by the Food and Nutrition Act of 2008 or regulations issued pursuant to the Act, shall be subject to forfeiture and denial of property rights. Such property is deemed forfeited to the United States Department of Agriculture (USDA) at the time it is either exchanged or offered in exchange.
(ii) These forfeiture and denial of property rights provisions shall apply to property exchanged or offered in exchange during investigations conducted by the Inspector General, USDA, and by other authorized Federal law enforcement agencies.
(iii) These forfeiture and denial of property rights provisions shall not apply to property exchanged or intended to be exchanged during the course of internal investigations by retail firms, during investigations conducted solely by State and local law enforcement agencies and without the participation of an authorized Federal law enforcement agency, or during compliance investigations conducted by the Food and Nutrition Service.
(2) Custodians and their responsibilities. (i) The Inspector General, USDA, the Inspector General’s designee, and other authorized Federal law enforcement officials shall be custodians of property acquired during investigations.
(ii) Upon receiving property subject to forfeiture the custodian shall:
(A) Place the property in an appropriate location for storage and safekeeping, or
(B) Request that the General Services Administration (GSA) take possession of the property and remove it to an appropriate location for storage and safekeeping.
(iii) The custodian shall store property received at a location in the judicial district where the property was acquired unless good cause exists to store the property elsewhere.
(iv) Custodians shall not dispose of property prior to the fulfillment of the notice requirements set out in paragraph 3, or prior to the conclusion of any related administrative, civil, or criminal proceeding, without reasonable cause. Reasonable cause to dispense with notice requirements might exist, for example, where explosive materials are being stored which may present a danger to persons or property.
(v) Custodians may dispose of any property in accordance with applicable statutes or regulations relative to disposition. The custodian may:
(A) Retain the property for official use;
(B) Donate the property to Federal, State, or local government facilities such as hospitals or to any nonprofit charitable organizations recognized as such under section 501(c)(3) of the Internal Revenue Code; or
(C) Request that GSA take custody of the property and remove it for disposition or sale.
(vi) Proceeds from the sale of forfeited property and any moneys forfeited shall be used to pay all proper expenses of the proceedings for forfeiture and sale including expenses of seizure, maintenance of custody, transportation costs, and any recording fees. Moneys remaining after payment of such expenses shall be deposited into the general fund of the United States Treasury.
(3) Notice requirements. (i) The custodian shall make reasonable efforts to notify the actual or apparent owner(s) of or person(s) with possessory interests in the property subject to forfeiture except for the good cause exception if the owner cannot be notified.
(ii) The notice shall:
(A) Include a brief description of the property;
(B) Inform the actual or apparent owner(s) of or person(s) with possessory interests in the property subject to forfeiture of the opportunity to request an administrative review of the forfeiture;
(C) Inform the actual or apparent owner(s) of or person(s) with possessory interests in the property subject to forfeiture of the requirements for requesting administrative review of the forfeiture; and
(D) State the title and address of the official to whom a request for administrative review of the forfeiture may be addressed.
(iii) Except as provided in paragraphs (e)(3) (iv) and (v) of this section, notice shall be given within 45 days from the date the United States convicts, acquits, or declines to act against the person who exchanged the property.
(iv) Notice may be delayed if it is determined that such action is likely to endanger the safety of a law enforcement official or compromise another ongoing criminal investigation conducted by OIG, the United States Secret Service, the United States Postal Inspection Service, or other authorized Federal law enforcement agency.
(v) Notice need not be given to the general public.
(4) Administrative review. (i) The actual or apparent owner(s) of or person(s) with possessory interests in the property shall have 30 days from the date of the delivery of the notice of forfeiture to make a request for an administrative review of the forfeiture.
(ii) The request shall be made in writing to the Assistant Inspector General for Investigations, Office of Inspector General, USDA, or to his/her designee, hereinafter referred to as the reviewing official.
(iii) A request for an administrative review of the forfeiture of property shall include the following:
(A) A complete description of the property, including serial numbers, if any;
(B) Proof of the person’s property interest in the property; and,
(C) The reason(s) the property should not be forfeited.
(iv) The requestor may, at the time of his/her written request for administrative review, also request an oral hearing of the reasons the property should not be forfeited.
(v) The burden of proof will rest upon the requestor, who shall be required to demonstrate, by a preponderance of the evidence, that the property should not be forfeited.
(vi) Should the administrative determination be in their favor, the actual or apparent owner(s) of or person(s) with possessory interests in the property subject to forfeiture may request that forfeited items be returned or that compensation be made if the custodian has already disposed of the property.
(vii) The reviewing official shall not remit or mitigate a forfeiture unless the requestor:
(A) Establishes a valid, good faith property interest in the property as owner or otherwise; and
(B) Establishes that the requestor at no time had any knowledge or reason to believe that the property was being or would be used in violation of the law; and
(C) Establishes that the requestor at no time had any knowledge or reason to believe that the owner had any record or reputation for violating laws of the United States or of any State for related crimes.
(viii) The reviewing official may postpone any decision until the conclusion of any related administrative, civil, or criminal proceeding.
(ix) The decision of the reviewing official as to the disposition of the property shall be the final agency determination for purposes of judicial review.
§ 271.6 Complaint procedure.
(a) State agency responsibility—(1) General scope. The State agency shall maintain a system of its choosing for handling program complaints filed by participants, potential participants, or other concerned individuals or groups. This shall not include complaints alleging discrimination on the basis of race, sex, age, religious creed, national origin, political beliefs or disability; such complaints shall be handled in accordance with § 272.6. This procedure also need not include complaints that can be pursued through a fair hearing. Complaints regarding such areas as processing standards and service to participants and potential participants would generally be handled under this complaint procedure.
(2) Minimum requirements. The State agency shall follow up on complaints, resolve complaints and take corrective action where warranted, and respond to the complainant on the State agency’s disposition of the complaint. The State agency shall make information on the complaint system and how to file a complaint available to participants, potential participants and other interested persons. The State agency may make the information available through written materials or posters at certification offices or other appropriate means.
(3) Complaint analysis. The State agency shall maintain records of complaints received and their disposition, and shall review records at least annually to assess whether patterns of problems may be present in local offices, project areas, or throughout the State. The results of this review shall be provided to the Performance Reporting System coordinator for appropriate action, and for inclusion, if appropriate, in the State Corrective Action Plan in accordance with § 275.16 of this chapter. The information provided to the Performance Reporting System Coordinator shall include the identification, if any, of potential or actual patterns of deficiencies in local offices, project areas, or throughout the State, and any identification of causes of these problems.
(4) Monitoring. FNS shall monitor State compliance with these requirements through the Performance Reporting System.
(b) Regional office responsibility. (1) Persons or agencies desiring program information or wishing to file a complaint may contact the appropriate FNS Regional Office.
(i) For Delaware, the District of Columbia, Maryland, New Jersey, Pennsylvania, Puerto Rico, Virginia, the Virgin Islands of the United States, and West Virginia: Mid-Atlantic Regional Office, U.S. Department of Agriculture, Food and Nutrition Service, CN 02150, Trenton, NJ 08650.
(ii) For Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee: Southeast Regional Office, U.S. Department of Agriculture, Food and Nutrition Service, 77 Forsyth Street SW., suite 112, Atlanta, GA 30303-3427.
(iii) For Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin: Midwest Regional Office, U.S. Department of Agriculture, Food and Nutrition Service, 77 West Jackson Blvd., 20th Floor, Chicago, IL 60604-3507.
(iv) For Arkansas, Louisiana, New Mexico, Oklahoma, and Texas: Southwest Regional Office, U.S. Department of Agriculture, Food and Nutrition Service, 1100 Commerce Street, suite 5-C-30, Dallas, TX 75242.
(v) For Alaska, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon and Washington: Western Regional Office, U.S. Department of Agriculture, Food and Nutrition Service, 550 Kearny Street, room 400, San Francisco, CA 94108.
(vi) For Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont: Northeast Regional Office, U.S. Department of Agriculture, Food and Nutrition Service, 10 Causeway St., Boston, MA 02222-1069.
(vii) For Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah, and Wyoming: Mountain Plains Regional Office, U.S. Department of Agriculture, Food and Nutrition Service, 1244 Speer Blvd., suite 903, Denver, CO 80204-3581.
(2) Complainants shall be advised of the appropriate State complaint handling and fair hearing procedures. Upon household request, other complaints shall be pursued by the Department rather than the State agency, unless the complaint is one upon which the complainant wishes to request a fair hearing.
§ 271.7 Allotment reduction procedures.
(a) General purpose. This section sets forth the procedures to be followed if the monthly SNAP allotments determined in accordance with the provisions of § 273.10 must be reduced, suspended, or cancelled to comply with section 18 of the Food and Nutrition Act of 2008, as amended. The best available data pertaining to the number of people participating in the program and the amounts of benefits being issued shall be used in deciding whether such action is necessary.
(b) Nature of reduction action. Action to comply with section 18 of the Food and Nutrition Act of 2008, as amended, may be a suspension or cancellation of allotments for one or more months, a reduction in allotment levels for one or more months or a combination of these three actions. If a reduction in allotments is deemed necessary, allotments shall be reduced by reducing maximum SNAP allotments amounts for each household size by the same percentage. This results in all households of a given size having their benefits reduced by the same dollar amount. The dollar reduction would be smallest for one-person households and greatest for the largest households. Since the dollar amount would be the same for all households of the same size, the rate of reduction would be lowest for zero net income households and greatest for the highest net income households. All one- and two-person households affected by a reduction action shall be guaranteed the minimum benefit unless the action is a cancellation of benefits, a suspension of benefits, or a reduction of benefits of 90 percent or more of the total amount of benefits projected to be issued in the affected month.
(c) Reduction method. If a reduction in allotments is deemed necessary, the maximum SNAP allotments amounts for all household sizes shall be reduced by a percentage specified by FNS. For example, if it is determined that a 25 per cent reduction in the maximum SNAP allotments amount is to be made, the reduction for all four-person households would be calculated as follows: The maximum SNAP allotments amount for a four-person household ($209 in November 1980) would be reduced by 25% to $157. Then 30 percent of the household’s net SNAP income would be deducted from the reduced maximum SNAP allotments amount. For example, 30 per cent of a net SNAP income of $200, $60, would be deducted from the reduced maximum SNAP allotments amount ($157), resulting in a reduced allotment of $97.
(d) Implementation of allotment reductions—(1) Reductions. (i) If a decision is made to reduce monthly SNAP allotments, FNS shall notify State agencies of the date the reduction is to take effect and by what percentage maximum SNAP allotments amounts are to be reduced.
(ii) Upon receiving notification that a reduction is to be made in an upcoming month’s allotment, State agencies shall act immediately to implement the reduction. Such action could differ from State to State depending on the nature of the issuance system in use. Where there are computerized issuance systems, the program used for calculating allotments shall be altered to reflect the appropriate percentage reduction in the maximum SNAP allotments for each household size and the computer program shall be adjusted to allow for the minimum benefit for one- and two-person households. The computer program shall also be adjusted to provide for the rounding of benefit levels of $1, $3 and $5 to $2, $4 and $6, respectively. FNS will provide State agencies with revised issuance tables reflecting the percentage reductions to be made in the maximum SNAP allotments amounts and reduce maximum SNAP allotments levels. In States where manual issuance is used, State agencies shall reproduce the issuance tables provided by FNS and distribute them to issuance personnel. State agencies shall ensure that the revised issuance tables are distributed to issuance agents and personnel in time to allow benefit reductions during the month ordered by FNS. In an HIR card system State agencies have the option of enacting the reduction in benefits either by changing all HIR cards before issuance activity for the affected month begins or by adjusting allotments at the point of issuance as each household appears at the issuance office.
(2) Suspensions and cancellations. (i) If a decision is made to suspend or cancel the distribution of SNAP benefits in a given month, FNS shall notify State agencies of the date the suspension or cancellation is to take effect. In the event of a suspension or cancellation of benefits, the provision for the minimum benefit for households with one or two members only shall be disregarded and all households shall have their benefits suspended or cancelled. Upon receiving notification that an upcoming month’s issuance is to be suspended or cancelled, State agencies shall take immediate action to effect the suspension or cancellation. This action would involve making necessary computer adjustments, and notifying issuance agents and personnel.
(ii) Upon being notified by FNS that a suspension of benefits is over, State agencies shall act immediately to resume issuing benefits to certified households and shall resume benefit issuance as soon as practicable.
(3) Affected allotments. Whenever a reduction of allotments is ordered for a particular month, reduced benefits shall be calculated for all households for the designated month. However, any household with one or two members whose reduced benefits would be less than the minimum benefit shall receive the minimum benefit except as provided in § 273.10(e)(2). Allotments or portions of allotments representing restored or retroactive benefits for a prior unaffected month would not be reduced, suspended, or cancelled even though they are issued during an affected month.
(4) Notification of eligible households. Reductions, suspensions and cancellations of allotments shall be considered to be Federal adjustments to allotments. As such, State agencies shall notify households of reductions, suspensions and cancellations of allotments in accordance with the notice provisions of § 273.12(e)(1), except that State agencies shall not provide notices of adverse action to households affected by reductions, suspensions or cancellations of allotments.
(5) Restoration of benefits. Households whose allotments are reduced or cancelled as a result of the enactment of these procedures are not entitled to the restoration of the lost benefits at a future date. However, if there is a surplus of funds as a result of the reduction or cancellation, FNS shall direct State agencies to provide affected households with restored benefits unless the Secretary determines that the amount of surplus funds is too small to make this practicable. The procedures implemented by State agencies for reducing and cancelling benefits shall be designed so that in the event FNS directs the restoration of benefits, such benefits are issued promptly.
(e) Effects of reductions, suspensions and cancellations on the certification of eligible households. (1) Except as provided in paragraph (e)(2) of this section, determinations of the eligibility of applicant households shall not be affected by reductions, suspensions or cancellations of allotments. State agencies shall accept and process applications during a month(s) in which a reduction, suspension or cancellation is in effect in accordance with the requirements of part 273. Determinations of eligibility shall also be made according to the provisions of part 273. If an applicant is found to be eligible for benefits and a reduction is in effect, the amount of benefits shall be calculated by reducing the maximum SNAP allotments amount by the appropriate percentage for the applicant’s household size and then deducting 30 percent of the household’s net SNAP income from the reduced maximum SNAP allotments amount. If an applicant is found to be eligible for benefits while a suspension or cancellation is in effect, no benefits shall be issued to the applicant until issuance is again authorized by FNS.
(2) Expedited service. (i) Households eligible to receive expedited processing who apply for program benefits during months in which reductions or suspensions are in effect, shall have their cases processed in accordance with the expedited processing provisions of § 273.2(i).
(A) Those households that receive expedited service in months in which reductions are in effect and that are determined to be eligible shall be issued allotments that are reduced in accordance with the reduction in effect. These reduced allotments shall be made available to the households within the benefit delivery timeframe specified in § 273.2(i).
(B) Those households that receive expedited service in months in which suspensions are in effect and that are determined to be eligible shall have benefits issued to them within the timeframe specified in § 273.2(i). However, if the suspension is still in effect at the time issuance is to be made, the issuance shall be suspended until the suspension is ended.
(ii) Households eligible to receive expedited processing who apply for Program benefits during months in which cancellations are in effect shall receive expedited service. However, the deadline for completing the processing of such cases shall be five calendar days or the end of the month of application, whichever date is later. All other rules pertaining to expedited service, contained in § 273.2(i), shall be applicable to these cases.
(3) The reduction, suspension or cancellation of allotments in a given month shall have no effect on the certification periods assigned to households. Those participating households whose certification periods expire during a month in which allotments have been reduced, suspended or cancelled shall be recertified according to the provisions of § 273.14. Households found eligible to participate during a month in which allotments have been reduced, suspended or cancelled shall have certification periods assigned in accordance with the provisions of § 273.10.
(f) Fair hearings. Any household that has its allotment reduced, suspended or cancelled as a result of an order issued by FNS in accordance with these rules may request a fair hearing if it disagrees with the action, subject to the following conditions. State agencies shall not be required to hold fair hearings unless the request for a fair hearing is based on a household’s belief that its benefit level was computed incorrectly under these rules or that the rules were misapplied or misinterpreted. State agencies shall be allowed to deny fair hearings to those households who are merely disputing the fact that a reduction, suspension or cancellation was ordered. Furthermore, since the reduction, suspension or cancellation would be necessary to avoid an expenditure of funds beyond those appropriated by Congress, households do not have a right to a continuation of benefits pending the fair hearing. A household may receive retroactive benefits in an appropriate amount if it is determined that its benefits were reduced by more than the amount by which the State agency was directed to reduce benefits.
(g) Issuance services. State agencies must have issuance services available to serve housholds receiving restored or retroactive benefits for a prior, unaffected month.
(h) Penalties. Notwithstanding any other provision of this subchapter, FNS may take one or more of the following actions against a State agency that fails to comply with a directive to reduce, suspend or cancel allotments in a particular month.
(1) If FNS ascertains that a State agency does not plan to comply with a directive to reduce, suspend or cancel allotments for a particular month, a warning will be issued advising the State agency that if it does not comply, FNS may cancel 100 percent of the Federal share of the State agency’s administrative costs for the affected month(s). If, after receiving such a warning, a State agency does not comply with a directive to reduce, suspend or cancel allotments, FNS may cancel 100 percent of the Federal share of the State agency’s administrative costs for the affected month(s).
(2) If FNS ascertains after warning a State agency as provided in paragraph (h)(1) of this section, that the State agency does not plan to comply with a directive to reduce, suspend or cancel allotments, a court injunction may be sought to compel compliance.
(3) If a State agency fails to reduce, suspend or cancel allotments as directed, FNS will bill the State agency for all over issuances that result. If a State agency fails to remit the billed amount to FNS within a prescribed period of time the funds will be recovered through offsets against the Federal share of the State agency’s administrative costs, or any other means available under law.
§ 271.8 Information collection/recordkeeping—OMB assigned control numbers.
| 7 CFR section where requirements are described | Current OMB control No. |
|---|---|
| 272.1(f) | 0584-0010 |
| 0584-0025 | |
| 0584-0034 | |
| 0584-0037 | |
| 0584-0064 | |
| 0584-0069 | |
| 0584-0074 | |
| 0584-0080 | |
| 0584-0081 | |
| 0584-0083 | |
| 0584-0299 | |
| 0584-0303 | |
| 0584-0336 | |
| 0584-0339 | |
| 272.2(d) | 0584-0064 |
| 272.2(a), (c), (d), (e), (f) | 0584-0083 |
| 272.5(c) | 0584-0083 |
| 272.3(a), (b), (c) | 0584-0083 |
| 272.6(g), (h) | 0584-0025 |
| 273.2(a), (b), (c), (e), (f), (h) | 0584-0064 |
| 273.5(b) | 0584-0064 |
| 273.7(a), (d), (e) | 0584-0339 |
| 273.7(c) | 0584-0083 |
| 0584-0339 | |
| 273.8(b), (e ) | 0584-0064 |
| 273.9(d) | 0584-0496 |
| 273.9(d) (c) | 0584-0064 |
| 273.10(e), (g)(1) | 0584-0064 |
| 273.11(b) | 0584-0496 |
| 273.11(i)(1)-(4) | 0584-0080 |
| 0584-0081 | |
| 273.11(i)(5) | 0584-0081 |
| 273.11(i)(6) | 0584-0080 |
| 0584-0081 | |
| 273.12(a), (b), (c), (d) | 0584-0064 |
| 273.13(a), (b) | 0584-0064 |
| 273.14(b) | 0584-0064 |
| 273.16(a), (b), (d), (e), (f), (g), (h), (i) | 0584-0064 |
| 273.18(h) | 0584-0069 |
| 273.21(h) | 0584-0064 |
| 273.24(f) | 0584-0479 |
| 274.3(d) | 0584-0069 |
| 0584-0080 | |
| 274.4(a) | 0584-0080 |
| 274.4(b) | 0584-0080 |
| 0584-0081 | |
| 274.6(a), (b) and (e) | 0584-0080 |
| 0584-0081 | |
| 275.2(a) | 0584-0010 |
| 0584-0303 | |
| 275.4(a) | 0584-0010 |
| 0584-0303 | |
| 275.4(b) | 0584-0010 |
| 275.4(c) | 0584-0034 |
| 0584-0074 | |
| 0584-0299 | |
| 275.5(a), (b) | 0584-0010 |
| 275.6(b) | 0584-0010 |
| 275.8(a) | 0584-0010 |
| 275.9(b), (g) | 0584-0010 |
| 275.10(a) | 0584-0074 |
| 0584-0299 | |
| 0584-0303 | |
| 275.11(a) | 0584-0303 |
| 275.12(b), (c), (d), (e) | 0584-0074 |
| 275.12(f), (g) | 0584-0299 |
| 275.13(b), (d), (e) | 0584-0034 |
| 275.14(c), (d) | 0584-0034 |
| 0584-0074 | |
| 0584-0299 | |
| 275.16(b), (c), (d) | 0584-0010 |
| 275.17(a), (b) | 0584-0010 |
| 275.18(a), (b) | 0584-0010 |
| 275.19(a), (b), (c) | 0584-0010 |
| 275.20(a) | 0584-0010 |
| 275.21(b) | 0584-0034 |
| 0584-0074 | |
| 0584-0299 | |
| 275.21(c), (d), (e) | 0584-0034 |
| 275.22(a), (b) | 0584-0010 |
| 275.23 | 0584-0010 |
| 0584-0034 | |
| 0584-0074 | |
| 0584-0299 | |
| 277.18(a), (c), (d), (f), (i) | 0584-0083 |
| 278.1(a), (b), (l) | 0584-0008 |
| 278.5(c), (d), (f) | 0584-0008 |
| 278.6(b) | 0584-0008 |
| 278.7(b), (c) | 0584-0008 |
| 278.8(a) | 0584-0008 |
| 280.7(c), (d), (g) | 0584-0336 |
| 280.9(b) | 0584-0037 |
| 280.10(a) | 0584-0336 |
§ 271.9 Promotional activities.
No funds authorized to be appropriated under the Food and Nutrition Act of 2008, as amended, shall be used for recruitment or promotion activities as described in § 277.4(b)(5). No entity receiving funds under the Food and Nutrition Act of 2008, as amended, shall be permitted to perform activities described in § 277.4(b)(6) of this chapter.
PART 272—REQUIREMENTS FOR PARTICIPATING STATE AGENCIES
§ 272.1 General terms and conditions.
(a) Coupons do not reduce benefits. The coupon allotment provided any eligible household shall not be considered income or resources for any purpose under any Federal, State, or local laws including, but not limited to, laws on taxation, welfare, and public assistance programs. No participating State or political subdivision shall decrease any assistance otherwise provided an individual or individuals because of the receipt of a coupon allotment.
(b) No sales taxes on SNAP purchases. (1) A State shall not participate in SNAP if State or local sales taxes or other taxes or fees, including but not limited to excise taxes, are collected within the State on purchases made with SNAP coupons. “Purchases made with food coupons” for purposes of this provision shall refer to purchases of “eligible foods” as defined in § 271.2. Where the total value of groceries being bought by the recipient is larger than the amount of coupons being presented by the recipient, only the portion of the sale made in exchange for SNAP benefits must be exempt from taxation in order for a State to satisfy the requirements of this provision. Although a SNAP recipient may use a combination of cash and SNAP benefits in making a food purchase, only the dollar amount represented by the food coupons needs to be exempt from taxation.
(2) State and/or local law shall not permit the imposition of tax on food paid for with coupons. FNS may terminate the issuance of coupons and disallow administrative funds otherwise payable pursuant to part 277 in any State where such taxes are charged. Action to disallow administrative funds shall be taken in accordance with the procedures set forth in § 276.4.
(3) A State or local area which taxes some, but not all, eligible food items shall ensure that retail food stores in that locale sequence purchases of eligible foods paid for with a combination of coupons and cash so as to not directly or indirectly charge or assign a tax to SNAP recipients on eligible food items purchased with coupons. Prohibited methods include, but are not limited to, the allocation of coupons first to non-taxable eligible items, and the application of cash, rather than coupons, to taxable eligible food.
(c) Disclosure. (1) Use or disclosure of information obtained from SNAP applicant or recipient households shall be restricted to:
(i) Persons directly connected with the administration or enforcement of the provisions of the Food and Nutrition Act of 2008 or regulations, other Federal assistance programs, federally-assisted State programs providing assistance on a means-tested basis to low income individuals, or general assistance programs which are subject to the joint processing requirements in § 273.2(j)(2).
(ii) Persons directly connected with the administration or enforcement of the programs which are required to participate in the State income and eligibility verification system (IEVS) as specified in § 272.8(a)(2), to the extent the SNAP information is useful in establishing or verifying eligibility or benefit amounts under those programs;
(iii) Persons directly connected with the verification of immigration status of aliens applying for SNAP benefits, through the Systematic Alien Verification for Entitlements (SAVE) Program, to the extent the information is necessary to identify the individual for verification purposes.
(iv) Persons directly connected with the administration of the Child Support Program under part D, title IV of the Social Security Act in order to assist in the administration of that program, and employees of the Secretary of Health and Human Services as necessary to assist in establishing or verifying eligibility or benefits under titles II and XVI of the Social Security Act;
(v) Employees of the Comptroller General’s Office of the United States for audit examination authorized by any other provision of law; and
(vi) Local, State, or Federal law enforcement officials, upon their written request, for the purpose of investigating an alleged violation of the Food and Nutrition Act of 2008 or regulation. The written request shall include the identity of the individual requesting the information and his authority to do so, violation being investigated, and the identity of the person on whom the information is requested.
(vii) Local, State, or Federal law enforcement officers acting in their official capacity, upon written request by such law enforcement officers that includes the name of the household member being sought, for the purpose of obtaining the address, social security number, and, if available, photograph of the household member, if the member is fleeing to avoid prosecution or custody for a crime, or an attempt to commit a crime, that would be classified as a felony (or a high misdemeanor in New Jersey), or is violating a condition of probation or parole imposed under a Federal or State law. The State agency shall provide information regarding a household member, upon written request of a law enforcement officer acting in his or her official capacity that includes the name of the person being sought, if the other household member has information necessary for the apprehension or investigation of the other household member who is fleeing to avoid prosecution or custody for a felony, or has violated a condition of probation or parole imposed under Federal or State law. The State agency must accept any document that reasonably establishes the identity of the household member being sought by law enforcement authorities. If a law enforcement officer provides documentation indicating that a household member is fleeing to avoid prosecution or custody for a felony, or has violated a condition of probation or parole, the State agency shall follow the procedures in § 273.11(n) to determine whether the member’s eligibility in SNAP should be terminated. A determination and request for information that does not comply with the terms and procedures in § 273.11(n) would not be sufficient to terminate the member’s participation. The State agency shall disclose only such information as is necessary to comply with a specific written request of a law enforcement agency authorized by this paragraph.
(viii) Local educational agencies administering the National School Lunch Program established under the Richard B. Russell National School Lunch Act or the School Breakfast Program established under the Child Nutrition Act of 1966, for the purpose of directly certifying the eligibility of school-aged children for receipt of free meals under the School Lunch and School Breakfast programs based on their receipt of Supplemental Nutrition Assistance Program benefits.
(2) Recipients of information released under paragraph (c)(1) of this section must adequately protect the information against unauthorized disclosure to persons or for purposes not specified in this section. In addition, information received through the IEVS must be protected from unauthorized disclosure as required by regulations established by the information provider. Information released to the State agency pursuant to section 6103(l) of the Internal Revenue Code of 1954 shall be subject to the safeguards established by the Secretary of the Treasury in section 6103(l) of the Internal Revenue Code and implemented by the Internal Revenue Service in its publication, Tax Information and Security Guidelines.
(3) If there is a written request by a responsible member of the household, its currently authorized representative, or a person acting on its behalf to review material and information contained in its casefile, the material and information contained in the casefile shall be made available for inspection during normal business hours. However, the State agency may withhold confidential information, such as the names of individuals who have disclosed information about the household without the household’s knowledge, or the nature or status of pending criminal prosecutions.
(4) Disclosure of information obtained from the National Accuracy Clearinghouse (NAC), as described in § 272.18, shall be restricted to persons directly connected with the administration or enforcement of the provisions of the Food and Nutrition Act of 2008, as amended, or SNAP regulations in this subchapter. Information obtained from the NAC may only be used for the purpose of preventing multiple issuances of SNAP benefits to an individual by more than one State agency in a given month. Recipients of information from the NAC must adequately protect the information against disclosure to unauthorized persons and use for purposes not specified in this paragraph (c)(4).
(d) Information available to the public. (1) Federal regulations, Federal procedures embodied in FNS notices and policy memos, State Plans of Operation, and corrective action plans shall be available upon request for examination by members of the public during office hours at the State agency headquarters as well as at FNS regional and national offices. State agency handbooks shall be available for examination upon request at each local certification office within each project area as well as at the State agency headquarters and FNS Regional offices. State agencies, at their option, may require other offices within the State to maintain a copy of Federal regulations.
(2) Copies of regulations, plans of operation, State manuals, State corrective action plans, and Federal procedures may be obtained from FNS in accordance with part 295 of this chapter.
(e) Records and reports. Each State agency shall keep such records and submit such reports and other information as required by FNS.
(f) Retention of records. Each State agency shall retain all Program records in an orderly fashion for audit and review purposes for no less than 3 years from the month of origin of each record. In addition:
(1) The State agency shall retain fiscal records and accountable documents for 3 years from the date of fiscal or administrative closure. Fiscal closure means that obligations for or against the Federal government have been liquidated. Administrative closure means that the State agency has determined and documented that no further action to liquidate the obligation is appropriate. Fiscal records and accountable documents include, but are not limited to, claims and documentation of lost benefits.
(2) Case records relating to intentional Program violation disqualifications and related notices to the household shall be retained indefinitely until the State agency obtains reliable information that the record subject has died or until FNS advises via the disqualified recipient database system edit report that all records associated with a particular individual, including the disqualified recipient database record, may be permanently removed from the database because of the individual’s 80th birthday.
(3) Disqualification records submitted to the disqualified recipient database must be purged by the State agency that submitted them when the supporting documents are no longer accurate, relevant, or complete. The State agency shall follow a prescribed records management program to meet this requirement. Information about this program shall be available for FNS review.
(g) Implementation. The implementation schedule for any amendment to the regulations shall be specified in the amendment.
(1) Amendment 132. Program changes required by Amendment 132 to the SNAP regulations shall be implemented as follows:
(i) State agencies shall eliminate the purchase requirement for all households on or before January 1, 1979. The State agency shall designate the month the purchase requirement is to be eliminated. If the month designated is other than January 1979, the State agency shall obtain prior approval of FNS. FNS shall approve the designation of months prior to January 1979, if the State agency demonstrates that an accounting procedure for the new issuance system will be in place. The submission dates for the forms FNS-250 and FNS-256, stipulated in § 274.8(a), shall be effective with the reports for the first month of issuance without a purchase requirement. For example, if EPR is implemented in January, the FNS-250 and FNS-256 for January would be due by March 17, 1979. The FNS-259 shall be submitted in accordance with § 274.8(a)(3) starting with the quarter beginning January 1979.
(ii) State agencies may implement all eligibility rules contained in part 273 and all issuance rules contained in part 274 at the same time the purchase requirement is eliminated, but in no case shall eligibility and issuance rules be implemented prior to elimination of the purchase requirement. State agencies may also implement portions of part 273 and part 274 separately after the purchase requirement is eliminated, provided that the eligibility rules setting the income standards, the income deductions and the household allotment calculation are implemented at the same time, and all rules are implemented no later than 3 months after the purchase requirement is eliminated. However, if a State agency implements EPR after December 1, 1978, it shall implement the certification and other issuance regulations for all new applications and recertifications no later than March 1, 1979.
(iii) State agencies shall have up to 4 months following the first day that applications are taken under the new rules, to convert the current caseload to the new program. Households coming due for recertification during this time will be converted to the new program at recertification. Remaining households shall be converted by a desk review during that 4-month period. The new income definition, deductions, and allotment calculation shall be completed for all households which are converted through a desk review. To the extent that the case file and other information available to the State agency permit, other eligibility criteria, such as work registration, resources, tax dependency, and alien status, shall be considered during the desk review. Otherwise, nonincome eligibility factors shall be deferred until the household’s scheduled recertification. In no event shall a household’s certification period be extended as a result of the desk review. Until recertified or converted by a desk review, a household shall continue to receive the bonus portion of the allotment, calculated in accordance with the income, deduction, and basis of issuance provisons of the Food and Nutrition Act of 2008 of 1964. During the case file conversion period, some households may be participating on the basis of the old program rules and some on the new rules. Claims against households and restoration of benefits shall not be assessed provided that whichever program rules are in use for a particular case are correctly applied during the conversion period. However, errors caused by miscalculations based on the old or new program rules which result in an entitlement to restoration of lost benefits or an overissuance shall be assessed in accordance with §§ 273.17 and 273.18 of these regulations. The procedures for calculating lost benefits or overissuances as specified in §§ 273.17 and 273.18 shall be applied to any case found to be in error after the implementation of these procedures, even though the action which caused the error may have occurred prior to the date of implementation. Notwithstanding anything to the contrary in the preceding provisions of this paragraph, State agencies shall have up to four months following the first day that applications are taken under the new rules, to convert the current caseload to the new program. Households coming due for recertification during this time shall be converted to the new Program at recertification. However, if the State agency elects to schedule a desk review for these households earlier in the four-month period, conversion shall take place after the desk review. Further, State agencies may elect to do a point-in-time computer conversion in lieu of individual desk reviews. Such a computer conversion must cover entire categories of households, such as public assistance households, all households in a particular project area, all households currently in the computer files, etc., and the State agency may not elect to postpone the conversion of certain cases until recertification.
(iv) State agencies shall implement § 273.17 on the restoration of lost benefits on or before March 1, 1979. State agencies are encouraged to implement restoration of lost benefits concurrent with the elimination of the purchase requirement, especially as they relate to households which are entitled to lost benefits but which have been unable to receive them because the households are currently ineligible. State agencies shall notify currently ineligible households of the availability of their lost benefits by using one of the following procedures:
(A) State agencies which can readily identify the ineligible households which are entitled to lost benefits shall notify these households and restore the lost benefits within 4 months of the date restoration of lost benefits is implemented.
(B) Other State agencies shall issue a one-time-only press release notifying ineligible households that benefits can be restored. The press release shall advise households to contact the local SNAP office for more information. In addition, State agencies issuing the press release shall request the assistance of local Community Action Programs, general assistance agencies, legal services programs funded by the Legal Services Corporation, State employment service and unemployment compensation offices and other State and Federal governmental agencies providing services to low-income households, such as the Social Security Administration or the Community Services Administration. FNS shall provide the State agency with copies of the letter to be used to request assistance from outreach organizations and governmental agencies, and the fliers and posters which will be distributed upon request to such organizations and agencies. The language of the request for assistance, the notice to households and the poster is contained in the appendix to this rulemaking. State agencies shall mail the request for assistance and display posters in all local agency SNAP certification and issuance offices and welfare offices within 30 days of receipt from FNS. In project areas subject to the bilingual requirements of § 272.4(c), State agencies shall provide translations of the posters and fliers. Upon request, FNS shall provide Spanish posters and fliers. FNS shall reimburse State agencies for all costs of providing translations of the posters and fliers in languages other than Spanish. The State agency shall display the posters in its offices for six months. Households whose entitlement to benefits has been clearly established may apply for restoration of lost benefits under this paragraph for an indefinite period. Households whose entitlement to restoration of lost benefits was established more than three years prior to application for retroactive benefits under this paragraph shall be permitted to document entitlement if entitlement cannot be verified from State agency records. Such households shall sign an affidavit under penalty of perjury explaining their entitlement. In lieu of the requirements of this paragraph, State agencies may elect to provide notice pursuant to paragraph (g)(1)(iv)(A) of this section, in any or all project areas within the State.
(v) State agencies shall assume the authority to settle or adjust recipient claims delegated under § 271.4(b) on or before July 1, 1979.
(vi) State agencies without a currently approved utility standard required in § 273.9(d)(5) shall develop and implement an FNS approved utility standard on or before October 1, 1979. The State agency shall notify households certified at the time the utility standard is implemented of the availability of the standard and the conditions for its use in lieu of actual expenses. Households qualified to use the standard and which elect to do so shall have the standard applied as any other change in circumstances. Otherwise, actual utility expenses shall continue to be used for households qualified for the standard until their next recertification.
(vii) State agencies shall advise FNS of their determination of the need for bilingual services as required by § 272.4(c) on or before December 1, 1978. If the State agency cannot determine, based on available information sources, whether or not bilingual services are required in particular project areas, it shall so advise FNS on or before December 1, 1978. The State agency shall then develop procedures to record the number of non-English-speaking low-income households which make contact with its offices in these project areas as required by § 272.4(c)(6). These procedures shall be implemented on or before March 1, 1979, and shall continue for 6 months. The State agency shall submit to FNS its determination(s) of the need for bilingual services not later than 60 days following the end of the 6-month period. Bilingual outreach materials shall be available for distribution within 90 days of the State agency’s determination that such materials are required. When the State agency determines that bilingual staff and certification materials are required, it shall also make a determination of whether volunteers or paid staff will be used. When volunteers are to be used, the State agency shall provide the materials and arrange for volunteers within 90 days. Paid staff and materials shall be provided within 180 days.
(viii) Prior to the certification of households under these regulations, State agencies shall implement staff training for the transition as required in § 272.4(e)(3), and training for outreach workers, receptionists, and others, as required in § 272.4(e)(1) (v) and (vi). Beginning with these training sessions for the transition, State agencies shall implement the requirements for public participation at training sessions, as specified in § 272.4(e)(1)(iv). State agencies shall designate a training coordinator and develop and implement the ongoing training program required by § 272.4(e) on or before July 1, 1979.
(ix) Elimination of the purchase requirement and the implementation of the basic financial and nonfinancial eligibility criteria and other coupon issuance criteria shall not be extended for any reason. FNS may grant extensions for other provisions contained in these rules, provided that the State agency presents compelling justification for a delay and establishes an acceptable alternative schedule in advance of the implementation deadline. In no event will FNS grant an extension in excess of 120 days from the specified implementation date. In those cases where extensions are granted, the relevant Department regulations under the Food and Nutrition Act of 2008 of 1964 shall remain in effect until superseded by implementation of the new rules.
(2) Amendment 137. Program changes required by Amendment 137 to the SNAP regulations shall be implemented for all households initially applying for SNAP benefits no later than 90 days following the publication of this amendment.
(3) Amendment 146. The procedures contained in Amendment 146 shall be implemented by State agencies in time to be able to issue reduced SNAP allotments or to suspend or cancel allotments within 60 days after the date of publication of this amendment in the
(4) Amendment 141. State agencies shall begin planning for and conducting ongoing consultations with the Indian tribal organizations of the reservations within their jurisdiction as soon as possible after the effective date of this amendment. Portions of the State Plan of Operation to be submitted for fiscal year 1980 shall be subject to ITO comment as required by § 281.2(a). The funding authority in § 281.9 shall apply to budgets beginning with the fourth quarter of fiscal year 1979.
(5) Amendment 211. State agencies shall implement the new Social Security Number (SSN) provisions for new applicants no later than February 1, 1983 and convert the current caseload at recertification or when the case is otherwise reviewed, whichever occurs first. The citizenship provisions must be implemented on or before April 1, 1983. All other provisions shall be implemented at State agency discretion.
(6) Amendment 149. Changes to States’ Quality Control systems as required by this amendment shall be implemented as follows:
(i) All State agencies shall continue conducting modified QC reviews [in accordance with regulations published February 9, 1979 (43 FR 8548)] through August 31, 1979 and submit Form FNS-133 to FNS by September 15.
(ii) State agencies shall implement the requirements in subpart C of part 275 for conducting QC reviews no later than October 1, 1979. A quality control sampling plan (as specified in § 275.11(a) of these regulations) must be submitted by each State to the appropriate FNS Regional Office no later than September 1, 1979 (30 days prior to implementation). This will allow time necessary for approval of the plans prior to the October 1 implementation date.
(iii) State agencies are encouraged to implement QC September 1, if possible. States opting to implement early would not be required to operate for this month under an approved sampling plan. These States must, however, submit sampling plans in accordance with paragraph (g)(6)(ii) of this section. The month of September (sampling month) would serve as a test phase. Therefore, data collected for the sample month would not be required to be submitted to FNS or used in determining a State’s cumulative allotment error rate.
(iv) Regulations published October 17, 1978 (43 FR 47846) which implement major aspects of the Food and Nutrition Act of 2008 provide for the conversion of cases via a desk review (§ 272.1(g)(1)(iii)). Desk converted cases would be converted to the new eligibility criteria for income and deductions but may not have been converted to the new criteria for resources, work registration, tax dependency, etc. Therefore, States will have households participating in the program based on some of the eligibility criteria of the 1964 Food and Nutrition Act of 2008. Desk converted cases as provided in § 272.1(g)(1)(iii) and cases which should have been converted via desk review (some cases may not undergo the conversion process as required), shall be subject to standard QC review procedures. When the QC reviewer detects a variance in one of these cases which results from an element of eligibility which was not converted and was not required to have been converted, the reviewer shall disregard the variance. When the reviewer detects a variance in a case when an element of eligibility was, or should have been converted, the reviewer shall handle the variance like any other QC variance as identified in § 275.12 of these regulations. It is possible that desk converted cases may continue to show up in QC samples through February 1980.
(v) State agencies shall submit reports of QC review activity (one copy to the appropriate FNS Regional Office and one copy to the Deputy Administrator for Family Nutrition Programs, Washington, DC) as follows:
(A) Each State agency shall report the monthly progress of sample selection and completion on a form provided by FNS. This report shall be submitted to FNS so that it is received no later than 10 days after the end of each month, beginning December 10, 1979. Each report shall reflect sampling and review activity for the previous month.
(B) Each State agency shall report the results of QC review activity on a form provided by FNS. This report shall be submitted to FNS so that it is received no later than 90 days from the end of the reporting period.
(C) Corrections to information on the above reports requested by FNS must be submitted within 10 days of the request.
(7) Amendment 151. (i) State agencies shall implement the program changes required by amendment for all new applications and recertifications no later than January 1, 1980. Currently eligible households shall be converted at recertification or when they request conversion to the new deduction system by responding to the notice required in paragraph (g)(7)(iii) of this section or by otherwise requesting recomputation.
(ii) State agencies may but are not required to convert the current caseload to the shelter deduction system provided for in § 273.9(d)(5) through desk reviews or by computer search. State agencies are encouraged to convert eligible households to the new shelter deduction as soon as possible to allow these households to benefit during the winter months.
(iii) Notices explaining the changes and their applicability shall be available at all SNAP certification offices and shall also be mailed or otherwise provided individually to all currently certified households at least once prior to implementation. At a minimum, these notices shall be distributed in the month prior to implementation either with the ATP card or separately but no later than the 15th of the month. The notice shall advise the household of the availability of the new deductions and the procedures for reporting medical and shelter expenses. If the State agency can identify those households to which this amendment would apply, only these households need to receive the notice.
(iv) Fliers advising of the changes contained in this amendment shall be made available to public and general assistance offices, local Social Security offices, and any interested organizations, particularly those dealing with the elderly or disabled or those places where the elderly or disabled congregate, such as housing units. Also, posters explaining the changes shall be displayed in SNAP certification offices and shall be made available to public and general assistance offices, local Social Security offices and any other interested groups. State agencies shall notify all organizations on its outreach contact list of the changes and of the availability of posters and fliers. State agencies shall issue press releases to the news media advising of the impending program changes.
(v) For the first two months of implementation, State agencies shall have up to 30 days to process changes in medical and shelter costs reported in conjunction with this amendment. The change shall be effective for the first issuance following that 30-day period with restoration of lost benefits to the point at which the change would normally become effective under § 273.12. The State agency may request an extension of processing time of up to 60 days to act on these changes. The State agency shall submit appropriate documentation to FNS for the State or any part of the State for which such an extension is requested. After the first two months the State agency shall act on these changes in accordance with the normal processing standards in § 273.12(c). For changes reported during a period of two months following a State agency’s implementation of this amendment, verification of shelter and medical expenses required by § 273.2(f) must be obtained prior to the issuance of the third normal monthly allotment after the change is reported. If the household does not provide verification, the household’s benefits will revert to the original level. State agencies are encouraged to complete such verification and, if needed, conduct an interview prior to processing the change. After this initial period, State agencies will verify these expenses in accordance with the normal timeliness standards.
(vi) Medical expenses shall be subject to the same rounding procedures used for shelter expenses in § 273.10(e)(1)(ii). This procedure shall be in effect until implementation of amendments to § 273.10(e)(1)(ii).
(vii) No household shall be entitled to restoration of lost benefits under this amendment for any period prior to the time the State agency has implemented its provisions. For the initial months after implementation, during which the longer processing time allowed under this amendment is in effect, a household shall be entitled to restoration of lost benefits back to the month the change would have become effective under the normal processing standards in § 273.12(c). After this initial period, no household shall be entitled to restoration of lost benefits unless the State agency does not act on reported changes in accordance with the timeliness standards in § 273.12(c) or the household is otherwise entitled under the provisions of § 273.17.
(viii) Implementation of these program changes falls in the last three months of the October 1979 to March 1980 reporting period for quality control. For the months of January, February and March 1980, all cases in which a household member is either 60 years of age or over, receives SSI, or disability benefits under title II of the Social Security Act will be subject to standard quality control review procedures, except that any varying information regarding medical deductions and/or shelter deductions in excess of the cap found in the review shall be disregarded in determining errors. Such information shall be noted on the Face Sheet of Form FNS-245 under part VII, Discrepancies and Other Information, and reported to the State agency for appropriate action on an individual case basis. Starting with the April-September 1980 reporting period, when the reviewer detects a variance in the medical deduction and/or the shelter deduction in excess of the cap, and these expenses were reported at application, recertification or during the certification period, the reviewer shall handle the variance like any other QC variance as identified in § 275.12 of the Performance Reporting System regulations.
(8) Amendment 152. The rounding procedure set forth in § 273.10(e) shall be in effect for new applications and recertifications no later than July 1, 1980. The State agency shall have up to 12 months following the implementation date of final regulations to convert the current caseload to the rounding procedure that is chosen under § 273.10(e)(1)(ii). The State agency shall have a choice of the following three options in converting households that are already participating at the time the new rounding procedure goes into effect:
(i) Convert households at recertification; (ii) convert households by conducting a desk review; or (iii) convert all households, or all households in a certain category, at a point-in-time. For example, the State agency may convert all public assistance households or all households in a project area by computer. Point-in-time mass conversions shall be conducted no later than July 1, 1980. In any case, the State agency shall advise FNS regarding which rounding and caseload conversion procedures are chosen and when the conversion will be completed.
(9) Amendment 154. State agencies shall implement the program changes required by Amendment 154 as follows:
(i) State agencies shall begin requiring social security numbers for all new applications and recertifications no later than the first day of the first month which commences 120 days from the date of publication of final rules. Participating households shall be requested to provide or apply for social security numbers (SSN) for appropriate household members at recertification, or at the time of office contact for any other reason. The State agency shall provide advance notification of this requirement and the consequences of noncompliance by sending an individual notice to all participating households and by providing press releases for dissemination through the media. The individual notices may be sent as either a one-time notice prior to implementation and/or with the notices of expiration of a certification period.
(ii) If any affected member(s) of a household does not have his or her SSN readily available at the time of application, recertification, or any office contact, he or she shall follow the procedures for furnishing an SSN in accordance with § 273.6 as amended.
(iii) State agencies shall implement the fraud claims procedures contained in §§ 273.16 and 273.18. Implementation shall be no later than the first of the month following the 120th day from the date of publication of final rules. By implementation the State agency shall also have an approved system for handling claims, including a method for accounting for the fifty percent retention of the value of funds collected from fraud claims. Any collection action on fraud claims after implementation is subject to the fifty percent retention including claims established under the Food and Nutrition Act of 2008 of 1964 as amended and under the Food and Nutrition Act of 2008, as amended. However, only individuals found guilty of fraud through an administrative fraud hearing or through a court of law under regulations promulgating the Food and Nutrition Act of 2008, as amended, are subject to the recovery provisions in §§ 273.16 and 273.18 retroactive to implementation of fraud claim provisions under the 1977 Act.
(10) Amendment 207. State agencies shall implement the changes in the rules required by Amendment 207 no later than January 1, 1983. Disabled parents who requested and were denied separate household status on or after September 8, 1982, will be entitled to benefits retroactive to the dates of their applications for separate household status.
(11) Amendment 160. State agencies shall implement the provisions of this amendment as follows:
(i) State agencies shall submit the initial State corrective action plans so they are received by FNS within 90 days of publication of these regulations as required in § 275.22(a) of this chapter. This initial plan shall contain all known deficiencies in the State which meet the criteria set forth in § 275.16(b) of this chapter and shall identify, for each such deficiency, the items required in § 275.17(b) of this chapter. Project areas also shall prepare and submit to the State corrective action plans for all identified deficiencies. These plans shall be submitted within 60 days of identification of a deficiency and shall include any deficiencies known to the project area prior to publication of these regulations for which corrective action has not been completed. Ninety days after publication of these regulations, all provisions of §§ 275.15, 275.16, 275.17, 275.18, 275.19 and 275.22 of this chapter shall be implemented.
(ii) State agencies shall have submitted management evaluation (ME) review schedules within 90 days of publication of these regulations as required by § 275.20 of this chapter. These review schedules shall contain all information required by § 275.20 of this chapter and shall be adhered to unless a change is necessary. If a modification to an ME review schedule is necessary at any time in the review period, the State shall notify the appropriate FNS Regional Office of the modification.
(iii) State agencies shall implement ME reviews within 90 days of publication of these regulations, following the provisions of §§ 275.5, 275.6, 275.7, 275.8, and 275.9 of this chapter. Any waiver from the requirements of § 275.7 or § 275.9 must be requested 60 days prior to its implementation as identified in § 275.5(c). Development or submission of requests for a deviation shall not delay implementation of the ME review sub-system past the required implementation date.
(iv) All provisions of these regulations which are not addressed in paragraphs (g)(11) (i) and (ii) of this section shall be implemented within 90 days of publication of these regulations. While this includes the requirements for a Performance Reporting System Coordinator and designation of an organizational entity for effecting corrective action as identified in § 275.2(a) of this chapter, this position and designation may be established on an interim basis; provided that the provisions of § 275.2(a) of this chapter are fully implemented by October 1, 1980. During this interim period States shall ensure that all responsibilities of the coordinator or entity are adhered to.
(12) [Reserved]
(13) Amendment 162. Program changes required by Amendment 162 of SNAP regulations shall be implemented as follows:
(i) The fee agent system for conducting interviews is currently in use and its continuing use is approved.
(ii) All other rules except paragraph (p) of § 272.8 shall be implemented as soon as practical but no later than 90 days following the date of final rulemaking. A fee agent training plan must be submitted within 45 days of the date of final rulemaking. Paragraph (p) of § 272.8 concerning points and hours shall be implemented following the time standards contained therein.
(14) Amendment 142. (i) State agencies shall restore lost benefits to households who had their eligibility or benefit levels adversely affected because Federal energy assistance payments were counted as income and/or resources. Entitlement to restoration of lost benefits shall be retroactive to October 1, 1979 for payments received under CSA’s ECAP; to November 27, 1979 for payments received under DHEW’s EAP; and to January 7, 1980 for the one-time-only energy assistance payments to SSI households in accordance with Pub. L. 96-126.
(ii) State agencies shall use the following procedures for notifying households of entitlement to restoration of benefits under Amendment 142:
(A) State agencies which can readily identify those SSI households who received the one-time payment and those households who received payments under the Energy Crisis Assistance or Energy Allowance Programs which lost benefits because their energy assistance payment was counted as income and/or resources must notify such households of entitlement to restoration of lost benefits.
(B) State agencies which cannot readily identify households entitled to restoration of lost benefits due to the circumstances described in § 272.1(g)(14)(i) must issue a one-time-only press release to notify households which have participated since October 1, 1979 of possible entitlement to restoration of lost benefits. State agencies may, at their option, use additional means of notification such as posters.
(15) Amendment 163. State agencies shall implement the provisions in this amendment no later than July 1, 1980.
(16) Amendment 174. State agencies shall implement the program changes required by Amendment 174 as follows:
(i) State agencies shall implement the income/resource disregard provision for Federal, State, and local energy assistance payments (§§ 273.8 and 273.9 of this subchapter) no later than October 1, 1981.
(ii) State agencies shall implement the new maximum resource limit and the exemption of vehicles for the physically disabled (§ 273.12 of this subchapter) no later than October 1, 1981 for all new applicants. State agencies shall convert the current caseload to the new resource limit at the time of recertification, or at any other time the casefile is reviewed prior to recertification.
(iii) State agencies shall implement the student participation provisions of this amendment (§§ 273.1, 273.2, 273.5, 273.7 and 273.11 of this subchapter) no later than October 1, 1981 for all new applicants. Current caseload shall be converted at the time of recertification or any time the casefile is reviewed prior to recertification.
(17) Amendment 158. (i) The procedures contained in part 273 regarding SSI SNAP joint application processing shall become effective on August 1, 1980 for all State agencies except that:
(A) In those areas designated as SSI/Elderly Cash-out Demonstration Project Sites or Demonstration Project Comparison Sites, implementation of these provisions will be delayed. In addition, Social Security office service areas which contain either demonstration projects sites or demonstration comparison sites will be temporarily exempted, in their entirety, from implementation of these provisions whether or not their boundaries are co-terminous with demonstration project sites and/or demonstration comparison site boundaries. This temporary exemption removes the administrative problem of the same SSA office simultaneously operating under both joint processing and cash-out regulations. The procedures contained in this rulemaking shall become effective for these project areas on the first day of the month following the ninetieth day after the termination of the demonstration project.
(B) State agencies in SSI cash-out States as defined in § 273.20 shall not implement the provisions of this rulemaking. In the event an SSI cash-out State loses that status, the State agency shall implement the provisions of this rulemaking on the first day of the month following the ninetieth day after the Secretary of Health and Human Services determines that the State no longer qualifies for cash-out status.
(ii) State agencies shall distribute fliers advising of the changes contained in this amendment to public and general assistance offices, local Social Security offices, any interested organizations, particularly those dealing with the elderly or disabled, and those places where the elderly or disabled congregate, such as housing units senior citizens centers, and elderly feeding programs. Also, posters explaining the changes shall be displayed in SNAP certification offices and shall be made available to public and general assistance offices, local Social Security offices and any other interested groups. State agencies shall notify all organizations on their outreach contact lists of the changes and of the availability of posters and fliers. State agencies shall issue press releases to the news media advising of the impending program changes. FNS will supply State agencies with model language describing the changes which State agencies may use in their publications.
(18) Amendment 168. The provisions of Amendment 168 shall be effective on the thirtieth day following their publication. Any claims filed against State agencies for incidents that occur after the publication of this amendment shall be filed in accordance with the provisions of this amendment. Any claims filed against State agencies for incidents that occurred prior to the publication of this amendment shall be filed in accordance with the rules in effect at the time they occurred. However, the administrative review procedures contained in this amendment shall be applicable to all claims that are filed after the effective date of this amendment.
(19)-(20) [Reserved]
(21) Amendment 178. State agencies shall implement the provisions of §§ 273.8 and 273.9 of this amendment for all new applicants no later than February 1, 1981. States shall convert the current caseload to the new rules at recertification or at the time the case is otherwise reviewed, whichever comes first.
(22) Amendment 179. State agencies shall implement those verification procedures mandated in §§ 273.2 and 273.8 no later than the first of the month 120 days following publication of final regulations. State agencies may implement those provisions allowed at State agency option in §§ 273.2 and 273.12, once the options have been approved by FNS and the State certification manuals have been revised to incorporate the options.
(23) Amendment 171. (i) All States operating an ATP issuance system shall submit the first Form FNS-46, Food Stamp Reconciliation Report, in accordance with Amendment No. 171, for the month of February 1981. This report shall be submitted to the FNS Regional Office within 90 days from the end of the report month.
(ii) All States shall submit the Form FNS-388, State Coupon Issuance and Particpation Estimates, for February 1981 and each month thereafter. Those States that have not submitted procedures for estimating program participation, shall submit them to the FNS Regional Office on or before February 9, 1981.
(24) Amendment 186. The procedures of part 275 regarding SSA/SNAP joint processing and demonstration cases shall become effective on August 1, 1980 for all applicable State agencies. These procedures must be implemented by October 1, 1980.
(25) Amendment 187. State agencies shall implement the complaint procedures required by § 271.6(a) no later than 180 days following publication of final regulations.
(26) Amendment 165. State welfare agencies and State employment agencies shall implement the provisions of Amendment 165 no later than the first of the month following 120 days from publication of amendment 165 in the
(i) Both agencies shall begin immediately to develop the work registration plan and agreements discussed in § 273.7(c) and (d) of Amendment 165. The plan and agreements must be approved and implemented within the 120 day timeframe established for implementation of all provisions of the final rule.
(ii) The provisions of amendment 165 shall be applied to households at the time of initial application, recertification, or reregistration, beginning no later than the first of the month following 120 days from publication of the amendment.
(27) Amendment 189. State agencies shall implement the provisions of Amendment No. 189 no later than July 1, 1982.
(28) Amendment 156. State agencies shall implement the program changes required by Amendment 156 within 120 days after publication of these regulations, meeting the submittal deadlines outlined in §§ 272.2 and 272.3.
(29) Amendment 190. State agencies shall implement these regulations no later than January 1, 1982. The rules are effective November 9, 1981.
(30) [Reserved]
(31) Amendment 169. The provisions of Amendment 169 shall be effective March 30, 1981. These provisions shall apply to the period beginning October 1, 1980, except that the provisions of § 277.4(b)(2) shall apply to the period October 1, 1978 through October 1, 1980. No State shall be subject to sanctions based upon quality control error rates for any period prior to October 1, 1980. No State shall receive enhanced funding based upon quality control data for a period prior to the date upon which its quality control system was in operation.
(32)-(33) [Reserved]
(34) Amendment 198. State agencies opting to match earnings data provided by applicants and participants with information maintained by the Social Security Administration shall first execute data exchange agreements with the Social Security Administration. After the effective date of this rule and after execution of this agreement, State agencies may implement wage match provisions at their discretion.
(35) Amendment 202. State agencies shall implement the provisions of Amendment No. 202 as follows:
(i) The rules shall be implemented no later than October 1, 1981, including the provisions for a medical deduction, separate dependent care deduction, and uncapped shelter expense deduction for the elderly and disabled in Puerto Rico, Guam, and the Virgin Islands. All households who apply October 1 or later and those households who are recertified October 1, 1981 or later shall be processed in accordance with these provisions. The proration of initial month benefits shall begin no later than October 1, 1981.
(ii) Conversion of the current caseload to the new gross income test and earned income deduction amount shall be completed no later than 90 days from October 1, 1981, or 90 days from the date of implementation approved through waiver requests in accordance with paragraph (g)(35)(vi) of this section.
(iii) Conversion of the current caseload to the new household definition; ineligibility of strikers and boarders; and, in Puerto Rico, Guam, and the Virgin Islands, a medical deduction, separate dependent care deduction, and uncapped excess shelter expense deduction shall be completed at or before recertification. In no event shall the new medical, dependent care, and excess shelter provisions for Guam, Puerto Rico and the Virgin Islands be implemented prior to October 1, 1981.
(iv) Notification to affected households of these changes shall be done, at a minimum, in the same manner required for mass changes in public assistance grants prescribed in § 273.12(e)(2)(ii).
(v) Beginning October 1, 1981, outreach activities engaged in by State agencies shall be ineligible for Federal matching funds.
(vi) FNS will consider requests for waivers to these timeframes, except for the timeframe in paragraph (g)(35)(v) of this section, on a state-by-state basis, if good cause can be established and justified, in writing, for the need for a longer timeframe.
(36) Amendment 259. State agencies may implement this Monthly Reporting and Retrospective Budgeting rule at any time, but shall implement this rule no later than January 1, 1984. Prior to January 1, 1984, this rule may be implemented Statewide, in only part of a State (such as in certain project areas), or for only certain reasonable classifications of households (such as for only households receiving Temporary Assistance for Needy Families) so long as the implementation is completed by January 1, 1984. State agencies shall have begun to send monthly reports to households so that they can report their January 1984 circumstances in accordance with § 273.21(h). However, the changes in the interim provisions made by this final rule need not be implemented on January 1, 1984. The changes made by this final rule shall be implemented no later than May 1, 1984. Unless otherwise specified in § 273.21 of this chapter, all other SNAP regulations shall apply to State agencies and to applying or participating households.
(37) Amendment 205. The procedures extending eligibility to otherwise eligible residents of shelters for battered women and children contained in Amendment 205 shall be implemented by State agencies no later than April 1, 1982.
(38)-(39) [Reserved]
(40) Amendment 213. All State agencies shall execute the appropriate data exchange agreements and implement the provisions of this amendment not later than January 1, 1983. State agencies may opt to match earnings data with information maintained by the Social Security Administration upon publication of final regulations provided they have executed data exchange agreements with the Social Security Administration. State agencies which are not prohibited by State law from wage matching with agencies administering unemployment compensation may do so upon publication of final regulations, provided they have executed the appropriate data exchange agreements.
(41) State agencies shall implement the provisions of Amendment 215 upon publication.
(42) Amendment 217. The regulations concerning the optional workfare program contained in Amendment 217 shall be in effect November 8, 1982. Workfare programs may be implemented after this date provided FNS has approved the workfare plan.
(43) Amendment 220. State agencies shall implement Amendment 220 on October 1, 1982.
(44) Amendment 221. State agencies shall implement on a case by case basis the provisions of this rule, excluding the provision which revises the application form, beginning the first of the month 30 days from the date of publication. The provision requiring a notice of verification on the application form shall be implemented on or before the first day of the month beginning at least 90 days from the date of publication. If the State agency has not depleted its existing supply of application forms, the State agency may opt to implement this provision by providing an insert to the application form containing the notice of verification.
(45) Amendment 222. This amendment shall be implemented by the first day of the month following the 30th day after publication. As of that date prior approval of forms, manuals, instructions, or any other type of operating guidelines will no longer be required and waivers will be granted or denied based on the new criteria contained herein. Additionally, as of that date State agencies shall inform FNS of changes, as they occur, in their organizational outline and agreements with other agencies. The submission requirement for the Budget Projection Statement, Form FNS-366A, as set forth in § 272.2(e) shall become effective on August 15, 1983, for the 1984 Federal fiscal year beginning October 1, 1983 through September 30, 1984.
(46) Amendment 225. The State agency shall obtain FNS approval for the exclusion of energy assistance provided under any State or local program, in accordance with the criteria set forth in §§ 273.8(e)(14) and 273.9(c)(11), within six months of the date of publication of the final rule. State or local energy assistance which is not approved during this six month period shall cease to be excluded at the end of the period. The new provisions concerning restoration of lost benefits in § 273.17 (a) and (e) shall be implemented no later than 120 days following publication of the final rule.
(47) [Reserved]
(48) Amendment 228. FNS will consider requests for waivers to monthly reporting requirements beginning November 5, 1982.
(49) Amendment 245. The mail issuance loss rates of 0.75 percent and $2,250 are effective January 1, 1983. The mail issuance loss rate of 0.5 percent and $1,500 are effective October 1, 1983. For the second quarter of fiscal year 1983 only, FNS will look at Statewide loss rates and the loss rates of individual reporting units within the State. Where the loss rate for individual reporting units within the State is over the tolerance in that quarter and the Statewide loss rate is also over tolerance, FNS will assess liability for losses exceeding the tolerance reported for the second quarter of 1983. Where the loss rate for individual reporting units within a State are over tolerance for the second quarter, but the Statewide loss rate is under tolerance, State agencies shall have one additional quarter (the third Fiscal Year 1983 quarter) to bring such individual reporting units’ loss rates into compliance with the tolerance levels. Thus for these reporting units, FNS will assess liability beginning with the fourth quarter of fiscal year 1983 and each quarter thereafter for losses which exceed the tolerance levels, regardless of Statewide loss rate. FNS will bill State agencies for losses on a semiannual basis.
(50) Amendment 230. State agencies shall implement the provisions of Amendment 230 no later than January 1, 1983.
(51)-(52) [Reserved]
(53) Amendment 233. State agencies shall implement these regulations no later than February 1, 1983.
(54) Amendment 234. The provisions of Amendment 234 shall apply to those sponsored aliens on behalf of whom the sponsor signed an affidavit of support or similar statement (as a condition of the alien’s entry into the United States as a lawful permanent resident) on or after February 1, 1983.
(55) Amendment 235. Except for the provisions which simply extend options to State agencies, State agencies shall implement the changes made by Amendment 235 no later than February 1, 1983. Elderly/disabled persons who requested and were denied separate household status or other considerations granted disabled persons on or after September 8, 1982, will be entitled to benefits retroactive to the dates of their applications for separate household status or other special considerations.
(56) [Reserved]
(57) Amendment 240. The provisions of Amendment 240 shall be effective on January 11, 1983. The enhanced funding, which the amendment implements, is available to political subdivisions retroactive to October 1, 1982. The enhanced funding is available to a political subdivision for a workfare participant who begins working on or after October 1, 1982.
(58) Amendment 242. State agencies shall implement the disqualification penalties for intentional Program violation, and the improved recovery of overpayments provisions contained in Amendment 242 no later than April 1, 1983.
(i) The provision in § 273.11(c) for handling the income and resources of an individual disqualified for intentional Program violation shall apply to any individual disqualified for such a violation since the implementation of the fraud disqualification provisions of the Food and Nutrition Act of 2008. The disqualification procedures for intentional Program violation in § 273.16 shall apply to any individual alleged to have committed one or more acts of intentional Program violation since the implementation of the fraud disqualification provisions under the Food and Nutrition Act of 2008. However, the disqualification penalties in § 273.16(b) shall apply only to individuals disqualified for acts of intentional Program violation which occur after implementation of this amendment. In addition, the disqualification penalties in § 273.16(b) shall apply only to individuals disqualified for acts of intentional Program violation which occurred either during a certification period based on an application form containing these penalties or after receipt of written notification from the State agency of these penalties. Recurring acts of intentional Program violation which occur over a period of time prior to and after implementation of this final rule shall not be separated. Only one penalty can be imposed for such recurring violations and the household member shall be disqualified in accordance with the disqualification penalties specified in this amendment. The reporting requirements of § 273.16(i) shall become effective upon implementation, however, the State agency shall have until October 1, 1983, to submit such reports on individuals disqualified under previous regulations implementing the Food and Nutrition Act of 2008.
(ii) The recovery provisions for claims against households in § 273.18 shall apply to any overissuance caused by an action which occurred after implementation of regulations promulgating the Food and Nutrition Act of 2008, as amended. And, the procedures for calculating the amount of overissuances as specified in § 273.18(c) shall apply to any month in which an overissuance occurred retroactive to March 1, 1979. However, State agency retention of 50 percent of the value of collected intentional Program violation claims and 25 percent of the value of collected inadvertent household error claims as provided in § 273.18(h) shall apply to any collection action retroactive to January 1, 1982. The State agency shall have the option of reinstating any claim previously suspended, but not terminated, under the recovery provisions of regulations implementing the Food and Nutrition Act of 2008 and, once reinstated, such claims shall be subject to the recovery provisions contained in this amendment. However, the State agency shall not reinstate any amount of a claim compromised or any claim terminated under previous regulations implementing the Food and Nutrition Act of 2008, as amended. The submission requirements for the Form FNS-209, Status of Claims Against Households, as set forth in § 273.18(h) shall become effective with the quarter ending March 31, 1983.
(59) Amendment 243. (i) State agencies shall implement the provisions contained in § 274.1(d) statewide no later than October 1, 1983. FNS will consider requests for waivers to this timeframe on a State-by-State basis if the State agency establishes good cause through submission of written justification of the need for a longer timeframe and submits a plan that shows when the system will be implemented.
(ii) State agencies shall implement the correction made to § 273.1(a)(1)(iv) retroactive to September 8, 1982.
(iii) The Commonwealth of Puerto Rico shall implement the changes to part 285 on January 1, 1984, as published in the
(60) Amendment 244. State agencies shall implement the provisions regarding joint SNAP/public assistance case processing at State agency discretion. The provisions regarding certification periods must be implemented at time of application or at recertification no later than July 1, 1983.
(61) [Reserved]
(62) Amendment 247. State agencies must implement the provisions relative to noncompliance with other programs no later than April 1, 1985. The provisions relative to disclosure of information must be implemented no later than February 1, 1985.
(63) Amendment 251. State agencies shall implement the program changes required by this amendment as follows:
(i) State agencies shall apply the work registration, job search, and voluntary quit provisions of this rule, amending portions of § 273.7, to new applicants no later than January 2, 1985. The provisions shall apply to participating households at recertification or at the time of office contact for any other reason.
(64) Amendment 252. (i) The sanction/incentive provisions of § 275.25 were effective October 1, 1982. The previous provisions of § 275.25 shall continue to apply to the review periods prior to October 1982.
(ii) The funding provisions of § 277.4(b)(2) were effective on October 1, 1982, and shall apply to the October 1982, through September 1983, review period and every review period thereafter.
(iii) The revised funding provisions of § 277.4(b)(7) shall apply to the 6-month review periods October 1, 1981 through March 1982 and April through September 1982.
(65) Amendment 253. The provisions of § 274.8(a)(6) (i), (ii), and (iii) shall be implemented the first month beginning on or after the 90th day following publication of this final rule. In that month, the FNS-388 report shall provide the actual second preceding month data. The initial semiannual coupon issuance and NA/PA household and person participation data shall be provided in September 1985 for the month of July 1985. State agencies will cease submission of the FNS-256 report as of July 1985.
(66) Amendment 254. State agencies shall implement the provisions of Amendment 254 no later than October 19, 1983.
(67) [Reserved]
(68) Amendment 260. (i) The quality control review provisions contained in Amendment 260 are effective starting with the beginning of Fiscal Year 1984, except as provided in the following sentences. All cases sampled for the six months October 1983 through March 1984 shall be disposed of and reported within 95 days of March 31, 1984. Cases sampled for April 1984 and for months thereafter shall be disposed of and reported according to § 275.21. For example, 90 percent of April cases are due within 75 days of April 30, and 100 percent are due within 95 days of that date. The structure of sample frames specified in § 275.11(e) must be implemented no later than the sample month of October 1984.
(ii) Starting with the October 1983 sample month, cases must be determined complete, not complete, or not subject to review according to §§ 275.12(g) and 275.13(e). As of the beginning of Fiscal Year 1984 the sample sizes stated in § 275.11(b) and related sampling plan requirements are effective, and State agencies are required to meet the completion standard stated in § 275.11(d). State agencies currently sampling at the levels provided in § 275.11(b)(1)(iii) must submit to their respective FNS Regional Offices the reliability statement required by § 275.11(a)(2) within 30 days of the publication of this rule, or no later than the second month after publication of this rule begin sampling at the levels specified in § 275.11(b)(1)(ii).
(69) Amendment 261. State agencies shall implement this amendment establishing the Alaska urban and rural allotment levels and the new cap for Guam no later than August 1, 1984. Households in rural Alaska which request retroactive benefits by February 1, 1985 will be entitled to retroactive benefits for the period after September 8, 1982, during which they lived in rural Alaska and participated in SNAP in that area. These retroacive benefits will be provided over a period of time not to exceed one year. The amount provided each month will be the higher of $50 or one-twelfth of the total amount due. Households in Guam which request retroactive benefits by February 1, 1985 will be entitled to retroactive benefits for the period October 1, 1982, through September 30, 1983, during which they lived in Guam, participated in SNAP in that area, and were in household sizes two, five, or eight or more.
(70) Amendment 264. These rules are effective on May 29, 1986. No later than that date State agencies are required to submit the attachment to their State Plan of Operation specified in § 272.2 and in § 272.8(i), documenting either full implementation of these rules or good faith efforts to implement them. The documentation of full implementation or of good faith efforts shall show either that the State agency is routinely requesting and using, or shall show the dates when it will begin routinely to request the use, information from the various data sources specified in § 272.8(a) according to the frequencies for requests, timeframes and other requirements of § 272.8(e), (f) and (g). Full implementation shall include requests for available information from the Social Security Administration for all recipients for which such information has not been previously requested. The 30-day timeframe specified in § 272.8(g) is effective for applicant households which become recipients as discussed in § 272.8(e)(1) as soon as a State agency begin receiving information from particular data sources.
(i) A Plan describing good faith efforts shall at a minimum document that the State agency is currently in compliance with wage match criteria as specified in the final rulemaking of November 5, 1982 (47 FR 50180), assure that such compliance will continue at current levels until such time as these provisions are implemented, and provide an implementation schedule that reflects full compliance in the minimum amount of additional time. Requests for delays of implementation beyond May 29, 1986 shall identify the applicable regulation part, the date for implementation, justification for the delay, and the implementation plan.
(ii) The Secretary shall consult with the Secretary of the Department of Health and Human Services and with the Secretary of the Department of Labor prior to the approval of Plans of Operation documenting good faith efforts. In no event shall the Secretary approve a delay of the provisions of individual notification in § 273.2(f)(9) beyond the initial implementation date of any of these new provisions.
(iii) Implementation schedules beyond September 30, 1986 are not approvable, with the following exception: If on April 1, 1985 no SWICA exists in a particular State, the provisions of the rule as they relate to SWICAs shall be effective upon the designation of a SWICA. Implementation of a SWICA after April 1, 1985 shall take place as soon thereafter as possible but in no event later than September 30, 1988. All SWICAs with delayed implementation shall be in operation so that wage information is reported to them starting with the month of October 1988.
(71) Amendment No. 266. The provisions contained in Amendment No. 266 shall be implemented by March 6, 1987.
(i) All Fiscal Year 1987 review schedules shall continue in force despite the implementation of these provisions. However, a State agency may, at its option, seek a change in that schedule.
(ii) Waivers shall remain in force until their expiration. If a State agency wishes to cancel a waiver it should contact its Regional Office and negotiate whatever change it needs.
(iii) The first periodic Corrective Action Plan update required by this amendment shall be submitted by May 1, 1987.
(72) Amendment 267. State agencies shall implement the eligibility requirements of this rulemaking as they apply to offsetting farm self-employment losses and publicly operated community mental health centers not later than March 27, 1986. State agencies must begin taking applications from residents of publicly operated community mental health centers (as defined in § 271.2) not later than March 27, 1986. FNS field offices may authorize these centers to act as retail food stores on February 25, 1986.
(73) Amendment 269. The correction to § 273.7(n)(1)(v) outlined in amendment 269 is effective retroactively to October 3, 1984. State agencies which may have implemented the voluntary quit error prior to receiving FNS notification not to effectuate the change, shall issue lost benefits to affected households, but not prior to November 2, 1984 (the effective date of the October 3, 1984 final rule). State agencies shall implement the revisions to the rules outlined in amendment 269 for all new applicants no later than the first day of the month following June 26, 1986. Any conversion of the current caseload necessitated by this amendment shall be done at recertification or at the time the case is next reviewed, whichever occurs first.
(74) Amendment 270. (i) State agencies shall implement the earned income and dependent care deduction amounts and the resource limit provisions of Amendment 270 on May 1, 1986. If, for any reason, a State agency fails to implement these provisions on that date, households shall be provided the lost benefits which they would have received if the State agency had implemented these provisions as required.
(ii) The provisions of § 272.1(b) regarding the prohibition of State or local sales taxes on foods purchased with SNAP coupons shall be implemented on October 1 of the calendar year during which the first regular session of each State’s Legislature is convened following enactment of Pub. L. 99-198 (enacted December 23, 1985). A “regular session” means a scheduled session of a State’s legislature convened to address the usual range of statutory and budgetary issues. A “budgetary” session of a legislature shall be considered a “regular session” if State rules allow for statutory issues to be introduced at these “budgetary” sessions even if rules governing these special procedures are stringent.
(A) FNS may approve a delay in the above implementation date if a State provides FNS a request documenting that such date would either:
(1) Have an adverse and disruptive effect on the administration of SNAP in such State; or
(2) would provide inadequate time for retail stores to implement required changes in sales tax policy.
(B) FNS has no authority to approve any State implementation schedule with an effective date later than October 1, 1987.
(75) Amendment 273. The State agency shall implement this amendment establishing Alaska urban, Rural I, and Rural II allotment levels by April 1, 1986.
(76) Amendment 274. (i) The provisions of this amendment at §§ 271.2, 273.2, 273.5, 273.9, 273.10(d)(6), and 273.21(b) shall be implemented for all new applications and the current caseload no later than August 1, 1986. If, for any reason, a State agency fails to implement these provisions on this date, households shall be provided lost benefits which they would have received if the State agency had implemented these provisions as required.
(ii) The provisions of this amendment at § 273.18 and part 285 shall be implemented June 20, 1986.
(iii) The provisions of this amendment at § 273.21(a)(4)(i)(A) and the second sentence in § 273.10(f)(7) are effective retroactive to August 31, 1981. Section § 273.21(a)(4)(ii)(A) and the first two sentences of § 273.21(a)(4)(ii)(B) described in this amendment are retroactive to September 8, 1982. The provisions of this amendment at §§ 272.3, 273.21(a), 273.21(a)(3), 273.21(a)(4)(i)(B), the third sentence at § 273.10(f)(7), and the last two sentences of § 273.21(a)(4)(ii)(B) are effective retroactive to December 2, 1983. The provision of this amendment at § 276.7(j) is effective retroactive to December 23, 1985.
(77) Amendment 275. The program change in § 273.2(l) of Amendment 275 shall be effective October 1, 1986.
(78) Amendment 276. (i) This rule is effective retroactively to December 23, 1985. Any household that applied and was denied benefits from that date until implementation of this rule is entitled to restored benefits if it:
(A) Was categorically eligible as defined in this rule;
(B) Is otherwise entitled to benefits; and
(C) Requests a review of its case or if the State agency otherwise becomes aware that a review is needed.
(ii) For quality control (QC) purposes only, QC reviewers shall not identify variances resulting solely from either implementation or nonimplementation of this rule in cases with review dates between December 23, 1985 and October 31, 1986, inclusive.
(79) Amendment 277. State agencies shall implement the provisions of Amendment 277 on August 22, 1986. If, for any reason, a State agency fails to implement the provisions, affected households shall be entitled to restored benefits but not prior to August 22, 1986.
(80) [Reserved]
(81) Amendment 279. (i) For State agencies which elected to implement a $160 dependent care deduction limit for all households prior to October 18, 1986, the dependent care deduction provision of Amendment No. 279 is effective retroactive to May 1, 1986 in accordance with section 638 of Pub. L. 99-500. In such States, for QC purposes only, QC reviewers shall not include in the error determination variances which resulted from early implementation by these States of the deduction limit provided the implementation occurred during the period beginning May 1, 1986 through October 1986.
(ii) For all other State agencies, the $160 dependent care deduction provision of Amendment No. 279 shall be implemented for elderly and disabled applicant and participating households on December 1, 1986. State agencies shall implement the provision as a mass change in accordance with § 273.12(e), except that affected households in Alaska, Hawaii and Guam shall be issued an individual notice which, at a minimum, informs the households of the general nature of the mass change, the effect of the deduction limit on the household’s allotment, and the month the change will take effect. If for any reason the State agency fails to implement the provision on the required date, affected households shall be provided restored benefits, back to December 1, 1986. For QC purposes only in such States, QC reviewers shall not include in the error determination variances which resulted solely from a State agency’s implementation or nonimplementation of the deduction limit between December 1, 1986 and January 1, 1987.
(82) Amendment 281. State agencies shall implement the provisions of this amendment no later than April 1, 1987.
(83) Amendment 282. The changes to § 273.2(i)(3)(i) contained in Amendment No. 282 are effective January 12, 1987 and shall be implemented no later than February 11, 1987.
(84) Amendment 285. (i) The provisions of Amendment No. 285 at §§ 273.9(d)(6)(i), 273.9(d)(6)(ii), 273.9(d)(6)(v)(B), 273.10(d)(1)(i) and 273.10(d)(6) are retroactively effective to October 1, 1986. The State agency shall implement the provisions immediately upon publication and any eligibility determination made on or after that date shall be made in accordance with this rule. The State agency shall review a case to determine if the household was denied benefits under these amendments whenever the household requests a review or the State agency becomes aware that such a denial may have occurred. Any household that was denied benefits as a result of an eligibility or benefit calculation (e.g., processed change report) made on or after October 1, 1986 is entitled to restored benefits. Restored benefits for these households shall be made available, if appropriate, in accordance with § 273.17 back to:
(A) October 1, 1986 or the date of application whichever is later for new applications; or
(B) October 1, 1986 or the first month in which the application of these amendments would have affected the household’s benefits, whichever is later, for certified households.
(ii) For quality control (QC) purposes only, a variance resulting solely from either the implementation or non-implementation of this rule shall not be identified between October 1, 1986 and April 1, 1987.
(85) Amendment No. 286. (i) The provisions of Amendment No. 286 which permit homeless meal providers to apply for authorization to accept SNAP benefits were effective March 11, 1987.
(ii) All other provisions of this amendment were effective April 1, 1987.
(86) Amendment No. 287. The provisions of this amendment are effective April 7, 1987.
(87) Amendment No. 288. The removal of the word “funded” from the last sentence in § 273.11(e)(1), the amendments to the first and fourth sentences in § 278.1(e), and the revision of paragraph (a)(2)(iii) in § 273.11 are effective February 25, 1986 and shall be implemented not later than March 27, 1986.
(88) Amendment No. 292. (i) The effective date of the provisions of this amendment is retroactive to November 6, 1986.
(ii) The actual dates upon which aliens may become eligible under § 273.4(a) (8), (9), (10), and (11) are specified in those paragraphs. State agencies must inform their staff of the respective dates as they pertain to the eligibility or ineligibility of applicant aliens.
(89) Amendment No. 293. The provisions of Amendment No. 293 are effective retroactively to October 17, 1986 and shall be implemented as follows:
(i) State agencies shall implement the provisions of this amendment for new applicant households which apply for program benefits on or after June 1, 1987.
(ii) State agencies shall convert their affected current caseload to the provisions of this amendment at household request, at recertification, or when the case is next reviewed, whichever occurs first and provide restored benefits, if appropriate, back to the date of application of October 17, 1986, whichever occurred later.
(iii) Any affected household that applied for Program benefits from October 17, 1986 until implementation of this rule and was denied benefits is entitled to restored benefits back to the date of application or October 17, 1986, whichever occurred later, if the household:
(A) Is otherwise entitled to benefits, and
(B) Requests a review of its case or the State agency otherwise becomes aware that review is needed.
(iv) For quality control (QC) purposes only, QC shall not identify variances resulting solely from either implementation or nonimplementation of the provisions of this amendment for cases with review dates between October 17, 1986 (the date of enactment of Pub. L. 99-498) and August 31, 1987.
(90) Amendment No. 294. State agencies shall implement the Title IV-D child support income exclusion provision of Amendment No. 294 at its own option, provided it has procedures in place, at the time of implementation, for applying the provision to all affected households and for calculating and reimbursing FNS as required under the provision. State agencies shall implement the remaining provisions of Amendment No. 294 retroactively to April 1, 1987. State agencies shall provide restored benefits, if appropriate, back to the date of application or April 1, 1987, whichever occurred later. Any affected household that applied for Program benefits from April 1, 1987 until implementation of this rule and was denied benefits is entitled to restored benefits back to the date of application or April 1, 1987, whichever occurred later, if the household is otherwise entitled to benefits and requests a review of its case or the State agency otherwise becomes aware that a review is needed. The provision at 7 CFR 273.17, limiting restored benefits to 12 months, shall not apply to households entitled to resorted benefits under the provisions of Amendment No. 294. For QC purposes, implementation variances shall not be identified unless a case meets all four of the following conditions: the case’s review date is after August 31, 1987; the State agency certified or recertified the case (or was required to recertify the case) after August 31, 1987; the certification or recertification was effective for the review date (or the required recertification should have been effective for the review date); and in a retrospective budget system, the household’s budget month was September 1987 or later or in a prospective budget system, the household’s issuance month was September 1987 or later. For the purpose of this amendment, State agencies shall not establish a claim against any household which received overissued benefits resulting solely from retroactive implementation of the JTPA income provision in § 273.9(b)(1)(v).
(91) Amendment No. 295—(i) Automated Federal information exchange systems. States’ QC liability exemption for errors resulting from proper use of a Federal automatic information exchange system is effective beginning with the Fiscal Year 1986 reporting period.
(ii) FNS timeframes. The timeframes for notifying States of their payment error rates and payment error rate liabilities, if any, and the timeframe by which FNS must initiate collection action on claims for such liabilities are effective beginning with the Fiscal Year 1986 reporting period.
(92) Amendment No. 284. State agencies shall submit their ADP/CIS plans to FNS for approval no later than October 1, 1987. Portions of ADP/CIS plans may be submitted no later than January 1, 1988. Plans must be approvable within 60 days of State agency receipt of FNS comments but no later than March 1, 1988. State agencies must begin to implement provisions contained in their approved plans by October 1, 1988.
(93) Amendment No. 298. The provisions of Amendment No. 298 are effective, and shall be implemented, as follows:
(i) The provision in § 271.2 of this amendment which defines “General assistance” and the provisions contained in § 273.9(b)(2)(i), § 273.9(c)(1)(ii)(A), (c)(1)(ii)(B), and (c)(1)(ii)(C), regarding exclusion of certain PA/GA vendor payments are effective retroactively to April 1, 1987. The provision in § 273.9(c)(1)(iv)(B), exclusion of emergency/special PA/GA vendor payments, is also effective retroactive to April 1, 1987, however, this provision reflects current policy and requires no implementation efforts by State agencies. State agencies shall immediately implement the other provisions listed above. Affected households shall be entitled to restored benefits back to the date of application or April 1, 1987, whichever occurred later.
(ii) The technical amendment to part 277 is effective September 29, 1987, and does not require implementation efforts by State agencies. The remaining provisions of Amendment No. 298 are effective, and must be implemented, as follows:
(A) Section 271.2, definition of “Homeless individual,” effective July 22, 1987. State agencies shall immediately inform caseworkers of the new definition. No other implementation efforts are required to the State agencies.
(B) Section 273.9(c)(1)(ii)(D), the income exclusion of certain PA/GA vendor payments, is effective and shall be implemented for new applicant households which apply for benefits during the period beginning October 20, 1987 and ending September 30, 1989. This provision does not apply to allotments issued to any household for any month beginning before the effective period of the provision. State agencies shall convert their affected current caseload to this provision, if otherwise eligible, at recertification, when the household requests a review of its case, or when the State agency otherwise becomes aware that a review is needed but not prior to October 20, 1987.
(C) Section 272.5, the financial reimbursement for Program informational activities for the homeless, is effective July 22, 1987.
(D) Section 273.1(a)(2)(i)(C), § 273.1(a)(2)(i)(D), § 273.10(f)(2), the exception to certain household composition requirements, and the rule regarding recertification of households subject to the exception, are effective and must be implemented on October 1, 1987. Households which apply for benefits on or after October 1, 1987 may be granted separate household status under this provision. Current participants which may be eligible for separate household status under this provision, may be granted separate status, but not prior to October 1, 1987, if the household requests separate status and the State agency determines that the household meets the requirements of this provision.
(E) Section 273.2(i), the expansion of expedited service, is effective, and must be implemented, for affected households applying for Program benefits on or after December 1, 1987.
(F) Section 273.9(a)(3), regarding the date of making the annual adjustment to the income standards, is effective with the 1988 annual adjustment. The July 1, 1987 income limits will remain in effect until October 1, 1988.
(G) The first three sentences of § 273.9(d)(8)(i), the raising of the shelter deduction limit for the 48 States and DC., Alaska, Hawaii, Guam and Virgin Islands, are effective October 1, 1987. State agencies shall implement the higher deduction limits appearing in the first sentence of § 273.9(d)(8)(i) on October 1, 1987 only for households whose certification periods begin on or after October 1, 1987. State agencies shall implement the lower deduction limits appearing in the second sentence of § 273.9(d)(8)(i) on October 1, 1987 only for households whose certification periods begin before October 1, 1987. The State agency shall implement the higher deduction limits for households whose certification periods begin before October 1, 1987 beginning with the month in which such household is recertified after October 1, 1987.
(H) Section 273.9(d)(7)(i), the change in the standard deduction methodology, is effective October 1, 1987.
(I) The last sentence of § 273.9(d)(8)(i), the change in the excess shelter deduction methodology, is effective, October 1, 1988.
(J) Section 273.18(c)(2)(ii), the earned income deduction penalty, is effective on September 5, 1987. State agencies which issue on a calendar month basis, shall apply this provision to allotments issued for October 1987 and all allotments for subsequent months. State agencies which issue on other than a calendar month basis shall apply the provision to the issuance for the first issuance month beginning after September 5, 1987.
(iii) State agencies must implement the provisions as outlined in paragraph (g)(93)(ii) of this section on the specific dates required for each provision. If, for any reason, the State agency fails to implement the provisions on the required date, affected households, if appropriate, shall be entitled to restored benefits back to the date of application or the effective date of the provision involved, whichever occurred later.
(iv) Quality control variance exclusion.
(A) For QC purposes only, QC reviewers shall not identify variances resulting solely from implementation or nonimplementation of the following provisions in cases with review dates during the periods indicated:
(1) Sections 273.9(b)(2)(i), 273.9(c)(1) (ii)(A), 273.9(c)(1)(ii)(B), 273.9(c)(1)(ii)(C) and 273.9(c)(1)(iv)(B), concerning PA/GA vendor payments, from April 1, 1987 to December 31, 1987;
(2) Section 271.2, concerning the definition of “Homeless individual”, from July 22, 1987 to December 31, 1987;
(3) Section 273.9(c)(1)(ii)(D), concerning PA/GA vendor payments for certain housing assistance provided on behalf of households residing in temporary housing, from October 20, 1987 to December 31, 1987;
(4) Sections 273.1(a)(2)(i) (C) and (D), concerning household composition, from October 1, 1987 to December 31, 1987;
(5) Section 273.2(i), concerning entitlement to expedited service, from December 1, 1987 to December 31, 1987;
(6) Section 273.9(d)(8)(i), the first three sentences only, concerning the shelter deduction limit, from October 1, 1987 to December 31, 1987.
(B) State agencies may choose to exclude these variances in Federal subsample reviews; State agencies are not required to do so. To exclude the variances, they shall provide FNS with the following information by April 1, 1994: The review number of each affected Federal subsample review, the sample month, the reason and justification for excluding the variance, and the revised finding.
(94) Amendment No. 299. The changes to § 273.2(i)(3)(ii) are effective January 12, 1987 and shall be implemented no later than February 11, 1987.
(95) Amendment No. 268. The QC arbitration provisions shall be implemented by State agencies on February 22, 1988, for all cases for which the regional case findings or the regional arbitrator’s decision are received on or after February 22, 1988.
(96) Amendment 301. This rule pertains to the Income and Eligibility Verification System (IEVS). It is effective March 18, 1988, except for paragraphs 272.8(i) (3) and (4) and 272.8(j)(1) which will be effective upon publication in the
(97) Amendment No. 278. State agencies shall implement the provisions of this amendment no later than October 18, 1988.
(98) Amendment No. 303. The income exclusion provision § 273.9(c) of Amendment No. 303 shall be implemented immediately upon publication of the Amendment as follows:
(i) State agencies must apply the provision of this amendment for any eligibility or benefit calculation made on or after February 1, 1988.
(ii) Affected households which were denied benefits because the household’s eligibility or benefit calculation during the second Federal fiscal year quarter of 1988 (but not prior to February 1, 1988) did not include the income exclusion provision of this amendment shall be entitled to restored benefits at the time of recertification, whenever the household requests a review of its case, or when the State agency otherwise becomes aware that a review of a particular case is needed.
(iii) Benefits shall be restored back to February 1, 1988 or the date of the SNAP application, whichever occurred later. Restoration shall be made in accordance with § 273.17 except that the twelve-month limit for restoring benefits shall not apply.
(iv) For Quality Control (QC) purposes only, QC reviewers shall not identify variances resulting solely from implementation or nonimplementation of Amendment No. 303 for cases with review dates between February 1, 1988 and August 31, 1988. For retrospectively budgeted cases, QC reviewers shall begin identifying variances when September becomes the budget month. Variances shall not be identified in cases where Amendment No. 303 was not implemented prior to the QC review when the State agency correctly followed the implementation provisions of this section.
(99) [Reserved]
(100) Amendment 289.
(i) This rule is effective August 11, 1988.
(ii) State agency Work Plans setting forth proposals for conducting Simplified Application/Standardized Benefit Projects must be postmarked no later than November 9, 1988. Local agency Work Plans must be postmarked no later than December 9, 1988.
(101) Amendment No. 291. The provisions of Amendment No. 291 are effective September 19, 1988.
(102) Amendment No. 307. The provisions of this amendment are effective immediately and shall be implemented as follows:
(i) No later than October 1, 1988, for all new applicants, and no later than the first recertification on or after October 1, 1988, for the participating caseload, State agencies shall implement the provisions of § 272.2(b) relating to the alien/citizenship statement and notification of verification with INS; the provisions of § 273.1(b) relating to nonhousehold members; the provisions of § 273.2(f)(1)(ii) relating to the mandatory verification of alien status; the provisions of § 273.2(h)(3) relating to delays in application processing; and the provisions of § 272.11(c) relating to the treatment of income and resources of nonhousehold members; and
(ii) Unless a waiver has been approved by FNS by October 1, 1988, State agencies shall implement all other provisions of this rule no later than October 1, 1988. Implementation by October 1, 1988 shall be accomplished either by obtaining FNS approval to a Plan of Operation as required in the rule at § 272.11(e) or by submitting to FNS a substantially approvable Plan of Operation as described in material which FNS Regional Offices provided State agencies on or about September 2, 1988. That material provided points for State agencies to consider relative to requesting waivers. State agencies should contact FNS Regional Offices if they need further guidance on waivers.
(103) Amendment No. 308. The quality control changes to § 275.12(d)(2) shall be implemented for the quality control review period beginning October 1, 1988.
(104) Amendment No. 300. State agencies shall implement the requirements of this rulemaking no later than May 1, 1989.
(105) Amendment No. 271. This rule becomes effective April 1, 1989, and the State agencies shall implement all provisions on that date, with the exception of the following provisions: the new provisions on replacement issuances shall be implemented by October 1, 1989; the new liabilities for State agencies using authorization document issuance systems shall be implemented on October 1, 1989; the new mail issuance reporting and liability assessments shall be implemented on October 1, 1989; State agencies wanting to change their current unit-level of mail issuance loss reporting must submit their initial plans by May 15, 1989; the new provision on quality control case reviews shall be implemented for federal Fiscal Year 1990; State agencies shall begin to use the revised Form FNS-46, Issuance Reconciliation Report, to report figures for the month of October 1989; and, provisions pertaining to staggered issuance contained in any currently-approved waivers will automatically be cancelled April 1, 1989.
(106) Amendment No. 310. (i) The provisions of this amendment which adopt, as final, interim provisions published July 17, 1987 and those which redesignate or otherwise slightly modify the July 17 interim provisions for clarity only are effective retroactively to April 1, 1987. The conforming amendment at § 273.11(e)(7) is effective retroactively to February 25, 1986. The remaining technical amendments contained in this amendment at §§ 273.2(e)(2), 273.7(b)(1)(vii), 273.9(b)(1)(iii), 276.2(d) and 278.1(e) are effective April 24, 1989. These provisions do not alter or change current policy or procedures under which State agency are operating or do not require special implementation efforts by State agencies.
(ii) The provision in § 273.9(b)(1)(v) which limits application of the provision to on-the-job training programs under section 204(5), Title II, of the Job Training Partnership Act is effective retroactively to April 1, 1987 and shall be implemented as follows:
(A) State agencies shall implement the provision for all new applicant households no later than June 1, 1989. Affected applicant households which applied for Program benefits during the period April 1, 1987 and the date the State agency implemented this change and were denied benefits shall be provided restored benefits, if applicable, back to April 1, 1987 or the date of the SNAP application, whichever occurs later, if the household is otherwise entitled to benefits and requests a review of its case or the State agency otherwise becomes aware that a review is needed.
(B) All other households shall be converted to the provision at household request, at recertification, or when the case is next reviewed, whichever occurs first. Restored benefits shall be provided, if applicable, for such households back to April 1, 1987 or the date of the SNAP application, whichever occurs later.
(C) The provision at 7 CFR 273.17, limiting restored benefits to 12 months, does not apply for households entitled to restored benefits under Amendment No. 310.
(107) Amendment No. 313. The performance-based funding provisions for Employment and Training programs shall be effective October 1, 1989.
(108) Amendment No. 314. (i) The provision of Amendment No. 314 which adds five sentences to § 273.2(j)(1)(iv) and the provisions which add a new paragraph § 273.2(j)(2)(iii)(B) and amend §§ 273.17 and 273.18 are effective July 7, 1989 and shall be implemented no later than September 1, 1989.
(ii) All remaining provisions of Amendment No. 314, which adopt the interim provisions of August 5, 1986 as final without change or modify the interim provisions for clarity only, are effective retroactively to December 23, 1985 (the effective date of the interim rulemaking). These provision do not reflect a change in intended policy and, therefore, do not require special implementation efforts by State agencies.
(109) Amendment No. 315. Program changes required by Amendment No. 315 to the SNAP regulations shall be implemented as follows:
(i) The provisions relating to migrant and seasonal farmworkers (7 CFR 273.9(c)(1)(ii)(E) and 273.10(a)(1)(ii)) are effective September 1, 1988 for all households applying or certified subsequent to August 31, 1988. Changes affecting currently participating households are to be implemented at recertification or when it is necessary to implement other changes affecting the household.
(ii) State agencies were required to implement the provision of this rule regarding a technical correction concerning energy assistance payments (7 CFR 273.9(c)(11)) on September 19, 1988.
(iii) State agencies were required to implement revised SNAP allotments on October 1, 1988 (7 CFR 271.2, 271.7, 273.10(e)(2), 273.10(e)(4)(ii), and 273.12(e)). Revised allotments were implemented as mass changes in accordance with 7 CFR 273.12(e).
(iv) State agencies were required to implement the provision relating to the dependent care deduction, 7 CFR 273.9(d)(4), 273.10(d)(1)(i), and 273.10(e)(1)(i)(E), and monthly reporting and retrospective budgeting, 7 CFR 273.21(a) and (b), on October 1, 1988. These provisions were immediately effective for all households certified subsequent to September 30, 1988. Changes affecting currently participating households were to be implemented upon recertification, at the household’s request, or when it was necessary to implement other changes affecting the household. (For example, a change reported by a nonmonthly reporting retrospectively budgeted household was to be implemented in accordance with 7 CFR 273.12.) The Department was not requiring State agencies to conduct a casefile review to implement monthly reporting and retrospective budgeting changes for currently participating households. Monthly reports submitted by households which became exempt from MRRB as a result of the Hunger Prevention Act, such as non-migrant seasonal farmworkers or the homeless, were to be treated as change reports and processed prospectively in accordance with 7 CFR 273.12(c).
(v) State agencies were required to implement the provisions of this rule concerning the exclusion of advance payment of earned income tax credits, 7 CFR 273.8(c)(1) and 273.9(c)(14), on January 1, 1989. Households applying subsequent to December 31, 1988 should have had this provision applied to them as of their date of application. Changes affecting households participating as of December 31, 1988 were to be implemented upon recertification, at the household’s request, or when it was necessary to implement other changes affecting the household.
(vi) All other provisions of this rule, relating to technical corrections concerning the urban Alaska TFP (7 CFR 272.7(c)), Alaska proration (7 CFR 272.7(f)(3)(iii)), and the dependent care deduction (7 CFR 273.11(c)(2)(iii) and 273.12(e)(1)(i)(C)), are to be implemented August 1, 1989.
(vii) Quality control errors made as a result of this rule’s changes to §§ 273.9, 273.10, and 273.21 during the required implementation time frame established by this rulemaking shall be handled in accordance with interim regulations published at 53 FR 44171, dated November 2, 1988. SNAP allotment changes are not covered by the interim regulation because this is a mass change.
(viii) State agencies which failed to implement any of these provisions by the required dates shall provide affected households with the lost benefits they would have received if the State agency had implemented these provisions as required.
(110) Amendment No. 316. State welfare agencies shall implement the provisions of Amendment No. 316 as follows:
(i) The provisions contained in § 274.2(b) of Amendment No. 316 are effective retroactively to January 1, 1989 and shall be implemented by State welfare agencies no later than January 1, 1990 for all households which newly apply for Program benefits or apply for recertification on or after that date.
(ii) The remaining provisions are effective July 1, 1989 and must be implemented on that date for all households which newly apply for Program benefits or apply for recertification on or after that date. The current caseload shall be converted to these provisions at household request, at the time of recertification, or when the case is next reviewed, whichever occurs first and restored benefits shall be provided, if appropriate, back to July 1, 1989 or the date of the application, whichever is later. Additionally, households which applied for Program benefits between July 1, 1989 and the date the State agency implemented these provisions, and were denied benefits, shall be entitled to restored benefits back to July 1, 1989 or the date of the application, whichever occurred later, if the household:
(A) Is otherwise entitled to benefits, and
(B) Requests a review of its case or the State agency otherwise becomes aware that a review is needed.
(111) Amendment No. 296. The provisions of Amendment 296 are effective July 5, 1989.
(112) Amendment No. 309. (i) The State agency shall have until June 18, 1990, to request regional arbitration of regional office case findings which the State received before February 22, 1988.
(ii) The State agency shall have until June 18, 1990, to request national office arbitration of regional arbitration decisions which the State agency received before February 22, 1988.
(113) Amendment (320). (i) The provisions of this rule are effective April 2, 1990.
(ii) The provisions relating to the Expanded Food and Nutrition Education Program (§ 272.5(b)(1)(iv)), the collection of fraud claims § 273.18, the monitoring of claims against households (§ 273.18(k)(5)), adverse action notice on claim demand letters (§ 273.18(d)(3)), notices of fair hearings (§ 273.18(d)(3)), and the results of geographic error prone profiles (§ 275.15(g)) shall be implemented no later than July 2, 1990. The provision relating to fraud detection units (§ 272.4(h)) shall be implemented no later than September 4, 1990. State agencies shall complete the first review of SNAP office hours (§ 272.4(g)) during Federal Fiscal Year 1990.
(iii) State agencies may submit attachments to their Plans of Operation pertaining to the intercept of unemployment compensation benefits to repay intentional Program violations claims as specified in §§ 272.2 (a) and (d) and 272.12(a) of this amendment as of February 22, 1990.
(114) Amendment No. 322. The changes contained in this amendment are effective October 15, 1990 and shall be implemented no later than that date. The changes to 7 CFR 273.11 contained in this amendment will apply only to disqualifications imposed after the effective date of this rulemaking.
(115) Amendment No. 324. The quality control changes to § 275.12 that are made by Amendment No. 324 shall be implemented for the quality control review period beginning January 1, 1991.
(116) Amendment No. 330. The provisions of Amendment No. 330 are effective and must be implemented on August 1, 1991. Any variance resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 90 days from this required implementation date in accordance with 7 CFR 275.12(d)(2)(vii). The provisions must be implemented for all households that newly apply for Program benefits on or after the required implementation date. The current caseload shall be converted to these provisions at household request, at the time of recertification, or when the case is next reviewed, whichever occurs first, and the State agency must provide restored benefits back to the required implementation date. If for any reason a State agency fails to implement on the required implementation date, restored benefits shall be provided, if appropriate, back to the required implementation date or the date of application, whichever is later.
(117) Amendment No. 332. The provision of Amendment No. 332 regarding the resource exemption for PA and SSI recipients is effective and must be implemented no later than February 1, 1992. Any variances resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 90 days from this required implementation date, in accordance with 7 CFR 275.12(d)(2)(vii). The provision must be implemented for all households that newly applied for Program benefits on or after the required implementation date. The current caseload shall be converted to these provisions at household request, at the time of recertification, or when the case is next reviewed, whichever occurs first, and the State agency must provide restored benefits back to the required implementation date. If for any reason a State agency fails to implement on the required implementation date, restored benefits shall be provided, if appropriate, back to the required implementation date or the date of application whichever is later.
(118) Amendment No. 321. (i) The provisions contained in §§ 273.7(d)(1)(ii)(A) and 273.9(c)(5)(i) (A) and (F) of Amendment No. 321, which implement section 404(c) of the Hunger Prevention Act of 1988, are effective and must be implemented retroactively to July 1, 1989.
(ii) The remaining provisions of Amendment No. 321 are effective October 1, 1988 and must be implemented no later than March 1, 1992. State agencies may implement the conciliation procedure provisions contained in § 273.7(g)(1)(ii) immediately upon publication of Amendment No. 321. However, in no case shall the conciliation procedures be implemented any later than March 1, 1992. By implemented, the Department means that the State agency shall begin to use conciliation procedures in all cases where the State agency has determined on or after the above implementation date that an individual has refused or failed to comply with an E&T requirement under § 273.7(f).
(119) Amendment No. 328. (i) The requirements for State agencies to begin implementation or corrective action for deficiencies which are the cause for non-entitlement to enhanced funding for the Fiscal Year 1986 review period, and review periods thereafter were effective as of October 1, 1985, pursuant to section 604 of Public Law 100-435.
(ii) The requirements for State agencies to begin the implementation of corrective action for deficiencies which result in underissuances, improper denials or improper terminations of benefits to eligible households where such errors are caused by State agency rules, practices or procedures were effective July 1, 1989, pursuant to section 320 of Public Law 100-435. The corrective action must address all such deficiencies which occurred on or after July 1, 1989.
(iii) The State agency shall have until December 27, 1991, to implement changes in the development of quality control sampling plans, such that only those State agencies proposing non-proportional integrated, or other alternative sampling plan designs must:
(A) Demonstrate that the alternative design provides payment error rate estimates with equal-or-better predicted precision than would be obtained had the State agency reviewed simple random samples of the sizes specified in § 275.11(b)(1) of the regulations,
(B) Describe all weighting, and estimation procedures if the sample design is non-self-weighted, or uses a sampling technique other than systematic sampling,
(C) Demonstrate that self-weighting is actually achieved in sample designs claimed to be self-weighting.
(iv) The State agency shall have until January 27, 1992, to request regional arbitration of any federally subsampled underissuance cases for which the State agency received FNS regional office QC findings on or after February 22, 1988.
(v) The State agency shall have until January 27, 1992, to request national arbitration of any regional arbitration decisions involving underissuance cases for which the State agency received FNS regional arbitration findings on or after February 22, 1988.
(120) Amendment No. 335. The provisions contained in Amendment No. 335 are effective and shall be implemented as follows:
(i) The provisions contained in §§ 271.2, 271.7, 273.1(e)(1)(iii), 273.2(k)(1)(i)(H), 273.2(m), 273.10, 273.18 and 278.1 of Amendment No. 335 are effective on February 1, 1992 and shall be implemented on that date as follows:
(A) The Guam and Virgin Islands State agencies shall communicate the two new group home provisions (§§ 271.2, 273.1(e)(1)(iii) and 278.1) to group homes in their areas by this date so that they can apply for the appropriate certification and residents can apply for SNAP benefits without delay. All State agencies shall implement the expanded group home provisions for applicants newly applying for program benefits on or after February 1, 1992 for approved group homes.
(B) No special implementation efforts are required with regard to the provisions in §§ 273.2(k)(1)(i)(H) and 273.2(m) about informing SSI applicants about SNAP and the availability of an application at the social security office.
(C) State agencies are not required to adjust their computers or train their caseworkers immediately in order to implement the provisions in §§ 271.2, 271.7, 273.10 and 273.18 relative to the minimum benefit for one- and two-person households because the methodology for annually adjusting the minimum benefit will not result in an increase in the minimum benefit for some time. However, State agencies are expected to have the capability of implementing a change in the minimum benefit in a timely manner when such a change in announced and, therefore, shall not wait until an actual change in the minimum benefit to adjust computers and train caseworkers.
(ii) The remaining provisions of Amendment No. 335 are effective February 1, 1992. The provisions which reflect that a joint application is no longer required for SSI applicants §§ 273.2 (c)(1), 273.2(i)(3)(i), and 273.2(k)(1)(i)(D) do not require implementation efforts by State agencies. The remaining provisions (§§ 273.4, 273.9(b) and 273.9(c)) also do not require special implementation efforts by State agencies as the provisions reflect current policy.
(iii) Any variance resulting from implementation of the provisions of this amendment shall be excluded from quality control error analysis for 90 days from the required implementation date which shall be handled in accordance with 7 CFR 275.12(d)(2)(vii).
(121) Amendment No. 336. The provisions of Amendment No. 336 are effective and must be implemented as follows:
(i) The provision that gives State agencies the option of using retrospective budgeting for nonmonthly reporting households other than those exempt from monthly reports (7 CFR 273.21(b) introductory text) was effective as of November 28, 1990, the date of enactment of the Leland Act.
(ii) The delegation of the responsibility for design of the monthly report form (§ 273.21(h)(3) and § 273.21(j)(1)(ii) of this chapter) must be implemented by February 1, 1992.
(iii) The remaining provisions are effective January 3, 1992 and must be implemented by July 1, 1992.
(iv) Any variances resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 90 days from the required implementation dates in accordance with 7 CFR 275.12(d)(2)(vii).
(122) Amendment No. 337. The provisions of Amendment No. 337 are effective and must be implemented as follows:
(i) State agencies shall implement the provisions of Amendment No. 337 on February 1, 1992, except as provided in paragraph (g)(122)(ii) of this section.
(ii) The amendments to revise the introductory text of § 273.2(j) and § 273.2(j)(3) as they relate to categorical eligibility and the amendment adding § 273.2(j)(4) are effective and must be implemented February 1, 1992 for recipients of GA from a State program. They are effective and must be implemented August 1, 1992 for recipients of GA from a local program.
(iii) Any variance resulting from implementation of the provisions of this amendment shall be excluded from error analysis in accordance with 7 CFR 275.12(d)(2)(vii) for 90 days from the required implementation date. The provisions must be implemented for all households that newly apply for Program benefits on or after the required implementation date. If for any reason a State agency fails to implement on the required implementation date, restored benefits shall be provided, if appropriate, back to the required implementation date, the date of the SNAP application or the date the household was determined categorically eligible in accordance with § 273.2(j)(4), whichever is later.
(iv) The current caseload shall be converted to these provisions at household request, at the time of recertification, or when the case is next reviewed, whichever occurs first. The State agency must provide restored benefits back to the required implementation date.
(123) Amendment No. 338. The provisions of Amendment No. 338 are effective and must be implemented on February 1, 1992. The provisions must be implemented for all households that newly apply for Program benefits on or after the required implementation date of February 1, 1992. The current caseload shall be converted to these provisions at household request, at the time of recertification, or when the case is next reviewed, whichever occurs first. If, for any reason, a State agency fails to implement by the required implementation date, restored benefits shall be provided, if appropriate, back to the required implementation date or the date of the SNAP application, whichever is later. Any variances resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 90 days from this required implementation date in accordance with 7 CFR 275.12(d)(2)(vii).
(124) Amendment No. 325. The quality control changes to § 275.23 that are made by Amendment No. 325 shall be implemented effective January 24, 1992.
(125) Amendment No. 345. The provisions of Amendment No. 345 are effective on April 1, 1992, and shall be implemented as follows:
(i) Currently operating demonstration projects shall submit to FNS for approval a plan no later than June 30, 1992, to satisfy the requirements of this regulation. The plan shall address the areas in which the State EBT demonstration project does not comply with the provisions of this rule and how the State agency plans to bring its system into compliance. The State agency shall submit a schedule of any actions it proposes to take and when they are to be completed. Compliance with the provisions of this final regulation shall occur within two years from the effective date unless approved by FNS to continue operations under the authority of section 17 of the Act (7 U.S.C. 2026) as a demonstration project. In seeking FNS approval to continue under Section 17 authority, the State agency shall state what research value would be obtained in continuing the demonstration.
(ii) For State agencies that have proposals or planning documents currently under review by the Department, the State agencies and the Department shall establish at what point the State agency is in the planning process and how the State agency will fit into the approval process of these rules. All such State agencies will be expected to comply with the standards of these rules.
(iii) A State agency that wishes to obtain approval for an EBT system shall submit a Planning Advanced Planning Document for FNS approval as prescribed herein.
(126) Amendment No. 327. (i) The statutory provision reflected in § 275.23(e)(6)(v) of Amendment No. 327 was effective October 1, 1985 pursuant to Public Law 100-435.
(ii) The remaining provisions are effective October 28, 1992.
(127) Amendment No. 340. (i) The provisions at § 273.7(d)(1)(i)(A) and § 273.7(d)(1)(i)(B) are effective retroactive to October 1, 1991.
(ii) The provision at § 273.7(c)(4)(viii) is effective and must be implemented by August 15, 1993, the date E&T plans must be submitted to FNS.
(iii) The provision at § 273.10(d)(1)(i) is effective January 19, 1993 and must be implemented by March 1, 1993.
(iv) The remaining provisions of Amendment No. 340 are effective and must be implemented retroactively to February 1, 1992.
(v) Any variances resulting from implementation of the provision at § 273.10(d)(1)(i) shall be excluded from error analysis for 90 days from the required implementation date in accordance with 7 CFR 273.12(d)(2)(vii).
(128) Amendment No. 326. The provisions of this amendment are effective and must be implemented no later than December 1, 1993. Any variance resulting from implementation of the provisions of this amendment shall be excluded from quality control error analysis for 60 days from the required implementation date which shall be handled in accordance with 7 CFR 275.12(d)(2)(vii).
(129) Amendment No. 349. The provisions of Amendment No. 349 are effective, and shall be implemented, as follows:
(i) § 273.1(a)(2)(i)(C), § 273.1(a)(2)(i)(D) and § 273.10(f)(2) are effective as of October 1, 1987; § 273.2(i)(1) (iii) and (iv) are effective as of December 1, 1987; the new § 273.9(c)(1)(ii)(G) is effective as of April 1, 1987. However, application of § 273.9(c)(1)(ii)G) in conjunction with the provisions at § 273.9 (c)(1)(ii) (A) through (F) and (c)(5)(i)(F) is effective as of the date the individual provisions at 7 CFR 273.9 (c)(1)(ii) (A) through (F) and (c)(5)(i)(F) became effective. Those dates are: § 273.9(c)(1)(ii) (A), (B), and (C), April 1, 1987; § 273.9(c)(1)(ii)(D), October 20, 1987; § 273.9(c)(1)(ii)(E), September 1, 1988, and § 273.9(c)(1)(ii)(F), August 1, 1991. The amendment to the first sentence of § 273.9(c)(1)(iv)(B) to include a regulatory reference to 7 CFR 273.9(c)(5)(i)(F) is effective as of August 1, 1991 (the date the individual provision at 7 CFR 273.9(c)(5)(i)(F) became effective), and § 273.18(c)(2)(ii) is effective as of September 5, 1987. To the extent that these provisions represent new or different policy from that under which the State agency is currently operating, the State agency shall implement the provisions not later than April 1, 1994 for households newly applying for Program benefits on or after such implementation date. State agencies shall convert their affected current caseload to these provisions (except for § 273.18(c)(2)(ii)) at recertification, when the household requests a review of its case, or when the State agency otherwise becomes aware that a review is needed, whichever occurs first. To the extent that the provisions will result in restored benefits for affected households, such benefits shall be provided back to the effective date of the provision or the date of the household’s first initial application, whichever occurs later;
(ii) The remaining provisions of Amendment No. 349 adopt as final, without change, interim provisions published September 29, 1987 and are effective as of the date the corresponding interim provision became effective as established at 7 CFR 272.1(g)(93). These provisions and the effective dates are: § 271.2, definition of “Homeless individual,” July 22, 1987; § 272.5, July 22, 1987; § 273.9(a)(3), October 1, 1988; § 271.2, definition of “General assistance,” April 1, 1987; § 273.9(b)(2)(i), April 1, 1987; § 273.9(c)(1) (ii)(A), (ii)(B) and (ii)(C), April 1, 1987; § 273.9(d)(7)(i), October 1, 1987; § 273.9(d)(8)(i), October 1, 1987 (except for the last sentence, which is effective October 1, 1988). The provisions do not change policy or procedures under which State agencies are currently operating and, therefore, do not require specific implementation efforts by State agencies.
(130) Amendment No. 342. The provision relating to household election of repayment method for IPV claims at § 273.18(d)(4)(ii) is effective retroactive to November 28, 1990. The provision relating to household election of repayment method for IHE claims at § 273.18(d)(4)(i) is effective December 13, 1991. The provisions for State agency retention rates on claim collections at § 273.18(h)(2) and (i) are effective retroactive to October 1, 1990. The provisions at § 277.18 which reduce the enhanced funding level for ADP is effective October 1, 1991, for costs incurred on that date and thereafter and does not apply to ADP funding approved prior to November 28, 1990.
(131) Amendment No. 347. The provisions of this amendment are effective as specified in paragraphs (g)(131)(ii) (A), (B), and (C) of this section. State agencies are not required to do file searches for cases relating to PASS households unless the question on an income exclusion for PASS had been raised with the State agency prior to December 13, 1991.
(i) The provisions at §§ 271.2, 273.1, and 273.11 were effective and had to be implemented no later than February 1, 1992.
(ii) The provision at § 273.9(c)(17) is effective the earlier of:
(A) December 13, 1991, the date of enactment of Pub. L. 102-237;
(B) October 1, 1990, for SNAP households for which the State agency knew, or had notice, that a household member had a PASS; or
(C) Beginning on the date that a fair hearing was requested contesting the denial of an income exclusion for amounts provided for a PASS.
(132) Amendment No. 316. The provisions of this final rule that amend 7 CFR 273.2(b)(3), 273.2(c)(5), 273.2(f)(8)(i)(A) and (ii), and paragraph (11) of the “Elderly or disabled member” definition in 7 CFR 271.2 are effective as of May 6, 1994. The State agency shall implement the provisions not later than September 5, 1994 for all households newly applying for Program benefits on or after such implementation date. The current caseload shall be converted to these provisions at household request, at the time of recertification, or when the case is next reviewed, whichever occurs first, and the State agency must provide restored benefits back to the required implementation date. If for any reason a State agency fails to implement on the required implementation date, restored benefits shall be provided, if appropriate, back to the required implementation date or the date of application whichever is later. Any variances resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 90 days from this required implementation date in accordance with 7 CFR 275.12(d)(2)(vii).
(133) Amendment No. 352. The provisions of this amendment are effective April 11, 1994.
(134) Amendment No. 355. The provisions of Amendment No. 355 are effective and must be implemented on August 1, 1994. Any variance resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 120 days from this required implementation date in accordance with 7 CFR 275.12(d)(2)(vii) as modified by section 13951(c)(2) of Pub. L. 103-66. The provisions must be implemented for all households that newly apply for Program benefits on or after the required implementation date. The current caseload shall be converted to these provisions at household request, at the time of recertification, or when the case is next reviewed, whichever occurs first, and the State agency must provide restored benefits back to the required implementation date. If for any reason a State agency fails to implement on the required implementation date, restored benefits shall be provided, if appropriate, back to the required implementation date or the date of application, whichever is later.
(135) Amendment No. 348. The provisions of Amendment No. 348 are effective August 5, 1994 and must be implemented for all QC billing actions beginning with Fiscal Year 1986.
(136) Amendment No. 346. The provision of Amendment No. 346 regarding an income exclusion for homeless households living in transitional housing is effective and must be implemented no later than September 1, 1994. Any variances resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 120 days from this required implementation date in accordance with 7 CFR 275.12(d)(2)(vii). The provision must be implemented for all households that newly apply for Program benefits on or after the required implementation date. The current caseload shall be converted to these provisions at the household’s request, at the time of recertification, or when the case is next reviewed, whichever occurs first. The State agency must provide restored benefits to such households back to the required implementation date or the date of application whichever is later. If for any reason a State agency fails to implement on the required implementation date, restored benefits shall be provided, if appropriate, back to the required implementation date or the date of application, whichever is later.
(137) Amendment No. 350. The provisions of Amendment No. 350 are effective and must be implemented as follows:
(i) The provision at § 273.8(e)(12)(i) of this chapter is effective and must be implemented according to statute retroactive to January 1, 1991.
(ii) The provision at § 273.8(e)(12)(ii) of this chapter will be effective and must be implemented on September 1, 1994.
(iii) The provision at § 273.21(b) of this chapter against establishing new monthly reporting requirements for households residing on Indian reservations if no monthly reporting system was in place on March 25, 1994 is effective and must be implemented according to statute retroactive to March 25, 1994.
(iv) The provision in § 273.2(j) of this chapter concerning categorical eligibility for GA recipients is effective and must be implemented according to statute retroactive to February 1, 1992.
(v) The remaining provisions are effective and must be implemented October 28, 1994.
(138) Amendment No. 359. The provision of Amendment No. 359 regarding the medical expense deduction is effective and must be implemented no later than October 1, 1994. Any variances resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 120 days from this required implementation date in accordance with 275.12(d)(2)(vii) of this chapter. The provision must be implemented for all households that newly apply for Program benefits on or after the required implementation date. State agencies must notify households eligible for the deduction of the change in medical deduction reporting requirements and the right of the household to be converted to those new procedures immediately. The current caseload shall be converted to these provisions at the household’s request, at the time of recertification, or when the case is next reviewed, whichever occurs first.
(139) Amendment No. 351. The provisions of Amendment No. 351 to amend 7 CFR 273.7(d) are effective October 1, 1993. State agencies are not required to take any action to implement these provisions.
(140) Amendment No. 333. The provisions of Amendment No. 333 are effective and must be implemented as follows:
(i) The provisions relating to aggregated (combined) allotments to households applying after the 15th of the month and mail issuance in rural areas where households experience transportation difficulties in obtaining benefits are effective and must be implemented by statute retroactive to February 1, 1992.
(ii) The provision relating to staggered issuance on Indian reservations was in place on March 25, 1994, is effective and must be implemented according to statute retroactive to March 25, 1994.
(iii) The remaining provisions are effective and must be implemented September 1, 1995.
(141) Amendment No. 360. This provision is effective September 20, 1995, and must be implemented no later than the first day of the first month beginning December 19, 1995.
(142) Amendment No. 357. The provisions of Amendment No. 357 are effective and must be implemented as follows:
(i) The provision relating to the increased penalties at 7 CFR 273.16(b) is effective and must be implemented retroactive to September 1, 1994. This includes providing notification of the increased penalties on the application form.
(ii) The remaining provisions are effective and must be implemented October 23, 1995.
(143) Amendment 367. The provisions of Amendment 367 must be implemented no later than October 2, 1995 except that State agencies currently participating in the Federal Income Tax Refund Offset Program (FTROP) must implement section 272.2(d)(1)(xii), which relates to the submission of the Plan of Operations, within November 30, 1995.
(144) Amendment No. (370). The provisions of Amendment No. (370) are effective and must be implemented as follows:
(i) Sections 273.5(b)(1), (b)(4), and (b)(9) are effective February 1, 1992. The introductory paragraph of 273.5(b)(6) is effective February 1, 1992. The introductory paragraph of 273.5(b)(10) is effective February 1, 1992. Sections 273.5(b)(11)(ii), (b)(11)(iii), and (b)(11)(iv) are effective February 1, 1992.
(ii) Sections 273.5(b)(6)(i) and (b)(6)(ii) and sections 273.5(b)(10)(i) and (b)(10)(ii) and the remaining provisions of this regulation are effective November 1, 1995 and shall be implemented no later than February 1, 1996.
(iii) The current caseload shall be converted to these provisions at the household’s request, at the time of recertification, or when the case is next reviewed, whichever occurs first. The State agency shall provide restored benefits back to the effective date.
(iv) Any variance resulting from implementation of a provision in this rule shall be excluded from error analysis for 120 days from the required implementation date of that provision.
(145) Amendment No. 369. The provisions of Amendment No. 369 are effective May 31, 1996. State agencies must implement no later than November 27, 1996. The provisions of this amendment are applicable for determinations of intentional failure to comply made on or after the effective date of the amendment.
(146) Amendment No. 368. The provisions of Amendment No. 368 are effective on July 29, 1996.
(147) Amendment No. 364. Except for the provisions of § 273.14(b)(2), the provisions of Amendment No. 364 are effective November 18, 1996 and must be implemented no later than May 1, 1997. The effective date and implementation date of the provisions of § 273.14(b)(2) will be announced in a document in the
(148) Amendment No. 362. The provision of section 13921 of Public Law 103-66 establishing a child support deduction was effective September 1, 1994, and was required to be implemented no later than October 1, 1995. The provisions of Amendment No. 362 are effective December 16, 1996 and must be implemented no later than May 1, 1997. State agencies shall implement the provisions no later than the required implementation date. The provisions must be implemented for all households that newly apply for Program benefits on or after either the required implementation date or the date the State agency implemented the provision prior to the required implementation date, whichever is earlier. State agencies are required to adjust the cases of participating households at the next recertification, at household request, or when the case is next reviewed, whichever comes first. State agencies which fail to implement or adjust cases by the required implementation date shall provide restored benefits as appropriate. For quality control purposes, any variances resulting from implementation of the provisions are excluded from error analysis for 120 days from the required implementation date, in accordance with 7 CFR 275.12(d)(2)(vii) and 7 U.S.C. 2025(c)(3)(A). State agencies which implement prior to the required implementation date must notify the appropriate regional office prior to implementation that they wish the variance exclusion period to begin with actual implementation, as provided in 7 CFR 275.12(d)(2)(vii)(A). Absent such notification, the exclusionary period will begin with the required implementation date.
(149) Amendment No. 374. The Higher Education Act Amendments of 1986, as amended in 1987, were effective and required to be implemented for the 1988-89 school year; the Perkins Act was effective and required to be implemented on July 1, 1991; the Mickey Leland Act (as amended by the 1991 Technical Amendments to the Food and Nutrition Act of 2008) was effective and required to be implemented on February 1, 1992, and the exclusions contained in the Higher Education Act Amendments of 1992 for the Tribal Development Student Assistance Revolving Loan Program were effective and required to be implemented on October 1, 1992, and for Title IV and BIA student assistance on July 1, 1993. The provisions of Amendment No. 374 are effective December 16, 1996 and must be implemented by March 1, 1997. The current caseload shall be converted to these provisions at the household’s request, at the time of recertification, or when the case is next reviewed, whichever occurs first. If implementation of the acts referenced in this paragraph or this amendment is delayed, benefits shall be restored, as appropriate, in accordance with the Food and Nutrition Act of 2008. Any variance resulting from implementation of this amendment shall be excluded from error analysis for 120 days from March 1, 1997.
(150) Amendment No. 365. This provision is effective December 16, 1996 and must be implemented no later than March 1, 1997. Any variances resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 120 days from this required implementation date in accordance with § 275.12(d)(2)(vii) of this chapter.
(151) Amendment No. 375. Public Law 103-66, the Mickey Leland Childhood Hunger Relief Act, was effective and required to be implemented on September 1, 1994. The provisions of Amendment No. 375 are effective December 16, 1996, and must be implemented by March 1, 1997. The State agency shall implement the provisions of this amendment no later than the appropriate required implementation date for all households newly applying for Program benefits on or after such implementation date. The current caseload shall be converted to these provisions at household request, at the time of recertification, or when the case is next reviewed, whichever occurs first, and the State agency must provide restored benefits, as may be appropriate under the Food and Nutrition Act of 2008, back to the appropriate required implementation date. If for any reason a State agency fails to implement on the appropriate implementation date, restored benefits shall be provided, if appropriate, back to the appropriate required implementation date or the date of application, whichever is later. Any variances resulting from implementation of this amendment shall be excluded from quality control error analysis for 120 days from March 1, 1997.
(152) Amendment No. 361 The provisions of Amendment No. 361 are effective December 26, 1996, and must be implemented May 27, 1997. Any variances resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 120 days from this required implementation date in accordance with 7 CFR 275.12(d)(2)(vii). The provision must be implemented for all households that newly apply for Program benefits on or after the required implementation date. The current caseload shall be converted to these provisions at the household’s request, at the time of recertification, or when the case is next reviewed, whichever occurs first. The State agency must provide restored benefits to such households back to the required implementation date or the date of application whichever is later.
If for any reason a State agency fails to implement on the required implementation date, restored benefits shall be provided, if appropriate, back to the required implementation date or the date of application whichever is later, but for no more than 12 months in accordance with § 273.17(a) of this chapter.
(153) Amendment No. 366. (i) With the exception of the changes to § 275.3(c)(4) [Arbitration], § 275.23(e)(5) [State agencies’ liabilities for payment error-Fiscal Year 1992 and beyond], § 275.23(e)(7) [Good Cause], and § 275.23(e)(9) [timeframes], all quality control changes that are made by Amendment No. 366 shall be implemented July 2, 1997.
(ii) The quality control changes to § 275.3(c)(4) [Arbitration], § 275.23(e)(5) [State agencies’ liabilities for payment error-Fiscal Year 1992 and beyond], § 275.23(e)(7) [Good Cause], and § 275.23(e)(9) [Timeframes], shall be implemented after approval of the provisions at § 275.3(c)(4) [Arbitration], and § 275.23(e)(7) [Good Cause] by the Office of Management and Budget under the Paperwork Reduction Act of 1995. FNS will publish a notice in the
(154) Amendment No. 386. The provisions of Amendment No.386 are effective August 4, 2000. State agencies may begin implementing the rule August 4, 2000 but not later than January 2, 2001. State agencies that have already implemented EBT shall have one year in which to grandfather adjustment disclosure into their training materials according to 7 CFR 274.12(f)(10)(viii).
(155) Amendment No. 373. The provision at § 275.23(e)(5)(iii) is effective and is to be implemented on July 16, 1999. The following provisions are effective on October 1, 1999 and are to be implemented on October 1, 2000, with the start of the Fiscal Year 2001 quality control review period: § 271.2; § 275.3(c)(3)(ii); § 275.10(a); § 275.11(c)(1); § 275.11(e)(2); § 275.11(f)(2); § 275.13(a); § 275.13(b); § 275.13(c)(1); § 275.13(c)(2); § 275.13(f)(2) and § 275.23(c)(4). The remaining provisions of this rule are effective and are to be implemented October 1, 1999, with the start of the Fiscal Year 2000 quality control review period, which begins with the October 1999 sample month.
(156) Amendment No. 379. The provision of Amendment No. 379 regarding the 15-percent exemption and additional funding for E&T is effective and must be implemented no later than November 2, 1999. Any variances resulting from implementation of the provisions of this amendment shall be excluded from error analysis for 120 days from this required implementation date in accordance with § 275.12(d)(2)(vii) of this chapter.
(157) Amendment No. 381. The provisions of Amendment 381 are implemented as follows:
(i) The definition of “Homeless individual” in § 271.2, and the amendments to § 273.1(b)(1)(ii), § 273.2(i)(3)(i) and (i)(3)(ii) were to be implemented August 22, 1996;
(ii) The amendments to § 273.8(f)(1) and § 273.10(e)(4)(ii) were to be implemented October 1, 1996;
(iii) The amendment to § 273.9(d)(8) was to be implemented January 1, 1997;
(iv) The amendments to § 273.1(b)(1)(iii) and § 273.8(e)(3)(i)(A) must be implemented no later than March 1, 2001; and
(v) All remaining amendments must be implemented no later than January 1, 2001.
(158) Amendment No. 382. The provisions of Amendment No.379 are effective and must be implemented March 30, 2000.
(159) Amendment (385). The provisions in § 277.11(d) regarding time limits for State agencies to file claims to amend a prior expenditure report to request retroactive funding for costs previously incurred are effective October 1, 2000. The conforming amendment to SNAP regulations in §§ 272.1(g), 272.2(c)(3), 272.11(d) and (e), 274.12(k), 277.4(b) and (g), 277.9(b), 277.18(b), (d), and (f), and 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415 are effective June 23, 2000.
(160) Amendment 389. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L. 104-193, (PRWORA) set the date of enactment, August 1, 2000, as the effective date for the provisions of the law relating to recipient claims. These non-discretionary provisions of this rule are at § 273.18(c)(1)(ii)(B), § 273.18(f) and § 273.18(g) and are effective retroactive to August 1, 2000. The remaining amendments of this rule are effective and must be implemented no later than August 1, 2000.
(161) Amendment No. 388 The provisions of Amendment No. 388 are implemented as follows:
(i) State agencies may implement the following amendments at their discretion at any time on or after the effective date: § 272.8; § 272.11(a); § 273.2(f)(9)(i); § 273.2(f)(10); § 273.2(j)(2)(ii); § 273.9(d)(6)(i); § 273.9(d)(6)(iii)(E); § 273.11(a)(3)(v); § 273.12(a)(1)(vii); § 273.25; and § 277.4(b).
(ii) State agencies may implement the following amendment at their discretion at any time after the effective date established by OMB approval of the associated information collection burden: § 273.12(f)(4).
(iii) State agencies must implement the following amendments no later than 180 days after the effective date established by OMB approval of the associated information collection burden for all households newly applying for Program benefits: § 273.2(c)(2)(i), § 273.2(e)(1), § 273.2(e)(2)(i), § 273.2(e)(2)(ii), § 273.2(e)(3), § 273.4(c)(3)(iv); and § 273.12(c)(3). State agencies must convert current caseloads no later than the next recertification following the implementation date.
(iv) State agencies must implement the amendment to § 273.2(b)(4)(iv) no later than August 1, 2001, for all households newly applying for Program benefits.
(v) State agencies must implement all remaining amendments no later than June 1, 2001, for all households newly applying for Program benefits. State agencies must convert current caseloads no later than the next recertification following the implementation date.
(vi) Acting under policy guidance the Department issued previous to the publication of this final rule, several State agencies that have identified programs to confer categorical eligibility for SNAP benefits that do not meet the criteria established at §§ 273.2(j)(2)(i)(B), 273.2(j)(2)(i)(C), 273.2(j)(2)(ii)(A), or 273.2(j)(2)(ii)(B) of this chapter. Any such State agency may continue to use these programs to confer categorical eligibility for SNAP purposes until September 30, 2001.
(vii) A State agency which first implements option 1 under 7 CFR 273.11(c)(3)(ii), and then decides at a later date to implement option 2 under that same paragraph is entitled to a second variance exclusion period under 7 CFR 275.12(d)(2)(vii).
(162) Amendment No. 384. The provisions of Amendment No. 384 are effective September 14, 2000, and must be implemented as follows:
(i) Any new contract executed after October 16, 2000, must have provisions for interoperability and portability which include an implementation date for this functionality no later than October 1, 2002, except under the following circumstances:
(A) State agencies with contracts entered into before October 16, 2000, are not required to re-negotiate their EBT services contract to include interoperability and portability, even if the contract expires after the October 1, 2002 deadline; such State agencies are exempt from the interoperability requirement until they re-negotiate or re-procure their EBT contract.
(B) Smart Card systems are not required to be interoperable with other State EBT systems until such time that the Department determines a practicable technological method is available for interoperability with on-line EBT systems.
(ii) Enhanced funding is available for interoperability costs incurred after February 11, 2000, and before October 1, 2002, for State agencies which have implemented standards of interoperability and portability adopted by a majority of State agencies, and for such costs incurred after September 1, 2002, for State agencies that have adopted standards for interoperability and portability in accordance with this regulation at 7 CFR 274.12.
(163) [Reserved]
(164) Amendment No. 390. The provisions of Amendment No. 390 are effective November 3, 2000. State agencies may implement the provisions anytime after the effective date. However, Electronic Benefit Transfer (EBT) systems must be in place statewide no later than October 1, 2002, as required by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
(165) Amendment No. 387—This rule is effective no later than {insert the first day of the month 60 days after publication of the final rule, except for the amendment to 7 CFR 272.2(d)(1)(xiii) which is effective August 1, 2001. State agencies must implement the provisions in this final rule no later than August 1, 2001.
(166) Amendment No. 393. The provisions of Amendment No. 393, regarding the Work Provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 are effective August 19, 2002.
(167) Amendment No. 376. The provisions of Amendment No. 376 are effective May 29, 2003 and must be implemented no later than November 1, 2003. The provisions must be implemented for all households that newly apply for Program benefits on or after either the required implementation date or the date the State agency implements the provision prior to the required implementation date. The current change reporting caseload shall be converted to these provisions no later than the required implementation date in accordance with procedures established by the State agency. However, for households subject to the reporting requirements at § 273.12(a)(1)(i)(C)(1) or (2) of this chapter, the State agency has until January 1, 2004 to convert households to 6 month certification periods. Monthly reporting households shall be converted in accordance with § 273.21(r) of this chapter. For quality control purposes, any variances resulting from the implementation of this rule shall be excluded from error analysis for 120 days from the required implementation date, in accordance with § 275.12(d)(2)(vii) of this chapter.
(168) Amendment No. 394. The interim and final provisions of Amendment No. 394 are effective May 11, 2005. State agencies may implement the provisions anytime after May 11, 2005 but no later than October 11, 2005.
(169) Amendment No. 395. The provisions of Amendment 395 are effective December 15, 2003.
(170) Amendment No. 396. The provisions of amendment number 396 are effective April 8, 2005.
(171) Amendment No. 397. The provisions of Amendment No. 397 are effective January 4, 2006. State agencies may implement the provisions anytime after the rule is published but no later than June 5, 2006.
(172) Amendment No. 400. The provisions of Amendment No. 400, regarding the Employment and Training Program Provisions of the Farm Security and Rural Investment Act of 2002 are effective August 8, 2006.
(173) Amendment No. 401. The provisions of Amendment No. 401 are implemented as follows:
(i) The following amendments were to be implemented October 1, 2002: 7 CFR 273.4(a)(6)(ii)(H), 7 CFR 273.8(b), and 7 CFR 273.9(d)(1).
(ii) The following amendments were to be implemented April 1, 2003: 7 CFR 273.4(a)(6)(ii)(B) through 7 CFR 273.4(a)(6)(ii)(F) and 273.4(a)(6)(iii).
(iii) The following amendments were to be implemented October 1, 2003: 7 CFR 273.4 (a)(6)(ii)(J); 7 CFR 273.4(c)(3)(vi).
(iv) State agencies must implement the following amendments no later than August 1, 2010: 7 CFR 273.4(c)(2)(v), 7 CFR 273.4(c)(3)(iv), 7 CFR 273.4(c)(3)(vii), 7 CFR 273.9(b)(1)(vi), and 7 CFR 273.9(c)(3)(ii)(A).
(v) State agencies may implement all other amendments on or after the effective date.
(vi) State agencies that implemented discretionary provisions, either under existing regulations or policy guidance issued by the Department, prior to the publication of this final rule have until August 1, 2010 to amend their policies to conform to the final rule requirements.
§ 272.2 Plan of operation.
(a) General purpose and content—(1) Purpose. State agencies shall periodically plan and budget program operations and establish objectives. When planning and budgeting for program operations for the next year, State agencies shall consider major corrective action objectives, existing program strengths and deficiencies, and other factors anticipated to impact on the operation of the State’s SNAP and on projected expenditures.
(2) Content. The basic components of the State Plan of Operation are the Federal/State Agreement, the Budget Projection Statement, and the Program Activity Statement. In addition, certain attachments to the Plan are specified in this section and in § 272.3. The requirements for the basic components and attachments are specified in § 272.2(c) and § 272.2(d) respectively. The Federal/State Agreement is the legal agreement between the State and the Department of Agriculture. This Agreement is the means by which the State elects to operate SNAP and to administer the program in accordance with the Food and Nutrition Act of 2008, as amended, regulations issued pursuant to the Act and the FNS-approved State Plan of Operation. The Budget Projection Statement and Program Activity Statement provide information on the number of actions and amounts budgeted for various functional areas such as certification and issuance. The Plan’s attachments include the Quality Control Sample Plan, the Disaster Plan (currently reserved), the Employment and Training Plan, the optional Nutrition Education Plan, the optional plan for Program informational activities directed to low-income households, the optional plan for intercepting Unemployment Compensation (UC) benefits for collecting claims for intentional Program violations, the Systematic Alien Verification for Entitlements (SAVE) Plan, and the plan for the State Income and Eligibility Verification System. The State agency shall either include the Workfare Plan in its State Plan of Operation or append the Workfare Plan to the State Plan of Operation, as appropriate, in accordance with § 273.22(b)(3) of this chapter. The Workfare Plan shall be submitted separately, in accordance with § 273.22(b)(1) of this chapter. The ADP/CIS Plan is considered part of the State Plan of Operation but is submitted separately as prescribed under § 272.2(e)(8). State agencies and/or political subdivisions selected to operate a Simplified Application/Standardized Benefit Project shall include that Project’s Work Plan in the State Plan of Operation. The Plan’s attachments shall also include the Mail Issuance Loss Reporting Level Plan.
(b) Federal/State Agreement. (1) The wording of the Federal/State Agreement is as follows:
The SNAP State agency of ______ and the Food and Nutrition Service (FNS), U.S. Department of Agriculture (USDA), hereby agree to act in accordance with the provisions of the Food and Nutrition Act of 2008, as amended, implementing regulations and the FNS approved State Plan of Operation. The State agency and FNS USDA further agree to fully comply with any changes in Federal law and regulations. This agreement may be modified with the mutual written consent of both parties.
The State agrees to:
1. Administer the program in accordance with the provisions contained in the Food and Nutrition Act of 2008, as amended, and in the manner prescribed by regulations issued pursuant to the Act; and to implement the FNS-approved State Plan of Operation.
2. Assurance of Civil Rights Compliance: Comply with Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), Title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), section 11(c) of the Food and Nutrition Act of 2008, as amended (7 U.S.C. 2020), Title II and Title III of the Americans with Disabilities Act (ADA) of 1990 as amended by the ADA Amendments Act of 2008 (42 U.S.C. 12131-12189) as implemented by Department of Justice regulations at 28 CFR part 35 and 36, Executive Order 13166, “Improving Access to Services for Persons with Limited English Proficiency” (August 11, 2000), and all requirements imposed by the regulations issued by the Department of Agriculture to the effect that, no person in the United States shall, on the grounds of sex, including gender identity and sexual orientation, race, color, age, political belief, religious creed, disability, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subject to discrimination under SNAP. This includes program-specific requirements found at 7 CFR part 15 et seq. and 7 CFR 272.6.
This assurance is given in consideration of and for the purpose of obtaining any and all Federal assistance extended to the State by USDA under the authority of the Food and Nutrition Act of 2008, as amended. Federal financial assistance includes grants, and loans of Federal funds; reimbursable expenditures, grants, or donations of Federal property and interest in property; the detail of Federal personnel; the sale, lease of, or permission to use Federal property or interest in such property; the furnishing of services without consideration, or at a nominal consideration, or at a consideration that is reduced for the purpose of assisting the recipient or in recognition of the public interest to be served by such sale, lease, or furnishing of services to the recipient; or any improvements made with Federal financial assistance extended to the State by USDA. This assistance also includes any Federal agreement, arrangement, or other contract that has as one of its purposes the provision of cash assistance for the purchase of food, cash assistance for purchase or rental of food service equipment or any other financial assistance extended in reliance on the representations and agreements made in this assurance.
By accepting this assurance, the State agency agrees to compile data, maintain records, and submit records and reports as required, to permit effective enforcement of nondiscrimination laws and permit authorized USDA personnel during hours of program operation to review and copy such records, books, and accounts, access such facilities and interview such personnel as needed to ascertain compliance with the nondiscrimination laws. If there are any violations of this assurance, USDA, FNS, shall have the right to seek judicial enforcement of this assurance. This assurance is binding on the State agency, its successors, transferees and assignees as long as it receives assistance or retains possession of any assistance from USDA. The person or persons whose signatures appear below are authorized to sign this assurance on behalf of the State agency.
3. (For States with Indian Reservations only). Implement the Program in a manner that is responsive to the special needs of American Indians on reservations and consult in good faith with tribal organizations about that portion of the State’s Plan of Operation pertaining to the implementation of the Program for members of the tribe on reservations.
4. FNS agrees to: 1. Pay administrative costs in accordance with the Food and Nutrition Act of 2008, implementing regulations, and an approved Cost Allocation Plan.
2. Carry out any other responsibilities delegated by the Secretary in the Food and Nutrition Act of 2008, as amended.
(2) The State agency may propose alternative language to any or all the provisions listed in paragraph (b)(1) of this section. The alternative language is subject to approval by both parties before signature.
(c) Budget Projection Statement and Program Activity Statement. (1) The State agency shall submit to FNS for approval a Budget Projection Statement and Program Activity Statement in accordance with the submittal dates in § 272.2(e).
(i) The Budget Projection Statement solicits projections of the total costs for major areas of program operations. The Budget Projection Statement shall be submitted annually and updated as necessary through the year. The Budget Projection Statement shall contain projections for each quarter of the next Federal fiscal year. The State agency shall submit with the Budget Projection Statement a narrative justification documenting and explaining the assumptions used to arrive at the projections. The narrative shall cover such subjects as: The number and salary level of employees; other factors affecting personnel costs including anticipated increases in pay rates or benefits, and reallocations of staff among units or functions, insofar as these might result in cost increases or decreases; costs for purchasing, leasing, and maintaining equipment and space, especially as concerns any upcoming, one-time-only purchases of new capital assets such as ADP equipment, renegotiation of leases, changes in depreciation rates or procedures, relocation of offices, maintenance and renovation work, and inflation; issuance system costs, including renegotiation of issuing agent fees and plans to change issuance systems; changes in caseload and factors contributing to increases or decreases in the number of participants; recertifications, including the anticipated impact of economic conditions (and in particular unemployment) and seasonality; cost implications of corrective action plans; anticipated changes in program regulations and operating guidelines and instructions; training needs; travel costs; and adjustments in insurance premiums. The narrative should cover as many of the items listed above, and any other items deemed relevant by the State agency, that will have a significant impact on costs. The State agency is not required to discuss every item in the list in every submission of a Budget Projection Statement. The narrative should concentrate on items that account for increases or decreases in costs from the preceding submissions.
(ii) The Program Activity Statement, to be submitted quarterly (unless otherwise directed by FNS), solicits a summary of Program activity for the State agency’s operations during the preceding reporting period.
(2) The organizational outline submitted in 1982 as an attachment to the Program Activity Statement shall be considered the basic outline. Henceforth, changes to this outline shall be provided to FNS as they occur. The outline contains the following information:
(i) The position of the head of the State agency responsible for administering SNAP in relation to the overall State organizational structure, i.e., the Program Director in relation to the Commissioner of Welfare;
(ii) A description of the organizational structure through which the State agency will administer and operate SNAP, including whether the Program is State, county, locally, or regionally-administered; whether the workers have single SNAP or multi-program functions; and the title and position of the individual or panel designated as the hearing authority and whether officials conduct both fair and fraud hearings.
(iii) A description of the funding arrangement by which State, county, and local jurisdictions will contribute to the State agency portion of administrative costs;
(iv) The position within the State organizational structure of the Performance Reporting System (PRS) coordinator, including whether the PRS coordinator is full or part-time, and is responsible for direct supervision over Quality Control or Management Evaluation or if these functions are handled separately, and whether quality control reviewers have single SNAP or multi-program review responsibilities;
(v) The position of the training coordinator and whether this is a full or part-time position; and
(vi) The organizational entity responsible for corrective action.
(3) Additional attachments. Attached for informational purposes (not subject to approval as part of the plan submission procedures) to the Program Activity Statement and submitted as required in paragraph (e)(3) of this section shall be the agreements between the State agency and the United States Postal Service for coupon issuance, and between the State agency and the Social Security Administration for supplemental income/SNAP joint application processing and for routine user status.
(d) Planning documents. (1) The following planning documents shall be submitted:
(i) Quality Control Sampling Plan as required by § 275.11(a)(4);
(ii) Disaster Plan as required by § 280.6 (currently reserved), or certification that a previously submitted Disaster Plan has been reviewed and remains current;
(iii) Nutrition Education Plan if the State agency elects to request Federal Supplemental Nutrition Assistance Program Education (SNAP-Ed) grant funds to conduct nutrition education and obesity prevention services as discussed in paragraph (d)(2) of this section.
(iv) A plan for the State Income and Eligibility Verification System required by § 272.8.
(v) Employment and Training Plan as required in § 273.7 (c)(6).
(vi) ADP/CIS Plan as required by § 272.10.
(vii) A plan for the Systematic Alien Verification for Entitlements (SAVE) Program as required by § 272.11(e).
(viii) Mail Issuance Loss Reporting Level Plan required by § 276.2(b)(4), for the State agency using mail issuance, shall contain the unit level of reporting mail issuance losses for the upcoming fiscal year as elected by the State agency. If a State agency does not revise its Plan by August 15 in any given year, FNS shall continue to require reporting and to assess liabilities for the next fiscal year at the level last indicated by the State agency. If the agency has selected the unit provided for in § 276.2(b)(4)(ii), a listing of the issuance sites or counties comprising each administrative unit within the State agency shall also be included in the Plan.
(ix) A plan for Program informational activities as specified in § 272.5(c).
(x) Claims Management Plan as required by § 273.18(a)(3) to be submitted for informational purposes only; not subject to approval as part of the plan submission procedures under paragraph (e) of this section.
(xi)-(xii) [Reserved]
(xiii) If the State agency chooses to implement the optional provisions specified in (273.11(k), (l), (o), (p), and (q) of this chapter, it must include in the Plan’s attachment the options it selected, the guidelines it will use, and any good cause criteria under paragraph (o). For § 273.11(k) of this chapter, the State agency must identify which sanctions in the other programs this provision applies to. The State agency must also include in the plan a description of the safeguards it will use to restrict the use of information it collects in implementing the optional provision contained in § 273.11(p) of this chapter.
(xiv) The State agency’s disqualification plan, in accordance with § 273.7(f)(3) of this chapter.
(xv) If the State agency chooses to implement the provisions for a work supplementation or support program, the work supplementation or support program plan, in accordance with § 273.7(l)(1) of this chapter.
(xvi) If the State agency chooses to implement the optional provisions specified in:
(A) Section 273.2(c)(7)(viii) and 273.2(c)(7)(ix) of this chapter, it must include in the Plan’s attachment the option to accept telephonic signatures and gestured signatures on the application and reapplication forms (other than for households the State may be required to accept such signatures as a reasonable accommodation under Section 504 of the Rehabilitation Act or in compliance with other civil rights laws) and a description of the procedures being pursued under the provision;
(B) Sections 273.2(e)(2) and 273.14(b)(3) of this chapter, it must include in the Plan’s attachment the option to provide telephone interviews in lieu of face-to-face interviews at initial application and reapplication for households other than those that meet the hardship criteria and a description of the procedures being pursued under the provision;
(C) Sections 273.2(f)(1)(xii), 273.2(f)(8)(i)(A), 273.9(d)(5), 273.9(d)(6)(i) and 273.12(a)(4) of this chapter, it must include in the Plan’s attachment the options it has selected;
(D) Section 273.5(b)(5) of this chapter, it must include in the Plan’s attachment the option to average student work hours and a description of how student work hours will be calculated;
(E) Section 273.8(e)(19) of this chapter, it must include in the Plan’s attachment a statement that the option has been selected and a description of the resources being excluded under the provision;
(F) Section 273.9(c)(3) of this chapter, it must include in the Plan’s attachment a statement that the option has been selected and a description of the types of educational assistance being excluded under the provision;
(G) Sections 273.9(c)(18) and 273.9(c)(19) of this chapter, it must include in the Plan’s attachment a statement of the options selected and a description of the types of payments or the types of income being excluded under the provisions;
(H) Section 273.12(a)(5) of this chapter, it must include in the Plan’s attachment a statement that the option has been selected and a description of the types of households to whom the option applies;
(I) Section 273.12(c) of this chapter, it must include in the Plan’s attachment a statement that the option has been selected and a description of the deductions affected; and
(J) Section 273.26 of this chapter, it must include in the Plan’s attachment a statement that transitional SNAP benefits are available and a description of the eligible cash-assistance programs by which households may qualify for transitional benefits; if one of the eligible programs includes a State-funded cash assistance program; whether household participation in that program runs concurrently, sequentially, or alternatively to TANF; the categories of households eligible for such benefits; the maximum number of months for which transitional benefits will be provided.
(xvii) A plan indicating the definition of fleeing felon the State agency has adopted, as provided for in § 273.11(n).
(xviii) A list indicating the names of gaming entities with which the State agency has entered into cooperative agreements and the frequency of data matches with such entities.
(2) Nutrition Education Plan. If submitted, the Supplemental Nutrition Assistance Program Education (SNAP-Ed) Plan must include the following:
(i) Conform to standards established in this regulation, SNAP-Ed Plan Guidance, and other FNS policy. A State agency may propose to implement an annual or multiyear Plan of up to three years;
(ii) Identify the methods the State will use to notify applicants, participants and eligible individuals to the maximum extent possible of the availability of SNAP-Ed activities in local communities;
(iii) Describe methods the State agency will use to identify its target audience. FNS will consider for approval targeting strategies and supporting data sources included in SNAP-Ed Plan Guidance and alternate targeting strategies and supporting data sources proposed by State agencies;
(iv) Present a valid and data-driven needs assessment of the nutrition, physical activity, and obesity prevention needs of the target population, and their barriers to accessing healthy foods and physical activity. The needs assessment should consider the diverse characteristics of the target population, including race/ethnicity, gender, employment status, housing, language, transportation/mobility needs, and other factors;
(v) Ensure interventions are appropriate for the low-income population defined as SNAP participants and low-income individuals eligible to receive benefits under SNAP or other means-tested Federal assistance programs and individuals residing in communities with a significant low-income population. The interventions must recognize the population’s constrained resources and potential eligibility for Federal food assistance;
(vi) Describe the evidence-based nutrition education and obesity prevention services that the State will provide in SNAP-Ed and how the State will deliver those services, either directly or through agreements with other State or local agencies or community organizations, and how the interventions and strategies meet the assessed nutrition, physical activity, and obesity prevention needs of the target population;
(vii) Use of Funds. (A) A State agency must use the SNAP-Ed nutrition education and obesity prevention grant to fund the administrative costs of planning, implementing, operating, and evaluating its SNAP-Ed program in accordance with its approved SNAP-Ed Plan; State agencies shall provide program oversight to ensure integrity of funds and demonstrate program effectiveness regarding SNAP-Ed outcomes and impacts;
(B) Definitions. SNAP nutrition education and obesity prevention services are defined as a combination of educational strategies, accompanied by supporting environmental interventions, demonstrated to facilitate adoption of food and physical activity choices and other nutrition-related behaviors conducive to the health and well-being of SNAP participants and low-income individuals eligible to receive benefits under SNAP or other means-tested Federal assistance programs and individuals residing in communities with a significant low-income population. Nutrition education and obesity prevention services are delivered through multiple venues, often through partnerships, and involve activities at the individual, interpersonal, community, and societal levels. Acceptable policy level interventions are activities that encourage healthier choices based on the current Dietary Guidelines for Americans. Intervention strategies may focus on increasing consumption of certain foods, beverages, or nutrients as well as limiting consumption of certain foods, beverages, or nutrients consistent with the Dietary Guidelines for Americans;SNAP-Ed nutrition education and obesity prevention activities must be evidence-based. An evidence-based approach for nutrition education and obesity prevention is defined as the integration of the best research evidence with best available practice-based evidence. The best research evidence refers to relevant rigorous nutrition and public health nutrition research including systematically reviewed scientific evidence. Practice-based evidence refers to case studies, pilot studies and evidence from the field on nutrition education interventions that demonstrate obesity prevention potential. Evidence may be related to obesity prevention target areas, intervention strategies and/or specific interventions. The target areas are identified in the current Dietary Guidelines for Americans. SNAP-Ed services may also include emerging strategies or interventions, which are community- or practitioner-driven activities that have the potential for obesity prevention, but have not yet been formally evaluated for obesity prevention outcomes. Emerging strategies or interventions require a justification for a novel approach and must be evaluated for effectiveness. Intervention strategies are broad approaches to intervening on specific target areas. Interventions are a specific set of evidence-based, behaviorally-focused activities and/or actions to promote healthy eating and active lifestyles. Evidence-based allowable uses of funds for SNAP-Ed include conducting and evaluating intervention programs, and implementing and measuring the effects of policy, systems and environmental changes in accordance with SNAP-Ed Plan Guidance;
(C) SNAP-Ed activities must promote healthy food and physical activity choices based on the most recent Dietary Guidelines for Americans.
(D) SNAP-Ed activities must include evidence-based activities using two or more of these approaches: individual or group-based nutrition education, health promotion, and intervention strategies; comprehensive, multi-level interventions at multiple complementary organizational and institutional levels; community and public health approaches to improve nutrition and physical activity;
(viii) Include a description of the State’s efforts to coordinate activities with national, State, and local nutrition education, obesity prevention, and health promotion initiatives and interventions, whether publicly or privately funded. States must consult and coordinate with State and local operators of other FNS programs, including the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the National School Lunch Program, Farm to School, and the Food Distribution Program on Indian Reservations, to ensure SNAP-Ed complements the nutrition education and obesity prevention activities of those programs. States may engage in breastfeeding education, promotion, and support that is supplementary to and coordinated with WIC, which has the lead and primary role in all breastfeeding activities among FNS programs. The relationship between the State agency and other organizations it plans to coordinate with for the provision of services, including statewide organizations must be described. Copies of contracts and Memoranda of Agreement or Understanding that involve funds made available under the State agency’s Federal SNAP-Ed grant must be available for inspection upon request;
(ix) Include an operating budget for the Federal fiscal year with an estimate of the cost of operation for one or more years, according to the State’s approved SNAP-Ed Plan. As part of the budget process, the State must inform FNS by the end of the first quarter of each Federal fiscal year (December 31) of any portion of its prior year allocation that it cannot or does not plan to spend for SNAP-Ed activities by the end of the Federal fiscal year.
(x) Federal financial participation and allocation of grants. (A) A State agency’s receipt of a Federal SNAP-Ed grant is contingent on FNS’ approval of the State agency’s SNAP-Ed Plan. If an adequate Plan is not submitted or an extension granted, FNS may reallocate a State agency’s grant among other State agencies with approved Plans. These funds are the only source of Federal funds to States available under section 28 of the Food and Nutrition Act of 2008, as amended, for SNAP nutrition education and obesity prevention services. Funds in excess of the grants are not eligible for SNAP Federal reimbursement. The grant requires no State contribution or match;
(B) Shall identify the uses of funding for State or local projects and show that the funding received shall remain under the administrative control of the State agency;
(C) For each of fiscal years (FY) 2011-2013, each State agency that submitted an approved 2009 SNAP-Ed Plan received a Federal grant based on the State’s SNAP-Ed expenditures in FY 2009, as reported to the Secretary in February 2010, in proportion to FY 2009 SNAP-Ed expenditures by all States in that year.
(D) For FY 2014 and subsequent years, the allocation formula (prescribed in
section 28(d)(2)(A) of the Food and Nutrition Act of 2008) is based on a ratio of:
(1) A State’s share of national SNAP-Ed expenditures in FY 2009 in relation to State SNAP-Ed expenditures nationally (as described in paragraph (d)(2)(x)(C) of this section) and
(2) The percentage of the number of individuals participating in SNAP in the State during the preceding fiscal year in relation to the percentage of SNAP participation nationally during that year.
(E) The second part of the formula applicable to FY 2014 and subsequent years, the ratio of SNAP participation in a State in relation to SNAP participation nationally, will annually increase as a percentage of the annual Federal SNAP-Ed funding. In FY 2014, the formula’s ratio of State FY 2009 SNAP-Ed expenditures to SNAP participation was 90/10. SNAP participation will increase as a factor in the funding formula until FY 2018, when the ratio will be 50/50. The 50/50 ratio shall continue after FY 2018.
The allocations to a State for SNAP-Ed grants will be:
(1) For FY 2013, in direct proportion to a State’s SNAP-Ed expenditures for FY 2009, as reported in February 2010;
(2) For FY 2014, 90 percent based on a State’s FY 2009 SNAP-Ed expenditures, and 10 percent based on the State’s share of national SNAP participants for the 12-month period February 1, 2012 to January 31, 2013;
(3) For FY 2015, 80 percent based on a State’s FY 2009 SNAP-Ed expenditures, and 20 percent based on the State’s share of national SNAP participants for the 12-month period February 1, 2013 to January 31, 2014;
(4) For FY 2016, 70 percent based on a State’s FY 2009 SNAP-Ed expenditures, and 30 percent based on the State’s share of national SNAP participants for the 12-month period February 1, 2014 to January 31, 2015;
(5) For FY 2017, 60 percent based on a State’s FY 2009 SNAP-Ed expenditures, and 40 percent based on the State’s share of national SNAP participants for the 12-month period February 1, 2015 to January 31, 2016; and,
(6) For FY 2018 and subsequent years, 50 percent based on a State’s FY 2009 SNAP-Ed expenditures, and 50 percent based on the State’s share of national SNAP participants for the previous 12-month period ending January 31;
(F) If a participating State agency notifies FNS as required in (ix) above that it will not obligate or expend all of the funds allocated to it for a fiscal year under this section, FNS may reallocate the unobligated or unexpended funds to other participating State agencies that have approved SNAP-Ed Plans during the period for which the funding is available for new obligations by FNS. Reallocated funds received by a State will be considered part of its base FY 2009 allocation for the purpose of determining the State’s allocation for the next fiscal year; funds surrendered by a State shall not be considered part of its base FY 2009 allocation for the next fiscal year for the purpose of determining the State’s allocation for the next fiscal year.
(xi) Fiscal recordkeeping and reporting requirements. Each participating State agency must meet FNS fiscal recordkeeping and reporting requirements. Total SNAP-Ed expenditures and State, private, and other contributions to SNAP-Ed activities are reported through the financial reporting means and in the timeframe designated by FNS;
(xii) Additional information may be required of the State agency, on an as needed basis, regarding the type of nutrition education and obesity prevention activities offered and the characteristics of the target population served, depending on the contents of the State’s SNAP-Ed Plan, to determine whether nutrition education goals are being met;
(xiii) The State agency must submit a SNAP-Ed Annual Report to FNS by January 31 of each year. The report shall describe SNAP-Ed Plan project activities, outcomes, and budget for the prior year.
(e) Submittal requirements. States shall submit to the appropriate FNS Regional Office for approval each of the components of the Plan of Operation for approval within the timeframes established by this paragraph. Approval or denial of the document may be withheld pending review by FNS. However, if FNS fails to either approve, deny, or request additional information within 30 days, the document is approved. If additional information is requested, the State agency shall provide this as soon as possible, and FNS shall approve or deny the Plan within 30 days after receiving the information.
(1) The Federal/State agreement shall be signed by the Governor of the State or authorized designee and shall be submitted to FNS within 120 days after publication of these regulations in final form and shall remain in effect until terminated.
(2) The Budget Projection Statement and Program Activity Statement shall be signed by the head of the State agency or its chief financial officer and submitted as follows:
(i) The Budget Projection Statement shall be submitted annually, no later than August 15 of each year.
(ii) The Program Activity Statement shall be submitted quarterly (unless otherwise directed by FNS) based on the Federal fiscal year.
(3) Changes to the organizational outline required by § 272.2(c)(2) and the agreements with other agencies outlined in § 272.2(c)(3)(ii) shall be provided to FNS as changes occur. The attachments outlined in § 272.2(c)(3)(i) shall be submitted annually with the Program Activity Statement.
(4) The Quality Control Sampling Plan shall be signed by the head of the State agency and submitted to FNS prior to implementation as follows:
(i) According to the timeframes specified in paragraph (e)(4)(ii) of this section, prior to each annual review period each State agency shall submit any changes in their sampling plan for FNS approval or submit a statement that there are no such changes. These submittals shall include the statement required by § 275.11(a)(2), if appropriate. The Quality Control Sampling Plan in effect for each State agency as of the beginning of Fiscal Year 1984 shall be considered submitted and approved for purposes of this section, provided that the State agency has obtained prior FNS approval of its sampling plan.
(ii) Initial submissions of and major changes to sampling plans and changes in sampling plans resulting from general changes in procedure shall be submitted to FNS for approval at least 60 days prior to implementation. Minor changes to approved sampling plans shall be submitted at least 30 days prior to implementation.
(5) Disaster Plan. [Reserved]
(6) The SNAP-Ed Plan shall be signed by the head of the State agency and submitted prior to funding of nutrition education and obesity prevention activities when the State agency elects to request Federal grant funds to conduct these SNAP-Ed activities. The Plan shall be submitted for approval no later than August 15. Approved plans become effective the following FFY October 1 to September 30.
(7) Where applicable, State agencies shall consult (on an ongoing basis) with the tribal organization of an Indian reservation about those portions of the State Plan of Operation pertaining to the special needs of the members of the tribe.
(8) ADP/CIS Plan. The ADP/CIS Plan shall be signed by the head of the State agency and submitted to FNS by October 1, 1987. State agencies which require additional time to complete their ADP/CIS plan may submit their plan in two phases as described in § 272.10(a)(2), with the first part of the plan being submitted October 1, 1987. State agencies requiring additional time shall submit the second part of their plans by January 1, 1988. If FNS requests additional information to be provided in the State agency ADP/CIS Plan or if FNS requests that changes be made in the State agency ADP/CIS Plan, State agencies must comply with FNS comments and submit an approvable ADP/CIS Plan within 60 days of their receipt of the FNS comments but in no event later than March 1, 1988. Requirements for the ADP/CIS plan are specified in § 272.10.
(9) The Employment and Training Plan shall be submitted as specified under § 273.7(c)(8).
(f) Revisions. Revisions to any of the planning documents or the Program and Budget Summary Statement shall be prepared and submitted for approval to the appropriate FNS Regional Office in the same manner as the original document. However, revisions to the budget portion of the Budget Projection Statement and Program Activity Statement shall be submitted as follows:
(1) Program funds. (i) For program funds, State agencies shall request prior approvals promptly from FNS for budget revisions whenever:
(A) The revision indicates the need for additional Federal funding;
(B) The program budget exceeds $100,000, and the cumulative amount of transfers among program functions exceeds or is expected to exceed five percent of the program budget. The same criteria apply to the cumulative amount of transfers among functions and activities when budgeted separately for program funds provided to a subagency, except that FNS shall permit no transfer which would cause any Federal appropriation, or part thereof, to be used for purposes other than those intended;
(C) The revisions involve the transfer of amounts budgeted for indirect costs to absorb increases in direct costs; or
(D) The revisions pertain to the addition of items requiring prior approval by FNS in accordance with the provisions of the applicable cost principles specified 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415.
(ii) No other changes to the Program fund budget require approval from FNS. Examples of changes which do not require Federal approval are: The use of State agency funds to accomplish program objectives over and above the State agency minimum share included in the approved Program budget; and the transfer of amounts budgeted for direct costs to absorb authorized increases in indirect costs.
(iii) The requirements of paragraph (f)(1)(i)(B) of this section may be waived by FNS provided that:
(A) No different limitation or approval requirement may be imposed; and,
(B) FNS shall not permit a transfer which would cause any Federal appropriation, or part, thereof, to be used for purpose other than those intended.
(2) Authorized funds exceeding State agency needs. When it becomes apparent that the funds authorized by the Letter of Credit will exceed the needs of the State agency, FNS will make appropriate adjustments in the Letter of Credit in accordance with part 277.
(3) Method of requesting approvals. When requesting approval for budget revisions, State agencies shall use the same format as the Budget Projection Statement used in the previous submission. However, State agencies may request by letter the approvals required by paragraph (f)(1)(i)(D) of this section.
(4) Notification of approval or disapproval. Within 30 days from the date of receipt of the request for budget revisions, FNS shall review the request and notify the State agency whether or not the budget revisions have been approved. If the revision is still under consideration at the end of 30 days, FNS shall inform the State agency in writing as to when the decision will be made.
§ 272.3 Operating guidelines and forms.
(a) Coverage of operating guidelines. State agencies shall prepare and provide to staff responsible for administering the Program written operating procedures. In those States which have State regulations that outline these Operating Procedures, these are equivalent to Operating Guidelines. Other examples of Operating Guidelines are manuals, instructions, directives or transmittal memos. The following categories shall be included in the Operating Guidelines:
(1) Certification of households, including but not limited to:
(i) Application processing;
(ii) Nonfinancial eligibility standards;
(iii) Financial criteria and the eligibility determination;
(iv) Actions resulting from eligibility determinations;
(v) Determining eligibility of special situation households as specified in § 273.11;
(vi) Additional certification functions such as processing changes during certification periods and reporting requirements for households;
(vii) Lost benefits/claims against households;
(viii) Fair/fraud hearings;
(ix) A list of Federal and State energy assistance programs that qualify for the resource and income exclusions discussed in §§ 273.8(e)(14) and 273.9(c)(11) and how these payments are identified as being eligible for the exemption;
(x) Work registration and employment and training requirements.
(2) Issuance, accountability, and reconciliation;
(3) The Performance Reporting System, including instructions or directives for conducting quality control and management evaluation reviews and the quality control sample plan;
(4) A description of the training program, including a listing of the organizational component which conducts training, to whom and how often training is provided;
(5) The fair/fraud hearing procedures if not included in the Certification Handbook.
(6) The consultation process (where applicable) with the tribal organization of an Indian reservation about the State Plan of Operation and Operating Guidelines in terms of the special needs of members of the tribe and the method to be used for incorporating the comments from the tribal organization into the State Plan of Operations and Operating Guidelines.
(b) Submittal of operating guidelines and forms. (1) State agencies shall develop the necessary forms, except the Application for Food Stamps, and other operating guidelines to implement the provisions of the Food and Nutrition Act of 2008 and regulations. In accordance with §§ 273.2(b) and 273.12(b)(1) State agencies shall use the FNS-designed Application for SNAP benefits or an FNS-approved deviation.
(2) State agencies shall submit their operating guidelines and forms and amendments to these materials to FNS for review and audit purposes simultaneous with distribution within the States.
(3) State agencies may request that FNS review and provide comments on their operating guidelines, forms and any amendments to these materials prior to distribution of the materials within the State.
(4) If deficiencies are discovered in a State agency’s materials, FNS shall provide the State agency with written notification.
(c) Waivers. (1) The Administrator of the Food and Nutrition Service or Deputy Administrator for Family Nutrition Programs may authorize waivers to deviate from specific regulatory provisions. Requests for waivers may be approved only in the following situations:
(i) The specific regulatory provision cannot be implemented due to extraordinary temporary situations such as a sudden increase in the caseload due to the loss of SSI cash-out status;
(ii) FNS determines that the waiver would result in a more effective and efficient administration of the program; or
(iii) Unique geographic or climatic conditions within a State preclude effective implementation of the specific regulatory provision and require an alternate procedure; for example, the use of fee agents in Alaska to perform many of the duties involved in the certification of households including conducting the interviews.
(2) FNS shall not approve requests for waivers when:
(i) The waiver would be inconsistent with the provisions of the Act; or
(ii) The waiver would result in material impairment of any statutory or regulatory rights of participants or potential participants.
(3) FNS shall approve waivers for a period not to exceed one year unless the waiver is for an on-going situation. If the waiver is requested for longer than a year, appropriate justification shall be required and FNS will determine if a longer period is warranted and if so, the duration of the waiver. Extensions may be granted provided that States submit appropriate justification as part of the State Plan of Operation.
(4) When submitting requests for waivers, State agencies shall provide compelling justification for the waiver in terms of how the waiver will improve the efficiency and effectiveness of the administration of the Program. At a minimum, requests for waivers shall include but not necessarily be limited to:
(i) Reasons why the waiver is needed;
(ii) The portion of caseload or potential caseload which would be affected and the characteristics of the affected caseload such as geographic, urban, or rural concentration;
(iii) Anticipated impact on service to participants or potential participants who would be affected;
(iv) Anticipated time period for which the waiver is needed; and
(v) Thorough explanation of the proposed alternative provision to be used in lieu of the waived regulatory provision.
(5) Notwithstanding the preceding paragraphs, waivers may be granted by the Food and Nutrition Service as provided in section 5(f) of the Act. Waivers authorized by this paragraph are not subject to the public comment provisions of paragraph (d) of this section.
(6) Notwithstanding the preceding paragraphs, waivers may be granted by the Food and Nutrition Service as provided in section 6(c) of the Act. Waivers authorized by this paragraph are not subject to the public comment provisions of paragraph (d) of this section.
(d) Public comment. State agencies shall solicit public input and comment on overall Program operations as State laws require or as the individual State agency believes would be useful.
§ 272.4 Program administration and personnel requirements.
(a) Merit personnel. (1) State agency personnel used in the certification process shall be employed in accordance with the current standards for a merit system of personnel administration or any standards later prescribed by the U.S. Civil Service Commission under section 208 of the Intergovernmental Personnel Act of 1970.
(2) State agency employees meeting the standards outlined in paragraph (a)(1) of this section shall perform the interviews required in § 273.2(e). Volunteers and other non-State agency employees shall not conduct certification interviews or certify SNAP applicants. Exceptions to the use of State merit system personnel in the interview and certification process are specified in § 273.2(k) for SSI households, § 272.7(d) for households residing in rural Alaska, and part 280 for disaster victims. State agencies are encouraged to use volunteers in activities such as outreach, prescreening, assisting applicants in the application and certification process, and in securing needed verification. Individuals and organizations who are parties to a strike or lockout, and their facilities, may not be used in the certification process except as a source of verification for information supplied by the applicant. Only authorized employees of the State agency, coupon issuers, coupon bulk storage points, and Federal employees involved in administration of the program shall be permitted access to food coupons, ATP’s, or other issuance documents.
(b) Bilingual requirements. (1) Based on the estimated total number of low-income households in a project area which speak the same non-English language (a single-language minority), the State agency shall provide bilingual program information and certification materials, and staff or interpreters as specified in paragraphs (b) (2) and (3) of this section. Single-language minority refers to households which speak the same non-English language and which do not contain adult(s) fluent in English as a second language;
(2) The State agency shall provide materials used in Program informational activities in the appropriate language(s) as follows:
(i) In project areas with less than 2,000 low-income households, if approximately 100 or more of those households are of a single-language minority;
(ii) In project areas with 2,000 or more low-income households, if approximately 5 percent or more of those households are of a single-language minority; and
(iii) In project areas with a certification office that provides bilingual service as required in paragraph (b)(3) of this section.
(3) The State agency shall provide both certification materials in the appropriate language(s) and bilingual staff or interpreters as follows:
(i) In each individual certification office that provides service to an area containing approximately 100 single-language minority low-income households; and
(ii) In each project area with a total of less than 100 low-income households if a majority of those households are of a single-language minority.
(A) Certification materials shall include the SNAP application form, change report form and notices to households.
(B) If notices are required in only one language other than English, notices may be printed in English on one side and in the other language on the reverse side. If the certification office is required to use several languages, the notice may be printed in English and may contain statements in other languages summarizing the purpose of the notice and the telephone number (toll-free number or a number where collect calls will be accepted for households outside the local calling area) which the household may call to receive additional information. For example, a notice of eligibility could in the appropriate language(s) state:
Your application for SNAP benefits has been approved in the amount stated above. If you need more information telephone ________.
(4) In project areas with a seasonal influx of non-English-speaking households, the State agency shall provide bilingual materials and staff or interpreters, if during the seasonal influx the number of single-language minority low-income households which move into the area meets or exceeds the requirements in paragraphs (b) (2) and (3) of this section.
(5) The State agency shall insure that certification offices subject to the requirements of paragraph (b) (3) or (4) of this section provide sufficient bilingual staff or interpreters for the timely processing of non-English-speaking applicants.
(6) The State agency shall develop estimates of the number of low-income single-language minority households, both participating and not participating in the program, for each project area and certification office by using census data (including the Census Bureau’s Current Population Report: Population Estimates and Projections, Series P-25, No. 627) and knowledge of project areas and areas serviced by certification offices. Local Bureau of Census offices, Community Services Administration offices, community action agencies, planning agencies, migrant service organizations, and school officials may be important sources of information in determining the need for bilingual service. If these information sources do not provide sufficient information for the State agency to determine if there is a need for bilingual staff or interpreters, each certification office shall, for a 6-month period, record the total number of single-language minority households that visit the office to make inquiries about the program, file a new application for benefits, or be recertified. Those certification offices that are contacted by a total of over 100 single-language minority households in the 6-month period shall be required to provide bilingual staff or interpreters. State agencies shall also combine the figures collected in each certification office to determine the need for bilingual outreach materials in each project area.
(c) Internal controls—(1) Requirements. In order to safeguard certification and issuance records from unauthorized creation or tampering, the State agency shall establish an organizational structure which divides the responsibility for eligibility determinations and coupon issuance among certification, data management, and issuance units. The certification unit shall be responsible for the determination of household eligibility and the creation of records and documents to authorize the issuance of coupons to eligible households. The data management unit, in response to input from the certification unit, shall create and maintain the household issuance record (HIR) master file on cards, computer discs, tapes, or similar memory devices. The issuance unit shall provide certified households with the authorized allotments. In cases where personnel are periodically, or on a part-time basis, shifted from one unit to another, supervisory controls should be sufficient to assure that the unauthorized creation or modification of case records is not possible.
(2) Exceptions. With prior written FNS approval, a project area may combine unit responsibilities if the controls specified in paragraph (c)(1) of this section have been found to be administratively infeasible.
(i) To receive approval of combined operations, the State agency shall establish special review requirements which at a minimum include:
(A) Biweekly reconciliation and verification of transactions; and
(B) Semiannual comparison of HIR cards and case records as required by § 274.6(d) and, at least once every other month, second-party review of certification actions.
(ii) The State agency shall annually determine whether each combined operation continues to be justified and shall so advise FNS in writing.
(d) Court suit reporting—(1) State agency responsibility. (i) In the event that a State agency is sued by any person(s) in a State or Federal Court in any matter which involves the State agency’s administration of SNAP, the State agency shall immediately notify FNS that suit has been brought and shall furnish FNS with copies of the original pleadings. State agencies involved in suits shall, upon request of FNS, take such action as is necessary to join the United States and/or appropriate officials of the Federal Government, such as the Secretary of USDA or the Administrator of FNS, as parties to the suit. FNS may request to join the following types of suits:
(A) Class action suits;
(B) A suit in which an adverse decision could have a national impact;
(C) A suit challenging Federal policy such as a provision of the Act or regulations or an interpretation of the regulations; or,
(D) A suit based on an empirical situation that is likely to recur.
(ii) FNS may advise a State agency to seek a settlement agreement of a court suit if the State agency is being sued because it misapplied Federal policy in administering the Program.
(iii) State agencies shall notify FNS when court cases have been dismissed or otherwise settled. State agencies shall also provide FNS with information that is requested regarding the State agency’s compliance with the requirements of court orders or settlement agreements.
(2) FNS shall notify all State agencies of any suits brought in Federal court that involve FNS’ administration of the Program and which have the potential of affecting many State agencies’ Program operations. (State agencies need not be notified of suits brought in Federal Court involving FNS’ administration of the Program which may only affect Program operations in one or two States.) The notification provided to State agencies shall contain a description of the Federal policy that is involved in the litigation.
(e) State monitoring of duplicate participation. (1) Each State agency shall establish a system to assure that no individual participates more than once in a month, in more than one jurisdiction, or in more than one household within the State in SNAP. To identify such individuals, the system shall use names and social security numbers at a minimum, and other identifiers such as birth dates or addresses as appropriate.
(i) If the State agency detects a large number of duplicates, it shall implement other measures, such as more frequent checks or increased emphasis on prevention.
(ii) If the State agency provides cash assistance in lieu of coupons for SSI recipients or for households participating in cash-out demonstration projects, the State agency shall check to assure that no individual receives both coupons and other benefits provided in lieu of coupons. Checks to detect individuals receiving both food coupons and cash-out benefits, or any other form of duplicate benefits, shall be made at the time of certification, recertification, and whenever a new member is added to an existing household. However, if the State agency can show that these time frames are incompatible with its system, the State agency shall check for duplicate benefits when necessary, but no less often than annually.
(2) Processing standards for duplicate participation checks at certification and recertification shall not delay the issuance of benefits.
(i) If the State agency chooses to check at the time of certification and recertification, the check for duplicates shall not delay processing of the application and provision of benefits beyond the normal processing standards in § 273.2(g).
(ii) If a duplicate is found in making such a check, the duplication needs to be resolved in accordance with § 273.2(f)(4)(iv) before the application can be processed and benefits provided. Delays in processing caused by this resolution shall be handled in accordance with § 273.2(h).
(3) State agencies shall develop follow-up procedures and corrective action requirements, including time frames within which action must be taken, to be applied to data obtained from matching for duplicate participation. Follow-up actions shall include, but not be limited to, the adjustment of benefits and eligibility, filing of claims, disqualification hearings, and referrals for prosecution, as appropriate.
(4) FNS reserves the right to review State agencies’ use of data obtained from matching for duplicate participation and may require State agencies to take additional specific action to ensure that such data is being used to protect Program integrity.
(f) Hours of operation. State agencies are responsible for setting the hours of operation for their SNAP offices. In doing so, State agencies must take into account the special needs of the populations they serve including households containing a working person.
(g) Fraud detection units. State agencies shall establish and operate fraud detection units in all project areas in which 5,000 or more households participate in the Program. The fraud detection unit shall be responsible for detecting, investigating and assisting in the prosecution of Program fraud and need not be physically located in each 5,000 household “catchment area”. The workers fulfilling this function need not work full-time in fraud detection nor work exclusively on the Program. A written State agency procedure which systematically identifies and refers potential fraud cases to Investigators shall be considered a “detection” activity meeting the requirements of this section. The fraud detection function may be performed by persons not employed by the State agency.
§ 272.5 Program informational activities.
(a) Definition. “Program informational activities” are those activities that convey information about the Program, including household rights and responsibilities, through means such as publications, telephone hotlines, and face-to-face contacts.
(b) Minimum requirements. State agencies shall comply with the following minimum information requirements for applicants and recipients.
(1) Rights and responsibilities. State agencies shall inform participant and applicant households of their Program rights and responsibilities. This information may be provided through whatever means the State agencies deem appropriate.
(2) All Program informational material shall be available in languages other than English as required in § 272.4(b) and shall include a statement that the Program is available to all without regard to race, color, sex, age, handicap, religious creed, national origin or political belief.
(c) Program informational activities for low-income households. At their option, State agencies may carry out and claim associated costs for Program informational activities designed to inform low-income households about the availability, eligibility requirements, application procedures, and benefits of SNAP. Allowable informational activities shall not include recruitment activities as described in § 277.4(b)(5) of this chapter. Program informational materials used in such activities shall be subject to § 272.4(b), which pertains to bilingual requirements. Before FNS considers costs for allowable informational activities eligible for reimbursement at the fifty percent rate under part 277 of this chapter, State agencies shall obtain FNS approval for the attachment to their Plans of Operation as specified in § 272.2(d)(1)(ix). In such attachments, State agencies shall describe the subject activities with respect to the socio-economic and demographic characteristics of the target population, types of media used, geographic areas warranting attention, and outside organizations which would be involved. State agencies shall update this attachment to their Plans of Operation when significant changes occur and shall report projected costs for this Program activity in accordance with § 272.2(c), (e), and (f).
§ 272.6 Nondiscrimination compliance.
(a) Requirement. State agencies shall not discriminate against any applicant or participant in any aspect of program administration, including, but not limited to, the certification of households, the issuance of coupons, the conduct of fair hearings, or the conduct of any other program service for reasons of age, race, color, sex, disability, religious creed, national origin, or political beliefs. Discrimination in any aspect of program administration is prohibited by these regulations, the Food and Nutrition Act of 2008, the Age Discrimination Act of 1975 (Pub. L. 94-135), the Rehabilitation Act of 1973 (Pub. L. 93-112, section 504), Americans with Disabilities Act of 1990 (42 U.S.C. 12101) and title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d). Enforcement action may be brought under any applicable Federal law. Title VI complaints shall be processed in accord with 7 CFR part 15.
(b) Right to file a complaint. Individuals who believe that they have been subject to discrimination as specified in paragraph (a) of this section may file a written complaint with the Secretary or the Administrator, FNS, Washington, DC 20250, and/or with the State agency, if the State agency has a system for processing discrimination complaints. The State agency shall explain both the FNS and, if applicable, the State agency complaint system to each individual who expresses an interest in filing a discrimination complaint and shall advise the individual of the right to file a complaint in either or both systems.
(c) FNS complaint requirements. (1) Complaints shall contain the following information to facilitate investigations:
(i) The name, address, and telephone number or other means of contacting the person alleging discrimination.
(ii) The location and name of the organization or office which is accused of discriminatory practices.
(iii) The nature of the incident or action or the aspect of program administration that led the person to allege discrimination.
(iv) The reason for the alleged discrimination (age, race, color, sex, handicap, religious creed, national origin, or political belief).
(v) The names, titles (if appropriate), and addresses of persons who may have knowledge of the alleged discriminatory acts.
(vi) The date or dates on which the alleged discriminatory actions occurred.
(2) If a complainant makes allegations verbally and is unable or is reluctant to put the allegations in writing, the FNS employee to whom the allegations are made shall document the complaint in writing. Every effort shall be made by the individual accepting the complaint to have the complainant provide the information specified in paragraph (c)(1) of this section.
(3) Complaints will be accepted by the Secretary or the Administrator, FNS, even if the information specified in paragraph (c)(1) of this section is not complete. However, investigations will be conducted only if information concerning paragraphs (c)(1) (ii), (iii) or (iv) of this section is provided.
(4) A complaint must be filed no later than 180 days from the date of the alleged discrimination. However, the time for filing may be extended by the Secretary.
(d) State agency complaint requirements. (1) The State agency may develop and use a State agency complaint system.
(2) The State agency shall submit to FNS a report on each discrimination complaint processed at the State level. The report shall contain as much information in paragraph (c)(1) of this section as is available to the State agency, the findings of the investigation, and, if appropriate, the corrective action planned or taken.
(e) Reviews. [Reserved]
(f) Public notification. The State agency shall: (1) Publicize the procedures described in paragraphs (b) and (c) of this section, and, if applicable, the State agency’s complaint procedures; (2) insure that all offices involved in administering the program and that also serve the public display the nondiscrimination poster provided by FNS; and (3) insure that participants and other low-income households have access to information regarding nondiscrimination statutes and policies, complaint procedures, and the rights of participants, within 10 days of the date of a request.
(g) Data collection. The State agency must obtain racial and ethnic data on participating households in the manner specified by FNS. The application form must clearly indicate that the information is voluntary, that it will not affect the eligibility or the level of benefits, and that the reason for the information is to assure that program benefits are distributed without regard to race, color, or national origin. The State agency must develop alternative means of collecting the ethnic and racial data on households when the information is not provided voluntarily by the household on the application form. These alternative means of data collection shall not include observation (also known as visual observation).
(h) Reports. As required by FNS, the State agency must report the racial and ethnic data on participating household contacts on forms or formats provided by FNS.
§ 272.7 Procedures for program administration in Alaska.
(a) Purpose. To achieve the efficient and effective administration of SNAP in rural areas of Alaska, FNS has determined that it is necessary to develop additional regulations which are specifically designed to accommodate the unique demographic and climatic characteristics which exist in these rural areas. The regulations established in this section, except for paragraph (f) of this section, shall apply only in those areas of Alaska designated as “rural” in paragraph (b) of this section. All regulations not specifically modified by this section shall remain in effect.
(b) Area Designations. (1) Rural I Alaska TFP refers to a Thrifty Food Plan (TFP) that is the higher of the TFP that was in effect in each area on October 1, 1985, or 28.52 percent higher than the Anchorage TFP, as calculated by FNS, with rounding and other reductions that are appropriate. It is to be used in the following areas: In all places in Kodiak Island Borough with the exception of Kodiak; in all places in the Kenai Peninsula Borough that are west of Cook Inlet (including Tyonek, Kustatan, Kalgin Island, Iliamna, Chenik, and Augustine Island) and Chugach Island, English Bay, Port Graham, Portlock, Pt. Gore, Pye Island, and Seldovia. In the Yukon-Koyukuk Census Area, the city of Nenana; and Skwentna in the Matanuska-Susitna Borough. In the Valdez-Cordova Census Area, all places except Dayville and Valdez; and in the Southeast Fairbanks Census Area all places except Big Delta, Delta Junction, and Fort Greely. In the Skagway-Yakutat-Angoon Census Area, all places except Skagway; in Sitka Borough all places except Sitka; in the Wrangell-Petersburg Census Area, all places except Wrangell and Petersburg; in the Ketchikan Gateway Borough, all places except Ketchikan, Saxman, and Ward Cove; in the Prince of Wales-Outer Ketchikan Census Area, all places except Craig, Hyder, and Metlakatla.
(2) Rural II Alaska TFP refers to a TFP that is 56.42 percent higher than the Anchorage TFP, as calculated by FNS, with rounding and other reductions that are appropriate. It is to be used in the following areas: North Slope Borough; Kobuk Census Area; Nome Census Area; Yukon-Koyukuk Census Area except for the city of Nenana; Wade Hampton Census Area; Bethel Census Area; Denali in the Matanuska-Susitna Borough; Dillingham-Bristol Bay Borough; and in all places in the Aleutian Islands except for Cold Bay and Adak.
(3) Urban Alaska TFP refers to a TFP that is the higher of the TFP that was in effect in each area on October 1, 1985, or .79 percent higher than the Anchorage TFP, as calculated by FNS, with rounding and other reductions that are appropriate. It is to be used in the following areas: Cold Bay and Adak in the Aleutian Islands; Kodiak in Kodiak Island Borough; Valdez and Dayville in the Valdez-Cordova Census Area; all places in Kenai Peninsula Borough that are on the Kenai Peninsula except for those specifically designated as Rural I; the entire Anchorage Borough; the entire Matanuska-Susitna Borough except for Denali and Skwentna; the entire Fairbanks-North Star Borough; the entire Juneau Borough; the entire Haines Borough; Sitka in the Sitka Borough; Skagway in the Skagway-Yakutat-Angoon Census Area; Wrangell and Petersburg in the Wrangell-Petersburg Census Area; Ketchikan, Saxman, and Ward Cove in the Ketchikan-Gateway Borough; Craig, Hyder, and Metlakatla in the Prince of Wales-Outer Ketchikan Census Area; and Big Delta, Delta Junction, and Fort Greely in the Southeast-Fairbanks Census Area.
(4) The State agency may, in consultation with FNS, change the designation of any Alaska subdivision contained in the Plan of Operation to reflect changes in demographics or the cost of food within the subdivision.
(c) Fee agents. “Fee agent” means a paid agent who, on behalf of the State, is authorized to make applications available to low-income households, assist in the completion of applications, conduct required interviews, secure required verification, forward completed applications and supporting documentation to the State agency, and provide other services as required by the State agency. Such services shall not include making final decisions on household eligibility or benefit levels.
(d) Application processing. The State agency may modify the application processing requirements in § 273.2 of this chapter as necessary to insure prompt delivery of services to eligible households. The following restrictions apply:
(1) Fee agent processing. If the signed application is first submitted by a household to a fee agent, the fee agent shall mail the application to the State agency within 5 days of receipt. The fee agent shall give the household the maximum amount of time to provide needed verification as long as the five-day processing period is met.
(2) Application filing date. An application is considered filed for purposes of timely processing when it is received by an office of the State agency.
(3) Application processing timeframes. Eligible households must be provided an opportunity to participate as soon as possible but no later than 30 days after the application is received by an office of the State agency.
(4) Expedited service. (i) If the signed application is first submitted by a household to a fee agent, the fee agent shall mail the application to the State agency within 5 days of receipt. If the household is eligible for expedited service, the State agency will mail the coupons no later than the close of business of the second working day following the date the application was received by the State agency.
(ii) If the signed application is submitted directly to the State agency in person by a rural resident or its authorized representative or by mail, the State agency shall process the application and issue coupons to households eligible for expedited service in accordance with the time standards contained in § 273.2(i)(3) of this chapter.
(iii) If an incomplete application is submitted directly to the State agency by mail, the State agency shall conduct the interview by the first working day following the date the application was received if the fee agent can contact the household or the household can be reached by telephone or radio-phone and does not object to this method of interviewing on grounds of privacy. Based on information obtained during the interview, the State agency shall complete the application and process the case. Because of the mailing time in rural areas, the State agency shall not return the completed application to the household for signature. The processing standard shall be calculated from the date the application was filed.
(5) SSI Joint Processing. SSA workers shall mail all jointly processed applications to the appropriate State agency office within 5 days of receipt of the application. A jointly processed application shall be considered filed for purposes of timely processing when it is received by an office of the State agency. The household, if determined eligible, shall receive benefits retroactive to the first day of the month in which the jointly processed application was received by the SSA worker.
(6) Interviews. The State agency shall interview applicant households in the most efficient manner possible, either by face-to-face contact, telephone, radiophone, or other means of correspondence including written correspondence. In instances in which an interview cannot be conducted, the State agency may postpone the interview until after the household is certified.
(e) Determining household eligibility and benefit level. If a household submits its application to a fee agent, it shall, if eligible, receive benefits retroactive to the date the application is received by the fee agent. If a household submits its application directly to a State agency office, it shall, if determined eligible, receive benefits retroactive to the date the application is received by the State agency.
(f) Vehicles. In areas of the State where there are no licensing requirements, snowmobiles and boats used by the household for basic transportation shall be evaluated in accordance with § 273.8(h) of this chapter even though they are unlicensed. Vehicles necessary for subsistence hunting and fishing shall not be counted as a household resource.
(g) Reporting changes. The State agency shall allow the household to choose to report changes either directly to the State agency or to the fee agent. If the household reports the change to the fee agent, the fee agent will mail the change report to the State agency office within two working days of the date of receipt. The household’s obligation to report the change will have been met if it submits the change to the fee agent within 10 days of the date the change becomes known to the household. However, for purposes of State agency action for increasing or decreasing benefits, the change will be considered to have been reported when it is received by a State agency office.
(h) Fair hearings, fraud hearings, and agency conferences. The State agency shall conduct fair hearings, administrative fraud hearings, and agency conferences with households that wish to contest denial of expedited service in the most efficient manner possible, either by face-to-face contact, telephone, radiophone, or other means of correspondence including written correspondence, in order to meet the respective time standards contained in §§ 273.15 and 273.16 of this chapter.
(i) Issuance services. With the approval of FNS, coupons may be mailed on a quarterly or semiannual basis to certain rural areas of Alaska when provisions are not available on a monthly basis. The decision to allow the distribution of coupons in this manner will be made on an annual basis. These areas shall be listed in the State’s Plan of Operation. The State agency shall advise households that live in rural areas where quarterly or semiannual allotments are authorized. If, as the result of the issuance of quarterly or semiannual allotments, food coupons are overissued or underissued, the State agency shall process claim determinations and restore lost benefits.
§ 272.8 State income and eligibility verification system.
(a) General. (1) State agencies shall maintain and use an income and eligibility verification system (IEVS), as specified in this section. By means of the IEVS, State agencies may request wage and benefit information from the agencies identified in this paragraph (a)(1) and use that information in verifying eligibility for and the amount of SNAP benefits due to eligible households. Such information may be requested and used with respect to all household members, including any considered excluded household members as specified in § 273.11(c) of this chapter whenever the SSNs of such excluded household members are available to the State agency. If not otherwise documented, State agencies must obtain written agreements from these information provider agencies affirming that they must not record any information about individual SNAP households and that staff in those agencies are subject to the disclosure restrictions of the information provider agencies and § 272.1(c). The information provider agencies, at a minimum, are:
(i) The State Wage Information Collection Agency (SWICA) which maintains wage information;
(ii) The Social Security Administration (SSA) which maintains information about net earnings from self-employment, wages, and payments of retirement income, which is available pursuant to section 6103(1)(7)(A) of the Internal Revenue Service (IRS) Code; and information which is available from SSA regarding Federal retirement, and survivors, disability, SSI and related benefits;
(iii) The IRS from which unearned income information is available pursuant to section 6103(1)(7)(B) of the IRS Code; and
(iv) The agency administering Unemployment Insurance Benefits (UIB) which maintains claim information and any information in addition to information about wages and UIB available from the agency which is useful for verifying eligibility and benefits, subject to the provisions and limitations of section 303(d) of the Social Security Act.
(2) State agencies may exchange with State agencies administering certain other programs in the IEVS information about SNAP households’ circumstances which may be of use in establishing or verifying eligibility or benefit amounts under SNAP and those programs. State agencies may exchange such information with these agencies in other States when they determine that the same objectives are likely to be met. These programs are:
(i) Temporary Assistance for Needy Families;
(ii) Medicaid;
(iii) Unemployment Compensation (UC);
(iv) Food Stamps; and
(v) Any State program administered under a plan approved under title I, X, or XIV (the adult categories), or title XVI of the Social Security Act.
(3) State agencies must provide information to those administering the Child Support Program (title IV-D of the Social Security Act) and titles II (Federal Old Age, Survivors, and Disability Insurance Benefits) and XVI (Supplemental Security Income for the Aged, Blind, and Disabled) of the Social Security Act.
(4) Prior to requesting or exchanging information with other agencies, State agencies must execute data exchange agreements with those agencies. The agreements must specify the information to be exchanged and the procedures which will be used in the exchange of information. These agreements are not part of the State agency’s Plan of Operation.
(5) State agencies must provide information to FNS and to the State agencies administering the National School Lunch Program for the purpose of direct certification of children for school meals as described in § 245.12(c)(2) of this chapter. In addition, State agencies must execute a data exchange and privacy agreement in accordance with paragraph (a)(4) of this section and § 272.1(c).
(b) Alternate data sources. A State agency may continue to use income information from an alternate source or sources to meet any requirement under paragraph (a) of this section.
(c) Actions on recipient households. (1) State agency action on information items about recipient households shall include:
(i) Review of the information and comparison of it to case record information;
(ii) For all new or previously unverified information received, contact with the households and/or collateral contacts to resolve discrepancies as specified in §§ 273.2(f)(4)(iv) and 273.2 (f)(9)(iii) and (f)(9)(iv); and
(iii) If discrepancies warrant reducing benefits or terminating eligibility, notices of adverse action.
(2) State agencies must initiate and pursue the actions on recipient households specified in paragraph (c)(1) of this section so that the actions are completed within 45 days of receipt of the information items. Actions may be completed later than 45 days from the receipt of information if:
(i) The only reason that the actions cannot be completed is the nonreceipt of verification requested from collateral contacts; and
(ii) The actions are completed as specified in § 273.12 of this chapter when verification from a collateral contact is received or in conjunction with the next case action when such verification is not received, whichever is earlier.
(3) When the actions specified in paragraph (c)(1) of this section substantiate an overissuance, State agencies must establish and take actions on claims as specified in § 273.18 of this chapter.
(4) State agencies must use appropriate procedures to monitor the timeliness requirements in paragraph (c)(2) of this section.
(5) Except for the claims actions specified in paragraph (c)(3) of this section, State agencies may exclude from the actions required in paragraph (c) of this section information items pertaining to household members who are participating in one of the other programs listed in paragraph (a)(2) of this section.
(d) IEVS information and quality control. The requirements of this section do not relieve the State agency of its responsibility for determining erroneous payments and/or its liability for such payments as specified in part 275 of this chapter (which pertains to quality control) and in guidelines on quality control established under that part.
(e) Documentation. The State agency must document, as required by § 273.2(f)(6) of this chapter, information obtained through the IEVS both when an adverse action is and is not instituted.
§ 272.9 Approval of homeless meal providers.
The State SNAP agency, or another appropriate State or local governmental agency identified by the State SNAP agency, shall approve establishments serving the homeless upon sufficient evidence, as determined by the agency, that the establishment does in fact serve meals to homeless persons. Where the State SNAP agency identifies another appropriate State or local agency for the purpose of approving establishments serving the homeless, the State SNAP agency will remain responsible for insuring that the provisions of the preceding sentence are effectively carried out. The State SNAP agency, or another appropriate State or local governmental agency identified by the State SNAP agency or private nonprofit organization under contract with the State SNAP agency shall execute contracts with restaurants wishing to sell meals in exchange for SNAP benefits to homeless SNAP households. Such contracts shall specify that such meals are to be sold at “concessional” (low or reduced) prices and shall also specify the approximate prices which will be charged, or the amount and type of price reduction.
§ 272.10 ADP/CIS Model Plan.
(a) General purpose and content—(1) Purpose. All State agencies are required to sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. Sufficient automation levels are those which result in effective programs or in cost effective reductions in errors and improvements in management efficiency, such as decreases in program administrative costs. Thus, for those State agencies which operate exceptionally efficient and effective programs, a lesser degree of automation may be considered sufficient than in other State agencies. In order to determine a sufficient level of automation in each State, each State agency shall develop an ADP/CIS plan. FNS may withhold State agency funds under § 276.4(a) for failure to submit an ADP/CIS plan in accordance with the deadlines for submission, for failure to make appropriate changes in their ADP/CIS plan within 60 days of their receipt of FNS comments, or for failure to implement the approved ADP/CIS plan in accordance with the dates specified therein, unless extensions of time or deviations from the plan or schedules have been approved by FNS.
(2) Content. In developing their ADP/CIS plans, State agencies shall use one of the following three formats:
(i) State agencies which are sufficiently automated in each area specified in § 272.10(b) may provide a single certification statement that they are sufficiently automated in each area.
(ii) State agencies which are sufficiently automated in some, but not all, areas specified in § 272.10(b) shall submit an ADP/CIS plan which consists of two parts. The first part would be the State agency’s certification as to the areas in which they are sufficiently automated. The second part would describe the areas of § 272.10(b) which the State agency has not automated or, in its opinion, has not automated sufficiently and include the State agency’s plans for sufficiently automating these areas. State agencies shall include a description of how they intend to automate each area and a timetable for each planned activity, including a consideration of transfers as discussed in paragraph (a)(3) of this section. State agencies which are not planning to automate each of the areas specified § 272.10(b) or which are not already automated in these areas shall provide justification. Any such justification shall include a cost-effectiveness analysis.
(iii) State agencies which are not sufficiently automated in any of the areas specified in § 272.10(b) shall submit an ADP/CIS plan which describes their plans for sufficiently automating each area, including a timetable for each planned activity, and including a consideration of transfers as discussed in paragraph (a)(3) of this section. State agencies which are not planning to automate each of the areas specified in § 272.10(b) or which are not, in their opinion, sufficiently automated in these areas shall provide justification. Any such justification shall include a cost-effectiveness analysis.
(3) Transfers. (i) State agencies planning additional automation shall consult with other State agencies and with the appropriate Regional Office to determine whether a transfer or modification of an existing system from another jurisdiction would be more efficient and cost effective than the development of a new system. In assessing the practicability of a transfer, State agencies should consult with other State agencies that have similar characteristics such as whether they are urban or rural, whether they are county or State administered, the geographic size of the States and the size of the caseload.
(ii) State agencies that plan to automate operations using any method other than transfers will need to be able to justify why they are not using transfers. The justification will need to include the results of the consultations with other State agencies, the relative costs of transfer and the system the State agency plans to develop, and the reasons for not using a transfer. Common reasons for not using transfers include: The State agency is required to use a central data processing facility and the (otherwise) transferable system is incompatible with it; the State agency’s data base management software is incompatible with the transferable system; the State agency’s ADP experts are not familiar with the software/hardware used by the transferable system and acquiring new expertise would be expensive; the transferable system is interactive or uses “generic” caseworkers, the receiving State agency does not and it would be expensive to modify the existing system and/or procedures; and transfer would provoke disputes with the State agency’s personnel union. State agencies that cite any of these reasons shall not automatically receive approval to develop non-transferred systems. State agencies shall show what efforts were considered to overcome the problems and that those efforts are cost ineffective. This justification will need to be included as part of the Advance Planning Document that the State agency must submit for approval of its proposed system.
(iii) FNS will assist State agencies that request assistance in determining what other States have systems that should be considered as possible transfers.
(b) Model Plan. In order to meet the requirements of the Act and ensure the efficient and effective administration of the program, a SNAP system, at a minimum, shall be automated in each of the following program areas in paragraphs (b)(1), Certification, and (b)(2), Issuance Reconciliation and Reporting of this section. The SNAP system must further meet all the requirements in paragraph (b)(3), General, of this section.
(1) Certification. (i) Determine eligibility and calculate benefits or validate the eligibility worker’s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members’ names, addresses, dates of birth, social security numbers, individual household members’ earned and unearned income by source, deductions, resources and household size). Redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances;
(ii) Identify other elements that affect the eligibility of household members such as alien status, presence of an elderly person in the household, status of periodic work registration, disqualification actions, categorical eligibility, and employment and training status;
(iii) Provide for an automatic cutoff of participation for households which have not been recertified at the end of their certification period;
(iv) Notify the certification unit (or generate notices to households) of cases requiring Notices of:
(A) Case Disposition,
(B) Adverse Action and Mass Change, and
(C) Expiration;
(v) Prior to certification, crosscheck for duplicate cases for all household members by means of a comparison with SNAP records within the relevant jurisdiction;
(vi) Meet the requirements of the IEVS system of § 272.8. Generate information, as appropriate, to other programs.
(vii) Provide the capability to effect mass changes: Those initiated at the State level, as well as those resulting from changes at the Federal level (eligibility standards, allotments, deductions, utility standards, SSI, TANF, SAA benefits);
(viii) Identify cases where action is pending or follow-up must be pursued, for example, households and verification pending or households containing disqualified individuals or a striker;
(ix) Calculate or validate benefits based on restored benefits or claims collection, and maintain a record of the changes made;
(x) Store information concerning characteristics of all household members;
(xi) Provide for appropriate Social Security enumeration for all required household members; and
(xii) Provide for monthly reporting and retrospective budgeting as required.
(2) Issuance, reconciliation and reporting. (i) Generate authorizations for benefits in issuance systems employing ATP’s, direct mail, or online issuance and store all Household Issuance Record (HIR) information including: name and address of household, household size, period of certification, amount of allotment, case type (PA or NA), name and address of authorized representative, and racial/ethnic data;
(ii) Prevent a duplicate HIR from being established for presently participating or disqualified households;
(iii) Allow for authorized under- or over-issuance due to claims collection or restored benefits;
(iv) Provide for reconciliation of all transacted authorization documents to the HIR masterfile. This process must incorporate any manually-issued authorization documents, account for any replacement or supplemental authorization documents issued to a household, and identify cases of unauthorized and duplicate participation;
(v) Provide a mechanism allowing for a household’s redemption of more than one valid authorization document in a given month;
(vi) Generate data necessary to meet Federal issuance and reconciliation reporting requirements, and provide for the eventual capability of directly transmitting data to FNS including:
(A) Issuance:
(1) FNS-259—Summary of mail issuance and replacement;
(2) FNS-250—Reconciliation of redeemed ATPs with reported authorized coupon issuance.
(B) Reconciliation: FNS-46—ATP Reconciliation Report.
(vii) Generate data necessary to meet other reporting requirements and provide for the eventual capability of directly transmitting data to FNS, including:
(A) FNS-101—Program participation by race;
(B) FNS-209—Status of claims against households; and
(C) FNS-388—Coupon issuance and participation estimates.
(viii) Allow for sample selection for quality control reviews of casefiles, and for management evaluation reviews;
(ix) Provide for program-wide reduction or suspension of benefits and restoration of benefits if funds later become available and store information concerning the benefit amounts actually issued;
(x) Provide for expedited issuance of benefits within prescribed timeframes;
(xi) Produce and store a participation history covering three (3) year(s) for each household receiving benefits.
(xii) Provide for cutoff of benefits for households which have not been recertified timely; and
(xiii) Provide for the tracking, aging, and collection of recipient claims and preparation of the FNS-209, Status of Claims Against Households report.
(3) General. The following functions shall be part of an overall State agency system but need not necessarily be automated:
(i) All activities necessary to meet the various timeliness and data quality requirements established by FNS;
(ii) All activities necessary to coordinate with other appropriate Federal and State programs, such as TANF or SSI;
(iii) All activities necessary to maintain the appropriate level of confidentiality of information obtained from applicant and recipient households;
(iv) All activities necessary to maintain the security of automated systems to operate SNAP;
(v) Implement regulatory and other changes including a testing phase to meet implementation deadlines, generally within 90 days;
(vi) Generate whatever data is necessary to provide management information for the State agency’s own use, such as caseload, participation and actions data;
(vii) Provide support as necessary for the State agency’s management of Federal funds relative to SNAP administration, generate information necessary to meet Federal financial reporting requirements;
(viii) Routine purging of case files and file maintenance, and
(ix) Provide for the eventual direct transmission of data necessary to meet Federal financial reporting requirements.
§ 272.11 Systematic Alien Verification for Entitlements (SAVE) Program.
(a) General. A State agency shall use an immigration status verification system established under section 1137 of the Social Security Act (42 U.S.C. 1320b-7) to verify the eligible status of all aliens applying for SNAP benefits. USCIS maintains the Systematic Alien Verification for Entitlements (SAVE) Program to conduct such verification.
(b) Agreements. (1) Prior to implementing the SAVE Program, the State agency shall execute an agreement with USCIS. The agreement shall specify the information to be exchanged and the procedures which will be used in the exchange of information.
(2) The agreement shall cover at least the following areas:
(i) Identification of positions of all agency officials with authority to request immigration status information;
(ii) Identification and location of all SAVE access points covered by the agreement;
(iii) For automated SAVE verification through access to the Alien Status Verification Index (ASVI), a description of the access method and procedures;
(iv) For secondary verification as described in paragraph (d) of this section, the locations of USCIS District Offices to which verification requests will be directed;
(v) The safeguards limiting release or redisclosure as required by State or Federal law or regulation as discussed in § 272.1(c) and as may be required by other guidelines published by the Secretary; and
(vi) Reimbursement or billing agreements for ongoing SAVE operational costs, as well as any developmental costs associated with establishing access to the ASVI database.
(c) Use of data. The State agency shall use information obtained through the SAVE Program only for the purposes of:
(1) Verifying the validity of documentation of alien status presented by an applicant;
(2) Verifying an individual’s eligibility for benefits;
(3) Investigating whether participating households received benefits to which they were not entitled, if an individual was previously certified to receive benefits on the basis of eligible alien status; and
(4) Assisting in or conducting administrative disqualification hearings, or criminal or civil prosecutions based on receipt of SNAP benefits to which participating households were not entitled.
(d) Method of verification. The State agency may verify the documentation presented by an alien applicant by completing USCIS Form G-845 and submitting photocopies of such documentation to the USCIS for verification as described in § 273.2(f)(10) of this chapter. In States that participate in SAVE, the State agency must use this secondary verification procedure whenever the applicant-individual’s documented alien status has not been verified through automated access to the ASVI or significant discrepancies exist between the data on the ASVI and the information provided by the alien applicant.
(e) Plan of operation. The requirements for participation in the SAVE Program shall be included in an attachment to the State agency’s Plan of Operation as required in § 272.2(d). This document shall include a description of procedures used, method of access and the agreement specified in paragraph (b) of this section, including steps taken to meet requirements of limiting disclosure and safeguarding of information obtained from SNAP households as specified in § 272.1.
§ 272.12 Computer matching requirements.
(a) General purpose. The Computer Matching and Privacy Protection Act (CMA) of 1988, as amended, addresses the use of information from computer matching programs that involve a Federal System of Records. Each State agency participating in a computer matching program shall adhere to the provisions of the CMA if it uses an FNS system of records for the following purposes:
(1) Establishing or verifying initial or continuing eligibility for Federal Benefit Programs;
(2) Verifying compliance with either statutory or regulatory requirements of the Federal Benefit Programs; or
(3) Recouping payments or delinquent debts under such Federal Benefit Programs.
(b) Matching agreements. State agencies must enter into written agreements with USDA/FNS, consistent with 5 U.S.C. 552a(o) of the CMA, in order to participate in a matching program involving a USDA/FNS Federal system of records.
(c) Use of computer matching information. (1) A State agency shall not take any adverse action to terminate, deny, suspend, or reduce benefits to an applicant or recipient based on information produced by a Federal computer matching program that is subject to the requirements of the CMA, unless:
(i) The information has been independently verified by the State agency (in accordance with the independent verification requirements set out in the State agency’s written agreement as required by paragraph (b) of this section) and a Notice of Adverse Action or Notice of Denial has been sent to the household, in accordance with § 273.2(f); or
(ii) The Federal agency’s Data Integrity Board has waived the two-step independent verification and notice requirement and notice of adverse action has been sent to the household, in accordance with § 273.2(f) of this chapter.
(2) A State agency which receives a request for verification from another State agency, or from FNS pursuant to the provisions of § 273.16(i) of this chapter shall, within 20 working days of receipt, respond to the request by providing necessary verification (including copies of appropriate documentation and any statement that an individual has asked to be included in their file).
§ 272.13 Prisoner verification system (PVS).
(a) General. Each State agency shall establish a system to monitor and prevent individuals who are being held in any Federal, State, and/or local detention or correctional institutions for more than 30 days from being included in a SNAP household.
(b) Use of match data. State prisoner verification systems shall provide for:
(1) The comparison of identifying information about each household member, excluding minors, as that term is defined by each State, and one-person households in States where a face-to-face interview is conducted, against identifying information about inmates of institutions at Federal, State and local levels;
(2) The reporting of instances where there is a match;
(3) The independent verification of match hits to determine their accuracy;
(4) Notice to the household of match results. The State must use the procedures laid forth in § 273.12(c)(3)(iii) of this chapter;
(5) An opportunity for the household to respond to the match prior to an adverse action to deny, reduce, or terminate benefits; and
(6) The establishment and collections of claims as appropriate.
(c) Match frequency. State agencies shall make a comparison of match data for adult household members at the time of application and at recertification. States that opt to obtain and use prisoner information collected under Section 1611(e)(1)(I)(i)(I) of the Social Security Act (42 U.S.C. 1382(e)(1)(I)(i)(I)) shall be considered in compliance with this section. States shall enter into a computer matching agreement with the SSA under authority contained in 42 U.S.C. 405(r)(3).
§ 272.14 Deceased matching system.
(a) General. Each State agency shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased.
(b) Data source. States shall use the SSA’s Death Master File, obtained through the State Verification and Exchange System (SVES) and enter into a computer matching agreement with SSA pursuant to authority to share data contained in 42 U.S.C. 405(r)(3).
(c) Use of match data. States shall provide a system for:
(1) Comparing identifiable information about each household member against information from databases on deceased individuals. States shall make the comparison of matched data at the time of application and no less frequently than once a year.
(2) The reporting of instances where there is a match;
(3) The independent verification of match hits to determine their accuracy;
(4) Notice to the household of match results. The State must use the procedures laid forth in § 273.12(c)(3)(iii) of this chapter;
(5) An opportunity for the household to respond to the match prior to an adverse action to deny, reduce, or terminate benefits; and
(6) The establishment and collection of claims as appropriate.
§ 272.15 Major changes in program design.
(a) States’ reporting of major changes. (1) State agencies shall notify FNS when they make major changes in their operation of SNAP. State agencies shall notify FNS when the plans for the change are approved by State leadership, but no less than 120 days prior to beginning implementation of the change or entering into contractual obligations to implement any proposed major changes. If it is not possible for a State to provide notification 120 days in advance, the State shall provide notification as soon as it is aware of the major change and explain why it could not meet the 120-day requirement. No approval from FNS is necessary for a State to proceed with implementation of the major change.
(2) Major changes shall include the following:
(i) Closure of any local office that performs major functions for 750 or more SNAP households or 5 percent of the State’s total SNAP monthly caseload, whichever is less, and there is not another office available to serve the affected households within 35 miles. An office performing major functions is an office where households can file an application for SNAP in person and receive assistance from merit system personnel staff.
(ii) Substantial increased reliance on automated systems for the performance of responsibilities previously performed by State merit system personnel (as described in section 11(e)(6)(B) of the Act) or changes in the way that applicants and participants interact with the State’s SNAP agency. This includes the replacement of the State’s automated systems used in the certification process, adding functionality to the existing automated systems used in the certification process, or changes in the way applicants and participants interact with SNAP. For example, adding an overlay on an existing legacy automated system used by eligibility workers, adding online portals to an existing automated system for use by SNAP applicants, participants or community partners, establishment of an online application, use of telephonic technology to accept applications, relying upon an interactive voice response system to provide case status information to participants or implementation of finger imaging shall be considered major changes. Under this criterion, if the State documents that the change is expected to impact less than five percent of the State’s SNAP applicants or participants, it will not be considered a major change. Reporting a major change as required in this section does not relieve States of meeting the requirements for new system approvals in § 277.18 of this chapter.
(iii) Changes in operations that potentially increase the difficulty of households reporting required information. This could include implementation of a call center or internet web portal for change reporting, a major modification to forms that households use to report changes or the discontinuation of an existing avenue for reporting changes (e.g., households can no longer contact the local office because all changes must be reported to a unit that handles change reports). Selecting a different change reporting policy option as allowed in § 273.12 of this chapter, or the implementation of a policy waiver related to change reporting would not be a major change.
(iv) Any reduction or change of the functions or responsibilities currently assigned to SNAP merit system personnel.
(v) A decrease of more than 5 percent in the total number of merit system personnel involved in the SNAP certification process in the State from one year to the next. In addition, a decrease of more than eight percent in the total number of merit system personnel involved in the SNAP certification process in the State over a two year period would be a major change. These decreases would include those resulting from State budget cuts or hiring freezes, but not include loss of personnel through resignation, retirement or release when the State is seeking to replace the personnel within 6 months. Evidence of the intent to replace personnel shall include advertising to fill positions and having sufficient funding in the personnel budget for the new hires.
(vi) Other major changes identified by FNS.
(3) When a State initially reports a major change to FNS as required in paragraph (a)(1) of this section, an analysis of the expected impact of the major change shall accompany the report. The initial report to FNS that the State is making one of the major changes identified in paragraph (a)(2) of this section, shall include a description of the change and an analysis of its anticipated impacts on program performance.
(i) The description of the change shall include the following:
(A) Identification of the major change the State is implementing;
(B) An explanation of what the change is intended to accomplish;
(C) The schedule for implementation;
(D) How the change will be tested and whether it will be piloted;
(E) Whether the change is statewide or identification of the jurisdictions it will encompass;
(F) How the major change is expected to affect applicants and/or participants and how they will be informed;
(G) How the change will affect caseworkers and, as applicable, how they will be trained;
(H) The projected administrative cost of the major change in the year it is implemented and the subsequent year;
(I) How the impact of the major change will be monitored;
(J) How the major change will affect operation of the State automated system;
(K) The State’s backup plans if the major change creates significant problems in one or more of the program measures in paragraph (a)(3)(ii) of this section;
(L) A description of any consultation with stakeholders/advocacy groups or public comment obtained regarding the planned changes; and
(M) Procedures the State will put in place to minimize the burdens on people with disabilities and other populations (as identified in paragraph (a)(3)(ii)(E) of this section) relative to the change.
(ii) The analysis portion of the State’s initial report shall include the projected impact of the major change on:
(A) The State’s payment error rate;
(B) Program access, including the impact on applicants filing initial applications and recertification applications;
(C) The State’s negative error rate;
(D) Application processing timeliness including both the households entitled to 7-day expedited service and those subject to the 30-day processing standards;
(E) Whether the major change will increase the difficulty elderly households, households living in rural areas, households containing a disabled member, homeless households, non-English speaking households, or households living on a reservation will have obtaining SNAP information, filing an initial application, providing verification, being interviewed, reporting changes or reapplying for benefits;
(F) Customer service including the time it takes for a household to contact the State, be interviewed, report changes and any other parameter defined by the State agency; and
(G) Timeliness of recertification actions.
(b) FNS and State action on reports. (1) FNS will evaluate the initial report provided by a State to determine if the change is, in fact, a major change as described in paragraph (a)(2) of this section and notify the State of its determination. States implementing a major change shall report the following monthly State-level information to FNS on a quarterly basis beginning with the quarter prior to implementation of the major change:
(i) The number of initial applications received;
(ii) Of the number of initial applications received in paragraph (b)(1)(i) of this section, the number subject to expedited service;
(iii) Of the number of initial applications received in paragraph (b)(1)(i) of this section, the number broken out by method of application (i.e., in-person, online, telephone, mail, fax);
(iv) The number of initial applications that are approved timely;
(v) Of the number of initial applications approved timely in paragraph (b)(1)(iv) of this section, the number subject to expedited service processed within the 7-day processing requirement;
(vi) The number of initial applications that are approved untimely;
(vii) Of the number of initial applications approved untimely in paragraph (b)(1)(vi) of this section, the number subject to expedited service processed outside the 7-day processing requirement;
(viii) The number of initial applications that are denied;
(ix) Of the number of initial applications that were denied in paragraph (b)(1)(viii) of this section, the number broken out by those denied due to ineligibility and those denied because the State agency was unable to determine eligibility;
(x) The total number of households due for recertification;
(xi) The number of recertification applications received;
(xii) Of the number of recertification applications received in paragraph (b)(1)(xi) of this section, the number broken out by method of application (i.e., in-person, online, telephone, mail, fax);
(xiii) The number of households that were recertified without a delay or break in benefits;
(xiv) The number of households that the State recertifies with a delay or break in benefits of less than one month;
(xv) Of the total number of households due for recertification in paragraph (b)(1)(x) of this section, the number of households that fail to reapply for recertification by the required deadline;
(xvi) The number of recertification applications that are denied; and
(xvii) Of the number of recertification applications that were denied in paragraph (b)(1)(xvi) of this section, the number broken out by those denied due to ineligibility and those denied because the State agency was unable to determine eligibility.
(2) The information required by paragraph (b)(1)(1) of this section shall be reported separately for households with elderly members and households with members that have a disability.
(3) At a minimum, the information required by paragraphs (b)(1)(i), (iv), (vi), (viii), (x), (xi), (xiii), (xiv), (xv), and (xvi) of this section shall be disaggregated to provide sub-state information. FNS will require the State to disaggregate all the information in paragraph (b)(2) if FNS determines that such data are necessary to evaluate the impact of the change. FNS will consult with States on a case-by-case basis to determine if this information shall be reported by: Local offices, call centers, county, project areas, or by other administrative structures within the State. FNS’ determination will be based upon the type of major change and the State’s SNAP organization.
(4) In addition the information required in paragraphs (b)(1), (2) and (3) of this section, FNS may require additional information to be included in a State’s quarterly report. FNS reserves the right to require the information it needs to determine the impact of a major change on integrity and access in SNAP. FNS will work with States to determine what additional information is practicable and require only the data that is necessary and not otherwise available from ongoing reporting mechanisms. While the data elements outlined in paragraph (b)(2) of this section will generally be required to be reported on a statewide basis and at a sub-state level, major changes that are limited to localized areas, such as a county or project area, may only require localized reporting. Depending upon the nature of the major change, States will be required to report more specific or timely information concerning the impact of the major change within the following areas:
(i) Payment accuracy. FNS will use Quality Control (QC) data when possible, but may require data from case reviews focused on households with specific characteristics, to obtain greater local reliability, or to provide more timely data.
(ii) Negative error rates. FNS will use QC data when possible, but may require data from case reviews focused on households with specific characteristics, to obtain greater local reliability or to provide more timely data on the causes of incorrect denials.
(iii) Impact on households with specific characteristics. In addition to the information required by paragraph (b)(2) of this section, a major change that could disproportionately impact the households identified at paragraph (a)(3)(ii)(E) of this section may require additional information on the impact of the change on the participation of these households. The nature of the change and its potential impact would dictate how this information would need to be reported.
(iv) Impact of certain major changes on customer service. Some major changes may require specific information that is not typically available from a States automated SNAP system. For example, if a State implements a major change that allowed (or required) households to report changes in their individual circumstances through a change center or allows applicants to apply or reapply for SNAP through the use of call center, the following data may be required:
(A) The total number of calls made to the center;
(B) The average time a caller has to wait to talk to a SNAP worker (includes hold time for transfers);
(C) Based upon the call centers standards and negotiation with FNS, the percentage of calls with excessive wait times;
(D) The percentage of calls abandoned by callers prior to and after being answered by the call center;
(E) The total number of calls dropped by the call center system and the number of callers that received a busy signal; and
(F) Customer satisfaction (based upon survey results).
(5) States shall submit reports containing monthly data on a quarterly basis. As practicable, and based upon consultation with the State, FNS may require any additional information under paragraph (b)(4) of this section regarding the State’s operation to be reported for the quarter just prior to implementation of the major change.
(6) States shall submit reports for one year after the major change is fully in place. FNS may extend this timeframe as it deems necessary.
(7) If FNS becomes aware that a State appeared to be implementing a major change that had not been formally reported, FNS would work with the State to determine if it is a major change, and if so proceed as required by this section.
(8) If the data a State submits regarding its major change or other information FNS obtains indicates an adverse impact on SNAP access or integrity, FNS would work with the State to correct the cause of the problem and provide relevant technical assistance, and will require the State to provide additional information as it deems appropriate. Depending upon the severity of the problem, FNS may also require a formal corrective action plan as identified in § 275.16 and § 275.17 of this chapter. States agencies that fail to comply with reporting requirements may be subject to the suspension or disallowance of Federal Financial Participation administrative funds per § 276.4 of this chapter.
§ 272.16 National Directory of New Hires.
(a) General. Each State agency shall establish a system to verify applicant employment data for the determination of SNAP eligibility and correct benefit amount.
(b) Data source. States shall use the U.S. Department of Health and Human Service (HHS) National Directory of New Hires (NDNH) and enter into a computer matching agreement with HHS pursuant to the authority in 42 U.S.C. 653(j)(10).
(c) Use of match data. In accordance with the procedural requirements and privacy protections required for computer data matching at 5 U.S.C. 552a(p), States shall provide a system for:
(1) Comparing identifiable information about each adult household member against data from the NDNH. States must, at minimum, match household members against new hire data available in the database. States shall make the comparison of matched data at the time of application and recertification.
(2) The reporting of instances where there is a match;
(3) The independent verification of match hits to determine their accuracy;
(4) Notice to the household of match results;
(5) An opportunity for the household to respond to the match prior to an adverse
action to deny, reduce, or terminate benefits; and
(6) The establishment and collection of claims as appropriate.
§ 272.17 Substantial lottery or gambling winnings.
(a) General. Each State agency, to the maximum extent practicable, shall establish cooperative agreements with gaming entities within their State to identify members of certified households who have won substantial lottery or gambling winnings as defined in § 273.11(r).
(b) Cooperative Agreements. State agencies, to the maximum extent practicable, shall enter into cooperative agreements with the gaming entities responsible for the regulation or sponsorship of gaming in the State. Cooperative agreements should specify the type of information to be shared by the gaming entity, the procedures used to share information, the frequency of sharing information, and the job titles of individuals who will have access to the data. Cooperative agreements shall also include safeguards to prevent release or disclosure of personally identifiable information of SNAP recipients who are the subject of data matches in accordance with 272.1(c).
(c) Use of information on winnings. States shall provide a system for:
(1) Comparing information obtained from gaming entities about individuals with substantial winnings with databases of currently certified households within the State;
(2) The reporting of instances where there is a match;
(3) The verification of matches to determine their accuracy in accordance with § 273.2(f);
(4) If during a household’s certification period, as defined in § 273.11(r), prior to any action to terminate the household’s benefits, the State agency shall provide the household notice in accordance with the provisions on notices of adverse action appearing in § 273.13. If the information received is unclear, the State agency shall follow procedures at § 273.12(c)(3). For households that are found to have received substantial winnings at the time of the household’s recertification, the State agency shall notify such households, in accordance with the provisions on notices of denial appearing in § 273.10(g)(2); and
(5) The establishment and collection of claims as appropriate.
(d) Frequency of data matches. The State agency shall perform data matches as frequently as is feasibly possible to identify SNAP recipients with substantial winnings, as defined in § 273.11(r); however, at a minimum the State agency shall conduct data matches when a household files a periodic report and at the time of the household’s recertification.
(e) State Plan of Operation. The State agency shall include as an attachment to the annual State Plan of Operation, as required in accordance with § 272.2, the names of gaming entities with which the State agency has entered into cooperative agreements, the frequency of data matches with such entities.
§ 272.18 National Accuracy Clearinghouse.
(a) General. (1) FNS shall establish an interstate data system, known as the National Accuracy Clearinghouse (NAC) to prevent individuals from receiving SNAP benefits in more than one State in a given month and shall institute processes and procedures for interacting with the system to prevent duplicate participation and assist households with disenrollment.
(2) Each State agency that administers SNAP shall participate in the NAC data matching system. State agencies shall take action on matches from the NAC to ensure participants are only receiving benefits in the State in which they reside and are otherwise eligible to receive them. State agencies are encouraged to integrate and automate NAC processes into SNAP eligibility systems and existing workflows to the fullest extent possible.
(3) Each participating State agency shall enter into a written computer matching agreement with FNS consistent with the requirements for matching programs in the Privacy Act of 1974, as amended by the Computer Matching and Privacy Protection Act of 1988 and the Computer Matching and Privacy Protection Amendments of 1990 (5 U.S.C. 552a(o)), prior to participating in the NAC.
(b) States’ reporting requirements. (1) State agencies shall provide information for each active SNAP participant to the NAC according to procedures and formats established by FNS. For the purposes of the NAC, an active SNAP participant is defined as an individual who is approved to receive benefits for the benefit month in which the State agency is uploading the data. State agencies shall establish procedures to ensure the information provided is accurate and only includes active participants.
(2) Information provided to the NAC will be used for matching by other State agencies also matching with the NAC. Each State agency shall provide, once per working day in accordance with FNS procedures, the NAC data matching elements and other information as noted in paragraphs (b)(3) and (4) of this section for each active SNAP household member.
(3) For each individual, State agencies must report the following identifying information, referred to as NAC data matching elements, to the NAC: name, Social Security number, and date of birth. State agencies must transmit the NAC data matching elements to the system per the process specified by FNS. The NAC data matching elements are used by the NAC to determine the existence of positive matches.
(4) State agencies shall also report the following information: participant ID and, when applicable, a vulnerable individual flag. All information shall be reported in accordance with procedures provided by FNS. State agencies must comply with 7 CFR 273.6 in instances where a Social Security number is not available.
(i) A vulnerable individual flag is used to identify when precautions must be taken to protect the individual’s information in the event of a match. A vulnerable individual can self-identify during the application or recertification process. State agencies also have the discretion to determine whether an individual meets the vulnerable individual definition in paragraph (a)(9) of this section if the individual does not self-identify.
(ii) A participant ID is the State agency’s unique identifier for a participant or applicant.
(5) State agencies shall maintain the security, privacy, and accuracy of information submitted to the NAC, including ensuring that information provided to the NAC follows the standards and procedures provided by FNS and only includes active SNAP participants.
(c) Use of match data. (1) NAC queries are conducted by the State agency by submitting the NAC data matching elements described in paragraph (b)(3) of this section for an individual, per the process specified by FNS. The system will compare the query against the daily upload of active SNAP participants provided to the NAC by the State agencies to determine if an individual is currently receiving SNAP benefits in another State. The NAC will indicate a positive match when the NAC data matching elements submitted for comparison are the same as those in one or more records in the NAC.
(2) Prior to conducting a NAC query at application, recertification, or the addition of a household member, the State agency shall follow verification procedures described in 7 CFR 273.2(f)(1)(v) for Social Security numbers, (f)(1)(vi) for residency, and (f)(1)(vii) for identity. After following these verification procedures, State agencies shall conduct a NAC query on the individual applying, recertifying, or being added to a household.
(3) When a State agency receives a positive match from a NAC query at application, recertification, or when adding a household member:
(i) The State agency shall have 10 days from the date the match is received to initiate action to resolve the match as described in paragraph (c)(3)(ii) of this section and notify the other State agency of the initiated action.
(ii) The State agency must resolve the match to determine the appropriate actions to take on the case. To resolve a match, State agencies may use information known to the State agency, must verify any questionable information in accordance with 7 CFR 273.2(f)(2), and must notify the individual of the match. States may not take any action to deny, terminate, suspend, or reduce SNAP benefits based on information received from the NAC until the information has been verified by the State agency and the individual has been provided notice of the match and an opportunity to respond to the notice, in accordance with § 272.12(c)(1).
(iii) Any communication or notice resulting from a NAC match must not include the location of the individual(s) identified in the match to protect vulnerable individuals.
(A) If the State agency needs more information to resolve the match or if the information it has could lead to a denial of benefits or other adverse action on the case, the State agency shall provide a written notice of match results that clearly explains what information is needed from the household and the consequences of failing to respond within the timeline provided in the notice. The notice must comply with this paragraph (c)(3)(iii) and § 272.4(b) bilingual requirements and must afford at least 10 days from the date the notice is mailed for a response.
(B) If the State agency is able to resolve the match and there is no potential for adverse action, a written notice of match results is not required. However, the State agency must provide a verbal notification of a match, which must be documented in the case file.
(iv) After the State agency has determined the appropriate disposition of the case, it shall promptly share the resolution information with the other State agency.
(v) The State agency must follow timeliness standards set forth in 7 CFR 273.2(g) and 273.14(d) for normal processing, and 7 CFR 273.2(i) for expedited service, as applicable. A lack of timely action or communication required by paragraph (c)(3)(i) of this section between the State agencies must not delay the determination of benefits for an individual.
(4) The NAC shall automatically conduct bulk matches on a monthly basis (“monthly bulk matches”) of the NAC data matching elements provided by all participating State agencies from the daily upload of active SNAP participants to discover existing duplicate participation and shall provide notifications to State agencies when matches are found for participants in their State.
(5) If a State agency receives information related to a NAC data match during the certification period for an individual currently participating in SNAP in the State, it must pursue clarification and verification by following the unclear information procedures provided in 7 CFR 273.12(c)(3)(iv) to provide notice and an opportunity to contest the information received before taking any adverse action. Information related to a NAC data match that may be received during the certification period includes:
(i) Notification of data matches directly from the NAC indicating that an active SNAP participant is receiving benefits in another State; and
(ii) Communication from another State agency based on a NAC data match indicating that an active SNAP participant is part of an applicant household or was added to an active household in another State.
(6) State agencies shall report and document instances in the household’s case file where there is a match and the actions taken to resolve it per existing State operations.
(7) State agencies shall provide for the establishment and collection of claims as appropriate. The State agency that fails to meet the requirements in paragraph (c)(3) of this section or requirements at 7 CFR 273.12(c)(3)(iv) will be considered responsible for any duplicate participation that occurs. That State agency shall be responsible for the establishment and collection of the claim in accordance with regulations at 7 CFR 273.18.
(8) Information obtained from the NAC is subject to the disclosure provisions in § 272.1(c)(4). State agencies shall not use information obtained from the NAC for any purpose other than to prevent duplicate participation.
(9) State agencies shall establish a process to prevent the disclosure of any location information received from the NAC about any SNAP applicant or participant who is considered a vulnerable individual. A vulnerable individual, for the purpose of the NAC, includes but is not limited to, those who would be endangered by the dissemination of their information, regardless of their age or gender, such as a resident of a shelter for battered women and children as described in 7 CFR 271.2, a resident of a domestic violence shelter, or a person who self-identifies as fleeing domestic violence at any point during application, recertification, certification, or addition of a new household member. State agencies shall take steps to ensure that any information resulting from a NAC match, including identity and location, is protected during verification or resolution when a vulnerable individual is indicated in a positive match. The change in the household composition resulting from the move of the vulnerable individual must be communicated to the former household via a notice of adverse action per 7 CFR 273.11(g).
PART 273—CERTIFICATION OF ELIGIBLE HOUSEHOLDS
2. Nomenclature changes to part 273 appear at 84 FR 15093, Apr. 15, 2019.
Subpart A—General Rules
§ 273.1 Household concept.
(a) General household definition. A household is composed of one of the following individuals or groups of individuals, unless otherwise specified in paragraph (b) of this section:
(1) An individual living alone;
(2) An individual living with others, but customarily purchasing food and preparing meals for home consumption separate and apart from others; or
(3) A group of individuals who live together and customarily purchase food and prepare meals together for home consumption.
(b) Special household requirements—(1) Required household combinations. The following individuals who live with others must be considered as customarily purchasing food and preparing meals with the others, even if they do not do so, and thus must be included in the same household, unless otherwise specified.
(i) Spouses;
(ii) A person under 22 years of age who is living with his or her natural or adoptive parent(s) or step-parent(s); and
(iii) A child (other than a foster child) under 18 years of age who lives with and is under the parental control of a household member other than his or her parent. A child must be considered to be under parental control for purposes of this provision if he or she is financially or otherwise dependent on a member of the household, unless State law defines such a person as an adult.
(2) Elderly and disabled persons. Notwithstanding the provisions of paragraph (a) of this section, an otherwise eligible member of a household who is 60 years of age or older and is unable to purchase and prepare meals because he or she suffers from a disability considered permanent under the Social Security Act or a non disease-related, severe, permanent disability may be considered, together with his or her spouse (if living there), a separate household from the others with whom the individual lives. Separate household status under this provision must not be granted when the income of the others with whom the elderly disabled individual resides (excluding the income of the elderly and disabled individual and his or her spouse) exceeds 165 percent of the poverty line.
(3) Boarders. (i) Residents of a commercial boarding house, regardless of the number of residents, are not eligible to participate in the Program. A commercial boarding house is an establishment licensed to offer meals and lodging for compensation. It does not include any of the entities listed in paragraph (b)(7)(vii) of this section. In project areas without licensing requirements, a commercial boarding house is a commercial establishment that offers meals and lodging for compensation with the intent of making a profit.
(ii) All other individuals or groups of individuals paying a reasonable amount for meals or meals and lodging must be considered boarders and are not eligible to participate in the Program independently of the household providing the board. Such individuals or groups of individuals may participate, along with a spouse or children living with them, as members of the household providing the boarder services, only at the request of the household providing the boarder services. An individual paying less than a reasonable amount for board must not be considered a boarder but must be considered, along with a spouse or children living with him or her, as a member of the household providing the board.
(A) For individuals whose board arrangement is for more than two meals per day, “reasonable compensation” must be an amount that equals or exceeds the maximum SNAP allotment for the appropriate size of the boarder household.
(B) For individuals whose board arrangement is for two meals or less per day, “reasonable compensation” must be an amount that equals or exceeds two-thirds of the maximum SNAP allotment for the appropriate size of the boarder household.
(iii) Boarders must not be considered to be residents of an institution as outlined in paragraph (b)(7)(vii) of this section.
(4) Foster care individuals. Individuals placed in the home of relatives or other individuals or families by a Federal, State, or local governmental foster care program must be considered to be boarders. They cannot participate in the Program independently of the household providing the foster care services. Such foster care individuals may participate, along with a spouse or children living with them, as members of the household providing the foster care services, only at the request of the household providing the foster care.
(5) Roomers. Individuals to whom a household furnishes lodging for compensation, but not meals, may participate as separate households. Persons described in paragraph (b)(1) of this section must not be considered roomers.
(6) Live-in attendants. A live-in attendant may participate as a separate household. Persons described in paragraph (b)(1) of this section must not be considered live-in attendants.
(7) Ineligible household members. The following persons are not eligible to participate as separate households or as a member of any household:
(i) Ineligible aliens and students as specified in §§ 273.4 and 273.5, respectively;
(ii) SSI recipients in “cash-out” States as specified in § 273.20;
(iii) Individuals disqualified for noncompliance with the work requirements of § 273.7;
(iv) Individuals disqualified for failure to provide an SSN as specified in § 273.6;
(v) Individuals disqualified for an intentional Program violation as specified in § 273.16; and
(vi) Residents of an institution, with some exceptions. Individuals must be considered residents of an institution when the institution provides them with the majority of their meals (over 50 percent of three meals daily) as part of the institution’s normal services. Exceptions to this requirement include only the individuals listed in paragraphs (b)(7)(vii)(A) through (b)(7)(vii)(E) of this section. The individuals listed in paragraphs (b)(7)(vii)(A) through (b)(7)(vii)(E) can participate in the Program and must be treated as separate households from the others with whom they reside, subject to the mandatory household combination requirements of paragraph (b)(1) of this section, unless otherwise stated:
(A) Individuals who are residents of federally subsidized housing for the elderly;
(B) Individuals who are narcotic addicts or alcoholics and reside at a facility or treatment center for the purpose of regular participation in a drug or alcohol treatment and rehabilitation program. This includes the children but not the spouses of such persons who live with them at the treatment center or facility;
(C) Individuals who are disabled or blind and are residents of group living arrangements;
(D) Individual women or women with their children who are temporarily residing in a shelter for battered women and children; and
(E) Individuals who are residents of public or private nonprofit shelters for homeless persons.
(vii) Individuals who are ineligible under § 273.11(m) because of a drug-related felony conviction.
(viii) At State agency option, individuals who are disqualified in another assistance program in accordance with § 273.11(k).
(ix) Individuals who are fleeing to avoid prosecution or custody for a crime, or an attempt to commit a crime, or who are violating a condition of probation or parole who are ineligible under § 273.11(n).
(x) Individuals disqualified for failure to cooperate with child support enforcement agencies in accordance with § 273.11(o) or (p), or for being delinquent in any court-ordered child support obligation in accordance with § 273.11(q).
(xi) Persons ineligible under § 273.24, the time limit for able-bodied adults.
(xii) Individuals convicted of certain crimes and who are out of compliance with the terms of their sentence and ineligible under § 273.11(s).
(c) Unregulated situations. For situations that are not clearly addressed by the provisions of paragraphs (a) and (b) of this section, the State agency may apply its own policy for determining when an individual is a separate household or a member of another household if the policy is applied fairly, equitably and consistently throughout the State.
(d) Head of household. (1) A State agency shall not use the head of household designation to impose special requirements on the household, such as requiring that the head of household, rather than another responsible member of the household, appear at the certification office to make application for benefits. When designating the head of household, the State agency shall allow the household to select an adult parent of children (of any age) living in the household, or an adult who has parental control over children (under 18 years of age) living in the household, as the head of household provided that all adult household members agree to the selection. The State agency shall permit such households to select their head at each certification action or whenever there is a change in household composition. The State agency shall provide written notice to all households at the time of application and as otherwise appropriate that specifies the household’s right to select its head of household in accordance with this paragraph. The written notice shall identify which households have the option to select their head of household, the circumstances under which a household may change its designation of head of household, and how such changes must be reported to the State agency. If all adult household members do not agree to the selection or decline to select an adult parent as the head of household, the State agency may designate the head of household or permit the household to make another selection. In no event shall the household’s failure to select an adult parent of children or an adult who has parental control over children as the head of household delay the certification or result in the denial of benefits of an otherwise eligible household. For households that do not consist of adult parents and children or adults who have parental control of children living in the household, the State agency shall designate the head of household or permit the household to do so.
(2) For purposes of failure to comply with the work requirements of § 273.7, the head of household shall be the principal wage earner unless the household has selected an adult parent of children as specified in paragraph (d)(1) of this section. The principal wage earner shall be the household member (including excluded members) who is the greatest source of earned income in the two months prior to the month of the violation. This provision applies only if the employment involves 20 hours or more per week or provides weekly earnings at least equivalent to the Federal minimum wage multiplied by 20 hours. No person of any age living with a parent or person fulfilling the role of a parent who is registered for work or exempt from work registration requirements because such parent or person fulfilling the role of a parent is subject to and participating in any work requirement under title IV of the Social Security Act, or in receipt of unemployment compensation (or has registered for work as part of the application for or receipt of unemployment compensation), or is employed or self-employed and working a minimum of 30 hours weekly or receiving weekly earnings equal to the Federal minimum wage multiplied by 30 hours shall be considered the head of household unless the person is an adult parent of children as specified in § 273.1(d)(1) and the household elects to designate the adult parent as its head of household. If there is no principal source of earned income in the household, the household member, documented in the casefile as the head of the household at the time of the violation, shall be considered the head of household. The designation of head of household through the circumstances of this paragraph shall take precedence over a previous designation of head of household at least until the period of ineligibility is ended.
(e) Strikers. Households with a striking member are not eligible to participate in the Program, unless the household was eligible for benefits the day before the strike and is otherwise eligible at the time of application. A striker must be anyone involved in a strike or concerted stoppage of work by employees (including a stoppage by reason of the expiration of a collective-bargaining agreement) and any concerted slowdown or other concerted interruption of operations by employees. Any employee affected by a lockout, however, must not be deemed to be a striker. Further, an individual who goes on strike but is exempt from work registration under § 273.7(b) the day before the strike, other than those exempt solely on the grounds that they are employed, must not be deemed to be a striker. Also, persons such as truck drivers who cannot do their jobs because the strike has left them with nothing to deliver, and employees who are not part of the bargaining unit and do not want to cross the picket line for fear of personal injury or death, must not be deemed to be strikers.
(1) Pre-strike eligibility must be determined by considering the day prior to the strike as the day of application and assuming the strike did not occur.
(2) Eligibility at the time of application must be determined by comparing the striking member’s income before the strike to the striker’s current income and adding the higher of the two to the current income of non-striking members during the month of application. If the household is eligible, the higher income figure must also be used in determining the household’s benefits.
§ 273.2 Office operations and application processing.
(a) Operation of SNAP offices and processing of applications—(1) Office operations. State agencies must establish procedures governing the operation of SNAP offices that the State agency determines best serve households in the State, including households with special needs, such as, but not limited to, households with elderly or disabled members, households in rural areas with low-income members, homeless individuals, households residing on reservations, households with adult members who are not proficient in English, and households with earned income (working households). The State agency must provide timely, accurate, and fair service to applicants for, and participants in, SNAP. The State agency cannot, as a condition of eligibility, impose additional application or application processing requirements, including in the implementation of a photo EBT card policy. The State agency’s photo EBT card policy must not affect the certification process for purposes of determining eligibility regardless of whether an individual has his/her photo placed on the EBT card. The State agency must have a procedure for informing persons who wish to apply for SNAP benefits about the application process and their rights and responsibilities. The State agency must base SNAP eligibility solely on the criteria contained in the Act and this part.
(2) Application processing. The application process includes filing and completing an application form, being interviewed, and having certain information verified. The State agency must act promptly on all applications and provide SNAP benefits retroactive to the month of application to those households that have completed the application process and have been determined eligible. States must meet application processing timelines, regardless of whether a State agency implements a photo EBT card policy. The State agency must make expedited service available to households in immediate need. Specific responsibilities of households and State agencies in the application process are detailed below.
(b) SNAP application form—(1) A State agency may consider an application form to be a paper document, on-line document or a recorded conversation. Each application form shall contain:
(i) In prominent and boldface lettering and understandable terms a statement that the information provided by the applicant in connection with the application for SNAP benefits will be subject to verification by Federal, State and local officials to determine if such information is factual; that if any information is incorrect, SNAP benefits may be denied to the applicant; and that the applicant may be subject to criminal prosecution for knowingly providing incorrect information;
(ii) In prominent and boldface lettering and understandable terms a description of the civil and criminal provisions and penalties for violations of the Food and Nutrition Act of 2008;
(iii) A statement to be signed by one adult household member which certifies, under penalty of perjury, the truth of the information contained in the application, including the information concerning citizenship and alien status of the members applying for benefits;
(iv) A place on the front page of the application where the applicant can write his/her name, address, and signature.
(v) In plain and prominent language on or near the front page of the application, notification of the household’s right to immediately file the application as long as it contains the applicant’s name and address and the signature of a responsible household member or the household’s authorized representative. Regardless of the type of system the State agency uses (paper or electronic), it must provide a means for households to immediately begin the application process with name, address and signature;
(vi) In plain and prominent language on or near the front page of the application, a description of the expedited service provisions described in paragraph (i) of this section;
(vii) In plain and prominent language on or near the front page of the application, notification that benefits are provided from the date of application; and
(viii) The following nondiscrimination statement on the application itself even if the State agency uses a joint application form: “In accordance with Federal law and U.S. Department of Agriculture policy, this institution is prohibited from discriminating on the basis of race, color, national origin, sex, age, religion, political beliefs, or disability. “To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W, Whitten Building, 1400 Independence Avenue SW, Washington, DC 20250-9410 or call (202) 720-5964 (voice and TDD). USDA is an equal opportunity provider and employer.”; and
(ix) For multi-program applications, contain language which clearly affords applicants the option of answering only those questions relevant to the program or programs for which they are applying.
(2) Income and eligibility verification system (IEVS). In using IEVS in accordance with paragraph (f)(9) of this section, a State agency must notify all applicants for SNAP benefits at the time of application and at each recertification through a written statement on, or provided with, the application form that information available through IEVS will be requested, used, and may be verified through collateral contact when discrepancies are found by the State agency, and that such information may affect the household’s eligibility and level of benefits. The regulations at § 273.2(f)(4)(ii) govern the use of collateral contacts. The State agency must also notify all applicants on the application form that the alien status of applicant household members may be subject to verification by USCIS through the submission of information from the application to USCIS, and that the submitted information received from USCIS may affect the household’s eligibility and level of benefits.
(3) Jointly processed cases. If a State agency has a procedure that allows applicants to apply for SNAP and another program at the same time, the State agency shall notify applicants that they may file a joint application for more than one program or they may file a separate application for SNAP benefits independent of their application for benefits from any other program. All SNAP applications, regardless of whether they are joint applications or separate applications, must be processed for SNAP purposes in accordance with SNAP procedural, timeliness, notice, and fair hearing requirements. No household shall have its SNAP benefits denied solely on the basis that its application to participate in another program has been denied or its benefits under another program have been terminated without a separate determination by the State agency that the household failed to satisfy a SNAP eligibility requirement. Households that file a joint application for SNAP benefits and another program and are denied benefits for the other program shall not be required to resubmit the joint application or to file another application for SNAP benefits but shall have its SNAP eligibility determined based on the joint application in accordance with the SNAP processing time frames from the date the joint application was initially accepted by the State agency.
(4) Privacy Act statement. As a State agency, you must notify all households applying and being recertified for SNAP benefits of the following:
(i) The collection of this information, including the social security number (SSN) of each household member, is authorized under the Food and Nutrition Act of 2008, as amended, 7 U.S.C. 2011-2036. The information will be used to determine whether your household is eligible or continues to be eligible to participate in SNAP. We will verify this information through computer matching programs. This information will also be used to monitor compliance with program regulations and for program management.
(ii) This information may be disclosed to other Federal and State agencies for official examination, and to law enforcement officials for the purpose of apprehending persons fleeing to avoid the law.
(iii) If a SNAP claim arises against your household, the information on this application, including all SSNs, may be referred to Federal and State agencies, as well as private claims collection agencies, for claims collection action.
(iv) Providing the requested information, including the SSN of each household member, is voluntary. However, failure to provide an SSN will result in the denial of SNAP benefits to each individual failing to provide an SSN. Any SSNs provided will be used and disclosed in the same manner as SSNs of eligible household members.
(c) Filing an application—(1) Household’s right to file—(i) Where to file. Households must file SNAP applications by submitting the forms to the SNAP office either in person, through an authorized representative, by mail, by completing an on-line electronic application, or, if available, by fax, telephone, or other electronic transmission.
(ii) Right to file in writing. All households have the right to apply or to re-apply for SNAP in writing. The State agency shall neither deny nor interfere with a household’s right to apply or to re-apply in writing.
(iii) Right to same-day filing. Each household has the right to file an application form on the same day it contacts the SNAP office during office hours. The household shall be advised that it does not have to be interviewed before filing the application and may file an incomplete application form as long as the form contains the applicant’s name and address, and is signed by a responsible member of the household or the household’s authorized representative. Regardless of the type of application system used, the State agency must provide a means for all applicants applying through any mechanism to immediately begin the application process by filing an application with only the name, address and signature.
(iv) Recording the filing date. The date of application is the date the application is received by the State agency. State agencies must document the application date on the application. If the application is received outside normal business hours the State agency will consider the date of application the next business day. For online applications, the date of application is the date the application is submitted, or the next business day if it is submitted after business hours. For telephonic applications, the date of application is the date on which the household member provides verbal assent.
(v) Application copies. When a household member completes an application, the State agency must offer to provide a copy of the completed application. For purposes of this subsection, a copy of the completed application is a copy of the information provided by the client that the State agency has used or will use to determine a household’s eligibility and benefit allotment. At the option of the household, the State may provide the copy in an electronic format.
(vi) Residents of institutions. The following special provisions apply to residents of institutions.
(A) Filing date. When a resident of an institution is jointly applying for SSI and SNAP benefits prior to leaving the institution, the filing date of the application that the State agency must record is the date of release of the applicant from the institution.
(B) Processing deadline. The length of time a State agency has to deliver benefits is calculated from the date the application is filed in the SNAP office designated by the State agency to accept the household’s application, except when a resident of a public institution is jointly applying for SSI and SNAP benefits prior to his/her release from an institution in accordance with § 273.11(i).
(C) Certification procedures. Residents of public institutions who apply for SNAP prior to their release from the institution shall be certified in accordance with § 273.2 paragraph (g)(1) or § 273.2(i)(3)(i) of this section, as appropriate.
(2) Contacting the SNAP office. (i) State agencies shall encourage households to file an application form the same day the household or its representative contacts the SNAP office in person or by telephone and expresses interest in obtaining SNAP assistance or expresses concerns which indicate food insecurity. If the State agency attempts to discourage households from applying for cash assistance, it shall make clear that the disadvantages and requirements of applying for cash assistance do not apply to SNAP benefits. In addition, it shall encourage applicants to continue with their application for SNAP benefits. The State agency shall inform households that receiving SNAP benefits will have no bearing on any other program’s time limits that may apply to the household. If a household contacting the SNAP office by telephone does not wish to come to the appropriate office to file the application that same day and instead prefers receiving an application through the mail, the State agency shall mail an application form to the household on the same day the telephone request is received. An application shall also be mailed on the same day a written request for food assistance is received.
(ii) Where a project area has designated certification offices to serve specific geographic areas, households may contact an office other than the one designated to service the area in which they reside. When a household contacts the wrong certification office within a project area in person or by telephone, the certification office shall, in addition to meeting other requirements in paragraph (c)(2)(i) of this section, give the household the address and telephone number of the appropriate office. The certification office shall also offer to forward the household’s application to the appropriate office that same day if the household has completed enough information on the application to file or forward it the next day by any means that ensures the application arrives at the application office the day it is forwarded. The household shall be informed that its application will not be considered filed and the processing standards shall not begin until the application is received by the appropriate office. If the household has mailed its application to the wrong office within a project area, the certification office shall mail the application to the appropriate office on the same day, or forward it the next day by any means that ensures the application arrives at the application office the day it is forwarded.
(iii) In State agencies that elect to have Statewide residency, as provided in § 273.3, the application processing timeframes begin when the application is filed in any SNAP office in the State.
(3) Availability of the application form. (i) General availability. The State agency shall make application forms readily accessible to potentially eligible households. The State agency shall also provide an application form to anyone who requests the form. Regardless of the type of system the State agency uses, the State agency must provide a means for applicants to immediately file an application that includes only name, address and signature. If the State agency maintains a Web page, it must make the application available on the Web page in each language in which the State agency makes a printed application available. The State agency must provide on the Web page the addresses and phone numbers of all State SNAP offices and a statement that the household should return the application form to its nearest local office. The applications must be accessible to persons with disabilities in accordance with Section 504 of the Rehabilitation Act of 1973, Public Law 93-112, as amended by the Rehabilitation Act Amendments of 1974, Public Law 93-516, 29 U.S.C. 794, and the Americans with Disabilities Act of 1990, 42 U.S.C. 12101.
(ii) Paper forms. The State agency must make paper application forms readily accessible and available even if the State agency also accepts application forms through other means.
(4) Notice of right to file. The State agency shall post signs in the certification office which explain the application processing standards and the right to file an application on the day of initial contact. The State agency shall include similar information about same day filing on the application form.
(5) Notice of Required Verification. The State agency shall provide each household at the time of application for certification and recertification with a notice that informs the household of the verification requirements the household must meet as part of the application process. The notice shall also inform the household of the State agency’s responsibility to assist the household in obtaining required verification provided the household is cooperating with the State agency as specified in (d)(1) of this section. The notice shall be written in clear and simple language and shall meet the bilingual requirements designated in § 272.4(b) of this chapter. At a minimum, the notice shall contain examples of the types of documents the household should provide and explain the period of time the documents should cover.
(6) Withdrawing application. The household may voluntarily withdraw its application at any time prior to the determination of eligibility. The State agency shall document in the case file the reason for withdrawal, if any was stated by the household, and that contact was made with the household to confirm the withdrawal. The household shall be advised of its right to reapply at any time subsequent to a withdrawal.
(7) Signing an application or reapplication form. In this paragraph, the word “form” refers to applications and reapplications.
(i) Requirement for a signature. A form must be signed to establish a filing date and to determine the State agency’s deadline for acting on the form. The State agency shall not certify a household without a signed form.
(ii) Right to provide written signature. All households have the right to sign a SNAP form in writing.
(iii) Unwritten signatures. The State agency shall decide whether unwritten signatures are generally acceptable. The State agency may decide to accept unwritten signatures. A State agency that does not select this option must accept unwritten signatures when necessary to comply with civil rights laws.
(A) These may include electronic signature techniques, recorded telephonic signatures, or recorded gestured signatures.
(B) A State agency is not required to obtain a written signature in addition to an unwritten signature.
(iv) Who may sign the form.
(A) An adult member of the household.
(B) An authorized representative, as described in paragraph (n)(1) of this section.
(v) Application copies. When a household member completes an application, the State agency must offer to provide a copy of the completed application. For purposes of this subsection, a copy of the completed application is a copy of the information provided by the client that the State agency has used or will use to determine a household’s eligibility and benefit allotment. At the option of the household, the State may provide the copy in an electronic format.
(vi) Handwritten signatures. These provisions apply specifically to handwritten signatures, including handwritten signatures that the household transmits by facsimile or other electronic transmission.
(A) If the signatory cannot sign with a name, an X is a valid signature.
(B) The State agency may require a witness to attest to an X signature.
(C) An employee of the State agency may serve as a witness.
(vii) Electronic signatures. These provisions apply specifically to electronic signatures.
(A) The State agency may accept an electronic signature but is not required to do so.
(B) Some examples of electronic signature are the use of a Personal Identification Number (PIN), a computer password, clicking on an “I accept these conditions” button on a screen, or clicking on a “Submit” button on a screen.
(viii) Telephonic signatures. These provisions apply specifically to telephonic signatures.
(A) A State agency that chooses to accept telephonic signatures under this paragraph (c)(7)(viii) must specify in its State plan of operation that it has selected this option.
(B) To constitute a valid telephonic signature, the State agency’s telephonic signature system must make an audio recording of the household’s verbal assent and a summary of the information to which the household assents. An example of a telephonic signature is a recording of “Yes” or “No”, “I agree” or “I do not agree”, or otherwise clearly indicating agreement or disagreement during an interview over the telephone. An example of a summary of the information to which the household assents is a recording of a reiteration of the household’s details agreed to during the telephone conversation.
(C) A telephonic signature system must provide for linkage from the audio file of the recorded verbal assent to the application so that the State agency has ready access to the household’s entire case file.
(D) The State agency shall promptly provide to the household member a written copy of the completed application, with instructions for a simple procedure for correcting any errors or omissions.
(ix) Gestured signatures. These provisions apply specifically to gestured signatures.
(A) A State agency that chooses to accept gestured signatures under this paragraph (c)(7)(ix) must specify in its State plan of operation that it has selected this option.
(B) Gestured signatures include the use of signs and expressions to communicate “Yes” or “I agree” in American Sign Language (ASL), Manually Coded English (MCE) or another similar language or method during an interview, in person or over a video link.
(C) The State agency shall promptly provide to the household member a written copy of the completed application, with instructions for a simple procedure for correcting any errors or omissions.
(d) Household cooperation. (1) To determine eligibility, the application form must be completed and signed, the household or its authorized representative must be interviewed, and certain information on the application must be verified. If the household refuses to cooperate with the State agency in completing this process, the application shall be denied at the time of refusal. For a determination of refusal to be made, the household must be able to cooperate, but clearly demonstrate that it will not take actions that it can take and that are required to complete the application process. For example, to be denied for refusal to cooperate, a household must refuse to be interviewed not merely failing to appear for the interview. If there is any question as to whether the household has merely failed to cooperate, as opposed to refused to cooperate, the household shall not be denied, and the agency shall provide assistance required by paragraph (c)(5) of this section. The household shall also be determined ineligible if it refuses to cooperate in any subsequent review of its eligibility, including reviews generated by reported changes and applications for recertification. Once denied or terminated for refusal to cooperate, the household may reapply but shall not be determined eligible until it cooperates with the State agency. The State agency shall not determine the household to be ineligible when a person outside of the household fails to cooperate with a request for verification. The State agency shall not consider individuals identified as nonhousehold members under § 273.1(b)(2) as individuals outside the household.
(2) Cooperation with QC Reviewer. In addition, the household shall be determined ineligible if it refuses to cooperate in any subsequent review of its eligibility as a part of a quality control review. If a household is terminated for refusal to cooperate with a quality control reviewer, in accordance with §§ 275.3(c)(5) and 275.12(g)(1)(ii) of this chapter, the household may reapply, but shall not be determined eligible until it cooperates with the quality control reviewer. If a household terminated for refusal to cooperate with a State quality control reviewer reapplies after 125 days from the end of the annual review period, the household shall not be determined ineligible for its refusal to cooperate with a State quality control reviewer during the completed review period, but must provide verification in accordance with paragraph (f)(1)(ix) of this section. If a household terminated for refusal to cooperate with a Federal quality control reviewer reapplies after nine months from the end of the annual review period, the household shall not be determined ineligible for its refusal to cooperate with a Federal quality control reviewer during the completed review period, but must provide verification in accordance with paragraph (f)(1)(ix) of this section. In the event that one or more household members no longer resides with a household terminated for refusal to cooperate, the penalty for refusal to cooperate will attach to household of the person(s) who refused to cooperate. If the State agency is unable to determine which household member(s) refused to cooperate, the State agency shall determine the household to which the penalty shall apply.
(e) Interviews. (1) Except for households certified for longer than 12 months, and except as provided in paragraph (e)(2) of this section, households must have a face-to-face interview with an eligibility worker at initial certification and at least once every 12 months thereafter. State agencies may not require households to report for an in-office interview during their certification period, though they may request households to do so. For example, State agencies may not require households to report en masse for an in-office interview during their certification periods simply to review their case files, or for any other reason. State agencies may not require an in person interview solely to take a photo. Interviews may be conducted at the SNAP office or other mutually acceptable location, including a household’s residence. If the interview will be conducted at the household’s residence, it must be scheduled in advance with the household. If a household in which all adult members are elderly or disabled is certified for 24 months in accordance with § 273.10(f)(1), or a household residing on a reservation is required to submit monthly reports and is certified for 24 months in accordance with § 273.10(f)(2), a face-to-face interview is not required during the certification period. The individual interviewed may be the head of household, spouse, any other responsible member of the household, or an authorized representative. The applicant may bring any person he or she chooses to the interview. The interviewer must not simply review the information that appears on the application, but must explore and resolve with the household unclear and incomplete information. The interviewer must advise households of their rights and responsibilities during the interview, including the appropriate application processing standard and the households’ responsibility to report changes. The interviewer must advise households that are also applying for or receiving PA benefits that time limits and other requirements that apply to the receipt of PA benefits do not apply to the receipt of SNAP benefits, and that households which cease receiving PA benefits because they have reached a time limit, have begun working, or for other reasons, may still qualify for SNAP benefits. The interviewer must conduct the interview as an official and confidential discussion of household circumstances. The State agency must protect the applicant’s right to privacy during the interview. Facilities must be adequate to preserve the privacy and confidentiality of the interview.
(2) The State agency may use a telephone interview instead of the face-to-face interview required in paragraph (e)(1) of this section for all applicant households, for specified categories of households, or on a case-by-case basis because of household hardship situations as determined by the State agency. The hardship conditions must include, but are not limited to, illness, transportation difficulties, care of a household member, hardships due to residency in a rural area, prolonged severe weather, or work or training hours that prevent the household from participating in an in-office interview. If a State agency has not already provided that a telephone interview will be used for a household, and that household meets the State agency’s hardship criteria and requests to not have an in-office interview, the State agency must offer to the household to conduct the interview by telephone. The State agency may provide a home-based interview only if a household meets the hardship criteria and requests one. A State agency that chooses to routinely interview households by telephone in lieu of the face-to-face interview must specify this choice in its State plan of operation and describe the types of households that will be routinely offered a telephone interview in lieu of a face-to-face interview. The State agency must grant a face-to-face interview to any household that requests one.
(i) State agencies must inform each applicant of the opportunity for a face-to-face interview at the time of application and recertification and grant a face-to-face interview to any household that requests one at any time, even if the State agency has elected the option to routinely provide telephone interviews.
(ii) Like households participating in face-to-face interviews, households interviewed by any means other than the face-to-face interview are not exempt from verification requirements. However, the State agency may use special procedures to permit the household to provide verification and thus obtain its benefits in a timely manner, such as substituting a collateral contact in cases where documentary verification would normally be provided.
(iii) The use of non-face-to-face interviews may not affect the length of a household’s certification period.
(iv) State agencies must provide Limited English Proficient (LEP) households with bilingual personnel during the interview as required under § 272.4(b) of this chapter.
(3) The State agency must schedule an interview for all applicant households who are not interviewed on the day they submit their applications. To the extent practicable, the State agency must schedule the interview to accommodate the needs of groups with special circumstances, including working households. The State agency must schedule all interviews as promptly as possible to insure eligible households receive an opportunity to participate within 30 days after the application is filed. The State agency must notify each household that misses its interview appointment that it missed the scheduled interview and that the household is responsible for rescheduling a missed interview. If the household contacts the State agency within the 30 day application processing period, the State agency must schedule a second interview. The State agency may not deny a household’s application prior to the 30th day after application if the household fails to appear for the first scheduled interview. If the household requests a second interview during the 30-day application processing period and is determined eligible, the State agency must issue prorated benefits from the date of application.
(f) Verification. Verification is the use of documentation or a contact with a third party to confirm the accuracy of statements or information. The State agency must give households at least 10 days to provide required verification. Paragraph (i)(4) of this section contains verification procedures for expedited service cases.
(1) Mandatory verification. State agencies shall verify the following information prior to certification for households initially applying:
(i) Gross nonexempt income. Gross nonexempt income shall be verified for all households prior to certification. However, where all attempts to verify the income have been unsuccessful because the person or organization providing the income has failed to cooperate with the household and the State agency, and all other sources of verification are unavailable, the eligibility worker shall determine an amount to be used for certification purposes based on the best available information.
(ii) Alien eligibility. (A) The State agency shall verify the eligible status of all aliens applying for SNAP benefits by using an immigration status verification system established under section 1137 of the Social Security Act (42 U.S.C. 1320b-7). FNS may require State agencies to provide written confirmation from USCIS that the system used by the State is an immigration status verification system established under section 1137 of the Social Security Act. If an alien does not wish the State agency to contact USCIS to verify his or her immigration status, the State agency must give the household the option of withdrawing its application or participating without that member. The Department of Justice (DOJ) Interim Guidance On Verification of Citizenship, Qualified Alien Status and Eligibility Under Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Interim Guidance) (62 FR 61344, November 17, 1997) contains information on acceptable documents and USCIS codes. State agencies should use the Interim Guidance until DOJ publishes a final rule on this issue. Thereafter, State agencies should consult both the Interim Guidance and the DOJ final rule. Where the Interim Guidance and the DOJ final rule conflict, the latter should control the verification of alien eligibility. As provided in § 273.4, the following information may also be relevant to the eligibility of some aliens: date of admission or date status was granted; military connection; battered status; if the alien was lawfully residing in the United States on August 22, 1996; membership in certain Indian tribes; if the person was age 65 or older on August 22, 1996; if a lawful permanent resident can be credited with 40 qualifying quarters of covered work and if any Federal means-tested public benefits were received in any quarter after December 31, 1996; or if the alien was a member of certain Hmong or Highland Laotian tribes during a certain period of time or is the spouse or unmarried dependent of such a person. The State agency must also verify these factors, if applicable to the alien’s eligibility. The SSA Quarters of Coverage History System (QCHS) is available for purposes of verifying whether a lawful permanent resident has earned or can receive credit for a total of 40 qualifying quarters. However, the QCHS may not show all qualifying quarters. For instance, SSA records do not show current year earnings and in some cases the last year’s earnings, depending on the time of request. Also, in some cases, an applicant may have work from uncovered employment that is not documented by SSA, but is countable toward the 40 quarters test. In both these cases, the individual, rather than SSA, would need to provide the evidence needed to verify the quarters.
(B) An alien is ineligible until acceptable documentation is provided unless:
(1) The State agency has submitted a copy of a document provided by the household to USCIS for verification. Pending such verification, the State agency cannot delay, deny, reduce or terminate the individual’s eligibility for benefits on the basis of the individual’s immigration status; or
(2) The applicant or the State agency has submitted a request to SSA for information regarding the number of quarters of work that can be credited to the individual, SSA has responded that the individual has fewer than 40 quarters, and the individual provides documentation from SSA that SSA is conducting an investigation to determine if more quarters can be credited. If SSA indicates that the number of qualifying quarters that can be credited is under investigation, the State agency must certify the individual pending the results of the investigation for up to 6 months from the date of the original determination of insufficient quarters; or
(3) The applicant or the State agency has submitted a request to a Federal agency for verification of information which bears on the individual’s eligible alien status. The State agency must certify the individual pending the results of the investigation for up to 6 months from the date of the original request for verification.
(C) The State agency must provide alien applicants with a reasonable opportunity to submit acceptable documentation of their eligible alien status as of the 30th day following the date of application. A reasonable opportunity must be at least 10 days from the date of the State agency’s request for an acceptable document. When the State agency fails to provide an alien applicant with a reasonable opportunity as of the 30th day following the date of application, the State agency must provide the household with benefits no later than 30 days following the date of application, provided the household is otherwise eligible.
(iii) Utility expenses. The State agency shall verify a household’s utility expenses if the household wishes to claim expenses in excess of the State agency’s utility standard and the expense would actually result in a deduction. If the household’s actual utility expenses cannot be verified before the 30 days allowed to process the application expire, the State agency shall use the standard utility allowance, provided the household is entitled to use the standard as specified in § 273.9(d). If the household wishes to claim expenses for an unoccupied home, the State agency shall verify the household’s actual utility expenses for the unoccupied home in every case and shall not use the standard utility allowance.
(iv) Medical expenses. The amount of any medical expenses (including the amount of reimbursements) deductible under § 273.9(d)(3) shall be verified prior to initial certification. Verification of other factors, such as the allowability of services provided or the eligibility of the person incurring the cost, shall be required if questionable.
(v) Social security numbers. The State agency shall verify the social security number(s) (SSN) reported by the household by submitting them to the Social Security Administration (SSA) for verification according to procedures established by SSA. The State agency shall not delay the certification for or issuance of benefits to an otherwise eligible household solely to verify the SSN of a household member. Once an SSN has been verified, the State agency shall make a permanent annotation to its file to prevent the unnecessary reverification of the SSN in the future. The State agency shall accept as verified an SSN which has been verified by another program participating in the IEVS described in § 272.8. If an individual is unable to provide an SSN or does not have an SSN, the State agency shall require the individual to submit Form SS-5, Application for a Social Security Number, to the SSA in accordance with procedures in § 273.6. A completed SSA Form 2853 shall be considered proof of application for an SSN for a newborn infant.
(vi) Residency. The residency requirements of § 273.3 shall be verified except in unusual cases (such as homeless households, some migrant farmworker households, or households newly arrived in a project area) where verification of residency cannot reasonably be accomplished. Verification of residency should be accomplished to the extent possible in conjunction with the verification of other information such as, but not limited to, rent and mortgage payments, utility expenses, and identity. If verification cannot be accomplished in conjunction with the verification of other information, then the State agency shall use a collateral contact or other readily available documentary evidence. Documents used to verify other factors of eligibility should normally suffice to verify residency as well. Any documents or collateral contact which reasonably establish the applicant’s residency must be accepted and no requirement for a specific type of verification may be imposed. No durational residency requirement shall be established.
(vii) Identity. The identity of the person making application shall be verified. Where an authorized representative applies on behalf of a household, the identity of both the authorized representative and the head of household shall be verified. Identity may be verified through readily available documentary evidence, or if this is unavailable, through a collateral contact. Examples of acceptable documentary evidence which the applicant may provide include, but are not limited to, a driver’s license, a work or school ID, an ID for health benefits or for another assistance or social services program, a voter registration card, wage stubs, or a birth certificate. Any documents which reasonably establish the applicant’s identity must be accepted, and no requirement for a specific type of document, such as a birth certificate, may be imposed.
(viii) Disability. (A) The State agency shall verify disability as defined in § 271.2 as follows:
(1) For individuals to be considered disabled under paragraphs (2), (3) and (4) of the definition, the household shall provide proof that the disabled individual is receiving benefits under titles I, II, X, XIV or XVI of the Social Security Act.
(2) For individuals to be considered disabled under paragraph (6) of the definition, the household must present a statement from the Veterans Administration (VA) which clearly indicates that the disabled individual is receiving VA disability benefits for a service-connected or non-service-connected disability and that the disability is rated as total or paid at the total rate by VA.
(3) For individuals to be considered disabled under paragraphs (7) and (8) of the definition, proof by the household that the disabled individual is receiving VA disability benefits is sufficient verification of disability.
(4) For individuals to be considered disabled under paragraphs (5) and (9) of the definition, the State agency shall use the Social Security Administration’s (SSA) most current list of disabilities considered permanent under the Social Security Act for verifying disability. If it is obvious to the caseworker that the individual has one of the listed disabilities, the household shall be considered to have verified disability. If disability is not obvious to the caseworker, the household shall provide a statement from a physician or licensed or certified psychologist certifying that the individual has one of the nonobvious disabilities listed as the means for verifying disability under paragraphs (5) and (9) of the definition.
(5) For individuals to be considered disabled under paragraph (10) of the definition, the household shall provide proof that the individual receives a Railroad Retirement disability annuity from the Railroad Retirement Board and has been determined to qualify for Medicare.
(6) For individuals to be considered disabled under paragraph (11) of the definition, the household shall provide proof that the individual receives interim assistance benefits pending the receipt of Supplemental Security Income; or disability-related medical assistance under title XIX of the SSA; or disability-based State general assistance benefits. The State agency shall verify that the eligibility to receive these benefits is based upon disability or blindness criteria which are at least as stringent as those used under title XVI of the Social Security Act.
(B) For disability determinations which must be made relevant to the provisions of § 273.1(a)(2)(ii), the State agency shall use the SSA’s most current list of disabilities as the initial step for verifying if an individual has a disability considered permanent under the Social Security Act. However, only those individuals who suffer from one of the disabilities mentioned in the SSA list who are unable to purchase and prepare meals because of such disability shall be considered disabled for the purpose of this provision. If it is obvious to the caseworker that the individual is unable to purchase and prepare meals because he/she suffers from a severe physical or mental disability, the individual shall be considered disabled for the purpose of the provision even if the disability is not specifically mentioned on the SSA list. If the disability is not obvious to the caseworker, he/she shall verify the disability by requiring a statement from a physician or licensed or certified psychologist certifying that the individual (in the physician’s/psychologist’s opinion) is unable to purchase and prepare meals because he/she suffers from one of the nonobvious disabilities mentioned in the SSA list or is unable to purchase meals because he/she suffers from some other severe, permanent physical or mental disease or nondisease-related disability. The elderly and disabled individual (or his/her authorized representative) shall be responsible for obtaining the cooperation of the individuals with whom he/she resides in providing the necessary income information about the others to the State agency for purposes of this provision.
(ix) State agencies shall verify all factors of eligibility for households who have been terminated for refusal to cooperate with a State quality control reviewer, and reapply after 95 days from the end of the annual review period. State agencies shall verify all factors of eligibility for households who have been terminated for refusal to cooperate with a Federal quality control reviewer and reapply after seven months from the end of the annual review period.
(x) Household composition. State agencies shall verify factors affecting the composition of a household, if questionable. Individuals who claim to be a separate household from those with whom they reside shall be responsible for proving that they are a separate household to the satisfaction of the State agency. Individuals who claim to be a separate household from those with whom they reside based on the various age and disability factors for determining separateness shall be responsible for proving a claim of separateness (at the State agency’s request) in accordance with the provisions of § 273.2(f)(1)(viii).
(xi) Students. If a person claims to be physically or mentally unfit for purposes of the student exemption contained in § 273.5(b)(2) and the unfitness is not evident to the State agency, verification may be required. Appropriate verification may consist of receipt of temporary or permanent disability benefits issued by governmental or private sources, or of a statement from a physician or licensed or certified psychologist.
(xii) Legal obligation and actual child support payments. The State agency shall obtain verification of the household’s legal obligation to pay child support, the amount of the obligation, and the monthly amount of child support the household actually pays. Documents that are accepted as verification of the household’s legal obligation to pay child support shall not be accepted as verification of the household’s actual monthly child support payments. State agencies may and are strongly encouraged to obtain information regarding a household member’s child support obligation and payments from Child Support Enforcement (CSE) automated data files. For households that pay their child support exclusively through their State CSE agency, the State agency may use information provided by that agency in determining a household’s legal obligation to pay child support, the amount of its obligation and amount the household has actually paid. A household would not have to provide additional verification unless it disagrees with the data presented by the State CSE agency. Before the State agency may use the CSE agency’s information, the household must sign a statement authorizing release of the household’s child support payment records to the State agency. State agencies that choose to rely on information provided by their State CSE agency in accordance with this paragraph (f)(1)(xii) must specify in their State plan of operation that they have selected this option. The State agency shall give the household an opportunity to resolve any discrepancy between household verification and CSE records in accordance with paragraph (f)(9) of this section.
(xiii) [Reserved]
(xiv) Additional verification for able-bodied adults subject to the time limit—(A) Hours worked. For individuals subject to the SNAP time limit of § 273.24 who are satisfying the work requirement by working, by combining work and participation in a work program, or by participating in a work or workfare program that is not operated or supervised by the State agency, the individuals’ work hours shall be verified.
(B) Countable months in another state. For individuals subject to the SNAP time limit of § 273.24, the State agency must verify the number of countable months (as defined in § 273.24(b)(1)) an individual has used in another State if there is an indication that the individual participated in that State. The normal processing standards of 7 CFR 273.2(g) apply. The State agency may accept another State agency’s assertion as to the number of countable months an individual has used in another State.
(2) Verification of questionable information. (i) The State agency shall verify, prior to certification of the household, all other factors of eligibility which the State agency determines are questionable and affect the household’s eligibility and benefit level. The State agency shall establish guidelines to be followed in determining what shall be considered questionable information. These guidelines shall not prescribe verification based on race, religion, ethnic background, or national origin. These guidelines shall not target groups such as migrant farmworkers or American Indians for more intensive verification under this provision.
(ii) If a member’s citizenship or status as a non-citizen national is questionable, the State agency must verify the member’s citizenship or non-citizen national status in accordance with attachment 4 of the DOJ Interim Guidance. After DOJ issues final rules, State agencies should consult both the Interim Guidance and the final rule. Where the Interim Guidance and the DOJ final rule conflict, the latter should control the eligibility determination. The State agency must accept participation in another program as acceptable verification if verification of citizenship or non-citizen national status was obtained for that program. If the household cannot obtain the forms of verification suggested in attachment 4 of the DOJ Interim Guidance and the household can provide a reasonable explanation as to why verification is not available, the State agency must accept a signed statement, under penalty of perjury, from a third party indicating a reasonable basis for personal knowledge that the member in question is a U.S. citizen or non-citizen national. The signed statement must contain a warning of the penalties for helping someone commit fraud. Absent verification or third party attestation of U.S. citizenship or non-citizen national status, the member whose citizenship or non-citizen national status is in question is ineligible to participate until the issue is resolved. The member whose citizenship or non-citizen national status is in question will have his or her income and resources considered available to any remaining household members as set forth in § 273.11(c).
(3) State agency options. In addition to the verification required in paragraphs (f)(1) and (f)(2) of this section, the State agency may elect to mandate verification of any other factor which affects household eligibility or allotment level, including household size where not questionable. Such verification may be required Statewide or throughout a project area, but shall not be imposed on a selective, case-by-case basis on particular households.
(i) The State agency may establish its own standards for the use of verification, provided that, at a minimum, all questionable factors are verified in accordance with paragraph (f)(2) of this section and that such standards do not allow for inadvertent discrimination. For example, no standard may be applied which prescribes variances in verification based on race, religion, ethnic background or national origin, nor may a State standard target groups such as migrant farmworkers or American Indians for more intensive verification than other households. The options specified in this paragraph, shall not apply in those offices of the Social Security Administration (SSA) which, in accordance with paragraph (k) of this section, provide for the SNAP certification of households containing recipients of Supplemental Security Income (SSI) and social security benefits. The State agency, however, may negotiate with those SSA offices with regard to mandating verification of these options.
(ii) If a State agency opts to verify a deductible expense and obtaining the verification may delay the household’s certification, the State agency shall advise the household that its eligibility and benefit level may be determined without providing a deduction for the claimed but unverified expense. This provision also applies to the allowance of medical expenses as specified in paragraph (f)(1)(iv) of this section. Shelter costs would be computed without including the unverified components. The standard utility allowance shall be used if the household is entitled to claim it and has not verified higher actual costs. If the expense cannot be verified within 30 days of the date of application, the State agency shall determine the household’s eligibility and benefit level without providing a deduction of the unverified expense. If the household subsequently provides the missing verification, the State agency shall redetermine the household’s benefits, and provide increased benefits, if any, in accordance with the timeliness standards in § 273.12 on reported changes. If the expense could not be verified within the 30-day processing standard because the State agency failed to allow the household sufficient time, as defined in paragraph (h)(1) of this section, to verify the expense, the household shall be entitled to the restoration of benefits retroactive to the month of application, provided that the missing verification is supplied in accordance with paragraph (h)(3) of this section. If the household would be ineligible unless the expense is allowed, the household’s application shall be handled as provided in paragraph (h) of this section.
(4) Sources of verification—(i) Documentary evidence. State agencies shall use documentary evidence as the primary source of verification for all items except residency and household size. These items may be verified either through readily available documentary evidence or through a collateral contact, without a requirement being imposed that documentary evidence must be the primary source of verification. Documentary evidence consists of a written confirmation of a household’s circumstances. Examples of documentary evidence include wage stubs, rent receipts, and utility bills. Although documentary evidence shall be the primary source of verification, acceptable verification shall not be limited to any single type of document and may be obtained through the household or other source. Whenever documentary evidence cannot be obtained or is insufficient to make a firm determination of eligibility or benefit level, the eligibility worker may require collateral contacts or home visits. For example, documentary evidence may be considered insufficient when the household presents pay stubs which do not represent an accurate picture of the household’s income (such as out-dated pay stubs) or identification papers that appear to be falsified.
(ii) Collateral contacts. A collateral contact is an oral confirmation of a household’s circumstances by a person outside of the household. The collateral contact may be made either in person or over the telephone. The State agency may select a collateral contact if the household fails to designate one or designates one which is unacceptable to the State agency. Examples of acceptable collateral contacts may include employers, landlords, social service agencies, migrant service agencies, and neighbors of the household who can be expected to provide accurate third-party verification. When talking with collateral contacts, State agencies should disclose only the information that is absolutely necessary to get the information being sought. State agencies should avoid disclosing that the household has applied for SNAP benefits, nor should they disclose any information supplied by the household, especially information that is protected by § 273.1(c), or suggest that the household is suspected of any wrong doing.
(iii) Home visits. Home visits may be used as verification only when documentary evidence is insufficient to make a firm determination of eligibility or benefit level, or cannot be obtained, and the home visit is scheduled in advance with the household. Home visits are to be used on a case-by-case basis where the supplied documentation is insufficient. Simply because a household fits a profile of an error-prone household does not constitute lack of verification. State agencies shall assist households in obtaining sufficient verification in accordance with paragraph (c)(5) of this section.
(iv) Discrepancies. Where unverified information from a source other than the household contradicts statements made by the household, the household shall be afforded a reasonable opportunity to resolve the discrepancy prior to a determination of eligibility or benefits. The State agency may, if it chooses, verify the information directly and contact the household only if such direct verification efforts are unsuccessful. If the unverified information is received through the IEVS, as specified in § 272.8, the State agency may obtain verification from a third party as specified in paragraph (f)(9)(v) of this section.
(v) Homeless households. Homeless households claiming actual shelter expenses or those with extremely low shelter costs may provide verification of their shelter expenses to qualify for the homeless shelter deduction if the State agency has such a deduction. If a homeless household has difficulty in obtaining traditional types of verification of shelter costs, the caseworker shall use prudent judgment in determining if the verification obtained is adequate. For example, if a homeless individual claims to have incurred shelter costs for several nights and the costs are comparable to costs typically incurred by homeless people for shelter, the caseworker may decide to accept this information as adequate information and not require further verification.
(5) Responsibility of obtaining verification. (i) The household has primary responsibility for providing documentary evidence to support statements on the application and to resolve any questionable information. The State agency must assist the household in obtaining this verification provided the household is cooperating with the State agency as specified under paragraph (d)(1) of this section. Households may supply documentary evidence in person, through the mail, by facsimile or other electronic device, or through an authorized representative. The State agency must not require the household to present verification in person at the SNAP office. The State agency must accept any reasonable documentary evidence provided by the household and must be primarily concerned with how adequately the verification proves the statements on the application. However, the State agency has primary responsibility for verifying fleeing felon and parole or probation violator status in accordance with § 273.11(n). If a SNAP applicant’s attestation regarding disqualified felon status described in § 273.2(o) is questionable, the State agency shall verify the attestation. Each element of a questionable attestation—that the individual has been convicted of a crime listed at § 273.11(s), and that the individual is not in compliance with the terms of their sentence—shall be verified by the State agency. The State agency shall determine whether an attestation is questionable based on the standards established under § 273.2(f)(2)(i). In conducting verifications of questionable attestations under this paragraph, the State agency shall establish reasonable, consistent standards, evaluate each case separately, and document the case file accordingly.
(ii) Whenever documentary evidence is insufficient to make a firm determination of eligibility or benefit level, or cannot be obtained, the State agency may require a collateral contact or a home visit in accordance with paragraph (f)(4) of this section. The State agency, generally, shall rely on the household to provide the name of any collateral contact. The household may request assistance in designating a collateral contact. The State agency is not required to use a collateral contact designated by the household if the collateral contact cannot be expected to provide an accurate third-party verification. When the collateral contact designated by the household is unacceptable, the State agency shall either designate another collateral contact, ask the household to designate another collateral contact or to provide an alternative form of verification, or substitute a home visit. The State agency is responsible for obtaining verification from acceptable collateral contacts.
(6) Documentation. Case files must be documented to support eligibility, ineligibility, and benefit level determinations. Documentation shall be in sufficient detail to permit a reviewer to determine the reasonableness and accuracy of the determination.
(7) State Data Exchange and Beneficiary Data Exchange. The State agency may verify SSI benefits through the State Data Exchange (SDX), and Social Security benefit information through the Beneficiary Data Exchange (BENDEX), or through verification provided by the household. The State agency may use SDX and BENDEX data to verify other SNAP eligibility criteria. The State agency may access SDX and BENDEX data without release statements from households, provided the State agency makes the appropriate data request to SSA and executes the necessary data exchange agreements with SSA. The household shall be given an opportunity to verify the information from another source if the SDX or BENDEX information is contradictory to the information provided by the household or is unavailable. Determination of the household’s eligibility and benefit level shall not be delayed past the application processing time standards of paragraph (g) of this section if SDX or BENDEX data is unavailable.
(8) Verification subsequent to initial certification—(i) Recertification (A) At recertification the State agency shall verify a change in income if the source has changed or the amount has changed by more than $50. Previously unreported medical expenses, actual utility expenses and total recurring medical expenses which have changed by more than $25 shall also be verified at recertification. The State agency shall not verify income if the source has not changed and if the amount is unchanged or has changed by $50 or less, unless the information is incomplete, inaccurate, inconsistent or outdated. The State agency shall also not verify total medical expenses, or actual utility expenses claimed by households which are unchanged or have changed by $25 or less, unless the information is incomplete, inaccurate, inconsistent or outdated. For households eligible for the child support deduction or exclusion, the State agency may use information provided by the State CSE agency in determining the household’s legal obligation to pay child support, the amount of its obligation and amounts the household has actually paid if the household pays its child support exclusively through its State CSE agency and has signed a statement authorizing release of its child support payment records to the State agency. A household would not have to provide any additional verification unless they disagreed with the information provided by the State CSE agency. State agencies that choose to use information provided by their State CSE agency in accordance with this paragraph (f)(8)(i)(A) must specify in their State plan of operation that they have selected this option. For all other households eligible for the child support deduction or exclusion, the State agency shall require the household to verify any changes in the legal obligation to pay child support, the obligated amount, and the amount of legally obligated child support a household member pays to a nonhousehold member. The State agency shall verify reportedly unchanged child support information only if the information is incomplete, inaccurate, inconsistent or outdated.
(B) Newly obtained social security numbers shall be verified at recertification in accordance with verification procedures outlined in § 273.2(f)(1)(v).
(C) For individuals subject to the SNAP time limit of § 273.24 who are satisfying the work requirement by working, by combining work and participation in a work program, or by participating in a work program that is not operated or supervised by the State agency, the individuals’ work hours shall be verified.
(D) Other information which has changed may be verified at recertification. Unchanged information shall not be verified unless the information is incomplete, inaccurate, inconsistent or outdated. Verification under this paragraph shall be subject to the same verification procedures as apply during initial verification.
(ii) Changes. Changes reported during the certification period shall be subject to the same verification procedures as apply at initial certification, except that the State agency shall not verify changes in income if the source has not changed and if the amount has changed by $50 or less, unless the information is incomplete, inaccurate, inconsistent or outdated. The State agency shall also not verify total medical expenses or actual utility expenses which are unchanged or have changed by $25 or less, unless the information is incomplete, inaccurate, inconsistent or outdated.
(9) Mandatory use of IEVS. (i) The State agency must obtain information through IEVS in accordance with procedures specified in § 272.8 of this chapter and use it to verify the eligibility and benefit levels of applicants and participating households.
(ii) The State agency must access data through the IEVS in accordance with the disclosure safeguards and data exchange agreements required by part 272.
(9) Mandatory use of IEVS. (i) The State agency must obtain information through IEVS in accordance with procedures specified in § 272.8 of this chapter and use it to verify the eligibility and benefit levels of applicants and participating households.
(ii) The State agency must access data through the IEVS in accordance with the disclosure safeguards and data exchange agreements required by part 272.
(iii) The State agency shall take action, including proper notices to households, to terminate, deny, or reduce benefits based on information obtain through the IEVS which is considered verified upon receipt. This information is social security and SSI benefit information obtained from SSA, and TANF benefit information and UIB information obtained from the agencies administering those programs. If the State agency has information that the IEVS-obtained information about a particular household is questionable, this information shall be considered unverified upon receipt and the State agency shall take action as specified in paragraph (f)(9)(iv) of this section.
(iv) Except as noted in this paragraph, prior to taking action to terminate, deny, or reduce benefits based on information obtained through the IEVS which is considered unverified upon receipt, State agencies shall independently verify the information. Such unverified information is unearned income information from IRS, wage information from SSA and SWICAs, and questionable IEVS information discussed in paragraph (f)(9)(iii) of this section. Independent verification shall include verification of the amount of the asset or income involved, whether the household actually has or had access to such asset or income such that it would be countable income or resources for SNAP purposes, and the period during which such access occurred. Except with respect to unearned income information from IRS, if a State agency has information which indicates that independent verification is not needed, such verification is not required.
(v) The State agency shall obtain independent verification of unverified information obtained from IEVS by means of contacting the household and/or the appropriate income, resource or benefit source. If the State agency chooses to contact the household, it must do so in writing, informing the household of the information which it has received, and requesting that the household respond within 10 days. If the household fails to respond in a timely manner, the State agency shall send it a notice of adverse action as specified in § 273.13. The State agency may contact the appropriate source by the means best suited to the situation. When the household or appropriate source provides the independent verification, the State agency shall properly notify the household of the action it intends to take and provide the household with an opportunity to request a fair hearing prior to any adverse action.
(10) Mandatory use of SAVE. Households are required to submit documentation for each alien applying for SNAP benefits in order for the State agency to verify their immigration statuses. State agencies shall verify the validity of such documents through an immigration status verification system established under section 1137 of the Social Security Act (42 U.S.C. 1320b-7) in accordance with § 272.11 of this chapter. USCIS maintains the SAVE system to conduct this verification. When using SAVE to verify immigration status, State agencies shall use the following procedures:
(i) The State agency shall provide an applicant alien with a reasonable opportunity to submit acceptable documentation of their eligible alien status prior to the 30th day following the date of application. A reasonable opportunity shall be at least 10 days from the date of the State agency’s request for an acceptable document. An alien who has been given a reasonable opportunity to submit acceptable documentation and has not done so as of the 30th day following the date of application shall not be certified for benefits until acceptable documentation has been submitted. However, if the 10-day reasonable opportunity period provided by the State agency does not lapse before the 30th day following the date of application, the State agency shall provide the household with benefits no later than 30 days following the date of application Provided the household is otherwise eligible.
(ii) The written consent of the alien applicant shall not be required as a condition for the State agency to contact USCIS to verify the validity of documentation.
(iii) State agencies which access the ASVI database through an automated access shall also submit USCIS Form G-845, with an attached photocopy of the alien’s document, to USCIS whenever the initial automated access does not confirm the validity of the alien’s documentation or a significant discrepancy exists between the data provided by the ASVI and the information provided by the applicant. Pending such responses from either the ASVI or USCIS Form G-845, the State agency shall not delay, deny, reduce, or terminate the alien’s eligibility for benefits on the basis of the individual’s alien status.
(iv) If the State agency determines, after complying with the requirements of this section, that the alien is not in an eligible alien status, the State agency shall take action, including proper notices to the household, to terminate, deny or reduce benefits. The State agency shall provide households the opportunity to request a fair hearing under § 273.15 prior to any adverse action.
(v) The use of SAVE shall be documented in the casefile or other agency records. When the State agency is waiting for a response from SAVE, agency records shall contain either a notation showing the date of the State agency’s transmission or a copy of the USCIS Form G-845 sent to USCIS. Once the SAVE response is received, agency records shall show documentation of the ASVI Query Verification Number or contain a copy of the USCIS-annotated Form G-845. Whenever the response from automated access to the ASVI directs the eligibility worker to initiate secondary verification, agency records shall show documentation of the ASVI Query Verification Number and contain a copy of the USCIS Form G-845.
(vi) State agencies may use information contained in SAVE search results to confirm whether an alien has a sponsor who has signed a legally binding affidavit of support when evaluating the alien’s application for SNAP benefits in accordance with the deeming requirements described in § 273.4(c)(2).
(11) Use of disqualification data. (i) Pursuant to § 273.16(i), information in the disqualified recipient database will be available for use by any State agency that executes a computer matching agreement with FNS. The State agency shall use the disqualified recipient database for the following purposes:
(A) Ascertain the appropriate penalty to impose based on past disqualifications in a case under consideration;
(B) Conduct matches as specified in § 273.16 on:
(1) Program application information prior to certification and for a newly added household member whenever that might occur; and
(2) The current recipient caseload at the time of recertification for a period of 1 year after the implementation date of this match. State agencies do not need to include minors, as that term is defined by each State.
(3) States having the ability to conduct a one-time match of their entire active caseload against active cases from the disqualified recipient database may do so and be exempted from the 1-year requirement to conduct matches at recertification.
(ii) State agencies shall not take any adverse action to terminate, deny, suspend, or reduce benefits to an applicant, or SNAP recipient, based on disqualified recipient match results unless the match information has been independently verified. The State agency shall provide to an applicant, or recipient, an opportunity to contest any adverse disqualified recipient match result pursuant to the provisions of § 273.13.
(iii) Independent verification shall take place separate from and prior to issuing a notice of adverse action—a two-step process. Independent verification for disqualification purposes means contacting the applicant or recipient household and/or the State agency that originated the disqualification record immediately to obtain corroborating information or documentation to support the reported disqualification information in the intentional Program violation database.
(A) Documentation may be in any form deemed appropriate and legally sufficient by the State agency considering the adverse action. Such documentation may include, but shall not be limited to, electronic or hard copies of court decisions, administrative disqualification hearing determinations, signed disqualification consent agreements or administrative disqualification hearing waivers.
(B) A State may accept a verbal or written statement from another State agency attesting to the existence of the documentation listed in paragraph (f)(11)(iii)(A) of this section.
(C) A State may accept a verbal or written statement from the household affirming the accuracy of the disqualification information if such a statement is properly documented and included in the case record.
(D) If a State agency is not able to provide independent verification because of a lack of supporting documentation, the State agency shall so advise the requesting State agency or FNS, as appropriate, and shall take immediate action to remove the unsupported record from the disqualified recipient database in accordance with § 273.16(i)(6).
(iv) Once independent verification has been received, the requesting State agency shall review and immediately enter the information into the case record and send the appropriate notice(s) to the record subject and any remaining members of the record subject’s SNAP household.
(v) Information from the disqualified recipient database is subject to the disclosure provisions in § 272.1(c) of this chapter and the routine uses described in the most recent “Notice of Revision of Privacy Act System of Records” published in the
(g) Normal processing standard—(1) Thirty-day processing. The State agency shall provide eligible households that complete the initial application process an opportunity to participate (as defined in § 274.2(b)) as soon as possible, but no later than 30 calendar days following the date the application was filed, except for residents of public institutions who apply jointly for SSI and SNAP benefits prior to release from the institution in accordance with § 273.11(i). An application is filed the day the appropriate SNAP office receives an application containing the applicant’s name and address, which is signed by either a responsible member of the household or the household’s authorized representative. Households entitled to expedited processing are specified in paragraph (i) of this section. For residents of public institutions who apply for SNAP benefits prior to their release from the institution in accordance with § 273.11(i), the State agency shall provide an opportunity to participate as soon as possible, but not later than 30 calendar days from the date of release of the applicant from the institution.
(2) Combined allotments. Households which apply for initial month benefits (as described in § 273.10(a)) after the 15th of the month, are processed under normal processing timeframes, have completed the application process within 30 days of the date of application, and have been determined eligible to receive benefits for the initial month of application and the next subsequent month, may be issued a combined allotment at State agency option which includes prorated benefits for the month of application and benefits for the first full month of participation. The benefits shall be issued in accordance with § 274.2(c) of this chapter.
(3) Denying the application. Households that are found to be ineligible shall be sent a notice of denial as soon as possible but not later than 30 days following the date the application was filed. If the household has failed to appear for a scheduled interviewand has made no subsequent contact with the State agency to express interest in pursuing the application, the State agency shall send the household a notice of denial on the 30th day following the date of application. The household must file a new application if it wishes to participate in the program. In cases where the State agency was able to conduct an interview and request all of the necessary verification on the same day the application was filed, and no subsequent requests for verification have been made, the State agency may also deny the application on the 30th day if the State agency provided assistance to the household in obtaining verification as specified in paragraph (f)(5) of this section, but the household failed to provide the requested verification.
(h) Delays in processing. If the State agency does not determine a household’s eligibility and provide an opportunity to participate within 30 days following the date the application was filed, the State agency shall take the following action:
(1) Determining cause. The State agency shall first determine the cause of the delay using the following criteria:
(i) A delay shall be considered the fault of the household if the household has failed to complete the application process even though the State agency has taken all the action it is required to take to assist the household. The State agency must have taken the following actions before a delay can be considered the fault of the household:
(A) For households that have failed to complete the application form, the State agency must have offered, or attempted to offer, assistance in its completion.
(B) If one or more members of the household have failed to register for work, as required in § 273.7, the State agency must have informed the household of the need to register for work, determined if the household members are exempt from work registration, and given the household at least 10 days from the date of notification to register these members.
(C) In cases where verification is incomplete, the State agency must have provided the household with a statement of required verification and offered to assist the household in obtaining required verification and allowed the household sufficient time to provide the missing verification. Sufficient time shall be at least 10 days from the date of the State agency’s initial request for the particular verification that was missing.
(D) For households that have failed to appear for an interview, the State agency must notify the household that it missed the scheduled interview and that the household is responsible for rescheduling a missed interview. If the household contacts the State agency within the 30 day processing period, the State agency must schedule a second interview. If the household fails to schedule a second interview, or the subsequent interview is postponed at the household’s request or cannot otherwise be rescheduled until after the 20th day but before the 30th day following the date the application was filed, the household must appear for the interview, bring verification, and register members for work by the 30th day; otherwise, the delay shall be the fault of the household. If the household has failed to appear for the first interview, fails to schedule a second interview, and/or the subsequent interview is postponed at the household’s request until after the 30th day following the date the application was filed, the delay shall be the fault of the household. If the household has missed both scheduled interviews and requests another interview, any delay shall be the fault of the household.
(ii) Delays that are the fault of the State agency include, but are not limited to, those cases where the State agency failed to take the actions described in paragraphs (h)(1)(i) (A) through (D) of this section.
(2) Delays caused by the household. (i) If by the 30th day the State agency cannot take any further action on the application due to the fault of the household, the household shall lose its entitlement to benefits for the month of application. However, the State agency shall give the household an additional 30 days to take the required action, except that, if verification is lacking, the State agency has the option of holding the application pending for only 30 days following the date of the initial request for the particular verification that was missing.
(A) The State agency has the option of sending the household either a notice of denial or a notice of pending status on the 30th day. The option chosen may vary from one project area to another, provided the same procedures apply to all households within a project area. However, if a notice of denial is sent and the household takes the required action within 60 days following the date the application was filed, the State agency shall reopen the case without requiring a new application. No further action by the State agency is required after the notice of denial or pending status is sent if the household failed to take the required action within 60 days following the date the application was filed, or if the State agency chooses the option of holding the application pending for only 30 days following the date of the initial request for the particular verification that was missing, and the household fails to provide the necessary verification by this 30th day.
(B) State agencies may include in the notice a request that the household report all changes in circumstances since it filed its application. The information that must be contained on the notice of denial or pending status is explained in § 273.10(g)(1) (ii) and (iii).
(ii) If the household was at fault for the delay in the first 30-day period, but is found to be eligible during the second 30-day period, the State agency shall provide benefits only from the month following the month of application. The household is not entitled to benefits for the month of application when the delay was the fault of the household.
(3) Delays caused by the State agency. (i) Whenever a delay in the initial 30-day period is the fault of the State agency, the State agency shall take immediate corrective action. Except as specified in §§ 273.2(f)(1)(ii)(F) and 273.2(f)(10)(i), the State agency shall not deny the application if it caused the delay, but shall instead notify the household by the 30th day following the date the application was filed that its application is being held pending. The State agency shall also notify the household of any action it must take to complete the application process. If verification is lacking the State agency has the option of holding the application pending for only 30 days following the date of the initial request for the particular verification that was missing.
(ii) If the household is found to be eligible during the second 30-day period, the household shall be entitled to benefits retroactive to the month of application. If, however, the household is found to be ineligible, the State agency shall deny the application.
(4) Delays beyond 60 days. (i) If the State agency is at fault for not completing the application process by the end of the second 30-day period, and the case file is otherwise complete, the State agency shall continue to process the original application until an eligibility determination is reached. If the household is determined eligible, and the State agency was at fault for the delay in the initial 30 days, the household shall receive benefits retroactive to the month of application. However, if the initial delay was the household’s fault, the household shall receive benefits retroactive only to the month following the month of application. The State agency may use the original application to determine the household’s eligibility in the months following the 60-day period, or it may require the household to file a new application.
(ii) If the State agency is at fault for not completing the application process by the end of the second 30-day period, but the case file is not complete enough to reach an eligibility determination, the State agency may continue to process the original application, or deny the case and notify the household to file a new application. If the case is denied, the household shall also be advised of its possible entitlement to benefits lost as a result of State agency caused delays in accordance with § 273.17. If the State agency was also at fault for the delay in the initial 30 days, the amount of benefits lost would be calculated from the month of application. If, however, the household was at fault for the initial delay, the amount of benefits lost would be calculated from the month following the month of application.
(iii) If the household is at fault for not completing the application process by the end of the second 30-day period, the State agency shall deny the application and require the household to file a new application if it wishes to participate. If however, the State agency has chosen the option of holding the application pending only until 30 days following the date of the initial request for the particular verification that was missing, and verification is not received by that 30th day, the State agency may immediately close the application. A notice of denial need not be sent if the notice of pending status informed the household that it would have to file a new application if verification was not received within 30 days of the initial request. The household shall not be entitled to any lost benefits, even if the delay in the initial 30 days was the fault of the State agency.
(i) Expedited service—(1) Entitlement to expedited service. The following households are entitled to expedited service:
(i) Households with less than $150 in monthly gross income, as computed in § 273.10 provided their liquid resources (i.e., cash on hand, checking or savings accounts, savings certificates, and lump sum payments as specified in § 273.9(c)(8)) do not exceed $100;
(ii) Migrant or seasonal farmworker households who are destitute as defined in § 273.10(e)(3) provided their liquid resources (i.e., cash on hand, checking or savings accounts, savings certificates, and lump sum payments as specified in § 273.9(c)(8)) do not exceed $100;
(iii) Households whose combined monthly gross income and liquid resources are less than the household’s monthly rent or mortgage, and utilities (including entitlement to a SUA, as appropriate, in accordance with § 273.9(d)).
(2) Identifying households needing expedited service. The State agency’s application procedures shall be designed to identify households eligible for expedited service at the time the household requests assistance. For example, a receptionist, volunteer, or other employee shall be responsible for screening applications as they are filed or as individuals come in to apply.
(3) Processing standards. All households receiving expedited service, except those receiving it during months in which allotments are suspended or cancelled, shall have their cases processed in accordance with the following provisions. Those households receiving expedited service during suspensions or cancellations shall have their cases processed in accordance with the provisions of § 271.7(e)(2).
(i) General. For households entitled to expedited service, the State agency shall post benefits to the household’s EBT card and make them available to the household not later than the seventh calendar day following the date an application was filed. For a resident of a public institution who applies for benefits prior to his/her release from the institution in accordance with § 273.11(i) and who is entitled to expedited service, the date of filing of his/her SNAP application is the date of release of the applicant from the institution. Whatever systems a State agency uses to ensure meeting this delivery standard shall be designed to provide the household with an EBT card and PIN no later than the seventh calendar day following the day the application was filed.
(ii) Drug addicts and alcoholics, group living arrangement facilities. For residents of drug addiction or alcoholic treatment and rehabilitation centers and residents of group living arrangements who are entitled to expedited service, the State agency shall make benefits available to the recipient not later than the 7 calendar days following the date an application was filed.
(iii) Out-of-office interviews. If a household is entitled to expedited service and is also entitled to a waiver of the office interview, the State agency shall conduct the interview (unless the household cannot be reached) and complete the application process within the expedited service standards. The first day of this count is the calendar day following application filing. If the State agency conducts a telephone interview and must mail the application to the household for signature, the mailing time involved will not be calculated in the expedited service standards. Mailing time shall only include the days the application is in the mail to and from the household and the days the application is in the household’s possession pending signature and mailing.
(iv) Late determinations. If the prescreening required in paragraph (i)(2) of this section fails to identify a household as being entitled to expedited service and the State agency subsequently discovers that the household is entitled to expedited service, the State agency shall provide expedited service to households within the processing standards described in paragraphs (i)(3) (i) and (ii) of this section, except that the processing standard shall be calculated from the date the State agency discovers the household is entitled to expedited service.
(v) Residents of shelters for battered women and children. Residents of shelters for battered women and children who are otherwise entitled to expedited service shall be handled in accordance with the time limits in paragraph (i)(3)(i) of this section.
(4) Special procedures for expediting service. The State agency shall use the following procedures when expediting certification and issuance:
(i) In order to expedite the certification process, the State agency shall use the following procedures:
(A) In all cases, the applicant’s identity (i.e., the identity of the person making the application) shall be verified through a collateral contact or readily available documentary evidence as specified in paragraph (f)(1) of this section.
(B) All reasonable efforts shall be made to verify within the expedited processing standards, the household’s residency in accordance with § 273.2(f)(1)(vi), income statement (including a statement that the household has no income), liquid resources and all other factors required by § 273.2(f), through collateral contacts or readily available documentary evidence. However, benefits shall not be delayed beyond the delivery standards prescribed in paragraph (i)(3) of this section, solely because these eligibility factors have not been verified.
(ii) Once an acceptable collateral contact has been designated, the State agency shall promptly contact the collateral contact, in accordance with the provisions of paragraph (f)(4)(ii) of this section. Although the household has the primary responsibility for providing other types of verification, the State agency shall assist the household in promptly obtaining the necessary verification.
(iii) Households that are certified on an expedited basis and have provided all necessary verification required in paragraph (f) of this section prior to certification shall be assigned normal certification periods. If verification was postponed, the State agency may certify these households for the month of application (the month of application and the subsequent month for those households applying after the 15th of the month) or, at the State agency’s option, may assign normal certification periods to those households whose circumstances would otherwise warrant longer certification periods. State agencies, at their option, may request any household eligible for expedited service which applies after the 15th of the month and is certified for the month of application and the subsequent month only to submit a second application (at the time of the initial certification) if the household’s verification is postponed.
(A) For households applying on or before the 15th of the month, the State agency may assign a one-month certification period or assign a normal certification period. Satisfaction of the verification requirements may be postponed until the second month of participation. If a one-month certification period is assigned, the notice of eligibility may be combined with the notice of expiration or a separate notice may be sent. The notice of eligibility must explain that the household has to satisfy all verification requirements that were postponed. For subsequent months, the household must reapply and satisfy all verification requirements which were postponed or be certified under normal processing standards. If the household does not satisfy the postponed verification requirements and does not appear for the interview, the State agency does not need to contact the household again.
(B) For households applying after the 15th of the month, the State agency may assign a 2-month certification period or a normal certification period of no more than 12 months. Verification may be postponed until the third month of participation, if necessary, to meet the expedited timeframe. If a two-month certification period is assigned, the notice of eligibility may be combined with the notice of expiration or a separate notice may be sent. The notice of eligibility must explain that the household is obligated to satisfy the verification requirements that were postponed. For subsequent months, the household must reapply and satisfy the verification requirements which were postponed or be certified under normal processing standards. If the household does not satisfy the postponed verification requirements and does not attend the interview, the State agency does not need to contact the household again. When a certification period of longer than 2 months is assigned and verification is postponed, households must be sent a notice of eligibility advising that no benefits for the third month will be issued until the postponed verification requirements are satisfied. The notice must also advise the household that if the verification process results in changes in the household’s eligibility or level of benefits, the State agency will act on those changes without advance notice of adverse action.
(C) Households which apply for initial benefits (as described in § 273.10(a)) after the 15th of the month, are entitled to expedited service, have completed the application process, and have been determined eligible to receive benefits for the initial month and the next subsequent month, shall receive a combined allotment consisting of prorated benefits for the initial month of application and benefits for the first full month of participation within the expedited service timeframe. If necessary, verification shall be postponed to meet the expedited timeframe. The benefits shall be issued in accordance with § 274.2(c) of this chapter.
(D) The provisions of paragraph (i)(4)(iii)(C) of this section do not apply to households which have been determined ineligible to receive benefits for the month of application or the following month, or to households which have not satisfied the postponed verification requirements. However, households eligible for expedited service may receive benefits for the initial month and next subsequent month under the verification standards of paragraph (i)(4) of this section.
(E) If the State agency chooses to exercise the option to require a second application in accordance with paragraph (i)(4)(iii) of this section and receives the application before the third month, it shall not deny the application but hold it pending until the third month. The State agency will issue the third month’s benefits within 5 working days from receipt of the necessary verification information but not before the first day of the month. If the postponed verification requirements are not completed before the end of the third month, the State agency shall terminate the household’s participation and shall issue no further benefits.
(iv) There is no limit to the number of times a household can be certified under expedited procedures, as long as prior to each expedited certification, the household either completes the verification requirements that were postponed at the last expedited certification or was certified under normal processing standards since the last expedited certification. The provisions of this section shall not apply at recertification if a household reapplies before the end of its current certification period.
(v) Households requesting, but not entitled to, expedited service shall have their applications processed according to normal standards.
(j) PA, GA and categorically eligible households. The State agency must notify households applying for public assistance (PA) of their right to apply for SNAP benefits at the same time and must allow them to apply for SNAP benefits at the same time they apply for PA benefits. The State agency must also notify such households that time limits or other requirements that apply to the receipt of PA benefits do not apply to the receipt of SNAP benefits, and that households which cease receiving PA benefits because they have reached a time limit, have begun working, or for other reasons, may still qualify for SNAP benefits. If the State agency attempts to discourage households from applying for cash assistance, it shall make clear that the disadvantages and requirements of applying for cash assistance do not apply to SNAP benefits. In addition, it shall encourage applicants to continue with their application for SNAP benefits. The State agency shall inform households that receiving SNAP benefits will have no bearing on any other program’s time limits that may apply to the household. The State agency may process the applications of such households in accordance with the requirements of paragraph (j)(1) of this section, and the State agency must base their eligibility solely on SNAP eligibility criteria unless the household is categorically eligible, as provided in paragraph (j)(2) of this section. If a State has a single Statewide GA application form, households in which all members are included in a State or local GA grant may have their application for SNAP benefits included in the GA application form. State agencies may use the joint application processing procedures described in paragraph (j)(1) of this section for GA recipients in accordance with paragraph (j)(3) of this section. The State agency must base eligibility of jointly processed GA households solely on SNAP eligibility criteria unless the household is categorically eligible as provided in paragraph (j)(4) of this section. The State agency must base the benefit levels of all households solely on SNAP criteria. The State agency must certify jointly processed and categorically eligible households in accordance with SNAP procedural, timeliness, and notice requirements, including the 7-day expedited service provisions of paragraph (i) of this section and normal 30-day application processing standards of paragraph (g) of this section. Individuals authorized to receive PA, SSI, or GA benefits but who have not yet received payment are considered recipients of benefits from those programs. In addition, individuals are considered recipients of PA, SSI, or GA if their PA, SSI, or GA benefits are suspended or recouped. Individuals entitled to PA, SSI, or GA benefits but who are not paid such benefits because the grant is less than a minimum benefit are also considered recipients. The State agency may not consider as recipients those individuals not receiving GA, PA, or SSI benefits who are entitled to Medicaid only.
(1) Applicant PA households. (i) If a joint PA/SNAP application is used, the application may contain all the information necessary to determine a household’s SNAP eligibility and level of benefits. Information relevant only to SNAP eligibility must be contained in the PA form or must be an attachment to it. The joint PA/SNAP application must clearly indicate that the household is providing information for both programs, is subject to the criminal penalties of both programs for making false statements, and waives the notice of adverse action as specified in paragraph (j)(1)(iv) of this section.
(ii) The State agency may conduct a single interview at initial application for both public assistance and SNAP purposes. A household’s eligibility for SNAP out-of-office interview provisions in paragraph (e)(2) of this section does not relieve the household of any responsibility for a face-to-face interview to be certified for PA.
(iii) For households applying for both PA and SNAP benefits, the State agency must follow the verification procedures described in paragraphs (f)(1) through (f)(8) of this section for those factors of eligibility which are needed solely for purposes of determining the household’s eligibility for SNAP benefits. For those factors of eligibility which are needed to determine both PA eligibility and SNAP eligibility, the State agency may use the PA verification rules. However, if the household has provided the State agency sufficient verification to meet the verification requirements of paragraphs (f)(1) through (f)(8) of this section, but has failed to provide sufficient verification to meet the PA verification rules, the State agency may not use such failure as a basis for denying the household’s SNAP application or failing to comply with processing requirements of paragraph (g) of this section. Under these circumstances, the State agency must process the household’s SNAP application and determine eligibility based on its compliance with the requirements of paragraphs (f)(1) through (f)(8) of this section.
(iv) In order to determine if a household will be eligible due to its status as a recipient PA/SSI household, the State agency may temporarily postpone, within the 30-day processing standard, the SNAP eligibility determination if the household is not entitled to expedited service and appears to be categorically eligible. However, the State agency shall postpone denying a potentially categorically eligible household until the 30th day in case the household is determined eligible to receive PA benefits. Once the PA application is approved, the household is to be considered categorically eligible if it meets all the criteria concerning categorical eligibility in § 273.2(j)(2). If the State agency can anticipate the amount and the date of receipt of the initial PA payment, but the payment will not be received until a subsequent month, the State agency shall vary the household’s SNAP benefit level according to the anticipated receipt of the payment and notify the household. Portions of initial PA payments intended to retroactively cover a previous month shall be disregarded as lump sum payments under § 273.9(c)(8). If the amount or date of receipt of the initial PA payment cannot be reasonably anticipated at the time of the SNAP eligibility determination, the PA payments shall be handled as a change in circumstances. However, the State agency is not required to send a notice of adverse action if the receipt of the PA grant reduces, suspends or terminates the household’s SNAP benefits, provided the household is notified in advance that its benefits may be reduced, suspended, or terminated when the grant is received. The case may be terminated if the household is not categorically eligible in accordance with § 273.12(c). The State agency shall ensure that the denied application of a potentially categorically eligible household is easily retrievable. For a household filing a joint application for SNAP benefits and PA benefits or a household that has a PA application pending and is denied SNAP benefits but is later determined eligible to receive PA benefits and is otherwise categorically eligible, the State agency shall provide benefits using the original application and any other pertinent information occurring subsequent to that application. Except for residents of public institutions who apply jointly for SSI and SNAP benefits prior to their release from a public institution in accordance with § 273.11(i), benefits shall be paid from the beginning of the period for which PA or SSI benefits are paid, the original SNAP application date, or December 23, 1985 whichever is later. Residents of public institutions who apply jointly for SSI and SNAP benefits prior to their release from the institution shall be paid benefits from the date of their release from the institution. In situations where the State agency must update and reevaluate the original application of a denied case, the State agency shall not reinterview the household, but shall use any available information to update the application. The State agency shall then contact the household by phone or mail to explain and confirm changes made by the State agency and to determine if other changes in household circumstances have occurred. If any information obtained from the household differs from that which the State agency obtained from available information or the household provided additional changes in information, the State agency shall arrange for the household or it authorized representative to initial all changes, re-sign and date the updated application and provide necessary verification. In no event can benefits be provided prior to the date of the original SNAP application filed on or after December 23, 1985. Any household that is determined to be eligible to receive PA benefits for a period of time within the 30-day SNAP processing time, shall be provided SNAP benefits back to the date of the SNAP application. However, in no event shall SNAP benefits be paid for a month for which such household is ineligible for receipt of any PA benefits for the month, unless the household is eligible for SNAP benefits and an NPA case. Benefits shall be prorated in accordance with § 273.10(a)(1)(ii) and (e)(2)(ii)(B). Household that file joint applications that are found categorically eligible after being denied NPA SNAP benefits shall have their benefits for the initial month prorated from the date from which the PA benefits are payable, or the date of the original SNAP application, whichever is later. The State agency shall act on reevaluating the original application either at the household’s request or when it becomes otherwise aware of the household’s PA and/or SSI eligibility. The household shall be informed on the notice of denial required by § 273.10(g)(1)(ii) to notify the State agency if its PA or SSI benefits are approved.
(v) The State agency may not require households which file a joint PA/SNAP application and whose PA applications are denied to file new SNAP applications. Rather, the State agency must determine or continue their SNAP eligibility on the basis of the original applications filed jointly for PA and SNAP purposes. In addition, the State agency must use any other documented information obtained subsequent to the application which may have been used in the PA determination and which is relevant to SNAP eligibility or level of benefits.
(2) Categorically eligible PA and SSI households. (i) The following households are categorically eligible for SNAP benefits unless the entire household is institutionalized as defined in § 273.1(e) or disqualified for any reason from receiving SNAP benefits.
(A) Any household (except those listed in paragraph (j)(2)(vii) of this section) in which all members receive or are authorized to receive cash through a PA program funded in full or in part with Federal money under Title IV-A or with State money counted for maintenance of effort (MOE) purposes under Title IV-A;
(B) Any household (except those listed in paragraph (j)(2)(vii) of this section) in which all members receive or are authorized to receive non-cash or in-kind benefits or services from a program that is more than 50 percent funded with State money counted for MOE purposes under Title IV-A or Federal money under Title IV-A and that is designed to forward purposes one and two of the TANF block grant, as set forth in Section 401 of P.L. 104-193.
(C) Any household (except those listed in paragraph (j)(2)(vii) of this section) in which all members receive or are authorized to receive non-cash or in-kind benefits or services from a program that is more than 50 percent funded with State money counted for MOE purposes under Title IV-A or Federal money under Title IV-A and that is designed to further purposes three and four of the TANF block grant, as set forth in Section 401 of P.L. 104-193, and requires participants to have a gross monthly income at or below 200 percent of the Federal poverty level.
(D) Any household in which all members receive or are authorized to receive SSI benefits, except that residents of public institutions who apply jointly for SSI and SNAP benefits prior to their release from the institution in accordance with § 273.11(i), are not categorically eligible upon a finding by SSA of potential SSI eligibility prior to such release. The State agency must consider the individuals categorically eligible at such time as SSA makes a final SSI eligibility and the institution has released the individual.
(E) Any household in which all members receive or are authorized to receive PA and/or SSI benefits in accordance with paragraphs (j)(2)(i)(A) through (j)(2)(i)(D) of this section.
(ii) The State agency, at its option, may extend categorical eligibility to the following households only if doing so will further the purposes of the Food and Nutrition Act of 2008:
(A) Any household (except those listed in paragraph (j)(2)(vii) of this section) in which all members receive or are authorized to receive non-cash or in-kind services from a program that is less than 50 percent funded with State money counted for MOE purposes under Title IV-A or Federal money under Title IV-A and that is designed to further purposes one and two of the TANF block grant, as set forth in Section 401 of P.L. 104-193. States must inform FNS of the TANF services under this paragraph that they are determining to confer categorical eligibility.
(B) Subject to FNS approval, any household (except those listed in paragraph (j)(2)(vii) of this section) in which all members receive or are authorized to receive non-cash or in-kind services from a program that is less than 50 percent funded with State money counted for MOE purposes under Title IV-A or Federal money under Title IV-A and that is designed to further purposes three and four of the TANF block grant, as set forth in Section 401 of P.L 104-193, and requires participants to have a gross monthly income at or below 200 percent of the Federal poverty level.
(iii) Any household in which one member receives or is authorized to receive benefits according to paragraphs (j)(2)(i)(B), (j)(2)(i)(C), (j)(2)(ii)(A) and (j)(2)(ii)(B), of this section and the State agency determines that the whole household benefits.
(iv) For purposes of paragraphs (j)(2)(i), (j)(2)(ii),and (j)(2)(iii) of this section, “authorized to receive” means that an individual has been determined eligible for benefits and has been notified of this determination, even if the benefits have been authorized but not received, authorized but not accessed, suspended or recouped, or not paid because they are less than a minimum amount.
(v) The eligibility factors which are deemed for SNAP eligibility without the verification required in paragraph (f) of this section because of PA/SSI status are the resource, gross and net income limits; social security number information, sponsored alien information, and residency. However, the State agency must collect and verify factors relating to benefit determination that are not collected and verified by the other program if these factors are required to be verified under paragraph (f) of this section. If any of the following factors are questionable, the State agency must verify, in accordance with paragraph (f) of this section, that the household which is considered categorically eligible:
(A) Contains only members that are PA or SSI recipients as defined in the introductory paragraph (j) of this section;
(B) Meets the household definition in § 273.1(a);
(C) Includes all persons who purchase and prepare food together in one SNAP household regardless of whether or not they are separate units for PA or SSI purposes; and
(D) Includes no persons who have been disqualified as provided for in paragraph (j)(2)(vi) of this section.
(vi) Households subject to retrospective budgeting that have been suspended for PA purposes as provided for in Temporary Assistance for Needy Families (TANF) regulations, or that receive zero benefits shall continue to be considered as authorized to receive benefits from the appropriate agency. Categorical eligibility shall be assumed at recertification in the absence of a timely PA redetermination. If a recertified household is subsequently terminated from PA benefits, the procedures in § 273.12(f)(3), (4), and (5) shall be followed, as appropriate.
(vii) Under no circumstances shall any household be considered categorically eligible if:
(A) Any member of that household is disqualified for an intentional Program violation in accordance with § 273.16 or for failure to comply with monthly reporting requirements in accordance with § 273.21;
(B) The entire household is disqualified because one or more of its members failed to comply with workfare in accordance with § 273.22; or
(C) The head of the household is disqualified for failure to comply with the work requirements in accordance with § 273.7.
(D) Any member of that household is ineligible under § 273.11(m) by virtue of a conviction for a drug-related felony, under § 273.11(n) for being a fleeing felon or a probation or parole violator, or under § 273.11(s) for having a conviction of certain crimes and not being in compliance with the sentence.
(viii) These households are subject to all SNAP eligibility and benefits provisions (including the provisions of § 273.11(c)) and cannot be reinstated in the Program on the basis of categorical eligibility provisions.
(ix) No person shall be included as a member in any household which is otherwise categorically eligible if that person is:
(A) An ineligible alien as defined in § 273.4;
(B) Ineligible under the student provisions in § 273.5;
(C) An SSI recipient in a cash-out State as defined in § 273.20; or
(D) Institutionalized in a nonexempt facility as defined in § 273.1(e).
(E) Ineligible because of failure to comply with a work requirement of § 273.7.
(x) For the purposes of work registration, the exemptions in § 273.7(b) shall be applied to individuals in categorically eligible households. Any such individual who is not exempt from work registration is subject to the other work requirements in § 273.7.
(xi) When determining eligibility for a categorically eligible household all provisions of this subchapter except for those listed below shall apply:
(A) Section 273.8 except for the last sentence of paragraph (a).
(B) Section 273.9(a) except for the fourth sentence in the introductory paragraph.
(C) Section 273.10(a)(1)(i).
(D) Section 273.10(b).
(E) Section 273.10(c) for the purposes of eligibility.
(3) Applicant GA households. (i) State agencies may use the joint application processing procedures in paragraph (j)(1) of this section for GA households, except for the effective date of categorical eligibility, when the criteria in paragraphs (j)(3)(i) (A) and (B) of this section are met. Benefits for GA households that are categorically eligible, as provided in paragraph (j)(4) of this section, shall be provided from the date of the original SNAP application, the beginning of the period for which GA benefits are authorized, or the effective date of State GA categorical eligibility (February 1, 1991) or local GA categorical eligibility (August 1, 1992), whichever is later:
(A) The State agency administers a GA program which uses formalized application procedures and eligibility criteria that test levels of income and resources; and,
(B) Administration of the GA program is integrated with the administration of the PA or SNAP programs, in that the same eligibility workers process applications for GA benefits and PA or SNAP benefits.
(ii) State agencies in which different eligibility workers process applications for GA benefits and PA or SNAP benefits, but procedures otherwise meet the criteria in paragraph (j)(3)(i) of this section may, with FNS approval, jointly process GA and SNAP applications. If approved, State agencies shall adhere to the joint application processing procedures in paragraph (j)(1) of this section, except for the effective date of categorical eligibility for GA households. Benefits shall be provided GA households that are categorically eligible, as provided in paragraph (j)(4) of this section, from the date of the original SNAP application, the beginning of the period for which GA benefits are authorized, or the effective date of State GA categorical eligibility (February 1, 1992) or local GA categorical eligibility (August 1, 1992), whichever is later.
(4) Categorically eligible GA households. Households in which each member receives benefits from a State or local GA program which meets the criteria for conferring categorical eligibility in paragraph (j)(4)(i) of this section shall be categorically eligible for SNAP benefits unless the individual or household is ineligible as specified in paragraph (j)(4)(iv) and (j)(4)(v) of this section.
(i) Certification of qualifying programs. Recipients of benefits from programs that meet the criteria in paragraphs (j)(4)(i)(A) through (j)(4(i)(C) of this section shall be considered categorically eligible to receive benefits from SNAP. If a program does not meet all of these criteria, the State agency may submit a program description to the appropriate FNS regional office for a determination. The description should contain, at a minimum, the type of assistance provided, the income eligibility standard, and the period for which the assistance is provided.
(A) The program must have income standards which do not exceed the gross income eligibility standard in § 273.9(a)(1). The rules of the GA program apply in determining countable income.
(B) The program must provide GA benefits as defined in § 271.2 of this part.
(C) The program must provide benefits which are not limited to one-time emergency assistance.
(ii) Verification requirements. In determining whether a household is categorically eligible, the State agency shall verify that each member receives PA benefits, SSI, or GA from a program that meets the criteria in paragraph (j)(4)(i) section or that has been certified by FNS as an appropriate program and that it includes no individuals who have been disqualified as provided in paragraph (j)(4)(iv) or (j)(2)(v) of this section. The State agency shall also verify household composition if it is questionable, in accordance with § 273.2(f), in order to determine that the household meets the definition of a household in § 273.1(a).
(iii) Deemed eligibility factors. When determining eligibility for a categorically eligible household, all SNAP requirements apply except the following:
(A) Resources. None of the provisions of § 273.8 apply to categorically eligible households except the second sentence of § 273.8(a) pertaining to categorical eligibility and § 273.8(i) concerning transfer of resources. The provision in § 273.10(b) regarding resources available the time of the interview does not apply to categorically eligible households.
(B) Gross and net income limits. None of the provisions in § 273.9(a) relating to income eligibility standards apply to categorically eligible households, except the fourth sentence pertaining to categorical eligibility. The provisions in §§ 273.10(a)(1)(i) and 273.10(c) relating to the income eligibility determination also do not apply to categorically eligible households.
(C) Zero benefit households. All eligible households of one or two persons must be provided the minimum benefit, as required by § 273.10(e)(2)(ii)(C).
(D) Residency.
(E) Sponsored alien information.
(iv) Ineligible household members. No person shall be included as a member of an otherwise categorically eligible household if that person is:
(A) An ineligible alien, as defined in § 273.4;
(B) An ineligible student, as defined in § 273.5;
(C) Disqualified for failure to provide or apply for an SSN, as required by § 273.6;
(D) A household member, not the head of household, disqualified for failure to comply with a work requirement of § 273.7;
(E) Disqualified for intentional program violation, as required by § 273.16;
(F) An SSI recipient in a cash-out State, as defined in § 273.20; or
(G) An individual who is institutionalized in a nonexempt facility, as defined in § 273.1(e).
(v) Ineligible households. A household shall not be considered categorically eligible if:
(A) It refuses to cooperate in providing information to the State agency that is necessary for making a determination of its eligibility or for completing any subsequent review of its eligibility, as described in §§ 273.2(d) and 273.21(m)(1)(ii);
(B) The household is disqualified because the head of household fails to comply with a work requirement of § 273.7;
(C) The household is ineligible under the striker provisions of § 273.1(g); or
(D) The household is ineligible because it knowingly transferred resources for the purpose of qualifying or attempting to qualify for the Program, as provided in § 273.8(i).
(vi) Combination households. Households consisting entirely of recipients of PA, SSI and/or GA from a program that meets the requirements of § 273.2(j)(4)(i) shall be categorically eligible in accordance with the provisions for paragraphs (j)(2)(iii) and (j)(2)(v) of this section for members receiving PA and SSI or provisions of paragraphs (j)(4) (iv) and (v) of this section for members receiving GA.
(5) Households with some PA or GA recipients. State agencies that use the joint application processing procedures in paragraphs (j)(1) and (j)(3) of this section may apply these procedures to a SNAP applicant household in which some, but not all, members are in the PA/GA filing unit, except for procedures concerning categorical eligibility. If the State agency decides not to use the joint application procedures for these households, the households shall file separate applications for PA/GA and SNAP benefits. This decision shall not be made on a case-by-case basis, but shall be applied uniformly to all households of this type in a project area.
(k) SSI households. For purposes of this paragraph, SSI is defined as Federal SSI payments made under title XVI of the Social Security Act, federally administered optional supplementary payments under section 1616 of that Act, or federally administered mandatory supplementary payments made under section 212(a) of Pub. L. 93-66. Except in cashout States (§ 273.20), households which have not applied for SNAP benefits in the thirty preceding days, and which do not have applications pending, may apply and be certified for SNAP benefits in accordance with the procedures described in § 273.2(k)(1)(i) or § 273.2(k)(1)(ii) and with the notice, procedural and timeliness requirements of the Food and Nutrition Act of 2008 and its implementing regulations. Households applying simultaneously for SSI and SNAP benefits shall be subject to SNAP eligibility criteria, and benefit levels shall be based solely on SNAP eligibility criteria until the household is considered categorically eligible. However, households in which all members are either PA or SSI recipients or authorized to receive PA or SSI benefits (as discussed in § 273.2(j)) shall be SNAP eligible based on their PA/SSI status as provided for in § 273.2(j)(1)(iv) and (j)(2). Households denied NPA SNAP benefits that have an SSI application pending shall be informed on the notice of denial of the possibility of categorical eligibility if they become SSI recipients. The State agency shall make an eligibility determination based on information provided by SSA or by the household.
(1) Initial application and eligibility determination. At each SSA office, the State agency shall either arrange for SSA to complete and forward SNAP applications, or the State agency shall outstation State SNAP eligibility workers at the SSA Offices with SSA’s concurrence, based upon an agreement negotiated between the State agency and the SSA.
(i) If the State agency arranges with the SSA to complete and forward SNAP applications the following actions shall be taken:
(A) Whenever a member of a household consisting only of SSI applicants or recipients transacts business at an SSA office, the SSA shall inform the household of:
(1) Its right to apply for SNAP benefits at the SSA office without going to the SNAP office; and
(2) Its right to apply at a SNAP office if it chooses to do so.
(B) The SSA will accept and complete SNAP applications received at the SSA Office from SSI households and forward them, within one working day after receipt of a signed application, to a designated office of the State agency. SSA shall also forward to the State agency a transmittal form which will be approved by SSA and FNS. The SSA will use the national SNAP application form for joint processing. State agencies may substitute a State SNAP application, provided that prior approval is received from both FNS and SSA. SSA shall approve, deny, or comment upon FNS-approved State SNAP applications within thirty days of their submission to SSA.
(C) SSA will accept and complete SNAP applications from SSI households received by SSA staff in contact stations. SSA will forward all SNAP applications from SSI households to the designated SNAP office.
(D) The SSA staff shall complete joint SSI and SNAP applications for residents of public institutions in accordance with § 273.11(i).
(E) The State agency shall designate an address for the SSA to forward SNAP applications and accompanying information to the State agency for eligibility determination. Applications and accompanying information must be forwarded to the agreed upon address in accordance with the time standards contained in § 273.2(k)(1)(i)(B).
(F) Except for applications taken in accordance with paragraph (k)(1)(i)(D) of this section, the State agency shall make an eligibility determination and issue SNAP benefits to eligible SSI households within 30 days following the date the application was received by the SSA. Applications shall be considered filed for normal processing purposes when the signed application is received by SSA. The expedited processing time standards shall begin on the date the State agency receives a SNAP application. The State agency shall make an eligibility determination and issue SNAP benefits to a resident of a public institution who applies jointly for SSI and SNAP benefits within 30 days following the date of the applicant’s release from the institution. Expedited processing time standards for an applicant who has applied for SNAP benefits and SSI prior to release shall also begin on the date of the applicant’s release from the institution in accordance with § 273.2 (i)(3)(i). SSA shall notify the State agency of the date of release of the applicant from the institution. If, for any reason, the State agency is not notified on a timely basis of the applicant’s release date, the State agency shall restore benefits in accordance with § 273.17 to such applicant back to the date of release. SNAP applications and supporting documentation sent to an incorrect SNAP office shall be sent to the correct office, by the State agency, within one working day of their receipt in accordance with § 273.2(c)(2)(ii).
(G) Households in which all members are applying for or participating in SSI will not be required to see a State eligibility worker, or otherwise be subjected to an additional State interview. The SNAP application will be processed by the State agency. The State agency shall not contact the household further in order to obtain information for certification for SNAP benefits unless: the application is improperly completed; mandatory verification required by § 273.2(f)(1) is missing; or, the State agency determines that certain information on the application is questionable. In no event would the applicant be required to appear at the SNAP office to finalize the eligibility determination. Further contact made in accordance with this paragraph shall not constitute a second SNAP certification interview.
(H) SSA shall refer non-SSI households to the correct SNAP office. The State agencies shall process those applications in accordance with the procedures noted in § 273.2. Applications from such households shall be considered filed on the date the signed application is taken at the correct State agency office, and the normal and expedited processing time standards shall begin on that date.
(I) The SSA shall prescreen all applications for entitlement to expedited services on the day the application is received at the SSA office and shall mark “Expedited Processing” on the first page of all households’ applications that appear to be entitled to such processing. The SSA will inform households which appear to meet the criteria for expedited service that benefits may be issued a few days sooner if the household applies directly at the SNAP office. The household may take the application from SSA to the SNAP office for screening, an interview, and processing of the application. This provision does not apply to applications described in paragraph (k)(1)(i)(D) of this section.
(J) The State agency shall prescreen all applications received from the SSA for entitlement to expedited service on the day the application is received at the correct SNAP office. All SSI households entitled to expedited service shall be certified in accordance with § 273.2(i) except that the expedited processing time standard shall begin on the date the application is received at the correct State agency office, unless the applicant is a resident of a public institution as described in § 273.11(i).
(K) The State agency shall develop and implement a method to determine if members of SSI households whose applications are forwarded by the SSA are already participating in SNAP directly through the State agency.
(L) If SSA takes an SSI application or redetermination on the telephone from a member of a pure SSI household, a SNAP application shall also be completed during the telephone interview. In these cases, the SNAP application shall be mailed to the claimant for signature for return to the SSA office or to the State agency. SSA shall then forward any SNAP applications it receives to the State agency. The State agency may not require the household to be interviewed again in the SNAP office. The State agency shall not contact the household further in order to obtain information for certification for SNAP benefits except in accordance with § 273.2(k)(1)(i)(F).
(M) To SSI recipients redetermined for SSI by mail, the SSA shall send a stuffer informing them of their right to file a SNAP application at the SSA office (if they are members of a pure SSI household) or at their local SNAP office, and their right to an out-of-office SNAP interview to be performed by the State agency if the household is unable to appoint an authorized representative.
(N) Section 272.4 bilingual requirements shall not apply to the Social Security Administration.
(O) State agencies shall provide and SSA shall distribute an information sheet or brochure to all households processed under this paragraph. This material shall inform the household of the following: The address and telephone number of the household’s correct SNAP office, the remaining actions to be taken in the application process, and a statement that a household should be notified of the SNAP determinations within thirty days and can contact the SNAP office if it receives no notification within thirty days, or has other questions or problems. It shall also include the client’s rights and responsibilities (including fair hearings, authorized representatives, out-of-office interviews, reporting changes and timely reapplication), information on how and where to obtain an EBT card and PIN and how to use an EBT card and PIN (including the commodities clients may purchase with SNAP benefits.
(P) As part of the SSA-State agency joint SNAP processing agreement, States may negotiate, on behalf of project areas, to have SSA provide initial eligibility and payment data where the local area is unable to access accurate and timely data through the State’s SDX. However, in negotiating such agreements, SSA may challenge a State’s determination that it does not have the computer capability to use SDX data. If SSA, FNS, and the State are unable to resolve this matter, and SSA determines that a State does have the capability to provide accurate and timely SDX data to the SNAP project area, SSA is not required to provide alternate means of transmitting initial SSI eligibility and payment data.
(ii) If the State agency chooses to outstation eligibility workers at SSA offices, with SSA’s concurrence, the following actions shall be completed.
(A) SSA will provide adequate space for State SNAP eligibility workers in SSA offices.
(B) The State agency shall have at least one outstationed worker on duty at all time periods during which households will be referred for SNAP application processing. In most cases this would require the availability of an outstationed worker throughout normal SSA business hours.
(C) The following households shall be entitled to file SNAP applications with, and be interviewed by an outstationed eligibility worker:
(1) Households containing an applicant for or recipient of SSI;
(2) Households which do not have an applicant for or recipient of SSI, but which contain an applicant for or recipient of benefits under title II of the Social Security Act, if the State agency and SSA have an agreement to allow the processing of such households at SSA offices.
(D) Households shall be interviewed for SNAP benefits on the day of application unless there is insufficient time to conduct an interview. The State agency shall arrange for the outstationed worker to interview applicants as soon as possible.
(E) The State agency shall not refuse to provide service to persons served by the SSA office because they do not reside in the county or project area in which the SSA office is located, provided, however, that they reside within the jurisdictions served by the SSA office and the State agency. The State agency is not required to process the applications of persons who are not residing within the SSA office jurisdiction but who do reside within the State agency’s jurisdiction, other than to forward the forms to the correct SNAP offices.
(F) The State agency may permit the eligibility worker outstationed at the SSA to determine the eligibility of households, or may require that completed applications be forwarded elsewhere for the eligibility determination.
(G) Applications from households entitled to joint processing through an outstationed eligibility worker shall be considered filed on the date they are submitted to that worker. Both the normal and expedited service time standards shall begin on that date.
(H) Households not entitled to joint processing shall be entitled to obtain and submit applications at the SSA office. The outstationed eligibility worker need not process these applications except to forward them to the correct SNAP office where they shall be considered filed upon receipt (any activities beyond acceptance and referral of the application would require SSA concurrence). Both the normal and expedited service time standards shall begin on that date.
(iii) Regardless of whether the State agency or SSA conducts the SNAP interview, the following actions shall be taken:
(A) Verification. (1) The State agency shall ensure that information required by § 273.2(f) is verified prior to certification for households initially applying. Households entitled to expedited certification services shall be processed in accordance with § 273.2(i).
(2) The State agency has the option of verifying SSI benefit payments through the State Data Exchange (SDX), the Beneficiary Data Exchange (BENDEX) and/or through verification provided by the household.
(3) State agencies may verify other information through SDX and BENDEX but only to the extent permitted by data exchange agreements with SSA. Information verified through SDX or BENDEX shall not be reverified unless it is questionable. Households shall be given the opportunity to provide verification from another source if all necessary information is not available on the SDX or the BENDEX, or if the SDX/BENDEX information is contradictory to other household information.
(B) Certification period. (1) State agencies shall certify households under these procedures for up to twelve months, according to the standards in § 273.10(f), except for State agencies which must assign the initial certification period to coincide with adjustments to the SSI benefit amount as designated in § 273.10(f)(3)(iii).
(2) In cases jointly processed in which the SSI determination results in denial, and the State agency believes that SNAP eligibility or benefit levels may be affected, the State agency shall send the household a notice of expiration advising that the certification period will expire the end of the month following the month in which the notice is sent and that it must reapply if it wishes to continue to participate. The notice shall also explain that its certification period is expiring because of changes in circumstances which may affect SNAP eligibility or benefit levels and that the household may be entitled to an out-of-office interview, in accordance with § 273.2(e)(2).
(C) Changes in circumstances. (1) Households shall report changes in accordance with the requirements in § 273.12. The State agency shall process changes in accordance with § 273.12.
(2) Within ten days of learning of the determination of the application for SSI through SDX, the household, advisement from SSA where SSA agrees to do so for households processed under § 273.2(k)(1)(i), or from any other source, the State agency shall take required action in accordance with § 273.12. State agencies are encouraged to monitor the results of the SSI determination through SDX and BENDEX to the extent practical.
(3) The State agency shall process adjustments to SSI cases resulting from mass changes, in accordance with provisions of § 273.12(e).
(D) SSI households applying at the SNAP office. The State agency shall allow SSI households to submit SNAP applications to local SNAP offices rather than through the SSA if the household chooses. In such cases all verification, including that pertaining to SSI program benefits, shall be provided by the household, by SDX or BENDEX, or obtained by the State agency rather than being provided by the SSA.
(E) Restoration of lost benefits. The State agency shall restore to the household benefits which were lost whenever the loss was caused by an error by the State agency or by the Social Security Administration through joint processing. Such an error shall include, but not be limited to, the loss of an applicant’s SNAP application after it has been filed with SSA or with a State agency’s outstationed worker. Lost benefits shall be restored in accordance with § 273.17.
(2) Recertification. (i) The State agency shall complete the application process and approve or deny timely applications for recertification in accordance with § 273.14 of the SNAP regulations. A face-to-face interview shall be waived if requested by a household consisting entirely of SSI participants unable to appoint an authorized representative. The State agency shall provide SSI households with a notice of expiration in accordance with § 273.14(b), except that such notification shall inform households consisting entirely of SSI recipients that they are entitled to a waiver of a face-to-face interview if the household is unable to appoint an authorized representative.
(ii) Households shall be entitled to make a timely application (in accordance with § 273.14(b)(3)) for SNAP recertification at an SSA office under the following conditions.
(A) In SSA offices where § 273.2(k)(1)(i) is in effect, SSA shall accept the application of a pure SSI household and forward the completed application, transmittal form and any available verification to the designated SNAP office. Where SSA accepts and refers the application in such situations, the household shall not be required to appear at a second office interview, although the State agency may conduct an out-of-office interview, if necessary.
(B) In SSA offices where § 273.2(k)(1)(ii) is in effect, the outstationed worker shall accept the application and interview the recipient and the State agency shall process the application according to § 273.14.
(l) Households applying for or receiving social security benefits. An applicant for or recipient of social security benefits under title II of the Social Security Act shall be informed at the SSA office of the availability of benefits under SNAP and the availability of a SNAP application at the SSA office. The SSA office is not required to accept applications and conduct interviews for title II applicants/recipients in the manner prescribed in § 273.2(k) for SSI applicants/recipients unless the State agency has chosen to outstation eligibility workers at the SSA office and has an agreement with SSA to allow the processing of such households at SSA offices. In these cases, processing shall be in accordance with § 273.2(k)(1)(ii).
(m) Households where not all members are applying for or receiving SSI. An applicant for or recipient of SSI shall be informed at the SSA office of the availability of benefits under SNAP and the availability of a SNAP application at the SSA office. The SSA office is not required to accept applications or to conduct interviews for SSI applicants or recipients who are not members of households in which all are SSI applicants or recipients unless the State agency has chosen to outstation eligibility workers at the SSA office. In this case, processing shall be in accordance with § 273.2(k)(1)(ii).
(n) Authorized representatives. Representatives may be authorized to act on behalf of a household in the application process, in obtaining SNAP benefits, and in using SNAP benefits.
(1) Application processing and reporting. The State agency shall inform applicants and prospective applicants that indicate that they may have difficulty completing the application process, that a nonhousehold member may be designated as the authorized representative for application processing purposes. The household member or the authorized representative may complete work registration forms for those household members required to register for work. The authorized representative designated for application processing purposes may also carry out household responsibilities during the certification period, such as reporting changes in the household’s income or other household circumstances in accordance with §§ 273.12(a) and 273.21. Except for those situations in which a drug and alcohol treatment center or other group living arrangement acts as the authorized representative, the State agency must inform the household that the household will be held liable for any overissuance that results from erroneous information given by the authorized representative.
(i) A nonhousehold member may be designated as an authorized representative for the application process provided that the person is an adult who is sufficiently aware of relevant household circumstances and the authorized representative designation has been made in writing by the head of the household, the spouse, or another responsible member of the household. Paragraph (n)(4) of this section contains further restrictions on who can be designated an authorized representative.
(ii) Residents of drug or alcohol treatment centers must apply and be certified through the use of authorized representatives in accordance with § 273.11(e). Residents of group living arrangements have the option to apply and be certified through the use of authorized representatives in accordance with § 273.11(f).
(2) Obtaining SNAP benefits. An authorized representative may be designated to obtain benefits. Even if the household is able to obtain benefits, it should be encouraged to name an authorized representative for obtaining benefits in case of illness or other circumstances which might result in an inability to obtain benefits. The name of the authorized representative must be recorded in the household’s case record. The authorized representative for obtaining benefits may or may not be the same individual designated as an authorized representative for the application process or for meeting reporting requirements during the certification period.
(3) Using benefits. A household may allow any household member or nonmember to use its EBT card to purchase food or meals, if authorized, for the household. Drug or alcohol treatment centers and group living arrangements which act as authorized representatives for residents of the facilities must use SNAP benefits for food prepared and served to those residents participating in SNAP (except when residents leave the facility as provided in § 273.11(e) and (f)).
(4) Restrictions on designations of authorized representatives. (i) The State agency must restrict the use of authorized representatives for purposes of application processing and obtaining SNAP benefits as follows:
(A) State agency employees who are involved in the certification or issuance processes and retailers who are authorized to accept SNAP benefits may not act as authorized representatives without the specific written approval of a designated State agency official and only if that official determines that no one else is available to serve as an authorized representative.
(B) An individual disqualified for an intentional Program violation cannot act as an authorized representative during the disqualification period, unless the State agency has determined that no one else is available to serve as an authorized representative. The State agency must separately determine whether the individual is needed to apply on behalf of the household, or to obtain benefits on behalf of the household.
(C) If a State agency has determined that an authorized representative has knowingly provided false information about household circumstances or has made improper use of benefits, it may disqualify that person from being an authorized representative for up to one year. The State agency must send written notification to the affected household(s) and the authorized representative 30 days prior to the date of disqualification. The notification must specify the reason for the proposed action and the household’s right to request a fair hearing. This provision is not applicable in the case of drug and alcoholic treatment centers and those group homes which act as authorized representatives for their residents. However, drug and alcohol treatment centers and the heads of group living arrangements that act as authorized representatives for their residents, and which intentionally misrepresent households circumstances, may be prosecuted under applicable Federal and State statutes for their acts.
(D) Homeless meal providers, as defined in § 271.2 of this chapter, may not act as authorized representatives for homeless SNAP recipients.
(ii) In order to prevent abuse of the program, the State agency may set a limit on the number of households an authorized representative may represent.
(iii) In the event employers, such as those that employ migrant or seasonal farmworkers, are designated as authorized representatives or that a single authorized representative has access to a large number of EBT accounts, the State agency should exercise caution to assure that each household has freely requested the assistance of the authorized representative, the household’s circumstances are correctly represented, the household is receiving the correct amount of benefits and that the authorized representative is properly using the benefits.
(o) Each State agency shall require the individual applying for SNAP benefits to attest to whether the individual or any other member of the household has been convicted of a crime as an adult as described in § 273.11(s) and whether the convicted member is complying with the terms of the sentence.
(1) The State agency shall update its application process, including certification and recertification procedures, to include the attestation requirement. Attestations may be done in writing, verbally, or both, provided that the attestation requirement shall be explained to the applicant household during the interview and the attestation is legally binding in the law of the State. Whatever procedure a State chooses to implement must be reasonable and consistent for all households applying for SNAP benefits. However, no individual shall be required to come to the SNAP office solely for an attestation.
(2) The State agency shall document this attestation in the case file.
(3) The State agency shall establish standards for verification of only those attestations that are questionable, as described in § 273.2(f)(2). When verifying an attestation, the State agency must verify any conviction for a crime described in § 273.11(s) and that the individual is not in compliance with the terms of the sentence.
(4) Application processing shall not be delayed beyond required processing timeframes solely because the State agency has not obtained verification of an attestation. The State agency shall continue to process the application while awaiting verification. If the State agency is required to act on the case without being able to verify an attestation in order to meet the time standards in § 273.2(g) or § 273.2(i)(3), the State agency shall process the application without consideration of the individual’s felony and compliance status.
Subpart B—Residency and Citizenship
§ 273.3 Residency.
(a) A household shall live in the State in which it files an application for participation. The State agency may also require a household to file an application for participation in a specified project area (as defined in § 271.2 of this chapter) or office within the State. No individual may participate as a member of more than one household or in more than one project area, in any month, unless an individual is a resident of a shelter for battered women and children as defined in § 271.2 and was a member of a household containing the person who had abused him or her. Residents of shelters for battered women and children shall be handled in accordance with § 273.11(g). The State agency shall not impose any durational residency requirements. The State agency shall not require an otherwise eligible household to reside in a permanent dwelling or have a fixed mailing address as a condition of eligibility. Nor shall residency require an intent to reside permanently in the State or project area. Persons in a project area solely for vacation purposes shall not be considered residents.
(b) When a household moves within the State, the State agency may require the household to reapply in the new project area or it may transfer the household’s casefile to the new project area and continue the household’s certification without reapplication. If the State agency chooses to transfer the case, it shall act on changes in household circumstances resulting from the move in accordance with § 273.12(c) or § 273.21. It shall also ensure that duplicate participation does not occur in accordance with § 272.4(f) of this chapter, and that the transfer of a household’s case shall not adversely affect the household.
§ 273.4 Citizenship and alien status.
(a) Household members meeting citizenship or alien status requirements. No person is eligible to participate in the Program unless that person is:
(1) A U.S. citizen
(2) A U.S. non-citizen national
(3) An individual who is:
(i) An American Indian born in Canada who possesses at least 50 per centum of blood of the American Indian race to whom the provisions of section 289 of the Immigration and Nationality Act (INA) (8 U.S.C. 1359) apply; or
(ii) A member of an Indian tribe as defined in section 4(e) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b(e)) which is recognized as eligible for the special programs and services provided by the U.S. to Indians because of their status as Indians;
(4) An individual who is:
(i) Lawfully residing in the U.S. and was a member of a Hmong or Highland Laotian tribe at the time that the tribe rendered assistance to U.S. personnel by taking part in a military or rescue operation during the Vietnam era beginning August 5, 1964, and ending May 7, 1975;
(ii) The spouse, or surviving spouse of such Hmong or Highland Laotian who is deceased, or
(iii) An unmarried dependent child of such Hmong or Highland Laotian who is under the age of 18 or if a full-time student under the age of 22; an unmarried child under the age of 18 or if a full time student under the age of 22 of such a deceased Hmong or Highland Laotian provided the child was dependent upon him or her at the time of his or her death; or an unmarried disabled child age 18 or older if the child was disabled and dependent on the person prior to the child’s 18th birthday. For purposes of this paragraph (a)(4)(iii), child means the legally adopted or biological child of the person described in paragraph (a)(4)(i) of this section, or
(5) An individual who is:
(i) An alien who has been subjected to a severe form of trafficking in persons and who is certified by the Department of Health and Human Services, to the same extent as an alien who is admitted to the United States as a refugee under Section 207 of the INA; or
(ii) An alien who has been subjected to a severe form of trafficking in persons and who is under the age of 18, to the same extent as an alien who is admitted to the United States as a refugee under Section 207 of the INA;
(iii) The spouse, child, parent or unmarried minor sibling of a victim of a severe form of trafficking in persons under 21 years of age, and who has received a derivative T visa, to the same extent as an alien who is admitted to the United States as a refugee under Section 207 of the INA; or
(iv) The spouse or child of a victim of a severe form of trafficking in persons 21 years of age or older, and who has received a derivative T visa, to the same extent as an alien who is admitted to the United States as a refugee under Section 207 of the INA; or
(6) An individual who is both a qualified alien as defined in paragraph (a)(6)(i) of this section and an eligible alien as defined in paragraph (a)(6)(ii) or (a)(6)(iii) of this section.
(i) A qualified alien is:
(A) An alien who is lawfully admitted for permanent residence under the INA;
(B) An alien who is granted asylum under section 208 of the INA;
(C) A refugee who is admitted to the United States under section 207 of the INA;
(D) An alien who is paroled into the U.S. under section 212(d)(5) of the INA for a period of at least 1 year;
(E) An alien whose deportation is being withheld under section 243(h) of the INA as in effect prior to April 1, 1997, or whose removal is withheld under section 241(b)(3) of the INA;
(F) An alien who is granted conditional entry pursuant to section 203(a)(7) of the INA as in effect prior to April 1, 1980;
(G) An alien who has been battered or subjected to extreme cruelty in the U.S. by a spouse or a parent or by a member of the spouse or parent’s family residing in the same household as the alien at the time of the abuse, an alien whose child has been battered or subjected to battery or cruelty, or an alien child whose parent has been battered;
(H) An alien who is a Cuban or Haitian entrant, as defined in section 501(e) of the Refugee Education Assistance Act of 1980.
(ii) A qualified alien, as defined in paragraph (a)(6)(i) of this section, is eligible to receive SNAP benefits and is not subject to the requirement to be in qualified status for 5 years as set forth in paragraph (a)(6)(iii) of this section, if such individual meets at least one of the criteria of this paragraph (a)(6)(ii):
(A) An alien age 18 or older lawfully admitted for permanent residence under the INA who has 40 qualifying quarters as determined under Title II of the SSA, including qualifying quarters of work not covered by Title II of the SSA, based on the sum of: quarters the alien worked; quarters credited from the work of a parent of the alien before the alien became 18 (including quarters worked before the alien was born or adopted); and quarters credited from the work of a spouse of the alien during their marriage if they are still married or the spouse is deceased.
(1) A spouse may not get credit for quarters of a spouse when the couple divorces prior to a determination of SNAP eligibility. However, if the State agency determines eligibility of an alien based on the quarters of coverage of the spouse, and then the couple divorces, the alien’s eligibility continues until the next recertification. At that time, the State agency must determine the alien’s eligibility without crediting the alien with the former spouse’s quarters of coverage.
(2) After December 31, 1996, a quarter in which the alien actually received any Federal means-tested public benefit, as defined by the agency providing the benefit, or actually received SNAP benefits is not creditable toward the 40-quarter total. Likewise, a parent’s or spouse’s quarter is not creditable if the parent or spouse actually received any Federal means-tested public benefit or actually received SNAP benefits in that quarter. The State agency must evaluate quarters of coverage and receipt of Federal means-tested public benefits on a calendar year basis. The State agency must first determine the number of quarters creditable in a calendar year, then identify those quarters in which the alien (or the parent(s) or spouse of the alien) received Federal means-tested public benefits and then remove those quarters from the number of quarters of coverage earned or credited to the alien in that calendar year. However, if the alien earns the 40th quarter of coverage prior to applying for SNAP benefits or any other Federal means-tested public benefit in that same quarter, the State agency must allow that quarter toward the 40 qualifying quarters total;
(B) An alien admitted as a refugee under section 207 of the INA;
(C) An alien granted asylum under section 208 of the INA;
(D) An alien whose deportation is withheld under section 243(h) of the INA as in effect prior to April 1, 1997, or whose removal is withheld under section 241(b)(3) or the INA;
(E) An alien granted status as a Cuban or Haitian entrant (as defined in section 501(e) of the Refugee Education Assistance Act of 1980);
(F) An Amerasian admitted pursuant to section 584 of Public Law 100-202, as amended by Public Law 100-461;
(G) An alien with one of the following military connections:
(1) A veteran who was honorably discharged for reasons other than alien status, who fulfills the minimum active-duty service requirements of 38 U.S.C. 5303A(d), including an individual who died in active military, naval or air service. The definition of veteran includes an individual who served before July 1, 1946, in the organized military forces of the Government of the Commonwealth of the Philippines while such forces were in the service of the Armed Forces of the U.S. or in the Philippine Scouts, as described in 38 U.S.C. 107;
(2) An individual on active duty in the Armed Forces of the U.S. (other than for training); or
(3) The spouse and unmarried dependent children of a person described in paragraphs (a)(6)(ii)(G)(1) or (a)(6)(ii)(G)(2) of this section, including the spouse of a deceased veteran, provided the marriage fulfilled the requirements of 38 U.S.C. 1304, and the spouse has not remarried. An unmarried dependent child for purposes of this paragraph (a)(6)(ii)(G)(3) is: a child who is under the age of 18 or, if a full-time student, under the age of 22; such unmarried dependent child of a deceased veteran provided such child was dependent upon the veteran at the time of the veteran’s death; or an unmarried disabled child age 18 or older if the child was disabled and dependent on the veteran prior to the child’s 18th birthday. For purposes of this paragraph (a)(6)(ii)(G)(3), child means the legally adopted or biological child of the person described in paragraph (a)(6)(ii)(G)(1) or (a)(6)(ii)(G)(2) of this section.
(H) An individual who is receiving benefits or assistance for blindness or disability (as specified in § 271.2 of this chapter).
(I) An individual who on August 22, 1996, was lawfully residing in the U.S., and was born on or before August 22, 1931; or
(J) An individual who is under 18 years of age.
(iii) The following qualified aliens, as defined in paragraph (a)(6)(i) of this section, must be in a qualified status for 5 years before being eligible to receive SNAP benefits. The 5 years in qualified status may be either consecutive or nonconsecutive. Temporary absences of less than 6 months from the United States with no intention of abandoning U.S. residency do not terminate or interrupt the individual’s period of U.S. residency. If the resident is absent for more than 6 months, the agency shall presume that U.S. residency was interrupted unless the alien presents evidence of his or her intent to resume U.S. residency. In determining whether an alien with an interrupted period of U.S. residency has resided in the United States for 5 years, the agency shall consider all months of residency in the United States, including any months of residency before the interruption:
(A) An alien age 18 or older lawfully admitted for permanent residence under the INA.
(B) An alien who is paroled into the U.S. under section 212(d)(5) of the INA for a period of at least 1 year;
(C) An alien who has been battered or subjected to extreme cruelty in the U.S. by a spouse or a parent or by a member of the spouse or parent’s family residing in the same household as the alien at the time of the abuse, an alien whose child has been battered or subjected to battery or cruelty, or an alien child whose parent has been battered;
(D) An alien who is granted conditional entry pursuant to section 203(a)(7) of the INA as in effect prior to April 1, 1980.
(iv) Each category of eligible alien status stands alone for purposes of determining eligibility. Subsequent adjustment to a more limited status does not override eligibility based on an earlier less rigorous status. Likewise, if eligibility expires under one eligible status, the State agency must determine if eligibility exists under another status.
(7) For purposes of determining eligible alien status in accordance with paragraphs (a)(4) and (a)(6)(ii)(I) of this section “lawfully residing in the U.S.” means that the alien is lawfully present as defined at 8 CFR 103.12(a).
(b) Reporting illegal aliens. (1) The State agency must inform the local USCIS office immediately whenever personnel responsible for the certification or recertification of households determine that any member of a household is ineligible to receive SNAP benefits because the member is present in the U.S. in violation of the INA. The State agency may meet this requirement by conforming with the Interagency Notice providing guidance for compliance with PRWORA section 404 published on September 28, 2000 (65 FR 58301).
(2) When a household indicates inability or unwillingness to provide documentation of alien status for any household member, the State agency must classify that member as an ineligible alien. When a person indicates inability or unwillingness to provide documentation of alien status, the State agency must classify that person as an ineligible alien. In such cases the State agency must not continue efforts to obtain that documentation.
(c) Households containing sponsored alien members—(1) Definition. A sponsored alien is an alien for whom a person (the sponsor) has executed an affidavit of support (USCIS Form I-864 or I-864A) on behalf of the alien pursuant to section 213A of the INA.
(2) Deeming of sponsor’s income and resources. For purposes of this paragraph (c)(2), only in the event a sponsored alien is an eligible alien in accordance with paragraph (a) of this section will the State agency consider available to the household the income and resources of the sponsor and spouse. For purposes of determining the eligibility and benefit level of a household of which an eligible sponsored alien is a member, the State agency must deem the income and resources of sponsor and the sponsor’s spouse, if he or she has executed USCIS Form I-864 or I-864A, as the unearned income and resources of the sponsored alien. The State agency must deem the sponsor’s income and resources until the alien gains U. S. citizenship, has worked or can receive credit for 40 qualifying quarters of work as described in paragraph (a)(6)(ii)(A) of this section, or the sponsor dies.
(i) The monthly income of the sponsor and sponsor’s spouse (if he or she has executed USCIS Form I-864 or I-864A) deemed as that of the eligible sponsored alien must be the total monthly earned and unearned income, as defined in § 273.9(b) with the exclusions provided in § 273.9(c) of the sponsor and sponsor’s spouse at the time the household containing the sponsored alien member applies or is recertified for participation, reduced by:
(A) A 20 percent earned income amount for that portion of the income determined as earned income of the sponsor and the sponsor’s spouse; and
(B) An amount equal to the Program’s monthly gross income eligibility limit for a household equal in size to the sponsor, the sponsor’s spouse, and any other person who is claimed or could be claimed by the sponsor or the sponsor’s spouse as a dependent for Federal income tax purposes.
(ii) If the alien has already reported gross income information on his or her sponsor in compliance with the sponsored alien rules of another State agency administered assistance program, the State agency may use that income amount for SNAP deeming purposes. However, the State agency must limit allowable reductions to the total gross income of the sponsor and the sponsor’s spouse prior to attributing an income amount to the alien to amounts specified in paragraphs (c)(2)(i)(A) and (c)(2)(i)(B) of this section.
(iii) The State agency must consider as income to the alien any money the sponsor or the sponsor’s spouse pays to the eligible sponsored alien, but only to the extent that the money exceeds the amount deemed to the eligible sponsored alien in accordance with paragraph (c)(2)(i) of this section.
(iv) The State agency must deem as available to the eligible sponsored alien the total amount of the resources of the sponsor and sponsor’s spouse as determined in accordance with § 273.8, reduced by $1,500.
(v) If a sponsored alien can demonstrate to the State agency’s satisfaction that his or her sponsor is the sponsor of other aliens, the State agency must divide the income and resources deemed under the provisions of paragraphs (c)(2)(i) and (c)(2)(iii) of this section by the number of such sponsored aliens. The State agency must use the same procedure to determine the amount of deemed income and resources to exclude in the case of a sponsored alien or a citizen child of a sponsored alien who is exempt from deeming in accordance with paragraphs (c)(3)(vi) or (c)(3)(vii) of this section.
(3) Exempt aliens. The provisions of paragraph (c)(2) of this section do not apply to:
(i) An alien who is a member of his or her sponsor’s SNAP household;
(ii) An alien who is sponsored by an organization or group as opposed to an individual;
(iii) An alien who is not required to have a sponsor under the Immigration and Nationality Act, such as a refugee, a parolee, an asylee, or a Cuban or Haitian entrant;
(iv) An indigent alien that the State agency has determined is unable to obtain food and shelter taking into account the alien’s own income plus any cash, food, housing, or other assistance provided by other individuals, including the sponsor(s). Prior to determining whether an alien is indigent, the State agency must explain the purpose of the determination to the alien and/or household representative and provide the alien and/or household representative the opportunity to refuse the determination. If the household refuses the determination, the State agency will not complete the determination and will deem the sponsor’s income and resources to the alien’s household in accordance with paragraph (c)(2) of this section. The State agency must inform the sponsored alien of the consequences of refusing this determination. For purposes of this paragraph (c)(3)(iv), the phrase “is unable to obtain food and shelter” means that the sum of the eligible sponsored alien’s household’s own income, the cash contributions of the sponsor and others, and the value of any in-kind assistance the sponsor and others provide, does not exceed 130 percent of the poverty income guideline for the household’s size. The State agency must determine the amount of income and other assistance provided in the month of application. If the alien is indigent, the only amount that the State agency must deem to such an alien will be the amount actually provided for a period beginning on the date of such determination and ending 12 months after such date. Each indigence determination is renewable for additional 12-month periods. The State agency must notify the Attorney General of each such determination, including the names of the sponsor and the sponsored alien involved. State agencies may develop an administrative process under which information about the sponsored alien is not shared with the Attorney General or the sponsor without the sponsored alien’s consent. The State agency must inform the sponsored alien of the consequences of failure to provide such consent. If the sponsored alien fails to provide consent, he or she shall be ineligible pursuant to paragraph (c)(5) of this section, and the State agency shall determine the eligibility and benefit level of the remaining household members in accordance with § 273.11(c).
(v) A battered alien spouse, alien parent of a battered child, or child of a battered alien, for 12 months after the State agency determines that the battering is substantially connected to the need for benefits, and the battered individual does not live with the batterer.
(vi) A sponsored alien child under 18 years of age of a sponsored alien.
(vii) A citizen child under age 18 of a sponsored alien.
(4) Eligible sponsored alien’s responsibilities. During the period the alien is subject to deeming, the eligible sponsored alien is responsible for obtaining the cooperation of the sponsor and for providing the State agency at the time of application and at the time of recertification with the information and documentation necessary to calculate deemed income and resources in accordance with paragraphs (c)(2)(i) through (c)(2)(v) of this section. The eligible sponsored alien is responsible for providing the names and other identifying factors of other aliens for whom the alien’s sponsor has signed an affidavit of support. The State agency must attribute the entire amount of income and resources to the applicant eligible sponsored alien until he or she provides the information specified under this paragraph (c)(4). The eligible sponsored alien is also responsible for reporting the required information about the sponsor and sponsor’s spouse should the alien obtain a different sponsor during the certification period and for reporting a change in income should the sponsor or the sponsor’s spouse change or lose employment or die during the certification period. The State agency must handle such changes in accordance with the timeliness standards described in § 273.12 or § 273.21, as appropriate.
(5) Awaiting verification. Until the alien provides information or verification necessary to carry out the provisions of paragraph (c)(2) of this section, the sponsored alien is ineligible. The State agency must determine the eligibility of any remaining household members. The State agency must consider available to the remaining household members the income and resources of the ineligible alien (excluding the deemed income and resources of the alien’s sponsor and sponsor’s spouse) in determining the eligibility and benefit level of the remaining household members in accordance with § 273.11(c). If the sponsored alien refuses to cooperate in providing information or verification, other adult members of the alien’s household are responsible for providing the information or verification required in accordance with the provisions of § 273.2(d). If the State agency subsequently receives information or verification, it must act on the information as a reported change in household membership in accordance with the timeliness standards in § 273.12 or § 273.21, as appropriate. If the same sponsor is responsible for the entire household, the entire household is ineligible until such time as the household provides the needed sponsor information or verification. The State agency must assist aliens in obtaining verification in accordance with the provisions of § 273.2(f)(5).
(6) Demands for restitution. The State agency must exclude any sponsor who is participating in the Program from any demand made under 8 CFR 213a.4(a) for the value of SNAP benefits issued to an eligible sponsored alien he or she sponsors.
Subpart C—Education and Employment
§ 273.5 Students.
(a) Applicability. An individual who is enrolled at least half-time in an institution of higher education shall be ineligible to participate in SNAP unless the individual qualifies for one of the exemptions contained in paragraph (b) of this section. An individual is considered to be enrolled in an institution of higher education if the individual is enrolled in a business, technical, trade, or vocational school that normally requires a high school diploma or equivalency certificate for enrollment in the curriculum or if the individual is enrolled in a regular curriculum at a college or university that offers degree programs regardless of whether a high school diploma is required.
(b) Student Exemptions. To be eligible for the program, a student as defined in paragraph (a) of the section must meet at least one of the following criteria.
(1) Be age 17 or younger or age 50 or older;
(2) Be physically or mentally unfit;
(3) Be receiving Temporary Assistance for Needy Families under Title IV of the Social Security Act;
(4) Be enrolled as a result of participation in the Job Opportunities and Basic Skills program under Title IV of the Social Security Act or its successor program;
(5) Be employed for a minimum of 20 hours per week and be paid for such employment or, if self-employed, be employed for a minimum of 20 hours per week and receiving weekly earnings at least equal to the Federal minimum wage multiplied by 20 hours. The State agency may choose to determine compliance with this requirement by calculating whether the student worked an average of 20 hours per week over the period of a month, quarter, trimester or semester. State agencies may choose to exclude hours accrued during academic breaks that do not exceed one month. A State agency that chooses to average student work hours must specify this choice and specify the time period over which the work hours will be averaged in its State plan of operation;
(6) Be participating in a State or federally financed work study program during the regular school year.
(i) To qualify under this provision, the student must be approved for work study at the time of application for SNAP benefits, the work study must be approved for the school term, and the student must anticipate actually working during that time. The exemption shall begin with the month in which the school term begins or the month work study is approved, whichever is later. Once begun, the exemption shall continue until the end of the month in which the school term ends, or it becomes known that the student has refused an assignment.
(ii) The exemption shall not continue between terms when there is a break of a full month or longer unless the student is participating in work study during the break.
(7) Be participating in an on-the-job training program. A person is considered to be participating in an on-the-job training program only during the period of time the person is being trained by the employer;
(8) Be responsible for the care of a dependent household member under the age of 6;
(9) Be responsible for the care of a dependent household member who has reached the age of 6 but is under age 12 when the State agency has determined that adequate child care is not available to enable the student to attend class and comply with the work requirements of paragraph (b)(5) or (b)(6) of this section;
(10) Be a single parent enrolled in an institution of higher education on a full-time basis (as determined by the institution) and be responsible for the care of a dependent child under age 12.
(i) This provision applies in those situations where only one natural, adoptive or stepparent (regardless of marital status) is in the same SNAP household as the child.
(ii) If no natural, adoptive or stepparent is in the same SNAP household as the child, another full-time student in the same SNAP household as the child may qualify for eligible student status under this provision if he or she has parental control over the child and is not living with his or her spouse.
(11) Be assigned to or placed in an institution of higher education through or in compliance with the requirements of one of the programs identified in paragraphs (b)(11)(i) through (b)(11)(iv) of this section. Self-initiated placements during the period of time the person is enrolled in one of these employment and training programs shall be considered to be in compliance with the requirements of the employment and training program in which the person is enrolled provided that the program has a component for enrollment in an institution of higher education and that program accepts the placement. Persons who voluntarily participate in one of these employment and training programs and are placed in an institution of higher education through or in compliance with the requirements of the program shall also qualify for the exemption. The programs are:
(i) A program under the Job Training Partnership Act of 1974 (29 U.S.C. 1501, et seq.);
(ii) An employment and training program under § 273.7, subject to the condition that the course or program of study, as determined by the State agency:
(A) Is part of a program of career and technical education as defined in section 3 of the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2302) designed to be completed in not more than 4 years at an institution of higher education as defined in section 102 of the Higher Education Act of 1965 (20 U.S.C. 2296); or
(B) is limited to remedial courses, basic adult education, literacy, or English as a second language.
(iii) A program under section 236 of the Trade Act of 1974 (19 U.S.C. 2296); or
(iv) An employment and training program for low-income households that is operated by a State or local government where one or more of the components of such program is at least equivalent to an acceptable SNAP employment and training program component as specified in § 273.7(e)(1). Using the criteria in § 273.7(e)(1), State agencies shall make the determinations as to whether or not the programs qualify.
(c) The enrollment status of a student shall begin on the first day of the school term of the institution of higher education. Such enrollment shall be deemed to continue through normal periods of class attendance, vacation and recess, unless the student graduates, is suspended or expelled, drops out, or does not intend to register for the next normal school term (excluding summer school).
(d) The income and resources of an ineligible student shall be handled as outlined in § 273.11(d).
§ 273.6 Social security numbers.
(a) Requirements for participation. The State agency shall require that a household participating or applying for participation in SNAP provide the State agency with the social security number (SSN) of each household member or apply for one before certification. If individuals have more than one number, all numbers shall be required. The State agency shall explain to applicants and participants that refusal or failure without good cause to provide an SSN will result in disqualification of the individual for whom an SSN is not obtained.
(b) Obtaining SSNs for SNAP household members. (1) For those individuals who provide SSNs prior to certification, recertification or at any office contact, the State agency shall record the SSN and verify it in accordance with § 273.2(f)(1)(v).
(2) For those individuals who do not have an SSN, the State agency shall:
(i) If an enumeration agreement with SSA exists, complete the application for an SSN, Form SS-5. To complete Form SS-5, the State agency must document the verification of identity, age, and citizenship or alien status as required by SSA and forward the SS-5 to SSA.
(ii) If no enumeration agreement exists, an individual must apply at the SSA, and the State agency shall arrange with SSA to be notified directly of the SSN when it is issued. The State agency shall inform the household where to apply and what information will be needed, including any which may be needed for SSA to notify the State agency of the SSN. The State agency shall advise the household member that proof of application from SSA will be required prior to certification. SSA normally uses the Receipt of Application for a Social Security Number, Form SSA-5028, as evidence that an individual has applied for an SSN. State agencies may also use their own documents for this purpose.
(3) The State agency shall follow the procedures described in paragraphs (b)(2) (i) and (ii) of this section for individuals who do not know if they have an SSN, or are unable to find their SSN.
(4) If the household is unable to provide proof of application for an SSN for a newborn, the household must provide the SSN or proof of application at its next recertification or within 6 months following the month the baby is born, whichever is later. If the household is unable to provide an SSN or proof of application for an SSN at its next recertification within 6 months following the baby’s birth, the State agency shall determine if the good cause provisions of paragraph (d) of this section are applicable.
(c) Failure to comply. If the State agency determines that a household member has refused or failed without good cause to provide or apply for an SSN, then that individual shall be ineligible to participate in SNAP. The disqualification applies to the individual for whom the SSN is not provided and not to the entire household. The earned or unearned income and resources of an individual disqualified from the household for failure to comply with this requirement shall be counted as household income and resources to the extent specified in § 273.11(c) of these regulations.
(d) Determining good cause. In determining if good cause exists for failure to comply with the requirement to apply for or provide the State agency with an SSN, the State agency shall consider information from the household member, SSA and the State agency (especially if the State agency was designated to send the SS-5 to SSA and either did not process the SS-5 or did not process it in a timely manner). Documentary evidence or collateral information that the household member has applied for an SSN or made every effort to supply SSA with the necessary information to complete an application for an SSN shall be considered good cause for not complying timely with this requirement. Good cause does not include delays due to illness, lack of transportation or temporary absences, because SSA makes provisions for mail-in applications in lieu of applying in person. If the household member can show good cause why an application for a SSN has not been completed in a timely manner, that person shall be allowed to participate for one month in addition to the month of application. If the household member applying for an SSN has been unable to obtain the documents required by SSN, the State agency caseworker should make every effort to assist the individual in obtaining these documents. Good cause for failure to apply must be shown monthly in order for such a household member to continue to participate. Once an application has been filed, the State agency shall permit the member to continue to participate pending notification of the State agency of the household member’s SSN.
(e) Ending disqualification. The household member(s) disqualified may become eligible upon providing the State agency with an SSN.
(f) Use of SSNs. The State agency is authorized to use SSNs in the administration of SNAP. To the extent determined necessary by the Secretary and the Secretary of Health and Human Services, State agencies shall have access to information regarding individual SNAP applicants and participants who receive benefits under title XVI of the Social Security Act to determine such a household’s eligibility to receive assistance and the amount of assistance, or to verify information related to the benefit of these households. State agencies shall use the State Data Exchange (SDX) to the maximum extent possible. The State agency should also use the SSNs to prevent duplicate participation, to facilitate mass changes in Federal benefits as described in § 273.12(e)(3) and to determine the accuracy and/or reliability of information given by households. In particular, SSNs shall be used by the State agency to request and exchange information on individuals through the IEVS as specified in § 272.8.
(g) Entry of SSNs into automated data bases. State agencies with automated SNAP data bases containing household information shall enter all SSNs obtained in accordance with § 273.6(a) into these files.
§ 273.7 Work provisions.
(a) Work requirements. (1) As a condition of eligibility for SNAP benefits, each household member not exempt under paragraph (b)(1) of this section must comply with the following SNAP work requirements:
(i) Register for work or be registered by the State agency at the time of application and every 12 months after initial registration. The member required to register need not complete the registration form.
(ii) Participate in a Food Stamp Employment and Training (E&T) program if assigned by the State agency, to the extent required by the State agency;
(iii) Participate in a workfare program if assigned by the State agency;
(iv) Provide the State agency or its designee with sufficient information regarding employment status or availability for work;
(v) Report to an employer to whom referred by the State agency or its designee if the potential employment meets the suitability requirements described in paragraph (h) of this section;
(vi) Accept a bona fide offer of suitable employment, as defined in paragraph (h) of this section, at a site or plant not subject to a strike or lockout, at a wage equal to the higher of the Federal or State minimum wage or 80 percent of the wage that would have governed had the minimum hourly rate under section 6(a)(1) of the Fair Labor Standards Act been applicable to the offer of employment.
(vii) Do not voluntarily and without good cause quit a job of 30 or more hours a week or reduce work effort to less than 30 hours a week, in accordance with paragraph (j) of this section.
(2) The Food and Nutrition Service (FNS) has defined the meaning of “good cause,” and “voluntary quit,” and “reduction of work effort” as used in paragraph (a)(1)(vii) of this section. See paragraph (i) of this section for a discussion of good cause; see paragraph (j) of this section for a discussion of voluntary quit and reduction of work effort.
(3) Each State agency will determine the meaning of any other terms used in paragraph (a)(1) of this section; the procedures for establishing compliance with SNAP work requirements; and whether an individual is complying with SNAP work requirements. A State agency must not use a meaning, procedure, or determination that is less restrictive on SNAP recipients than is a comparable meaning, procedure, or determination under the State agency’s program funded under title IV-A of the Social Security Act.
(4) Strikers whose households are eligible under the criteria in § 273.1(e) are subject to SNAP work requirements unless they are exempt under paragraph (b)(1) of this section at the time of application.
(5) State agencies may request approval from FNS to substitute State or local procedures for work registration for PA households not subject to the work requirements under title IV of the Social Security Act or for GA households. However, the failure of a household member to comply with State or local work requirements that exceed the requirements listed in this section must not be considered grounds for disqualification. Work requirements imposed on refugees participating in refugee resettlement programs may also be substituted, with FNS approval.
(6) Household members who are applying for SSI and for SNAP benefits under § 273.2(k)(1)(i) will have SNAP work requirements waived until they are determined eligible for SSI and become exempt from SNAP work requirements, or until they are determined ineligible for SSI, at which time their exemptions from SNAP work requirements will be reevaluated.
(b) Exemptions from work requirements. (1) The following persons are exempt from SNAP work requirements:
(i) A person younger than 16 years of age or a person 60 years of age or older. A person age 16 or 17 who is not the head of a household or who is attending school, or is enrolled in an employment training program, on at least a half-time basis, is also exempt. If the person turns 16 (or 18 under the preceding sentence) during a certification period, the State agency must register the person as part of the next scheduled recertification process, unless the person qualifies for another exemption.
(ii) A person physically or mentally unfit for employment. For the purposes of this paragraph (b), a State agency will define physical and mental fitness; establish procedures for verifying; and will verify claimed physical or mental unfitness when necessary. However, the State agency must not use a definition, procedure for verification, or verification that is less restrictive on SNAP recipients than a comparable meaning, procedure, or determination under the State agency’s program funded under title IV-A of the Social Security Act.
(iii) A person subject to and complying with any work requirement under title IV of the Social Security Act. If the exemption claimed is questionable, the State agency is responsible for verifying the exemption.
(iv) A parent or other household member responsible for the care of a dependent child under 6 or an incapacitated person. If the child has his or her 6th birthday during a certification period, the State agency must work register the individual responsible for the care of the child as part of the next scheduled recertification process, unless the individual qualifies for another exemption.
(v) A person receiving unemployment compensation. A person who has applied for, but is not yet receiving, unemployment compensation is also exempt if that person is complying with work requirements that are part of the Federal-State unemployment compensation application process. If the exemption claimed is questionable, the State agency is responsible for verifying the exemption with the appropriate office of the State employment services agency.
(vi) A regular participant in a drug addiction or alcoholic treatment and rehabilitation program.
(vii) An employed or self-employed person working a minimum of 30 hours weekly or earning weekly wages at least equal to the Federal minimum wage multiplied by 30 hours. This includes migrant and seasonal farm workers under contract or similar agreement with an employer or crew chief to begin employment within 30 days (although this will not prevent individuals from seeking additional services from the State employment services agency). For work registration purposes, a person residing in areas of Alaska designated in § 274.10(a)(4)(iv) of this chapter, who subsistence hunts and/or fishes a minimum of 30 hours weekly (averaged over the certification period) is considered exempt as self-employed. An employed or self-employed person who voluntarily and without good cause reduces his or her work effort and, after the reduction, is working less than 30 hours per week, is ineligible to participate in SNAP under paragraph (j) of this section.
(viii) A student enrolled at least half-time in any recognized school, training program, or institution of higher education. Students enrolled at least half-time in an institution of higher education must meet the student eligibility requirements listed in § 273.5. A student will remain exempt during normal periods of class attendance, vacation, and recess. If the student graduates, enrolls less than half-time, is suspended or expelled, drops out, or does not intend to register for the next normal school term (excluding summer), the State agency must work register the individual, unless the individual qualifies for another exemption.
(2)(i) Persons losing exemption status due to any changes in circumstances that are subject to the reporting requirements of § 273.12 must register for employment when the change is reported. If the State agency does not use a work registration form, it must annotate the change to the member’s exemption status. If a work registration form is used, the State agency is responsible for providing the participant with a work registration form when the change is reported. Participants are responsible for returning the completed form to the State agency within 10 calendar days from the date the form was handed to the household member reporting the change in person, or the date the State agency mailed the form. If the participant fails to return the completed form, the State agency must issue a notice of adverse action stating that the participant is being terminated and why, but that the termination can be avoided by returning the form.
(ii) Those persons who lose their exemption due to a change in circumstances that is not subject to the reporting requirements of § 273.12 must register for employment at their household’s next recertification.
(c) State agency responsibilities. (1)(i) The State agency must register for work each household member not exempted by the provisions of paragraph (b)(1) of this section. The State agency must permit the applicant to complete a record or form for each household member required to register for employment in accordance with paragraph (a)(1)(i) of this section. Household members are considered to have registered when an identifiable work registration form is submitted to the State agency or when the registration is otherwise annotated or recorded by the State agency.
(ii) During the certification process, the State agency must provide a written notice and oral explanation to the household of all applicable work requirements for all members of the household, and identify which household member is subject to which work requirement. These work requirements include the general work requirement in paragraph (a) of this section, mandatory E&T in paragraph (a)(1)(ii) of this section, and the ABAWD work requirement at § 273.24. The written notice and oral explanation must be provided in accordance with (c)(1)(iii) of this section. This written notice and oral explanation must also be provided to the household when a previously exempt household member or new household member becomes subject to these work requirements, and at recertification.
(iii) The consolidated written notice must include all pertinent information related to each of the applicable work requirements, including: An explanation of each applicable work requirement; which individuals are subject to which work requirement; exemptions from each applicable work requirement; an explanation of the process to request an exemption (including contact information to request an exemption); the rights and responsibilities of each applicable work requirement; what is required to maintain eligibility under each applicable work requirement; pertinent dates by which an individual must take any actions to remain in compliance with each applicable work requirement; the consequences for failure to comply with each applicable work requirement; an explanation of the process for requesting good cause (including examples of good cause circumstances and contact information to initiate a good cause request); and any other information the State agency believes would assist the household members with compliance. If an individual is subject to mandatory E&T, the written notice must also explain the individual’s right to receive participant reimbursements for allowable expenses related to participation in E&T, up to any applicable State cap, and the responsibility of the State agency to exempt the individual from the requirement to participate in E&T if the individual’s allowable expenses exceed what the State agency will reimburse, as provided in paragraph (d)(4) of this section. In addition, as stated in paragraph (c)(2) of this section and § 273.24(b)(8), the State agency must provide a comprehensive oral explanation to the household of each applicable work requirement pertaining to individuals in the household.
(2) The State agency is responsible for screening each work registrant to determine whether or not it is appropriate, based on the State agency’s criteria, to refer the individual to an E&T program. If the State agency determines the individual is required to participate in an E&T program, as defined in paragraph (e) of this section and § 271.2, the State agency must provide the participant with the written notice and the comprehensive oral explanation described in paragraph (c)(1)(iii) of this section. The State agency must refer participants to E&T, this referral may vary from participant to participant, but in all cases E&T participants must receive both case management services and at least one E&T component while participating in E&T. The State agency must determine the order in which the participant will receive the elements of an E&T program (e.g., case management followed by a component, case management embedded within a component, etc.). The State agency must explain to the participant next steps for accessing the E&T program. If there is not an appropriate and available opening in an E&T program, the State agency must determine the participant has good cause for failure to comply with the mandatory E&T requirement in accordance with paragraph (i)(4) of this section. The State agency may, with FNS approval, use intake and sanction systems that are compatible with its title IV-A work program. Such systems must be proposed and explained in the State agency’s E&T State Plan.
(3) After learning of an individual’s non-compliance with SNAP work requirements, the State agency must issue a notice of adverse action to the individual, or to the household if appropriate, within 10 days of establishing that the noncompliance was without good cause. The notice of adverse action must meet the timeliness and adequacy requirements of § 273.13. If the individual complies before the end of the advance notice period, the State agency will cancel the adverse action. If the State agency offers a conciliation process as part of its E&T program, it must issue the notice of adverse action no later than the end of the conciliation period. Mandatory E&T participants who have received a provider determination in accordance with paragraph (c)(18)(i) of this section shall not be subject to disqualification for refusal without good cause to participate in a mandatory E&T program until after the State has taken one of the four actions in paragraph (c)(18)(i)(B) of this section, and the individual subsequently refuses to participate without good cause.
(4) The State agency must design and operate an E&T program that consists of case management services in accordance with paragraph (e)(1) of this section and at least one or more, or a combination of, employment and/or training components as described in paragraph (e)(2) of this section. The State agency must ensure that it is notified by the agency or agencies operating its E&T components within 10 days if an E&T mandatory participant fails to comply with E&T requirements.
(5) The State agency must design its E&T program in consultation with the State workforce development board, or with private employers or employer organizations if the State agency determines the latter approach is more effective and efficient. Each component of the State agency’s E&T program must be delivered through its statewide workforce development system, unless the component is not available locally through such a system.
(6) In accordance with § 272.2(d) and (e) of this chapter, the State agency must prepare and submit an E&T Plan to its appropriate FNS Regional Office. The E&T Plan must be available for public inspection at the State agency headquarters. In its E&T Plan, the State agency will detail the following:
(i) The nature of the E&T components the State agency plans to offer and the reasons for such components, including cost information. The methodology for State agency reimbursement for education components must be specifically addressed. If a State agency plans to offer supervised job search in accordance with paragraph (e)(2)(i) of this section, the State agency must also include in the E&T plan a summary of the State guidelines implementing supervised job search. This summary of the State guidelines, at a minimum, must describe: The criteria used by the State agency to approve locations for supervised job search, an explanation of why those criteria were chosen, and how the supervised job search component meets the requirements to directly supervise the activities of participants and track the timing and activities of participants;
(ii) A description of the case management services and models, how participants will be referred to case management, how the participant’s case will be managed, who will provide case management services, and how the service providers will coordinate with E&T providers, the State agency, and other community resources, as appropriate. The State plan should also discuss how the State agency will ensure E&T participants are provided with targeted case management services through an efficient administrative process;
(iii) An operating budget for the Federal fiscal year with an estimate of the cost of operation for one full year. Any State agency that requests 50 percent Federal reimbursement for State agency E&T administrative costs, other than for participant reimbursements, must include in its plan, or amendments to its plan, an itemized list of all activities and costs for which those Federal funds will be claimed, including the costs for case management and casework to facilitate the transition from economic dependency to self-sufficiency through work. Costs in excess of the Federal grant will be allowed only with the prior approval of FNS and must be adequately documented to assure that they are necessary, reasonable and properly allocated;
(iv) The categories and types of individuals the State agency intends to exempt from E&T participation, the estimated percentage of work registrants the State agency plans to exempt, and the frequency with which the State agency plans to reevaluate the validity of its exemptions;
(v) The characteristics of the population the State agency intends to place in E&T;
(vi) The estimated number of volunteers the State agency expects to place in E&T;
(vii) The geographic areas covered and not covered by the E&T Plan and why, and the type and location of services to be offered;
(viii) The method the State agency uses to count all work registrants as of the first day of the new fiscal year;
(ix) The method the State agency uses to report work registrant information on the quarterly Form FNS-583;
(x) The method the State agency uses to prevent work registrants from being counted twice within a Federal fiscal year. If the State agency universally work registers all SNAP applicants, this method must specify how the State agency excludes those exempt from work registration under paragraph (b)(1) of this section. If the State agency work registers nonexempt participants whenever a new application is submitted, this method must also specify how the State agency excludes those participants who may have already been registered within the past 12 months as specified under paragraph (a)(1)(i) of this section;
(xi) The organizational relationship between the units responsible for certification and the units operating the E&T program, including units of the statewide workforce development system, if available. FNS is specifically concerned that the lines of communication be efficient and that noncompliance be reported to the certification unit within 10 working days after the noncompliance occurs;
(xii) The relationship between the State agency and other organizations it plans to coordinate with for the provision of services, including organizations in the statewide workforce development system, if available. Copies of contracts must be available for inspection. The State agency must document how it consulted with the State workforce development board. If the State agency consulted with private employers or employer organizations in lieu of the State workforce development board, it must document this consultation and explain the determination that doing so was more effective or efficient. The State agency must include in its E&T State plan a description of any outcomes from the consultation with the State workforce development board or private employers or employer organizations. The State agency must also address in the E&T State plan the extent to which E&T activities will be carried out in coordination with the activities under title I of WIOA;
(xiii) The availability, if appropriate, of E&T programs for Indians living on reservations;
(xiv) If a conciliation process is planned, the procedures that will be used when an individual fails to comply with an E&T program requirement. Include the length of the conciliation period;
(xv) The payment rates for child care established in accordance with the Child Care and Development Block Grant provisions of 45 CFR 98.43, and based on local market rate surveys;
(xvi) The combined (Federal/State) State agency reimbursement rate for transportation costs and other expenses reasonably necessary and directly related to participation incurred by E&T participants. If the State agency proposes to provide different reimbursement amounts to account for varying levels of expenses, for instance for greater or lesser costs of transportation in different areas of the State, it must include them here;
(xvii) Information about expenses the State agency proposes to reimburse. FNS must be afforded the opportunity to review and comment on the proposed reimbursements before they are implemented;
(xviii) For each component that is expected to include 100 or more participants, reporting measures that the State will collect and include in the annual report in paragraph (c)(17) of this section. Such measures may include:
(A) The percentage and number of program participants who received E&T services and are in unsubsidized employment subsequent to the receipt of those services;
(B) The percentage and number of participants who obtain a recognized credential, a registered apprenticeship, or a regular secondary school diploma (or its recognized equivalent), while participating in, or within 1 year after receiving E&T services;
(C) The percentage and number of participants who are in an education or training program that is intended to lead to a recognized credential, a registered apprenticeship an on-the-job training program, a regular secondary school diploma (or its recognized equivalent), or unsubsidized employment;
(D) Measures developed to assess the skills acquisition of E&T program participants that reflect the goals of the specific components including the percentage and number of participants who are meeting program requirements or are gaining skills likely to lead to employment; and
(E) Other indicators approved by FNS in the E&T State plan; and
(xix) Any State agency that will be requesting Federal funds that may become available for reallocation in accordance with paragraph (d)(1)(iii)(A), (B), or (D) of this section should include this request in the E&T State plan for the year the State agency would plan to use the reallocated funds. The request must include a separate budget and narrative explaining how the State agency intends to use the reallocated funds. FNS will review all State agency requests for reallocated funds and notify State agencies of the approval of any reallocated funds in accordance with regulations at (d)(1)(iii)(E) of this section. FNS’ approval or denial of requests for reallocated funds will occur separately from the approval or denial of the rest of the E&T State plan.
(7) A State agency interested in receiving additional funding for serving able-bodied adults without dependents (ABAWDs) subject to the 3-month time limit, in accordance with paragraph (d)(3) of this section, must include in its annual E&T plan:
(i) Its pledge to offer a qualifying activity to all at-risk ABAWD applicants and recipients;
(ii) Estimated costs of fulfilling its pledge;
(iii) A description of management controls in place to meet pledge requirements;
(iv) A discussion of its capacity and ability to serve at-risk ABAWDs;
(v) Information about the size and special needs of its ABAWD population; and
(vi) Information about the education, training, and workfare components it will offer to meet the ABAWD work requirement.
(8) The State agency will submit its E&T Plan annually, at least 45 days before the start of the Federal fiscal year. The State agency must submit plan revisions to the appropriate FNS regional office for approval if it plans to alter the nature or location of its components or the number or characteristics of persons served. The proposed changes must be submitted for approval at least 30 days prior to planned implementation.
(9) The State agency will submit an E&T Program Activity Report to FNS no later than 45 days after the end of each Federal fiscal quarter. The report will contain monthly figures for:
(i) Participants newly work registered;
(ii) Number of ABAWD applicants and recipients participating in qualifying components;
(iii) Number of all other applicants and recipients (including ABAWDs involved in non-qualifying activities) participating in components; and
(iv) ABAWDs subject to the 3-month time limit imposed in accordance with § 273.24(b) who are exempt under the State agency’s discretionary exemptions under § 273.24(g).
(10) The State agency will submit annually, on its first quarterly report, the number of work registrants in the State on October 1 of the new fiscal year.
(11) The State agency will submit annually, on its final quarterly report:
(i) A list of E&T components it offered during the fiscal year and the number of ABAWDs and non-ABAWDs who participated in each;
(ii) The number of ABAWDs and non-ABAWDs who participated in the E&T Program during the fiscal year. Each individual must be counted only once;
(iii) Number of SNAP applicants and participants required to participate in E&T by the State agency and of those the number who begin participation in an E&T program and the number who begin participation in an E&T component. An E&T participant begins to participate in an E&T program when the participant commences at least one part of an E&T program including an orientation, assessment, case management, or a component. An E&T participant begins to participate in an E&T component when the participant commences the first activity in the E&T component; and
(iv) Number of mandatory E&T participants who were determined ineligible for failure to comply with E&T requirements.
(12) Additional information may be required of the State agency, on an as needed basis, regarding the type of components offered and the characteristics of persons served, depending on the contents of its E&T Plan.
(13) The State agency must ensure, to the maximum extent practicable, that E&T programs are provided for Indians living on reservations.
(14) If a benefit overissuance is discovered for a month or months in which a mandatory E&T participant has already fulfilled a work component requirement, the State agency must follow the procedure specified in paragraph (m)(6)(v) of this section for a workfare overissuance.
(15) If a State agency fails to efficiently and effectively administer its E&T program, the provisions of § 276.1(a)(4) of this chapter will apply.
(16) FNS may require a State agency to make modifications to its SNAP E&T plan to improve outcomes if FNS determines that the E&T outcomes are inadequate.
(17) The State agency shall submit an annual E&T report by January 1 each year that contains the following information for the Federal fiscal year ending the preceding September 30.
(i) The number and percentage of E&T participants and former participants who are in unsubsidized employment during the second quarter after completion of participation in E&T.
(ii) The number and percentage of E&T participants and former participants who are in unsubsidized employment during the fourth quarter after completion of participation in E&T.
(iii) Median average quarterly earnings of the E&T participants and former participants who are in unsubsidized employment during the second quarter after completion of participation in E&T.
(iv) The total number and percentage of participants that completed an educational, training work experience or an on-the-job training component.
(v) The number and percentage of E&T participants who:
(A) Are voluntary vs. mandatory participants;
(B) Have received a high school degree (or GED) prior to being provided with E&T services;
(C) Are ABAWDs;
(D) Speak English as a second language;
(E) Are male vs. female; and
(F) Are within each of the following age ranges: 16-17, 18-35, 36-49, 50-59, 60 or older.
(vi) Of the number and percentage of E&T participants reported in paragraphs (c)(17)(i) through (iv) of this section, a disaggregation of the number and percentage of those participants and former participants by the characteristics listed in paragraphs (c)(17)(v)(A), (B), and (C) of this section.
(vii) Reports for the measures identified in a State’s E&T plan related to components that are designed to serve at least 100 participants a year; and
(viii) States that have committed to offering all at-risk ABAWDs participation in a qualifying activity and have received an additional allocation of funds as specified in paragraph (d)(3) of this section shall include:
(A) The monthly average number of individuals in the State who meet the conditions in paragraph (d)(3)(i) of this section;
(B) The monthly average number of individuals to whom the State offers a position in a program described in § 273.24(a)(3) and (4);
(C) The monthly average number of individuals who participate in such programs; and
(D) A description of the types of employment and training programs the State agency offered to at risk ABAWDs and the availability of those programs throughout the State.
(ix) States may be required to submit the annual report in a standardized format based upon guidance issued by FNS.
(x) State agencies certifying workforce partnerships for operation in their State in accordance with paragraph (n) of this section may report relevant data to demonstrate the number of program participants served by the workforce partnership, and of those how many were mandatory E&T participants.
(18)(i) The State agency must ensure E&T providers are informed of their authority and responsibility to determine if an individual is ill-suited for a particular E&T component. Such determinations shall be referred to as provider determinations. For purposes of this paragraph, an E&T provider is the provider of an E&T component. The E&T provider must notify the State agency of a provider determination within 10 days of the date the determination is made and inform the State agency of the reason for the provider determination. The E&T provider may also provide input on the most appropriate next step, as outlined in paragraph (c)(18)(i)(B) of this section, for the individual with a provider determination. If the State agency is unable to obtain the reason for the provider determination from the E&T provider, the State agency must continue to act on the provider determination in accordance with this section. If an E&T provider finds an individual is ill-suited for one component, but the E&T provider determines the individual may be suitable for another component offered by the E&T provider, at State agency option, the E&T provider may switch the individual to the other component and inform the State agency of the new component without the need for the State agency to act further on the provider determination. The E&T provider has the authority to determine if an individual is ill-suited for the E&T component from the time an individual is referred to an E&T component until completion of the component. When a State agency receives notification that an individual has received a provider determination, and the individual is not exempt from the work requirement as specified in paragraph (b) of this section, the State agency must:
(A) Notify the mandatory or voluntary E&T participant, within 10 days of receiving notification from the E&T provider, of the provider determination including the following information, as applicable. The State agency must explain what a provider determination is, the next steps the State agency will take as a result of the provider determination, and contact information for the State agency. In the case of either a mandatory or voluntary E&T participant with a provider determination, the State agency must also notify the individual that they are not being sanctioned as a result of the provider determination. In the case of an ABAWD who has received a provider determination, the State agency must also notify the ABAWD that the ABAWD will accrue countable months toward their three-month participation time limit the next full benefit month after the month during which the State agency notifies the ABAWD of the provider determination, unless the ABAWD fulfills the work requirements in accordance with § 273.24, or the ABAWD has good cause, lives in a waived area, or is otherwise exempt. The State agency may make such notification either verbally or in writing, but must, at a minimum, document when the notification occurs in the participant’s case file; and
(B) Take the most suitable action from among the following options no later than the date of the individual’s recertification. If an individual with a provider determination requests that the State agency take one of the following actions sooner than the next recertification, the State agency must take the most suitable action as soon as possible:
(1) Refer the individual to an appropriate E&T program component in accordance with paragraph (e)(2) of this section. Before making this referral, the State agency must screen the individual for participation in the E&T program in accordance with paragraph (c)(2) of this section, and determine that it is appropriate to refer the individual to an E&T component, considering the suitability of the individual for any available E&T components. In accordance with paragraph (e)(1) of this section, all E&T participants must receive case management services along with at least one E&T component;
(2) Refer the individual to an appropriate workforce partnership as defined in paragraph (n) of this section, if available. Before making this referral, the State agency must provide information about workforce partnerships to assist the individual in making an informed decision about whether to voluntarily participate in the workforce partnership, in accordance with paragraph (n)(10) of this section;
(3) Reassess the physical and mental fitness of the individual. If the individual is not found to be physically or mentally fit, the individual is exempt from the work requirement in accordance with paragraph (b)(1)(ii) of this section. If the individual is found to be physically or mentally fit, and the State agency determines the individual is not otherwise exempt from the general work requirements the State agency must consider if one of the other available actions in paragraph (c)(18)(i)(B) of this section would be appropriate for the individual. If the State agency determines the individual should not be required to participate in E&T, the State agency must exempt the individual from mandatory E&T; or
(4) Coordinate, to the maximum extent practicable, with other Federal, State, or local workforce or assistance programs to identify work opportunities or assistance for the individual. If the State agency chooses this option, the State agency must not require the individual to participate in E&T.
(ii) From the time an E&T provider determines an individual is ill-suited for an E&T component until after the State agency takes one of the actions in paragraph (c)(18)(i)(B) of this section, the individual shall not be found to have refused without good cause to participate in mandatory E&T. In the case of an ABAWD who has received a provider determination, the ABAWD will accrue countable months toward their three-month participation time limit the next full benefit month after the month during which the State agency notifies the ABAWD of the provider determination, unless the ABAWD fulfills the work requirements in accordance with § 273.24, or the ABAWD has good cause, lives in a waived area, or is otherwise exempt.
(d) Federal financial participation—(1) Employment and training grants—(i) Allocation of grants. Each State agency will receive a 100 percent Federal grant each fiscal year to operate an E&T program in accordance with paragraph (e) of this section. The grant requires no State matching.
(A) In determining each State agency’s 100 percent Federal E&T grant, FNS will apply the percentage determined in accordance with paragraph (d)(1)(i)(B) of this section to the total amount of 100 percent Federal funds authorized under section 16(h)(1)(A) of the Act for each fiscal year.
(B) FNS will allocate the funding available each fiscal year for E&T grants using a formula designed to ensure that each State agency receives its appropriate share.
(1) Ninety percent of the annual 100 percent Federal E&T grant will be allocated based on the number of work registrants in each State as a percentage of work registrants nationwide. FNS will use work registrant data reported by each State agency on the FNS-583, Employment and Training Program Activity Report, from the most recent Federal fiscal year.
(2) Ten percent of the annual 100 percent Federal E&T grant will be allocated based on the number of ABAWDs in each State, as determined by SNAP QC data for the most recently available completed fiscal year, which provide a breakdown of each State’s population of adults age 18 through 49 who are not disabled and who do not live with children.
(C) No State agency will receive less than $100,000 in Federal E&T funds. To ensure this, FNS will, if necessary, reduce the grant of each State agency allocated more than $100,000. In order to guarantee an equitable reduction, FNS will calculate grants as follows. First, disregarding those State agencies scheduled to receive less than $100,000, FNS will calculate each remaining State agency’s percentage share of the fiscal year’s E&T grant. Next, FNS will multiply the grant—less $100,000 for every State agency under the minimum—by each remaining State agency’s same percentage share to arrive at the revised amount. The difference between the original and the revised amounts will represent each State agency’s contribution. FNS will distribute the funds from the reduction to State agencies initially allocated less than $100,000.
(ii) Use of funds. (A) A State agency must use E&T program grants to fund the administrative costs of planning, implementing and operating its SNAP E&T program in accordance with its approved State E&T plan. E&T grants must not be used for the process of determining whether an individual must be work registered, the work registration process, or any further screening performed during the certification process, nor for sanction activity that takes place after the operator of an E&T program reports noncompliance without good cause. For purposes of this paragraph (d), the certification process is considered ended when an individual is referred to an E&T program for assessment or participation. E&T grants may be used to subsidize wages in accordance with paragraph (e)(2)(iv)(2) of this section, and may not be used to reimburse participants under paragraph (d)(4) of this section.
(B) A State agency’s receipt of its 100 percent Federal E&T grant is contingent on FNS’s approval of the State agency’s E&T plan. If an adequate plan is not submitted, FNS may reallocate a State agency’s grant among other State agencies with approved plans. Non-receipt of an E&T grant does not release a State agency from its responsibility under paragraph (c)(4) of this section to operate an E&T program.
(C) Federal funds made available to a State agency to operate an educational component under paragraph (e)(2)(vi) of this section must not be used to supplant nonfederal funds for existing educational services and activities that promote the purposes of this component. Education expenses are approvable to the extent that E&T component costs exceed the normal cost of services provided to persons not participating in an E&T program.
(D) In accordance with section 6(d)(4)(K) of the Food and Nutrition Act of 2008, and notwithstanding any other provision of this paragraph (d), the amount of Federal E&T funds, including participant and dependent care reimbursements, a State agency uses to serve participants who are receiving cash assistance under a State program funded under title IV-A of the Social Security Act must not exceed the amount of Federal E&T funds the State agency used in FY 1995 to serve participants who were receiving cash assistance under a State program funded under title IV-A of the Social Security Act.
(1) Based on information provided by each State agency, FNS established claimed Federal E&T expenditures on this category of recipients in fiscal year 1995 for the State agencies of Colorado ($318,613), Utah ($10,200), Vermont ($1,484,913), and Wisconsin ($10,999,773). These State agencies may spend up to a like amount each fiscal year to serve SNAP recipients who also receive title IV assistance.
(2) All other State agencies are prohibited from expending any Federal E&T funds on title IV cash assistance recipients.
(iii) If a State agency will not obligate or expend all of the funds allocated to it for a fiscal year under paragraph (d)(1)(i) of this section, FNS will reallocate the unobligated, unexpended funds to other State agencies during the fiscal year or subsequent fiscal year. FNS will allocate carryover funding to meet some or all of the State agencies’ requests, as it considers appropriate and equitable in accordance with the following process:
(A) Not less than 50 percent shall be reallocated to State agencies requesting funding to conduct employment and training programs and activities for which the State agency had previously received funding under the pilots authorized by the Agricultural Act of 2014 (Pub. L. 113-79) that FNS determines have the most demonstrable impact on the ability of participants to find and retain employment that leads to increased household income and reduced reliance on public assistance.
(B) Not less than 30 percent shall be reallocated to State agencies requesting funding for E&T programs and activities under paragraph (e)(1) or (2) of this section that FNS determines have the most demonstrable impact on the ability of participants to find and retain employment that leads to increased household income and reduced reliance on public assistance, including activities targeted to:
(1) Individuals 50 years of age or older;
(2) Formerly incarcerated individuals;
(3) Individuals participating in a substance abuse treatment program;
(4) Homeless individuals;
(5) People with disabilities seeking to enter the workforce;
(6) Other individuals with substantial barriers to employment, including disabled veterans; or
(7) Households facing multi-generational poverty, to support employment and workforce participation through an integrated and family-focused approach in providing supportive services.
(C) State agencies who receive reallocated funds under paragraph (d)(1)(iii)(A) of this section may also be considered to receive reallocated funds under paragraph (d)(1)(iii)(B) of this section.
(D) Any remaining funds not accounted for with the reallocations specified in paragraphs (d)(1)(iii)(A) or (B) of this section shall be reallocated to State agencies requesting such funds for E&T programs and activities under paragraph (e)(1) or (2) of this section that FNS determines have the most demonstrable impact on the ability of participants to find and retain employment that leads to increased household income and reduced reliance on public assistance.
(E) State agencies requesting the reallocated funds specified in paragraph (d)(1)(iii)(A), (B), or (D) of this section, shall make their request for those funds in their E&T State plans submitted for the upcoming fiscal year. FNS will determine the amount of reallocated funds each requesting State agency shall receive and provide the reallocated funds to those State agencies within a timeframe that allows each State agency to which funds are reallocated at least 270 days to expend the reallocated funds. When making the reallocations, FNS will also consider the size of the request relative to the level of the State agency’s E&T spending in prior years, the specificity of the State agency’s plan for spending carryover funds, and the quality of program and scope of impact for the State’s E&T program.
(F) Unobligated, unexpended funds not reallocated in the process specified in paragraph (E) of this section, shall be reallocated to State agencies upon request for E&T programs and activities under paragraph (e)(1) or (2) of this section that FNS determines have the most demonstrable impact on the ability of participants to find and retain employment that leads to increased household income and reduced reliance on public assistance. In making these reallocations FNS will also consider the size of the request relative to the level of the State agency’s E&T spending in prior years, the specificity of the State agency’s plan for spending carryover funds, and the quality of program and scope of impact for the State’s E&T program.
(2) Additional administrative costs. Fifty percent of all other administrative costs incurred by State agencies in operating E&T programs, above the costs referenced in paragraph (d)(1) of this section, will be funded by the Federal Government.
(3) Additional allocations. In addition to the E&T program grants discussed in paragraph (d)(1) of this section, FNS will allocate $20 million in Federal funds each fiscal year to State agencies that ensure availability of education, training, or workfare opportunities that permit ABAWDs to remain eligible beyond the 3-month time limit.
(i) To be eligible, a State agency must make and comply with a commitment, or “pledge,” to use these additional funds to defray the cost of offering a position in an education, training, or workfare component that fulfills the ABAWD work requirement, as defined in § 273.24(a), to each applicant and recipient who is:
(A) In the last month of the 3-month time limit described in § 273.24(b);
(B) Not eligible for an exception to the 3-month time limit under § 273.24(c);
(C) Not a resident of an area of the State granted a waiver of the 3-month time limit under § 273.24(f); and
(D) Not included in each State agency’s 15 percent ABAWD exemption allotment under § 273.24(g).
(ii) While a participating pledge State may use a portion of the additional funding to provide E&T services to ABAWDs who do not meet the criteria discussed in paragraph (d)(3)(i) of this section, it must guarantee that the ABAWDs who do meet the criteria are provided the opportunity to remain eligible.
(iii) State agencies will have one opportunity each fiscal year to take the pledge described in paragraph (d)(3)(i) of this section. An interested State agency, in its E&T Plan for the upcoming fiscal year, must include the following:
(A) A request to be considered as a pledge State, along with its commitment to comply with the requirements of paragraph (d)(3)(i) of this section;
(B) The estimated costs of complying with its pledge;
(C) A description of management controls it has established to meet the requirements of the pledge;
(D) A discussion of its capacity and ability to serve vulnerable ABAWDs;
(E) Information about the size and special needs of the State’s ABAWD population; and
(F) Information about the education, training, and workfare components that it will offer to allow ABAWDs to remain eligible.
(iv) If the information provided in accordance with paragraph (d)(3)(iii) of this section clearly indicates that the State agency will be unable to fulfill its commitment, FNS may require the State agency to address its deficiencies before it is allowed to participate as a pledge State.
(v) If the State agency does not address its deficiencies by the beginning of the new fiscal year on October 1, it will not be allowed to participate as a pledge State.
(vi) No pledges will be accepted after the beginning of the fiscal year.
(vii)(A) Once FNS determines how many State agencies will participate as pledge States in the upcoming fiscal year, it will, as early in the fiscal year as possible, allocate among them the $20 million based on the number of ABAWDs in each participating State, as a percentage of ABAWDs in all the participating States. FNS will determine the number of ABAWDs in each participating State using SNAP QC data for the most recently available completed fiscal year, which provide a breakdown of each State’s population of adults age 18 through 49 who are not disabled and who do not live with children.
(B) Each participating State agency’s share of the $20 million will be disbursed in accordance with paragraph (d)(6) of this section.
(C) Each participating State agency must meet the fiscal recordkeeping and reporting requirements of paragraph (d)(7) of this section.
(viii) If a participating State agency notifies FNS that it will not obligate or expend its entire share of the additional funding allocated to it for a fiscal year, FNS will reallocate the unobligated, unexpended funds to other participating State agencies during the fiscal year, as it considers appropriate and equitable, on a first come-first served basis. FNS will notify other pledge States of the availability of additional funding. To qualify, a pledge State must have already obligated its entire annual 100 percent Federal E&T grant, excluding an amount that is proportionate to the number of months remaining in the fiscal year, and it must guarantee in writing that it intends to obligate its entire grant by the end of the fiscal year. A State’s annual 100 percent Federal E&T grant is its share of the regular 100 percent Federal E&T allocation plus its share of the additional $20 million (if applicable). Interested pledge States must submit their requests for additional funding to FNS. FNS will review the requests and, if they are determined reasonable and necessary, will reallocate some or all of the unobligated, unspent ABAWD funds.
(ix) Unlike the funds allocated in accordance with paragraph (d)(1) of this section, the additional pledge funding will not remain available until obligated or expended. Unobligated funds from this grant must be returned to the U.S. Treasury at the end of each fiscal year.
(x) The cost of serving at-risk ABAWDs is not an acceptable reason to fail to live up to the pledge. A slot must be made available and the ABAWD must be served even if the State agency exhausts all of its 100 percent Federal E&T funds and must use State funds to guarantee an opportunity for all at-risk ABAWDs to remain eligible beyond the 3-month time limit. State funds expended in accordance with the approved State E&T Plan are eligible for 50 percent Federal match. If a participating State agency fails, without good cause, to meet its commitment, it may be disqualified from participating in the subsequent fiscal year or years.
(4) Participant reimbursements. The State agency must provide payments to participants in its E&T program, including applicants and volunteers, for expenses that are reasonably necessary and directly related to participation in the E&T program. The Federal Government will fund 50 percent of State agency payments for allowable expenses, except that Federal matching for dependent care expenses is limited to the maximum amount specified in paragraph (d)(4)(i) of this section. These payments may be provided as a reimbursement for expenses incurred or in advance as payment for anticipated expenses in the coming month. The State agency must inform each E&T participant that allowable expenses up to the amounts specified in paragraphs (d)(4)(i) and (ii) of this section will be reimbursed by the State agency upon presentation of appropriate documentation. Reimbursable costs may include, but are not limited to, dependent care costs, transportation, and other work, training or education related expenses such as uniforms, personal safety items or other necessary equipment, and books or training manuals. These costs must not include the cost of meals away from home. If applicable, any allowable costs incurred by a noncompliant E&T participant after the expiration of the noncompliant participant’s minimum mandatory disqualification period, as established by the State agency, that are reasonably necessary and directly related to reestablishing eligibility, as defined by the State agency, are reimbursable under paragraphs (d)(4)(i) and (ii) of this section. The State agency may reimburse participants for expenses beyond the amounts specified in paragraph (d)(4)(i) of this section; however, only costs that are up to but not in excess of those amounts are subject to Federal cost sharing. Reimbursement must not be provided from E&T grants allocated under paragraph (d)(1)(i) of this section. Any expense covered by a reimbursement under this section is not deductible under § 273.10(d)(1)(i).
(i) The State agency will reimburse the cost of dependent care it determines to be necessary for the participation of a household member in the E&T program up to the actual cost of dependent care, or the applicable payment rate for child care, whichever is lowest. The payment rates for child care are established in accordance with the Child Care and Development Block Grant provisions of 45 CFR 98.43, and are based on local market rate surveys. The State agency will provide a dependent care reimbursement to an E&T participant for all dependents requiring care unless otherwise prohibited by this section. The State agency will not provide a reimbursement for a dependent age 13 or older unless the dependent is physically and/or mentally incapable of caring for himself or herself or is under court supervision. The State agency must provide a reimbursement for all dependents who are physically and/or mentally incapable of caring for themselves or who are under court supervision, regardless of age, if dependent care is necessary for the participation of a household member in the E&T program. The State agency will obtain verification of the physical and/or mental incapacity for dependents age 13 or older if the physical and/or mental incapacity is questionable. Also, the State agency will verify a court-imposed requirement for the supervision of a dependent age 13 or older if the need for dependent care is questionable. If more than one household member is required to participate in an E&T program, the State agency will reimburse the actual cost of dependent care or the applicable payment rate for child care, whichever is lowest, for each dependent in the household, regardless of the number of household members participating in the E&T program. An individual who is the caretaker relative of a dependent in a family receiving cash assistance under title IV-A of the Social Security Act in a local area where an employment, training, or education program under title IV-A is in operation is not eligible for such reimbursement. An E&T participant is not entitled to the dependent care reimbursement if a member of the E&T participant’s SNAP household provides the dependent care services. The State agency must verify the participant’s need for dependent care and the cost of the dependent care prior to the issuance of the reimbursement. The verification must include the name and address of the dependent care provider, the cost and the hours of service (e.g., five hours per day, five days per week for two weeks). A participant may not be reimbursed for dependent care services beyond that which is required for participation in the E&T program. In lieu of providing reimbursements for dependent care expenses, a State agency may arrange for dependent care through providers by the use of purchase of service contracts, by providing vouchers to the household or by other means. A State agency may require that dependent care provided or arranged by the State agency meet all applicable standards of State and local law, including requirements designed to ensure basic health and safety protections (e.g., fire safety). An E&T participant may refuse available appropriate dependent care as provided or arranged by the State agency, if the participant can arrange other dependent care or can show that such refusal will not prevent or interfere with participation in the E&T program as required by the State agency.
(ii) The State agency will reimburse the actual costs of transportation and other costs (excluding dependent care costs) it determines to be necessary and directly related to participation in the E&T program up the maximum level of reimbursement established by the State agency. Such costs are the actual costs of participation unless the State agency has a method approved in its E&T Plan for providing allowances to participants to reflect approximate costs of participation. If a State agency has an approved method to provide allowances rather than reimbursements, it must provide participants an opportunity to claim actual expenses up to the maximum level of reimbursements established by the State agency.
(iii) No participant cost that has been reimbursed under a workfare program under paragraph (m)(7)(i) of this section, title IV of the Social Security Act or other work program will be reimbursed under this section.
(iv) Any portion of dependent care costs that are reimbursed under this section may not be claimed as an expense and used in calculating the dependent care deduction under § 273.9(d)(4) for determining benefits.
(v) The State agency must inform all mandatory E&T participants that they may be exempted from E&T participation if their monthly expenses that are reasonably necessary and directly related to participation in the E&T program, including participation in case management services and E&T components, exceed the allowable reimbursement amount. Persons for whom allowable monthly expenses in an E&T component exceed the amounts specified under paragraphs (d)(4)(i) and (ii) of this section are not required to participate in that component. These individuals will be placed, if possible, in another suitable component in which the individual’s monthly E&T expenses would not exceed the allowable reimbursable amount paid by the State agency. If a suitable component is not available, these individuals will be exempt from E&T participation until a suitable component is available or the individual’s circumstances change and his/her monthly expenses do not exceed the allowable reimbursable amount paid by the State agency. Dependent care expenses incurred that are otherwise allowable but not reimbursed because they exceed the reimbursable amount specified under paragraph (d)(4)(i) of this section will be considered in determining a dependent care deduction under § 273.9(d)(4).
(5) Workfare cost sharing. Enhanced cost-sharing due to placement of workfare participants in paid employment is available only for workfare programs funded under paragraph (m)(7)(iv) of this section at the 50 percent reimbursement level and reported as such.
(6) Funding mechanism. E&T program funding will be disbursed through States’ Letters of Credit in accordance with § 277.5 of this chapter. The State agency must ensure that records are maintained that support the financial claims being made to FNS.
(7) Fiscal recordkeeping and reporting requirements. Total E&T expenditures are reported on the Financial Status Report (SF-425 using FNS-778/FNS-778A worksheet) in the column containing “other” expenses. E&T expenditures are also separately identified in an attachment to the SF-425 using FNS-778/FNS-778A worksheet to show, as provided in instructions, total State and Federal E&T expenditures; expenditures funded with the unmatched Federal grants; State and Federal expenditures for participant reimbursements; State and Federal expenditures for E&T costs at the 50 percent reimbursement level; and State and Federal expenditures for optional workfare program costs, operated under section 20 of the Food and Nutrition Act of 2008 and paragraph (m)(7) of this section. Claims for enhanced funding for placements of participants in employment after their initial participation in the optional workfare program will be submitted in accordance with paragraph (m)(7)(iv) of this section.
(e) Employment and training programs. Work registrants not otherwise exempted by the State agency are subject to the E&T program participation requirements imposed by the State agency. Such individuals are referred to in this section as E&T mandatory participants or mandatory E&T participants. Requirements may vary among participants. Failure to comply without good cause with the requirements imposed by the State agency will result in disqualification as specified in paragraph (f)(2) of this section. Mandatory E&T participants who receive an E&T provider determination in accordance with paragraph (c)(18)(i) of this section shall not be subject to disqualification for refusal without good cause to participate in mandatory E&T during the time specified in (c)(18)(ii) of this section.
(1) Case management. The State E&T program must provide case management services such as comprehensive intake assessments, individualized service plans, progress monitoring, or coordination with service providers which are provided to all E&T participants. The purpose of case management services shall be to guide the participant towards appropriate E&T components and activities based on the participant’s needs and interests, support the participant in the E&T program, and to provide activities and resources that help the participant achieve program goals. Case management services and activities must directly support an individual’s participation in the E&T program. Case management may include referrals to activities and supports outside of the E&T program, but State agencies can only use E&T funds for allowable components, activities, and participant reimbursements. The provision of case management services must not be an impediment to the participant’s successful participation in E&T. In addition, if the case manager determines a mandatory E&T participant may meet an exemption from the requirement to participate in an E&T program, may have good cause for non-compliance with a work requirement, or both, the case manager must inform the appropriate State agency staff. Also, if the case manager is unable to identify an appropriate and available opening in an E&T component for a mandatory E&T participant, the case manager must inform the appropriate State agency staff.
(2) Components. To be considered acceptable by FNS, any component offered by a State agency must entail a certain level of effort by the participants. The level of effort should be comparable to spending approximately 12 hours a month for two months making job contacts (less in workfare or work experience components if the household’s benefit divided by the minimum wage is less than this amount). However, FNS may approve components that do not meet this guideline if it determines that such components will advance program goals. An initial screening by an eligibility worker to determine whom to place in an E&T program does not constitute a component. The State agency may require SNAP applicants to participate in any component it offers in its E&T program at the time of application. The State agency must screen applicants to determine if it is appropriate to participate in E&T in accordance with paragraph (c)(2) of this section, provide the applicant with participant reimbursements in accordance with (d)(4) of this section, and inform the applicant of E&T participation requirements including how to access the component and consequences for failing to participate. The State agency must not impose requirements that would delay the determination of an individual’s eligibility for benefits or in issuing benefits to any household that is otherwise eligible. In accordance with section 6(o)(1)(C) of the Food and Nutrition Act of 2008 and § 273.24, supervised job search and job search training, when offered as components of an E&T program, are not qualifying activities relating to the participation requirements necessary to fulfill the ABAWD work requirement under § 273.24. However, job search, including supervised job search, or job search training activities, when offered as part of other E&T program components, are acceptable as long as those activities comprise less than half the total required time spent in the components. An E&T program offered by a State agency must include one or more of the following components:
(i) A supervised job search program. Supervised job search programs are those that occur at State-approved locations at which the activities of participants shall be directly supervised and the timing and activities of participants tracked in accordance with guidelines issued by the State agency and summarized in their E&T State plan in accordance with paragraph (c)(6)(i) of this section. State-approved locations include any location deemed suitable by the State agency where the participant has access to the tools and materials they need to perform supervised job search. Tools used in the supervised job search program may include virtual tools, including, but not limited to, websites, portals, or web applications to access supervised job search services. State agencies are encouraged to offer a variety of locations and formats to best meet participant needs, and to the extent practicable, allow participants to choose their preferred location. Supervision can occur asynchronously with respect to the participant’s job search activities, but must be provided by skilled staff, either remotely or in-person, who provide meaningful guidance and support with at least monthly check-ins, and must be provided in such a way so as to best support the participant. State agencies have discretion to develop tracking methods that best meet the needs of the participant. Supervised job search activities must have a direct link to increasing the employment opportunities of individuals engaged in the activity. Job search that does not meet the definition of supervised job search is allowed as a subsidiary activity of another E&T component, so long as the job search activity comprises less than half of the total time spent in the component. The State agency may require an individual to participate in supervised job search from the time an application is filed for an initial period established by the State agency, so long as the criteria for serving applicants in this paragraph (e)(2) are satisfied. Following this initial period (which may extend beyond the date when eligibility is determined) the State agency may require an additional supervised job search period in any period of 12 consecutive months. The first such period of 12 consecutive months will begin at any time following the close of the initial period. The State agency may establish a supervised job search period that, in its estimation, will provide participants a reasonable opportunity to find suitable employment. The State agency should not, however, establish a continuous, year-round supervised job search requirement. If a reasonable period of supervised job search does not result in employment, placing the individual in a training or education component to improve job skills will likely be more productive. In accordance with section 6(o)(1)(C) of the Food and Nutrition Act of 2008 and § 273.24, a supervised job search program is not a qualifying E&T activity relating to the participation requirements necessary to maintain SNAP eligibility for ABAWDs. However, a job search program, supervised or otherwise, when operated under title I of the Workforce Innovation and Opportunity Act (WIOA), under section 236 of the Trade Act, or a program of employment and training for veterans operated by the Department of Labor or the Department of Veterans Affairs, is considered a qualifying activity relating to the participation requirements necessary to maintain SNAP eligibility for ABAWDs.
(ii) A job search training program that includes reasonable job search training and support activities. Such a program may consist of employability assessments, training in techniques to increase employability, job placement services, or other direct training or support activities, including educational programs determined by the State agency to expand the job search abilities or employability of those subject to the program. Job search training activities are approvable if they directly enhance the employability of the participants. A direct link between the job search training activities and job-readiness must be established for a component to be approved. In accordance with section 6(o)(1)(C) of the Food and Nutrition Act of 2008 and § 273.24, a job search training program is not a qualifying activity relating to the participation requirements necessary to maintain SNAP eligibility for ABAWDs. However, such a program, when operated under title I of WIOA, under section 236 of the Trade Act, or a program of employment and training for veterans operated by the Department of Labor or the Department of Veterans Affairs, is considered a qualifying activity relating to the participation requirements necessary to maintain SNAP eligibility for ABAWDs.
(iii) A workfare program as described in paragraph (m) of this section.
(A) The participation requirements of section 20(b) of the Food and Nutrition Act of 2008 and paragraphs (m)(5)(i)(A) and (B) of this section for individuals exempt from SNAP work requirements under paragraphs (b)(1)(iii) and (v) of this section, are not applicable to E&T workfare components.
(B) In accordance with section 20(e) of the Food and Nutrition Act of 2008 and paragraph (m)(6)(ii) of this section, the State agency may establish a job search period of up to 30 days following certification prior to making a workfare assignment. This job search activity is part of the workfare assignment, and not a job search “program.” Participants are considered to be participating in and complying with the requirements of workfare, thereby meeting the participation requirement for ABAWDs.
(C) The sharing of workfare savings authorized under section 20(g) of the Food and Nutrition Act of 2008 and paragraph (m)(7)(iv) of this section are not available for E&T workfare components.
(iv) A work experience program designed to improve the employability of household members through actual work experience or training, or both, and to enable individuals employed or trained under such programs to move promptly into regular public or private employment. Work experience is a planned, structured learning experience that takes place in a workplace for a limited period of time. Work experience may be paid or unpaid, as appropriate, and consistent with other laws such as the Fair Labor Standards Act. Work experience may be arranged within the private for-profit sector, the non-profit sector, or the public sector. Labor standards apply in any work experience setting where an employee/employer relationship, as defined by the Fair Labor Standards Act, exists.
(A) A work experience program may include:
(1) A work activity performed in exchange for SNAP benefits that provides an individual with an opportunity to acquire the general skills, knowledge, and work habits necessary to obtain employment. The purpose of work activity is to improve the employability of those who cannot find unsubsidized full-time employment.
(2) A work-based learning program, which, for the purposes of SNAP E&T, are sustained interactions with industry or community professionals in real world settings to the extent practicable, or simulated environments at an educational institution that foster in-depth, firsthand engagement with the tasks required in a given career field, that are aligned to curriculum and instruction. Work-based learning emphasizes employer engagement, includes specific training objectives, and leads to regular employment. Work-based learning can include internships, pre-apprenticeships, apprenticeships, customized training, transitional jobs, incumbent worker training, and on-the-job training as defined under WIOA. Work-based learning can include both subsidized and unsubsidized employment models.
(B) A work experience program must:
(1) Not provide any work that has the effect of replacing the employment of an individual not participating in the employment or training experience program; and
(2) Provide the same benefits and working conditions that are provided at the job site to employees performing comparable work for comparable hours.
(v) A project, program or experiment such as a supported work program aimed at accomplishing the purpose of the E&T program.
(vi) Educational programs or activities to improve basic skills, build work readiness, or otherwise improve employability including educational programs determined by the State agency to expand the job search abilities or employability of those subject to the program.
(A) Allowable educational programs or activities may include, but are not limited to, courses or programs of study that are part of a program of career and technical education (as defined in section 3 of the Carl D. Perkins Act of 2006), high school or equivalent educational programs, remedial education programs to achieve a basic literacy level, and instructional programs in English as a second language.
(B) Only educational components that directly enhance the employability of the participants are allowable. A direct link between the education and job-readiness must be established for a component to be approved.
(vii) A program designed to improve the self-sufficiency of recipients through self-employment. Included are programs that provide instruction for self-employment ventures.
(viii) Job retention services that are designed to help achieve satisfactory performance, retain employment and to increase earnings over time. The State agency may offer job retention services, such as case management, job coaching, dependent care assistance and transportation assistance, for up to 90 days to an individual who has secured employment. State agencies must make a good faith effort to provide job retention services for at least 30 days. The State agency may determine the start date for job retention services provided that the individual is participating in SNAP in the month of or the month prior to beginning job retention services. The State agency may provide job retention services to households leaving SNAP up to the 90-day limit unless the individual is leaving SNAP due to a disqualification in accordance with § 273.7(f) or § 273.16. The participant must have secured employment after or while receiving other employment/training services under the E&T program offered by the State agency. There is no limit to the number of times an individual may receive job retention services as long as the individual has re-engaged with E&T prior to obtaining new employment. An otherwise eligible individual who refuses or fails to accept or comply with job retention services offered by the State agency may not be disqualified as specified in paragraph (f)(2) of this section.
(ix) Programs and activities conducted under the pilots authorized by the Agricultural Act of 2014 (Pub. L. 113-79) that the Secretary determines, based on the results from the independent evaluations conducted for those pilots, have the most demonstrable impact on the ability of participants to find and retain employment that leads to increased household income and reduced reliance on public assistance.
(3) Exemptions. Each State agency may, at its discretion, exempt individual work registrants and categories of work registrants from E&T participation. Each State agency must periodically reevaluate its individual and categorical exemptions to determine whether they remain valid. Each State agency will establish the frequency of its periodic evaluation.
(4) Time spent in an employment and training program. (i) Each State agency will determine the length of time a participant spends in case management or any E&T component it offers. The State agency may also determine the number of successive components in which a participant may be placed.
(ii) The time spent by the members of a household collectively each month in an E&T work program (including, but not limited to, those carried out under paragraphs (e)(2)(iii) and (iv) of this section) combined with any hours worked that month in a workfare program under paragraph (m) of this section must not exceed the number of hours equal to the household’s allotment for that month divided by the higher of the applicable Federal or State minimum wage. The total hours of participation in an E&T program for any household member individually in any month, together with any hours worked in a workfare program under paragraph (m) of this section and any hours worked for compensation (in cash or in kind), must not exceed 120.
(5) Voluntary participation. (i) A State agency may operate an E&T program in which individuals elect to participate.
(ii) A State agency must not disqualify voluntary participants in an E&T program for failure to comply with E&T requirements.
(iii) Voluntary participants are not subject to the restrictions in paragraph (e)(4)(ii) of this section, as long as the voluntary participants are paid a wage at least equal to the higher of the applicable Federal or State minimum wage for all hours spent in an E&T work program or workfare.
(f) Failure to comply—(1) Ineligibility for failure to comply. A nonexempt individual who refuses or fails without good cause, as defined in paragraphs (i)(2), (3), and (4) of this section, to comply with SNAP work requirements listed under paragraph (a)(1) of this section is ineligible to participate in SNAP, and will be considered an ineligible household member, pursuant to § 273.1(b)(7).
(i) As soon as the State agency learns of the individual’s noncompliance it must determine whether good cause for the noncompliance exists, as discussed in paragraph (i) of this section. Within 10 days of establishing that the noncompliance was without good cause, the State agency must provide the individual with a notice of adverse action, as specified in § 273.13. If the State agency offers a conciliation process as part of its E&T program, it must issue the notice of adverse action no later than the end of the conciliation period.
(ii) The notice of adverse action must contain the particular act of noncompliance committed and the proposed period of disqualification. The notice must also specify that the individual may, if appropriate, reapply at the end of the disqualification period. Information must be included on or with the notice describing the action that can be taken to avoid the disqualification before the disqualification period begins. The disqualification period must begin with the first month following the expiration of the 10-day adverse notice period, unless a fair hearing is requested.
(iii) An E&T disqualification may be imposed after the end of a certification period. Thus, a notice of adverse action must be sent whenever the State agency becomes aware of an individual’s noncompliance with SNAP work requirements, even if the disqualification begins after the certification period expires and the household has not been recertified.
(2) Disqualification periods. The following disqualification periods will be imposed:
(i) For the first occurrence of noncompliance, the individual will be disqualified until the later of:
(A) The date the individual complies, as determined by the State agency;
(B) One month; or
(C) Up to three months, at State agency option.
(ii) For the second occurrence, until the later of:
(A) The date the individual complies, as determined by the State agency;
(B) Three months; or
(C) Up to six months, at State agency option.
(iii) For the third or subsequent occurrence, until the later of:
(A) The date the individual complies, as determined by the State agency;
(B) Six months;
(C) A date determined by the State agency; or
(D) At the option of the State agency, permanently.
(3) Record retention. In accordance with § 272.1(f) of this chapter, State agencies are required to retain records concerning the frequency of noncompliance with FSP work requirements and the resulting disqualification actions imposed. These records must be available for inspection and audit at any reasonable time to ensure conformance with the minimum mandatory disqualification periods instituted.
(4) Disqualification plan. In accordance with § 272.2(d)(1)(xiii) of this chapter, each State agency must prepare and submit a plan detailing its disqualification policies. The plan must include the length of disqualification to be enforced for each occurrence of noncompliance, how compliance is determined by the State agency, and the State agency’s household disqualification policy.
(5) Household ineligibility. (i) If the individual who becomes ineligible to participate under paragraph (f)(1) of this section is the head of a household, the State agency, at its option, may disqualify the entire household from SNAP participation.
(ii) The State agency may disqualify the household for a period that does not exceed the lesser of:
(A) The duration of the ineligibility of the noncompliant individual under paragraph (f)(2) of this section; or
(B) 180 days.
(iii) A household disqualified under this provision may reestablish eligibility if:
(A) The head of the household leaves the household;
(B) A new and eligible person joins the household as the head of the household, as defined in § 273.1(d)(2); or
(C) The head of the household becomes exempt from work requirements during the disqualification period.
(iv) If the head of the household joins another household as its head, that household will be disqualified from participating in SNAP for the remaining period of ineligibility.
(6) Fair hearings. Each individual or household has the right to request a fair hearing, in accordance with § 273.15, to appeal a denial, reduction, or termination of benefits due to a determination of nonexempt status, or a State agency determination of failure to comply with SNAP work requirements. Individuals or households may appeal State agency actions such as exemption status, the type of requirement imposed, or State agency refusal to make a finding of good cause if the individual or household believes that a finding of failure to comply has resulted from improper decisions on these matters. The State agency or its designee operating the relevant component or service of the E&T program must receive sufficient advance notice to either permit the attendance of a representative or ensure that a representative will be available for questioning over the phone during the hearing. A representative of the appropriate agency must be available through one of these means. A household must be allowed to examine its E&T program casefile at a reasonable time before the date of the fair hearing, except for confidential information (that may include test results) that the agency determines should be protected from release. Confidential information not released to a household may not be used by either party at the hearing. The results of the fair hearing are binding on the State agency.
(7) Failure to comply with a work requirement under title IV of the Social Security Act, or an unemployment compensation work requirement. An individual exempt from SNAP work requirements by paragraph (b)(1)(iii) or (v) of this section because he or she is subject to work requirements under title IV-A or unemployment compensation who fails to comply with a title IV-A or unemployment compensation work requirement will be treated as though he or she failed to comply with SNAP work requirement.
(i) When a SNAP household reports the loss or denial of title IV-A or unemployment compensation benefits, or if the State agency otherwise learns of a loss or denial, the State agency must determine whether the loss or denial resulted when a household member refused or failed without good cause to comply with a title IV-A or unemployment compensation work requirement.
(ii) If the State agency determines that the loss or denial of benefits resulted from an individual’s refusal or failure without good cause to comply with a title IV or unemployment compensation requirement, the individual (or household if applicable under paragraph (f)(5) of this section) must be disqualified in accordance with the applicable provisions of this paragraph (f). However, if the noncomplying individual meets one of the work registration exemptions provided in paragraph (b)(1) of this section (other than the exemptions provided in paragraph (b)(1)(iii) or (v) of this section) the individual (or household if applicable under paragraph (f)(5) of this section) will not be disqualified.
(iii) If the State agency determination of noncompliance with a title IV-A or unemployment compensation work requirement leads to a denial or termination of the individual’s or household’s SNAP benefits, the individual or household has a right to appeal the decision in accordance with the provisions of paragraph (f)(6) of this section.
(iv) In cases where the individual is disqualified from the title IV-A program for refusal or failure to comply with a title IV-A work requirement, but the individual meets one of the work registration exemptions provided in paragraph (b)(1) of this section, other than the exemption in paragraphs (b)(1)(iii) of this section, the State agency may, at its option, apply the identical title IV-A disqualification on the individual under SNAP. The State agency must impose such optional disqualifications in accordance with section 6(i) of the Food and Nutrition Act of 2008 and with the provisions of § 273.11(1).
(g) Ending disqualification. Except in cases of permanent disqualification, at the end of the applicable mandatory disqualification period for noncompliance with SNAP work requirements, participation may resume if the disqualified individual applies again and is determined by the State agency to be in compliance with work requirements. A disqualified individual may be permitted to resume participation during the disqualification period (if otherwise eligible) by becoming exempt from work requirements.
(h) Suitable employment. (1) Employment will be considered suitable unless:
(i) The wage offered is less than the highest of the applicable Federal minimum wage, the applicable State minimum wage, or eighty percent (80%) of the Federal minimum wage if neither the Federal nor State minimum wage is applicable.
(ii) The employment offered is on a piece-rate basis and the average hourly yield the employee can reasonably be expected to earn is less than the applicable hourly wages specified under paragraph (h)(1)(i) of this section.
(iii) The household member, as a condition of employment or continuing employment, is required to join, resign from, or refrain from joining any legitimate labor organization.
(iv) The work offered is at a site subject to a strike or lockout at the time of the offer unless the strike has been enjoined under section 208 of the Labor-Management Relations Act (29 U.S.C. 78) (commonly known as the Taft-Hartley Act), or unless an injunction has been issued under section 10 of the Railway Labor Act (45 U.S.C. 160).
(v) It fails to meet additional suitability criteria established by State agencies.
(2) In addition, employment will be considered suitable unless the household member involved can demonstrate or the State agency otherwise becomes aware that:
(i) The degree of risk to health and safety is unreasonable.
(ii) The member is physically or mentally unfit to perform the employment, as documented by medical evidence or by reliable information from other sources.
(iii) The employment offered within the first 30 days of registration is not in the member’s major field of experience.
(iv) The distance from the member’s home to the place of employment is unreasonable considering the expected wage and the time and cost of commuting. Employment will not be considered suitable if daily commuting time exceeds 2 hours per day, not including the transporting of a child to and from a child care facility. Nor will employment be considered suitable if the distance to the place of employment prohibits walking and neither public nor private transportation is available to transport the member to the jobsite.
(v) The working hours or nature of the employment interferes with the member’s religious observances, convictions, or beliefs.
(i) Good cause. (1) The State agency is responsible for determining good cause when a SNAP recipient fails or refuses to comply with SNAP work requirements. Since it is not possible for the Department to enumerate each individual situation that should or should not be considered good cause, the State agency must take into account the facts and circumstances, including information submitted by the employer and by the household member involved, in determining whether or not good cause exists.
(2) Good cause includes circumstances beyond the member’s control, such as, but not limited to, illness, illness of another household member requiring the presence of the member, a household emergency, the unavailability of transportation, or the lack of adequate child care for children who have reached age six but are under age 12.
(3) Good cause for leaving employment includes the good cause provisions found in paragraph (i)(2) of this section, and resigning from a job that is unsuitable, as specified in paragraphs (h)(1) and (2) of this section. Good cause for leaving employment also includes:
(i) Discrimination by an employer based on age, race, sex, color, handicap, religious beliefs, national origin or political beliefs;
(ii) Work demands or conditions that render continued employment unreasonable, such as working without being paid on schedule;
(iii) Acceptance of employment by the individual, or enrollment by the individual in any recognized school, training program or institution of higher education on at least a half time basis, that requires the individual to leave employment;
(iv) Acceptance by any other household member of employment or enrollment at least half-time in any recognized school, training program or institution of higher education in another county or similar political subdivision that requires the household to move and thereby requires the individual to leave employment;
(v) Resignations by persons under the age of 60 which are recognized by the employer as retirement;
(vi) Employment that becomes unsuitable, as specified in paragraphs (h)(1) and (2) of this section, after the acceptance of such employment;
(vii) Acceptance of a bona fide offer of employment of more than 30 hours a week or in which the weekly earnings are equivalent to the Federal minimum wage multiplied by 30 hours that, because of circumstances beyond the individual’s control, subsequently either does not materialize or results in employment of less than 30 hours a week or weekly earnings of less than the Federal minimum wage multiplied by 30 hours; and
(viii) Leaving a job in connection with patterns of employment in which workers frequently move from one employer to another such as migrant farm labor or construction work. There may be some circumstances where households will apply for SNAP benefits between jobs particularly in cases where work may not yet be available at the new job site. Even though employment at the new site has not actually begun, the quitting of the previous employment must be considered as with good cause if it is part of the pattern of that type of employment.
(4) Good cause includes circumstances where the State agency determines that there is not an appropriate and available opening within the E&T program to accommodate the mandatory participant. Good cause for circumstances where there is not an appropriate or available opening within the E&T program shall extend until the State agency identifies an appropriate and available E&T opening, and the State agency informs the SNAP participant. In addition, good cause for circumstances where there is not an appropriate and available opening within the E&T program shall only apply to the requirement to participate in E&T and shall not provide good cause to ABAWDs who fail to fulfill the ABAWD work requirement in accordance with § 273.24.
(5) Verification. To the extent that the information given by the household is questionable, as defined in § 273.2(f)(2), State agencies must request verification of the household’s statements. The primary responsibility for providing verification, as provided in § 273.2(f)(5), rests with the household.
(j) Voluntary quit and reduction of work effort—(1) Period for establishing voluntary quit and reduction of work effort. For the purpose of establishing that a voluntary quit without good cause or reduction in work effort without good cause occurred prior to applying for SNAP benefits, a State agency may, at its option, choose a period between 30 and 60 days before application in which to determine voluntary quit or reduction in work effort.
(2) Individual ineligibility. An individual is ineligible to participate in SNAP if, in a period established by the State agency between 30 and 60 day before applying for SNAP benefits or at any time thereafter, the individual:
(i) Voluntarily and without good cause quits a job of 30 hours a week or more; or
(ii) Reduces his or her work effort voluntarily and without good cause and, after the reduction, is working less than 30 hours per week.
(3) Determining whether a voluntary quit or reduction of work effort occurred and application processing. (i) When a household files an application for participation, or when a participating household reports the loss of a source of income or a reduction in household earnings, the State agency must determine whether any household member voluntarily quit his or her job or reduced his or her work effort. Benefits must not be delayed beyond the normal processing times specified in § 273.2 pending the outcome of this determination.
(ii) The voluntary quit provision applies if the employment involved 30 hours or more per week or provided weekly earnings at least equivalent to the Federal minimum wage multiplied by 30 hours; the quit occurred within a period established by the State agency between 30 to 60 days prior to the date of application or anytime thereafter; and the quit was without good cause. Changes in employment status that result from terminating a self-employment enterprise or resigning from a job at the demand of the employer will not be considered a voluntary quit for purposes of this paragraph (j). An employee of the Federal Government, or of a State or local government who participates in a strike against such government, and is dismissed from his or her job because of participation in the strike, will be considered to have voluntarily quit his or her job without good cause. If an individual quits a job, secures new employment at comparable wages or hours and is then laid off or, through no fault of his own, loses the new job, the individual must not be disqualified for the earlier quit.
(iii) The reduction of work effort provision applies if, before the reduction, the individual was employed 30 hours or more per week; the reduction occurred within a period established by the State agency between 30 and 60 days prior to the date of application or anytime thereafter; and the reduction was voluntary and without good cause. If the individual reduces his or her work hours to less than 30 a week, but continues to earn weekly wages that exceed the Federal minimum wage multiplied by 30 hours, the individual remains exempt from Program work requirements, in accordance with paragraph (b)(1)(vii) of this section, and the reduction in work effort provision does not apply. Minor variations in the number of hours worked or in the weekly minimum wage equivalent wages are inevitable and must be taken into consideration when assessing a recipient’s compliance with Program work rules.
(iv) In the case of an applicant household, the State agency must determine if any household member subject to SNAP work requirements voluntarily quit his or her job or reduced his or her work effort within a period established by the State agency between 30 and 60 days prior to date of application. If the State agency learns that a household has lost a source of income or experienced a reduction in income after the date of application but before the household is certified, the State agency must determine whether a voluntary quit or reduction in work effort occurred.
(v) Upon determining that an individual voluntarily quit employment or reduced work effort, the State agency must determine if the voluntary quit or reduction of work effort was with good cause as defined in paragraph (i) of this section.
(vi) In the case of an individual who is a member of an applicant household, if the voluntary quit or reduction in work effort was without good cause, the individual will be determined ineligible to participate and will be disqualified according to the State agency’s established minimum mandatory sanction schedule. The ineligible individual must be considered an ineligible household member, pursuant to § 273.1(b)(7). The disqualification is effective upon the determination of eligibility for the remaining household members. If the individual who becomes ineligible is the head of the household, as defined in § 273.1(d)(2), the State agency may choose to disqualify the entire household, in accordance with paragraph (f)(5) of this section. If the State agency chooses to disqualify the household, the State agency must provide the applicant household with a notice of denial in accordance with § 273.2(g)(3). The notice must inform the household of the proposed period of disqualification; its right to reapply at the end of the disqualification period; and of its right to a fair hearing. The household’s disqualification is effective upon the issuance of the notice of denial.
(vii) In the case of an individual who is a member of a participating household, if the State agency determines that the individual voluntarily quit his or her job or reduced his or her work effort without good cause while participating in the program or discovers that the individual voluntarily quit his or her job or reduced his or her work effort without good cause during a period established by the State agency between 30 and 60 days prior to the date of application for benefits or between application and certification, the State agency must provide the individual with a notice of adverse action as specified in § 273.13 within 10 days after the determination of a quit or reduction in work effort. The notification must contain the particular act of noncompliance committed, the proposed period of ineligibility, the actions that may be taken to avoid the disqualification, and it must specify that the individual, if otherwise eligible, may resume participation at the end of the disqualification period if the State agency determines the individual to be in compliance with Program work requirements. The individual will be disqualified according to the State agency’s established minimum mandatory sanction schedule. The ineligible individual must be considered an ineligible household member, pursuant to § 273.1(b)(7). The disqualification period will begin the first month following the expiration of the 10-day adverse notice period, unless the individual requests a fair hearing. If a voluntary quit or reduction in work effort occurs in the last month of a certification period, or is determined in the last 30 days of the certification period, the individual must be denied recertification for a period equal to the appropriate mandatory disqualification period, beginning with the day after the last certification period ends and continuing for the length of the disqualification, regardless of whether the individual reapplies for SNAP benefits. Each individual has a right to a fair hearing to appeal a denial or termination of benefits due to a determination that the individual voluntarily quit his or her job or reduced his or her work effort without good cause. If the participating individual’s benefits are continued pending a fair hearing and the State agency determination is upheld, the disqualification period must begin the first of the month after the hearing decision is rendered.
(viii) If the individual who voluntarily quit his or her job, or who reduced his or her work effort without good cause is the head of a household, as defined in § 273.1(d), the State agency, at its option, may disqualify the entire household from SNAP participation in accordance with paragraph (f)(5) of this section.
(4) Ending a voluntary quit or a reduction in work disqualification. Except in cases of permanent disqualification, following the end of the mandatory disqualification period for voluntarily quitting a job or reducing work effort without good cause, an individual may begin participation in the program if he or she reapplies and is determined eligible by the State agency. Eligibility may be reestablished during a disqualification and the individual, if otherwise eligible, may be permitted to resume participation if the individual becomes exempt from Program work requirements under paragraph (b)(1) of this section.
(5) Application in the final month of disqualification. Except in cases of permanent disqualification, if an application for participation in the Program is filed in the final month of the mandatory disqualification period, the State agency must, in accordance with § 273.10(a)(3), use the same application for the denial of benefits in the remaining month of disqualification and certification for any subsequent month(s) if all other eligibility criteria are met.
(k) Employment initiatives program—(1) General. In accordance with section 17(d)(1)(B) of the Food and Nutrition Act of 2008, qualified State agencies may elect to operate an employment initiatives program, in which an eligible household can receive the cash equivalent of its SNAP benefit allotment.
(2) State agency qualification. A State agency qualifies to operate an employment initiatives program if, during the summer of 1993, at least half of its SNAP households also received cash benefits from a State program funded under title IV-A of the Social Security Act.
(3) Qualified State agencies. The State agencies of Alaska, California, Connecticut, the District of Columbia, Massachusetts, Michigan, Minnesota, New Jersey, West Virginia, and Wisconsin meet the qualification. These 10 State agencies may operate an employment initiatives program.
(4) Eligible households. A SNAP household in one of the 10 qualified State agencies may receive cash benefits in lieu of a SNAP benefit allotment if it meets the following requirements:
(i) The SNAP household elects to participate in an employment initiatives program;
(ii) An adult member of the household:
(A) Has worked in unsubsidized employment for the last 90 days, earning a minimum of $350 per month;
(B) Is receiving cash benefits under a State program funded under title IV-A of the Social Security Act; or
(C) Was receiving cash benefits under the State program but, while participating in the employment initiatives program, became ineligible because of earnings and continues to earn at least $350 a month from unsubsidized employment.
(5) Program Provisions. (i) Cash benefits provided in an employment initiatives program will be considered an allotment, as defined at § 271.2 of this chapter.
(ii) An eligible household receiving cash benefits in an employment initiatives program will not receive any other SNAP benefit during the period for which cash assistance is provided.
(iii) A qualified State agency operating an employment initiatives program must increase the cash benefit to participating households to compensate for any State or local sales tax on food purchases, unless FNS determines that an increase is unnecessary because of the limited nature of items subject to the State or local sales tax.
(iv) Any increase in cash assistance to account for a State or local sales tax on food purchases must be paid by the State agency.
(6) Evaluation. After two years of operating an employment initiatives program, a State agency must evaluate the impact of providing cash assistance in lieu of a SNAP benefit allotment to participating households. The State agency must provide FNS with a written report of its evaluation findings. The State agency, with the concurrence of FNS, will determine the content of the evaluation.
(l) Work supplementation program. In accordance with section 16(b) of the Food and Nutrition Act of 2008, States may operate work supplementation (or support) programs that allow the cash value of SNAP benefits and public assistance, such as cash assistance authorized under title IV-A of the Social Security Act or cash assistance under a program established by a State, to be provided to employers as a wage subsidy to be used for hiring and employing public assistance recipients. The goal of these programs is to promote self-sufficiency by providing public assistance recipients with work experience to help them move into unsubsidized jobs. In accordance with § 272.2(d)(1)(xiv) of this chapter, State agencies that wish to exercise their option to implement work supplementation programs must submit to FNS for approval a plan that complies with the provisions of this paragraph (l). Work supplementation programs may not be implemented without prior approval from FNS.
(1) Plan—(i) Assurances. The plan must contain the following assurances:
(A) The individual participating in a work supplementation program must not be employed by the employer at the time the individual enters the program;
(B) The wage subsidy received under the work supplementation program must be excluded from household income and resources during the term the individual is participating in work supplementation;
(C) The household must not receive a separate SNAP allotment while participating in the work supplementation program;
(D) An individual participating in a work supplementation program is excused from meeting any other work requirements;
(E) The work supplementation program must not displace any persons currently employed who are not supplemented or supported;
(F) The wage subsidy must not be considered income or resources under any Federal, State or local laws, including but not limited to, laws relating to taxation, welfare, or public assistance programs, and the household’s SNAP allotment must not be decreased due to taxation or any other reason because of its use as a wage subsidy;
(G) The earned income deduction does not apply to the subsidized portion of wages received in a work supplementation program; and
(H) All work supplemented or supported employees must receive the same benefits (sick and personal leave, health coverage, workmen’s compensation, etc.) as similarly situated coworkers who are not participating in work supplementation and wages paid under a wage supplementation or support program must meet the requirements of the Fair Labor Standards Act and other applicable employment laws.
(ii) Description. The plan must also describe:
(A) The procedures the State agency will use to ensure that the cash value of SNAP benefits for participating households are not subject to State or local sales taxes on food purchases. The costs of increasing household SNAP allotments to compensate for such sales taxes must be paid from State funds;
(B) State agency, employer and recipient obligations and responsibilities;
(C) The procedures the State agency will use to provide wage subsidies to employers and to ensure accountability;
(D) How public assistance recipients in the proposed work supplementation program will, within a specified period of time, be moved from supplemented or supported employment to employment that is not supplemented or supported;
(E) Whether the SNAP allotment and public assistance grant will be frozen at the time a recipient begins a subsidized job; and
(F) The procedures the State agency will use to ensure that work supplementation program participants do not incur any Federal, State, or local tax liabilities on the cash value of their SNAP benefits.
(2) Budget. In addition to the plan described in paragraph (l)(1) of this section, an operating budget for the proposed work supplementation program must be submitted to FNS.
(3) Approval. FNS will review the initial plan and any subsequent amendments. Upon approval by FNS, the State agency must incorporate the approved work supplementation program plan or subsequent amendment into its State Plan of Operation and its operating budget must be included in the State agency budget. No plan or amendment may be implemented without approval from FNS.
(4) Reporting. State agencies operating work supplementation and support programs are required to comply with all FNS reporting requirements, including reporting the amount of benefits contributed to employers as a wage subsidy on the FNS-388, State Issuance and Participation Estimates; FNS-388A, Participation and Issuance by Project Area; FNS-46, Issuance Reconciliation Report; and SF-425, using FNS-778 worksheet, Addendum Financial Status Report. State agencies are also required to report administrative costs associated with work supplementation programs on the FNS-366A, Budget Projection and SF-425 using FNS-778/FNS-778A worksheet, Financial Status Report. Special codes for work supplementation programs will be assigned for reporting purposes.
(5) Funding. FNS will pay the cash value of a participating household’s SNAP benefits to a State agency with an approved work supplementation program to pay to an employer as a wage subsidy, and will also reimburse the State agency for related administrative costs, in accordance with Section 16 of the Food and Nutrition Act of 2008.
(6) Quality control. Cases in which a household member is participating in a work supplementation program will be coded as not subject to review.
(m) Optional workfare program—(1) General. This paragraph (m) contains the rules to be followed in operating a SNAP workfare program. In workfare, nonexempt SNAP recipients may be required to perform work in a public service capacity as a condition of eligibility to receive the benefit allotment to which their household is normally entitled. The primary goal of workfare is to improve employability and enable individuals to move into regular employment.
(2) Program administration. (i) A SNAP workfare program may be operated as a component of a State agency’s E&T program, or it may be operated independently. If the workfare program is part of an E&T program it must be included as a component in the State agency’s E&T plan in accordance with the requirements of paragraph (c)(4) of this section. If it is operated independent of the E&T program, the State agency must submit a workfare plan to FNS for its approval. For the purpose of this paragraph (m), a political subdivision is any local government, including, but not limited to, any county, city, town or parish. A State agency may implement a workfare program statewide or in only some areas of the State. The areas of operation must be identified in the State agency’s workfare or E&T plan.
(ii) Political subdivisions are encouraged, but not required, to submit their plans to FNS through their respective State agencies. At a minimum, however, plans must be submitted to the State agencies concurrent with their submission to FNS. Workfare plans and subsequent amendments must not be implemented prior to their approval by FNS.
(iii) When a State agency chooses to sponsor a workfare program by submitting a plan to FNS, it must incorporate the approved plan into its State Plan of Operations. When a political subdivision chooses to sponsor a workfare program by submitting a plan to FNS, the State agency is responsible as a facilitator in the administration of the program by disbursing Federal funding and meeting the requirements identified in paragraph (m)(4) of this section. When it is notified that FNS has approved a workfare plan submitted by a political subdivision in its State, the State agency must append that political subdivision’s workfare plan to its own State Plan of Operations.
(iv) The operating agency is the administrative organization identified in the workfare plan as being responsible for establishing job sites, assigning eligible recipients to the job sites, and meeting the requirements of this paragraph (m). The operating agency may be any public or private, nonprofit organization. The State agency or political subdivision that submitted the workfare plan is responsible for monitoring the operating agency’s compliance with the requirements of this paragraph (m) or of the workfare plan. The Department may suspend or terminate some or all workfare program funding, or withdraw approval of the workfare program from the State agency or political subdivision that submitted the workfare plan upon finding that that State agency or political subdivision, or their respective operating agencies, have failed to comply with the requirements of this paragraph (m) or of the workfare plan.
(v) State agencies or other political subdivisions must describe in detail in the plan how the political subdivision, working with the State agency and any other cooperating agencies that may be involved in the program, will fulfill the provisions of this paragraph (m). The plan will be a one-time submittal, with amendments submitted as needed to cover any changes in the workfare program as they occur.
(vi) State agencies or political subdivisions submitting a workfare plan must submit with the plan an operating budget covering the period from the initiation of the workfare program’s implementation schedule to the close of the Federal fiscal year. In addition, an estimate of the cost for one full year of operation must be submitted together with the workfare plan. For subsequent fiscal years, the workfare program budget must be included in the State agency’s budget.
(vii) If workfare plans are submitted by more than one political subdivision, each representing the same population (such as a city within a county), the Department will determine which political subdivision will have its plan approved. Under no circumstances will a SNAP recipient be subject to more than one SNAP workfare program. If a political subdivision chooses to operate a workfare program and represents a population which is already, at least in part, subject to a SNAP workfare program administered by another political subdivision, it must establish in its workfare plan how SNAP recipients will not be subject to more than one SNAP workfare program.
(3) Operating agency responsibilities. (i) General. The operating agency, as designated by the State agency or other political subdivision that submits a plan, is responsible for establishing and monitoring job sites, interviewing and assessing eligible recipients, assigning eligible recipients to appropriate job sites, monitoring participant compliance, making initial determinations of good cause for household noncompliance, and otherwise meeting the requirements of this paragraph (m).
(ii) Establishment of job sites. Workfare job slots may only be located in public or private nonprofit agencies. Contractual agreements must be established between the operating agency and organizations providing jobs that include, but are not limited to, designation of the slots available and designation of responsibility for provision of benefits, if any are required, to the workfare participant.
(iii) Notifying State agency of noncompliance. The operating agency must notify the State agency of noncompliance by an individual with a workfare obligation when it determines that the individual did not have good cause for the noncompliance. This notification must occur within five days of such a determination so that the State agency can make a final determination as provided in paragraph (m)(4)(iv) of this section.
(iv) Notifications. (A) State agencies must establish and use notices to notify the operating agency of workfare-eligible households. The notice must include the case name, case number, names of workfare-eligible household members, address of the household, certification period, and indication of any part-time work. If the State agency is calculating the hours of obligation, it must also include this in the notice. If the operating agency is computing the hours to be worked, include the monthly allotment amount.
(B) Operating agencies must establish and use notices to notify the workfare participant of where and when the participant is to report, to whom the participant is to report, a brief description of duties for the particular placement, and the number of hours to be worked.
(C) Operating agencies must establish and use notices to notify the State agency of failure by a household to meet its workfare obligation.
(v) Recordkeeping requirements. (A) Files that record activity by workfare participants must be maintained. At a minimum, these records must contain job sites, hours assigned, and hours completed.
(B) Program records must be maintained, for audit and review purposes, for a period of 3 years from the month of origin of each record. Fiscal records and accountable documents must be retained for 3 years from the date of fiscal or administrative closure of the workfare program. Fiscal closure, as used in this paragraph (m), means that workfare program obligations for or against the Federal government have been liquidated. Administrative closure, as used in this paragraph (m), means that the operating agency or Federal government has determined and documented that no further action to liquidate the workfare program obligation is appropriate. Fiscal records and accountable records must be kept in a manner that will permit verification of direct monthly reimbursements to recipients, in accordance with paragraph (m)(7)(iii) of this section.
(vi) Reporting requirements. The operating agency is responsible for providing information needed by the State agency to fulfill the reporting requirements contained in paragraph (m)(4)(v) of this section.
(vii) Disclosure. The provisions of § 272.1(c) of this chapter restricting the use and disclosure of information obtained from SNAP households is applicable to the administration of the workfare program.
(4) State agency responsibilities. (i) If a political subdivision chooses to operate a workfare program, the State agency must cooperate with the political subdivision in developing a plan.
(ii) The State agency must determine at certification or recertification which household members are eligible for the workfare program and inform the household representative of the nature of the program and of the penalties for noncompliance. If the State agency is not the operating agency, each member of a household who is subject to workfare under paragraph (m)(5)(i) of this section must be referred to the organization which is the operating agency. The information identified in paragraph (m)(3)(iv)(A) of this section must be forwarded to the operating agency within 5 days after the date of household certification. Computation of hours to be worked may be delegated to the operating agency.
(iii) The State agency must inform the household and the operating agency of the effect of any changes in a household’s circumstances on the household’s workfare obligation. This includes changes in benefit levels or workfare eligibility.
(iv) Upon notification by the operating agency that a participant has failed to comply with the workfare requirement without good cause, the State agency must make a final determination as to whether or not the failure occurred and whether there was good cause for the failure. If the State agency determines that the participant did not have good cause for noncompliance, a sanction must be processed as provided in paragraphs (f)(1)(i) and (f)(1)(ii) of this section. The State agency must immediately inform the operating agency of the months during which the sanction will apply.
(v) The State agency must submit quarterly reports to FNS within 45 days of the end of each quarter identifying for that quarter for that State:
(A) The number of households with workfare-eligible recipients referred to the operating agency. A household will be counted each time it is referred to the operating agency;
(B) The number of households assigned to jobs each month by the operating agency;
(C) The number of individuals assigned to jobs each month by the operating agency;
(D) The total number of hours worked by participants; and
(E) The number of individuals against which sanctions were applied. An individual being sanctioned over two quarters should only be reported as sanctioned for the earlier quarter.
(vi) The State agency may, at its option, assume responsibility for monitoring all workfare programs in its State to assure that there is compliance with this section and with the plan submitted and approved by FNS. Should the State agency assume this responsibility, it would act as agent for FNS, which is ultimately responsible for ensuring such compliance. Should the State agency determine that noncompliance exists, it may withhold funding until compliance is achieved or FNS directs otherwise.
(5) Household responsibilities. (i) Participation requirement. Participation in workfare, if assigned by the State agency, is a SNAP work requirement for all nonexempt household members, as provided in paragraph (a) of this section. In addition:
(A) Those recipients exempt from SNAP work requirements because they are subject to and complying with any work requirement under title IV of the Social Security Act are subject to workfare if they are currently involved less than 20 hours a week in title IV work activities. Those recipients involved 20 hours a week or more may be subject to workfare at the option of the political subdivision; and
(B) Those recipients exempt from SNAP work requirements because they have applied for or are receiving unemployment compensation are subject to workfare.
(ii) Household obligation. The maximum total number of hours of work required of a household each month is determined by dividing the household’s benefit allotment by the Federal or State minimum wage, whichever is higher. Fractions of hours of obligation may be rounded down. The household’s hours of obligation for any given month may not be carried over into another month.
(6) Other program requirements. (i) Conditions of employment. (A) A participant may be required to work a maximum of 30 hours per week. This maximum must take into account hours worked in any other compensated capacity (including hours of participation in a title IV work program) by the participant on a regular or predictable part-time basis. With the participant’s consent, the hours to be worked may be scheduled in such a manner that more than 30 hours are worked in one week, as long as the total for that month does not exceed the weekly average of 30 hours.
(B) No participant will be required to work more than eight hours on any given day without his or her consent.
(C) No participant will be required to accept an offer of workfare employment if it fails to meet the criteria established in paragraphs (h)(1)(iii), (h)(1)(iv), (h)(2)(i), (h)(2)(ii), (h)(2)(iv), and (h)(2)(v) of this section.
(D) If the workfare participant is unable to report for job scheduling, to appear for scheduled workfare employment, or to complete the entire workfare obligation due to compliance with Unemployment Insurance requirements; other SNAP work requirements established in paragraph (a)(1) of this section; or the job search requirements established in paragraph (e)(1)(i) of this section, that inability must not be considered a refusal to accept workfare employment. If the workfare participant informs the operating agency of the time conflict, the operating agency must, if possible, reschedule the missed activity. If the rescheduling cannot be completed before the end of the month, that must not be considered as cause for disqualification.
(E) The operating agency must assure that all persons employed in workfare jobs receive job-related benefits at the same levels and to the same extent as similar non-workfare employees. These are benefits related to the actual work being performed, such as workers’ compensation, and not to the employment by a particular agency, such as health benefits. Of those benefits required to be offered, any elective benefit that requires a cash contribution by the participant will be optional at the discretion of the participant.
(F) The operating agency must assure that all workfare participants experience the same working conditions that are provided to non-workfare employees similarly employed.
(G) The provisions of section 2(a)(3) of the Service Contract Act of 1965 (Public Law 89-286), relating to health and safety conditions, apply to the workfare program.
(H) Operating agencies must not place a workfare participant in a work position that has the effect of replacing or preventing the employment of an individual not participating in the workfare program. Vacancies due to hiring freezes, terminations, or lay-offs must not be filled by workfare participants unless it can be demonstrated that the vacancies are a result of insufficient funds to sustain former staff levels.
(I) Workfare jobs must not, in any way, infringe upon the promotional opportunities that would otherwise be available to regular employees.
(J) Workfare jobs must not be related in any way to political or partisan activities.
(K) The cost of workers’ compensation or comparable protection provided to workfare participants by the State agency, political subdivision, or operating agency is a matchable cost under paragraph (m)(7) of this section. However, whether or not this coverage is provided, in no case is the Federal government the employer in these workfare programs (unless a Federal agency is the job site). The Department does not assume liability for any injury to or death of a workfare participant while on the job.
(L) The nondiscrimination requirement provided in § 272.6(a) of this chapter applies to all agencies involved in the workfare program.
(ii) Job search period. The operating agency may establish a job search period of up to 30 days following certification prior to making a workfare assignment during which the potential participant is expected to look for a job. This period may only be established at household certification, not at recertification. The potential participant would not be subject to any job search requirements beyond those required under this section during this time.
(iii) Participant reimbursement. The operating agency must reimburse participants for transportation and other costs that are reasonably necessary and directly related to participation in the program. These other costs may include the cost of child care, or the cost of personal safety items or equipment required for performance of work if these items are also purchased by regular employees. These other costs may not include the cost of meals away from home. No participant cost reimbursed under a workfare program operated under Title IV of the Social Security Act or any other workfare program may be reimbursed under the SNAP workfare program. Only reimbursement of participant costs up to but not in excess of $25 per month for any participant will be subject to Federal cost sharing as provided in paragraph (m)(7) of this section. Reimbursed child care costs may not be claimed as expenses and used in calculating the child care deduction for determining household benefits. In accordance with paragraph (m)(4)(i) of this section, a State agency may decide what its reimbursement policy shall be.
(iv) Failure to comply. When a workfare participant is determined by the State agency to have failed or refused without good cause to comply with the requirements of this paragraph (m), the provisions of paragraph (f) of this section will apply.
(v) Benefit overissuances. If a benefit overissuance is discovered for a month or months in which a participant has already performed a workfare or work component requirement, the State agency must apply the claim recovery procedures as follows:
(A) If the person who performed the work is still subject to a work obligation, the State must determine how may extra hours were worked because of the improper benefit. The participant should be credited those extra hours toward future work obligations; and
(B) If a workfare or work component requirement does not continue, the State agency must determine whether the overissuance was the result of an intentional program violation, an inadvertent household error, or a State agency error. For an intentional program violation a claim should be established for the entire amount of the overissuance. If the overissuance was caused by an inadvertent household error or State agency error, the State agency must determine whether the number of hours worked in workfare are more than the number which could have been assigned had the proper benefit level been used in calculating the number of hours to work. A claim must be established for the amount of the overissuance not “worked off,” if any. If the hours worked equal the amount of hours calculated by dividing the overissuance by the minimum wage, no claim will be established. No credit for future work requirements will be given.
(7) Federal financial participation—(i) Administrative costs. Fifty percent of all administrative costs incurred by State agencies or political subdivisions in operating a workfare program will be funded by the Federal government. Such costs include those related to recipient participation in workfare, up to $25 per month for any participant, as indicated in paragraph (m)(6)(iii) of this section. Such costs do not include the costs of equipment, capital expenditures, tools or materials used in connection with the work performed by workfare participants, the costs of supervising workfare participants, the costs of reimbursing participants for meals away from home, or reimbursed expenses in excess of $25 per month for any participant. State agencies must not use any portion of their annual 100 percent Federal E&T allocations to fund the administration of optional workfare programs under section 20 of the Food and Nutrition Act of 2008 and this paragraph (m).
(ii) Funding mechanism. The State agencies have responsibility for disbursing Federal funds used for the workfare program through the State agencies’ Letters of Credit. The State agency must also assure that records are being maintained which support the financial claims being made to FNS. This will be for all programs, regardless of who submits the plan. Mechanisms for funding local political subdivisions which have submitted plans must be established by the State agencies.
(iii) Fiscal recordkeeping and reporting requirements. Workfare-related costs must be identified by the State agency on the Financial Status Report (Form SF-269) as a separate column. All financial records, supporting documents, statistical records, negotiated contracts, and all other records pertinent to workfare program funds must be maintained in accordance with § 277.12 of this chapter.
(iv) Sharing workfare savings—(A) Entitlement. A political subdivision is entitled to share in the benefit reductions that occur when a workfare participant begins employment while participating in workfare for the first time, or within thirty days of ending the first participation in workfare.
(1) To begin employment means to appear at the place of employment and to begin working.
(2) First participation in workfare means performing work for the first time in a particular workfare program. The only break in participation that does not end the first participation will be due to the participant’s taking a job which does not affect the household’s allotment by an entire month’s wages and which is followed by a return to workfare.
(B) Calculating the benefit reductions. The political subdivision will calculate benefit reductions from each workfare participant’s employment as follows.
(1) Unless the political subdivision knows otherwise, it will presume that the benefit reduction equals the difference between the last allotment issued before the participant began the new employment and the first allotment that reflects a full month’s wages, earned income deduction, and dependent care deduction attributable to the new job.
(2) If the political subdivision knows of other changes besides the new job that affect the household’s allotment after the new job began, the political subdivision will obtain the first allotment affected by an entire month’s wages from the new job. The political subdivision will then recalculate the allotment to account for the wages, earned income deduction, and dependent care deduction attributable to the new job. In recalculating the allotment the political subdivision will also replace any benefits from a State program funded under title IV-A of the Social Security Act received after the new job with benefits received in the last month before the new job began. The difference between the first allotment that accounts for the new job and the recalculated allotment will be the benefit reduction.
(3) The political subdivision’s share of the benefit reduction is three times this difference, divided by two.
(4) If, during these procedures, an error is discovered in the last allotment issued before the new employment began, that allotment must be corrected before the savings are calculated.
(C) Accounting. The reimbursement from workfare will be reported and paid as follows:
(1) The political subdivision will report its enhanced reimbursement to the State agency in accordance with paragraph (m)(7)(iii) of this section.
(2) The Food and Nutrition Service will reimburse the political subdivision in accordance with paragraph (m)(7)(ii) of this section.
(3) The political subdivision will, upon request, make available for review sufficient documentation to justify the amount of the enhanced reimbursement.
(4) The Food and Nutrition Service will reimburse only the political subdivision’s reimbursed administrative costs in the fiscal year in which the workfare participant began new employment and which are acceptable according to paragraph (m)(7)(i) of this section.
(8) Voluntary workfare program. State agencies and political subdivisions may operate workfare programs whereby participation by SNAP recipients is voluntary. In such a program, the penalties for failure to comply, as provided in paragraph (f) of this section, will not apply for noncompliance. The amount of hours to be worked will be negotiated between the household and the operating agency, though not to exceed the limits provided under paragraph (m)(5)(ii) of this section. In addition, all protections provided under paragraph (m)(6)(i) of this section shall continue to apply. Those State agencies and political subdivisions choosing to operate such a program shall indicate in their workfare plan how their staffing will adapt to anticipated and unanticipated levels of participation. The Department will not approve plans which do not show that the benefits of the workfare program, in terms of hours worked by participants and reduced SNAP allotments due to successful job attainment, are expected to exceed the costs of such a program. In addition, if the Department finds that an approved voluntary program does not meet this criterion, the Department reserves the right to withdraw approval.
(9) Comparable workfare programs. In accordance with section 6(o)(2)(C) of the Food and Nutrition Act of 2008, State agencies and political subdivisions may establish programs comparable to workfare under this paragraph (m) for the purpose of providing ABAWDs subject to the time limits specified at § 273.24 a means of fulfilling the work requirements in order to remain eligible for SNAP benefits. While comparable to workfare in that they require the participant to work for his or her household’s SNAP allotment, these programs may or may not conform to other workfare requirements. State agencies or political subdivisions desiring to operate a comparable workfare program must meet the following conditions:
(i) The maximum number of hours worked weekly in a comparable workfare activity, combined with any other hours worked during the week by a participant for compensation (in cash or in kind) in any other capacity, must not exceed 30;
(ii) Participants must not receive a fourth month of SNAP benefits (the first month for which they would not be eligible under the time limit) without having secured a workfare position or without having met their workfare obligation. Participation must be verified timely to prevent issuance of a month’s benefits for which the required work obligation is not met;
(iii) The State agency or political subdivision must maintain records to support the issuance of benefits to comparable workfare participants beyond the third month of eligibility; and
(iv) The State agency or political subdivision must provide a description of its program, including a methodology for ensuring compliance with (m)(9)(ii) of this section. The description should be submitted to the appropriate Regional office, with copies forwarded to SNAP National office.
(n) Workforce partnerships. Workforce partnerships must meet the following requirements.
(1) Workforce partnerships are programs operated by:
(i) A private employer, an organization representing private employers, or a nonprofit organization providing services relating to workforce development; or
(ii) An entity identified as an eligible provider of training services under section 122(d) of WIOA (29 U.S.C. 3152(d)).
(2) Workforce partnerships may include multi-State programs.
(3) Workforce partnerships must be in compliance with the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq), as applicable.
(4) Certification of workforce partnerships. All workforce partnerships must be certified by the Secretary or by the State agency to the Secretary to indicate all of the following. The workforce partnership must:
(i) Assist SNAP households in gaining high-quality, work-relevant skills, training, work, or experience that will increase the ability of the participants to obtain regular employment;
(ii) Provide participants with not less than 20 hours per week, averaged monthly of training, work, or experience; for the purposes of this provision, 20 hours a week averaged monthly means 80 hours a month;
(iii) Not use any funds authorized to be appropriated under the Food and Nutrition Act of 2008;
(iv) Provide sufficient information to the State agency, on request, to determine whether members of SNAP households who are subject to the work requirement in 7 CFR 273.7(a), the ABAWD work requirements in 7 CFR 273.24, or both are fulfilling the work requirement through the workforce partnership;
(v) Be willing to serve as a reference for participants who are members of SNAP households for future employment or work-related programs.
(5) In certifying that a workforce partnership meets the criteria in paragraphs (n)(4)(i) and (ii) of this section to be certified as a workforce partnership, the Secretary or the State agency shall require that the program submit to the Secretary or the State agency sufficient information that describes both:
(i) The services and activities of the program that would provide participants with not less than 20 hours per week of training, work, or experience; and
(ii) How the workforce partnership would provide services and activities described in paragraph (n)(5)(i) of this section that would directly enhance the employability or job readiness of the participant.
(6) Application to employment and training. (i) Workforce partnerships may not use any funds authorized to be appropriated by the Food and Nutrition Act of 2008.
(ii) If a member of a SNAP household is required to participate in an employment and training program in accordance with paragraph (a)(1)(ii) of this section, the State shall consider an individual participating in a workforce partnership certified in accordance with paragraph (n)(4) of this section to be in compliance with the employment and training requirements. The State agency cannot disqualify an individual for no longer participating in a workforce partnership. When a State agency learns that an individual is no longer participating in a workforce partnership, and the individual had been subject to mandatory E&T in accordance with paragraph (a)(1)(ii) of this section, the State agency must re-screen the individual to determine if the individual qualifies for an exemption from the work requirements in accordance with paragraph (b) of this section, and re-screen the individual to determine if the individual meets State criteria for referral to an E&T program or component in accordance with paragraph (c)(2) of this section. After this re-screening, if it is appropriate to require the individual to participate in an E&T program, the State agency may refer the individual to an E&T program or workforce partnership, as applicable.
(7) Supplement, Not Supplant. A state agency may use a workforce partnership to supplement, not to supplant, the employment and training program of the State agency.
(8) Application to work programs. Workforce partnerships certified in accordance with paragraph (n)(4) of this section are included in the definition of a work program under 7 CFR 273.24(a)(3) for the purposes of fulfilling the ABAWD work requirement.
(9) The State agency shall not require any member of a household participating in SNAP to participate in a workforce partnership.
(10) List of workforce partnerships. A State agency shall maintain a list of workforce partnerships certified in accordance with paragraph (n)(4) of this section. A State agency must also inform any SNAP participant whom the State agency has determined is likely to benefit from participation in a workforce partnership of the availability of the workforce partnership, and provide the participant with all available pertinent information regarding the workforce partnership to enable the participant to make an informed choice about participation. The information must include, if available: contact information for the workforce partnership; the types of activities the participant would be engaged in through the workforce partnership, screening criteria used by the workforce partnership to select individuals, the location of the workforce partnership, the work schedule or schedules, any special skills required to participate, and wage and benefit information, if applicable.
(11) Participation in a workforce partnership shall not replace the employment or training of an individual not participating in a workforce partnership.
(12) A workforce partnership may select individuals for participation in the workforce partnership who may or may not meet the criteria for the general work requirement at 7 CFR 273.7(a), including participation in E&T, or the ABAWD work requirement at 7 CFR 273.24(a)(1).
(13) Reporting. Workforce partnership reporting requirements to the State agency are limited to the following:
(i) On notification that an individual participating in the workforce partnership is receiving SNAP benefits, notifying the State agency that the individual is participating in a workforce partnership;
(ii) Identifying participants who have completed or are no longer participating in the workforce partnership;
(iii) Identifying changes to the workforce partnership that result in the workforce partnership no longer meeting the certification requirements in accordance with paragraph (n)(4) of this section; and
(iv) Providing sufficient information, on request by the State agency, for the State agency to verify that a participant is fulfilling the applicable work requirements in paragraph (a) of this section or 7 CFR 273.24.
Subpart D—Eligibility and Benefit Levels
§ 273.8 Resource eligibility standards.
(a) Uniform standards. The State agency shall apply the uniform national resource standards of eligibility to all applicant households, including those households in which members are recipients of federally aided public assistance, general assistance, or supplemental security income. Households which are categorically eligible as defined in § 273.2(j)(2) or 273.2(j)(4) do not have to meet the resource limits or definitions in this section.
(b) Maximum allowable financial resources. The maximum allowable liquid and non-liquid financial resources of all members of a household without members who are elderly or have a disability shall not exceed $2,000, as adjusted for inflation in accordance with paragraph (b)(1) and (b)(2) of this section. For households including one or more member who is elderly or has a disability, such financial resources shall not exceed $3,000, as adjusted for inflation in accordance with paragraph (b)(1) and (b)(2) of this section.
(1) Beginning October 1, 2008, and each October 1 thereafter, the maximum allowable financial resources shall be adjusted and rounded down to the nearest $250 to reflect changes in the Consumer Price Index for the All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor (for the 12-month period ending the preceding June).
(2) Each adjustment shall be based on the unrounded amount for the prior 12-month period.
(c) Definition of resources. In determining the resources of a household, the following shall be included and documented by the State agency in sufficient detail to permit verification:
(1) Liquid resources, such as cash on hand, money in checking and savings accounts, saving certificates, stocks or bonds, and lump sum payments as specified in § 273.9(c)(8); and
(2) Nonliquid resources, personal property, licensed and unlicensed vehicles, buildings, land, recreational properties, and any other property, provided that these resources are not specifically excluded under paragraph (e) of this section. The value of nonexempt resources, except for licensed vehicles as specified in paragraph (f) of this section, shall be its equity value. The equity value is the fair market value less encumbrances.
(3) For a household containing a sponsored alien, the State agency must deem the resources of the sponsor and the sponsor’s spouse in accordance with § 273.4(c)(2).
(d) Jointly owned resources. Resources owned jointly by separate households shall be considered available in their entirety to each household, unless it can be demonstrated by the applicant household that such resources are inaccessible to that household. If the household can demonstrate that it has access to only a portion of the resource, the value of that portion of the resource shall be counted toward the household’s resource level. The resource shall be considered totally inaccessible to the household if the resource cannot practically be subdivided and the household’s access to the value of the resource is dependent on the agreement of a joint owner who refuses to comply. For the purpose of this provision, ineligible aliens or disqualified individuals residing with the household shall be considered household members. Resources shall be considered inaccessible to persons residing in shelters for battered women and children, as defined in § 271.2, if
(1) The resources are jointly owned by such persons and by members of their former household; and
(2) The shelter resident’s access to the value of the resources is dependent on the agreement of a joint owner who still resides in the former household.
(e) Exclusions from resources. In determining the resources of a household, only the following shall be excluded:
(1) The home and surrounding property which is not separated from the home by intervening property owned by others. Public rights of way, such as roads which run through the surrounding property and separate it from the home, will not affect the exemption of the property. The home and surrounding property shall remain exempt when temporarily unoccupied for reasons of employment, training for future employment, illness, or uninhabitability caused by casualty or natural disaster, if the household intends to return. Households that currently do not own a home, but own or are purchasing a lot on which they intend to build or are building a permanent home, shall receive an exclusion for the value of the lot and, if it is partially completed, for the home.
(2) Household goods, personal effects, the cash value of life insurance policies, one burial plot per household member, and the value of one funeral agreement per household member. The cash value of pension plans or funds shall be excluded. The following retirement accounts shall be excluded:
(i) Funds in a plan, contract, or account that meets the requirements that is described in one of the following sections of the Internal Revenue Code of 1986:
(A) Section 401(a), which includes funds commonly known as “tax qualified retirement plans,” including “401(k) plans”;
(B) Section 403(a), which includes funds that are similar to 401(a) plans but are funded through annuity contracts;
(C) Section 403(b), which includes tax-sheltered annuities, custodial accounts, and retirement income accounts retirement plans for some employees of public schools and tax exempt organizations;
(D) Section 408, which includes traditional Individual Retirement Accounts and traditional Individual Retirement Annuities (IRAs);
(E) Section 408A, which includes plans commonly known as “Roth IRAs” (including the “myRA”);
(F) Section 457(b), which includes plans commonly known as “eligible deferred compensation plans” for employees of state or local government or tax-exempt entities; or
(G) Section 501(c)(18), which includes plans funded by employee contributions.
(ii) Funds in a Section 529A, which includes funds in a qualified ABLE program.
(iii) Funds in the Federal Thrift Savings Fund within the meaning of that term as used in section 7701(j) of the Internal Revenue Code of 1986. as defined by 5 U.S.C. 8439.
(iv) Any other retirement plan or arrangement that is designated as tax-exempt under a successor or similar provision of the Internal Revenue Code of 1986.
(iv) Any other retirement account determined by FNS to be appropriate for exclusion.
(3)(i) Licensed vehicles that meet the following conditions:
(A) Used for income-producing purposes such as, but not limited to, a taxi, truck, or fishing boat, or a vehicle used for deliveries, to call on clients or customers, or required by the terms of employment. Licensed vehicles that have previously been used by a self-employed household member engaged in farming but are no longer used in farming because the household member has terminated his/her self-employment from farming must continue to be excluded as a resource for one year from the date the household member terminated his/her self-employment farming;
(B) Annually producing income consistent with its fair market value, even if used only on a seasonal basis;
(C) Necessary for long-distance travel, other than daily commuting, that is essential to the employment of a household member (or ineligible alien or disqualified person whose resources are being considered available to the household)—for example, the vehicle of a traveling sales person or a migrant farm worker following the work stream;
(D) Used as the household’s home and, therefore, excluded under paragraph (e)(1) of this section;
(E) Necessary to transport a physically disabled household member (or physically disabled ineligible alien or physically disabled disqualified person whose resources are being considered available to the household) regardless of the purpose of such transportation (limited to one vehicle per physically disabled household member). The vehicle need not have special equipment or be used primarily by or for the transportation of the physically disabled household member; or
(F) Necessary to carry fuel for heating or water for home use when the transported fuel or water is anticipated to be the primary source of fuel or water for the household during the certification period. Households must receive this resource exclusion without having to meet any additional tests concerning the nature, capabilities, or other uses of the vehicle. Households must not be required to furnish documentation, as mandated by § 273.2(f)(4), unless the exclusion of the vehicle is questionable. If the basis for exclusion of the vehicle is questionable, the State agency may require documentation from the household, in accordance with § 273.2(f)(4).
(G) The value of the vehicle is inaccessible, in accordance with paragraph (e)(18) of this section, because its sale would produce an estimated return of not more than $1,500.
(ii) On those Indian reservations that do not require vehicles driven by tribal members to be licensed, such vehicles must be treated as licensed vehicles for the purpose of this exclusion.
(iii) The exclusions in paragraphs (e)(3)(i)(A) through (e)(3)(i)(C) of this section will apply when the vehicle is not in use because of temporary unemployment, such as when a taxi driver is ill and cannot work, or when a fishing boat is frozen in and cannot be used.
(4) Property which annually produces income consistent with its fair market value, even if only used on a seasonal basis. Such property shall include rental homes and vacation homes.
(5) Property, such as farm land or work related equipment, such as the tools of a tradesman or the machinery of a farmer, which is essential to the employment or self-employment of a household member. Property essential to the self-employment of a household member engaged in farming shall continue to be excluded for one year from the date the household member terminates his/her self-employment from farming.
(6) Installment contracts for the sale of land or buildings if the contract or agreement is producing income consistent with its fair market value. The exclusion shall also apply to the value of the property sold under the installment contract, or held as security in exchange for a purchase price consistent with the fair market value of that property.
(7) Any governmental payments which are designated for the restoration of a home damaged in a disaster, if the household is subject to a legal sanction if the funds are not used as intended; for example, payments made by the Department of Housing and Urban Development through the individual and family grant program or disaster loans or grants made by the Small Business Administration.
(8) Resources having a cash value which is not accessible to the household, such as but not limited to, irrevocable trust funds, security deposits on rental property or utilities, property in probate, and real property which the household is making a good faith effort to sell at a reasonable price and which has not been sold. The State agency may verify that the property is for sale and that the household has not declined a reasonable offer. Verification may be obtained through a collateral contact or documentation, such as an advertisement for public sale in a newspaper of general circulation or a listing with a real estate broker. Any funds in a trust or transferred to a trust, and the income produced by that trust to the extent it is not available to the household, shall be considered inaccessible to the household if:
(i) The trust arrangement is not likely to cease during the certification period and no household member has the power to revoke the trust arrangement or change the name of the beneficiary during the certification period;
(ii) The trustee administering the funds is either:
(A) A court, or an institution, corporation, or organization which is not under the direction or ownership of any household member, or (B) an individual appointed by the court who has court imposed limitations placed on his/her use of the funds which meet the requirements of this paragraph;
(iii) Trust investments made on behalf of the trust do not directly involve or assist any business or corporation under the control, direction, or influence of a household member; and
(iv) The funds held in irrevocable trust are either:
(A) Established from the household’s own funds, if the trustee uses the funds solely to make investments on behalf of the trust or to pay the educational or medical expenses of any person named by the household creating the trust, or (B) established from non-household funds by a nonhousehold member.
(9) Resources, such as those of students or self-employed persons, which have been prorated as income. The treatment of student income is explained in § 273.10(c) and the treatment of self-employment income is explained in § 273.11(a).
(10) Indian lands held jointly with the Tribe, or land that can be sold only with the approval of the Department of the Interior’s Bureau of Indian Affairs; and
(11) Resources which are excluded for SNAP purposes by express provision of Federal statute.
(12) Earned income tax credits shall be excluded as follows:
(i) A Federal earned income tax credit received either as a lump sum or as payments under section 3507 of the Internal Revenue Code for the month of receipt and the following month for the individual and that individual’s spouse.
(ii) Any Federal, State or local earned income tax credit received by any household member shall be excluded for 12 months, provided the household was participating in SNAP at the time of receipt of the earned income tax credit and provided the household participates continuously during that 12-month period. Breaks in participation of one month or less due to administrative reasons, such as delayed recertification or missing or late monthly reports, shall not be considered as nonparticipation in determining the 12-month exclusion.
(13) Where an exclusion applies because of use of a resource by or for a household member, the exclusion shall also apply when the resource is being used by or for an ineligible alien or disqualified person whose resources are being counted as part of the household’s resources. For example, work related equipment essential to the employment of an ineligible alien or disqualified person shall be excluded (in accordance with paragraph (e)(5) of this section), as shall one burial plot per ineligible alien or disqualified household member (in accordance with paragraph (e)(2) of this section).
(14) Energy assistance payments or allowances excluded as income under § 273.9(c)(11).
(15) Non-liquid asset(s) against which a lien has been placed as a result of taking out a business loan and the household is prohibited by the security or lien agreement with the lien holder (creditor) from selling the asset(s).
(16) Property, real or personal, to the extent that it is directly related to the maintenance or use of a vehicle excluded under paragraphs (e)(3)(i)(A), (e)(3)(i)(B) or (e)(3)(i)(C) of this section. Only that portion of real property determined necessary for maintenance or use is excludable under this provision. For example, a household which owns a produce truck to earn its livelihood may be prohibited from parking the truck in a residential area. The household may own a 100-acre field and use a quarter-acre of the field to park and/or service the truck. Only the value of the quarter-acre would be excludable under this provision, not the entire 100-acre field.
(17) The resources of a household member who receives SSI or PA benefits. A household member is considered a recipient of these benefits if the benefits have been authorized but not received, if the benefits are suspended or recouped, or if the benefits are not paid because they are less than a minimum amount. For purposes of this paragraph (e)(17), if an individual receives non-cash or in-kind services from a program specified in §§ 273.2(j)(2)(i)(B), 273.2(j)(2)(i)(C), 273.2(j)(2)(ii)(A), or 273.2(j)(2)(ii)(B), the State agency must determine whether the individual or the household benefits from the assistance provided, in accordance with § 273.2(j)(2)(iii). Individuals entitled to Medicaid benefits only are not considered recipients of SSI or PA.
(18) The State agency must develop clear and uniform standards for identifying kinds of resources that, as a practical matter, the household is unable to sell for any significant return because the household’s interest is relatively slight or the costs of selling the household’s interest would be relatively great. The State agency must so identify a resource if its sale or other disposition is unlikely to produce any significant amount of funds for the support of the household or the cost of selling the resource would be relatively great. This provision does not apply to financial instruments such as stocks, bonds, and negotiable financial instruments. The determination of whether any part of the value of a vehicle is included as a resource must be made in accordance with the provisions of paragraphs (e)(3) and (f) of this section. The State agency may require verification of the value of a resource to be excluded if the information provided by the household is questionable. The State agencies must use the following definitions in developing these standards:
(i) “Significant return” means any return, after estimating costs of sale or disposition, and taking into account the ownership interest of the household, that the State agency determines are more than $1,500; and
(ii) “Any significant amount of funds” means funds amounting to more than $1,500.
(19) At State agency option, any resources that the State agency excludes when determining eligibility or benefits for TANF cash assistance, as defined by 45 CFR 260.31 (a)(1) and (a)(2), or medical assistance under Section 1931 of the SSA. Resource exclusions under TANF and Section 1931 programs that do not evaluate the financial circumstances of adults in the household and programs grandfathered under Section 404(a)(2) of the SSA shall not be excluded under this paragraph (e)(19). Additionally, licensed vehicles not excluded under Section 5(g)(2)(C) or (D) of the Food and Nutrition Act of 2008, as amended (7 U.S.C. 2014(g)(2)(C) or (D)), cash on hand, amounts in any account in a financial institution that are readily available to the household including money in checking or savings accounts, savings certificates, stocks, or bonds shall also not be excluded. The term “readily available” applies to resources that the owner can simply withdraw from a financial institution. State agencies may exclude deposits in individual development accounts (IDAs). A State agency that chooses to exclude resources under this paragraph (e)(19) must specify in its State plan of operation that it has selected this option and provide a description of the resources that are being excluded.
(20) The following education accounts are excluded from allowable financial resources:
(i) Funds in a qualified tuition program, as defined by section 529 of the Internal Revenue Code of 1986; (ii) Funds in a Coverdell education savings account, as defined by section 530 of the Internal Revenue Code of 1986; and
(iii) Funds in any other education savings account determined by FNS to be appropriate for exclusion.
(f) Determining the value of non-excluded vehicles. (1) The State agency must:
(i) Individually evaluate the fair market value of each licensed vehicle that is not excluded under paragraph (e)(3) of this section;
(ii) Count in full toward the household’s resource level, regardless of any encumbrances on the vehicle, that portion of the fair market value that exceeds $4,650 beginning October 1, 1996;
(iii) Evaluate such licensed vehicles as well as all unlicensed vehicles for their equity value (fair market value less encumbrances), unless specifically exempt from the equity value test; and
(iv) Count as a resource only the greater of the two amounts if the vehicle has a countable fair market value of more than $4,650 after October 1, 1996, and also has a countable equity value.
(2) Only the following vehicles are exempt from the equity value test outlined in paragraph (f)(1)(iii) of this section:
(i) Vehicles excluded under paragraph (e)(3)(i) of this section;
(ii) One licensed vehicle per adult household member (or an ineligible alien or disqualified household member whose resources are being considered available to household), regardless of the use of the vehicle; and
(iii) Any other vehicle a household member under age 18 (or an ineligible alien or disqualified household member under age 18 whose resources are being considered available to household) drives to commute to and from employment, or to and from training or education which is preparatory to employment, or to seek employment. This equity exclusion applies during temporary periods of unemployment to a vehicle which a household member under age 18 customarily drives to commute to and from employment.
(3) State agencies will be responsible for establishing methodologies for determining the fair market value of vehicles. In establishing such methodologies, the State agency must not increase the basic value of a vehicle by adding the value of low mileage or other factors such as optional equipment or special apparatus for the handicapped. Any household that claims that the State agency’s determination of the value of its vehicle(s) is not accurate must be given the opportunity to acquire verification of the true value of the vehicle from a reliable source.
(4) A State agency may substitute for the vehicle evaluation provisions in paragraphs (f)(1) through (f)(3) of this section the vehicle evaluation provisions of a program in that State that uses TANF or State or local funds to meet TANF maintenance of effort requirements and provides benefits that meet the definition of “assistance” according to TANF regulations at 45 CFR 260.31, where doing so results in a lower attribution of resources to the household. States electing this option must:
(i) Apply the substituted TANF vehicle rules to all SNAP households in the State, whether or not they receive or are eligible to receive TANF assistance of any kind;
(ii) Exclude from household resources any vehicles excluded by either the substituted TANF vehicle rules or the SNAP vehicle rules at paragraphs (e)(3), (e)(5), (e)(11) and (f) of this section;
(iii) Apply either the substituted TANF rules or the SNAP vehicle rules to each of a household’s vehicles in turn, using whichever set of rules produces the lower attribution of resources to the household;
(iv) Apply any vehicle exclusions allowed by their TANF vehicle rules to the vehicles with the highest values; and
(v) Exclude any vehicle owned by any household in the State if it selects TANF vehicle rules that exclude all vehicles completely or contain no resource provisions at all.
(g) Handling of excluded funds. Excluded funds that are kept in a separate account, and that are not commingled in an account with nonexcluded funds, shall retain their resource exclusion for an unlimited period of time. The resources of students and self-employment households which are excluded as provided in paragraph (e)(9) of this section and are commingled in an account with nonexcluded funds shall retain their exclusion for the period of time over which they have been prorated as income. All other excluded moneys which are commingled in an account with nonexcluded funds shall retain their exemption for six months from the date they are commingled. After six months from the date of commingling, all funds in the commingled account shall be counted as a resource.
(h) Transfer of resources. (1) At the time of application, households shall be asked to provide information regarding any resources which any household member (or ineligible alien or disqualified person whose resources are being considered available to the household) had transferred within the 3-month period immediately preceding the date of application. Households which have transferred resources knowingly for the purpose of qualifying or attempting to qualify for SNAP benefits shall be disqualified from participation in the program for up to 1 year from the date of the discovery of the transfer. This disqualification period shall be applied if the resources are transferred knowingly in the 3-month period prior to application or if they are transferred knowingly after the household is determined eligible for benefits. An example of the latter would be assets which the household acquires after being certified and which are then transferred to prevent the household from exceeding the maximum resource limit.
(2) Eligibility for the program will not be affected by the following transfers:
(i) Resources which would not otherwise affect eligibility, for example, resources consisting of excluded personal property such as furniture or of money that, when added to other nonexempt household resources, totaled less at the time of the transfer than the allowable resource limits;
(ii) Resources which are sold or traded at, or near, fair market value;
(iii) Resources which are transferred between members of the same household (including ineligible aliens or disqualified persons whose resources are being considered available to the household); and
(iv) Resources which are transferred for reasons other than qualifying or attempting to qualify for SNAP benefits, for example, a parent placing funds into an educational trust fund described in paragraph (e)(9) of this section.
(3) In the event the State agency establishes that an applicant household knowingly transferred resources for the purpose of qualifying or attempting to qualify for SNAP benefits, the household shall be sent a notice of denial explaining the reason for and length of the disqualification. The period of disqualification shall begin in the month of application. If the household is participating at the time of the discovery of the transfer, a notice of adverse action explaining the reason for and length of the disqualification shall be sent. The period of disqualification shall be made effective with the first allotment to be issued after the notice of adverse action period has expired, unless the household has requested a fair hearing and continued benefits.
(4) The length of the disqualification period shall be based on the amount by which nonexempt transferred resources, when added to other countable resources, exceeds the allowable resource limits. The following chart will be used to determine the period of disqualification.
| Amount in excess of the resource limit | Period of disqualification (months) |
|---|---|
| $0 to 249.99 | 1 |
| 250 to 999.99 | 3 |
| 1,000 to 2999.99 | 6 |
| 3,000 to 4,999.99 | 9 |
| 5,000 or more | 12 |
(i) Resources of non-household members. (1) The resources of non-household members, as defined in § 273.1(b)(7)(i) and (ii), must be handled as outlined in § 273.11(d).
(2) The resources of non-household members, as defined in § 273.1(b)(7)(iii) through (vi), must be handled as outlined in § 273.11(c) and (d), as appropriate.
§ 273.9 Income and deductions.
(a) Income eligibility standards. Participation in the Program shall be limited to those households whose incomes are determined to be a substantial limiting factor in permitting them to obtain a more nutritious diet. Households which contain an elderly or disabled member shall meet the net income eligibility standards for SNAP. Households which do not contain an elderly or disabled member shall meet both the net income eligibility standards and the gross income eligibility standards for SNAP. Households which are categorically eligible as defined in § 273.2(j)(2) or 273.2(j)(4) do not have to meet either the gross or net income eligibility standards. The net and gross income eligibility standards shall be based on the Federal income poverty levels established as provided in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)).
(1) The gross income eligibility standards for SNAP shall be as follows:
(i) The income eligibility standards for the 48 contiguous States and the District of Columbia, Guam and the Virgin Islands shall be 130 percent of the Federal income poverty levels for the 48 contiguous States and the District of Columbia.
(ii) The income eligibility standards for Alaska shall be 130 percent of the Federal income poverty levels for Alaska.
(iii) The income eligibility standards for Hawaii shall be 130 percent of the Federal income poverty levels for Hawaii.
(2) The net income eligibility standards for SNAP shall be as follows:
(i) The income eligibility standards for the 48 contiguous States and the District of Columbia, Guam and the Virgin Islands shall be the Federal income poverty levels for the 48 contiguous States and the District of Columbia.
(ii) The income eligibility standards for Alaska shall be the Federal income poverty levels for Alaska.
(iii) The income eligibility standard for Hawaii shall be the Federal income poverty levels for Hawaii.
(3) The income eligibility limits, as described in this paragraph, are revised each October 1 to reflect the annual adjustment to the Federal income poverty guidelines for the 48 States and the District of Columbia, for Alaska, and for Hawaii.
(i) 130 percent of the annual income poverty guidelines shall be divided by 12 to determine the monthly gross income standards, rounding the results upwards as necessary. For households greater than eight persons, the increment in the Federal income poverty guidelines is multiplied by 130 percent, divided by 12, and the results rounded upward if necessary.
(ii) The annual income poverty guidelines shall be divided by 12 to determine the monthly net income eligibility standards, rounding the results upward as necessary. For households greater than eight persons, the increment in the Federal income poverty guidelines is divided by 12, and the results rounded upward if necessary.
(4) The monthly gross and net income eligibility standards for all areas will be prescribed in tables posted on the FNS web site, at www.fns.usda.gov/snap
(b) Definition of income. Household income shall mean all income from whatever source excluding only items specified in paragraph (c) of this section.
(1) Earned income shall include: (i) All wages and salaries of an employee.
(ii) The gross income from a self-employment enterprise, including the total gain from the sale of any capital goods or equipment related to the business, excluding the costs of doing business as provided in paragraph (c) of this section. Ownership of rental property shall be considered a self-employment enterprise; however, income derived from the rental property shall be considered earned income only if a member of the household is actively engaged in the management of the property at least an average of 20 hours a week. Payments from a roomer or boarder, except foster care boarders, shall also be considered self-employment income.
(iii) Training allowances from vocational and rehabilitative programs recognized by Federal, State, or local governments, such as the work incentive program, to the extent they are not a reimbursement. Training allowances under Workforce Investment Act of 1998, other than earnings as specified in paragraph (b)(1)(v) of this section, are excluded from consideration as income.
(iv) Payments under Title I (VISTA, University Year for Action, etc.) of the Domestic Volunteer Service Act of 1973 (Pub. L. 93-113 Stat., as amended) shall be considered earned income and subject to the earned income deduction prescribed in § 273.10(e)(1)(i)(B), excluding payments made to those households specified in paragraph (c)(10)(iii) of this section.
(v) Earnings to individuals who are participating in on-the-job training programs under Title 1 of the Workforce Investment Act of 1998. This provision does not apply to household members under 19 years of age who are under the parental control of another adult member, regardless of school attendance and/or enrollment as discussed in paragraph (c)(7) of this section. For the purpose of this provision, earnings include monies paid under the Workforce Investment Act and monies paid by the employer.
(vi) Educational assistance which has a work requirement (such as work study, an assistantship or fellowship with a work requirement) in excess of the amount excluded under § 273.9(c)(3). Earned income from work study programs that are funded under section 20 U.S.C. 1087uu of the Higher Education Act is excluded.
(2) Unearned income shall include, but not be limited to:
(i) Assistance payments from Federal or federally aided public assistance programs, such as supplemental security income (SSI) or Temporary Assistance for Needy Families (TANF); general assistance (GA) programs (as defined in § 271.2); or other assistance programs based on need. Such assistance is considered to be unearned income even if provided in the form of a vendor payment (provided to a third party on behalf of the household), unless the vendor payment is specifically exempt from consideration as countable income under the provisions of paragraph (c)(1) of this section. Assistance payments from programs which require, as a condition of eligibility, the actual performance of work without compensation other than the assistance payments themselves, shall be considered unearned income.
(ii) Annuities; pensions; retirement, veteran’s, or disability benefits; worker’s or unemployment compensation including any amounts deducted to repay claims for intentional program violations as provided in § 272.12; old-age, survivors, or social security benefits; strike benefits; foster care payments for children or adults who are considered members of the household; gross income minus the cost of doing business derived from rental property in which a household member is not actively engaged in the management of the property at least 20 hours a week.
(iii) Support or alimony payments made directly to the household from nonhousehold members.
(iv) Scholarships, educational grants, deferred payment loans for education, veteran’s educational benefits and the like, other than educational assistance with a work requirement, in excess of amounts excluded under § 273.9(c).
(v) Payments from Government-sponsored programs, dividends, interest, royalties, and all other direct money payments from any source which can be construed to be a gain or benefit.
(vi) Monies which are withdrawn or dividends which are or could be received by a household from trust funds considered to be excludable resources under § 273.8(e)(8). Such trust withdrawals shall be considered income in the month received, unless otherwise exempt under the provisions of paragraph (c) of this section. Dividends which the household has the option of either receiving as income or reinvesting in the trust are to be considered as income in the month they become available to the household unless otherwise exempt under the provisions of paragraph (c) of this section.
(3) The earned or unearned income of an individual disqualified from the household for intentional Program violation, in accordance with § 273.16, or as a result of a sanction imposed while he/she was participating in a household disqualified for failure to comply with workfare requirements, in accordance with § 273.22, shall continue to be attributed in their entirety to the remaining household members. However, the earned or unearned income of individuals disqualified from households for failing to comply with the requirement to provide an SSN, in accordance with § 273.6, or for being an ineligible alien, in accordance with § 273.4, shall continue to be counted as income, less a pro rata share for the individual. Procedures for calculating this pro rata share are described in § 273.11(c).
(4) For a household containing a sponsored alien, the income of the sponsor and the sponsor’s spouse must be deemed in accordance with § 273.4(c)(2).
(5) Income shall not include the following:
(i) Moneys withheld from an assistance payment, earned income, or other income source, or moneys received from any income source which are voluntarily or involuntarily returned, to repay a prior overpayment received from that income source, provided that the overpayment was not excludable under paragraph (c) of this section. However, moneys withheld from assistance from another program, as specified in § 273.11(k), shall be included as income.
(ii) Child support payments received by TANF recipients which must be transferred to the agency administering title IV-D of the Social Security Act, as amended, to maintain TANF eligibility.
(c) Income exclusions. Only the following items shall be excluded from household income and no other income shall be excluded:
(1) Any gain or benefit which is not in the form of money payable directly to the household, including in-kind benefits and certain vendor payments. In-kind benefits are those for which no monetary payment is made on behalf of the household and include meals, clothing, housing, or produce from a garden. A vendor payment is a money payment made on behalf of a household by a person or organization outside of the household directly to either the household’s creditors or to a person or organization providing a service to the household. Payments made to a third party on behalf of the household are included or excluded as income as follows:
(i) Public assistance (PA) vendor payments. PA vendor payments are counted as income unless they are made for:
(A) Medical assistance;
(B) Child care assistance;
(C) Energy assistance as defined in paragraph (c)(11) of this section;
(D) Emergency assistance (including, but not limited to housing and transportation payments) for migrant or seasonal farmworker households while they are in the job stream;
(E) Housing assistance payments made through a State or local housing authority;
(F) Emergency and special assistance. PA provided to a third party on behalf of a household which is not specifically excluded from consideration as income under the provisions of paragraphs (c)(1)(i)(A) through (c)(1)(i)(E) of this section shall be considered for exclusion under this provision. To be considered emergency or special assistance and excluded under this provision, the assistance must be provided over and above the normal PA grant or payment, or cannot normally be provided as part of such grant or payment. If the PA program is composed of various standards or components, the assistance would be considered over and above the normal grant or not part of the grant if the assistance is not included as a regular component of the PA grant or benefit or the amount of assistance exceeds the maximum rate of payment for the relevant component. If the PA program is not composed of various standards or components but is designed to provide a basic monthly grant or payment for all eligible households and provides a larger basic grant amount for all households in a particular category, e.g., all households with infants, the larger amount is still part of the normal grant or benefit for such households and not an “extra” payment excluded under this provision. On the other hand, if a fire destroyed a household item and a PA program provides an emergency amount paid directly to a store to purchase a replacement, such a payment is excluded under this provision. If the PA program is not composed of various standards, allowances, or components but is simply designed to provide assistance on an as-needed basis rather than to provide routine, regular monthly benefits to a client, no exclusion would be granted under this provision because the assistance is not provided over and above the normal grant, it is the normal grant. If it is not clear whether a certain type of PA vendor payment is covered under this provision, the State agency shall apply to the appropriate FNS Regional Office for a determination of whether the PA vendor payments should be excluded. The application for this exclusion determination must explain the emergency or special nature of the vendor payment, the exact type of assistance it is intended to provide, who is eligible for the assistance, how the assistance is paid, and how the vendor payment fits into the overall PA benefit standard. A copy of the rules, ordinances, or statutes which create and authorize the program shall accompany the application request.
(ii) General assistance (GA) vendor payments. Vendor payments made under a State or local GA program or a comparable basic assistance program are excluded from income except for some vendor payments for housing. A housing vendor payment is counted as income unless the payment is for:
(A) Energy assistance (as defined in paragraph (c)(11) of this section);
(B) Housing assistance from a State or local housing authority;
(C) Emergency assistance for migrant or seasonal farmworker households while they are in the job stream;
(D) Emergency or special payments (as defined in paragraph (c)(1)(i)(F) of this section; or
(E) Assistance provided under a program in a State in which no GA payments may be made directly to the household in the form of cash.
(iii) Department of Housing and Urban Development (HUD) vendor payments. Rent or mortgage payments made to landlords or mortgagees by HUD are excluded.
(iv) Educational assistance vendor payments. Educational assistance provided to a third party on behalf of the household for living expenses shall be treated the same as educational assistance payable directly to the household.
(v) Vendor payments that are reimbursements. Reimbursements made in the form of vendor payments are excluded on the same basis as reimbursements paid directly to the household in accordance with paragraph (c)(5) of this section.
(vi) Demonstration project vendor payments. In-kind or vendor payments which would normally be excluded as income but are converted in whole or in part to a direct cash payment under a federally authorized demonstration project or waiver of provisions of Federal law shall be excluded from income.
(vii) Other third-party payments. Other third-party payments shall be handled as follows: moneys legally obligated and otherwise payable to the household which are diverted by the provider of the payment to a third party for a household expense shall be counted as income and not excluded. If a person or organization makes a payment to a third party on behalf of a household using funds that are not owed to the household, the payment shall be excluded from income. This distinction is illustrated by the following examples:
(A) A friend or relative uses his or her own money to pay the household’s rent directly to the landlord. This vendor payment shall be excluded.
(B) A household member earns wages. However, the wages are garnished or diverted by the employer and paid to a third party for a household expense, such as rent. This vendor payment is counted as income. However, if the employer pays a household’s rent directly to the landlord in addition to paying the household its regular wages, the rent payment shall be excluded from income. Similarly, if the employer provides housing to an employee in addition to wages, the value of the housing shall not be counted as income.
(C) A household receives court-ordered monthly support payments in the amount of $400. Later, $200 is diverted by the provider and paid directly to a creditor for a household expense. The payment is counted as income. Money deducted or diverted from a court-ordered support or alimony payment (or other binding written support or alimony agreement) to a third party for a household’s expense shall be included as income because the payment is taken from money that is owed to the household. However, payments specified by a court order or other legally binding agreement to go directly to a third party rather than the household are excluded from income because they are not otherwise payable to the household. For example, a court awards support payments in the amount of $400 a month and in addition orders $200 to be paid directly to a bank for repayment of a loan. The $400 payment is counted as income and the $200 payment is excluded from income. Support payments not required by a court order or other legally binding agreement (including payments in excess of the amount specified in a court order or written agreement) which are paid to a third party on the household’s behalf shall be excluded from income.
(2) Any income in the certification period which is received too infrequently or irregularly to be reasonably anticipated, but not in excess of $30 in a quarter.
(3)(i) Educational assistance, including grants, scholarships, fellowships, work study, educational loans on which payment is deferred, veterans’ educational benefits and the like.
(ii) To be excluded, educational assistance referred to in paragraph (c)(3)(i) must be:
(A) Received under 20 CFR 1087uu. This exemption includes student assistance received under part E of subchapter IV of Chapter 28 of title 20 and part C of subchapter I of chapter 34 of title 42, or under Bureau of Indian Affairs student assistance programs.
(B) Awarded to a household member enrolled at a:
(1) Recognized institution of post-secondary education (meaning any public or private educational institution which normally requires a high school diploma or equivalency certificate for enrollment or admits persons who are beyond the age of compulsory school attendance in the State in which the institution is located, provided that the institution is legally authorized or recognized by the State to provide an educational program beyond secondary education in the State or provides a program of training to prepare students for gainful employment, including correspondence schools at that level),
(2) School for the handicapped,
(3) Vocational education program,
(4) Vocational or technical school,
(5) Program that provides for obtaining a secondary school diploma or the equivalent;
(C) Used for or identified (earmarked) by the institution, school, program, or other grantor for the following allowable expenses:
(1) Tuition,
(2) Mandatory school fees, including the rental or purchase of any equipment, material, and supplies related to the pursuit of the course of study involved,
(3) Books,
(4) Supplies,
(5) Transportation,
(6) Miscellaneous personal expenses, other than normal living expenses, of the student incidental to attending a school, institution or program,
(7) Dependent care,
(8) Origination fees and insurance premiums on educational loans,
(9) Normal living expenses which are room and board are not excludable.
(10) Amounts excluded for dependent care costs shall not also be excluded under the general exclusion provisions of paragraph § 273.9(c)(5)(i)(C). Dependent care costs which exceed the amount excludable from income shall be deducted from income in accordance with paragraph § 273.9(d)(4) and be subject to a cap.
(iii) Exclusions based on use pursuant to paragraph (c)(3)(ii)(C) must be incurred or anticipated for the period the educational income is intended to cover regardless of when the educational income is actually received. If a student uses other income sources to pay for allowable educational expenses in months before the educational income is received, the exclusions to cover the expenses shall be allowed when the educational income is received. When the amounts used for allowable expense are more than amounts earmarked by the institution, school, program or other grantor, an exclusion shall be allowed for amounts used over the earmarked amounts. Exclusions based on use shall be subtracted from unearned educational income to the extent possible. If the unearned educational income is not enough to cover the expense, the remainder of the allowable expense shall be excluded from earned educational income.
(iv) An individual’s total educational income exclusions granted under the provisions of paragraph (c)(3)(i) through (c)(3)(iii) of this section cannot exceed that individual’s total educational income which was subject to the provisions of paragraph (c)(3)(i) through (c)(3)(iii) of this section.
(v) At its option, the State agency may exclude any educational assistance that must be excluded under its State Medicaid rules that would not already be excluded under this section. A State agency that chooses to exclude educational assistance under this paragraph (c)(3)(v) must specify in its State plan of operation that it has selected this option and provide a description of the educational assistance that is being excluded. The provisions of paragraphs (c)(3)(ii), (c)(3)(iii) and (c)(3)(iv) of this section do not apply to income excluded under this paragraph (c)(3)(v).
(4) All loans, including loans from private individuals as well as commercial institutions, other than educational loans on which repayment is deferred. Educational loans on which repayment is deferred shall be excluded pursuant to the provisions of § 273.9(c)(3)(i). A loan on which repayment must begin within 60 days after receipt of the loan shall not be considered a deferred repayment loan.
(5) Reimbursements for past or future expenses, to the extent they do not exceed actual expenses, and do not represent a gain or benefit to the household. Reimbursements for normal household living expenses such as rent or mortgage, personal clothing, or food eaten at home are a gain or benefit and, therefore, are not excluded. To be excluded, these payments must be provided specifically for an identified expense, other than normal living expenses, and used for the purpose intended. When a reimbursement, including a flat allowance, covers multiple expenses, each expense does not have to be separately identified as long as none of the reimbursement covers normal living expenses. The amount by which a reimbursement exceeds the actual incurred expense shall be counted as income. However, reimbursements shall not be considered to exceed actual expenses, unless the provider or the household indicates the amount is excessive.
(i) Examples of excludable reimbursements which are not considered to be a gain or benefit to the household are:
(A) Reimbursements or flat allowances, including reimbursements made to the household under § 273.7(d)(3), for job- or training-related expenses such as travel, per diem, uniforms, and transportation to and from the job or training site. Reimbursements which are provided over and above the basic wages for these expenses are excluded; however, these expenses, if not reimbursed, are not otherwise deductible. Reimbursements for the travel expenses incurred by migrant workers are also excluded.
(B) Reimbursements for out-of-pocket expenses of volunteers incurred in the course of their work.
(C) Medical or dependent care reimbursements.
(D) Reimbursements received by households to pay for services provided by Title XX of the Social Security Act.
(E) Any allowance a State agency provides no more frequently than annually for children’s clothes when the children enter or return to school or daycare, provided the State agency does not reduce the monthly TANF payment for the month in which the school clothes allowance is provided. State agencies are not required to verify attendance at school or daycare.
(F) Reimbursements made to the household under § 273.7(d)(3) for expenses necessary for participation in an education component under the E&T program.
(ii) The following shall not be considered a reimbursement excludable under this provision:
(A) No portion of benefits provided under title IV-A of the Social Security Act, to the extent such benefits are attributed to an adjustment for work-related or child care expenses (except for payments or reimbursements for such expenses made under an employment, education or training program initiated under such title after September 19, 1988), shall be considered excludable under this provision.
(B) No portion of any educational assistance that is provided for normal living expenses (room and board) shall be considered a reimbursement excludable under this provision.
(6) Moneys received and used for the care and maintenance of a third-party beneficiary who is not a household member. If the intended beneficiaries of a single payment are both household and nonhousehold members, any identifiable portion of the payment intended and used for the care and maintenance of the nonhousehold member shall be excluded. If the nonhousehold member’s portion cannot be readily identified, the payment shall be evenly prorated among intended beneficiaries and the exclusion applied to the nonhousehold member’s pro rata share or the amount actually used for the nonhousehold member’s care and maintenance, whichever is less.
(7) The earned income (as defined in paragraph (b)(1) of this section) of any household member who is under age 18, who is an elementary or secondary school student, and who lives with a natural, adoptive, or stepparent or under the parental control of a household member other than a parent. For purposes of this provision, an elementary or secondary school student is someone who attends elementary or secondary school, or who attends classes to obtain a General Equivalency Diploma that are recognized, operated, or supervised by the student’s state or local school district, or who attends elementary or secondary classes through a home-school program recognized or supervised by the student’s state or local school district. The exclusion shall continue to apply during temporary interruptions in school attendance due to semester or vacation breaks, provided the child’s enrollment will resume following the break. If the child’s earnings or amount of work performed cannot be differentiated from that of other household members, the total earnings shall be prorated equally among the working members and the child’s pro rata share excluded.
(8) Money received in the form of a nonrecurring lump-sum payment, including, but not limited to, income tax refunds, rebates, or credits; retroactive lump-sum social security, SSI, public assistance, railroad retirement benefits, or other payments; lump-sum insurance settlements; or refunds of security deposits on rental property or utilities. TANF payments made to divert a family from becoming dependent on welfare may be excluded as a nonrecurring lump-sum payment if the payment is not defined as assistance because of the exception for non-recurrent, short-term benefits in 45 CFR 261.31(b)(1). These payments shall be counted as resources in the month received, in accordance with § 273.8(c) unless specifically excluded from consideration as a resource by other Federal laws.
(9) The cost of producing self-employment income. The procedures for computing the cost of producing self-employment income are described in § 273.11.
(10) Any income that is specifically excluded by any other Federal statute from consideration as income for the purpose of determining eligibility for SNAP. The following laws provide such an exclusion:
(i) Reimbursements from the Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1970 (Pub. L. 91-646, section 216).
(ii) Payments received under the Alaska Native Claims Settlement Act (Pub. L. 92-203, section 21(a));
(iii) Any payment to volunteers under Title II (RSVP, Foster Grandparents and others) of the Domestic Volunteer Services Act of 1973 (Pub. L. 93-113) as amended. Payments under title I of that Act (including payments from such title I programs as VISTA, University Year for Action, and Urban Crime Prevention Program) to volunteers shall be excluded for those individuals receiving SNAP benefits or public assistance at the time they joined the title I program, except that households which were receiving an income exclusion for a Vista or other title I Subsistence allowance at the time of conversion to the Food and Nutrition Act of 2008 shall continue to receive an income exclusion for VISTA for the length of their volunteer contract in effect at the time of conversion. Temporary interruptions in SNAP participation shall not alter the exclusion once an initial determination has been made. New applicants who were not receiving public assistance or SNAPs at the time they joined VISTA shall have these volunteer payments included as earned income. The FNS National Office shall keep FNS Regional Offices informed of any new programs created under title I and II or changes in programs mentioned above so that they may alert State agencies.
(iv) Income derived from certain submarginal land of the United States which is held in trust for certain Indian tribes (Pub. L. 94-114, section 6).
(v) Allowances, earnings, or payments (including reimbursements) to individuals participating in programs under the Workforce Investment Act of 1998, except as provided for under paragraph (b)(1)(v) of this section.
(vi) Income derived from the disposition of funds to the Grand River Band of Ottawa Indians (Pub. L. 94-540).
(vii) Earned income tax credits received as a result of Pub. L. 95-600, the Revenue Act of 1978 which are received before January 1, 1980.
(viii) Payments by the Indian Claims Commission to the Confederated Tribes and Bands of the Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation (Pub. L. 95-433).
(ix) Payments to the Passamaquoddy Tribe and the Penobscot Nation or any of their members received pursuant to the Maine Indian Claims Settlement Act of 1980 (Pub. L. 96-420, section 5).
(x) Payments of relocation assistance to members of the Navajo and Hopi Tribes under Pub. L. 93-531.
(11) Energy assistance as follows:
(i) Any payments or allowances made for the purpose of providing energy assistance under any Federal law other than part A of Title IV of the Social Security Act (42 U.S.C. 601 et seq.), including utility reimbursements made by the Department of Housing and Urban Development and the Rural Housing Service, or
(ii) A one-time payment or allowance applied for on an as-needed basis and made under a Federal or State law for the costs of weatherization or emergency repair or replacement of an unsafe or inoperative furnace or other heating or cooling device. A down-payment followed by a final payment upon completion of the work will be considered a one-time payment for purposes of this provision.
(12) Cash donations based on need received on or after February 1, 1988 from one or more private nonprofit charitable organizations, but not to exceed $300 in a Federal fiscal year quarter.
(13) Earned income tax credit payments received either as a lump sum or payments under section 3507 of the Internal Revenue Code of 1986 (relating to advance payment of earned income tax credits received as part of the paycheck or as a reduction in taxes that otherwise would have been paid at the end of the year).
(14) Any payment made to an E&T participant under § 273.7(d)(3) for costs that are reasonably necessary and directly related to participation in the E&T program. These costs include, but are not limited to, dependent care costs, transportation, other expenses related to work, training or education, such as uniforms, personal safety items or other necessary equipment, and books or training manuals. These costs shall not include the cost of meals away from home. Also, the value of any dependent care services provided for or arranged under § 273.7(d)(3)(i) would be excluded.
(15) Governmental foster care payments received by households with foster care individuals who are considered to be boarders in accordance with § 273.1(c).
(16) Income of an SSI recipient necessary for the fulfillment of a plan for achieving self-support (PASS) which has been approved under section 1612(b)(4)(A)(iii) or 1612(b)(4)(B)(iv) of the Social Security Act. This income may be spent in accordance with an approved PASS or deposited into a PASS savings account for future use.
(17) Legally obligated child support payments paid by a household member to or for a nonhousehold member, including payments made to a third party on behalf of the nonhousehold member (vendor payments) and amounts paid toward child support arrearages. However, at its option, the State agency may allow households a deduction for such child support payments in accordance with paragraph (d)(5) of this section rather than an income exclusion.
(18) At the State agency’s option, any State complementary assistance program payments excluded for the purpose of determining eligibility under section 1931 of the SSA for a program funded under Title XIX of the SSA. A State agency that chooses to exclude complementary assistance program payments under this paragraph (c)(18) must specify in its State plan of operation that it has selected this option and provide a description of the types of payments that are being excluded.
(19) At the State agency’s option, any types of income that the State agency excludes when determining eligibility or benefits for TANF cash assistance as defined by 45 CFR 260.31(a)(1) and (a)(2), or medical assistance under Section 1931 of the SSA, (but not for programs that do not evaluate the financial circumstances of adults in the household and programs grandfathered under Section 404(a)(2) of the SSA). The State agency must exclude for SNAP purposes the same amount of income it excludes for TANF or Medicaid purposes. A State agency that chooses to exclude income under this paragraph (c)(19) must specify in its State plan of operation that it has selected this option and provide a description of the resources that are being excluded. The State agency shall not exclude:
(i) Wages or salaries;
(ii) Gross income from a self-employment enterprise, including the types of income referenced in paragraph (b)(1)(ii) of this section. Determining monthly income from self-employment must be calculated in accordance with § 273.11(a)(2);
(iii) Benefits under Title I, II, IV, X, XIV or XVI of the SSA, including supplemental security income (SSI) benefits, TANF benefits, and foster care and adoption payments from a government source;.
(iv) Regular payments from a government source. Payments or allowances a household receives from an intermediary that are funded from a government source are considered payments from a government source;
(v) Worker’s compensation;
(vi) Child support payments, support or alimony payments made to the household from a nonhousehold member;
(vii) Annuities, pensions, retirement benefits;
(viii) Disability benefits or old age or survivor benefits; and
(ix) Monies withdrawn or dividends received by a household from trust funds considered to be excludable resources under § 273.8(e)(8).
(20) Income received by a member of the United States Armed Forces under Chapter 5 of Title 37 of the United States Code that is:
(i) Received in addition to the service member’s basic pay;
(ii) Received as a result of the service member’s deployment to or service in an area designated as a combat zone as determined pursuant to Executive Order or Public Law; and
(iii) Not received by the service member prior to the service member’s deployment to or service in a Federally-designated combat zone.
(d) Income deductions. Deductions shall be allowed only for the following household expenses:
(1) Standard deduction—(i) 48 States, District of Columbia, Alaska, Hawaii, and the Virgin Islands. Effective October 1, 2002, in the 48 States and the District of Columbia, Alaska, Hawaii, and the Virgin Islands, the standard deduction for household sizes one through six shall be equal to 8.31 percent of the monthly net income eligibility standard for each household size established under paragraph (a)(2) of this section rounded up to the nearest whole dollar. For household sizes greater than six, the standard deduction shall be equal to the standard deduction for a six-person household.
(ii) Guam. Effective October 1, 2002, in Guam, the standard deduction for household sizes one through six shall be equal to 8.31 percent of double the monthly net income eligibility standard for each household size for the 48 States and the District of Columbia established under paragraph (a)(2) of this section rounded up to the nearest whole dollar. For household sizes greater than six, the standard deduction shall be equal to the standard deduction for a six-person household.
(iii) Minimum deduction levels. Notwithstanding paragraphs (d)(1)(i) and (d)(1)(ii) of this section, the standard deduction for FY 2009 for each household in the 48 States and the District of Columbia, Alaska, Hawaii, Guam and the U.S. Virgin Islands shall not be less than $144, $246, $203, $289, and $127, respectively. Beginning FY 2010 and each fiscal year thereafter, the amount of the minimum standard deduction is equal to the unrounded amount from the previous fiscal year adjusted to the nearest lower dollar increment to reflect changes for the 12-month period ending on the preceding June 30 in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor, for items other than food.
(2) Earned income deduction. Twenty percent of gross earned income as defined in paragraph (b)(1) of this section. Earnings excluded in paragraph (c) of this section shall not be included in gross earned income for purposes of computing the earned income deduction, except that the State agency must count any earnings used to pay child support that were excluded from the household’s income in accordance with the child support exclusion in paragraph (c)(17) of this section.
(3) Excess medical deduction. That portion of medical expenses in excess of $35 per month, excluding special diets, incurred by any household member who is elderly or disabled as defined in § 271.2. Spouses or other persons receiving benefits as a dependent of the SSI or disability and blindness recipient are not eligible to receive this deduction but persons receiving emergency SSI benefits based on presumptive eligibility are eligible for this deduction. Allowable medical costs are:
(i) Medical and dental care including psychotherapy and rehabilitation services provided by a licensed practitioner authorized by State law or other qualified health professional.
(ii) Hospitalization or outpatient treatment, nursing care, and nursing home care including payments by the household for an individual who was a household member immediately prior to entering a hospital or nursing home provided by a facility recognized by the State.
(iii) Prescription drugs, when prescribed by a licensed practitioner authorized under State law, and other over-the-counter medication (including insulin), when approved by a licensed practitioner or other qualified health professional.
(A) Medical supplies and equipment. Costs of medical supplies, sick-room equipment (including rental) or other prescribed equipment are deductible;
(B) Exclusions. The cost of any Schedule I controlled substance under The Controlled Substances Act, 21 U.S.C. 801 et seq., and any expenses associated with its use, are not deductible.
(iv) Health and hospitalization insurance policy premiums. The costs of health and accident policies such as those payable in lump sum settlements for death or dismemberment or income maintenance policies such as those that continue mortgage or loan payments while the beneficiary is disabled are not deductible;
(v) Medicare premiums related to coverage under Title XVIII of the Social Security Act; any cost-sharing or spend down expenses incurred by Medicaid recipients;
(vi) Dentures, hearing aids, and prosthetics;
(vii) Securing and maintaining a seeing eye or hearing dog including the cost of dog food and veterinarian bills;
(viii) Eye glasses prescribed by a physician skilled in eye disease or by an optometrist;
(ix) Reasonable cost of transportation and lodging to obtain medical treatment or services;
(x) Maintaining an attendant, homemaker, home health aide, or child care services, housekeeper, necessary due to age, infirmity, or illness. In addition, an amount equal to the one person benefit allotment shall be deducted if the household furnishes the majority of the attendant’s meals. The allotment for this meal related deduction shall be that in effect at the time of initial certification. The State agency is only required to update the allotment amount at the next scheduled recertification; however, at their option, the State agency may do so earlier. If a household incurs attendant care costs that could qualify under both the medical deduction of § 273.9(d)(3)(x) and the dependent care deduction of § 273.9(d)(4), the costs may be deducted as a medical expense or a dependent care expense, but not both.
(4) Dependent care. Payments for dependent care when necessary for a household member to search for, accept or continue employment, comply with the employment and training requirements as specified under § 273.7(e), or attend training or pursue education that is preparatory to employment, except as provided in § 273.10(d)(1)(i). Costs that may be deducted are limited to the care of an individual for whom the household provides dependent care, including care of a child under the age of 18 or an incapacitated person of any age in need of care. The costs of care provided by a relative may be deducted so long as the relative providing care is not part of the same SNAP household as the child or dependent adult receiving care. Dependent care expenses must be separately identified, necessary to participate in the care arrangement, and not already paid by another source on behalf of the household. If a household incurs attendant care costs that could qualify under both the medical deduction of § 273.9(d)(3)(x) and dependent care deduction of § 273.9(d)(4), the costs may be deducted as a medical expense or a dependent care expense, but not both. Allowable dependent care costs include:
(i) The costs of care given by an individual care provider or care facility;
(ii) Transportation costs to and from the care facility; and
(iii) Activity or other fees associated with the care provided to the dependent that are necessary for the household to participate in the care.
(5) Optional child support deduction. At its option, the State agency may provide a deduction, rather than the income exclusion provided under paragraph (c)(17) of this section, for legally obligated child support payments paid by a household member to or for a nonhousehold member, including payments made to a third party on behalf of the nonhousehold member (vendor payments) and amounts paid toward child support arrearages. Alimony payments made to or for a nonhousehold member shall not be included in the child support deduction. A State agency that chooses to provide a child support deduction rather than an exclusion in accordance with this paragraph (d)(5) must specify in its State plan of operation that it has chosen to provide the deduction rather than the exclusion.
(6) Shelter costs—(i) Homeless shelter deduction. A State agency may provide a standard homeless shelter deduction of $143 a month to households in which all members are homeless individuals but are not receiving free shelter throughout the month. The deduction must be subtracted from net income in determining eligibility and allotments for the households. The State agency may make a household with extremely low shelter costs ineligible for the deduction. A household receiving the homeless shelter deduction cannot have its shelter expenses considered under paragraphs (d)(6)(ii) or (d)(6)(iii) of this section. However, a homeless household may choose to claim actual costs under paragraph (d)(6)(ii) of this section instead of the homeless shelter deduction if actual costs are higher and verified. A State agency that chooses to provide a homeless household shelter deduction must specify in its State plan of operation that it has selected this option.
(ii) Excess shelter deduction. Monthly shelter expenses in excess of 50 percent of the household’s income after all other deductions in paragraphs (d)(1) through (d)(5) of this section have been allowed. If the household does not contain an elderly or disabled member, as defined in § 271.2 of this chapter, the shelter deduction cannot exceed the maximum shelter deduction limit established for the area. For fiscal year 2001, effective March 1, 2001, the maximum monthly excess shelter expense deduction limits are $340 for the 48 contiguous States and the District of Columbia, $543 for Alaska, $458 for Hawaii, $399 for Guam, and $268 for the Virgin Islands. FNS will set the maximum monthly excess shelter expense deduction limits for fiscal year 2002 and future years by adjusting the previous year’s limits to reflect changes in the shelter component and the fuels and utilities component of the Consumer Price Index for All Urban Consumers for the 12 month period ending the previous November 30. FNS will notify State agencies of the amount of the limit. Only the following expenses are allowable shelter expenses:
(A) Continuing charges for the shelter occupied by the household, including rent, mortgage, condo and association fees, or other continuing charges leading to the ownership of the shelter such as loan repayments for the purchase of a mobile home, including interest on such payments.
(B) Property taxes, State and local assessments, and insurance on the structure itself, but not separate costs for insuring furniture or personal belongings.
(C) The cost of fuel for heating; cooling (i.e., the operation of air conditioning systems or room air conditioners); electricity or fuel used for purposes other than heating or cooling; water; sewerage; well installation and maintenance; septic tank system installation and maintenance; garbage and trash collection; all service fees required to provide service for one telephone, including, but not limited to, basic service fees, wire maintenance fees, subscriber line charges, relay center surcharges, 911 fees, and taxes; and fees charged by the utility provider for initial installation of the utility. One-time deposits cannot be included.
(D) The shelter costs for the home if temporarily not occupied by the household because of employment or training away from home, illness, or abandonment caused by a natural disaster or casualty loss. For costs of a home vacated by the household to be included in the household’s shelter costs, the household must intend to return to the home; the current occupants of the home, if any, must not be claiming the shelter costs for SNAP purposes; and the home must not be leased or rented during the absence of the household.
(E) Charges for the repair of the home which was substantially damaged or destroyed due to a natural disaster such as a fire or flood. Shelter costs shall not include charges for repair of the home that have been or will be reimbursed by private or public relief agencies, insurance companies, or from any other source.
(iii) Standard utility allowances. (A) With FNS approval, a State agency may develop the following standard utility allowances (standards) to be used in place of actual costs in determining a household’s excess shelter deduction: an individual standard for each type of utility expense; a standard utility allowance for all utilities that includes heating or cooling costs (HCSUA); and, a limited utility allowance (LUA) that includes electricity and fuel for purposes other than heating or cooling, water, sewerage, well and septic tank installation and maintenance, telephone, and garbage or trash collection. The LUA must include expenses for at least two utilities. However, at its option, the State agency may include the excess heating and cooling costs of public housing residents in the LUA if it wishes to offer the lower standard to such households. The State agency may use different types of standards but cannot allow households the use of two standards that include the same expense. In States in which the cooling expense is minimal, the State agency may include the cooling expense in the electricity component. The State agency may vary the allowance by factors such as household size, geographical area, or season. Only utility costs identified in paragraph (d)(6)(ii)(C) of this section must be used in developing standards.
(B) The State agency must review the standards annually and make adjustments to reflect changes in costs, rounded to the nearest whole dollar. State agencies must provide the amounts of standards to FNS when they are changed and submit methodologies used in developing and updating standards to FNS for approval when the methodologies are developed or changed.
(C) A standard with a heating or cooling component must be made available to households that incur heating or cooling expenses separately from their rent or mortgage and to households that receive direct or indirect assistance under the Low Income Home Energy Assistance Act of 1981 (LIHEAA). A heating or cooling standard is available to households in private rental housing who are billed by their landlords on the basis of individual usage or who are charged a flat rate separately from their rent. However, households in public housing units which have central utility meters and which charge households only for excess heating or cooling costs are not entitled to a standard that includes heating or cooling costs based only on the charge for excess usage unless the State agency mandates the use of standard utility allowances in accordance with paragraph (d)(6)(iii)(E) of this section. Households that receive direct or indirect energy assistance that is excluded from income consideration (other than that provided under the LIHEAA) are entitled to a standard that includes heating or cooling only if the amount of the expense exceeds the amount of the assistance. Households that receive direct or indirect energy assistance that is counted as income and incur a heating or cooling expense are entitled to use a standard that includes heating or cooling costs. A household that has both an occupied home and an unoccupied home is only entitled to one standard.
(D) At initial certification, recertification, and when a household moves, the household may choose between a standard or verified actual utility costs for any allowable expense identified in paragraph (d)(6)(ii)(C) of this section (except the telephone standard), unless the State agency has opted, with FNS approval, to mandate use of a standard. The State agency may require use of the telephone standard for the cost of basic telephone service even if actual costs are higher. Households certified for 24 months may also choose to switch between a standard and actual costs at the time of the mandatory interim contact required by § 273.10(f)(1)(i), if the State agency has not mandated use of the standard.
(E) A State agency may mandate use of standard utility allowances for all households with qualifying expenses if the State has developed one or more standards that include the costs of heating and cooling and one or more standards that do not include the costs of heating and cooling, the standards will not result in increased program costs, and FNS approves the standard. The prohibition on increasing Program costs does not apply to necessary increases to standards resulting from utility cost increases. If the State agency chooses to mandate use of standard utility allowances, it must provide a standard utility allowance that includes heating or cooling costs to residents of public housing units which have central utility meters and which charge the households only for excess heating or cooling costs. The State agency also must not prorate a standard utility allowance that includes heating or cooling costs provided to a household that lives and shares heating or cooling expenses with others. In determining whether the standard utility allowances increase program costs, the State agency shall not consider any increase in costs that results from providing a standard utility allowance that includes heating or cooling costs to residents of public housing units which have central utility meters and which charge the households only for excess heating or cooling costs. The State agency shall also not consider any increase in costs that results from providing a full (i.e., not prorated) standard utility allowance that includes heating or cooling costs to a household that lives and shares heating or cooling expenses with others. Under this option households entitled to the standard may not claim actual expenses, even if the expenses are higher than the standard. Households not entitled to the standard may claim actual allowable expenses. Requests to use an LUA should include the approximate number of SNAP households that would be entitled to the nonheating and noncooling standard, the average utility costs prior to use of the mandatory standard, the proposed standards, and an explanation of how the standards were computed.
(F) If a household lives with and shares heating or cooling expenses with another individual, another household, or both, the State agency shall not prorate the standard for such households if the State agency mandates use of standard utility allowances in accordance with paragraph (d)(6)(iii)(E) of this section. The State agency may not prorate the SUA if all the individuals who share utility expenses but are not in the SNAP household are excluded from the household only because they are ineligible.
§ 273.10 Determining household eligibility and benefit levels.
(a) Month of application—(1) Determination of eligibility and benefit levels. (i) A household’s eligibility shall be determined for the month of application by considering the household’s circumstances for the entire month of application. Most households will have the eligibility determination based on circumstances for the entire calendar month in which the household filed its application. However, State agencies may, with the prior approval of FNS, use a fiscal month if the State agency determines that it is more efficient and satisfies FNS that the accounting procedures fully comply with certification and issuance requirements contained in these regulations. A State agency may elect to use either a standard fiscal month for all households, such as from the 15th of one calendar month to the 15th of the next calendar month, or a fiscal month that will vary for each household depending on the date an individual files an application for the Program. Applicant households consisting of residents of a public institution who apply jointly for SSI and SNAP benefits prior to release from the public institution in accordance with § 273.11(i) will have their eligibility determined for the month in which the applicant household was released from the institution.
(ii) A household’s benefit level for the initial months of certification shall be based on the day of the month it applies for benefits and the household shall receive benefits from the date of application to the end of the month unless the applicant household consists of residents of a public institution. For households which apply for SSI prior to their release from a public institution in accordance with § 273.11(i), the benefit level for the initial month of certification shall be based on the date of the month the household is released from the institution and the household shall receive benefits from the date of the household’s release from the institution to the end of the month. As used in this section, the term “initial month” means the first month for which the household is certified for participation in SNAP following any period during which the household was not certified for participation, except for migrant and seasonal farmworker households. In the case of migrant and seasonal farmworker households, the term “initial month” means the first month for which the household is certified for participation in SNAP following any period of more than 1 month during which the household was not certified for participation. Recertification shall be processed in accordance with § 273.10(a)(2). The State agency shall prorate a household’s benefits according to one of the two following options:
(A) The State agency shall use a standard 30-day calendar or fiscal month. A household applying on the 31st of a month will be treated as though it applied on the 30th of the month.
(B) The State agency shall prorate benefits over the exact length of a particular calendar or fiscal month.
(iii) To determine the amount of the prorated allotment, the State agency shall use either the appropriate Food Stamp Allotment Proration Table provided by FNS or whichever of the following formulae is appropriate:
(A) For State agencies which use a standard 30-day calendar or fiscal month the formula is as follows, keeping in mind that the date of application for someone applying on the 31st of a month is the 30th:
(B) For State agencies which use the exact number of days in a month, the formula is:
(C) If after using the appropriate formula the result ends in 1 through 99 cents, the State agency shall round the product down to the nearest lower whole dollar. If the computation results in an allotment of less than $10, then no issuance shall be made for the initial month.
(2) Application for recertification. Eligibility for recertification shall be determined based on circumstances anticipated for the certification period starting the month following the expiration of the current certification period. The level of benefits for recertifications shall be based on the same anticipated circumstances, except for retrospectively budgeted households which shall be recertified in accordance with § 273.21(f)(2). If a household, other than a migrant or seasonal farmworker household, submits an application after the household’s certification period has expired, that application shall be considered an initial application and benefits for that month shall be prorated in accordance with paragraph (a)(1)(ii) of this section. If a household’s failure to timely apply for recertification was due to an error of the State agency and therefore there was a break in participation, the State agency shall follow the procedures in § 273.14(e). In addition, if the household submits an application for recertification prior to the end of its certification period but is found ineligible for the first month following the end of the certification period, then the first month of any subsequent participation shall be considered an initial month. Conversely, if the household submits an application for recertification prior to the end of its certification period and is found eligible for the first month following the end of the certification period, then that month shall not be an initial month.
(3) Anticipated changes. Because of anticipated changes, a household may be eligible for the month of application, but ineligible in the subsequent month. The household shall be entitled to benefits for the month of application even if the processing of its application results in the benefits being issued in the subsequent month. Similarly, a household may be ineligible for the month of application, but eligible in the subsequent month due to anticipated changes in circumstances. Even though denied for the month of application, the household does not have to reapply in the subsequent month. The same application shall be used for the denial for the month of application and the determination of eligibility for subsequent months, within the timeliness standards in § 273.2.
(4) Changes in allotment levels. As a result of anticipating changes, the household’s allotment for the month of application may differ from its allotment in subsequent months. The State agency shall establish a certification period for the longest possible period over which changes in the household’s circumstances can be reasonably anticipated. The household’s allotment shall vary month to month within the certification period to reflect changes anticipated at the time of certification, unless the household elects the averaging techniques in paragraphs (c)(3) and (d)(3) of this section.
(b) Determining resources. Available resources at the time the household is interviewed shall be used to determine the household’s eligibility.
(c) Determining income—(1) Anticipating income. (i) For the purpose of determining the household’s eligibility and level of benefits, the State agency shall take into account the income already received by the household during the certification period and any anticipated income the household and the State agency are reasonably certain will be received during the remainder of the certification period. If the amount of income that will be received, or when it will be received, is uncertain, that portion of the household’s income that is uncertain shall not be counted by the State agency. For example, a household anticipating income from a new source, such as a new job or recently applied for public assistance benefits, may be uncertain as to the timing and amount of the initial payment. These moneys shall not be anticipated by the State agency unless there is reasonable certainty concerning the month in which the payment will be received and in what amount. If the exact amount of the income is not known, that portion of it which can be anticipated with reasonable certainty shall be considered as income. In cases where the receipt of income is reasonably certain but the monthly amount may fluctuate, the household may elect to income average. Households shall be advised to report all changes in gross monthly income as required by § 273.12.
(ii) Income received during the past 30 days shall be used as an indicator of the income that is and will be available to the household during the certification period. However, the State agency shall not use past income as an indicator of income anticipated for the certification period if changes in income have occurred or can be anticipated. If income fluctuates to the extent that a 30-day period alone cannot provide an accurate indication of anticipated income, the State agency and the household may use a longer period of past time if it will provide a more accurate indication of anticipated fluctuations in future income. Similarly, if the household’s income fluctuates seasonally, it may be appropriate to use the most recent season comparable to the certification period, rather than the last 30 days, as one indicator of anticipated income. The State agency shall exercise particular caution in using income from a past season as an indicator of income for the certification period. In many cases of seasonally fluctuating income, the income also fluctuates from one season in one year to the same season in the next year. However, in no event shall the State agency automatically attribute to the household the amounts of any past income. The State agency shall not use past income as an indicator of anticipated income when changes in income have occurred or can be anticipated during the certification period.
(2) Income only in month received. (i) Income anticipated during the certification period shall be counted as income only in the month it is expected to be received, unless the income is averaged. Whenever a full month’s income is anticipated but is received on a weekly or biweekly basis, the State agency shall convert the income to a monthly amount by multiplying weekly amounts by 4.3 and biweekly amounts by 2.15, use the State Agency’s PA conversion standard, or use the exact monthly figure if it can be anticipated for each month of the certification period. Nonrecurring lump-sum payments shall be counted as a resource starting in the month received and shall not be counted as income.
(ii) Wages held at the request of the employee shall be considered income to the household in the month the wages would otherwise have been paid by the employer. However, wages held by the employer as a general practice, even if in violation of law, shall not be counted as income to the household, unless the household anticipates that it will ask for and receive an advance, or that it will receive income from wages that were previously held by the employer as a general practice and that were, therefore, not previously counted as income by the State agency. Advances on wages shall count as income in the month received only if reasonably anticipated as defined in paragraph (c)(1) of this section.
(iii) Households receiving income on a recurring monthly or semimonthly basis shall not have their monthly income varied merely because of changes in mailing cycles or pay dates or because weekends or holidays cause additional payments to be received in a month.
(3) Income averaging. (i) Income may be averaged in accordance with methods established by the State agency to be applied Statewide for categories of households. When averaging income, the State agency shall use the household’s anticipation of monthly income fluctuations over the certification period. An average must be recalculated at recertification and in response to changes in income, in accordance with § 273.12(c), and the State agency shall inform the household of the amount of income used to calculate the allotment. Conversion of income received weekly or biweekly in accordance with paragraph (c)(2) of this section does not constitute averaging.
(ii) Households which, by contract or self-employment, derive their annual income in a period of time shorter than 1 year shall have that income averaged over a 12-month period, provided the income from the contract is not received on an hourly or piecework basis. These households may include school employees, sharecroppers, farmers, and other self-employed households. However, these provisions do not apply to migrant or seasonal farmworkers. The procedures for averaging self-employed income are described in § 273.11. Contract income which is not the household’s annual income and is not paid on an hourly or piecework basis shall be prorated over the period the income is intended to cover.
(iii) Earned and unearned educational income, after allowable exclusions, shall be averaged over the period which it is intended to cover. Income shall be counted either in the month it is received, or in the month the household anticipates receiving it or receiving the first installment payment, although it is still prorated over the period it is intended to cover.
(d) Determining deductions. Deductible expenses include only certain dependent care, shelter, medical and, at State agency option, child support costs as described in § 273.9.
(1) Disallowed expenses. (i) Any expense, in whole or part, covered by educational income which has been excluded pursuant to the provisions of § 273.9(c)(3) shall not be deductible. For example, the portion of rent covered by excluded vendor payments shall not be calculated as part of the household’s shelter cost. In addition, an expense which is covered by an excluded vendor payment that has been converted to a direct cash payment under the approval of a federally authorized demonstration project as specified under § 273.9(c)(1) shall not be deductible. However, that portion of an allowable medical expense which is not reimbursable shall be included as part of the household’s medical expenses. If the household reports an allowable medical expense at the time of certification but cannot provide verification at that time, and if the amount of the expense cannot be reasonably anticipated based upon available information about the recipient’s medical condition and public or private medical insurance coverage, the household shall have the nonreimbursable portion of the medical expense considered at the time the amount of the expense or reimbursement is reported and verified. A dependent care expense which is reimbursed or paid for by the Job Opportunities and Basic Skills Training (JOBS) program under title IV-F of the Social Security Act (42 U.S.C. 681) or the Transitional Child Care (TCC) program shall not be deductible. A utility expense which is reimbursed or paid by an excluded payment, including HUD or FmHA utility reimbursements, shall not be deductible.
(ii) Expenses shall only be deductible if the service is provided by someone outside of the household and the household makes a money payment for the service. For example, a dependent care deduction shall not be allowed if another household member provides the care, or compensation for the care is provided in the form of an inkind benefit, such as food.
(2) Billed expenses. Except as provided in paragraph (d)(3) of this section a deduction shall be allowed only in the month the expense is billed or otherwise becomes due, regardless of when the household intends to pay the expense. For example, rent which is due each month shall be included in the household’s shelter costs, even if the household has not yet paid the expense. Amounts carried forward from past billing periods are not deductible, even if included with the most recent billing and actually paid by the household. In any event, a particular expense may only be deducted once.
(3) Averaging expenses. Households may elect to have fluctuating expenses averaged. Households may also elect to have expenses which are billed less often than monthly averaged forward over the interval between scheduled billings, or, if there is no scheduled interval, averaged forward over the period the expense is intended to cover. For example, if a household receives a single bill in February which covers a 3-month supply of fuel oil, the bill may be averaged over February, March, and April. The household may elect to have one-time only expenses averaged over the entire certification period in which they are billed. Households reporting one-time only medical expenses during their certification period may elect to have a one-time deduction or to have the expense averaged over the remaining months of their certification period. Averaging would begin the month the change would become effective. For households certified for 24 months that have one-time medical expenses, the State agency must use the following procedure. In averaging any one-time medical expense incurred by a household during the first 12 months, the State agency must give the household the option of deducting the expense for one month, averaging the expense over the remainder of the first 12 months of the certification period, or averaging the expense over the remaining months in the certification period. One-time expenses reported after the 12th month of the certification period will be deducted in one month or averaged over the remaining months in the certification period, at the household’s option.
(4) Anticipating expenses. The State agency shall calculate a household’s expenses based on the expenses the household expects to be billed for during the certification period. Anticipation of the expense shall be based on the most recent month’s bills, unless the household is reasonably certain a change will occur. When the household is not claiming the utility standard, the State agency may anticipate changes during the certification period based on last year’s bills from the same period updated by overall price increases; or, if only the most recent bill is available, utility cost increases or decreases over the months of the certification period may be based on utility company estimates for the type of dwelling and utilities used by the household. The State agency shall not average past expenses, such as utility bills for the last several months, as a method of anticipating utility costs for the certification period. At certification and recertification, the household shall report and verify all medical expenses. The household’s monthly medical deduction for the certification period shall be based on the information reported and verified by the household, and any anticipated changes in the household’s medical expenses that can be reasonably expected to occur during the certification period based on available information about the recipient’s medical condition, public or private insurance coverage, and current verified medical expenses. The household shall not be required to file reports about its medical expenses during the certification period. If the household voluntarily reports a change in its medical expenses, the State agency shall verify the change in accordance with § 273.2(f)(8)(ii) if the change would increase the household’s allotment. The State agency has the option of either requiring verification prior to acting on the change, or requiring the verification prior to the second normal monthly allotment after the change is reported. In the case of a reported change that would decrease the household’s allotment, or make the household ineligible, the State agency shall act on the change without requiring verification, though verification which is required by § 273.2(f)(8) shall be obtained prior to the household’s recertification. If a child in the household reaches his or her second birthday during the certification period, the $200 maximum dependent care deduction defined in § 273.9(d)(4) shall be adjusted in accordance with this section not later than the household’s next regularly scheduled recertification.
(5) Conversion of deductions. The income conversion procedures in paragraph (c)(2) of this section shall also apply to expenses billed on a weekly or biweekly basis.
(6) Energy Assistance Payments. Except for payments made under the Low Income Energy Assistance Act of 1981, the State agency shall prorate energy assistance payments as provided for in § 273.9(d) over the entire heating or cooling season the payment is intended to cover.
(7) Households which contain a member who is a disabled SSI recipient in accordance with paragraphs (2), (3), (4) or (5) of the definition of a disabled member in § 271.2 or households which contain a member who is a recipient of SSI benefits and the household is determined within the 30-day processing standard to be categorically eligible (as discussed in § 273.2(j)) or determined to be eligible as an NPA household and later becomes a categorically eligible household, shall be entitled to the excess medical deduction of § 273.9(d)(3) and the uncapped excess shelter expense deduction of § 273.9(d)(5) for the period for which the SSI recipient is authorized to receive SSI benefits or the date of the SNAP application, whichever is later, if the household incurs such expenses. Households, which contain an SSI recipient as discussed in this paragraph, which are determined ineligible as an NPA household and later become categorically eligible and entitled to restored benefits in accordance with § 273.2(j)(1)(iv), shall receive restored benefits using the medical and excess shelter expense deductions from the beginning of the period for which SSI benefits are paid, the original SNAP application date or December 23, 1985, whichever is later, if the household incurs such expenses.
(8) Optional child support deduction. If the State agency opts to provide households with an income deduction rather than an income exclusion for legally obligated child support payments in accordance with § 273.9(d)(5), the State agency may budget such payments in accordance with paragraphs (d)(2) through (d)(5) of this section, or retrospectively, in accordance with § 273.21(b) and § 273.21(f)(2), regardless of the budgeting system used for the household’s other circumstances.
(e) Calculating net income and benefit levels—(1) Net monthly income. (i) To determine a household’s net monthly income, the State agency shall:
(A) Add the gross monthly income earned by all household members and the total monthly unearned income of all household members, minus income exclusions, to determine the household’s total gross income. Net losses from the self-employment income of a farmer shall be offset in accordance with § 273.11(a)(2)(iii).
(B) Multiply the total gross monthly earned income by 20 percent and subtract that amount from the total gross income; or multiply the total gross monthly earned income by 80 percent and add that to the total monthly unearned income, minus income exclusions. If the State agency has chosen to treat legally obligated child support payments as an income exclusion in accordance with § 273.9(c)(17), multiply the excluded earnings used to pay child support by 20 percent and subtract that amount from the total gross monthly income.
(C) Subtract the standard deduction.
(D) If the household is entitled to an excess medical deduction as provided in § 273.9(d)(3), determine if total medical expenses exceed $35. If so, subtract that portion which exceeds $35.
(E) Subtract allowable monthly dependent care expenses, if any, as specified under § 273.9(d)(4) for each dependent.
(F) If the State agency has chosen to treat legally obligated child support payments as a deduction rather than an exclusion in accordance with § 273.9(d)(5), subtract allowable monthly child support payments in accordance with § 273.9(d)(5).
(G) Subtract the homeless shelter deduction, if any, up to the maximum of $143.
(H) Total the allowable shelter expenses to determine shelter costs, unless a deduction has been subtracted in accordance with paragraph (e)(1)(i)(G) of this section. Subtract from total shelter costs 50 percent of the household’s monthly income after all the above deductions have been subtracted. The remaining amount, if any, is the excess shelter cost. If there is no excess shelter cost, the net monthly income has been determined. If there is excess shelter cost, compute the shelter deduction according to paragraph (e)(1)(i)(I) of this section.
(I) Subtract the excess shelter cost up to the maximum amount allowed for the area (unless the household is entitled to the full amount of its excess shelter expenses) from the household’s monthly income after all other applicable deductions. Households not subject to a capped shelter expense shall have the full amount exceeding 50 percent of their net income subtracted. The household’s net monthly income has been determined.
(ii) In calculating net monthly income, the State agency shall use one of the following two procedures:
(A) Round down each income and allotment calculation that ends in 1 through 49 cents and round up each calculation that ends in 50 through 99 cents; or
(B) Apply the rounding procedure that is currently in effect for the State’s Temporary Assistance for Needy Families (TANF) program. If the State TANF program includes the cents in income calculations, the State agency may use the same procedures for SNAP income calculations. Whichever procedure is used, the State agency may elect to include the cents associated with each individual shelter cost in the computation of the shelter deduction and round the final shelter deduction amount. Likewise, the State agency may elect to include the cents associated with each individual medical cost in the computation of the medical deduction and round the final medical deduction amount.
(2) Eligibility and benefits. (i)(A) Households which contain an elderly or disabled member as defined in § 271.2, shall have their net income, as calculated in paragraph (e)(1) of this section (except for households considered destitute in accordance with paragraph (e)(3) of this section), compared to the monthly income eligibility standards defined in § 273.9(a)(2) for the appropriate household size to determine eligibility for the month.
(B) In addition to meeting the net income eligibility standards, households which do not contain an elderly or disabled member shall have their gross income, as calculated in accordance with paragraph (e)(1)(i)(A) of this section, compared to the gross monthly income standards defined in § 273.9(a)(1) for the appropriate household size to determine eligibility for the month.
(C) For households considered destitute in accordance with paragraph (e)(3) of this section, the State agency shall determine a household’s eligibility by computing its gross and net income according to paragraph (e)(3) of this section, and comparing, as appropriate, the gross and/or net income to the corresponding income eligibility standard in accordance with § 273.9(a) (1) or (2).
(D) If a household contains a member who is fifty-nine years old on the date of application, but who will become sixty before the end of the month of application, the State agency shall determine the household’s eligibility in accordance with paragraph (e)(2)(i)(A) of this section.
(E) If a household contains a student whose income is excluded in accordance with § 273.9(c)(7) and the student becomes 18 during the month of application, the State agency shall exclude the student’s earnings in the month of application and count the student’s earnings in the following month. If the student becomes 18 during the certification period, the student’s income shall be excluded until the month following the month in which the student turns 18.
(ii)(A) Except as provided in paragraphs (a)(1), (e)(2)(iii) and (e)(2)(vi) of this section, the household’s monthly allotment shall be equal to the maximum SNAP allotment for the household’s size reduced by 30 percent of the household’s net monthly income as calculated in paragraph (e)(1) of this section. If 30 percent of the household’s net income ends in cents, the State agency shall round in one of the following ways:
(1) The State agency shall round the 30 percent of net income up to the nearest higher dollar; or
(2) The State agency shall not round the 30 percent of net income at all. Instead, after subtracting the 30 percent of net income from the appropriate Thrifty Food Plan, the State agency shall round the allotment down to the nearest lower dollar.
(B) If the calculation of benefits in accordance with paragraph (e)(2)(ii)(A) of this section for an initial month would yield an allotment of less than $10 for the household, no benefits shall be issued to the household for the initial month.
(C) Except during an initial month, all eligible one-person and two-person households shall receive minimum monthly allotments equal to the minimum benefit. The minimum benefit is 8 percent of the maximum allotment for a household of one, rounded to the nearest whole dollar.
(iii) For an eligible household with three or more members which is entitled to no benefits (except because of the proration requirements of paragraph (a)(1) and the provision precluding issuances of less than $10 in an initial month of paragraph (e)(2)(ii)(B)) of this section:
(A) The State agency shall deny the household’s application on the grounds that its net income exceeds the level at which benefits are issued; or
(B) The State agency shall certify the household but suspend its participation, subject to the following conditions:
(1) The State agency shall inform the suspended household, in writing, of its suspended status, and of its rights and responsibilities while it is in that status.
(2) The State agency shall set the household’s change reporting requirements and the manner in which those changes will be reported and processed.
(3) The State agency shall specify which changes shall entitle the household to have its status converted from suspension to issuance, and which changes shall require the household to reapply for participation.
(4) The household shall retain the right to submit a new application while it is suspended.
(5) The State agency shall convert a household from suspension to issuance status, without requiring an additional certification interview, and issue its initial allotment, within ten days of the date the household reports the change.
(6) The State agency shall prorate the household’s benefits, in the first month after the suspension period, from the date the household reports a change, in accordance with paragraph (a)(1) of this section.
(7) The State agency may delay the work registration of the household’s members until the household is determined to be entitled to benefits.
(iv) For those eligible households which are entitled to no benefits in their initial month of application, in accordance with paragraph (a)(1) or (e)(2)(ii)(B) of this section, but are entitled to benefits in subsequent months, the State agency shall certify the households beginning with the month of application.
(v) When a household’s circumstances change and it becomes entitled to a different income eligibility standard, the State agency shall apply the different standard at the next recertification or whenever the State agency changes the household’s eligibility, benefit level or certification period, whichever occurs first.
(vi) During a month when a reduction, suspension or cancellation of allotments has been ordered pursuant to the provisions of § 271.7, eligible households shall have their benefits calculated as follows:
(A) If a benefit reduction is ordered, State agencies shall reduce the maximum SNAP allotment amounts for each household size by the percentage ordered in the Department’s notice on benefit reductions. State agencies shall multiply the maximum SNAP allotment amounts by the percentage specified in the FNS notice; if the result ends in 1 through 99 cents, round the result up to the nearest higher dollar; and subtract the result from the normal maximum SNAP allotment amount. In calculating benefit levels for eligible households, State agencies would follow the procedures detailed in paragraph (e)(2)(ii) of this section and substitute the reduced maximum SNAP allotment amounts for the normal maximum SNAP allotment amounts.
(B) Except as provided in paragraphs (a)(1), (e)(2)(ii)(B), and (e)(2)(vi)(C) of this section, one- and two-person households shall be provided with at least the minimum benefit.
(C) In the event that the national reduction in benefits is 90 percent or more of the benefits projected to be issued for the affected month, the provision for a minimum benefit for households with one or two members only may be disregarded and all households may have their benefits lowered by reducing maximum SNAP allotment amounts by the percentage specified by the Department. The benefit reduction notice issued by the Department to effectuate a benefit reduction will specify whether minimum benefits for households with one or two members only are to be provided to households.
(D) If the action in effect is a suspension or cancellation, eligible households shall have their allotment levels calculated according to the procedures in paragraph (e)(2)(ii) of this section. However, the allotments shall not be issued for the month the suspension or cancellation is in effect. The provision for the minimum benefit for households with one or two members only shall be disregarded and all households shall have their benefits suspended or cancelled for the designated month.
(E) In the event of a suspension or cancellation, or a reduction exceeding 90 percent of the affected month’s projected issuance, all households, including one and two-person households, shall have their benefits suspended, cancelled or reduced by the percentage specified by FNS.
(3) Destitute households. Migrant or seasonal farmworker households may have little or no income at the time of application and may be in need of immediate food assistance, even though they receive income at some other time during the month of application. The following procedures shall be used to determine when migrant or seasonal farmworker households in these circumstances may be considered destitute and, therefore, entitled to expedited service and special income calculation procedures. Households other than migrant or seasonal farmworker households shall not be classified as destitute.
(i) Households whose only income for the month of application was received prior to the date of application, and was from a terminated source, shall be considered destitute households and shall be provided expedited service.
(A) If income is received on a monthly or more frequent basis, it shall be considered as coming from a terminated source if it will not be received again from the same source during the balance of the month of application or during the following month.
(B) If income is normally received less often than monthly, the nonreceipt of income from the same source in the balance of the month of application or in the following month is inappropriate to determine whether or not the income is terminated. For example, if income is received on a quarterly basis (e.g., on January 1, April 1, July 1, and October 1), and the household applies in mid-January, the income should not be considered as coming from a terminated source merely because no further payments will be received in the balance of January or in February. The test for whether or not this household’s income is terminated is whether the income is anticipated to be received in April. Therefore, for households that normally receive income less often than monthly, the income shall be considered as coming from a terminated source if it will not be received in the month in which the next payment would normally be received.
(ii) Households whose only income for the month of application is from a new source shall be considered destitute and shall be provided expedited service if income of more than $25 from the new source will not be received by the 10th calendar day after the date of application.
(A) Income which is normally received on a monthly or more frequent basis shall be considered to be from a new source if income of more than $25 has not been received from that source within 30 days prior to the date the application was filed.
(B) If income is normally received less often than monthly, it shall be considered to be from a new source if income of more than $25 was not received within the last normal interval between payments. For example, if a household applies in early January and is expecting to be paid every 3 months, starting in late January, the income shall be considered to be from a new source if no income of more than $25 was received from the source during October or since that time.
(iii) Households may receive both income from a terminated source prior to the date of application, and income from a new source after the date of application, and still be considered destitute if they receive no other income in the month of application and income of more than $25 from the new source will not be received by the 10th day after the date of application.
(iv) Destitute households shall have their eligibility and level of benefits calculated for the month of application by considering only income which is received between the first of the month and the date of application. Any income from a new source that is anticipated after the day of application shall be disregarded.
(v) Some employers provide travel advances to cover the travel costs of new employees who must journey to the location of their new employment. To the extent that these payments are excluded as reimbursements, receipt of travel advances will not affect the determination of when a household is destitute. However, if the travel advance is by written contract an advance of wages that will be subtracted from wages later earned by the employee, rather than a reimbursement, the wage advance shall count as income. In addition, the receipt of a wage advance for travel costs of a new employee shall not affect the determination of whether subsequent payments from the employer are from a new source of income, nor whether a household shall be considered destitute. For example, if a household applies on May 10, has received a $50 advance for travel from its new employer on May 1 which by written contract is an advance on wages, but will not receive any other wages from the employer until May 30, the household shall be considered destitute. The May 30 payment shall be disregarded, but the wage advance received prior to the date of application shall be counted as income.
(vi) A household member who changes jobs but continues to work for the same employer shall be considered as still receiving income from the same source. A migrant farmworker’s source of income shall be considered to be the grower for whom the migrant is working at a particular point in time, and not the crew chief. A migrant who travels with the same crew chief but moves from one grower to another shall be considered to have moved from a terminated income source to a new source.
(vii) The above procedures shall apply at initial application and at recertification, but only for the first month of each certification period. At recertification, income from a new source shall be disregarded in the first month of the new certification period if income of more than $25 will not be received from this new source by the 10th calendar day after the date of the household’s normal issuance cycle.
(4) Thrifty Food Plan (TFP) and Maximum SNAP Allotments.
(i) Maximum SNAP allotment level. Maximum SNAP allotments shall be based on the TFP as defined in § 271.2, and they shall be uniform by household size throughout the 48 contiguous States and the District of Columbia. The TFP for Hawaii shall be the TFP for the 48 States and DC adjusted for the price of food in Honolulu. The TFPs for urban, rural I, and rural II parts of Alaska shall be the TFP for the 48 States and DC adjusted by the price of food in Anchorage and further adjusted for urban, rural I, and rural II Alaska as defined in § 272.7(c). The TFPs for Guam and the Virgin Islands shall be adjusted for changes in the cost of food in the 48 States and DC, provided that the cost of these TFPs may not exceed the cost of the highest TFP for the 50 States. The TFP amounts and maximum allotments in each area are adjusted annually and will be prescribed in a table posted on the FNS web site, at www.fns.usda.gov/fsp.
(ii) Adjustment. Effective October 1, 1996, the maximum SNAP allotments must be based on 100% of the cost of the TFP as defined in § 271.2 of this chapter for the preceding June, rounded to the nearest lower dollar increment, except that on October 1, 1996, the allotments may not fall below those in effect on September 30, 1996.
(f) Certification periods. The State agency must certify each eligible household for a definite period of time. State agencies must assign the longest certification period possible based on the predictability of the household’s circumstances. The first month of the certification period will be the first month for which the household is eligible to participate. The certification period cannot exceed 12 months except to accommodate a household’s transitional benefit period and as specified in paragraphs (f)(1) and (f)(2) of this section.
(1) Households in which all adult members are elderly or disabled. The State agency may certify for up to 24 months households in which all adult members are elderly or disabled. The State agency must have at least one contact with each household every 12 months. The State agency may use any method it chooses for this contact.
(2) Households residing on a reservation. The State agency must certify for 24 months those households residing on a reservation which it requires to submit monthly reports in accordance with § 273.21, unless the State agency obtains a waiver from FNS. In the waiver request the State agency must include justification for a shorter period and input from the affected Indian tribal organization(s). When households move off the reservation, the State agency must either continue their certification periods until they would normally expire or shorten the certification periods in accordance with paragraph (f)(4) of this section.
(3) Certification period length. The State agency should assign each household the longest certification period possible, consistent with its circumstances.
(i) Households should be assigned certification periods of at least 6 months, unless the household’s circumstances are unstable or the household contains an ABAWD.
(ii) Households with unstable circumstances, such as households with zero net income, and households with an ABAWD member should be assigned certification periods consistent with their circumstances, but generally no less than 3 months.
(iii) Households may be assigned 1- or 2-month certification periods when it appears likely that the household will become ineligible for SNAP benefits in the near future.
(4) Shortening certification periods. The State agency may not end a household’s certification period earlier than its assigned termination date, unless the State agency receives information that the household has become ineligible, the household has not complied with the requirements of § 273.12(c)(3), or the State agency must shorten the household’s certification period to comply with the requirements of § 273.12(a)(5). Loss of public assistance or a change in employment status is not sufficient in and of itself to meet the criteria necessary for shortening the certification period. The State agency must close the household’s case or adjust the household’s benefit amount in accordance with § 273.12(c)(1) or (c)(2) in response to reported changes. The State agency must issue a notice of adverse action as provided in § 273.13 to shorten a participating household’s certification period in connection with imposing the simplified reporting requirement. The State agency may not use the Notice of Expiration to shorten a certification period, except that the State agency must use the Notice of Expiration to shorten a household’s certification period when the household is receiving transitional benefits under Subpart H, has not reached the maximum allowable number of months in its certification period during the transitional period, and the State agency has chosen to recertify the household in accordance with § 273.28(b). If the transition period results in a shortening of the household’s certification period, the State agency shall not issue a household a notice of adverse action but shall specify in the transitional notice required under § 273.29 that the household must be recertified when it reaches the end of the transitional benefit period or if it returns to TANF during the transitional period.
(5) Lengthening certification periods. State agencies may lengthen a household’s current certification period once it is established, as long as the total months of the certification period do not exceed 24 months for households in which all adult members are elderly or disabled, or 12 months for other households. If the State agency extends a household’s certification period, it must advise the household of the new certification ending date with a notice containing the same information as the notice of eligibility set forth in paragraph (g)(1)(i)(A) of this section.
(g) Certification notices to households—(1) Initial applications. State agencies shall provide applicants with one of the following written notices as soon as a determination is made, but no later than 30 days after the date of the initial application:
(i) Notice of eligibility. (A) If an application is approved, the State agency shall provide the household with written notice of the amount of the allotment and the beginning and ending dates of the certification period. The household shall also be advised of variations in the benefit level based on changes anticipated at the time of certification. If the initial allotment contains benefits for both the month of application and the current month’s benefits, the notice shall explain that the initial allotment includes more than 1 month’s benefits, and shall indicate the monthly allotment amount for the remainder of the certification period. The notice shall also advise the household of its right to a fair hearing, the telephone number of the SNAP office (a toll-free number or a number where collect calls will be accepted for households outside the local calling area), and, if possible, the name of the person to contact for additional information. If there is an individual or organization available that provides free legal representation, the notice shall also advise the household of the availability of the services. The State agency may also include in the notice a reminder of the household’s obligation to report changes in circumstance and of the need to reapply for continued participation at the end of the certification period. Other information which would be useful to the household may also be included.
(B) In cases where a household’s application is approved on an expedited basis without verification, as provided in § 273.2(i), the notice shall explain that the household must provide the verification which was waived. If the State agency has elected to assign a longer certification period to some households certified on an expedited basis, the notice shall also explain the special conditions of the longer certification period, as specified in § 273.2(i), and the consequences of failure to provide the postponed verification.
(C) For households provided a notice of expiration at the time of certification, as required in § 273.14(b), the notice of eligibility may be combined with the notice of expiration or separate notices may be sent.
(ii) Notice of denial. If the application is denied, the State agency shall provide the household with written notice explaining the basis for the denial, the household’s right to request a fair hearing, the telephone number of the SNAP office (a toll-free number or a number where collect calls will be accepted for households outside the local calling area), and, if possible, the name of the person to contact for additional information. If there is an individual or organization available that provides free legal representation, the notice shall also advise the household of the availability of the service. A household which is potentially categorically eligible but whose SNAP application is denied shall be asked to inform the State agency if it is approved to receive PA and/or SSI benefits or benefits from a State or local GA program. In cases where the State agency has elected to use a notice of denial when a delay was caused by the household’s failure to take action to complete the application process, as provided in § 273.2(h)(2), the notice of denial shall also explain: The action that the household must take to reactivate the application; that the case will be reopened without a new application if action is taken within 30 days of the date the notice of denial was mailed; and that the household must submit a new application if, at the end of the 30-day period, the household has not taken the needed action and wishes to participate in the program. If the State agency chooses the option specified in § 273.2(h)(2) of reopening the application in cases where verification is lacking only if household provides verification within 30 days of the date of the initial request for verification, the State agency shall include on the notice of denial the date by which the household must provide the missing verification.
(iii) Notice of pending status. If the application is to be held pending because some action by the State is necessary to complete the application process, as specified in § 273.2(h)(2), or the State agency has elected to pend all cases regardless of the reason for delay, the State agency shall provide the household with a written notice which informs the household that its application has not been completed and is being processed. If some action by the household is also needed to complete the application process, the notice shall also explain what action the household must take and that its application will be denied if the household fails to take the required action within 60 days of the date the application was filed. If the State agency chooses the option specified in § 273.2(h) (2) and (3) of holding the application pending in cases where verification is lacking only until 30 days following the date verification was initially requested, the State agency shall include on the notice of pending status the date by which the household must provide the missing verification.
(2) Applications for recertification. The State agency shall provide households that have filed an application by the 15th of the last month of their certification period with either a notice of eligibility or a notice of denial by the end of the current certification period if the household has complied with all recertification requirements. The State agency shall provide households that have received a notice of expiration at the time of certification, and have timely reapplied, with either a notice of eligibility or a notice of denial not later than 30 days after the date of the household’s initial opportunity to obtain its last allotment.
§ 273.11 Action on households with special circumstances.
(a) Self-employment income. The State agency must calculate a household’s self-employment income as follows:
(1) Averaging self-employment income. (i) Self-employment income must be averaged over the period the income is intended to cover, even if the household receives income from other sources. If the averaged amount does not accurately reflect the household’s actual circumstances because the household has experienced a substantial increase or decrease in business, the State agency must calculate the self-employment income on the basis of anticipated, not prior, earnings.
(ii) If a household’s self-employment enterprise has been in existence for less than a year, the income from that self-employment enterprise must be averaged over the period of time the business has been in operation and the monthly amount projected for the coming year.
(iii) Notwithstanding the provisions of paragraphs (a)(1)(i) and (a)(1)(ii) of this section, households subject to monthly reporting and retrospective budgeting who derive their self-employment income from a farming operation and who incur irregular expenses to produce such income have the option to annualize the allowable costs of producing self-employment income from farming when the self-employment farm income is annualized.
(2) Determining monthly income from self-employment. (i) For the period of time over which self-employment income is determined, the State agency must add all gross self-employment income (either actual or anticipated, as provided in paragraph (a)(1)(i) of this section) and capital gains (according to paragraph (a)(3) of this section), exclude the costs of producing the self-employment income (as determined in paragraph (a)(4) of this section), and divide the remaining amount of self-employment income by the number of months over which the income will be averaged. This amount is the monthly net self-employment income. The monthly net self-employment income must be added to any other earned income received by the household to determine total monthly earned income.
(ii) If the cost of producing self-employment income exceeds the income derived from self-employment as a farmer (defined for the purposes of this paragraph (a)(2)(ii) as a self-employed farmer who receives or anticipates receiving annual gross proceeds of $1,000 or more from the farming enterprise), such losses must be prorated in accordance with paragraph (a)(1) of this section, and then offset against countable income to the household as follows:
(A) Offset farm self-employment losses first against other self-employment income.
(B) Offset any remaining farm self-employment losses against the total amount of earned and unearned income after the earned income deduction has been applied.
(iii) If a State agency determines that a household is eligible based on its monthly net income, the State may elect to offer the household an option to determine the benefit level by using either the same net income which was used to determine eligibility, or by unevenly prorating the household’s total net income over the period for which the household’s self-employment income was averaged to more closely approximate the time when the income is actually received. If income is prorated, the net income assigned in any month cannot exceed the maximum monthly income eligibility standards for the household’s size.
(3) Capital gains. The proceeds from the sale of capital goods or equipment must be calculated in the same manner as a capital gain for Federal income tax purposes. Even if only 50 percent of the proceeds from the sale of capital goods or equipment is taxed for Federal income tax purposes, the State agency must count the full amount of the capital gain as income for SNAP purposes. For households whose self-employment income is calculated on an anticipated (rather than averaged) basis in accordance with paragraph (a)(1) of this section, the State agency must count the amount of capital gains the household anticipates receiving during the months over which the income is being averaged.
(b) Allowable costs of producing self-employment income. (1) Allowable costs of producing self-employment income include, but are not limited to, the identifiable costs of labor; stock; raw material; seed and fertilizer; payments on the principal of the purchase price of income-producing real estate and capital assets, equipment, machinery, and other durable goods; interest paid to purchase income-producing property; insurance premiums; and taxes paid on income-producing property.
(2) In determining net self-employment income, the following items are not allowable costs of doing business:
(i) Net losses from previous periods;
(ii) Federal, State, and local income taxes, money set aside for retirement purposes, and other work-related personal expenses (such as transportation to and from work), as these expenses are accounted for by the 20 percent earned income deduction specified in § 273.9(d)(2);
(iii) Depreciation; and
(iv) Any amount that exceeds the payment a household receives from a boarder for lodging and meals.
(3) When calculating the costs of producing self-employment income, State agencies may elect to use actual costs for allowable expenses in accordance with paragraphs (b)(1) and (b)(2) of this section or determine self-employment expenses as follows:
(i) For income from day care, use the current reimbursement amounts used in the Child and Adult Care Food Program or a standard amount based on estimated per-meal costs.
(ii) For income from boarders, other than those in commercial boarding houses or from foster care boarders, use:
(A) The maximum SNAP allotment for a household size that is equal to the number of boarders; or
(B) A flat amount or fixed percentage of the gross income, provided that the method used to determine the flat amount or fixed percentage is objective and justifiable and is stated in the State’s SNAP manual.
(iii) For income from foster care boarders, refer to § 273.1(c)(6).
(iv) Use the standard amount the State uses for its TANF program.
(v) Use an amount approved by FNS. State agencies may submit a proposal to FNS for approval to use a simplified self-employment expense calculation method that does not result in increased Program costs. Different methods may be proposed for different types of self-employment. The proposal must include a description of the proposed method, the number and type of households and percent of the caseload affected, and documentation indicating that the proposed procedure will not increase Program costs.
(c) Treatment of income and resources of certain nonhousehold members. During the period of time that a household member cannot participate for the reasons addressed in this section, the eligibility and benefit level of any remaining household members shall be determined in accordance with the procedures outlined in this section.
(1) Intentional Program violation, felony drug conviction, or fleeing felon disqualifications, and workfare or work requirement sanctions.
The eligibility and benefit level of any remaining household members of a household containing individuals determined ineligible because of a disqualification for an intentional Program violation, a felony drug conviction, their fleeing felon status, noncompliance with a work requirement of § 273.7, imposition of a sanction while they were participating in a household disqualified because of failure to comply with workfare requirements, or certain convicted felons as provided at § 273.11(s) shall be determined as follows:
(i) Income, resources, and deductible expenses. The income and resources of the ineligible household member(s) shall continue to count in their entirety, and the entire household’s allowable earned income, standard, medical, dependent care, child support, and excess shelter deductions shall continue to apply to the remaining household members.
(ii) Eligibility and benefit level. The ineligible member shall not be included when determining the household’s size for the purposes of:
(A) Assigning a benefit level to the household;
(B) Assigning a standard deduction to the household;
(C) Comparing the household’s monthly income with the income eligibility standards; or
(D) Comparing the household’s resources with the resource eligibility limits. The State agency shall ensure that no household’s coupon allotment is increased as a result of the exclusion of one or more household members.
(2) SSN disqualifications, comparable disqualifications, child support disqualifications, and ineligible ABAWDs. The eligibility and benefit level of any remaining household members of a household containing individuals determined to be ineligible for refusal to obtain or provide an SSN, for meeting the time limit for able-bodied adults without dependents or for being disqualified under paragraphs (k), (o), (p), or (q) of this section shall be determined as follows:
(i) Resources. The resources of such ineligible members shall continue to count in their entirety to the remaining household members.
(ii) Income. A pro rata share of the income of such ineligible members shall be counted as income to the remaining members. This pro rata share is calculated by first subtracting the allowable exclusions from the ineligible member’s income and dividing the income evenly among the household members, including the ineligible members. All but the ineligible members’ share is counted as income for the remaining household members.
(iii) Deductible expenses. The 20 percent earned income deduction shall apply to the prorated income earned by such ineligible members which is attributed to their households. That portion of the households’ allowable child support payment, shelter and dependent care expenses which are either paid by or billed to the ineligible members shall be divided evenly among the households’ members including the ineligible members. All but the ineligible members’ share is counted as a deductible child support payment, shelter or dependent care expense for the remaining household members.
(iv) Eligibility and benefit level. Such ineligible members shall not be included when determining their households’ sizes for the purposes of:
(A) Assigning a benefit level to the household;
(B) Assigning a standard deduction to the household;
(C) Comparing the household’s monthly income with the income eligibility standards; or
(D) Comparing the household’s resources with the resource eligibility limits.
(3) Ineligible alien. The State agency must determine the eligibility and benefit level of any remaining household members of a household containing an ineligible alien as follows:
(i) The State agency must count all or, at the discretion of the State agency, all but a pro rata share, of the ineligible alien’s income and deductible expenses and all of the ineligible alien’s resources in accordance with paragraphs (c)(1) or (c)(2) of this section. In exercising its discretion under this paragraph (c)(3)(i), the State agency may count all of the alien’s income for purposes of applying the gross income test for eligibility purposes while only counting all but a pro rata share to apply the net income test and determine level of benefits. This paragraph (c)(3)(i) does not apply to an alien:
(A) Who is lawfully admitted for permanent residence under the INA;
(B) Who is granted asylum under section 208 of the INA;
(C) Who is admitted as a refugee under section 207 of the INA;
(D) Who is paroled in accordance with section 212(d)(5) of the INA;
(E) Whose deportation or removal has been withheld in accordance with section 243 of the INA;
(F) Who is aged, blind, or disabled in accordance with section 1614(a)(1) of the Social Security Act and is admitted for temporary or permanent residence under section 245A(b)(1) of the INA; or
(G) Who is a special agricultural worker admitted for temporary residence under section 210(a) of the INA.
(ii) For an ineligible alien within a category described in paragraphs (c)(3)(i)(A) through (c)(3)(i)(G) of this section, State agencies may either:
(A) Count all of the ineligible alien’s resources and all but a pro rata share of the ineligible alien’s income and deductible expenses; or
(B) Count all of the ineligible alien’s resources, count none of the ineligible alien’s income and deductible expenses, count any money payment (including payments in currency, by check, or electronic transfer) made by the ineligible alien to at least one eligible household member, not deduct as a household expense any otherwise deductible expenses paid by the ineligible alien, but cap the resulting benefit amount for the eligible members at the allotment amount the household would receive if the household member within the one of the categories described in paragraphs (c)(3)(i)(A) through (c)(3)(i)(G) of this section were still an eligible alien. The State agency must elect one State-wide option for determining the eligibility and benefit level of households with members who are aliens within the categories described paragraphs (c)(3)(i)(A) through (c)(3)(i)(G) of this section.
(iii) For an alien who is ineligible under § 273.4(a) because the alien’s household indicates inability or unwillingness to provide documentation of the alien’s immigration status, the State agency must count all or, at the discretion of the State agency, all but a pro rata share of the ineligible alien’s income and deductible expenses and all of the ineligible alien’s resources in accordance with paragraphs (c)(1) or (c)(2) of this section. In exercising its discretion under this paragraph (c)(3)(iii), the State agency may count all of the alien’s income for purposes of applying the gross income test for eligibility purposes while only counting all but a pro rata to apply the net income test and determine level of benefits.
(iv) The State agency must compute the income of the ineligible aliens using the income definition in § 273.9(b) and the income exclusions in § 273.9(c).
(v) For purposes of this paragraph (c)(3), the State agency must not include the resources and income of the sponsor and the sponsor’s spouse in determining the resources and income of an ineligible sponsored alien.
(4) Reduction or termination of benefits within the certification period. Whenever an individual is determined ineligible within the household’s certification period, the State agency shall determine the eligibility or ineligibility of the remaining household members based, as much as possible, on information in the case file.
(i) Excluded for intentional Program violation disqualification. If a household’s benefits are reduced or terminated within the certification period because one of its members was excluded because of disqualification for intentional Program violation, the State agency shall notify the remaining members of their eligibility and benefit level at the same time the excluded member is notified of his or her disqualification. The household is not entitled to a notice of adverse action but may request a fair hearing to contest the reduction or termination of benefits, unless the household has already had a fair hearing on the amount of the claim as a result of consolidation of the administrative disqualification hearing with the fair hearing. However, a participating household is entitled to a notice of adverse action prior to any action to reduce, suspend or terminate its benefits, if a State agency determines that it contains an individual who was disqualified in another State and is still within the period of disqualification.
(ii) Disqualified or determined ineligible for reasons other than intentional Program violation. If a household’s benefits are reduced or terminated within the certification period for reasons other than an Intentional Program Violation disqualification, the State agency shall issue a notice of adverse action in accordance with § 273.13(a)(2) which informs the household of the ineligibility, the reason for the ineligibility, the eligibility and benefit level of the remaining members, and the action the household must take to end the ineligibility.
(d) Treatment of income and resources of other nonhousehold members. (1) For all other nonhousehold members defined in § 273.1 (b)(1) and (b)(2) who are not specifically mentioned in paragraph (c) of this section, the income and resources of such individuals shall not be considered available to the household with whom the individual resides. Cash payments from the nonhousehold member to the household will be considered income under the normal income standards set in § 273.9(b). Vendor payments, as defined in § 273.9(c)(1), shall be excluded as income. If the household shares deductible expenses with the nonhousehold member, only the amount actually paid or contributed by the household shall be deducted as a household expense. If the payments or contributions cannot be differentiated, the expenses shall be prorated evenly among persons actually paying or contributing to the expense and only the household’s pro rata share deducted.
(2) When the earned income of one or more household members and the earned income of a nonhousehold member are combined into one wage, the income of the household members shall be determined as follows:
(i) If the household’s share can be identified, the State agency shall count that portion due to the household as earned income.
(ii) If the household’s share cannot be identified the State agency shall prorate the earned income among all those whom it was intended to cover and count that prorated portion to the household.
(3) Such nonhousehold members shall not be included when determining the size of the household for the purposes of:
(i) Assigning a benefit level to the household;
(ii) Comparing the household’s monthly income with the income eligibility standards; or
(iii) Comparing the household’s resources with the resource eligibility limits.
(e) Residents of drug and alcohol treatment and rehabilitation programs. (1) Narcotic addicts or alcoholics who regularly participate in publicly operated or private non-profit drug addict or alcoholic treatment and rehabilitation programs (DAA treatment centers) on a resident basis may voluntarily apply for SNAP. Applications must be made through an authorized representative who is employed by the DAA treatment center and designated by the center for that purpose. The State agency may require the household to designate the DAA treatment center as its authorized representative for the purpose of receiving and using an allotment on behalf of the household. Residents must be certified as one-person households unless their children are living with them, in which case their children must be included in the household with the parent.
(2)(i) Prior to certifying any residents for SNAP, the State agency must verify that the DAA treatment center is authorized by FNS as a retailer in accordance with § 278.1(e) of this chapter or that it comes under part B of title XIX of the Public Health Service Act, 42 U.S.C. 300x et seq., (as defined in “Drug addiction or alcoholic treatment and rehabilitation program” in § 271.2 of this chapter).
(ii) Except as otherwise provided in this paragraph (e)(2), the State agency must certify residents of DAA treatment centers by using the same provisions that apply to all other households, including, but not limited to, the same rights to notices of adverse action and fair hearings.
(iii) The DAA treatment center must notify the State agency of changes in the household’s circumstances as provided in § 273.12(a).
(3) The DAA treatment center must provide the State agency a list of currently participating residents that includes a statement signed by a responsible center official attesting to the validity of the list. The State agency must require submission of the list on either a monthly or semimonthly basis. In addition, the State agency must conduct periodic random on-site visits to the center to assure the accuracy of the list and that the State agency’s records are consistent and up to date.
(4) The State agency may issue allotments on a semimonthly basis to households in DAA treatment centers.
(5) DAA treatment centers may redeem benefits in various ways depending on the State’s EBT system design. The designs may include DAA treatment center use of individual household EBT cards at authorized stores, authorization of DAA treatment centers as retailers with EBT access via POS at the center, DAA treatment center use of a center EBT card that is an aggregate of individual household benefits, and other designs. Regardless of the process elected, the State must ensure that the EBT design or DAA treatment center procedures prohibit the DAA treatment center from obtaining more than one-half of the household’s allotment prior to the 16th of the month or permit the return of benefits to the household’s EBT account through a refund, transfer, or other means. Guidelines for approval of EBT systems are contained in part 274 of this chapter.
(6) When a household leaves the DAA treatment center, the center must perform the following:
(i) Notify the State agency. If possible, the center must provide the household with a change report form to report to the State agency the household’s new address and other circumstances after leaving the center and must advise the household to return the form to the appropriate office of the State agency within 10 days. After the household leaves the DAA treatment center, the center can no longer act as the household’s authorized representative for certification purposes or for obtaining or using benefits.
(ii) Provide the household with its EBT card if it was in the possession of the DAA treatment center. The DAA treatment center must return to the State agency any EBT card not provided to departing residents by the end of each month.
(iii) If no benefits have been spent on behalf of the individual household, the center must return the full value of any benefits already debited from the household’s current monthly allotment back into the household’s EBT account at the time the household leaves the center.
(iv) If the benefits have already been debited from the EBT account and any portion spent on behalf of the household, the following procedures must be followed.
(A) If the household leaves prior to the 16th day of the month, the center must ensure that the household has one-half of its monthly benefit allotment remaining in its EBT account unless the State agency issues semi-monthly allotments and the second half has not been posted yet.
(B) If the household leaves on or after the 16th day of the month, the State agency, at its option, may require the center to give the household a portion of its allotment. If the center is authorized as a retailer, the State agency may require the center to provide a refund for that amount back to the household’s EBT account at the time that the household leaves the center. Under an EBT system where the center has an aggregate EBT card, the State agency may, but is not required to, transfer a portion of the household’s monthly allotment from a center’s EBT account back to the household’s EBT account. In either case, the household, not the center, must be allowed to have sole access to any benefits remaining in the household’s EBT account at the time the household leaves the center.
(v) If the household has already left the DAA treatment center, and as a result, the DAA treatment center is unable to return the benefits in accordance with this paragraph (e)(6), the DAA treatment center must advise the State agency, and the State agency must effect the return instead. These procedures are applicable at any time during the month.
(7) The organization or institution shall be responsible for any misrepresentation or intentional Program violation which it knowingly commits in the certification of center residents. As an authorized representative, the organization or institution must be knowledgeable about household circumstances and should carefully review those circumstances with residents prior to applying on their behalf. The DAA treatment center shall be strictly liable for all losses or misuse of benefits and/or EBT cards held on behalf of resident households and for all overissuances which occur while the households are residents of the DAA treatment center.
(8) The organization or institution authorized by FNS as a retail food store may be penalized or disqualified, as described in § 278.6, if it is determined administratively or judicially that coupons were misappropriated or used for purchases that did not contribute to a certified household’s meals. The State agency shall promptly notify FNS when it has reason to believe that a DAA treatment center is misusing benefits and/or EBT cards in its possession. However, the State agency shall take no action prior to FNS action against the organization or institution. The State agency shall establish a claim for overissuances of benefits held on behalf of resident clients as stipulated in paragraph (e)(7) of this section if any overissuances are discovered during an investigation or hearing procedure for redemption violations. If FNS disqualifies an organization or institution as an authorized retail food store, the State agency shall suspend its authorized representative status for the same period.
(f) Residents of a group living arrangement. (1) Disabled or blind residents of a group living arrangement (GLA) (as defined in § 271.2 of this chapter) may apply either through use of an authorized representative employed and designated by the group living arrangement or on their own behalf or through an authorized representative of their choice. The GLA must determine if a resident may apply on his or her own behalf based on the resident’s physical and mental ability to handle his or her own affairs. Some residents of the GLA may apply on their own behalf while other residents of the same GLA may apply through the GLA’s representative. Prior to certifying any residents, the State agency must verify that the GLA is authorized by FNS or is certified by the appropriate agency of the State (as defined in § 271.2 of this chapter) including the agency’s determination that the center is a nonprofit organization.
(i) If the residents apply on their own behalf, the household size must be in accordance with the definition in § 273.1. The State agency must certify these residents using the same provisions that apply to all other households. If FNS disqualifies the GLA as an authorized retail food store, the State agency must suspend its authorized representative status for the same time; but residents applying on their own behalf will still be able to participate if otherwise eligible.
(ii) If the residents apply through the use of the GLA’s authorized representative, their eligibility must be determined as a one-person household.
(2) Each group living arrangement shall provide the State agency with a list of currently participating residents. This list shall include a statement signed by a responsible center official attesting to the validity of the list. The State shall require the list on a periodic basis. In addition, the State agency shall conduct periodic random onsite visits to assure the accuracy of the list and that the State agency’s records are consistent and up to date.
(3) The same provisions applicable in § 273.11(e)(3) to residents of treatment centers also apply to blind or disabled residents of group living arrangements when the facility acts as the resident’s authorized representative.
(4) If the resident has made application on his/her own behalf, the household is responsible for reporting changes to the State agency as provided in § 273.12(a). If the GLA is acting in the capacity of an authorized representative, the GLA shall notify the State agency, as provided in § 273.12(a), of changes in the household’s income or other household circumstances and when the household leaves the GLA.
(5) When the household leaves the facility, the GLA, either acting as an authorized representative or retaining use of the EBT card and benefits on behalf of the residents (regardless of the method of application), shall return the EBT card (if applicable) to the household. The household, not the GLA, shall have sole access to any benefits remaining in the household’s EBT account at the time the household leaves the facility. The State agency must ensure that the EBT design or procedures for GLAs permit the GLA to return unused benefits to the household through a refund, transfer, or other means.
(6) If, at the time the household leaves, no benefits have been spent on behalf of that individual household, the facility must return the full value of any benefits already debited from the household’s current monthly allotment back into the household’s EBT account. These procedures are applicable at any time during the month. However, if the facility has already debited benefits and spent any portion of them on behalf of the individual, the facility shall do the following:
(i) If the household leaves the GLA prior to the 16th day of the month, the facility shall provide the household with its EBT card (if applicable) and one-half of its monthly benefit allotment. Where a group of residents has been certified as one household and a member of the household leaves the center:
(A) The facility shall return a pro rata share of one-half of the household’s benefit allotment to the EBT account and advise the State agency that the individual is entitled to that pro rata share; and
(B) The State agency shall create a new EBT account for the individual, issue a new EBT card and transfer the pro rata share from the original household’s EBT account to the departing individual’s EBT account. The facility will instruct the individual on how to obtain the new EBT card based on the State agency’s card issuance procedures.
(ii) If the household or an individual member of the group household leaves on or after the 16th day of the month and the benefits have already been debited and used, the household or individual does not receive any benefits.
(iii) The GLA shall return to the State agency any EBT cards not provided to departing residents at the end of each month. Also, if the household has already left the facility and as a result, the facility is unable to perform the refund or transfer in accordance with this paragraph (f)(5), the facility must advise the State agency, and the State agency must effect the return or transfer instead.
(iv) Once the resident leaves, the GLA no longer acts as his/her authorized representative. The GLA, if possible, shall provide the household with a change report form to report to the State agency the individual’s new address and other circumstances after leaving the GLA and shall advise the household to return the form to the appropriate office of the State agency within 10 days.
(7) The same provisions applicable to DAA treatment centers in paragraphs (e)(7) and (8) of this section also apply to GLAs when acting as an authorized representative. These provisions, however, are not applicable if a resident has applied on his/her own behalf. The resident applying on his/her own behalf shall be responsible for overissuances as would any other household as discussed in § 273.18.
(8) If the residents are certified on their own behalf, the benefits may either be debited by the GLA to be used to purchase meals served either communally or individually to eligible residents or retained by the residents and used to purchase and prepare food for their own consumption. The GLA may purchase and prepare food to be consumed by eligible residents on a group basis if residents normally obtain their meals at a central location as part of the GLA’s service or if meals are prepared at a central location for delivery to the individual residents. If personalized meals are prepared and paid for with SNAP, the GLA must ensure that the resident’s SNAP benefits are used for meals intended for that resident.
(g) Shelters for battered women and children. (1) Prior to certifying its residents under this paragraph, the State agency shall determine that the shelter for battered women and children meets the definition in § 271.2 and document the basis of this determination. Shelters having FNS authorization to redeem at wholesalers shall be considered as meeting the definition and the State agency is not required to make any further determination. The State agency may choose to require local project area offices to maintain a list of shelters meeting the definition to facilitate prompt certification of eligible residents following the special procedures outlined below.
(2) Many shelter residents have recently left a household containing the person who has abused them. Their former household may be certified for participation in the Program, and its certification may be based on a household size that includes the women and children who have just left. Shelter residents who are included in such certified households may nevertheless apply for and (if otherwise eligible) participate in the Program as separate households if such certified household which includes them is the household containing the person who subjected them to abuse. Shelter residents who are included in such certified households may receive an additional allotment as a separate household only once a month.
(3) Shelter residents who apply as separate households shall be certified solely on the basis of their income and resources and the expenses for which they are responsible. They shall be certified without regard to the income, resources, and expenses of their former household. Jointly held resources shall be considered inaccessible in accordance with § 273.8. Room payments to the shelter shall be considered as shelter expenses.
(4) Any shelter residents eligible for expedited service shall be handled in accordance with § 273.2(i).
(5) State agencies must take prompt action to ensure that the former household’s eligibility or allotment reflects the change in the household’s composition. Such action must include acting on the reported change in accordance with § 273.12 or § 273.21, as appropriate, by issuing a notice of adverse action in accordance with § 273.13.
(h) Homeless SNAP households. Homeless SNAP households shall be permitted to use their SNAP benefits to purchase prepared meals from homeless meal providers authorized by FNS under § 278.1(h).
(i) Prerelease applicants. A household which consists of a resident or residents of a public institution(s) which applies for SSI under SSA’s Prerelease Program for the Institutionalized shall be allowed to apply for SNAP benefits jointly with their application for SSI prior to their release from the institution. Such households shall be certified in accordance with the provisions of § 273.1(e), § 273.2(c), (g), (i), (j) and (k), and § 273.10(a), as appropriate.
(j) Reduction of public assistance benefits. If the benefits of a household that is receiving public assistance are reduced under a Federal, State, or local means-tested public assistance program because of the failure of a SNAP household member to perform an action required under the assistance program or for fraud, the State agency shall not increase the household’s SNAP allotment as the result of the decrease in income. In addition to prohibiting an increase in SNAP benefits, the State agency may impose a penalty on the household that represents a percentage of the SNAP allotment that does not exceed 25 percent. The 25 percent reduction in SNAP benefits must be based on the amount of SNAP benefits the household should have received under the regular SNAP benefit formula, taking into account its actual (reduced) income. However, under no circumstances can the SNAP benefits be allowed to rise. Reaching a time limit for time-limited benefits, having a child that is not eligible because of a family cap, failing to reapply or complete the application process for continued assistance under the other program, failing to perform an action that the individual is unable to perform as opposed to refusing to perform, or failing to comply with a purely procedural requirement, shall not be considered a failure to perform an action required by an assistance program for purposes of this provision. A procedural requirement, which would not trigger a SNAP sanction, is a step that an individual must take to continue receiving benefits in the assistance program such as submitting a monthly report form or providing verification of circumstances. A substantive requirement, which would trigger a SNAP sanction, is a behavioral requirement in the assistance program designed to improve the well being of the recipient family, such as participating in job search activities. The State agency shall not apply this provision to individuals who fail to perform a required action at the time the individual initially applies for assistance. The State agency shall not increase SNAP benefits, and may reduce SNAP benefits only if the person is receiving such assistance at the time the reduction in assistance is imposed or the reduction in assistance is imposed at the time of application for continued assistance benefits if there is no break in participation. The individual must be certified for SNAP benefits at the time of the failure to perform a required action for this provision to apply. Assistance benefits shall be considered reduced if they are decreased, suspended, or terminated.
(1) For purposes of this provision a Federal, State or local “means-tested public assistance program” shall mean public or general assistance as defined in § 271.2 of this chapter, and is referred to as “assistance”. This provision must be applied to all applicable cases. If a State agency is not successful in obtaining the necessary cooperation from another Federal, State or local means-tested welfare or public assistance program to enable it to comply with the requirements of this provision, the State agency shall not be held responsible for noncompliance as long as the State agency has made a good faith effort to obtain the information. The State agency, rather than the household, shall be responsible for obtaining information about sanctions from other programs and changes in those sanctions.
(2) The prohibition on increasing SNAP benefits applies for the duration of the reduction in the assistance program. If at any time the State agency can no longer ascertain the amount of the reduction, then the State agency may terminate the SNAP sanction. However, the sanction may not exceed the sanction in the other program. If the sanction is still in effect at the end of one year, the State agency shall review the case to determine if the sanction continues to be appropriate. If, for example, the household is not receiving assistance, it would not be appropriate to continue the sanction. Sanctions extended beyond one year must be reviewed at least annually but may be ended by the State agency at any time. It shall be concurrent with the reduction in the other assistance program to the extent allowed by normal SNAP change processing and notice procedures.
(3) The State agency shall determine how to prevent an increase in SNAP benefits. Among other options, the State agency may increase the assistance grant by a flat percent, not to exceed 25 percent, for all households that fail to perform a required action in lieu of computing an individual amount or percentage for each affected household.
(4) If the allotment of a household is reduced under Title IV-A of the Social Security Act, the State agency may use the same procedures that apply under Title IV-A to prevent an increase in SNAP benefits as the result of the decrease in Title IV-A benefits. For example, the same budgeting procedures and combined notices and hearings may be used, but the SNAP allotment may not be reduced by more than 25 percent.
(5) The State agency must lift the ban on increasing SNAP benefits if it becomes aware that the person has become ineligible for the assistance program during the disqualification period for some other reason, or the person’s assistance case is closed.
(6) If an individual moves within the State, the prohibition on increasing SNAP benefits shall be applied to the gaining household unless that person is ineligible for the assistance program for some other reason. If such individual moves to a new State the prohibition on increasing benefits shall not be applied.
(7) The State agency must restore lost benefits when necessary in accordance with § 273.17 if it is later determined that the reduction in the public assistance grant was not appropriate.
(8) The State agency must act on changes which are not related to the assistance violation and that would affect the household’s benefits.
(9) The State agency must include in its State Plan of Operations any options it has selected in this paragraph (j).
(k) Comparable disqualifications. If a disqualification is imposed on a member of a household for failure to perform an action required under a Federal, State or local means-tested public assistance program, the State agency may impose the same disqualification on the member of the household under SNAP. The program must be authorized by a Federal, State, or local law, but the provision itself does not have to be specified in the law. A State agency may choose to apply this provision to one or more of these programs, and it may select the types of disqualifications within a program that it wants to impose on SNAP recipients. The State agency shall be responsible for obtaining information about sanctions from other programs and changes in those sanctions. In the case of disqualification from the Food Distribution Program on Indian Reservations (FDPIR) for an intentional program violation as described under § 253.8 of this chapter, the State agency shall impose the same disqualification on the member of the household under SNAP. The State agency must, in cooperation with the appropriate FDPIR agency, develop a procedure that ensures that these household members are identified.
(1) For purposes of this section Federal, State or local “means-tested public assistance program” shall mean public and general assistance as defined in § 271.2 of this chapter.
(2) The State agency shall not apply this provision to individuals who are disqualified at the time the individual initially applies for assistance benefits. It may apply the provision if the person was receiving such assistance at the time the disqualification in the assistance program was imposed and to disqualifications imposed at the time of application for continued assistance benefits if there is no break in participation with the following exceptions: Reaching a time limit for time-limited benefits, having a child that is not eligible because of a family cap, failing to reapply or complete the application process for continued assistance, failing to perform an action that the individual is unable to perform as opposed to refusing to perform, and failing to perform purely procedural requirements, shall not be considered failures to perform an action required by an assistance program. A procedural requirement, which would not trigger a SNAP sanction, is a step that an individual must take to continue receiving benefits in the assistance program such as submitting a monthly report form or providing verification of circumstances. A substantive requirement, which would trigger a SNAP sanction, is a behavioral requirement in the assistance program designed to improve the well being of the recipient family, such as participating in job search activities. The individual must be receiving SNAP at the time of the disqualification in the assistance program to be disqualified from SNAP under this provision.
(3) The State agency must stop the SNAP disqualification when it becomes aware that the person has become ineligible for assistance for some other reason, or the assistance case is closed.
(4) If a disqualification is imposed for a failure of an individual to perform an action required under a program under Title IV-A of the Social Security Act, the State may use the rules and procedures that apply under the Title IV-A program to impose the same disqualification under SNAP.
(5) Only the individual who committed the violation in the assistance program may be disqualified for SNAP purposes even if the entire assistance unit is disqualified for Title IV-A purposes.
(6) A comparable disqualification for SNAP purposes shall be imposed concurrently with the disqualification in the assistance program to the extent allowed by normal SNAP processing times and notice requirements. The State agency may determine the length of the disqualification, providing that the disqualification does not exceed the disqualification in the other program. If the sanction is still in effect at the end of one year, the State agency shall review the case to determine if the sanction continues to be appropriate. If, for example, the household is not receiving assistance, if would not be appropriate to continue the sanction. Sanctions extended beyond one year must be reviewed at least annually but may be ended by the State agency at any time. In instances where the disqualification is a reciprocal action based on disqualification from the Food Distribution Program on Indian Reservations, the length of disqualification shall mirror the period prescribed by the Food Distribution Program on Indian Reservations.
(7) If there is a pending disqualification for a SNAP violation and a pending comparable disqualification, they shall be imposed concurrently to the extent appropriate. For example, if the household is disqualified for June for a SNAP violation and an individual is disqualified for June and July for an assistance program violation, the whole household shall be disqualified for June and the individual shall be disqualified for July for SNAP purposes.
(8) The State agency must treat the income and resources of the disqualified individual in accordance with § 273.11(c)(2).
(9) After a disqualification period has expired, the person may apply for SNAP benefits and shall be treated as a new applicant or a new household member, except that a current disqualification based on a SNAP work requirement shall be considered in determining eligibility.
(10) A comparable SNAP disqualification may be imposed in addition to any coupon allotment reductions made in accordance with paragraph (j) of this section.
(11) State agencies shall state in their Plan of Operation if they have elected to apply comparable disqualifications, identify which sanctions in the other programs this provision applies to, and indicate the options and procedures allowed in paragraphs (k)(1), (k)(2), (k)(3), (k)(4), and (k)(10) of this section which they have selected.
(12) The State agency must act on changes which are not related to the assistance violation and that would affect the household’s benefits.
(13) The State agency must restore lost benefits when necessary in accordance with 7 CFR 273.17 if it is later determined that the reduction in the public assistance grant was not appropriate.
(l) School Attendance. Section 404(i) of Part A of the Social Security Act, 42 U.S.C. 601, et seq., provides that any state receiving a TANF block grant cannot be prohibited from sanctioning a family that includes an adult who has received assistance financed with federal TANF dollars or provided from SNAP if such adult fails to ensure that the minor dependent children of such adult attend school as required by the law of the State in which the minor children reside. Section 404(j) of Part A of the Social Security Act, 42 U.S.C. 601, et seq., provides that States shall not be prohibited from sanctioning a family that includes an adult who is older than 20 and younger than 51 and who has received assistance that is either financed with federal TANF funds or provided through SNAP if such adult does not have, or is not working toward attaining, a secondary school diploma or recognized equivalent. These provisions do not provide independent authority for SNAP sanctions beyond any that may apply through paragraphs (j) and (k) of this section.
(m) Individuals convicted of drug-related felonies. An individual convicted (under Federal or State law) of any offense which is classified as a felony by the law of the jurisdiction involved and which has as an element the possession, use, or distribution of a controlled substance (as defined in section 102(6) of the Controlled Substance Act, 21 U.S.C. 802(6)) shall not be considered an eligible household member unless the State legislature of the State where the individual is domiciled has enacted legislation exempting individuals domiciled in the State from the above exclusion. If the State legislature has enacted legislation limiting the period of disqualification, the period of ineligibility shall be equal to the length of the period provided under such legislation. Ineligibility under this provision is only limited to convictions based on behavior which occurred after August 22, 1996. The income and resources of individuals subject to disqualification under this paragraph (m) shall be treated in accordance with the procedures at paragraph (c)(1) of this section.
(n) Fleeing felons and probation or parole violators. Individuals who are fleeing to avoid prosecution or custody for a crime, or an attempt to commit a crime, that would be classified as a felony (or in the State of New Jersey, a high misdemeanor) or who are violating a condition of probation or parole under a Federal or State law shall not be considered eligible household members. The income and resources of the ineligible member shall be handled in accordance with (c)(1) of this section.
(1) Fleeing felon. An individual determined to be a fleeing felon shall be an ineligible household member. To establish an individual as a fleeing felon, a State agency must verify that an individual is a fleeing felon as provided in paragraph (n)(1)(i) of this section, or a law enforcement official acting in his or her official capacity must have provided the State agency with a felony warrant as provided in paragraph (n)(1)(ii) of this section. The State shall specify in its State plan of operation which fleeing felon test it has adopted as required at § 272.2(d)(1)(xvii) of this chapter.
(i) Four-part test to establish fleeing felon status. To establish that an individual is a fleeing felon, the State agency must verify that:
(A) There is an outstanding felony warrant for the individual by a Federal, State, or local law enforcement agency, and the underlying cause for the warrant is for committing or attempting to commit a crime that is a felony under the law of the place from which the individual is fleeing or a high misdemeanor under the law of New Jersey;
(B) The individual is aware of, or should reasonably have been able to expect that, the felony warrant has already or would have been issued;
(C) The individual has taken some action to avoid being arrested or jailed; and
(D) The Federal, State, or local law enforcement agency is actively seeking the individual as provided in paragraph (n)(3) of this section.
(ii) Alternative test to establish fleeing felon status. Alternatively, a State agency may establish that an individual is a fleeing felon when a Federal, State, or local law enforcement officer acting in his or her official capacity presents an outstanding felony arrest warrant that conforms to one of the following National Crime Information Center Uniform Offense Classification Codes, to the State agency to obtain information on the location of and other information about the individual named in the warrant:
(A) Escape (4901);
(B) Flight to Avoid (prosecution, confinement, etc.) (4902); or
(C) Flight-Escape (4999).
(2) Probation and parole violator. An individual determined a parole or probation violator shall not be considered to be an eligible household member. To be considered a probation or parole violator, an impartial party, as designated by the State agency, must determine that the individual violated a condition of his or her probation or parole imposed under Federal or State law and that Federal, State, or local law enforcement authorities are actively seeking the individual to enforce the conditions of the probation or parole, as provided in paragraph (n)(3) of this section.
(3) Actively seeking. For the purposes of this paragraph (n), actively seeking is defined as follows:
(i) A Federal, State, or local law enforcement agency informs a State agency that it intends to enforce an outstanding felony warrant or to arrest an individual for a probation or parole violation within 20 days of submitting a request for information about the individual to the State agency;
(ii) A Federal, State, or local law enforcement agency presents a felony arrest warrant as provided in paragraph (n)(1)(ii) of this section; or
(iii) A Federal, State, or local law enforcement agency states that it intends to enforce an outstanding felony warrant or to arrest an individual for a probation or parole violation within 30 days of the date of a request from a State agency about a specific outstanding felony warrant or probation or parole violation.
(4) Response time. The State agency shall give the law enforcement agency 20 days to respond to a request for information about the conditions of a felony warrant or a probation or parole violation, and whether the law enforcement agency intends to actively pursue the individual. If the law enforcement agency does not indicate that it intends to enforce the felony warrant or arrest the individual for the probation or parole violation within 30 days of the date of the State agency’s request for information about the warrant, the State agency shall determine that the individual is not a fleeing felon or a probation or parole violator and document the household’s case file accordingly. If the law enforcement agency indicates that it does intend to enforce the felony warrant or arrest the individual for the probation or parole violation within 30 days of the date of the State agency’s request for information, the State agency will postpone taking any action on the case until the 30-day period has expired. Once the 30-day period has expired, the State agency shall verify with the law enforcement agency whether it has attempted to execute the felony warrant or arrest the probation or parole violator. If it has, the State agency shall take appropriate action to deny an applicant or terminate a participant who has been determined to be a fleeing felon or a probation or parole violator. If the law enforcement agency has not taken any action within 30 days, the State agency shall not consider the individual a fleeing felon or probation or parole violator, shall document the case file accordingly, and take no further action.
(5) Application processing. The State agency shall continue to process the application while awaiting verification of fleeing felon or probation or parole violator status. If the State agency is required to act on the case without being able to determine fleeing felon or probation or parole violator status in order to meet the time standards in § 273.2(g) or § 273.2(i)(3), the State agency shall process the application without consideration of the individual’s fleeing felon or probation or parole violator status.
(o) Custodial parent’s cooperation with the State Child Support Agency. For purposes of this provision, a custodial parent is a natural or adoptive parent who lives with his or her child, or other individual who is living with and exercises parental control over a child under the age of 18.
(1) Option to disqualify custodial parent for failure to cooperate. At the option of a State agency, subject to paragraphs (o)(2) and (o)(4) of this section, no natural or adoptive parent or, at State agency option, other individual (collectively referred to in this paragraph (o) as “the individual”) who is living with and exercising parental control over a child under the age of 18 who has an absent parent shall be eligible to participate in SNAP unless the individual cooperates with the agency administering a State Child Support Enforcement Program established under Part D of Title IV of the Social Security Act (42 U.S.C. 651, et seq.), hereafter referred to as the State Child Support Agency.
(i) If the State agency chooses to implement paragraph (o)(1) of this section, it must notify all individuals of this requirement in writing at the time of application and reapplication for continued benefits.
(ii) If the State agency chooses to implement paragraph (o)(1) of this section, it must refer all appropriate individuals to the State Child Support Agency.
(iii) If the individual is receiving TANF or Medicaid, or assistance from the State Child Support Agency, and has already been determined to be cooperating, or has been determined to have good cause for not cooperating, then the State agency shall consider the individual to be cooperating for SNAP purposes.
(iv) The individual must cooperate with the State Child Support Agency in establishing paternity of the child, and in establishing, modifying, or enforcing a support order with respect to the child and the individual in accordance with section 454(29) of the Social Security Act (42 U.S.C. 654(29)).
(v) Pursuant to Section 454(29)(E) of the Social Security Act (42 U.S.C. 654(29)(E) the State Child Support Agency will notify the individual and the State agency whether or not it has determined that the individual is cooperating in good faith.
(2) Claiming good cause for non-cooperation. Prior to requiring cooperation under paragraph (o)(1) of this section, the State agency will notify the household in writing at initial application and at application for continued benefits of the right to good cause as an exception to the cooperation requirement and of all the requirements applicable to a good cause determination. Paragraph (o)(1) of this section shall not apply to the individual if good cause is found for refusing to cooperate, as determined by the State agency:
(i) Circumstances under which cooperation may be “against the best interests of the child.” The individual’s failure to cooperate is deemed to be for “good cause” if:
(A) The individual meets the good cause criteria established under the State program funded under Part A of Title IV or Part D of Title IV of the Social Security Act (42 U.S.C. 601, et seq, or 42 U.S.C. 651, et seq.) (whichever agency is authorized to define and determine good cause) for failing to cooperate with the State Child Support Agency; or
(B) Cooperating with the State Child Support Agency would make it more difficult for the individual to escape domestic violence or unfairly penalize the individual who is or has been victimized by such violence, or the individual who is at risk of further domestic violence. For purposes of this provision, the term “domestic violence” means the individual or child would be subject to physical acts that result in, or are threatened to result in, physical injury to the individual; sexual abuse; sexual activity involving a dependent child; being forced as the caretaker relative of a dependent child to engage in nonconsensual sexual acts or activities; threats of, or attempts at physical or sexual abuse; mental abuse; or neglect or deprivation of medical care.
(C) The individual meets any other good cause criteria identified by the State agency. These criteria will be defined in consultation with the Child Support Agency or TANF program, whichever is appropriate, and identified in the State plan according to § 272.2(d) (xiii).
(ii) Proof of good cause claim. (A) The State agency will accept as corroborative evidence the same evidence required by Part A of Title IV or Part D of Title IV of the Social Security Act (42 U.S.C. 601, et seq. or 42 U.S.C. 651, et seq.) to corroborate a claim of good cause.
(B) The State agency will make a good cause determination based on the corroborative evidence supplied by the individual only after it has examined the evidence and found that it actually verifies the good cause claim.
(iii) Review by the State Child Support or TANF Agency. Prior to making a final determination of good cause for refusing to cooperate, the State agency will afford the State Child Support Agency or the agency which administers the program funded under Part A of the Social Security Act the opportunity to review and comment on the findings and the basis for the proposed determination and consider any recommendation from the State Child Support or TANF Agency.
(iv) Delayed finding of good cause. The State agency will not deny, delay, or discontinue assistance pending a determination of good cause for refusal to cooperate if the applicant or recipient has complied with the requirements to furnish corroborative evidence and information. In such cases, the State agency must abide by the normal processing standards according to § 273.2(g).
(3) Individual disqualification. If the State agency has elected to implement this provision and determines that the individual has not cooperated without good cause, then that individual shall be ineligible to participate in SNAP. The disqualification shall not apply to the entire household. The income and resources of the disqualified individual shall be handled in accordance with paragraph (c)(2) of this section.
(4) Fees. A State electing to implement this provision shall not require the payment of a fee or other cost for services provided under Part D of Title IV of the Social Security Act (42 U.S.C. 651, et seq.)
(5) Terminating the disqualification. The period of disqualification ends once it has been determined that the individual is cooperating with the State Child Support Agency. The State agency must have procedures in place for re-qualifying such an individual.
(p) Non-custodial parent’s cooperation with child support agencies. For purposes of this provision, a “non-custodial parent” is a putative or identified parent who does not live with his or her child who is under the age of 18.
(1) Option to disqualify non-custodial parent for refusal to cooperate. At the option of a State agency, subject to paragraphs (p)(2) and (p)(4) of this section, a putative or identified non-custodial parent of a child under the age of 18 (referred to in this subsection as “the individual”) shall not be eligible to participate in SNAP if the individual refuses to cooperate with the State agency administering the program established under Part D of Title IV of the Social Security Act (42 U.S.C. 651, et seq.), hereafter referred to as the State Child Support Agency, in establishing the paternity of the child (if the child is born out of wedlock); and in providing support for the child.
(i) If the State agency chooses to implement paragraph (p)(1) of this section, it must notify all individuals in writing of this requirement at the time of application and reapplication for continued benefits.
(ii) If the individual is receiving TANF, Medicaid, or assistance from the State Child Support Agency, and has already been determined to be cooperating, or has been determined to have good cause for not cooperating, then the State agency shall consider the individual is cooperating for SNAP purposes.
(iii) If the State agency chooses to implement paragraph (p)(1) of this section, it must refer all appropriate individuals to the State Child Support Agency established under Part D of Title IV of the Social Security Act (42 U.S.C. 651, et seq.).
(iv) The individual must cooperate with the State Child Support Agency in establishing the paternity of the child (if the child is born out of wedlock), and in providing support for the child.
(v) Pursuant to Section 454(29)(E) of the Social Security Act (42 U.S.C. 654(29)(E)), the State Child Support Agency will notify the individual and the State agency whether or not it has determined that the individual is cooperating in good faith.
(2) Determining refusal to cooperate. If the State Child Support Agency determines that the individual is not cooperating in good faith, then the State agency will determine whether the non-cooperation constitutes a refusal to cooperate. Refusal to cooperate is when an individual has demonstrated an unwillingness to cooperate as opposed to an inability to cooperate.
(3) Individual disqualification. If the State agency determines that the non-custodial parent has refused to cooperate, then that individual shall be ineligible to participate in SNAP. The disqualification shall not apply to the entire household. The income and resources of the disqualified individual shall be handled according to paragraph (c)(2) of this section.
(4) Fees. A State electing to implement this provision shall not require the payment of a fee or other cost for services provided under Part D of Title IV of the Social Security Act (42 U.S.C. 651, et seq.)
(5) Privacy. The State agency shall provide safeguards to restrict the use of information collected by a State agency administering the program established under Part D of Title IV of the Social Security Act (42 U.S.C. 651, et seq.) to purposes for which the information is collected.
(6) Termination of disqualification. The period of disqualification ends once it has been determined that the individual is cooperating with the child support agency. The State agency must have procedures in place for re-qualifying such an individual.
(q) Disqualification for child support arrears—(1) Option to disqualify. At the option of a State agency, no individual shall be eligible to participate in SNAP as a member of any household during any month that the individual is delinquent in any payment due under a court order for the support of a child of the individual. The State agency may opt to apply this provision to only non-custodial parents.
(2) Exceptions. A disqualification under paragraph (q)(1) of this section shall not apply if:
(i) A court is allowing the individual to delay payment;
(ii) The individual is complying with a payment plan approved by a court or the State agency designated under Part D of Title IV of the Social Security Act (42 U.S.C., 651 et seq.) to provide support of a child of the individual; or
(iii) The State agency determines the individual has good cause for non-support.
(3) Individual disqualification. If the State agency has elected to implement this provision and determines that the individual should be disqualified for child support arrears, then that individual shall be ineligible to participate in SNAP. The disqualification shall not apply to the entire household. The income and resources of the disqualified individual shall be handled according to paragraph (c)(2) of this section.
(4) Collecting claims. State agencies shall initiate collection action as provided for in § 273.18 for any month a household member is disqualified for child support arrears by sending the household a written demand letter which informs the household of the amount owed, the reason for the claim and how the household may pay the claim. The household should also be informed as to the adjusted amount of income, resources, and deductible expenses of the remaining members of the household for the month(s) a member is disqualified for child support arrears.
(r) Disqualification for Substantial Lottery or Gambling Winnings. Any household certified to receive benefits shall lose eligibility for benefits immediately upon receipt by any individual in the household of substantial lottery or gambling winnings, as defined in paragraph (r)(2) of this section. The household shall report the receipt of substantial winnings to the State agency in accordance with the reporting requirements contained in § 273.12(a)(5)(iii)(G)(3) and within the time-frames described in § 273.12(a)(2). The State agency shall also take action to disqualify any household identified as including a member with substantial winnings in accordance with § 272.17.
(1) Regaining Eligibility. Such households shall remain ineligible until they meet the allowable resources and income eligibility requirements described in §§ 273.8 and 273.9, respectively.
(2) Substantial Winnings—(i) In General. Substantial lottery or gambling winnings are defined as a cash prize equal to or greater than the maximum allowable financial resource limit for elderly or disabled households as defined in § 273.8(b) won in a single game before taxes or other withholdings. For the purposes of this provision, the resource limit defined in § 273.8(b) applies to all households, including non-elderly/disabled households, with substantial lottery and gambling winnings. If multiple individuals shared in the purchase of a ticket, hand, or similar bet, then only the portion of the winnings allocated to the member of the SNAP household would be counted in the eligibility determination.
(ii) Adjustment. The value of substantial winnings shall be adjusted annually in accordance with § 273.8(b)(1) and (2).
(s) Disqualification for certain convicted felons. An individual shall not be eligible for SNAP benefits if:
(1) The individual is convicted as an adult of:
(i) Aggravated sexual abuse under section 2241 of title 18, United States Code;
(ii) Murder under section 1111 of title 18, United States Code;
(iii) An offense under chapter 110 of title 18, United States Code;
(iv) A Federal or State offense involving sexual assault, as defined in section 40002(a) of the Violence Against Women Act of 1994 (42 U.S.C. 13925(a)); or
(v) An offense under State law determined by the Attorney General to be substantially similar to an offense described in clause (i), (ii), or (iii); and
(2) The individual is not in compliance with the terms of the sentence of the individual or the restrictions under § 273.11(n).
(3) The disqualification contained in this paragraph (s) shall not apply to a conviction if the conviction is for conduct occurring on or before February 7, 2014.
Subpart E—Continuing Participation
§ 273.12 Reporting requirements.
(a) Household responsibility to report. (1) Monthly reporting households are required to report as provided in § 273.21. Quarterly reporting households are subject to the procedures as provided in paragraph (a)(4) of this section. Simplified reporting households are subject to the procedures as provided in paragraph (a)(5) of this section. Certified change reporting households are required to report the following changes in circumstances:
(i) (A) A change of more than $100 in the amount of unearned income, except changes relating to public assistance (PA) or general assistance (GA) in project areas in which GA and SNAP cases are jointly processed. The State agency is responsible for identifying changes during the certification period in the amount of PA, or GA in jointly processed cases. If GA and SNAP cases are not jointly processed, the household is responsible for reporting changes in GA of more than $100.
(B) A change in the source of income, including starting or stopping a job or changing jobs, if the change in employment is accompanied by a change in income.
(C) One of the following, as determined by the State agency (different options may be used for different categories of households as long as no household is required to report under more than one option; the State may also utilize different options in different project areas within the State):
(1) A change in the wage rate or salary or a change in full-time or part-time employment status (as determined by the employer or as defined in the State’s PA program), provided that the household is certified for no more than 6 months; or
(2) A change in the amount earned of more than $100 a month from the amount last used to calculate the household’s allotment, provided that the household is certified for no more than 6 months.
(D) Beginning FY 2018, and for every fiscal year thereafter, the dollar amounts in paragraphs (a)(1)(i)(A) and (C) of this section shall be adjusted and rounded to the nearest $25 to reflect changes in the Consumer Price Index for the All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor (for the 12-month period ending the preceding June).
(ii) All changes in household composition, such as the addition or loss of a household member.
(iii) Changes in residence and the resulting change in shelter costs.
(iv) Acquisition of a licensed vehicle that is not fully excludable under § 273.8.
(v) A change in liquid resources, such as cash, stocks, bonds, and bank accounts that reach or exceed the resource limits as described in § 273.8(b) for elderly or disabled households and for all other households, unless these assets are excluded under § 273.8.
(vi) Changes in the legal obligation to pay child support. However, the State agency may remove this reporting requirement if it has chosen to use information provided by the State’s CSE agency in determining a household’s legal obligation to pay child support, the amount of its obligation, and amounts the household has actually paid in accordance with § 273.2(f)(1)(xii).
(vii) For able-bodied adults subject to the time limit of § 273.24, any changes in work hours that bring an individual below 20 hours per week, averaged monthly, as defined in § 273.24(a)(1)(i). An individual shall report this information in accordance with the reporting system for income to which he is subject.
(viii) Whenever a member of the household wins substantial lottery or gambling winnings in accordance with § 273.11(r).
(2) Certified households must report changes within 10 days of the date the change becomes known to the household, or at the State agency’s option, the household must report changes within 10 days of the end of the month in which the change occurred. For reportable changes of income, the State agency shall require that change to be reported within 10 days of the date that the household receives the first payment attributable to the change. For households subject to simplified reporting, the household must report changes no later than 10 days from the end of the calendar month in which the change occurred, provided that the household receives the payment with at least 10 days remaining in the month. If there are not 10 days remaining in the month, the household must report within 10 days from receipt of the payment. Optional procedures for reporting changes are contained in paragraph (f) of this section for households in States with forms for jointly reporting SNAP and public assistance changes and SNAP and general assistance changes
(3) An applying household shall report all changes related to its SNAP eligibility and benefits at the certification interview. Changes, as provided in paragraph (a)(1) of this section, which occur after the interview but before the date of the notice of eligibility, shall be reported by the household within 10 days of the date of the notice.
(4) The State agency may establish a system of quarterly reporting in lieu of the change reporting requirements specified under paragraph (a)(1) of this section. The following requirements are applicable to quarterly reporting systems:
(i) Included households. The State agency may include all households within a quarterly reporting system, except migrant or seasonal farmworker households, households that have no earned income and in which all adult members are elderly or disabled, households in which all members are homeless individuals, or households subject to the reporting requirement under paragraph (a)(1)(vii) of this section. The State agency may also limit quarterly reporting to specific categories of households.
(ii) Notification of the quarterly reporting requirement. The State agency must notify households of the quarterly reporting requirement, including the consequences of failure to file a report, at initial certification and recertification.
(iii) Failure to file a complete form by the specified filing date. If a household fails to file a complete report by the specified filing date, the State agency will send a notice to the household advising it of the missing or incomplete report no later than 10 days from the date the report should have been submitted. If the household does not respond to the notice, the household’s participation shall be terminated. The State agency may combine the notice of a missing or incomplete report with the adequate notice of termination described in paragraph (a)(4)(v) of this section.
(iv) Content of the quarterly report form. The State agency may include all of the items subject to reporting under paragraph (a)(1) of this section in the quarterly report, except changes reportable under paragraphs (a)(1)(vii) and (a)(1)(viii) of this section, or may limit the report to specific items while requiring that households report other items through the use of the change report form.
(v) Reduction or termination of benefits. If the household files a complete report resulting in reduction or termination of benefits, the State agency shall send an adequate notice, as defined in § 271.2 of this chapter. The notice must be issued so that it will be received by the household no later than the time that its benefits are normally received. If the household fails to provide sufficient information or verification regarding a deductible expense, the State agency will not terminate the household, but will instead determine the household’s benefits without regard to the deduction.
(vi) Changes reported outside of the quarterly report. The State agency must act on any changes reported outside of the quarterly report in accordance with paragraph (c) of this section.
(vii) Sole reporting requirement. The quarterly report form shall be the sole reporting requirement for any information that is required to be reported on the form, except that able-bodied adults subject to the time limit of § 273.24 shall report whenever their work hours fall below 20 hours per week, averaged monthly.
(5) The State agency may establish a simplified reporting system in lieu of the change reporting requirements specified under paragraph (a)(1) of this section. The following requirements are applicable to simplified reporting systems:
(i) Included households. The State agency may include any household certified for at least 4 months within a simplified reporting system.
(ii) Notification of simplified reporting requirement. At the initial certification, recertification and when the State agency transfers the households to simplified reporting, the State agency shall provide the household with the following:
(A) A written and oral explanation of how simplified reporting works;
(B) For households required to submit a periodic report, a written and oral explanation of the reporting requirements including:
(1) The additional changes that must be addressed in the periodic report and verified;
(2) When the report is due;
(3) How to obtain assistance in filing the periodic report; and
(4) The consequences of failing to file a report.
(C) Special assistance in completing and filing periodic reports to households whose adult members are all either mentally or physically handicapped or are non-English speaking or otherwise lacking in reading and writing skills such that they cannot complete and file the required report; and
(D) A telephone number (toll-free number or a number where collect calls will be accepted outside the local calling area) which the household may call to ask questions or to obtain help in completing the periodic report.
(iii) Periodic report. (A) Exempt households. The State agency must not require the submission of periodic reports by households certified for 12 months or less in which all adult members are elderly or have a disability with no earned income.
(B) Submission of periodic reports by non-exempt households. Households that are certified for longer than 6 months, except those households described in § 273.12(a)(5)(iii)(A), must file a periodic report between 4 months and 6 months, as required by the State agency. Households in which all adult members are elderly or have a disability with no earned income and are certified for periods lasting between 13 months and 24 months must file a periodic report once a year. In selecting a due date for the periodic report, the State agency must provide itself sufficient time to process reports so that households that have reported changes that will reduce or terminate benefits will receive adequate notice of action on the report in the first month of the new reporting period.
(C) The periodic report form must request from the household information on any changes in circumstances in accordance with paragraphs (a)(1)(i) through (a)(1)(vii) of this section and conform to the requirements of paragraph (b)(2) of this section.
(D) If the household files a complete report resulting in reduction or termination of benefits, the State agency shall send an adequate notice, as defined in § 271.2 of this chapter. The notice must be issued so that the household will receive it no later than the time that its benefits are normally received. If the household fails to provide sufficient information or verification regarding a deductible expense, the State agency will not terminate the household, but will instead determine the household’s benefits without regard to the deduction.
(E) If a household fails to file a complete report by the specified filing date, the State agency shall provide the household with a reminder notice advising the household that it has 10 days from the date the State agency mails the notice to file a complete report. If an eligible household files a complete periodic report during this 10 day period, the State agency shall provide it with an opportunity to participate no later than ten days after its normal issuance date If the household does not respond to the reminder notice, the household’s participation shall be terminated and the State agency must send an adequate notice of termination described in paragraph (a)(5)(iii)(C) of this section.
(F) If an eligible household that has been terminated for failure to file a complete report files a complete report after its extended filing date under (E), but before the end of the issuance month, the State agency may choose to reinstate the household. If the household has requested a fair hearing on the basis that a complete periodic report was filed, but the State does not have it, the State agency shall reinstate the household if a completed periodic report is filed before the end of the issuance month.
(G) The periodic report form shall be the sole reporting requirement for any information that is required to be reported on the form, except that a household required to report less frequently than quarterly shall report:
(1) When the household monthly gross income exceeds the monthly gross income limit for its household size in accordance with paragraph (a)(5)(v) of this section;
(2) Whenever able-bodied adults subject to the time limit of § 273.24 have their work hours fall below 20 hours per week, averaged monthly; and
(3) Whenever a member of the household wins substantial lottery or gambling winnings in accordance with § 273.11(r).
(H) If the State agency uses a combined periodic report for SNAP and TANF or Medicaid, the State agency shall clearly indicate on the form that SNAP-only households need not provide information required by another program. Non-applicant household or family members need not provide SSNs or information about citizenship or immigration status.
(iv) Processing periodic reports. In selecting a due date for the periodic report, the State agency must provide itself sufficient time to process reports so that households will receive adequate notice of action on the report in the first month of the new reporting period. The State agency shall provide the household a reasonable period after the end of the last month covered by the report in which to return the report. The State agency shall provide the household a reasonable period after the end of the last month covered by the report in which to return the report. Benefits should be issued in accordance with the normal issuance cycle if a complete report was filed timely.
(v) Reporting when gross income exceeds 130 percent of poverty. A household subject to simplified reporting in accordance with paragraph (a)(5)(i) of this section, whether or not it is required to submit a periodic report, must report when its monthly gross income exceeds the monthly gross income limit for its household size, as defined at § 273.9(a)(1). The household shall use the monthly gross income limit for the household size that existed at the time of its most recent certification or recertification, regardless of any subsequent changes in its household size.
(vi) State agency action on changes reported outside of a periodic report. The State agency must act when the household reports that its gross monthly income exceeds the gross monthly income limit for its household size. For other changes, the State agency need not act if the household reports a change for another public assistance program in which it is participating and the change does not trigger action in that other program but results in a decrease in the household’s SNAP benefit. The State agency must act on all other changes reported by a household outside of a periodic report in accordance with one of the following two methods:
(A) The State agency must act on any change in household circumstances in accordance with paragraph (c) of this section; or
(B) The State agency must not act on changes that would result in a decrease in the household’s benefits unless one of the following occurs:
(1) The household has voluntarily requested that its case be closed in accordance with § 273.13(b)(12).
(2) The State agency has information about the household’s circumstances considered verified upon receipt.
(3) A household member has been identified as a fleeing felon or probation or parole violator in accordance with § 273.11(n).
(4) There has been a change in the household’s PA grant, or GA grant in project areas where GA and food stamp cases are jointly processed in accordance with § 273.2(j)(2).
(5) The State agency has verified information that a member of a SNAP household has won substantial lottery or gambling winnings in accordance with § 273.11(r).
(vii) State plan requirement. A State agency that chooses to use simplified reporting procedures in accordance with this section must state in its State plan of operation that it has implemented simplified reporting and specify the types of households to whom the reporting requirement applies.
(6) For households eligible for the child support exclusion at § 273.9(c)(17) or deduction at § 273.9(d)(5), the State agency may use information provided by the State CSE agency in determining the household’s legal obligation to pay child support, the amount of its obligation and amounts the household has actually paid if the household pays its child support exclusively through its State CSE agency and has signed a statement authorizing release of its child support payment records to the State agency. A household would not have to provide any additional verification unless they disagreed with the information provided by the State CSE agency. State agencies that choose to utilize information provided by their State CSE agency in accordance with this paragraph (a)(6) must specify in their State plan of operation that they have selected this option. If the State agency chooses not to utilize information provided by its State CSE agency, the State agency may make reporting child support payments an optional change reporting item in accordance with paragraph (a)(5) of this section.The State agency shall process the reports in accordance with procedures for the systems used in budgeting the household’s income and deductions. The following requirements apply to quarterly reports:
(i) The State agency shall provide the household a reasonable period after the end of the last month covered by the report in which to return the report. If the household does not file the report by the due date or files an incomplete report, the State agency shall provide the household with a reminder notice advising the household that it has 10 days from the date the State agency mails the notice to file a complete report. If the household does not file a complete report by the extended filing date as specified in the reminder notice, the State agency shall determine the household’s eligibility and benefits without consideration of the child support deduction. The State agency shall not terminate the benefits of a household for failure to submit a quarterly report unless the household is otherwise ineligible. The State agency shall send the household an adequate notice as defined in § 271.2 of this chapter if the household fails to submit a complete report or if the information contained on a complete report results in a reduction or termination of benefits. The quarterly report shall meet the requirements specified in paragraph (b) of this section. The State agency may combine the content of the reminder notice and the adequate notice as long as the notice meets the requirements of the individual notices.
(ii) The quarterly report form, if required, shall be the sole reporting requirement for reporting child support payments during the certification period. Households excluded from monthly reporting as specified in § 273.21(b) and households required to submit monthly reports shall not be required to submit quarterly reports.
(7) State agencies shall not impose any SNAP reporting requirements on households except as provided in paragraph (a) of this section.
(b) Report forms. (1) The State agency shall provide the household with a form for reporting the changes required in paragraph (a)(1) of this section to be reported within 10 days and shall pay the postage for return of the form. The change report form shall, at a minimum, include the following:
(i) A space for the household to report whether the change shall continue beyond the report month;
(ii) The civil and criminal penalties for violations of the Act in understandable terms and in prominent and boldface lettering;
(iii) A reminder to the household of its right to claim actual utility costs if its costs exceed the standard;
(iv) The number of the SNAP office and a toll-free number or a number where collect calls will be accepted for households outside the local calling area; and
(v) A statement describing the changes in household circumstances contained in § 273.12(a)(1) that must be reported and a statement which clearly informs the household that it is required to report these changes.
(vi) If the State agency has chosen to disregard reported changes that affect some deductions in accordance with paragraph (c) of this section, a statement explaining that the State agency will not change certain deductions until the household’s next recertification and identifying those deductions.
(2) The quarterly report form, including the form for the quarterly reporting of the child support obligation, and the periodic report form used in simplified reporting under paragraph (a)(5)(ii) of this section, must:
(i) Be written in clear, simple language;
(ii) Meet the bilingual requirements described in § 272.4(b) of this chapter;
(iii) Specify the date by which the agency must receive the form;
(iv) Specify the consequences of submitting a late or incomplete form including whether the State agency shall delay payment if the form is not received by a specified date;
(v) Specify the verification the household must submit with the form;
(vi) Inform the household where to call for help in completing the form;
(vii) Include a statement to be signed by a member of the household (in accordance with § 273.2(c)(7) regarding acceptable methods of signature) indicating his or her understanding that the information provided may result in reduction or termination of benefits;
(viii) Include a brief description of SNAP fraud penalties;
(ix) Include a statement explaining that the State agency will not change certain deductions until the household’s next recertification and identify those deductions if the State agency has chosen to disregard reported changes that affect certain deductions in accordance with paragraph (c) of this section;
(x) If the form requests Social Security numbers, include a statement of the State agency’s authority to require Social Security numbers (including the statutory citation, the title of the statute, and the fact that providing Social Security numbers is mandatory except that non-participating household or family members need not provide SSNs or information about citizenship or immigration status), the purpose of requiring Social Security numbers, the routine uses for Social Security numbers, and the effect of not providing Social Security numbers. This statement may be on the form itself or included as an attachment to the form.
(3) Changes reported over the telephone or in person by the household shall be acted on in the same manner as those reported on the change report form.
(4) A change report form shall be provided to newly certified households at the time of certification, at recertification if the household needs a new form; and a new form shall be sent to the household whenever a change report form is returned by the household. A change report may be provided to households more often at the State agency’s option.
(c) State agency action on changes. The State agency shall take prompt action on all changes to determine if the change affects the household’s eligibility or allotment. However, the State agency has the option to disregard a reported change to an established deduction in accordance with paragraph (c)(4) of this section. If a household reports a change in income, and the new circumstance is expected to continue for at least one month beyond the month in which the change is reported, the State agency may act on the change in accordance with paragraphs (c)(1) and (c)(2) of this section. The time frames in paragraphs (c)(1) and (c)(2) of this section apply to these actions. During the certification period, the State agency shall not act on changes in the medical expenses of households eligible for the medical expense deduction which it learns of from a source other than the household and which, in order to take action, require the State agency to contact the household for verification. The State agency shall only act on those changes in medical expenses that it learns about from a source other than the household if those changes are verified upon receipt and do not necessitate contact with the household. Even if there is no change in the allotment, the State agency shall document the reported change in the casefile, provide another change report form to the household, and notify the household of the receipt of the change report. If the reported change affects the household’s eligibility or level of benefits, the adjustment shall also be reported to the household. The State agency shall also advise the household of additional verification requirements, if any, and state that failure to provide verification shall result in increased benefits reverting to the original allotment. The State agency shall document the date a change is reported, which shall be the date the State agency receives a report form or is advised of the change over the telephone or by a personal visit. Restoration of lost benefits shall be provided to any household if the State agency fails to take action on a change which increases benefits within the time limits specified in paragraph (c)(1) of this section.
(1) Increase in benefits. (i) For changes which result in an increase in a household’s benefits, other than changes described in paragraph (c)(1)(ii) of this section, the State agency shall make the change effective no later than the first allotment issued 10 days after the date the change was reported to the State agency. For example, a $30 decrease in income reported on the 15th of May would increase the household’s June allotment. If the same decrease were reported on May 28, and the household’s normal issuance cycle was on June 1, the household’s allotment would have to be increased by July.
(ii) For changes which result in an increase in a household’s benefits due to the addition of a new household member who is not a member of another certified household, or due to a decrease of $50 or more in the household’s gross monthly income, the State agency shall make the change effective not later than the first allotment issued 10 days after the date the change was reported. However, in no event shall these changes take effect any later than the month following the month in which the change is reported. Therefore, if the change is reported after the 20th of a month and it is too late for the State agency to adjust the following month’s allotment, the State agency shall issue a supplementary ATP or otherwise provide an opportunity for the household to obtain the increase in benefits by the 10th day of the following month, or the household’s normal issuance cycle in that month, whichever is later. For example, a household reporting a $100 decrease in income at any time during May would have its June allotment increased. If the household reported the change after the 20th of May and it was too late for the State agency to adjust the ATP normally issued on June 1, the State agency would issue a supplementary ATP for the amount of the increase by June 10.
(iii) The State agency may elect to verify changes which result in an increase in a household’s benefits in accordance with the verification requirements of § 273.2(f)(8)(ii), prior to taking action on these changes. If the State agency elects this option, it must allow the household 10 days from the date the change is reported to provide verification required by § 273.2(f)(8)(ii). If the household provides verification within this period, the State shall take action on the changes within the timeframes specified in paragraphs (c)(1) (i) and (ii) of this section. The timeframes shall run from the date the change was reported, not from the date of verification. If, however, the household fails to provide the required verification within 10 days after the change is reported but does provide the verification at a later date, then the timeframes specified in paragraphs (c)(1) (i) and (ii) of this section for taking action on changes shall run from the date verification is provided rather than from the date the change is reported. If the State agency does not elect this option, verification required by § 273.2(f)(8)(ii) must be obtained prior to the issuance of the second normal monthly allotment after the change is reported. If in these circumstances the household does not provide verification, the household’s benefits will revert to the original benefit level. Whenever a State agency increases a household’s benefits to reflect a reported change and subsequent verification shows that the household was actually eligible for fewer benefits, the State agency shall establish a claim for the overissuance in accordance with § 273.18. In cases where the State agency has determined that a household has refused to cooperate as defined in § 273.2(d), the State agency shall terminate the household’s eligibility following the notice of adverse action.
(2) Decreases in benefits. (i) If the household’s benefit level decreases or the household becomes ineligible as a result of the change, the State agency shall issue a notice of adverse action within 10 days of the date the change was reported unless one of the exemptions to the notice of adverse action in § 273.13 (a)(3) or (b) applies. When a notice of adverse action is used, the decrease in the benefit level shall be made effective no later than the allotment for the month following the month in which the notice of adverse action period has expired, provided a fair hearing and continuation of benefits have not been requested. When a notice of adverse action is not used due to one of the exemptions in § 273.13 (a)(3) or (b), the decrease shall be made effective no later than the month following the change. Verification which is required by § 273.2(f) must be obtained prior to recertification.
(ii) The State agency may suspend a household’s certification prospectively for one month if the household becomes temporarily ineligible because of a periodic increase in recurring income or other change not expected to continue in the subsequent month. If the suspended household again becomes eligible, the State agency shall issue benefits to the household on the household’s normal issuance date. If the suspended household does not become eligible after one month, the State agency shall terminate the household’s certification. Households are responsible for reporting changes as required by paragraph (a) of this section during the period of suspension.
(3) Unclear information. During the certification period, the State agency might obtain unclear information about a household’s circumstances from which the State agency cannot readily determine the effect on the household’s continued eligibility for SNAP, or in certain cases benefit amounts. The State agency may receive such unclear information from a third party. Unclear information is information that is not verified, or information that is verified but the State needs additional information to act on the change.
(i) The State agency must pursue clarification and verification (if applicable) of household circumstances using the following procedure if unclear information received outside the periodic report is: Fewer than 60 days old relative to the current month of participation; and would, if accurate, have been required to be reported under the requirements that apply to the household under 273.12 based on the reporting system to which they have been assigned. Additionally, the State agency must pursue clarification and verification (if applicable) of household circumstances using the following procedure for any unclear information that appears to present significantly conflicting information from that used by the State agency at the time of certification. The procedures for unclear information regarding matches described in § 272.18 of this chapter are found in paragraph (c)(3)(iv) of this section.
(A) The State agency shall issue a written request for contact (RFC) which clearly advises the household of the verification it must provide or the actions it must take to clarify its circumstances, which affords the household at least 10 days to respond and to clarify its circumstances, either by telephone or by correspondence, as the State agency directs, and which states the consequences if the household fails to respond to the RFC.
(B) If the household does not respond to the RFC, or does respond but refuses to provide sufficient information to clarify its circumstances, the State agency must issue a notice of adverse action as described in § 273.13. The State has two options:
(1) The State agency may elect to send a notice of adverse action that terminates the case, explains the reasons for the action, and advises the household of the need to submit a new application if it wishes to continue participating in the program; or
(2) Alternatively, the State agency may elect to issue a notice of adverse action that suspends the household for 1 month before the termination becomes effective, explains the reasons for the action, and advises the household of the need to submit new information if it wishes to continue participating. If the household responds satisfactorily to the RFC during the period of suspension, the State agency must reinstate the household without requiring a new application, issue the allotment for the month of suspension and, if necessary, adjust the household’s participation with a new notice of adverse action.
(C) If the household responds to the RFC and provides sufficient information, the State agency must act on the new circumstances in accordance with paragraphs (c)(1) or (c)(2) of this section, as appropriate.
(ii) If the unclear information does not meet the criteria in paragraph (c)(3)(i) of this section and does not relate to the matches described in paragraph (c)(3)(iii) of this section, then the State agency shall not act on the information or require the household to provide information until the household’s next certification action or periodic report is due. A State may follow up with a household to provide information on a voluntary basis if that information would result in an increase in benefits but may not take adverse action if the household does not respond.
(iii) Unclear information resulting from certain data matches. If a State receives match information from a match described in § 272.13 or § 272.14, the State shall follow up with a notice of match results as described in § 272.13(b)(4) and § 272.14 (c)(4). If a State receives information from a match described in § 272.18 of this chapter, the State shall follow up with a combined notice of match results and adverse action as described in paragraph (a)(2) of this section. The notices must clearly explain what information is needed from the household and the consequences of failing to respond to the notice as explained in paragraphs (c)(3)(iii)(A) and (B) this section.
(A) For households subject to change reporting, if the household fails to respond to the notice of match results or does respond but refuses to provide sufficient information to clarify its circumstances, the State agency shall issue a notice of adverse action as described in § 273.13 that terminates the case.
(B) For all households not subject to change reporting, if the household fails to respond to the notice of match results or does respond but refuses to provide sufficient information to clarify its circumstances, the State agency shall remove the subject individual and the individual’s income from the household and adjust benefits accordingly. As appropriate the State agency shall issue a notice of adverse action as described in § 273.13.
(iv) If a State agency receives unclear information during the certification period from a match described in § 272.18 of this chapter, the State agency shall initiate action to resolve the match and communicate with the other State agency within 10 days of receipt of the match notification, in accordance with paragraphs (c)(3)(iv)(A) and (B) of this section.
(A) The State agency that receives a NAC data match shall provide to the household a notice of match results and notice of adverse action as described at § 273.13. The notice must clearly explain what information is needed from the household and the consequences of not responding in a timely manner as described at paragraphs (c)(3)(iii)(A) and (B) of this section. Any communication with the household, including a written notice, must not include the location of the individual(s) identified in a match and must follow bilingual requirements at § 272.4(b) of this chapter. State agencies must also follow regulations at § 272.18(c)(9) of this chapter for those who are considered vulnerable individual. Consistent with verification standards in § 273.2(f), the State agency must give the household at least 10 days to provide required verification.
(B) The State agency shall communicate with the other State agency to inform them they have initiated action to resolve the match. After the State agency has determined the appropriate disposition of the case, they shall promptly share the resolution information with the other State agency.
(4) State agency option for processing changes in deductible expenses. (i) If the household reports a change to an established deduction amount during the first six months of the certification period, other than a change in earnings or residence, that would affect the household’s eligibility for, or amount of, the deduction under § 273.9(d), the State agency may at its option disregard the change and continue to provide the household the deduction amount that was established at certification until the household’s next recertification or after the sixth month for households certified for 12 months. When a household reports a change in residence, the State agency must investigate and take action on potential changes in shelter costs arising from this reported change. However, if a household fails to provide information regarding the associated changes in shelter costs within 10 days of the report, the State agency should send a notice to the household that their allotment will be recalculated without the deduction. The notice will make it clear that the household does not need to await its first regular utility or rental payments to contact the SNAP office. Alternative forms of verification can be accepted, if necessary.
(ii) In the case of a household assigned a 24-month certification period in accordance with § 273.10(f)(1) and (f)(2), the State agency must act on any disregarded changes reported during the first 12 months of the certification period at the required 12-month contact for elderly and disabled households and in the thirteenth month of the certification period for households residing on a reservation who are required to submit monthly reports. Changes reported during the second 12 months of the certification period can be disregarded until the household’s next recertification.
(iii) If the State agency chooses to act on changes that affect a deduction, it may not act on changes in only one direction, i.e., changes that only increase or decrease the amount of the deduction, but must act on all changes that affect the deduction.
(iv) The State agency may disregard changes reported by the household in accordance with paragraph (a)(1) of this section and changes it learns of from a source other than the household. The State agency must not disregard new deductions, changes in earned income or changes in shelter costs arising from a reported change in residence until the household’s next recertification or after the sixth month of a 12-month certification period but must act on those reports in accordance with paragraphs (c)(1) and (c)(2) of this section. When a household reports a change in residence, the State agency must investigate and take action on potential changes in shelter costs arising from this reported change. However, if a household fails to provide information regarding the associated changes in shelter costs within 10 days of the report, the State agency should send a notice to the household that their allotment will be recalculated without the deduction. The notice will make it clear that the household does not need to await its first regular utility or rental payments to contact the SNAP office. Alternative forms of verification can be accepted, if necessary.
(v) A State agency that chooses to postpone action on reported changes in deductions in accordance with this paragraph (c) must state in its State plan of operation that it has selected this option and specify the deductions affected.
(d) Failure to report. If the State agency discovers that the household failed to report a change as required by paragraph (a) of this section and, as a result, received benefits to which it was not entitled, the State agency shall file a claim against the household in accordance with § 273.18. If the discovery is made within the certification period, the household is entitled to a notice of adverse action if the household’s benefits are reduced. A household shall not be held liable for a claim because of a change in household circumstances which it is not required to report in accordance with § 273.12(a)(1). Individuals shall not be disqualified for failing to report a change, unless the individual is disqualified in accordance with the disqualification procedures specified in § 273.16.
(e) Mass changes. Certain changes are initiated by the State or Federal government which may affect the entire caseload or significant portions of the caseload. These changes include, but are not limited to, adjustments to the income eligibility standards, the shelter and dependent care deductions, the maximum SNAP allotment and the standard deduction; annual and seasonal adjustments to State utility standards; periodic cost-of-living adjustments to Retirement, Survivors, and Disability Insurance (RSDI), Supplemental Security Income (SSI) and other Federal benefits; periodic adjustments to Temporary Assistance for Needy Families (TANF) or General Assistance (GA) payments; and other changes in the eligibility and benefit criteria based on legislative or regulatory changes.
(1) Federal adjustments to eligibility standards, allotments, and deductions, and State adjustments to utility standards. (i) State agencies shall implement these changes for all households at a specific point in time. Adjustments to Federal standards shall be implemented prospectively regardless of the household’s budgeting system. Annual and seasonal adjustments in State utility standards shall also be implemented prospectively for all households.
(A) Adjustments in the maximum SNAP allotment shall be effective in accordance with § 273.10(e)(4)(ii).
(B) Adjustments in the standard deduction shall be effective in accordance with § 273.9(d)(1).
(C) Adjustments in the shelter deduction shall be effective in accordance with § 273.9(d)(6).
(D) Adjustments in the income eligibility standards shall be effective in accordance with § 273.9(a)(3).
(ii) A notice of adverse action shall not be used for these changes. At a minimum, the State agencies shall publicize these mass changes through the news media; posters in certification offices, issuance locations, or other sites frequented by certified households; or general notices mailed to households. At its option, the State agency may send the notice described in paragraph (e)(4) of this section or some other type of written explanation of the change. A household whose certification period overlaps a seasonal variation in the State utility standard shall be advised at the time of initial certification of when the adjustment will occur and what the variation in the benefit level will be, if known.
(2) Mass changes in public assistance and general assistance. (i) When the State agency makes an overall adjustment to public assistance (PA) payments, corresponding adjustments in households’ SNAP benefits shall be handled as a mass change in accordance with the procedures in paragraphs (e) (4), (5) and (6) of this section. When the State agency has at least 30 days, advance knowledge of the amount of the PA adjustment, the State agency shall make the change in benefits effective in the same month as the PA change. If the State agency does not have sufficient notice, the SNAP change shall be effective no later than the month following the month in which the PA change was made.
(ii) State agencies which also administer a general assistance (GA) program shall handle mass adjustments to GA payments in accordance with the schedules outlined in paragraph (e)(2)(i) and the procedures in paragraphs (e) (4), (5) and (6) of this section. However, where State agencies do not administer both programs, mass changes in GA payments shall be subject to the schedule in paragraph (e)(3) and the procedures in paragraphs (e) (4), (5) and (6) of this section.
(3) Mass changes in Federal benefits. The State agency shall establish procedures for making mass changes to reflect cost-of-living adjustments (COLAs) in benefits and any other mass changes under RSDI, SSI, and other programs such as veteran’s assistance under title 38 of the United States Code and the Black Lung Program, where information on COLA’s is readily available and is applicable to all or a majority of those programs’ beneficiaries. A State agency may require households to report the change on the appropriate monthly report or may handle the change using the mass change procedures in this section. If the State agency requires the household to report the information on the monthly report, the State agency shall handle such information in accordance with its normal procedures. Households that are not required to report the change on the monthly report, and households not subject to monthly reporting, shall not be responsible for reporting these changes. The State agency shall be responsible for automatically adjusting these households’ SNAP benefit levels in accordance with either paragraph (e)(3)(i) or (e)(3)(ii) of this section.
(i) The State agency may make mass changes by applying percentage increases communicated by the source agency to represent cost-of-living increases provided in other benefit programs. These changes shall be reflected no later than the second allotment issued after the month in which the change becomes effective.
(ii) The State agency may update household income information based on cost-of-living increases supplied by a data source covered under the Computer Matching and Privacy Protection Act of 1988 (CMA) in accordance with § 272.12 of this chapter. The State agency shall take action, including proper notices to households, to terminate, deny or reduce benefits based on this information if it is considered verified upon receipt under § 273.2(f)(9). If the information is not considered verified upon receipt, the State agency shall initiate appropriate action and notice in accordance with § 273.2(f)(9).
(4) Notice for mass change. When the State agency makes a mass change in SNAP eligibility or benefits by simultaneously converting the caseload, or that portion of the caseload that is affected, using the percentage increase calculation provided for in § 273.12(e)(3)(i), or by conducting individual desk reviews using information not covered under the Computer Matching and Privacy Protection Act (CMA) in place of a mass change, it shall notify all households whose benefits are reduced or terminated in accordance with the requirements of this paragraph, except for mass changes made under § 273.12(e)(1); and
(i) At a minimum, the State agency shall inform the household of:
(A) The general nature of the change;
(B) Examples of the change’s effect on households’ allotments;
(C) The month in which the change will take effect;
(D) The household’s right to a fair hearing;
(E) The household’s right to continue benefits and under what circumstances benefits will be continued pending a fair hearing;
(F) General information on whom to contact for additional information; and
(G) The liability the household will incur for any overissued benefits if the fair hearing decision is adverse.
(ii) At a minimum, the State agency shall notify the household of the mass change or the result of the desk review on the date the household is scheduled to receive the allotment which has been changed.
(iii) In addition, the State shall notify the household of the mass change as much before the household’s scheduled issuance date as reasonably possible, although the notice need not be given any earlier than the time required for advance notice of adverse action.
(5) Fair hearings. The household shall be entitled to request a fair hearing when it is aggrieved by the mass change.
(6) Continuation of benefits. A household which requests a fair hearing due to a mass change shall be entitled to continued benefits at its previous level only if the household meets three criteria;
(i) The household does not specifically waive its right to a continuation of benefits;
(ii) The household requests a fair hearing in accordance with § 273.13(a)(1); and
(iii) The household’s fair hearing is based upon improper computation of SNAP eligibility or benefits, or upon misapplication or misinterpretation of Federal law or regulation.
(f) PA and GA households. (1) Except as provided in paragraph (f)(2) of this section, PA households have the same reporting requirements as any other SNAP household. PA households which report a change in circumstances to the PA worker shall be considered to have reported the change for SNAP purposes. All of the requirements pertaining to reporting changes for PA households shall be applied to GA households in project areas where GA and SNAP cases are processed jointly in accordance with provisions of § 273.2(j)(3).
(2)(i) State agencies may use a joint change reporting form for households to report changes for both PA and SNAP purposes. Whenever a joint change reporting form is used, the State agency shall insure that adjustments are made in a household’s eligibility status or allotment for the months determined appropriate given the household’s budgeting cycle.
(ii) State agencies may combine the use of a joint PA/SNAP change reporting form with a PA reporting system that demands the regular submission of reports, such as a monthly reporting system. The State agency shall insure that the procedures in § 273.21(h) are followed.
(3) The State agency may not terminate a household’s SNAP benefits solely because it has terminated the household’s PA benefits without a separate determination that the household fails to satisfy the eligibility requirements for participation in the Program. Whenever a change results in the reduction or termination of a household’s PA benefits within its SNAP certification period, the State agency must follow the procedures set forth below:
(i) If a change in household circumstances requires a reduction or termination in the PA payment and the State agency has sufficient information to determine how the change affects the household’s SNAP eligibility and benefit level, the State agency must take the following actions:
(A) If the change requires a reduction or termination of SNAP benefits, the State agency must issue a single notice of adverse action for both the PA and SNAP actions. If the household requests a fair hearing within the period provided by the notice of adverse action, the State agency must continue the household’s SNAP benefits on the basis authorized immediately prior to sending the notice. If the fair hearing is requested for both programs’ benefits, the State agency must conduct the hearing according to PA procedures and timeliness standards. However, the household must reapply for SNAP benefits if the SNAP certification period expires before the fair hearing process is completed. If the household does not appeal, the State agency must make the change effective in accordance with the procedures specified in paragraph (c) of this section.
(B) If the household’s SNAP benefits will increase as a result of the reduction or termination of PA benefits, the State agency must issue the PA notice of adverse action, but must not take any action to increase the household’s SNAP benefits until the household decides whether it will appeal the PA adverse action. If the household decides to appeal and its PA benefits are continued, the household’s SNAP benefits must continue at the previous level. If the household does not appeal, the State agency must make the change effective in accordance with the procedures specified in paragraph (c) of this section, except that the time limits for the State agency to act on changes which increase a household’s benefits must be calculated from the date the PA notice of adverse action period expires.
(ii) Whenever a change results in the termination of a household’s PA benefits within its SNAP certification period, and the State agency does not have sufficient information to determine how the change affects the household’s SNAP eligibility and benefit level (such as when an absent parent returns to a household, and the household asks to have its TANF case closed without providing any information on the income of the new household member), the State agency must take the following action:
(A) If the situation requires a reduction or termination of PA benefits, the State agency must issue a request for contact (RFC) in accordance with paragraph (c)(3)(i) of this section at the same time it sends a PA notice of adverse action. Before taking further action, the State agency must wait until the household’s PA notice of adverse action period expires or until the household requests a fair hearing, whichever occurs first. If the household requests a fair hearing and elects to have its PA benefits continued pending the appeal, the State agency must continue the household’s SNAP benefits at the same level. If the household decides not to request a fair hearing and continuation of its PA benefits, the State agency must resume action on the changes as required in paragraph (c)(3) of this section.
(B) If the situation does not require a PA notice of adverse action, the State agency must issue a RFC and take action in accordance with paragraph (c)(3) of this section.
(iii) Depending on the household’s response to the RFC, the State agency must take appropriate action, if necessary, to close the household’s case or adjust the household’s benefit amount.
§ 273.13 Notice of adverse action.
(a) Use of notice. Prior to any action to reduce or terminate a household’s benefits within the certification period, the State agency shall, except as provided in paragraph (b) of this section, provide the household timely and adequate advance notice before the adverse action is taken.
(1) The notice of adverse action shall be considered timely if the advance notice period conforms to that period of time defined by the State agency as an adequate notice period for its public assistance caseload, provided that the period includes at least 10 days from the date the notice is mailed to the date upon which the action becomes effective. Also, if the adverse notice period ends on a weekend or holiday, and a request for a fair hearing and continuation of benefits is received the day after the weekend or holiday, the State agency shall consider the request timely received.
(2) The notice of adverse action shall be considered adequate if it explains in easily understandable language: The proposed action; the reason for the proposed action; the household’s right to request a fair hearing; the telephone number of the SNAP office (toll-free number or a number where collect calls will be accepted for households outside the local calling area) and, if possible, the name of the person to contact for additional information; the availability of continued benefits; and the liability of the household for any overissuances received while awaiting a fair hearing if the hearing official’s decision is adverse to the household. If there is an individual or organization available that provides free legal representation, the notice shall also advise the household of the availability of the service. A notice of adverse action that combines the request for verification of information received through an IEVS computer match shall meet the requirements in § 273.2(f)(9). A notice of adverse action that combines the request for verification of information received through a SAVE computer match shall meet the requirements in § 273.2(f)(10). A notice of adverse action that combines a notice of match results received through a National Accuracy Clearinghouse (NAC) computer match shall meet the requirements in § 273.12(c)(3)(iv) and § 272.18(c)(5) of this chapter.
(3) The State agency may notify a household that its benefits will be reduced or terminated, no later than the date the household receives, or would have received, its allotment, if the following conditions are met:
(i) The household reports the information which results in the reduction or termination.
(ii) The reported information is in writing and signed by the household.
(iii) The State agency can determine the household’s allotment or ineligibility based solely on the information provided by the household as required in paragraph (a)(3)(ii) of this section.
(iv) The household retains its right to a fair hearing as allowed in § 273.15.
(v) The household retains its right to continued benefits if the fair hearing is requested within the time period set by the State agency in accordance with § 273.13(a)(1).
(vi) The State agency continues the household’s previous benefit level, if required, within five working days of the household’s request for a fair hearing.
(4) The State agency shall notify a household that its benefits will be reduced if an EBT system-error has occurred during the redemption process resulting in an out-of-balance settlement condition. This notification shall be made no later than the date the action is initiated against the household account. The State agency shall adjust the benefit in accordance with § 274.12 of this chapter.
(b) Exemptions from notice. Individual notices of adverse action shall not be provided when:
(1) The State initiates a mass change through means other than computer matches as described in § 273.12(e)(1), (e)(2), or (e)(3)(i).
(2) The State agency determines, based on reliable information, that all members of a household have died.
(3) The State agency determines, based on reliable information, that the household has moved from the project area.
(4) The household has been receiving an increased allotment to restore lost benefits, the restoration is complete, and the household was previously notified in writing of when the increased allotment would terminate.
(5) The household’s allotment varies from month to month within the certification period to take into account changes which were anticipated at the time of certification, and the household was so notified at the time of certification.
(6) The household jointly applied for PA/GA and SNAP benefits and has been receiving SNAP benefits pending the approval of the PA/GA grant and was notified at the time of certification that SNAP benefits would be reduced upon approval of the PA/GA grant.
(7) A household member is disqualified for an intentional Program violation in accordance with § 273.16, or the benefits of the remaining household members are reduced or terminated to reflect the disqualification of that household member, except as provided in § 273.11(c)(3)(i). A notice of adverse action must be sent to a currently participating household prior to the reduction or termination of benefits if a household member is found through a disqualified recipient match to be within the period of disqualification for an intentional Program violation penalty determined in another State. In the case of applicant households, State agencies shall follow the procedures in § 273.2(f)(11) for issuing notices to the disqualified individual and the remaining household members. The notice requirements for individuals or households affected by intentional Program violation disqualifications are explained in § 273.16.
(8) The State agency has elected to assign a longer certification period to a household certified on an expedited basis and for whom verification was postponed, provided the household has received written notice that the receipt of benefits beyond the month of application is contingent on its providing the verification which was initially postponed and that the State agency may act on the verified information without further notice as provided in § 273.2(i)(4).
(9) The State agency must change the household’s benefits back to the original benefit level as required in § 273.12(c)(1)(iii).
(10) Converting a household from cash and/or SNAP benefit repayment to benefit reduction as a result of failure to make agreed upon repayment as discussed in § 273.18.
(11) The State agency is terminating the eligibility of a resident of a drug or alcoholic treatment center or a group living arrangement if the facility loses either its certification from the appropriate agency or agencies of the State (as defined in § 271.2) or has its status as an authorized representative suspended due to FNS disqualifying it as a retailer. However, residents of group living arrangements applying on their own behalf are still eligible to participate.
(12) The household voluntarily requests, in writing or in the presence of a caseworker, that its participation be terminated. If the household does not provide a written request, the State agency shall send the household a letter confirming the voluntary withdrawal. Written confirmation does not entail the same rights as a notice of adverse action except that the household may request a fair hearing.
(13) The State agency determines, based on reliable information, that the household will not be residing in the project area and, therefore, will be unable to obtain its next allotment. The State agency shall inform the household of its termination no later than its next scheduled issuance date. While the State agency may inform the household before its next issuance date, the State agency shall not delay terminating the household’s participation in order to provide advance notice.
(14) The State agency initiates recoupment of a claim as specified in § 273.18(g)(4) against a household which has previously received a notice of adverse action with respect to such claim.
(c) Optional notice. The State agency may, at its option, send the household an adequate notice as provided in paragraph (b)(3) of this section when the household’s address is unknown and mail directed to it has been returned by the post office indicating no known forwarding address.
§ 273.14 Recertification.
(a) General. No household may participate beyond the expiration of the certification period assigned in accordance with § 273.10(f) without a determination of eligibility for a new period. The State agency must establish procedures for notifying households of expiration dates, providing application forms, scheduling interviews, and recertifying eligible households prior to the expiration of certification periods. Households must apply for recertification and comply with interview and verification requirements.
(b) Recertification process—(1) Notice of expiration. (i) The State agency shall provide households certified for one month or certified in the second month of a two-month certification period a notice of expiration (NOE) at the time of certification. The State agency shall provide other households the NOE before the first day of the last month of the certification period, but not before the first day of the next-to-the-last month. Jointly processed PA and GA households need not receive a separate SNAP notice if they are recertified for SNAP benefits at the same time as their PA or GA redetermination.
(ii) Each State agency shall develop a NOE. The NOE must contain the following:
(A) The date the certification period expires;
(B) The date by which a household must submit an application for recertification in order to receive uninterrupted benefits;
(C) The consequences of failure to apply for recertification in a timely manner;
(D) Notice of the right to receive an application form upon request and to have it accepted as long as it contains a signature and a legible name and address;
(E) Information on alternative submission methods available to households which cannot come into the certification office or do not have an authorized representative and how to exercise these options;
(F) The address of the office where the application must be filed;
(G) The household’s right to request a fair hearing if the recertification is denied or if the household objects to the benefit issuance;
(H) Notice that any household consisting only of Supplemental Security Income (SSI) applicants or recipients is entitled to apply for SNAP recertification at an office of the Social Security Administration;
(I) Notice that failure to attend an interview may result in delay or denial of benefits; and
(J) Notice that the household is responsible for rescheduling a missed interview and for providing required verification information.
(iii) To expedite the recertification process, State agencies are encouraged to send a recertification form, an interview appointment letter that allows for either in-person or telephone interviews, and a statement of needed verification required by § 273.2(c)(5) with the NOE.
(2) Application. The State agency must develop an application to be used by households when applying for recertification. It may be the same as the initial application, a simplified version, a monthly reporting form, or other method such as annotating changes on the initial application form. A new household signature and date is required at the time of application for recertification. The provisions of § 273.2(c)(7) regarding acceptable signatures on applications also apply to applications used at recertification. The recertification process can only be used for those households which apply for recertification prior to the end of their current certification period, except for delayed applications as specified in paragraph (e)(3) of this section. The process, at a minimum, must elicit from the household sufficient information that, when added to information already contained in the casefile, will ensure an accurate determination of eligibility and benefits. The State agency must notify the applicant of information which is specified in § 273.2(b)(2), and provide the household with a notice of required verification as specified in § 273.2(c)(5).
(3) Interview. As part of the recertification process, the State agency must conduct an interview with a member of the household or its authorized representative at least once every 12 months for households certified for 12 months or less. The provisions of § 273.2(e) also apply to interviews for recertification. The State agency may choose not to interview the household at interim recertifications within the 12-month period. The requirement for an interview once every 12 months may be waived in accordance with § 273.2(e)(2).
(ii) If a household receives PA/GA and will be recertified for SNAP benefits more than once in a 12-month period, the State agency may choose to conduct a face-to-face interview with that household only once during that period. At any other recertification during that year period, the State agency may interview the household by telephone, conduct a home visit, or recertify the household by mail.
(iii) State agencies shall schedule interviews so that the household has at least 10 days after the interview in which to provide verification before the certification period expires. If a household misses its scheduled interview, the State agency shall send the household a Notice of Missed Interview that may be combined with the notice of denial. If a household misses its scheduled interview and requests another interview, the State agency shall schedule a second interview.
(4) Verification. Information provided by the household shall be verified in accordance with § 273.2(f)(8)(i). The State agency shall provide the household a notice of required verification as provided in § 273.2(c)(5) and notify the household of the date by which the verification requirements must be satisfied. The household must be allowed a minimum of 10 days to provide required verification information. Any household whose eligibility is not determined by the end of its current certification period due to the time period allowed for submitting any missing verification shall receive an opportunity to participate, if eligible, within 5 working days after the household submits the missing verification and benefits cannot be prorated.
(5) Advise of available employment and training services. (i) At the time of recertification, the State agency shall advise household members subject to the work requirements of § 273.7(a) who reside in households meeting the criteria in paragraph (b)(5)(ii) of this section of available employment and training services. This shall include, at a minimum, providing a list of available employment and training services electronically or in printed form to the household.
(ii) The State agency requirement in paragraph (b)(5)(i) of this section only applies to households that meet all of the following criteria, as most recently reported by the household:
(A) Contain a household member subject to the work requirements of § 273.7(a);
(B) Contain at least one adult;
(C) Contain no elderly or disabled individuals; and
(D) Have no earned income.
(c) Timely application for recertification. (1) Households reporting required changes in circumstances that are certified for one month or certified in the second month of a two-month certification period shall have 15 days from the date the NOE is received to file a timely application for recertification.
(2) Other households reporting required changes in circumstances that submit applications by the 15th day of the last month of the certification period shall be considered to have made a timely application for recertification.
(3) For monthly reporting households, the filing deadline shall be either the 15th of the last month of the certification period or the normal date for filing a monthly report, at the State agency’s option. The option chosen must be uniformly applied to the State agency’s entire monthly reporting caseload.
(4) For households consisting only of SSI applicants or recipients who apply for SNAP recertification at SSA offices in accordance with § 273.2(k)(1), an application shall be considered filed for normal processing purposes when the signed application is received by the SSA.
(d) Timely processing. (1) Households that were certified for one month or certified for two months in the second month of the certification period and have met all required application procedures shall be notified of their eligibility or ineligibility. Eligible households shall be provided an opportunity to receive benefits no later than 30 calendar days after the date the household received its last allotment.
(2) Other households that have met all application requirements shall be notified of their eligibility or ineligibility by the end of their current certification period. In addition, the State agency shall provide households that are determined eligible an opportunity to participate by the household’s normal issuance cycle in the month following the end of its current certification period.
(e) Delayed processing. (1) If an eligible household files an application before the end of the certification period but the recertification process cannot be completed within 30 days after the date of application because of State agency fault, the State agency must continue to process the case and provide a full month’s allotment for the first month of the new certification period. The State agency shall determine cause for any delay in processing a recertification application in accordance with the provisions of § 273.3(h)(1).
(2) If a household files an application before the end of the certification period, but fails to take a required action, the State agency may deny the case at that time, at the end of the certification period, or at the end of 30 days. Notwithstanding the State’s right to issue a denial prior to the end of the certification period, the household has 30 days after the end of the certification period to complete the process and have its application be treated as an application for recertification. If the household takes the required action before the end of the certification period, the State agency must reopen the case and provide a full month’s benefits for the initial month of the new certification period. If the household takes the required action after the end of the certification period but within 30 days after the end of the certification period, the State agency shall reopen the case and provide benefits retroactive to the date the household takes the required action. The State agency shall determine cause for any delay in processing a recertification application in accordance with the provisions of § 273.3(h)(1).
(3) If a household files an application within 30 days after the end of the certification period, the application shall be considered an application for recertification; however, benefits must be prorated in accordance with § 273.10(a). If a household’s application for recertification is delayed beyond the first of the month of what would have been its new certification period through the fault of the State agency, the household’s benefits for the new certification period shall be prorated based on the date of the new application, and the State agency shall provide restored benefits to the household back to the date the household’s certification period should have begun had the State agency not erred and the household been able to apply timely.
(f) Expedited service. A State agency is not required to apply the expedited service provisions of § 273.2(i) at recertification if the household applies for recertification before the end of its current certification period.
Subpart F—Disqualification and Claims
§ 273.15 Fair hearings.
(a) Availability of hearings. Except as provided in § 271.7(f), each State agency shall provide a fair hearing to any household aggrieved by any action of the State agency which affects the participation of the houshold in the Program.
(b) Hearing system. Each State agency shall provide for either a fair hearing at the State level or for a hearing at the local level which permits the household to further appeal a local decision to a State level fair hearing. State agencies may adopt local level hearings in some project areas and maintain only State level hearings in other project areas.
(c) Timely action on hearings—(1) State level hearings. Within 60 days of receipt of a request for a fair hearing, the State agency shall assure that the hearing is conducted, a decision is reached, and the household and local agency are notified of the decision. Decisions that result in an increase in household benefits shall be reflected in the household’s EBT account within 10 days of the receipt of the hearing decision even if the State agency must provide supplementary benefits or otherwise provide the household with an opportunity to obtain the benefits outside of the normal issuance cycle. However, the State agency may take longer than 10 days if it elects to make the decision effective in the household’s normal issuance cycle, provided that the issuance will occur within 60 days from the household’s request for the hearing. Decisions which result in a decrease in household benefits shall be reflected in the next scheduled issuance following receipt of the hearing decision.
(2) Local level hearings. Within 45 days of receipt of a request for a fair hearing, the State agency shall assure that the hearing is conducted, and that a decision is reached and reflected in the SNAP benefit allotment.
(3) Appeals of local level decisions. Within 45 days of receipt of any request for a State level review of a decision or for a new State level hearing, the State agency shall assure that the review or the new hearing is conducted, and that a decision is reached and reflected in the SNAP benefit allotment.
(4) Household requests for postponement. The household may request and is entitled to receive a postponement of the scheduled hearing. The postponement shall not exceed 30 days and the time limit for action on the decision may be extended for as many days as the hearing is postponed. For example, if a State level hearing is postponed by the household for 10 days, notification of the hearing decision will be required within 70 days from the date of the request for a hearing.
(d) Agency conferences. (1) The State agency shall offer agency conferences to households which wish to contest a denial of expedited service under the procedures in § 273.2(i). The State agency may also offer agency conferences to households adversely affected by an agency action. The State agency shall advise households that use of an agency conference is optional and that it shall in no way delay or replace the fair hearing process. The agency conferences may be attended by the eligibility worker responsible for the agency action, and shall be attended by an eligibility supervisor and/or the agency director, and by the household and/or its representative. An agency conference may lead to an informal resolution of the dispute. However, a fair hearing must still be held unless the household makes a written withdrawal of its request for a hearing.
(2) An agency conference for households contesting a denial of expedited service shall be scheduled within 2 working days, unless the household requests that it be scheduled later or states that it does not wish to have an agency conference.
(e) Consolidated hearings. State agencies may respond to a series of individual requests for hearings by conducting a single group hearing. State agencies may consolidate only cases where individual issues of fact are not disputed and where related issues of State and/or Federal law, regulation or policy are the sole issues being raised. In all group hearings, the regulations governing individual hearings must be followed. Each individual household shall be permitted to present its own case or have its case presented by a representative.
(f) Notification of right to request hearing. At the time of application, each household shall be informed in writing of its right to a hearing, of the method by which a hearing may be requested, and that its case may be presented by a household member or a representative, such as a legal counsel, a relative, a friend or other spokesperson. In addition, at any time the household expresses to the State agency that it disagrees with a State agency action, it shall be reminded of the right to request a fair hearing. If there is an individual or organization available that provides free legal representation, the household shall also be informed of the availability of that service.
(g) Time period for requesting hearing. A household shall be allowed to request a hearing on any action by the State agency or loss of benefits which occurred in the prior 90 days. Action by the State agency shall include a denial of a request for restoration of any benefits lost more than 90 days but less than a year prior to the request. In addition, at any time within a certification period a household may request a fair hearing to dispute its current level of benefits.
(h) Request for hearing. A request for a hearing is defined as a clear expression, oral or written, by the household or its representative to the effect that it wishes to appeal a decision or that an opportunity to present its case to a higher authority is desired. If it is unclear from the household’s request what action it wishes to appeal, the State agency may request the household to clarify its grievance. The freedom to make a request for a hearing shall not be limited or interfered with in any way.
(i) State agency responsibilities on hearing requests. (1) Upon request, the State agency shall make available without charge the specific materials necessary for a household or its representative to determine whether a hearing should be requested or to prepare for a hearing. If the individual making the request speaks a language other than English and the State agency is required by § 272.4(c)(3) to provide bilingual staff or interpreters who speak the appropriate language, the State agency shall insure that the hearing procedures are verbally explained in that language. Upon request, the State agency shall also help a household with its hearing request. If a household makes an oral request for a hearing, the State agency shall complete the procedures necessary to start the hearing process. Households shall be advised of any legal services available that can provide representation at the hearing.
(2) The State agency shall expedite hearing requests from households, such as migrant farmworkers, that plan to move from the jurisdiction of the hearing official before the hearing decision would normally be reached. Hearing requests from these households shall be processed faster than others if necessary to enable them to receive a decision and a restoration of benefits if the decision so indicates before they leave the area.
(3) The State agency shall publish clearly written uniform rules of procedure that conform to these regulations and shall make the rules available to any interested party. At a minimum, the uniform rules of procedure shall include the time limits for hearing requests as specified in paragraph (g) of this section, advance notification requirements as specified in paragraph (i)(1) of this section, hearing timeliness standards as specified in paragraph (c) of this section, and the rights and responsibilities of persons requesting a hearing as specified in paragraph (p) of this section.
(j) Denial or dismissal of request for hearing. (1) The State agency must not deny or dismiss a request for a hearing unless:
(i) The State agency does not receive the request within the appropriate time frame specified in paragraph (g) of this section, provided that the State agency considers untimely requests for hearings as requests for restoration of lost benefits in accordance with § 273.17;
(ii) The household or its representative fails, without good cause, to appear at the scheduled hearing;
(iii) The household or its representative withdraws the request in writing; or
(iv) The household or its representative orally withdraws the request and the State agency has elected to allow such oral requests.
(2) The State agency electing to accept an oral expression from the household or its representative to withdraw a fair hearing may discuss the option with the household when it appears that the State agency and household have resolved issues related to the fair hearing. However, the State agency is prohibited from coercion or actions which would influence the household or its representative to withdraw the household’s fair hearing request. The State agency must provide a written notice to the household within 10 days of the household’s request confirming the withdrawal request and providing the household with an opportunity to request a hearing. The written notice must advise the household it has 10 days from the date it receives the notice to advise the State agency of its desire to request, or reinstate, the hearing. If the household timely advises the State agency that it wishes to reinstate the fair hearing, the State agency must provide the household with a fair hearing, within the time frames specified in paragraph (c) of this section and beginning the date the household advises the State agency that it wishes to reinstate its request. The State agency must reinstate a fair hearing as requested from a household at least once. The State agency must not deny a household’s request for a fair hearing if the household is aggrieved by a State agency action that differs from the reinstated action.
(k) Continuation of benefits. (1) If a household requests a fair hearing within the period provided by the notice of adverse action, as set forth in § 273.13, and its certification period has not expired, the household’s participation in the program shall be continued on the basis authorized immediately prior to the notice of adverse action, unless the household specifically waives continuation of benefits. The form for requesting a fair hearing shall contain space for the household to indicate whether or not continued benefits are requested. If the form does not positively indicate that the household has waived continuation of benefits, the State agency shall assume that continuation of benefits is desired and the benefits shall be issued accordingly. If the State agency action is upheld by the hearing decision, a claim against the household shall be established for all overissuances, with one exception. In the case of an EBT adjustment, as defined in § 274.12(f)(4)(ii) of this chapter, once an adverse action is upheld, the State agency shall immediately debit the household’s account for the total amount stated in its original notice. If there are no benefits or insufficient benefits remaining in the household’s account at the time the State agency action is upheld, the State agency may only make the adjustment from the next month’s benefits, regardless of whether this satisfies the full adjustment amount. If a hearing request is not made within the period provided by the notice of adverse action, benefits shall be reduced or terminated as provided in the notice. However, if the household establishes that its failure to make the request within the advance notice period was for good cause, the State agency shall reinstate the benefits to the prior basis. When benefits are reduced or terminated due to a mass change, participation on the prior basis shall be reinstated only if the issue being contested is that SNAP eligibility or benefits were improperly computed or that Federal law or regulation is being misapplied or misinterpreted by the State agency.
(2) Once continued or reinstated, the State agency must not reduce or terminate benefits prior to the receipt of the official hearing decision unless:
(i) The certification period expires. The household may reapply and may be determined eligible for a new certification period with a benefit amount as determined by the State agency;
(ii) The hearing official makes a preliminary determination, in writing and at the hearing, that the sole issue is one of Federal law or regulation and that the household’s claim that the State agency improperly computed the benefits or misinterpreted or misapplied such law or regulation is invalid;
(iii) A change affecting the household’s eligibility or basis of issuance occurs while the hearing decision is pending and the household fails to request a hearing after the subsequent notice of adverse action;
(iv) A mass change affecting the household’s eligibility or basis of issuance occurs while the hearing decision is pending; or
(v) The household, or its representative, orally withdrew its request for a fair hearing and did not advise the State agency of its desire to reinstate the fair hearing within the time frame specified in paragraph (j)(2) of this section.
(3) The State agency shall promptly inform the household in writing if benefits are reduced or terminated pending the hearing decision.
(l) Notification of time and place of hearing. The time, date, and place of the hearing shall be arranged so that the hearing is accessible to the household. At least 10 days prior to the hearing, advance written notice shall be provided to all parties involved to permit adequate preparation of the case. However, the household may request less advance notice to expedite the scheduling of the hearing. The notice shall:
(1) Advise the household or its representative of the name, address, and phone number of the person to notify in the event it is not possible for the household to attend the scheduled hearing.
(2) Specify that the State agency will dismiss the hearing request if the household or its representative fails to appear for the hearing without good cause.
(3) Include the State agency hearing procedures and any other information that would provide the household with an understanding of the proceedings and that would contribute to the effective presentation of the household’s case.
(4) Explain that the household or representative may examine the case file prior to the hearing.
(m) Hearing official. Hearings shall be conducted by an impartial official(s) who: Does not have any personal stake or involvement in the case; was not directly involved in the initial determination of the action which is being contested; and was not the immediate supervisor of the eligibility worker who took the action. State level hearings shall be conducted by State level personnel and shall not be conducted by local level personnel.
(1) Designation of hearing official. The hearing official shall be:
(i) An employee of the State agency;
(ii) An individual under contract with the State agency;
(iii) An employee of another public agency designated by the State agency to conduct hearings;
(iv) A member or official of a statutory board or other legal entity designated by the State agency to conduct hearings; or
(v) An executive officer of the State agency, a panel of officials of the State agency or a person or persons expressly appointed to conduct State level hearings or to review State and/or local level hearing decisions.
(2) Power and duties. The hearing official shall:
(i) Administer oaths or affirmations if required by the State;
(ii) Insure that all relevant issues are considered;
(iii) Request, receive and make part of the record all evidence determined necessary to decide the issues being raised;
(iv) Regulate the conduct and course of the hearing consistent with due process to insure an orderly hearing;
(v) Order, where relevant and useful, an independent medical assessment or professional evaluation from a source mutually satisfactory to the household and the State agency;
(vi) Provide a hearing record and recommendation for final decision by the hearing authority; or, if the hearing official is the hearing authority, render a hearing decision in the name of the State agency, in accordance with paragraph (q) of this section, which will resolve the dispute.
(n) Hearing authority. The hearing authority shall be the person designated to render the final administrative decision in a hearing. The same person may act as both the hearing official and the hearing authority. The hearing authority shall be subject to the requirements specified in paragraph (m) of this section.
(o) Attendance at hearing. The hearing shall be attended by a representative of the State agency and by the household and/or its representative. The hearing may also be attended by friends or relatives of the household if the household so chooses. The hearing official shall have the authority to limit the number of persons in attendance at the hearing if space limitations exist.
(p) Household rights during hearing. The household may not be familiar with the rules of order and it may be necessary to make particular efforts to arrive at the facts of the case in a way that makes the household feel most at ease. The household or its representative must be given adequate opportunity to:
(1) Examine all documents and records to be used at the hearing at a reasonable time before the date of the hearing as well as during the hearing. The contents of the case file including the application form and documents of verification used by the State agency to establish the household’s ineligibility or eligibility and allotment shall be made available, provided that confidential information, such as the names of individuals who have disclosed information about the household without its knowledge or the nature or status of pending criminal prosecutions, is protected from release. If requested by the household or its representative, the State agency shall provide a free copy of the portions of the case file that are relevant to the hearing. Confidential information that is protected from release and other documents or records which the household will not otherwise have an opportunity to contest or challenge shall not be introduced at the hearing or affect the hearing official’s decision.
(2) Present the case or have it presented by a legal counsel or other person.
(3) Bring witnesses.
(4) Advance arguments without undue interference.
(5) Question or refute any testimony or evidence, including an opportunity to confront and cross-examine adverse witnesses.
(6) Submit evidence to establish all pertinent facts and circumstances in the case.
(q) Hearing decisions. (1) Decisions of the hearing authority shall comply with Federal law and regulations and shall be based on the hearing record. The verbatim transcript or recording of testimony and exhibits, or an official report containing the substance of what transpired at the hearing, together with all papers and requests filed in the proceeding, shall constitute the exclusive record for a final decision by the hearing authority. This record shall be retained in accordance with § 272.1(f). This record shall also be available to the household or its representative at any reasonable time for copying and inspection.
(2) A decision by the hearing authority shall be binding on the State agency and shall summarize the facts of the case, specify the reasons for the decision, and identify the supporting evidence and the pertinent Federal regulations. The decision shall become a part of the record.
(3) The household and the local agency shall each be notified in writing of: The decision; the reasons for the decision in accordance with paragraph (q)(2) of this section; the available appeal rights; and that the household’s benefits will be issued or terminated as decided by the hearing authority. The notice shall also state that an appeal may result in a reversal of the decision. The following are additional notice requirements and the available appeal rights:
(i) After a State level hearing decision which upholds the State agency action, the household shall be notified of the right to pursue judicial review of the decision. In addition, in States which provide for rehearings of State level decisions, the household shall be notified of the right to pursue a rehearing.
(ii) After a local level hearing decision which upholds the State agency action, the household shall be notified of the right to request a completely new State agency level hearing, and that a reversal of the decision may result in the restoration of lost benefits to the household. In addition, the household shall be advised that if a new hearing would pose an inconvenience to the household, a State level review of the decision based on the hearing record may be requested instead of a new hearing. A clear description of the two appeal procedures must be included to enable the household to make an informed choice, if it wishes to appeal. If the household indicates that it wishes to appeal, but does not select the method, the State agency shall proceed with a new State level hearing.
(4) If the household wishes to appeal a local level hearing decision, the appeal request must be filed within 15 days of the mailing date of the hearing decision notice. Within 45 days of receipt of any request for a State level review of the decision or for a new State level hearing, the State agency shall assure that the review or the hearing is conducted, and that a decision is reached and reflected in the SNAP benefit allotment. If a new hearing will not be held, the State level hearing official will review the local level hearing record to determine if the local decision was supported by substantial evidence. State level review procedures shall provide for notifying the local agency and the household that each may file a summary of arguments which shall become a part of the record if timely received. Both parties shall be advised that failure to file a summary will not be considered in deciding the case and that the summary must be postmarked within 10 days of receipt of the notice.
(5) All State agency hearing records and decisions shall be available for public inspection and copying, subject to the disclosure safeguards provided in § 272.1(c), and provided identifying names and addresses of household members and other members of the public are kept confidential.
(r) Implementation of local level hearing decision. (1) In the event the local hearing decision upholds the State agency action, any benefits to the household which were continued pending the hearing shall be discontinued beginning with the next scheduled issuance, regardless of whether or not an appeal is filed. Collection action for any claims against the household for overissuances shall be postponed until the 15-day appeal request period has elapsed, or if an appeal is requested, until the State agency upholds the decision of the local hearing authority.
(2) In the event the local hearing authority decides in favor of the household, benefits to the household shall begin or be reinstated, as required by the decision, within the 45-day time limit allowed for local hearing procedures. Any lost benefits due to the household shall be issued as soon as administratively feasible. The State agency shall restore benefits to households which are leaving the project area before the departure whenever possible. If benefits are not restored prior to the household’s departure, the State agency shall forward an authorization to the benefits to the household or to the new project area if this information is known. The new project area shall accept an authorization and issue the appropriate benefits whether the notice is presented by the household or received directly from another project area.
(s) Implementation of final State agency decisions. The State agency is responsible for insuring that all final hearing decisions are reflected in the household’s SNAP benefit allotment within the time limits specified in paragraph (c) of this section.
(1) When the hearing authority determines that a household has been improperly denied program benefits or has been issued a lesser allotment than was due, lost benefits shall be provided to the household in accordance with § 273.17. The State agency shall restore benefits to households which are leaving the project area before the departure whenever possible. If benefits are not restored prior to the household’s departure, the State agency shall forward an authorization to the benefits to the household or to the new project area if this information is known. The new project area shall accept an authorization and issue the appropriate benefits whether the notice is presented by the household or received directly from another project area.
(2) When the hearing authority upholds the State agency’s action, a claim against the household for any overissuances shall be prepared in accordance with § 273.18.
(t) Review of appeals of local level decisions. State agencies which adopt a local level hearing system shall establish a procedure for monitoring local level hearing decisions. The number of local level decisions overturned upon appeal to a State level hearing shall be examined. If the number of reversed decisions is excessive, the State agency shall take corrective action.
(u) Departmental review of decisions contrary to Federal law and regulations. [Reserved]
§ 273.16 Disqualification for intentional Program violation.
(a) Administrative responsibility. (1) The State agency shall be responsible for investigating any case of alleged intentional Program violation, and ensuring that appropriate cases are acted upon either through administrative disqualification hearings or referral to a court of appropriate jurisdiction in accordance with the procedures outlined in this section. Administrative disqualification procedures or referral for prosecution action should be initiated by the State agency in cases in which the State agency has sufficient documentary evidence to substantiate that an individual has intentionally made one or more acts of intentional Program violation as defined in paragraph (c) of this section. If the State agency does not initiate administrative disqualification procedures or refer for prosecution a case involving an overissuance caused by a suspected act of intentional Program violation, the State agency shall take action to collect the overissuance by establishing an inadvertent household error claim against the household in accordance with the procedures in § 273.18. The State agency should conduct administrative disqualification hearings in cases in which the State agency believes the facts of the individual case do not warrant civil or criminal prosecution through the appropriate court system, in cases previously referred for prosecution that were declined by the appropriate legal authority, and in previously referred cases where no action was taken within a reasonable period of time and the referral was formally withdrawn by the State agency. The State agency shall not initiate an administrative disqualification hearing against an accused individual whose case is currently being referred for prosecution or subsequent to any action taken against the accused individual by the prosecutor or court of appropriate jurisdiction, if the factual issues of the case arise out of the same, or related, circumstances. The State agency may initiate administrative disqualification procedures or refer a case for prosecution regardless of the current eligibility of the individual.
(2) Each State agency shall establish a system for conducting administrative disqualifications for intentional Program violation which conforms with the procedures outlined in paragraph (e) of this section. FNS shall exempt any State agency from the requirement to establish an administrative disqualification system if the State agency has already entered into an agreement, pursuant to paragraph (g)(1) of this section, with the State’s Attorney General’s Office or, where necessary, with county prosecutors. FNS shall also exempt any State agency from the requirement to establish an administrative disqualification system if there is a State law that requires the referral of such cases for prosecution and if the State agency demonstrates to FNS that it is actually referring cases for prosecution and that prosecutors are following up on the State agency’s referrals. FNS may require a State agency to establish an administrative disqualification system if it determines that the State agency is not promptly or actively pursuing suspected intentional Program violation claims through the courts.
(3) The State agency shall base administrative disqualifications for intentional Program violations on the determinations of hearing authorities arrived at through administrative disqualification hearings in accordance with paragraph (e) of this section or on determinations reached by courts of appropriate jurisdiction in accordance with paragraph (g) of this section. However, any State agency has the option of allowing accused individuals either to waive their rights to administrative disqualification hearings in accordance with paragraph (f) of this section or to sign disqualification consent agreements for cases of deferred adjudication in accordance with paragraph (h) of this section. Any State agency which chooses either of these options may base administrative disqualifications for intentional Program violation on the waived right to an administrative disqualification hearing or on the signed disqualification consent agreement in cases of deferred adjudication.
(b) Disqualification penalties. (1) Individuals found to have committed an intentional Program violation either through an administrative disqualification hearing or by a Federal, State or local court, or who have signed either a waiver of right to an administrative disqualification hearing or a disqualification consent agreement in cases referred for prosecution, shall be ineligible to participate in the Program:
(i) For a period of twelve months for the first intentional Program violation, except as provided under paragraphs (b)(2), (b)(3), (b)(4), and (b)(5) of this section;
(ii) For a period of twenty-four months upon the second occasion of any intentional Program violation, except as provided in paragraphs (b)(2), (b)(3), (b)(4), and (b)(5) of this section; and
(iii) Permanently for the third occasion of any intentional Program violation.
(2) Individuals found by a Federal, State or local court to have used or received benefits in a transaction involving the sale of a controlled substance (as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802)) shall be ineligible to participate in the Program:
(i) For a period of twenty four months upon the first occasion of such violation; and
(ii) Permanently upon the second occasion of such violation.
(3) Individuals found by a Federal, State or local court to have used or received benefits in a transaction involving the sale of firearms, ammunition or explosives shall be permanently ineligible to participate in the Program upon the first occasion of such violation.
(4) An individual convicted by a Federal, State or local court of having trafficked benefits for an aggregate amount of $500 or more shall be permanently ineligible to participate in the Program upon the first occasion of such violation.
(5) Except as provided under paragraph (b)(1)(iii) of this section, an individual found to have made a fraudulent statement or representation with respect to the identity or place of residence of the individual in order to receive multiple SNAP benefits simultaneously shall be ineligible to participate in the Program for a period of 10 years.
(6) The penalties in paragraphs (b)(2) and (b)(3) of this section shall also apply in cases of deferred adjudication as described in paragraph (h) of this section, where the court makes a finding that the individual engaged in the conduct described in paragraph (b)(2) and (b)(3) of this section.
(7) If a court fails to impose a disqualification or a disqualification period for any intentional Program violation, the State agency shall impose the appropriate disqualification penalty specified in paragraphs (b)(1), (b)(2), (b)(3), (b)(4), and (b)(5) of this section unless it is contrary to the court order.
(8) One or more intentional Program violations which occurred prior to April 1, 1983 shall be considered as only one previous disqualification when determining the appropriate penalty to impose in a case under consideration.
(9) Regardless of when an action taken by an individual which caused an intentional Program violation occurred, the disqualification periods specified in paragraphs (b)(2) and (b)(3) of this section shall apply to any case in which the court makes the requisite finding on or after September 1, 1994.
(10) For the disqualification periods in paragraphs (b)(1), (b)(5) or (b)(6) of this section, if the offense occurred prior to the implementation of these penalties, the State agency may establish a policy of disqualifying these individuals in accordance with the disqualification periods in effect at the time of the offense. This policy must be consistently applied for all affected individuals.
(11) State agencies shall disqualify only the individual found to have committed the intentional Program violation, or who signed the waiver of the right to an administrative disqualification hearing or disqualification consent agreement in cases referred for prosecution, and not the entire household.
(12) Even though only the individual is disqualified, the household, as defined in § 273.1, is responsible for making restitution for the amount of any overpayment. All intentional Program violation claims must be established and collected in accordance with the procedures set forth in § 273.18.
(13) The individual must be notified in writing once it is determined that he/she is to be disqualified. The disqualification period shall begin no later than the second month which follows the date the individual receives written notice of the disqualification. The disqualification period must continue uninterrupted until completed regardless of the eligibility of the disqualified individual’s household.
(c) Definition of intentional Program violation. Intentional Program violations shall consist of having intentionally:
(1) Made a false or misleading statement, or misrepresented, concealed or withheld facts; or
(2) Committed any act that constitutes a violation of SNAP, SNAP regulations, or any State statute for the purpose of using, presenting, transferring, acquiring, receiving, possessing or trafficking of SNAP benefits or EBT cards.
(d) Notification to applicant households. The State agency shall inform the household in writing of the disqualification penalties for intentional Program violation each time it applies for Program benefits. The penalties shall be in clear, prominent, and boldface lettering on the application form.
(e) Disqualification hearings. The State agency shall conduct administrative disqualification hearings for individuals accused of intentional Program violation in accordance with the requirements outlined in this section.
(1) Consolidation of administrative disqualification hearing with fair hearing. The State agency may combine a fair hearing and an administrative disqualification hearing into a single hearing if the factual issues arise out of the same, or related, circumstances and the household receives prior notice that hearings will be combined. If the disqualification hearing and fair hearing are combined, the State agency shall follow the timeframes for conducting disqualification hearings. If the hearings are combined for the purpose of settling the amount of the claim at the same time as determining whether or not intentional Program violation has occurred, the household shall lose its right to a subsequent fair hearing on the amount of the claim. However, the State agency shall, upon household request, allow the household to waive the 30-day advance notice period required by paragraph (e)(3)(i) of this section when the disqualification hearing and fair hearing are combined.
(2) Disqualification hearing procedures. (i) State agencies have the option of using the same hearing officials for disqualification hearings and fair hearings or designating hearing officials to conduct only disqualification hearings.
(ii) The provisions of § 273.15 (m), (n), (o), (p), and (q)(1) are also applicable for disqualification hearings.
(iii) At the disqualification hearing, the hearing official shall advise the household member or representative that they may refuse to answer questions during the hearing.
(iv) Within 90 days of the date the household member is notified in writing that a State or local hearing initiated by the State agency has been scheduled, the State agency shall conduct the hearing, arrive at a decision and notify the household member and local agency of the decision. The household member or representative is entitled to a postponement of the scheduled hearing, provided that the request for postponement is made at least 10 days in advance of the date of the scheduled hearing. However, the hearing shall not be postponed for more than a total of 30 days and the State agency may limit the number of postponements to one. If the hearing is postponed, the above time limits shall be extended for as many days as the hearing is postponed.
(v) The State agency shall publish clearly written rules of procedure for disqualification hearings, and shall make these procedures available to any interested party.
(3) Advance notice of hearing. (i) The State agency shall provide written notice to the individual suspected of committing an intentional Program violation at least 30 days in advance of the date a disqualification hearing initiated by the State agency has been scheduled. If mailed, the notice shall be sent either first class mail or certified mail-return receipt requested. The notice may also be provided by any other reliable method. If the notice is sent using first class mail and is returned as undeliverable, the hearing may still be held.
(ii) If no proof of receipt is obtained, a timely (as defined in paragraph (e)(4) of this section) showing of nonreceipt by the individual due to circumstances specified by the State agency shall be considered good cause for not appearing at the hearing. Each State agency shall establish the circumstances in which non-receipt constitutes good cause for failure to appear. Such circumstances shall be consistent throughout the State agency.
(iii) The notice shall contain at a minimum:
(A) The date, time, and place of the hearing;
(B) The charge(s) against the individual;
(C) A summary of the evidence, and how and where the evidence can be examined;
(D) A warning that the decision will be based solely on information provided by the State agency if the individual fails to appear at the hearing;
(E) A statement that the individual or representative will, upon receipt of the notice, have 10 days from the date of the scheduled hearing to present good cause for failure to appear in order to receive a new hearing;
(F) A warning that a determination of intentional Program violation will result in disqualification periods as determined by paragraph (b) of this section, and a statement of which penalty the State agency believes is applicable to the case scheduled for a hearing;
(G) A listing of the individual’s rights as contained in § 273.15(p);
(H) A statement that the hearing does not preclude the State or Federal Government from prosecuting the individual for the intentional Program violation in a civil or criminal court action, or from collecting any overissuance(s); and
(I) If there is an individual or organization available that provides free legal representation, the notice shall advise the affected individual of the availability of the service.
(iv) A copy of the State agency’s published hearing procedures shall be attached to the 30-day advance notice or the advance notice shall inform the individual of his/her right to obtain a copy of the State agency’s published hearing procedures upon request.
(v) Each State agency shall develop an advance notice form which contains the information required by this section.
(4) Scheduling of hearing. The time and place of the hearing shall be arranged so that the hearing is accessible to the household member suspected of intentional Program violation. If the household member or its representative cannot be located or fails to appear at a hearing initiated by the State agency without good cause, the hearing shall be conducted without the household member being represented. Even though the household member is not represented, the hearing official is required to carefully consider the evidence and determine if intentional Program violation was committed based on clear and convincing evidence. If the household member is found to have committed an intentional Program violation but a hearing official later determines that the household member or representative had good cause for not appearing, the previous decision shall no longer remain valid and the State agency shall conduct a new hearing. The hearing official who originally ruled on the case may conduct the new hearing. In instances where good cause for failure to appear is based upon a showing of nonreceipt of the hearing notice as specified in paragraph (e)(3)(ii) of this section, the household member has 30 days after the date of the written notice of the hearing decision to claim good cause for failure to appear. In all other instances, the household member has 10 days from the date of the scheduled hearing to present reasons indicating a good cause for failure to appear. A hearing official must enter the good cause decision into the record.
(5) Participation while awaiting a hearing. A pending disqualification hearing shall not affect the individual’s or the household’s right to be certified and participate in the Program. Since the State agency cannot disqualify a household member for intentional Program violation until the hearing official finds that the individual has committed intentional Program violation, the State agency shall determine the eligibility and benefit level of the household in the same manner it would be determined for any other household. For example, if the misstatement or action for which the household member is suspected of intentional Program violation does not affect the household’s current circumstances, the household would continue to receive its allotment based on the latest certification action or be recertified based on a new application and its current circumstances. However, the household’s benefits shall be terminated if the certification period has expired and the household, after receiving its notice of expiration, fails to reapply. The State agency shall also reduce or terminate the household’s benefits if the State agency has documentation which substantiates that the household is ineligible or eligible for fewer benefits (even if these facts led to the suspicion of intentional Program violation and the resulting disqualification hearing) and the household fails to request a fair hearing and continuation of benefits pending the hearing. For example, the State agency may have facts which substantiate that a household failed to report a change in its circumstances even though the State agency has not yet demonstrated that the failure to report involved an intentional act of Program violation.
(6) Criteria for determining intentional Program violation. The hearing authority shall base the determination of intentional Program violation on clear and convincing evidence which demonstrates that the household member(s) committed, and intended to commit, intentional Program violation as defined in paragraph (c) of this section.
(7) Decision format. The hearing authority’s decision shall specify the reasons for the decision, identify the supporting evidence, identify the pertinent FNS regulation, and respond to reasoned arguments made by the household member or representative.
(8) Imposition of disqualification penalties. (i) If the hearing authority rules that the individual has committed an intentional Program violation, the household member must be disqualified in accordance with the disqualification periods and procedures in paragraph (b) of this section. The same act of intentional Program violation repeated over a period of time must not be separated so that separate penalties can be imposed.
(ii) No further administrative appeal procedure exists after an adverse State level hearing. The determination of intentional Program violation made by a disqualification hearing official cannot be reversed by a subsequent fair hearing decision. The household member, however, is entitled to seek relief in a court having appropriate jurisdiction. The period of disqualification may be subject to stay by a court of appropriate jurisdiction or other injunctive remedy.
(iii) Once a disqualification penalty has been imposed against a currently participating household member, the period of disqualification shall continue uninterrupted until completed regardless of the eligibility of the disqualifed member’s household. However, the disqualified member’s household shall continue to be responsible for repayment of the overissuance which resulted from the disqualified member’s intentional Program violation regardless of its eligibility for Program benefits.
(9) Notification of hearing decision. (i) If the hearing official finds that the household member did not commit intentional Program violation, the State agency shall provide a written notice which informs the household member of the decision.
(ii) If the hearing official finds that the household member committed intentional Program violation, the State agency shall provide written notice to the household member prior to disqualification. The notice shall inform the household member of the decision and the reason for the decision. In addition, the notice shall inform the household member of the date the disqualification will take effect. If the individual is no longer participating, the notice shall inform the individual that the period of disqualification will be deferred until such time as the individual again applies for and is determined eligible for Program benefits. The State agency shall also provide written notice to the remaining household members, if any, of either the allotment they will receive during the period of disqualification or that they must reapply because the certification period has expired. The procedures for handling the income and resources of the disqualified member are described in § 273.11(c). A written demand letter for restitution, as described in § 273.18(d)(3), shall also be provided.
(iii) Each State agency shall develop a form for notifying individuals that they have been found by an administrative disqualification hearing to have committed intentional Program violation. The form shall contain the information required by this section.
(10) Local level hearings. (i) The State agency may choose to provide administrative disqualification hearings at the local level in some or all of its project areas with a right to appeal to a State level hearing. If a local level disqualification hearing determines that a household member committed intentional Program violation, the notification of hearing decision described in paragraph (e)(9) of this section shall also inform the household member of the right to appeal the decision within 15 days after the receipt of the notice, the date the disqualification will take effect unless a State level hearing is requested, and that benefits will be continued pending a State level hearing if the household is otherwise eligible. If the household member appeals the local level decision, the advance notice of hearing, as described in paragraph (e)(3) of this section, shall be provided at least 10 days in advance of the scheduled State level hearing and shall also inform the household member that the local hearing decision will be upheld if the household or its representative fails to appear for the hearing without good cause. When a local level decision is appealed, the State agency shall conduct the State level hearing, arrive at a decision, and notify the household member and local agency of the decision within 60 days of the date the household member appealed its case. The prior decision shall not be taken into consideration by the State hearing officer in making the final determination. In all other respects, local level disqualification hearings shall be handled in accordance with the procedures specified in this section for State level hearings.
(ii) The State agency shall develop appropriate forms which contain the information required by this section for notification of a local level hearing decision and advance notice of a scheduled State level hearing for appeal of a local level decision.
(f) Waived hearings. Each State agency shall have the option of establishing procedures to allow accused individuals to waive their rights to an administrative disqualification hearing. For State agencies which choose the option of allowing individuals to waive their rights to an administrative disqualification hearing, the procedures shall conform with the requirements outlined in this section.
(1) Advance notification. (i) The State agency shall provide written notification to the household member suspected of intentional Program violation that the member can waive his/her right to an administrative disqualification hearing. Prior to providing this written notification to the household member, the State agency shall ensure that the evidence against the household member is reviewed by someone other than the eligibility worker assigned to the accused individual’s household and a decision is obtained that such evidence warrants scheduling a disqualification hearing.
(ii) The written notification provided to the household member which informs him/her of the possibility of waiving the administrative disqualification hearing shall include, at a minimum:
(A) The date that the signed waiver must be received by the State agency to avoid the holding of a hearing and a signature block for the accused individual, along with a statement that the head of household must also sign the waiver if the accused individual is not the head of household, with an appropriately designated signature block;
(B) A statement of the accused individual’s right to remain silent concerning the charge(s), and that anything said or signed by the individual concerning the charge(s) can be used against him/her in a court of law;
(C) The fact that a waiver of the disqualification hearing will result in disqualification and a reduction in benefits for the period of disqualification, even if the accused individual does not admit to the facts as presented by the State agency;
(D) An opportunity for the accused individual to specify whether or not he/she admits to the facts as presented by the State agency. This opportunity shall consist of the following statements, or statements developed by the State agency which have the same effect, and a method for the individual to designate his/her choice:
(1) I admit to the facts as presented, and understand that a disqualification penalty will be imposed if I sign this waiver; and
(2) I do not admit that the facts as presented are correct. However, I have chosen to sign this waiver and understand that a disqualification penalty will result;
(E) The telephone number and, if possible, the name of the person to contact for additional information; and
(F) The fact that the remaining household members, if any, will be held responsible for repayment of the resulting claim.
(iii) The State agency shall develop a waiver of right to an administrative disqualification hearing form which contains the information required by this section as well as the information described in paragraph (e)(3) of this section for advance notice of a hearing. However, if the household member is notified of the possibility of waiving his/her right to an administrative disqualification hearing before the State agency has scheduled a hearing, the State agency is not required to notify the household member of the date, time and place of the hearing at that point as required by paragraph (e)(3)(i)(A) of this section.
(2) Imposition of disqualification penalties. (i) If the household member suspected of intentional Program violation signs the waiver of right to an administrative disqualification hearing and the signed waiver is received within the timeframes specified by the State agency, the household member shall be disqualified in accordance with the disqualification periods specified in paragraph (b) of this section. The period of disqualification shall begin with the first month which follows the date the household member receives written notification of the disqualification. However, if the act of intentional Program violation which led to the disqualification occurred prior to the written notification of the disqualification periods specified in paragraph (b) of this section, the household member shall be disqualified in accordance with the disqualification periods in effect at the time of the offense. The same act of intentional Program violation repeated over a period of time shall not be separated so that separate penalties can be imposed.
(ii) No further administrative appeal procedure exists after an individual waives his/her right to an administrative disqualification hearing and a disqualification penalty has been imposed. The disqualification penalty cannot be changed by a subsequent fair hearing decision. The household member, however is entitled to seek relief in a court having appropriate jurisdiction. The period of disqualification may be subject to stay by a court of appropriate jurisdiction or other injunctive remedy.
(iii) Once a disqualification penalty has been imposed against a currently participating household member, the period of disqualification shall continue uninterrupted until completed regardless of the eligibility of the disqualified member’s household. However, the disqualified member’s household shall continue to be responsible for repayment of the overissuance which resulted from the disqualified member’s intentional Program violation regardless of its eligibility for Program benefits.
(3) Notification of disqualification. The State agency shall provide written notice to the household member prior to disqualification. The State agency shall also provide written notice to any remaining household members of the allotment they will receive during the period of disqualification or that they must reapply because the certification period has expired. The notice(s) shall conform to the requirements for notification of a hearing decision specified in paragraph (e)(9) of this section. A written demand letter for restitution, as described in § 273.18(d)(3), shall also be provided.
(4) Waiver of hearing at local level. Any State agency which has adopted the two-tiered approach for administrative disqualification hearings may also provide for waiver of the right to disqualification hearing procedures outlined in this section.
(g) Court referrals. Any State agency exempted from the requirement to establish an administrative disqualification system in accordance with paragraph (a) of this section shall refer appropriate cases for prosecution by a court of appropriate jurisdiction in accordance with the requirements outlined in this section.
(1) Appropriate cases. (i) The State agency shall refer cases of alleged intentional Program violation for prosecution in accordance with an agreement with prosecutors or State law. The agreement shall provide for prosecution of intentional Program violation cases and include the understanding that prosection will be pursued in cases where appropriate. This agreement shall also include information on how, and under what circumstances, cases will be accepted for possible prosecution and any other criteria set by the prosecutor for accepting cases for prosecution, such as a minimum amount of overissuance which resulted from intentional Program violation.
(ii) State agencies are encouraged to refer for prosecution under State or local statutes those individuals suspected of committing intentional Program violation, particularly if large amounts of SNAP benefits are suspected of having been obtained by intentional Program violation, or the individual is suspected of committing more than one act of intentional Program violation. The State agency shall confer with its legal representative to determine the types of cases which will be accepted for possible prosecution. State agencies shall also encourage State and local prosecutors to recommend to the courts that a disqualification penalty as provided in section 6(b) of the Food and Nutrition Act of 2008 be imposed in addition to any other civil or criminal penalties for such violations.
(2) Imposition of disqualification penalties. (i) State agencies shall disqualify an individual found guilty of intentional Program violation for the length of time specified by the court. If the court fails to impose a disqualification period, the State agency shall impose a disqualification period in accordance with the provisions in paragraph (b) of this section, unless contrary to the court order. If disqualification is ordered but a date for initiating the disqualification period is not specified, the State agency shall initiate the disqualification period for currently eligible individuals within 45 days of the date the disqualification was ordered. Any other court-imposed disqualification shall begin within 45 days of the date the court found a currently eligible individual guilty of civil or criminal misrepresentation or fraud.
(ii) Once a disqualification penalty has been imposed against a currently participating household member, the period of disqualification shall continue uninterrupted until completed regardless of the eligibility of the disqualified member’s household. However, the disqualified member’s household shall continue to be responsible for repayment of the overissuance which resulted from the disqualified member’s intentional Program violation regardless of its eligibility for Program benefits.
(3) Notification of disqualification. If the court finds that the household member committed intentional Program violation, the State agency shall provide written notice to the household member. The notice shall be provided prior to disqualification, whenever possible. The notice shall inform the household member of the disqualification and the date the disqualification will take effect. The State agency shall also provide written notice to the remaining household members, if any, of the allotment they will receive during the period of disqualification or that they must reapply because the certification period has expired. The procedures for handling the income and resources of the disqualified member are described in § 273.11(c). In addition, the State agency shall provide the written demand letter for restitution described in § 273.18(d)(3).
(h) Deferred adjudication. Each State agency shall have the option of establishing procedures to allow accused individuals to sign disqualification consent agreements for cases of deferred adjudication. State agencies are encouraged to use this option for those cases in which a determination of guilt is not obtained from a court due to the accused individual having met the terms of a court order or which are not prosecuted due to the accused individual having met the terms of an agreement with the prosecutor. For State agencies which choose the option of allowing individuals to sign disqualification consent agreements in cases referred for prosecution, the procedures shall conform with the requirements outlined in this section.
(1) Advance notification. (i) The State agency shall enter into an agreement with the State’s Attorney General’s Office or, where necessary, with county prosecutors which provides for advance written notification to the household member of the consequences of consenting to disqualification in cases of deferred adjudication.
(ii) The written notification provided to the household member which informs him/her of the consequences of consenting to disqualification as a part of deferred adjudication shall include, at a minimum:
(A) A statement for the accused individual to sign that the accused individual understands the consequences of consenting to disqualification, along with a statement that the head of household must also sign the consent agreement if the accused individual is not the head of household, with an appropriately designated signature block.
(B) A statement that consenting to disqualification will result in disqualification and a reduction in benefits for the period of disqualification, even though the accused individual was not found guilty of civil of criminal misrepresentation or fraud.
(C) A warning that the disqualification periods for intentional Program violations under SNAP are as specified in paragraph (b) of this section, and a statement of which penalty will be imposed as a result of the accused individual having consented to disqualification.
(D) A statement of the fact that the remaining household members, if any, will be held responsible for repayment of the resulting claim, unless the accused individual has already repaid the claim as a result of meeting the terms of the agreement with the prosecutor or the court order.
(iii) The State agency shall develop a disqualification consent agreement, or language to be included in the agreements reached between the prosecutors and accused individuals or in the court orders, which contains the information required by this section for notifying a household member suspected of intentional Program violation of the consequences of signing a disqualification consent agreement.
(2) Imposition of disqualification penalties. (i) If the household member suspected of intentional Program violation signs the disqualification consent agreement, the household member shall be disqualified in accordance with the disqualification periods specified in paragraph (b) of this section, unless contrary to the court order. The period of disqualification shall begin within 45 days of the date the household member signed the disqualification consent agreement. However, if the court imposes a disqualification period or specifies the date for initiating the disqualification period, the State agency shall disqualify the household member in accordance with the court order.
(ii) Once a disqualification penalty has been imposed against a currently participating household member, the period of disqualification shall continue uninterrupted until completed regardless of the eligibility of the disqualified member’s household. However, the disqualified member’s household shall continue to be responsible for repayment of the overissuance which resulted from the disqualified member’s intentional Program violation regardless of its eligibility for Program benefits.
(3) Notification of disqualification. If the household member suspected of intentional Program violation signs the disqualification consent agreement, the State agency shall provide written notice to the household member. The notice shall be provided prior to disqualification, whenever possible. The notice shall inform the household member of the disqualification and the date the disqualification will take effect. The State agency shall also provide written notice to the remaining household members, if any, of the allotment they will receive during the period of disqualification or that they must reapply because the certification period has expired. The procedures for handling the income and resources of the disqualified member are described in § 273.11(c). In addition, the State agency shall provide the written demand letter for restitution described in § 273.18(d)(3).
(i) Reporting requirements. (1) Each State agency shall report to FNS information concerning individuals disqualified for an intentional Program violation, including those individuals disqualified based on the determination of an administrative disqualification hearing official or a court of appropriate jurisdiction, and those individuals disqualified as a result of signing either a waiver of right to a disqualification hearing or a disqualification consent agreement in cases referred for prosecution. This information shall be submitted to FNS so that it is received no more than 30 days after the date the disqualification took effect.
(2) State agencies shall report information concerning each individual disqualified for an intentional Program violation to FNS. FNS will maintain this information and establish the format for its use.
(i) State agencies shall report information to the disqualified recipient database in accordance with procedures specified by FNS.
(ii) State agencies shall access disqualified recipient information from the database that allows users to check for current and prior disqualifications.
(3) The elements to be reported to FNS are name, social security number, date of birth, gender, disqualification number, disqualification decision date, disqualification start date, length of disqualification period (in months), locality code, and the title, location and telephone number of the locality contact. These elements shall be reported in accordance with procedures prescribed by FNS.
(i) The disqualification decision date is the date that a disqualification decision was made at either an administrative or judicial hearing, or the date an individual signed a waiver to forego an administrative or judicial hearing and accept a disqualification penalty.
(ii) The disqualification start date is the date the disqualification penalty was imposed by any of the means identified in § 273.16(i)(3)(i).
(iii) The locality contact is a person, position or entity designated by a State agency as the point of contact for other State agencies to verify disqualification records supplied to the disqualified recipient database by the locality contact’s State.
(4) All data submitted by State agencies will be available for use by any State agency that is currently under a valid signed Matching Agreement with FNS.
(i) State agencies shall, at a minimum, use the data to determine the eligibility of individual Program applicants prior to certification, and for 1 year following implementation, to determine the eligibility at recertification of its currently participating caseload. In lieu of the 1-year match at recertification requirement and for the same purpose, State agencies may conduct a one-time match of their participating caseload against active disqualifications in the disqualified recipient database. State agencies have the option of exempting minors from this match.
(ii) State agencies shall also use the disqualified recipient database for the purpose of determining the eligibility of newly added household members.
(5) The disqualification of an individual for an intentional Program violation in one political jurisdiction shall be valid in another. However, one or more disqualifications for an intentional Program violation, which occurred prior to April 1, 1983, shall be considered as only one previous disqualification when determining the appropriate penalty to impose in a case under consideration, regardless of where the disqualification(s) took place. State agencies are encouraged to identify and report to FNS any individuals disqualified for an intentional Program violation prior to April 1, 1983. A State agency submitting such historical information should take steps to ensure the availability of appropriate documentation to support the disqualifications in the event it is contacted for independent verification.
(6) If a State determines that supporting documentation for a disqualification record that it has entered is inadequate or nonexistent, the State agency shall act to remove the record from the database.
(7) If a court of appropriate jurisdiction reverses a disqualification for an intentional Program violation, the State agency shall take action to delete the record in the database that contains information related to the disqualification that was reversed in accordance with instructions provided by FNS.
(8) If an individual disputes the accuracy of the disqualification record pertaining to him/herself the State agency submitting such record(s) shall be responsible for providing FNS with prompt verification of the accuracy of the record.
(i) If a State agency is unable to demonstrate to the satisfaction of FNS that the information in question is correct, the State agency shall immediately, upon direction from FNS, take action to delete the information from the disqualified recipient database.
(ii) In those instances where the State agency is able to demonstrate to the satisfaction of FNS that the information in question is correct, the individual shall have an opportunity to submit a brief statement representing his or her position for the record. The State agency shall make the individual’s statement a permanent part of the case record documentation on the disqualification record in question, and shall make the statement available to each State agency requesting an independent verification of that disqualification.
(j) Reversed disqualifications. In cases where the determination of intentional program violation is reversed by a court of appropriate jurisdiction, the State agency shall reinstate the individual in the program if the household is eligible. The State agency shall restore benefits that were lost as a result of the disqualification in accordance with the procedures specified in § 273.17(e).
§ 273.17 Restoration of lost benefits.
(a) Entitlement. (1) The State agency shall restore to households benefits which were lost whenever the loss was caused by an error by the State agency or by an administrative disqualification for intentional Program violation which was subsequently reversed as specified in paragraph (e) of this section, or if there is a statement elsewhere in the regulations specifically stating that the household is entitled to restoration of lost benefits. Furthermore, unless there is a statement elsewhere in the regulations that a household is entitled to lost benefits for a longer period, benefits shall be restored for not more than twelve months prior to whichever of the following occurred first:
(i) The date the State agency receives a request for restoration from a household; or
(ii) The date the State agency is notified or otherwise discovers that a loss to a household has occurred.
(2) The State agency shall restore to households benefits which were found by any judicial action to have been wrongfully withheld. If the judicial action is the first action the recipient has taken to obtain restoration of lost benefits, then benefits shall be restored for a period of not more than twelve months from the date the court action was initiated. When the judicial action is a review of a State agency action, the benefits shall be restored for a period of not more than twelve months from the first of the following dates:
(i) The date the State agency receives a request for restoration:
(ii) If no request for restoration is received, the date the fair hearing action was initiated; but
(iii) Never more than one year from when the State agency is notified of, or discovers, the loss.
(3) Benefits shall be restored even if the household is currently ineligible.
(b) Errors discovered by the State agency. If the State agency determines that a loss of benefits has occurred, and the household is entitled to restoration of those benefits, the State agency shall automatically take action to restore any benefits that were lost. No action by the household is necessary. However, benefits shall not be restored if the benefits were lost more than 12 months prior to the month the loss was discovered by the State agency in the normal course of business, or were lost more than 12 months prior to the month the State agency was notified in writing or orally of a possible loss to a specific household. The State agency shall notify the household of its entitlement, the amount of benefits to be restored, any offsetting that was done, the method of restoration, and the right to appeal through the fair hearing process if the household disagrees with any aspect of the proposed lost benefit restoration.
(c) Disputed benefits. (1) If the State agency determines that a household is entitled to restoration of lost benefits, but the household does not agree with the amount to be restored as calculated by the State agency or any other action taken by the State agency to restore lost benefits, the household may request a fair hearing within 90 days of the date the household is notified of its entitlement to restoration of lost benefits. If a fair hearing is requested prior to or during the time lost benefits are being restored, the household shall receive the lost benefits as determined by the State agency pending the results of the fair hearing. If the fair hearing decision is favorable to the household, the State agency shall restore the lost benefits in accordance with that decision.
(2) If a household believes it is entitled to restoration of lost benefits but the State agency, after reviewing the case file, does not agree, the household has 90 days from the date of the State agency determination to request a fair hearing. The State agency shall restore lost benefits to the household only if the fair hearing decision is favorable to the household. Benefits lost more than 12 months prior to the date the State agency was initially informed of the household’s possible entitlement to lost benefits shall not be restored.
(d) Computing the amount to be restored. After correcting the loss for future months and excluding those months for which benefits may have been lost prior to the 12-month time limits described in paragraphs (b) and (c) of this section, the State agency shall calculate the amount to be restored as follows:
(1) If the household was eligible but received an incorrect allotment, the loss of benefits shall be calculated only for those months the household participated. If the loss was caused by an incorrect delay, denial, or termination of benefits, the months affected by the loss shall be calculated as follows:
(i) If an eligible household’s application was erroneously denied, the month the loss initially occurred shall be the month of application, or for an eligible household filing a timely reapplication, the month following the expiration of its certification period.
(ii) If an eligible household’s application was delayed, the months for which benefits may be lost shall be calculated in accordance with procedures in § 273.2(h).
(iii) If a household’s benefits were erroneously terminated, the month the loss initially occurred shall be the first month benefits were not received as a result of the erroneous action.
(iv) After computing the date the loss initially occurred, the loss shall be calculated for each month subsequent to that date until either the first month the error is corrected or the first month the household is found ineligible.
(2) For each month affected by the loss, the State agency shall determine if the household was actually eligible. In cases where there is no information in the household’s case file to document that the household was actually eligible, the State agency shall advise the household of what information must be provided to determine eligibility for these months. For each month the household cannot provide the necessary information to demonstrate its eligibility, the household shall be considered ineligible.
(3) For the months the household was eligible, the State agency shall calculate the allotment the household should have received. If the household received a smaller allotment than it was eligible to receive, the difference between the actual and correct allotments equals the amount to be restored.
(4) If a claim against a household is unpaid or held in suspense as provided in § 273.18, the amount to be restored shall be offset against the amount due on the claim before the balance, if any, is restored to the household. At the point in time when the household is certified and receives an initial allotment, the initial allotment shall not be reduced to offset claims, even if the initial allotment is paid retroactively.
(e) Lost benefits to individuals disqualified for intentional Program violation. Individuals disqualified for intentional Program violation are entitled to restoration of any benefits lost during the months that they were disqualified, not to exceed twelve months prior to the date of State agency notification, only if the decision which resulted in disqualification is subsequently reversed. For example, an individual would not be entitled to restoration of lost benefits for the period of disqualification based solely on the fact that a criminal conviction could not be obtained, unless the individual successfully challenged the disqualification period imposed by an administrative disqualification in a separate court action. For each month the individual was disqualified, not to exceed twelve months prior to State agency notification, the amount to be restored, if any, shall be determined by comparing the allotment the household received with the allotment the household would have received had the disqualified member been allowed to participate. If the household received a smaller allotment than it should have received, the difference equals the amount to be restored. Participation in an administrative disqualification hearing in which the household contests the State agency assertion of intentional Program violation shall be considered notification that the household is requesting restored benefits.
(f) Method of restoration. Regardless of whether a household is currently eligible or ineligible, the State agency shall restore lost benefits to a household by issuing an allotment equal to the amount of benefits that were lost. The amount restored shall be issued in addition to the allotment currently eligible households are entitled to receive. The State agency shall honor reasonable requests by households to restore lost benefits in monthly installments if, for example, the household fears the excess coupons may be stolen, or that the amount to be restored is more than it can use in a reasonable period of time.
(g) Changes in household composition. Whenever lost benefits are due a household and the household’s membership has changed, the State agency shall restore the lost benefits to the household containing a majority of the individuals who were household members at the time the loss occurred. If the State agency cannot locate or determine the household which contains a majority of household members the State agency shall restore the lost benefits to the household containing the head of the household at the time the loss occurred.
(h) Accounting procedures. Each State agency shall be responsible for maintaining an accounting system for documenting a household’s entitlement to restoration of lost benefits and for recording the balance of lost benefits that must be restored to the household. Each State agency shall at a minimum, document how the amount to be restored was calculated and the reason lost benefits must be restored. The accounting system shall be designed to readily identify those situations where a claim against a household can be used to offset the amount to be restored.
§ 273.18 Claims against households.
(a) General. (1) A recipient claim is an amount owed because of:
(i) Benefits that are overpaid or
(ii) Benefits that are trafficked. Trafficking is defined in 7 CFR 271.2.
(2) This claim is a Federal debt subject to this and other regulations governing Federal debts. The State agency must establish and collect any claim by following these regulations.
(3) As a State agency, you must develop a plan for establishing and collecting claims that provides orderly claims processing and results in claims collections similar to recent national rates of collection. If you do not meet these standards, you must take corrective action to correct any deficiencies in the plan.
(4) The following are responsible for paying a claim:
(i) Each person who was an adult member of the household when the overpayment or trafficking occurred;
(ii) A person connected to the household, such as an authorized representative, who actually trafficks or otherwise causes an overpayment or trafficking.
(b) Types of claims. There are three types of claims:
| An . . . | is . . . |
|---|---|
| (1) Intentional Program violation (IPV) claim | any claim for an overpayment or trafficking resulting from an individual committing an IPV. An IPV is defined in § 273.16. |
| (2) Inadvertent household error (IHE) claim | any claim for an overpayment resulting from a misunderstanding or unintended error on the part of the household. |
| (3) Agency error (AE) claim | any claim for an overpayment caused by an action or failure to take action by the State agency. |
(c) Calculating the claim amount—(1) Claims not related to trafficking.
| (i) As a State agency, you | ||
| must calculate a claim . . . | and . . . | and . . . |
| back to at least twelve months prior to when you become aware of the overpayment | for an IPV claim, the claim must be calculated back to the month the act of IPV first occurred | for all claims, don’t include any amounts that occurred more than six years before you became aware of the overpayment. |
| (ii) The actual steps for calculating a claim are | ||
| you . . . | unless . . . | then . . . |
| (A) determine the correct amount of benefits for each month that a household received an overpayment | ||
| (B) do not apply the earned income deduction to that part of any earned income that the household failed to report in a timely manner when this act is the basis for the claim | the claim is an AE claim | apply the earned income deduction. |
| (C) subtract the correct amount of benefits from the benefits actually received. The answer is the amount of the overpayment | this answer is zero or negative | dispose of the claim referral. |
| (D) reduce the overpayment amount by any EBT benefits expunged from the household’s EBT benefit account in accordance with your own procedures. The difference is the amount of the claim | you are not aware of any expunged benefits | the amount of the overpayment calculated in paragraph (c)(1)(ii)(C) of this section is the amount of the claim. |
(2) Trafficking-related claims. Claims arising from trafficking-related offenses will be the value of the trafficked benefits as determined by:
(i) The individual’s admission;
(ii) Adjudication; or
(iii) The documentation that forms the basis for the trafficking determination.
(d) Claim referral management.
| (1) As a State agency, you | ||
| must . . . | and you . . . | unless . . . |
| establish a claim before the last day of the quarter following the quarter in which the overpayment or trafficking incident was discovered | will ensure that no less than 90 percent of all claim referrals are either established or disposed of according to this time frame | you develop and use your own standards and procedures that have been approved by us (see paragraph (d)(2) of this section). |
(2) Instead of using the standard in paragraph (d)(1) of this section, you may opt to develop and follow your own plan for the efficient and effective management of claim referrals.
(i) This plan must be approved by us.
(ii) At a minimum, this plan must include:
(A) Justification as to why your standards and procedures will be more efficient and effective than our claim referral standard;
(B) Procedures for the detection and referral of potential overpayments or trafficking violations;
(C) Time frames and procedures for tracking claim referrals through date of discovery to date of establishment;
(D) A description of the process to ensure that these time frames are being met;
(E) Any special procedures and time frames for IPV referrals; and
(F) A procedure to track and follow-up on IPV claim referrals when these referrals are referred for prosecutorial or similar action.
(3) States must establish claims even if they cannot be established within the timeframes outlined under paragraph (d) of this section.
(e) Initiating collection action and managing claims—(1) Applicability. State agencies must begin collection action on all claims unless the conditions under paragraph (e)(2) of this section apply.
(2) Pre-establishment cost effectiveness determination. A State agency may opt not to establish and subsequently collect an overpayment that is not cost effective. The following is our cost-effectiveness policy for State agencies:
| (i) You may follow your own cost effectiveness plan and | ||
| opt not to establish any claim if . . . | unless . . . | or . . . |
| you determine that the claim referral is not cost effective to pursue | you do not have a cost-effectiveness plan approved by us | you already established the claim or discovered the overpayment in a quality control review. |
| (ii) Or you may follow the FNS threshold and | ||
| opt not to establish any claim if . . . | unless . . . | or . . . |
| you determine that the claim referral is $125 or less | the household is currently participating in the Program | you already established the claim or discovered the overpayment in a quality control review. |
(3) Notification of claim. (i) Each State agency must develop and mail or otherwise deliver to the household written notification to begin collection action on any claim.
(ii) The claim will be considered established for tracking purposes as of the date of the initial demand letter or written notification.
(iii) If the claim or the amount of the claim was not established at a fair hearing, the State agency must provide the household with a one-time notice of adverse action. The notice of adverse action may either be sent separately or as part of the demand letter.
| (iv) The initial demand letter or notice of adverse action must include language stating: |
| (A) The amount of the claim. |
| (B) The intent to collect from all adults in the household when the overpayment occurred. |
| (C) The type (IPV, IHE, AE or similar language) and reason for the claim. |
| (D) The time period associated with the claim. |
| (E) How the claim was calculated. |
| (F) The phone number to call for more information about the claim. |
| (G) That, if the claim is not paid, it will be sent to other collection agencies, who will use various collection methods to collect the claim. |
| (H) The opportunity to inspect and copy records related to the claim. |
| (I) Unless the amount of the claim was established at a fair hearing, the opportunity for a fair hearing on the decision related to the claim. The household will have 90 days to request a fair hearing. |
| (J) That, if not paid, the claim will be referred to the Federal government for federal collection action. |
| (K) That the household can make a written agreement to repay the amount of the claim prior to it being referred for Federal collection action. |
| (L) That, if the claim becomes delinquent, the household may be subject to additional processing charges. |
| (M) That the State agency may reduce any part of the claim if the agency believes that the household is not able to repay the claim. |
| (N) A due date or time frame to either repay or make arrangements to repay the claim, unless the State agency is to impose allotment reduction. |
| (O) If allotment reduction is to be imposed, a due date or time frame to either repay or make arrangements to repay the claim in the event that the household stops receiving benefits. |
| (P) If allotment reduction is to be imposed, the percentage to be used and the effective date. |
(v) The due date or time frame for repayment must be not later than 30 days after the date of the initial written notification or demand letter.
(vi) Subsequent demand letters or notices may be sent at the discretion of the State agency. The language to be used and content of these letters is left up to the State agency.
(4) Repayment agreements. (i) Any repayment agreement for any claim must contain due dates or time frames for the periodic submission of payments.
(ii) The agreement must specify that the household will be subject to involuntary collection action(s) if payment is not received by the due date and the claim becomes delinquent.
(5) Determining Delinquency. (i) Unless specified in paragraph (e)(5)(iv) of this section, a claim must be considered delinquent if:
(A) The claim has not been paid by the due date and a satisfactory payment arrangement has not been made; or
(B) A payment arrangement has been established and a scheduled payment has not been made by the due date.
(ii) The date of delinquency for a claim covered under paragraph (e)(5)(i)(A) of this section is the due date on the initial written notification/demand letter. The claim will remain delinquent until payment is received in full, a satisfactory payment agreement is negotiated, or allotment reduction is invoked.
(iii) The date of delinquency for a claim covered under paragraph (e)(5)(i)(B) of this section is the due date of the missed installment payment unless the claim was delinquent prior to entering into a repayment agreement, in which case the due date will be the due date on the initial notification/demand letter. The claim will remain delinquent until payment is received in full, allotment reduction is invoked, or if the State agency determines to either resume or re-negotiate the repayment schedule.
(iv) A claim will not be considered delinquent if another claim for the same household is currently being paid either through an installment agreement or allotment reduction and you, as a State agency, expect to begin collection on the claim once the prior claim(s) is settled.
(v) A claim is not subject to the requirements for delinquent debts if the State agency is unable to determine delinquency status because collection is coordinated through the court system.
(6) Fair hearings and claims. (i) A claim awaiting a fair hearing decision must not be considered delinquent.
(ii) If the hearing official determines that a claim does, in fact, exist against the household, the household must be re-notified of the claim. The language to be used in this notice is left up to the State agency. The demand for payment may be combined with the notice of the hearing decision. Delinquency must be based on the due date of this subsequent notice and not on the initial pre-hearing demand letter sent to the household.
(iii) If the hearing official determines that a claim does not exist, the claim is disposed of in accordance with paragraph (e)(8) of this section.
(7) Compromising claims. (i) As a State agency, you may compromise a claim or any portion of a claim if it can be reasonably determined that a household’s economic circumstances dictate that the claim will not be paid in three years.
(ii) You may use the full amount of the claim (including any amount compromised) to offset benefits in accordance with § 273.17.
(iii) You may reinstate any compromised portion of a claim if the claim becomes delinquent.
(8) Terminating and writing-off claims—(i) A terminated claim is a claim in which all collection action has ceased. A written-off claim is no longer considered a receivable subject to continued Federal and State agency collection and reporting requirements.
(ii) The following is our claim termination policy:
| As a State agency, if . . . | Then you . . . | Unless . . . |
|---|---|---|
| (A) you find that the claim is invalid | must discharge the claim and reflect the event as a balance adjustment rather than a termination | it is appropriate to pursue the overpayment as a different type of claim (e.g., as an IHE rather than an IPV claim). |
| (B) all adult household members die | must terminate and write-off the claim | you plan to pursue the claim against the estate. |
| (C) the claim balance is $25 or less and the claim has been delinquent for 90 days or more | must terminate and write-off the claim | other claims exist against this household resulting in an aggregate claim total of greater than $25. |
| (D) you determine it is not cost effective to pursue the claim any further | must terminate and write-off the claim | we have not approved your overall cost-effectiveness criteria. |
| (E) the claim is delinquent for three years or more | must terminate and write-off the claim | you plan to continue to pursue the claim through Treasury’s Offset Program. |
| (F) you cannot locate the household | may terminate and write-off the claim | |
| (G) a new collection method or a specific event (such as winning the lottery) substantially increases the likelihood of further collections | may reinstate a terminated and written-off claim | you decide not to pursue this option. |
(f) Acceptable forms of payment.
| You may collect a claim by: | However . . . |
|---|---|
| (1) Reducing benefits prior to issuance. This includes allotment reduction and offsets to restored benefits | You must follow the instructions and limits found in paragraphs (g)(1) and (g)(3) of this section. |
| (2) Reducing benefits after issuance. These are benefits from electronic benefit transfer (EBT) accounts | You must follow the instructions and limits found in paragraph (g)(2) of this section. |
| (3) Accepting cash or any of its generally accepted equivalents. These equivalents include check, money order, and credit or debit cards | You do not have to accept credit or debit cards if you do not have the capability to accept these payments. |
| (4) Conducting your own offsets and intercepts. This includes but is not limited to wage garnishments and intercepts of various State payments. These collections are considered “cash” for FNS claim accounting and reporting purposes | You must follow any limits that may apply in paragraph (g) of this section. |
| (5) Requiring the household to perform public service | This form of payment must be ordered by a court and specifically be in lieu of paying any claim. |
| (6) Participating in the Treasury collection programs | You must follow the procedures found in paragraph (n) of this section. |
(g) Collection methods—(1) Allotment reduction. The following is our allotment reduction policy:
| As a State agency, you must . . . | Unless . . . |
|---|---|
| (i) Automatically collect payments for any claim by reducing the amount of monthly benefits that a household receives | the claim is being collected at regular intervals at a higher amount or another household is already having its allotment reduced for the same claim (see paragraph (g)(1)(vi) of this section). |
| (ii) For an IPV claim, limit the amount reduced to the greater of $20 per month or 20 percent of the household’s monthly allotment or entitlement | the household agrees to a higher amount. |
| (iii) For an IHE or AE claim, limit the amount reduced to the greater of $10 per month or 10 percent of the household’s monthly allotment | the household agrees to a higher amount. |
| (iv) Not reduce the initial allotment when the household is first certified | the household agrees to this reduction. |
| (v) Not use additional involuntary collection methods against individuals in a household that is already having its benefit reduced | the additional payment is voluntary; or the source of the payment is irregular and unexpected such as a State tax refund or lottery winnings offset. |
| You may . . . | |
| (vi) Collect using allotment reduction from two separate households for the same claim. However, you are not required to perform this simultaneous reduction. | |
| (vii) Continue to use any other collection method against any individual who is not a current member of the household that is undergoing allotment reduction. | |
(2) Benefits from EBT accounts. (i) As a State agency, you must allow a household to pay its claim using benefits from its EBT benefit account.
(ii) You must comply with the following EBT benefit claims collection and adjustment requirements:
| (A) For collecting from active (or reactivated) EBT benefits . . . | ||
| You . . . | or . . . | and . . . |
| need written permission which may be obtained in advance and done in accordance with paragraph (g)(2)(iv) of this section; | oral permission for one time reductions with you sending the household a receipt of the transaction within 10 days | the retention rules do apply to this collection. |
| (B) For collecting from stale EBT benefits . . . | ||
| You . . . | and . . . | and . . . |
| must mail or otherwise deliver to the household written notification that you intend to apply the benefits to the outstanding claim | give the household at least 10 days to notify you that it doesn’t want to use these benefits to pay the claim | the retention rules apply to this collection. |
| (C) For making an adjustment with expunged EBT benefits . . . | ||
| You . . . | and . . . | and . . . |
| must adjust the amount of any claim by subtracting any expunged amount from the EBT benefit account for which you become aware | this can be done anytime | the retention rules do not apply to this adjustment. |
(iii) A collection from an EBT account must be non-settling against the benefit drawdown account.
(iv) At a minimum, any written agreement with the household to collect a claim using active EBT benefits must include:
(A) A statement that this collection activity is strictly voluntary;
(B) The amount of the payment;
(C) The frequency of the payments (i.e., whether monthly or one time only);
(D) The length (if any) of the agreement; and
(E) A statement that the household may revoke this agreement at any time.
(3) Offsets to restored benefits. You must reduce any restored benefits owed to a household by the amount of any outstanding claim. This may be done at any time during the claim establishment and collection process.
(4) Lump sum payments. You must accept any payment for a claim whether it represents full or partial payment. The payment may be in any of the acceptable formats.
(5) Installment payments. (i) You may accept installment payments made for a claim as part of a negotiated repayment agreement.
(ii) As a household, if you fail to submit a payment in accordance with the terms of your negotiated repayment schedule, your claim becomes delinquent and it will be subject to additional collection actions.
(6) Intercept of unemployment compensation benefits. (i) As a State agency, you may arrange with a liable individual to intercept his or her unemployment compensation benefits for the collection of any claim. This collection option may be included as part of a repayment agreement.
(ii) You may also intercept an individual’s unemployment compensation benefits by obtaining a court order.
(iii) You must report any intercept of unemployment compensation benefits as “cash” payments when they are reported to us.
(7) Public service. If authorized by a court, the value of a claim may be paid by the household performing public service. As a State agency, you will report these amounts in accordance with our instructions.
(8) Other collection actions. You may employ any other collection actions to collect claims. These actions include, but are not limited to, referrals to collection and/or other similar private and public sector agencies, state tax refund and lottery offsets, wage garnishments, property liens and small claims court.
(9) Unspecified joint collections. When an unspecified joint collection is received for a combined public assistance/SNAP recipient claim, each program must receive its pro rata share of the amount collected. An unspecified joint collection is when funds are received in response to correspondence or a referral that contained both the SNAP and other program claim(s) and the debtor does not specify to which claim to apply the collection.
(h) Refunds for overpaid claims. (1) As a household, if you overpay a claim, the State agency must provide a refund for the overpaid amount as soon as possible after the State agency finds out about the overpayment. You will be paid by whatever method the State agency deems appropriate considering the circumstances.
(2) You are not entitled to a refund if the overpaid amount is attributed to an expunged EBT benefit.
(i) Interstate claims collection. (1) Unless a transfer occurs as outlined in paragraph (i)(2) of this section, as a State agency, you are responsible for initiating and continuing collection action on any SNAP recipient claim regardless of whether the household remains in your State.
(2) You may accept a claim from another State agency if the household with the claim moves into your State. Once you accept this responsibility, the claim is yours for future collection and reporting. You will report interstate transfers to us in accordance with our instructions.
(j) Bankruptcy. A State agency may act on our behalf in any bankruptcy proceeding against a bankrupt household with outstanding recipient claims.
(k) Retention rates. (1) The retention rates for State agencies are as follows:
| If you collect an . . . | then the retention rate is . . . |
|---|---|
| (i) IPV claim | 35 percent. |
| (ii) IHE claim | 20 percent. |
| (iii) IHE claim by reducing a person’s unemployment compensation benefit | 35 percent. |
| (iv) AE claim | nothing. |
(2) These rates do not apply to:
(i) Any reduction in benefits when you disqualify someone for an IPV;
(ii) The value of court-ordered public service performed in lieu of the payment of a claim; or
(iii) Payments made to a court that are not subsequently forwarded as payment of an established claim.
(l) Submission of payments to us. A State agency must send us the value of funds collected for IHE, IPV or AE claims according to our instructions. We must pay you for claims collection retention by electronic funds transfer.
(m) Accounting procedures. (1) As a State agency, you must maintain an accounting system for monitoring recipient claims against households. This accounting system shall consist of both the system of records maintained for individual debtors and the accounts receivable summary data maintained for these debts.
(2) At a minimum, the accounting system must document the following for each claim:
(i) The date of discovery;
(ii) The reason for the claim;
(iii) The calculation of the claim;
(iv) The date you established the claim;
(v) The methods used to collect the claim;
(vi) The amount and incidence of any claim processing charges;
(vii) The reason for the final disposition of the claim;
(viii) Any collections made on the claim;
(ix) Any correspondence, including follow-up letters, sent to the household.
(3) At a minimum, your accounting or certification system must also identify the following for each claim:
(i) Those households whose claims have become delinquent;
(ii) Those situations in which an amount not yet restored to a household can be used to offset a claim owed by the household; and
(iii) Those households with outstanding claims that are applying for benefits.
(4) When requested and at intervals determined by us, your accounting system must also produce:
(i) Accurate and supported outstanding balances and collections for established claims; and
(ii) Summary reports of the funds collected, the amount submitted to FNS, the claims established and terminated, any delinquent claims processing charges, the uncollected balance and the delinquency of the unpaid debt.
(5) On a quarterly basis, unless otherwise directed by us, your accounting system must reconcile summary balances reported to individual supporting records.
(n) Treasury’s Offset Programs (TOP)—(1) Referring debts to TOP. (i) As a State agency, you must refer to TOP all recipient claims that are delinquent for 180 or more days.
(ii) You must certify that all of these claims to be referred to TOP are 180 days delinquent and legally enforceable.
(iii) You must refer these claims in accordance with our and the Department of the Treasury’s (Treasury) instructions.
(iv) You must not refer claims to TOP that:
(A) You become aware that the debtor is a member of a participating household that is having its allotment reduced to collect the claim; or
(B) Fall into any other category designated by us as non-referable to TOP.
(2) Notifying debtors of referral to TOP. (i) As a State agency, you must notify the debtor of the impending referral to TOP according to our instructions relating to:
(A) What constitutes an adequate address to send the notice;
(B) What specific language will be included in the TOP referral notice;
(C) What will be the appropriate time frames and appeal rights; and
(D) Any other information that we determine necessary to fulfill all due process and other legal requirements as well as to adequately inform the debtor of the impending action.
(ii) You must also follow our instructions regarding procedures connected with responding to inquiries, subsequent reviews and hearings, and any other procedures determined by us as necessary in the debtor notification process.
(3) Effect on debtors. (i) If you, as a debtor, have your claim referred to TOP, any eligible Federal payment that you are owed may be intercepted through TOP.
(ii) You may also be responsible for paying any collection or processing fees charged by the Federal government to intercept your payment.
(4) Procedures when a claim is in TOP. (i) As a State agency, you must follow FNS and Treasury procedures when the claim is in TOP.
(ii) You must remove a claim from TOP if:
(A) FNS or Treasury instruct you to remove the debt; or
(B) You discover that:
(1) The debtor is a member of a SNAP household undergoing allotment reduction;
(2) The claim is paid up;
(3) The claim is disposed of through a hearing, termination, compromise or any other means;
(4) The claim was referred to TOP in error; or
(5) You make an arrangement with the debtor to resume payments.
(5) Receiving and reporting. As a State agency, you must follow our procedures on receiving and reporting TOP payments.
(6) Security or confidentiality agreements. As a State agency, you must follow our procedures regarding any security or confidentiality agreements or processes necessary for TOP participation.
§ 273.19 [Reserved]
Subpart G—Program Alternatives
§ 273.20 SSI cash-out.
(a) Ineligibility. No individual who receives supplemental security income (SSI) benefits and/or State supplementary payments as a resident of California is eligible to receive SNAP benefits. The Secretary of the Department of Health and Human Services has determined that the SSI payments in California have been specifically increased to include the value of the SNAP allotment.
(b) Receipt of SSI benefits. In California, an individual must actually receive, not merely have applied for, SSI benefits to be determined ineligible for SNAP. If the State agency provides payments at least equal to the level of SSI benefits to individuals who have applied for but are awaiting an SSI eligibility determination, receipt of these substitute payments will terminate the individual’s eligibility for SNAP benefits. Once SSI benefits are received, the individual will remain ineligible for SNAP benefits, even during months in which receipt of the SSI benefits is interrupted, or suspended, until the individual is terminated from the SSI program.
(c) Income and resources. In California, the income and resources of the SSI recipient living in a household shall not be considered in determining eligibility or level of benefits of the household, as specified in § 273.11(d).
§ 273.21 Monthly Reporting and Retrospective Budgeting (MRRB).
(a) System design. This section provides for an MRRB system for determining household eligibility and benefits. For included households, this system replaces the prospective budgeting system provided in the preceding sections of this part. The MRRB system provides for the use of retrospective information in calculating household benefits, normally based on information submitted by the household in monthly reports. The State agency shall establish an MRRB system as follows:
(1) In establishing either a one-month or a two-month MRRB system, the State agency shall use the same system it uses in its TANF Program unless it has been granted a waiver by FNS. Differences between a one-month and a two-month system are described in paragraph (d) of this section.
(2) The State agency shall determine eligibility, either prospectively or retrospectively, on the same basis that it uses for its TANF program, unless it has been granted a waiver by FNS.
(3) Budgeting waivers. FNS may approve waivers of the budgeting requirements of this section to conform to budgeting procedures in the TANF program, except for households excluded from retrospective budgeting under paragraph (b) of this section.
(b) Included and excluded households. The establishment of either a monthly reporting or retrospective budgeting system is a State agency option. Certain households are specifically excluded from both monthly reporting and retrospective budgeting. A household that is included in a monthly reporting system must be retrospectively budgeted. Households not required to submit monthly reports may have their benefits determined on either a prospective or retrospective basis at the State agency’s option, unless specifically excluded from retrospective budgeting.
(1) The following households are excluded from both monthly reporting and retrospective budgeting:
(i) Migrant or seasonal farmworker households.
(ii) Households in which all members are homeless individuals.
(iii) Households with no earned income in which all adult members are elderly or disabled.
(2) Households residing on an Indian reservation where there was no monthly reporting system in operation on March 25, 1994 are excluded from monthly reporting.
(c) Information on MRRB. At the certification and recertification interview, the State agency shall provide the household with the following:
(1) An oral explanation of the purpose of MRRB;
(2) A copy of the monthly report and an explanation of how to complete and file it;
(3) An explanation that information required to be reported on the monthly report is the only reporting requirement for such information;
(4) An explanation of what the household shall verify when it submits a monthly report and how it will verify it;
(5) A telephone number (toll-free number or a number where collect calls will be accepted outside the local calling area) which the household may call to ask questions or to obtain help in completing the monthly report; and
(6) Written explanations of this information.
(7) Special assistance. The State agency shall provide special assistance in completing and filing monthly reports to households whose adult members are all either mentally or physically handicapped or are non-English speaking or otherwise lacking in reading and writing skills such that they cannot complete and file the required reports.
(d) One and two-month systems. Each State agency shall adopt either a one-month or two-month MRRB system. A one-month system shall have either one or two beginning months in the certification period and a two-month system shall have two beginning months. Except for beginning months in sequence as described in the preceding sentence, the State agency shall not consider as a beginning month any month which immediately follows a month in which a household is certified.
(1) One-month system. In the one-month system, the issuance month immediately follows its corresponding budget month.
(2) Two-month system. In the two-month system, the issuance month is the second month following its corresponding budget month. There are two beginning months of participation in this system, the first month and the following month.
(e) Determining eligibility for households not certified under the beginning months’ procedures of § 273.21(g). The State agency shall determine eligibility consistent with paragraph (a)(2) of this section and in accordance with either of the following options.
(1) Prospective eligibility. The State agency shall determine eligibility by considering all factors of eligibility prospectively for each of the issuance months.
(2) Retrospective eligibility. The State agency shall determine eligibility by considering all factors of eligibility retrospectively using the appropriate budget month except for residency and compliance with the requirements regarding social security numbers. Compliance with work registration provisions shall be considered as of the issuance month or month of application. The 60-day time frame for determining the applicability of the voluntary quit provision of § 273.7(n) shall be measured by the State agency from the date of application.
(f) Calculating allotments for households following the beginning months—(1) Household composition. (i) If eligibility is determined retrospectively the State agency shall determine the household’s composition as of the last day of the budget month.
(ii) If eligibility is determined prospectively (during the beginning months or for households processed under paragraph (e)(1) of this section), the State agency shall determine the household’s composition as of the issuance month.
(iii) In a two-month system, the following provisions shall apply with regard to a household which reports, in the month between the budget month and the corresponding issuance month, that it has gained a new member.
(A) The State agency shall use the same household composition for determining the household’s eligibility that it uses for calculating the household’s benefit level.
(B) If the new member is not already certified to receive SNAP benefits in another household participating within the State, the new member’s income, deductible expenses, and resources from the issuance month shall be considered in determining the household’s eligibility and benefit level. If the new member had been providing income to the household on an ongoing basis prior to becoming a member of the household, the State agency shall exclude the previously provided income in determining the household’s issuance month benefits and eligibility.
(C) If the individual has moved out of one household receiving SNAP benefits within the State and into another, with no break in participation, the State agency shall use the individual’s income, deductible expenses, and resources from the budget month in determining benefits to be provided in the issuance month. The State agency shall include such an individual and the individual’s income, deductible expenses, and resources in determining the issuance month eligibility and benefit level of either the household from which the individual has moved or the household into which the individual has moved, but not both. In determining the issuance month eligibility and benefit level of the household into which the individual has moved, the State agency shall disregard budget month income received by the new member from a terminated source.
(D) The State agency may add new members to the household effective either the month the household reports the gain of a new household member or the first day of the issuance month following the month the household reports the gain of a new member. The benefits shall not be prorated.
(iv) The State agency shall add a previously excluded member who was disqualified for an intentional program violation or failure to comply with workfare or work requirements, was ineligible because of failure to comply with the social security number requirement, or was previously an ineligible alien retrospectively to the household the month after the disqualification period ends. All other previously excluded members shall be added in accordance with the procedures in paragraph (f)(1)(iii)(B) of this section, using the new member’s issuance month income and expenses.
(2) Income and deductions. For the household members as determined in accordance with paragraph (f)(1) of this section, the State agency shall calculate the allotment using the household members’ income and deductions from the budget month, except as follows:
(i) The State agency shall annualize self-employment income which is received other than monthly, in accordance with § 273.11(a). Such income shall be budgeted either prospectively or retrospectively and shall not affect more benefit months than the number of months in the period over which it is annualized or prorated. Except that, households which receive self-employment income from a farm operation monthly but incur irregular expenses to produce such self-employment farm income shall be given the option to annualize the self-employment farm income and expenses over a 12-month period.
(ii) The State agency shall prorate contract income received over a period of less than one year and either prospectively or retrospectively budget such income. Such income shall not effect more benefit months than the number of months in the period over which it is prorated.
(iii) Earned and unearned educational income shall be prorated over the period it is intended to cover in accordance with § 273.10(c)(3)(iii), and it shall be budgeted either prospectively or retrospectively. Such income shall not effect more benefit months than the number of months in the period over which it is prorated.
(iv) The State agency shall budget deductible expenses prorated over two or more months, except medical expenses, either prospectively or retrospectively, provided That such deductions are not budgeted over more months than they are intended to cover, and the total amount deducted does not exceed the total amount of the expenses. Medical expenses shall be budgeted prospectively. The State agency shall continue to allow deductions for expenses incurred even if billed on other than a monthly basis unless the household reports a change in the expense. The State agency may average the child support expense and budget it prospectively or retrospectively.
(v) The State agency shall budget income received on a recurring monthly or semimonthly basis for the month that it is intended to cover. The State agency shall not vary the budgeting of such income merely because it is received during another month as the result of changes in mailing cycles or pay dates, or because weekends or holidays result in an additional or missed payment.
(vi) The State agency may budget interest income using one of the following methods in paragraphs (f)(2)(vi) (A), (B), or (C) of this section. The State agency shall either establish categories of interest to be handled by each of the methods or shall offer each household the option of which method to budget the interest income.
(A) Actual interest income received in the budget month.
(B) Prorated interest income calculated by dividing the amount of interest anticipated during the certification period by the number of months in the certification period.
(C) An averaged amount adjusted for anticipated changes.
(vii) For a new household member described under paragraph (f)(1)(iii)(B) of this section, the State agency shall consider the new member’s income and deductible expenses prospectively until the new member’s first month living with the household becomes the budget month.
(viii) The options provided under paragraph (j)(1)(vii) of this section may affect the calculation of income and deductions.
(g) Determining eligibility and allotments in the beginning months. The State agency shall use the prospective budgeting procedures of this paragraph for determining the allotments and eligibility of households in the MRRB system during this first month, or first and second month of participation. The State agency shall not apply the procedures of this paragraph to the month(s) following the month of termination resulting from a temporary one-month change.
(1) Determining eligibility during the beginning months. The State agency shall determine eligibility prospectively in the beginning month(s).
(2) Calculating allotments during the beginning months. the State agency shall calculate allotments prospectively in the beginning month(s).
(3) The first months of retrospective budgeting following the beginning months. The State agency shall begin to base issuances to the household on retrospective budgeting during the first month for which the State’s system can use the month of application as a budget month. In a one-month system, the first month for which the issuance is based on retrospective budgeting shall be the second month of participation. In a two-month system, the first month for which the issuance is based on retrospective budgeting shall be the third month of participation. If the State agency had been averaging income or converting weekly or biweekly income to a monthly amount in the beginning months, it may begin using the household’s actual budget month income when the household becomes subject to retrospective budgeting. For purposes of this paragraph, any income received in either or both of the beginning months from a source which no longer provides income to the household (terminated income), which was included in the household’s prospective budget, shall be disregarded when the beginning month becomes the budget month.
(h) The monthly report form—(1) General. (i) The State agency shall give the household a reasonable period of time after close of the budget month to submit the monthly reports.
(ii) The State agency shall require each household in the MRRB system to report on household circumstances on a monthly basis as a condition of continuing eligibility.
(iii) The State agency shall provide an individual or agency unit which a household may contact to receive prompt answers about the completion of the form. A telephone number (toll free for households outside the local calling area) which a household may use to obtain further information shall also be available.
(iv) The State agency shall ensure that households are informed about the availability and amount of the standard utility allowances, if the State agency offers them.
(2) Monthly report form. The State agency’s monthly report form shall meet the following requirements:
(i) Be written in clear, simple language;
(ii) Meet the bilingual requirements described in § 272.4(b) of this chapter;
(iii) Specify the date by which the agency must receive the form and the consequences of a late or incomplete form, including whether the State agency shall delay payment if the form is not received by the specified date;
(iv) Specify the verification which the household must submit with the form, in accordance with § 273.21(i);
(v) Identify the individual or agency unit available to assist in completing the form:
(vi) Include a statement to be signed by a member of the household (in accordance with § 273.2(c)(7) regarding acceptable methods of signature), indicating his or her understanding that the provided information may result in changes in the level of benefits, including reduction and termination;
(vii) Include, in prominent and boldface lettering, an understandable description of the Act’s civil and criminal penalties for fraud.
(viii) If the form requests Social Security numbers, include a statement of the State agency’s authority to require Social Security numbers (SSN’s) (including the statutory citation, the title of the statute, and the fact that providing SSN’s is mandatory), the purpose of requiring SSN’s, the routine uses for SSN’s, and the effect of not providing SSN’s. This statement may be on the form itself or included as an attachment to the form.
(3) Reported information. The State agency may determine the information relevant to eligibility and benefit determination to be included on the monthly report form except that the State agency shall not require households to monthly report medical expenses. Medical expenses may be reported in accordance with § 273.10(d)(4).
(4) Combined form. If the State agency uses a combined monthly report for SNAP benefits and TANF, the State agency shall clearly indicate on the form that non-TANF SNAP households need not provide TANF-only information.
(i) Verification. Each month the household shall verify information for those items designated by the State agency. The State agency may designate that verification be submitted for any item that has changed or appears questionable. If the household voluntarily reports a change in its medical expenses, the State agency shall verify the change in accordance with § 273.2(f)(8)(ii) before acting on it if the change would increase the household’s allotment. In the case of a reported change that would decrease the household’s allotment, or make the household ineligible, the State agency shall act on the change without requiring verification, though verification which is required by § 273.2(f)(8)(i) shall be obtained prior to the household’s recertification.
(j) State agency action on reports—(1) Processing. Upon receiving a monthly report, the State agency shall:
(i) Review the report to ensure accuracy and completeness.
(ii) Consider the report incomplete only if:
(A) It is not signed by the head of the household, an authorized representative or a responsible member of the household;
(B) It is not accompanied by verification required by the State agency on the monthly report;
(C) It omits information required by the State agency on the monthly report necessary either to determine the household’s eligibility or to compute the household’s level of SNAP benefits.
(iii) Determine those items which will require additional verification, in accordance with paragraph (i) of this section.
(iv) Contact the household directly, and take action as needed, to obtain further information on specific items. These items include:
(A) The effect of a reported change in resources on a household’s total resources; and
(B) The effect of a reported change in household composition or loss of a job or source of earned income on the applicability of the work registration requirement.
(v) Notify the household, in accordance with paragraph (j)(3)(ii) of this section, of the need to submit a report, correct an incomplete or inaccurate report, or submit the necessary verification within the extension period.
(vi) Determine the household’s eligibility by considering all factors, including income, in accordance with paragraphs (e) or (g) of this section.
(vii) Determine the household’s level of benefits in accordance with § 273.10(e) based on the household composition determined in accordance with paragraph (f)(1) of this section. For those household members the following (except as provided in paragraph (f)(2) of this section) income and deductions shall be considered:
(A) Earned and unearned income received in the corresponding budget month, including income that has been averaged in accordance with paragraph (f) of this section. The earned income of an elementary or secondary school student excluded in accordance with § 273.9(c)(7) shall be excluded until the budget month following the budget month in which the student turns 18. The State agency has the option of converting to a regular monthly amount the income that a household receives weekly or biweekly. If the State agency elects to convert weekly or biweekly income for MRRB households, it shall do so for all households in its MRRB caseload. The State agency may convert or average income in the beginning months and use actual earned or unearned income received in the budget month following the beginning months of participation.
(B) The PA grant paid in the corresponding budget month or the PA grant to be paid in the issuance month. If the State agency elects to use the PA grant to be paid in the issuance month, the State agency shall ensure that:
(1) Any additional or corrective payments are counted, either prospectively or retrospectively; and
(2) the State agency shall disregard income received in the budget month from a terminated source which results in an increase in the PA grant, provided the household has reported the termination of the income either in the monthly report for the budget month or in some other manner which, as determined by the State agency, allows the State agency sufficient time to process the change and affect the allotment in the issuance month.
(C) Deductions as billed or averaged from the corresponding budget month, including those shelter costs billed less often than monthly which the household has chosen to average.
(viii) Issue benefits in accordance with part 274 of this chapter and on the time schedule set forth in paragraph (k) of this section.
(ix) Provide specific information on how the State agency calculated the benefit level if it has changed since the preceding month, either with the issuance or in a separate notification.
(2) Notices. (i) All notices regarding changes in a household’s benefits shall meet the definition of adequate notice as defined in § 271.2.
(ii) The State agency shall notify a household of any change from its prior benefit level and the basis for its determination. If the State agency reduces, suspends or terminates benefits, it shall send the notice so the household receives it no later than either the date the resulting benefits are to be received or in place of the benefits.
(iii) The State agency shall notify a household, in accordance with paragraph (j)(3)(iii), if its monthly report is late or incomplete, or further information is needed.
(3) Incomplete filing. (i) If a household fails to file a monthly report, or files an incomplete report, by the specified filing date, the State agency shall give the household at least ten more days, from the date the State agency mails the notice to file a complete monthly report.
(ii) The State agency shall notify the household within five days of the filing date:
(A) That the monthly report is either overdue or incomplete;
(B) What the household must do to complete the form;
(C) If any verification is missing and the lack of that verification will adversely affect the household’s allotment;
(D) That the Social Security number of a new member must be reported, if the household has reported a new member but not the new member’s Social Security number;
(E) What the extended filing date is;
(F) That the State agency will assist the household in completing the report.
(iii) When a State agency requires verification for the item listed and the household does not provide the verification, the State agency shall take the following actions:
(A) If the household does not verify earned income, the State agency shall regard the household’s report as incomplete, take action in accordance with paragraphs (j)(3)(i) and (j)(3)(ii) of this section and, if appropriate, terminate the household in accordance with paragraph (m) of this section.
(B) If the household is using its actual utility costs to establish its shelter cost deduction in accordance with § 273.9(d) and it does not verify a change in its actual utility expenses, the State agency shall not allow a deduction for such costs.
(C) If a household fails to verify a change in reported medical expenses in accordance with § 273.2(f)(8), and that change would increase the household’s allotment, the State agency shall not make the change. The State agency shall act on reported changes without requiring verification if the changes would decrease the household’s allotment, or make the household ineligible.
(D) If the household does not verify other items for which verification is required, the State agency shall:
(1) Act on the reported change if it would decrease benefits.
(2) Not act on the reported change if it would increase benefits.
(E) If the household does not report or verify changes in child support, the State agency shall not allow a child support deduction.
(k) Issuance of benefits—(1) Timely issuance. (i) For an eligible household which has filed a complete monthly report by the scheduled filing date, the State agency shall provide an opportunity to participate within the month following the budget month in a one-month system, or within the second month following the budget month in a two-month system.
(ii) The State agency shall provide each household with an issuance cycle so that the household receives its benefits at about the same time each month and has an opportunity to participate before the end of each issuance month.
(2) Delayed issuance. (i) If an eligible household files a complete monthly report during its extension period, the State agency shall provide it with an opportunity to participate no later than ten days after its normal issuance date.
(ii) If an eligible household which has been terminated for failure to file a complete report files a complete report after its extended filing date, but before the end of the issuance month, the State agency may choose to reinstate the household by providing it with an opportunity to participate. If the household has requested a fair hearing on the basis that a complete monthly report was filed, the State agency shall reinstate the household if a completed monthly report is filed before the end of the issuance month.
(iii) If an eligible household files a complete report after the issuance month, the State agency shall not provide the household with an opportunity to participate for that month.
(l) Other reporting requirements—(1) Information reported on the monthly report. The monthly report shall be the sole reporting requirement for information required to be included in the monthly report. Changes in household circumstances not subject to monthly reporting shall be reported in accordance with § 273.12.
(2) Households excluded from monthly reporting. Households which are excluded from monthly reporting shall report changes in accordance with § 273.12.
(m) Termination. (1) The State agency shall terminate a household’s SNAP participation if the household:
(i) Is ineligible for SNAP benefits, unless suspended in accordance with paragraph (n) of this section:
(ii) Fails to file a complete report by the extended filing date; or
(iii) Fails to comply with a nonfinancial eligibility requirement, such as registering for employment.
(2) The State agency shall issue a notice to the household which:
(i) Complies with the requirements of § 271.2 for adequate notice;
(ii) Informs the household of the reason for its termination;
(iii) If the State agency allows reinstatement under paragraph (k)(2)(ii), explains how the household may be reinstated;
(iv) Informs the household of its rights to request a fair hearing and to receive continued benefits. If termination is for failure to submit a monthly report and the household states that a monthly report has been filed, the notice must advise the household that a completed monthly report must be filed prior to the end of the issuance month as a condition for continued receipt of benefits.
(3) The State agency shall issue the notice to the household so that it receives the notice no later than the household’s normal or extended issuance date.
(n) Suspension. The State agency may suspend a household’s issuance in accordance with this paragraph. If the State agency does not choose this option, it shall instead terminate households in accordance with paragraph (m) of this section.
(1) The State agency may suspend a household’s issuance for one month if the household becomes temporarily ineligible due to a periodic increase in recurring income or other change not expected to continue in the subsequent month. The State agency may on a Statewide basis either suspend the household’s certification prospectively for the issuance month or retrospectively for the issuance month corresponding to the budget month in which the noncontinuing circumstance occurs.
(2) The State agency shall continue to supply monthly reports to the household for one month.
(3) If the suspended household again becomes eligible, the State agency shall issue benefits on the household’s normal issuance date.
(4) If the suspended household does not become eligible after one month, the State agency shall terminate the household.
(o) If a household has been terminated or suspended based on an anticipated change in circumstances, the State agency shall not count any noncontinuing circumstances which caused the prospective ineligibility when calculating the household’s benefits retrospectively in a subsequent month.
(p) Fair hearings—(1) Entitlement. All households participating in a MRRB system shall be entitled to fair hearings in accordance with § 273.15.
(2) Continuation of benefits. (i) Any household which requests a fair hearing and does not waive continuation of benefits, and is otherwise eligible for continuation of benefits, shall have its benefits continued until the end of the certification period or the resolution of the fair hearing, whichever is first. If the State agency did not receive a monthly report from the household by the extended filing date and the household states that a monthly report was submitted, the household is entitled to continued benefits, provided That a completed report is submitted no later than the last day of the issuance month.
(ii) The State agency shall provide continued benefits no later than five working days from the day it receives the household’s request.
(iii) A household whose benefits have been continued shall file montly reports until the end of the certification period. If the fair hearing is with regard to termination for nonreceipt of the monthly report by the State agency, a completed monthly report for the month in question shall be submitted by the household no later than the last day of the issuance month.
(iv) During the fair hearing period the State agency shall adjust allotments to take into account reported changes, except for the factor(s) on which the fair hearing is based.
(q) Recertification—(1) Timeliness. The State agency shall recertify an eligible household which timely reapplies and provides it with an opportunity to participate in the household’s normal issuance cycle.
(2) Retrospective Recertification. (i) The State agency shall recertify the household using retrospective information to determine the household’s benefit level for the first month of the new certification period.
(ii) If the State agency is operating a two-month MRRB system, the State agency may delay reflecting information from the recertification interview in the household’s eligibility and benefit level until the second month of the new certification period.
(iii) The State agency shall recertify households according to one of the three options set forth in paragraphs (q) (3), (4), or (5) of this section.
(3) Option One: Recertification form. (i) The State agency shall provide each household with a recertification form to obtain all necessary information about the household’s circumstances for the budget month.
(ii) The State agency shall mail the form to the household, along with a notice of expiration, in place of the monthly report form. The State agency shall either: Mail the recertification form along with the notice of expiration; use a recertification form which contains a notice of expiration; or mail the recertification form and the notice of expiration separately, as long as the forms are mailed at the same time.
(iii) The household shall submit the form to the State agency in accordance with paragraph (h)(1)(i) of this section.
(4) Option Two: Monthly report and addendum. (i) The State agency shall provide each household with a notice of expiration and monthly report form and an addendum to obtain all additional information necessary for recertification.
(ii) The State agency shall either: Mail the monthly report form along with the notice of expiration; use a monthly report form which contains a notice of expiration; or mail the monthly report form and the notice of expiration separately, as long as the forms are mailed at the same time.
(iii) The household shall submit the monthly report to the State agency in accordance with paragraph (h)(1)(i) of this section.
(iv) The State agency shall deliver the recertification addendum to the household along with the monthly report form or obtain the necessary information from the household at the interview.
(v) The household shall submit the addendum to the State agency no later than the time of the interview.
(5) Option Three: Signed Statement. (i) The State agency shall recertify households based on the monthly report and the interview.
(ii) At the interview, the State agency shall obtain all of the information not provided in the monthly report which is necessary for recertification.
(iii) The State agency shall ensure that it has on file a statement signed by the appropriate household member that the household has applied for recertification.
(6) Interview. (1) The State agency shall conduct a complete interview with a household member or an authorized representative.
(ii) The State agency shall schedule the interview at any time during the last month of the old certification period.
(iii) If the State agency schedules the interview for a date on or before the normal filing due date of the monthly report, the State agency shall permit the household member and authorized representative to bring the recertification form or monthly report to the interview.
(r) Procedures for households that change their reporting and budgeting status. The State agency shall use one of the following procedures for households subject to change in reporting/budgeting status.
(1) Households which become subject to MRRB. The State agency may change the reporting/budgeting status of households which become subject to monthly reporting at any time following the change in household circumstances which results in the change in the household’s reporting/budgeting status, subject to the following conditions:
(i) The State agency shall provide the household with information provided to MRRB households under paragraph (c) of this section. If the State agency elects to implement the change during the certification period, it may omit the oral explanation of MRRB required under paragraph (c)(1).
(ii) The State agency shall not require the household to submit a monthly report during any month in which the household was subject to the change reporting requirements of § 273.12.
(2) Households which are no longer subject to MRRB. The agency shall use one of the following procedures to remove households from the MRRB system.
(i) Procedures for households exempt from MRRB. For any household which becomes exempt from MRRB under paragraph (b) of this section, the State agency shall notify the household within 10 days of the date the State agency becomes aware of the change that the household has become exempt from monthly reporting and is no longer required to file any future monthly reports and has also become exempt from retrospective budgeting and when the change in budgeting will go into effect. The State agency shall begin determining the household’s benefits prospectively no later than the first issuance month for which a household has not submitted a monthly report for the budget month.
(ii) Other households moving from MRRB to change reporting and prospective budgeting. When a household is no longer subject to MRRB under a State agency’s system, the State agency may begin determining the household’s benefits prospectively in any month following the month the State agency becomes aware of the changed circumstances which necessitate the need to change the household’s reporting/budgeting status. If the State agency elects to change the household’s reporting/budgeting status prior recertification it shall provide the household with a notice explaining the change in the month prior to the month the change is effective. If the State agency elects to change the household’s status at recertification it shall advise the household at the recertification interview that its reporting/budgeting status is being changed.
(iii) Households moving from MRRB to retrospective budgeting and change reporting. If a household’s status necessitates changing it from a monthly reporter to a change reporter while continuing to be budgeted retrospectively, the State agency may change the household’s status at any time. If the State agency elects to change the household immediately, the State agency shall provide the household with a notice that it is no longer subject to monthly reporting. The notice shall include information about the household’s reporting requirements under § 273.12.
(s) Implementation of Regulatory Changes. The State agency shall implement changes in regulatory provisions for households subject to MRRB prospectively based on the effective date and implementation time frame published in the
(t) Monthly reporting requirements for households residing on reservations. The following procedures shall be used for households which reside on reservations and are required to submit monthly reports:
(1) Definition of a reservation. For purposes of this section, the term “reservation” shall mean the geographically defined area or areas over which a tribal organization exercises governmental jurisdiction. The term “tribal organization” shall mean the recognized governing body of an Indian tribe (including the tribally recognized intertribal organization of such tribes), as well as any Indian tribe, band, or community holding a treaty with a State government.
(2) Benefit determination for missing reports. The State agency shall not delay, reduce, or suspend the allotment of a household that fails to submit a report by the issuance date.
(3) Reinstatement. If a household is terminated for failing to submit a monthly report, the household shall be reinstated without being required to submit a new application if a monthly report is submitted no later than the last day of the month following the month the household was terminated.
(4) Notices. (i) All notices regarding changes in a household’s benefits shall meet the definition of adequate notice as defined in § 271.2 of this chapter.
(ii) If a household fails to file a monthly report by the specified filing date, the State agency shall notify the household within five days of the filing date:
(A) That the monthly report is either overdue or incomplete;
(B) What the household must do to complete the form;
(C) If any verification is missing;
(D) That the Social Security number of a new member must be reported, if the household has reported a new member but not the new member’s Social Security number;
(E) What the extended filing date is;
(F) That the State agency will assist the household in completing the report; and
(G) That the household’s benefits will be issued based on the previous month’s submitted report without regard to any changes in the household’s circumstances if the missing report is not submitted.
(iii) Simultaneously with the issuance, the State agency shall notify a household, if its report has not been received, that the benefits being provided are based on the previous month’s submitted report and that this benefit does not reflect any changes in the household’s circumstances. This notice shall also advise the household that, if a complete report is not filed timely, the household will be terminated.
(iv) If the household is terminated, the State agency shall send the notice so the household receives it no later than the date benefits would have been received. This notice shall advise the household of its right to reinstatement if a complete monthly report is submitted by the end of the month following termination.
(5) Supplements and claims. If the household submits the missing monthly report after the issuance date but in the issuance month, the State agency shall provide the household with a supplement, if warranted. If the household submits the missing monthly report after the issuance date or the State agency becomes aware of a change that would have decreased benefits in some other manner, the State agency shall file a claim for any benefits overissued.
§ 273.22 [Reserved]
§ 273.23 Simplified application and standardized benefit projects.
(a) General. This subpart establishes rules under which Simplified Application and Standardized Benefit Projects shall operate. State agencies and political subdivisions chosen as project operators may designate households containing members receiving TANF, SSI, or Medicaid benefits as project eligible. Project eligible households shall have their SNAP eligibility determined using simplified application procedures. SNAP eligibility shall be determined using information contained in their TANF, or Medicaid application, or, in the case of SSI, on the State Data Exchange (SDX) tape, and any appropriate addendum. Project-eligible households shall be considered categorically SNAP resource eligible based on their eligibility for these other programs and shall be required to meet SNAP income eligibility standards. However, income definitions appropriate to the TANF, SSI or Medicaid programs shall be used instead of SNAP income definitions in determining eligibility. In addition, such households shall, as a condition of program eligibility, meet and/or fulfill all SNAP nonfinancial eligibility requirements. (Project-eligible households defined as categorically eligible in § 273.2 (j) and (k) of these regulations are not required to meet the income eligibility standards.) To further simplify program administration, benefits provided to such households may be standardized by category of assistance and household size.
(b) Program administration. (1) Simplified application and standardized benefit procedures are applicable in five States and five political subdivisions. For the purpose of this section, a political subdivision is a project area as defined in § 271.2 of these regulations.
(2) State agencies and political subdivisions seeking to operate a Simplified Application and Standardized Benefit Project shall submit Work Plans to FNS in accordance with the requirements of this section.
(3) FNS shall evaluate Work Plans according to the criteria set forth in the Simplified Application/Standardized Benefit Notice of Intent.
(4) Political subdivisions shall submit their Work Plans to FNS through their respective State agencies for review and approval.
(5) A State agency selected by FNS to operate a Simplified Application and Standardized Benefit Project shall include the Work Plan in its State Plan of Operations. A political subdivision chosen to operate a Simplified Application and Standardized Benefit Project shall assure that the responsible State agency include that political subdivision’s project Work Plan in its own State Plan of Operations. The Work Plan shall be updated, as needed, to reflect changes in the benefit methodology, subject to prior FNS approval.
(c) Contents of the work plan. The Work Plan submitted by each applicant shall contain the following information:
(1) Background information on the proposed site’s characteristics, current operating procedures, and a general description of the proposed procedures;
(2) A description of the proposed project design, including the benefit methodology, households which will be project eligible, operational procedures, and the need for waivers;
(3) An implementation and monitoring plan describing tasks, staffing and a timetable for implementation;
(4) An estimate of project impacts including implementation costs and, on an annual basis, operating costs, administrative costs, error reduction, and benefit changes; and
(5) A statement signed by the State official with authority to commit the State or political subdivisions to the project’s operation.
(d) Project-eligible households. Each operating agency shall decide which of the following categories of household shall be eligible to participate in the project.
(1) Households all of whose members receive TANF benefits under part A of title IV of the Social Security Act;
(2) Households all of whose members receive SSI benefits under title XVI of the Social Security Act;
(3) Households all of whose members receive Medicaid benefits under title XIX of the Social Security Act;
(4) Households each of whose members receive one or more of the following: TANF, SSI, or Medicaid benefits (multiple-benefit households); and
(5) Households only some of whose members receive TANF, SSI, and/or Medicaid benefits (mixed households).
(e) Determining SNAP eligibility. Under the Simplified Application and Standardized Benefit Project, project eligible households shall have their SNAP eligibility determined using the following criteria.
(1) Certain households, at the operating agency’s option, which contain members receiving TANF, SSI, or Medicaid benefits, shall be designated project eligible and need not make separate application for SNAP benefits. Once such households indicate in writing a desire to receive SNAP benefits, their eligibility will be determined based on information contained in their application for TANF or Medicaid benefits or, in the case of SSI, on the State Data Exchange (SDX) tape. TANF or Medicaid applications may need to be modified, or be subject to an addendum in order to accommodate any additional information required by the operating agency.
(2) The income definitions and resource requirements prescribed under § 273.9 (b) and (c) and § 273.8 are inapplicable to project-eligible households. Project-eligible households which have met the resource requirements of the TANF, SSI, and/or Medicaid programs shall be considered to have satisfied the SNAP resource requirements. Gross income less any allowed exclusions, as defined by the appropriate categorical aid program, shall be used to determine SNAP income eligibility (unless the project household is categorically income eligible as defined in § 273.2 (j) and (k)) and benefit levels. Deemed income, as defined under TANF, SSI or Medicaid rules, shall be excluded to the extent that households with such income are part of the SNAP household providing the deemed income.
(3) Project-eligible households which are not categorically income eligible shall meet the gross and net income standards prescribed in § 273.9(a). Net income shall be determined by subtracting from gross income either actual or standardized deduction amounts. If standardized deduction amounts are used, they may be initially determined using recent historical data on deductions claimed by such households. Such deductions must be updated, as necessary, on at least an annual basis. Such deductions shall include:
(i) The current standard deduction for all households;
(ii) An excess shelter deduction and a dependent care deduction for households not containing an elderly or disabled member;
(iii) A dependent care deduction, an uncapped excess shelter deduction and a medical deduction for households containing a qualified elderly or disabled member; and
(iv) A standardized or actual earned income deduction for households containing members with earned income.
(4) All non-financial SNAP eligibility requirements shall be applicable to project-eligible households.
(f) Benefit levels. (1) In establishing benefits for project eligible households, either the appropriate State standard of need (maximum aid payment) or gross income as determined for the appropriate categorical aid program plus the value of any monetary categorical benefits received, if any, may be used as the gross income amount. If mixed households are designated project eligible, procedures shall be developed to include as household income the income of those household members not receiving categorical aid.
(2) If allotments are standardized, the average allotment for each category of household, by household size, shall be no less than average allotments would have been were the project not in operation.
(3) Benefit methodologies shall be constructed to ensure that benefits received by households having higher than average allotments under normal program rules are not significantly reduced as a result of standardization.
(4) Benefit methodologies shall be structured to ensure that decreases in household benefits are not reduced by more than $10 or 20%, whichever is less.
(5) The methodology to be used in developing benefit levels shall be determined by the operating agency but shall be subject to FNS approval.
(6) With FNS approval, operating agencies may develop an alternate methodology for standardizing allotments/deductions for specific sizes and categories of households where such size and category is so small as to make the use of average deductions and/or allotments impractical.
(7) FNS may require operating agencies to revise their standardized allotments during the course of the project to reflect changes in items such as household characteristics, the Thrifty Food Plan, deduction amounts, the benefit reduction rate, or benefit levels in TANF or SSI. Such changes will be documented by revising the Work Plan amendment to the State Plan of Operations.
(g) Household notification. All certified project-eligible households residing in the selected project sites shall be provided with a notice, prior to project commencement, informing them of the revised procedures and household requirements under the project. If household allotments are to be standardized, the notice shall also provide specific information on the value of the newly computed benefit and the formula used to calculate the benefit. The notice shall meet the requirements of a notice of adverse action as set forth in § 273.13(a)(2).
(h) Application processing procedures. (1) The operating agency shall allow project-eligible households to indicate in writing their desire to receive SNAP benefits. Such households shall be notified in writing, at the time such indication is made, that information contained in their TANF, SSI, or Medicaid application will be the basis of their SNAP eligibility determination. If mixed households are included in the project-eligible universe, the project operator shall develop a procedure to collect the necessary information on household members not receiving categorical aid.
(2) The operating agency may use simplified application and standardized benefit procedures only for those households containing at least one member certified to receive either TANF, SSI, or Medicaid benefits. If simplified procedures are to be used, the State agency shall make all eligibility determinations for households jointly applying for SNAP benefits and TANF, SSI, or Medicaid benefits within the 30-day SNAP processing period. If a household’s eligibility for TANF, SSI, or Medicaid cannot be established within the 30-day period, normal SNAP application, certification, and benefit determination procedures shall be used and benefits shall be issued within 30 days if the household is eligible. Households which are jointly applying for TANF, SSI, or Medicaid, and which qualify for expedited service, shall be certified for SNAP benefits using procedures prescribed at § 273.2(i). However, if the State agency can process the application of an expedited service household for categorical assistance within the expedited period prescribed at § 273.2(i), it may use simplified application and standardized benefit procedures to certify the household for SNAP benefits.
(i) Regulatory requirements. (1) All SNAP regulations shall remain in effect unless they are expressly altered by the provisions of this section or the provisions contained within the approved SA/SB Work Plan.
(2) Certification periods for mixed households. At the option of the operating agency, mixed households may be assigned certification periods of up to one year. Such households, if circumstances warrant, may be required to attend a face-to-face interview on a schedule which would conform to certification periods normally assigned such households as specified in § 273.10(f). At the time of the interview, the household shall be required to complete a modified application and provide additional information in accordance with § 273.2(f). If the household fails to comply with the interview review requirement or if information obtained indicates a revision in household eligibility or benefits, action will be taken in accordance with§ 273.13, Notice of Adverse Action.
(j) Quality control. (1) Project eligible households selected for quality control review shall be reviewed by the State agency using special procedures, based on project requirements, which have been developed by the State agency and approved by FNS.
(2) The error rate(s) determined using the special quality control review procedures shall be included when determining the State agency’s overall error rate.
(k) Funding. Operating agencies shall be reimbursed for project costs at the rates prescribed in § 277.4.
(l) Evaluation. Each project site shall conduct a self-evaluation of the project’s impact on benefits, administrative costs and participation. Such evaluation shall be conducted within three months of project implementation. The results of the self-evaluation shall be sent to FNS within six months of project implementation. The impact of the project on project-eligible households’ error rates shall be reported on an annual basis in accordance with § 273.23(m).
(m) Reporting requirements. Operating agencies shall be required to prepare and submit to FNS an annual report on the error rate attributable to project-eligible households. The timing of such reports shall coincide with the due date for the annual quality control report prescribed in § 275.21(d).
(n) State agency monitoring. Monitoring shall be undertaken to ensure compliance with these regulations and the Work Plan submitted to and approved by FNS. Project monitoring shall be conducted in accordance with the appropriate sections of part 275, Performance Reporting System, of these regulations. At a minimum, onsite reviews of the Simplified Application and Standardized Benefit Project shall be conducted once within six months of the project’s implementation and then in accordance with the Management Evaluation review schedule for the project area.
(o) Termination. (1) FNS may terminate project operations for any reason and at any time on 60 days written notice to the administering State agency or political subdivision. State or local agencies may also choose to terminate their participation with 60 days written notice to FNS. In either such event, operating agencies shall be given sufficient time to return to normal operations in an orderly fashion.
(2) If termination occurs, FNS may select another site for project operations. Such selection shall be based on either previously received project proposals or proposals received under a new solicitation.
§ 273.24 Time limit for able-bodied adults.
(a) Definitions. For purposes of the SNAP time limit, the terms below have the following meanings:
(1) Fulfilling the work requirement means:
(i) Working 20 hours per week, averaged monthly; for purposes of this provision, 20 hours a week averaged monthly means 80 hours a month;
(ii) Participating in and complying with the requirements of a work program 20 hours per week, as determined by the State agency;
(iii) Any combination of working and participating in a work program for a total of 20 hours per week, as determined by the State agency; or
(iv) Participating in and complying with a workfare program;
(2) Working means:
(i) Work in exchange for money;
(ii) Work in exchange for goods or services (“in kind” work); or
(iii) Unpaid work, verified under standards established by the State agency.
(iv) Any combination of paragraphs (a)(2)(i), (a)(2)(ii) and (a)(2)(iii) of this section.
(3) Work Program means:
(i) A program under title 1 of the Workforce Innovation and Opportunity Act (WIOA) (Pub. L.113-128);
(ii) A program under section 236 of the Trade Act of 1974 (19 U.S.C. 2296);
(iii) An employment and training program operated or supervised by a State or political subdivision of a State agency that meets standards approved by the Chief Executive Office, including a SNAP E&T program under § 2 73.7(e) excluding any job search, supervised job search, or job search training program. However, a program under this clause may contain job search, supervised job search, or job search training as subsidiary activities as long as such activity is less than half the requirement. Participation in job search, supervised job search, or job search training as subsidiary activities that make up less than half the requirement counts for purposes of fulfilling the work requirement under paragraph (a)(1)(ii) of this section.
(iv) A program of employment and training for veterans operated by the Department of Labor or the Department of Veterans Affairs. For the purpose of this paragraph, any employment and training program of the Department of Labor or Veterans Affairs that serves veterans shall be an approved work program; or
(v) A workforce partnership under § 273.7(n)
(b) General Rule. Individuals are not eligible to participate in SNAP as a member of any household if the individual received SNAP benefits for more than three countable months during any three-year period, except that individuals may be eligible for up to three additional countable months in accordance with paragraph (e) of this section.
(1) Countable months. Countable months are months during which an individual receives SNAP benefits for the full benefit month while not:
(i) Exempt under paragraph (c) of this section;
(ii) Covered by a waiver under paragraph (f) of this section;
(iii) Fulfilling the work requirement as defined in paragraph (a)(1) of this section;
(iv) Receiving benefits that are prorated in accordance with § 273.10; or
(v) In the month of notification from the State agency of a provider determination in accordance with § 273.7(c)(18)(i).
(2) Good cause. As determined by the State agency, if an individual would have fulfilled the work requirement as defined in paragraph (a)(1) of this section, but missed some hours for good cause, the individual shall be considered to have fulfilled the work requirement if the absence from work, the work program, or the workfare program is temporary. Good cause shall include circumstances beyond the individual’s control, such as, but not limited to, illness, illness of another household member requiring the presence of the member, a household emergency, or the unavailability of transportation. In addition, if the State agency grants an individual good cause under § 273.7(i) for failure or refusal to meet the mandatory E&T requirement, that good cause determination confers good cause under this paragraph, except in the case of § 273.7(i)(4), without the need for a separate good cause determination under this paragraph. Good cause granted under § 273.7(i)(4) only provides good cause to ABAWDs for failure or refusal to participate in a mandatory SNAP E&T program, and does not confer good cause for failure to fulfill the work requirement in paragraph (a)(1) of this section.
(3) Measuring the three-year period. The State agency may measure and track the three-year period as it deems appropriate. The State agency may use either a “fixed” or “rolling” clock. If the State agency chooses to switch tracking methods it must inform FNS in writing. With respect to a State, the three-year period:
(i) Shall be measured and tracked consistently so that individuals who are similarly situated are treated the same; and
(ii) Shall not include any period before the earlier of November 22, 1996, or the date the State notified SNAP recipients of the application of Section 824 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Pub. L. 104-193).
(4) Treatment of income and resources. The income and resources of an individual made ineligible under this paragraph (b) shall be handled in accordance with § 273.11(c)(2).
(5) Benefits received erroneously. If an individual subject to this section receives SNAP benefits erroneously, the State agency shall consider the benefits to have been received for purposes of this provision unless or until the individual pays it back in full.
(6) Verification. Verification shall be in accordance with § 273.2(f)(1) and (f)(8).
(7) Reporting. A change in work hours below 20 hours per week, averaged monthly, is a reportable change in accordance with § 273.12(a)(1)(viii). Regardless of the type of reporting system the State agency assigns to potential ABAWDs, the State agency must adhere to the statutory requirements of time-limited benefits for individuals who are subject to the work requirement. The State agency may opt to consider work performed in a job that was not reported according to the requirements of § 273.12 “work.”
(8) The State agency shall inform all ABAWDs of the ABAWD work requirement and time limit both in writing and orally in accordance with § 273.7(c)(1)(ii) and (iii).
(c) Exceptions. The time limit does not apply to an individual if he or she is:
(1) Under 18 or 50 years of age or older;
(2) Determined by the State agency to be medically certified as physically or mentally unfit for employment. An individual is medically certified as physically or mentally unfit for employment if he or she:
(i) Is receiving temporary or permanent disability benefits issued by governmental or private sources;
(ii) Is obviously mentally or physically unfit for employment as determined by the State agency; or
(iii) If the unfitness is not obvious, provides a statement from a physician, physician’s assistant, nurse, nurse practitioner, designated representative of the physician’s office, a licensed or certified psychologist, a social worker, or any other medical personnel the State agency determines appropriate, that he or she is physically or mentally unfit for employment.
(3) Is a parent (natural, adoptive, or step) of a household member under age 18, even if the household member who is under 18 is not himself eligible for SNAP benefits;
(4) Is residing in a household where a household member is under age 18, even if the household member who is under 18 is not himself eligible for SNAP benefits;
(5) Is otherwise exempt from work requirements under section 6(d)(2) of the Food and Nutrition Act of 2008, as implemented in regulations at § 273.7(b); or
(6) Is pregnant.
(d) Regaining eligibility. (1) An individual denied eligibility under paragraph (b) of this section, or who did not reapply for benefits because he was not meeting the work requirements under paragraph (b) of this section, shall regain eligibility to participate in SNAP if, as determined by the State agency, during any 30 consecutive days, he or she:
(i) Worked 80 or more hours;
(ii) Participated in and complied with the requirements of a work program for 80 or more hours;
(iii) Any combination of work and participation in a work program for a total of 80 hours; or participated in and complied with a workfare program; or
(iv) At State agency option, verifies that the he or she will meet one of the requirements in paragraphs (d)(1)(i), (d)(1)(ii), (d)(1)(iii), or (d)(1)(v) of this section, within the 30 days subsequent to application; or
(v) Becomes exempt.
(2) An individual regaining eligibility under paragraph (d)(1) of this section shall have benefits calculated as follows:
(i) For individuals regaining eligibility by working, participating in a work program, or combining hours worked and hours participating in a work program, the State agency may either prorate benefits from the day the 80 hours are completed or from the date of application, or
(ii) For individuals regaining eligibility by participating in a workfare program, and the workfare obligation is based on an estimated monthly allotment prorated back to the date of application, then the allotment issued must be prorated back to this date.
(3) There is no limit on how many times an individual may regain eligibility and subsequently maintain eligibility by meeting the work requirement.
(e) Additional three-month eligibility. An individual who regained eligibility under paragraph (d) of this section and who is no longer fulfilling the work requirement as defined in paragraph (a) of this section is eligible for a period of three consecutive countable months (as defined in paragraph (b) of this section), starting on the date the individual first notifies the State agency that he or she is no longer fulfilling the work requirement, unless the individual has been satisfying the work requirement by participating in a work or workfare program, in which case the period starts on the date the State agency notifies the individual that he or she is no longer meeting the work requirement. An individual shall not receive benefits under this paragraph (e) more than once in any three-year period.
(f) Waivers—(1) General. On the request of a State agency, FNS may waive the time limit for a group of individuals in the State if we determine that the area in which the individuals reside:
(i) Has an unemployment rate of over 10 percent; or
(ii) Does not have a sufficient number of jobs to provide employment for the individuals.
(2) Required data. The State agency may submit whatever data it deems appropriate to support its request. However, to support waiver requests based on unemployment rates or labor force data, States must submit data that relies on standard Bureau of Labor Statistics (BLS) data or methods. A non-exhaustive list of the kinds of data a State agency may submit follows:
(i) To support a claim of unemployment over 10 percent, a State agency may submit evidence that an area has a recent 12 month average unemployment rate over 10 percent; a recent three month average unemployment rate over 10 percent; or an historical seasonal unemployment rate over 10 percent; or
(ii) To support a claim of lack of sufficient jobs, a State may submit evidence that an area: Is designated as a Labor Surplus Area (LSA) by the Department of Labor’s Employment and Training Administration (ETA); is determined by the Department of Labor’s Unemployment Insurance Service as qualifying for extended unemployment benefits; has a low and declining employment-to-population ratio; has a lack of jobs in declining occupations or industries; is described in an academic study or other publications as an area where there are lack of jobs; has a 24-month average unemployment rate 20 percent above the national average for the same 24-month period. This 24-month period may not be any earlier than the same 24-month period the ETA uses to designate LSAs for the current fiscal year.
(3) Waivers that are readily approvable. FNS will approve State agency waivers where FNS confirms:
(i) Data from the BLS or the BLS cooperating agency that shows an area has a most recent 12 month average unemployment rate over 10 percent;
(ii) Evidence that the area has been designated a Labor Surplus Area by the ETA for the current fiscal year; or
(iii) Data from the BLS or the BLS cooperating agency that an area has a 24 month average unemployment rate that exceeds the national average by 20 percent for any 24-month period no earlier than the same period the ETA uses to designate LSAs for the current fiscal year.
(4) Effective date of certain waivers. In areas for which the State certifies that data from the BLS or the BLS cooperating agency show a most recent 12 month average unemployment rate over 10 percent; or the area has been designated as a Labor Surplus Area by the Department of Labor’s Employment and Training Administration for the current fiscal year, the State may begin to operate the waiver at the time the waiver request is submitted. FNS will contact the State if the waiver must be modified.
(5) Duration of waiver. In general, waivers will be approved for one year. The duration of a waiver should bear some relationship to the documentation provided in support of the waiver request. FNS will consider approving waivers for up to one year based on documentation covering a shorter period, but the State agency must show that the basis for the waiver is not a seasonal or short term aberration. We reserve the right to approve waivers for a shorter period at the State agency’s request or if the data is insufficient. We reserve the right to approve a waiver for a longer period if the reasons are compelling.
(6) Areas covered by waivers. States may define areas to be covered by waivers. We encourage State agencies to submit data and analyses that correspond to the defined area. If corresponding data does not exist, State agencies should submit data that corresponds as closely to the area as possible.
(g) Discretionary exemptions. (1) For the purpose of establishing the discretionary exemptions for each State agency, the following terms are defined:
(i) Caseload means the average monthly number of individuals receiving SNAP benefits during the 12-month period ending the preceding June 30.
(ii) Covered individual means a SNAP recipient, or an applicant denied eligibility for benefits solely because he or she received SNAP benefits during the 3 months of eligibility provided under paragraph (b) of this section, who:
(A) Is not exempt from the time limit under paragraph (c) of this section;
(B) Does not reside in an area covered by a waiver granted under paragraph (f) of this section;
(C) Is not fulfilling the work requirements as defined in paragraph (a)(1) of this section; and
(D) Is not receiving SNAP benefits under paragraph (e) of this section.
(2) Subject to paragraphs (h) and (i) of this section, a State agency may provide an exemption from the 3-month time limit of paragraph (b) of this section for covered individuals. Exemptions do not count towards a State agency’s allocation if they are provided to an individual who is otherwise exempt from the time limit during that month.
(3) For each fiscal year, a State agency may provide a number of exemptions such that the average monthly number of exemptions in effect during the fiscal year does not exceed 12 percent of the number of covered individuals in the State, as estimated by FNS, based on FY 1996 quality control data and other factors FNS deems appropriate, and adjusted by FNS to reflect changes in:
(i) The State agency’s caseload; and
(ii) FNS’s estimate of changes in the proportion of SNAP recipients covered by waivers granted under paragraph (f) of this section.
(4) State agencies must not discriminate against any covered individual for reasons of age, race, color, sex, disability, religious creed, national origin, or political beliefs. Such discrimination is prohibited by this part, the Food and Nutrition Act of 2008, the Age Discrimination Act of 1975 (Public Law 94-135), the Rehabilitation Act of 1973 (Public Law 93-112, section 504), and title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d). Enforcement action may be brought under any applicable Federal law. Title VI complaints will be processed in accord with 7 CFR part 15.
(h) Adjustments. FNS will make adjustments as follows:
(1) Caseload adjustments. FNS will adjust the number of exemptions estimated for a State agency under paragraph (g)(2) of this section during a fiscal year if the number of SNAP recipients in the State varies from the State’s caseload by more than 10 percent, as estimated by FNS.
(2) Exemption adjustments. During each fiscal year, FNS will adjust the number of exemptions allocated to a State agency based on the number of exemptions in effect in the State for the preceding fiscal year.
(i) If the State agency does not use all of its exemptions by the end of the fiscal year, FNS will increase the estimated number of exemptions allocated to the State agency for the subsequent fiscal year by the remaining balance.
(ii) If the State agency exceeds its exemptions by the end of the fiscal year, FNS will reduce the estimated number of exemptions allocated to the State agency for the subsequent fiscal year by the corresponding number.
(i) Reporting requirement. The State agency will track the number of exemptions used each month and report this number to the regional office on a quarterly basis as an addendum to the quarterly Employment and Training Report (Form FNS-583) required by § 273.7(c)(8).
(j) Other Program rules. Nothing in this section will make an individual eligible for SNAP benefits if the individual is not otherwise eligible for benefits under the other provisions of this part and the Food and Nutrition Act of 2008.
§ 273.25 Simplified SNAP.
(a) Definitions. For purposes of this section:
(1) Simplified SNAP (S-SNAP) means a program authorized under 7 U.S.C. 2035.
(2) Temporary Assistance for Needy Families (TANF) means a State program of family assistance operated by an eligible State under its TANF plan as defined at 45 CFR 260.30.
(3) Pure-TANF household means a household in which all members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.).
(4) Mixed-TANF household means a household in which 1 or more members, but not all members, receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.).
(5) Assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) means “assistance” as defined in regulations at 45 CFR 260.31.
(b) Limit on benefit reduction for mixed-TANF households under the S-SNAP. If a State agency chooses to operate an S-SNAP and includes mixed-TANF households in its program, the following requirements apply in addition to the statutory requirements governing the S-SNAP.
(1) If a State’s S-SNAP reduces benefits for mixed-TANF households, then no more than 5 percent of these participating households can have benefits reduced by 10 percent of the amount they are eligible to receive under the regular SNAP and no mixed-TANF household can have benefits reduced by 25 percent or more of the amount it is eligible to receive under the regular SNAP. Reductions of $10 or less will be disregarded when applying this requirement.
(2) The State must include in its State S-SNAP plan an analysis showing the impact its program has on benefit levels for mixed-TANF households by comparing the allotment amount such households would receive using the rules and procedures of the State’s S-SNAP with the allotment amount these households would receive if certified under regular SNAP rules and showing the number of households whose allotment amount would be reduced by 9.99 percent or less, by 10 to 24.99 percent, and by 25 percent or more, excluding those households with reductions of $10 or less. In order for FNS to accurately evaluate the program’s impact, States must describe in detail the methodology used as the basis for this analysis.
(3) To ensure compliance with the benefit reduction requirement once an S-SNAP is operational, States must describe in their plan and have approved by FNS a methodology for measuring benefit reductions for mixed-TANF households on an on-going basis throughout the duration of the SFSP. In addition, States must report to FNS on a periodic basis the amount of benefit loss experienced by mixed-TANF households participating in the State’s S-SNAP. The frequency of such reports will be determined by FNS taking into consideration such factors as the number of mixed-TANF households participating in the S-SNAP and the amount of benefit loss attributed to these households through initial or on-going analyses.
(c) Application processing standards. Under statutory requirements, a household is not eligible to participate in an S-SNAP unless it is receiving TANF assistance. If a household is not receiving TANF assistance (payments have not been authorized) at the time of its application for S-SNAP, the State agency must process the application using the regular SNAP requirements of § 273.2, including processing within the 30-day time frame, and screening for and provision of expedited service if eligible. The State agency must determine under regular SNAP rules the eligibility and benefits of any household that it has found ineligible for TANF assistance because of time limits, more restrictive resource standards, or other rules that do not apply to SNAP.
(d) Standards for shelter costs. Legislation governing the S-SNAP requires that State plans must address the needs of households with high shelter costs relative to their income. If a State chooses to standardize shelter costs under the S-SNAP, it must, therefore, use multiple standards that take into consideration households with high shelter costs versus those with low shelter costs. A State is prohibited from using a single standard based on average shelter costs for all households participating in an S-SNAP.
(e) Opportunity for public comment. States must provide an opportunity for public input on proposed S-SNAP plans (with special attention to changes in benefit amounts that are necessary in order to ensure that the overall proposal not increase Federal costs) through a public comment period, public hearings, or meetings with groups representing participants’ interests. Final approval will be given after the State informs the Department about the comments received from the public. After the public comment period, the State agency must inform the Department about the comments received from the public and submit its final S-SNAP plan for Departmental approval.
Subpart H—The Transitional Benefits Alternative
§ 273.26 General eligibility guidelines.
(a) Eligible programs. The State agency may elect to provide transitional SNAP benefits to households whose participation in the following programs is ending:
(1) TANF or State Maintenance of Effort (MOE) funded cash assistance programs, as authorized under part A of Title IV of the Social Security Act; or
(2) A State-funded cash assistance (SFCA) program that provides assistance to families with children. Eligible SFCA programs may include programs funded by both state and local funds provided the programs are intended to be statewide.
(b) Description of State transitional benefits. A State agency that chooses to provide transitional benefits must describe features of its transitional SNAP benefits alternative in its plan of operation, as specified in § 272.2(d)(1)(xvi)(H) of this chapter and as described in § 273.26(b)(1) through (b)(6).
(1) A statement that transitional benefits are available;
(2) The eligible programs by which households may qualify for transitional benefits;
(3) If the State agency is offering transitional benefits through a SFCA program, in addition to TANF or MOE, whether the SFCA program participation runs concurrently, sequentially, or alternatively to the TANF or MOE program;
(4) The categories of households eligible for such benefits;
(5) The maximum number of months for which transitional benefits will be provided; and
(6) Any other items required to be included under this subpart H.
(c) Eligible households. The State agency may limit transitional benefits to households in which all members had been receiving TANF, MOE, or SFCA, or it may provide such benefits to any household in which at least one member had been receiving TANF, MOE, or SFCA. If a member of a household has been sanctioned but the household is still receiving benefits, the remaining eligible household members may receive transitional SNAP benefits if the cash assistance ends for another reason.
(d) Ineligible households. The State agency may not provide transitional benefits to a household that is leaving TANF, MOE, or SFCA when:
(1) The household is leaving TANF or MOE due to a full-family TANF sanction or the household is leaving the SFCA program due to a full-family SFCA program sanction;
(2) The household is a member of a category of households designated by the State agency as ineligible for transitional benefits;
(3) All household members are ineligible to receive SNAP benefits because they are:
(i) Disqualified for an intentional program violation in accordance with § 273.16;
(ii) Ineligible for failure to comply with a work requirement in accordance with § 273.7;
(iii) Receiving SSI in a cash-out State in accordance with § 273.20;
(iv) Ineligible students in accordance with § 273.5;
(v) Ineligible aliens in accordance with § 273.4;
(vi) Disqualified for failing to provide information necessary for making a determination of eligibility or for completing any subsequent review of its eligibility in accordance with § 273.2(d) and § 273.21(m)(1)(ii);
(vii) Disqualified for knowingly transferring resources for the purpose of qualifying or attempting to qualify for the program as provided at § 273.8(h);
(viii) Disqualified for receipt of multiple SNAP benefits;
(ix) Disqualified for being a fleeing felon in accordance with § 273.11(n); or
(x) ABAWD who fail to comply with the requirements of § 273.24.
(e) Optional household exclusions. The State agency has the option to exclude households where all household members are ineligible to receive SNAP benefits because they are:
(1) Disqualified for failure to perform an action under Federal, State or local law relating to a means-tested public assistance program in accordance with § 273.11(k);
(2) Ineligible for failing to cooperate with child support agencies in accordance with § 273.11(o) and (p); or
(3) Ineligible for being delinquent in court-ordered child support in accordance with § 273.11(q).
(f) Recalculating eligibility for denied households. The State agency must use procedures at § 273.12(f)(3) to determine the continued eligibility and benefit level of households denied transitional benefits under § 273.26.
§ 273.27 General administrative guidelines.
(a) When a household leaves TANF, MOE, or a SFCA program, a State agency that has elected this option shall freeze the household’s benefit allotment for up to 5 months after making an adjustment for the loss of TANF, MOE, or the SFCA. This is the household’s transitional period. To provide the full transitional period, the State agency may extend the certification period for up to 5 months and may extend the household’s certification period beyond the maximum periods specified in § 273.10(f). Before initiating the transitional period, the State agency, without requiring additional information or verification from the household, must recalculate the household’s SNAP benefit amount by removing the TANF payment, MOE payment, or the SFCA payment from the household’s SNAP income. At its option, the State agency may also adjust the benefit to account for:
(1) Changes in household income that it learns about from another State or
Federal means-tested assistance program in which the household participates; or
(2) Automatic annual changes in the SNAP benefit rules, such as the annual cost of living adjustment, the standard deduction adjustment, and the adjustment to the cap on the excess shelter deduction.
(b) The State agency must include in its State plan of operation whether it has elected to make these changes:
(1) At the beginning of the transitional period; or
(2) Both at the beginning and during the transitional period.
(c) When a household leaves TANF, MOE, or SFCA program, the State agency at its option may end the household’s existing certification period and assign the household a new certification period that conforms to the transitional period. The recertification requirements at § 273.14 that would normally apply when the household’s certification period ends must be postponed until the end of the new certification period. If the transitional period results in a shortening of the household’s certification period, the State agency shall not issue a household a notice of adverse action under § 273.10(f)(4) but shall specify in the transitional notice required under § 273.29 that the household must be recertified when it reaches the end of the transitional benefit period or if it returns to TANF, MOE, or SFCA program during the transitional period.
§ 273.28 Application for SNAP recertification.
At any time during the transitional period, the household may apply for recertification. If a household applies for recertification during its transitional period, the State agency shall observe the following procedures:
(a) The State agency must schedule an interview in accordance with § 273.2(e);
(b) The State agency must provide the household with a notice of required verification in accordance with § 273.2(c)(5) and provide the household a minimum of 10 days to provide the required verification in accordance with § 273.2(f).
(c) Households that have met all of the required application procedures shall be notified of their eligibility or ineligibility as soon as possible, but no later than 30 calendar days following the date the application was filed.
(1) If the State agency does not determine a household’s eligibility and provide an opportunity to participate within 30 days following the date the application was filed, the State agency shall continue processing the application while continuing the household’s transitional benefits.
(2) If the application process cannot be completed due to State agency fault, the State agency must continue to process the application and provide a full month’s allotment for the first month of the new certification period. The State agency shall determine cause for any delay in processing a recertification application in accordance with the provisions of § 273.2(h)(1).
(d) If the application process cannot be completed because the household failed to take a required action, the State agency may deny the application at that time or at the end of the 30 days. If the household is determined to be ineligible for the program, the State agency will deny the household’s application for recertification and continue the household’s transitional benefits to the end of the transitional benefit period, at which time the State agency will either recertify the household or send a RFC in accordance with § 273.31;
(e) If the household is determined eligible for the regular SNAP but is entitled to a benefit lower than its transitional benefit, the State agency shall encourage the household to withdraw its application for recertification and continue to receive transitional benefits. If the household chooses not to withdraw its application, the State agency has the option to deny the application and allow the transitional period to run its course, or complete the recertification process and issue the household the lower benefit amount beginning with the first month of the new certification period.
(f) If the household is determined eligible for the program, its new certification period will begin with the first day of the month following the month in which the household submitted the application for recertification. The State agency must issue the household full benefits for that month. For example, if the household applied for recertification on the 25th day of the third month of a 5-month transitional period, and the household is determined eligible for the regular SNAP, the State agency will begin the household’s new certification period on the first day of what would have been the fourth month of the transitional period.
(g) If the household is eligible for the regular SNAP and entitled to benefits higher than its transitional benefits, and the State agency has already issued the household transitional benefits for the first month of its certification period, the State agency must issue the household a supplement.
(h) Applications for recertification submitted in the final month of the transitional period must be processed in accordance with § 273.14.
§ 273.29 Transitional notice requirements.
The State agency must issue a transitional notice (TN) to the household that includes the following information:
(a) A statement informing the household that it will be receiving transitional benefits and the length of its transitional period;
(b) A statement informing the household that it has the option of applying for recertification at any time during the transitional period. The household must be informed that if it does not apply for recertification during the transitional period, the State agency must, at the end of the transitional period, either reevaluate the household’s SNAP case or require the household to undergo a recertification;
(c) A statement that if the household returns to TANF, MOE, or SFCA program during its transitional benefit period, it will be asked to reapply for SNAP at the same time. However, if the household has been assigned a new certification period in accordance with § 273.27(c), the notice must inform the household that it must be recertified if it returns to TANF, MOE, or SFCA program during its transitional period;
(d) A statement explaining any changes in the household’s benefit amount due to the loss of TANF income, MOE income, or SFCA program income and/or changes in household circumstances learned from another State or Federal means-tested assistance program;
(e) A statement informing the household that it is not required to report and provide verification for any changes in household circumstances until the deadline established in accordance with § 273.12(c)(3) or its recertification interview; and
(f) A statement informing the household that the State agency will not act on changes that the household reports during the transitional period prior to the deadline specified in § 273.29(e) and that if the household experiences a decrease in income or an increase in expenses or household size prior to that deadline, the household should apply for recertification.
§ 273.30 Transitional benefit alternative change reporting requirements.
If the household does report changes in its circumstances during the transitional period, the State agency may make the change effective the month following the last month of the transitional period or invite the household to reapply and be certified to receive benefits. However, in order to prevent duplicate participation, the State agency must act to change the household’s transitional benefit when a household member moves out of the household and either reapplies as a new household or is reported as a new member of another household. Moreover, the State agency must remove any income, resources and deductible expenses clearly attributable to the departing member.
§ 273.31 Closing the transitional period.
In the final month of the transitional benefit period, the State agency must do one of the following:
(a) Issue the RFC specified in § 273.12(c)(3) and act on any information it has about the household’s new circumstances in accordance with § 273.12(c)(3). The State agency may extend the household’s certification period in accordance with § 273.10(f)(5) unless the household’s certification period has already been extended past the maximum period specified in § 273.10(f) in accordance with § 273.27(a); or
(b) Recertify the household in accordance with § 273.14. If the household has not reached the maximum number of months in its certification period during the transitional period, the State agency may shorten the household’s prior certification period in order to recertify the household. When shortening the household’s certification period pursuant to this section, the State agency must send the household a notice of expiration in accordance with § 273.14(b).
§ 273.32 Households that return to TANF, MOE, or SFCA program during the transitional period.
If a household receiving transitional benefits starts to receive TANF, MOE, or SFCA program during the transitional period, the State agency shall use the information from the TANF, MOE, or SFCA application to re-determine continued SNAP eligibility and benefits, at the same time that the TANF, MOE, or SFCA application is being processed and follow procedures in § 273.2(j) for joint processing of SNAP/TANF applications. This includes processing the application within 30 days. However, for a household assigned a new certification period in accordance with § 273.27(c), the household must be recertified if it returns to TANF, MOE, or the SFCA program during its transitional period.
PART 274—ISSUANCE AND USE OF PROGRAM BENEFITS
§ 274.1 Issuance system approval standards.
(a) Basic issuance requirements. State agencies shall establish issuance and accountability systems which ensure that only certified eligible households receive benefits; that Program benefits are timely distributed in the correct amounts; and that benefit issuance and reconciliation activities are properly conducted and accurately reported to FNS.
(b) System classification. State agencies may issue benefits to households through any of the following systems:
(1) An on-line Electronic Benefit Transfer (EBT) system in which Program benefits are stored in a central computer database and electronically accessed by households at the point of sale via reusable plastic cards.
(2) An off-line EBT system in which benefit allotments can be stored on a card or in a card access device and used to purchase authorized items at a point-of-sale (POS) terminal without real-time authorization from a central processor.
(c) Alternative benefit issuance system. (1) If the Secretary, in consultation with the Office of the Inspector General, determines that Program integrity would be improved by changing the issuance system of a State, the Secretary shall require the State agency to issue or deliver benefits using another method. The alternative method may be one of the methods described in paragraph (b) of this section. The determination of which alternative to use will be made by FNS after consultation with the State agency. The cost of conversion will be shared by the Department and the State agency in accordance with the cost accounting provision of part 277 of this chapter.
(2) The cost of documents or systems which may be required as a result of a permanent alternative issuance system pursuant to this section shall not be imposed upon retail food firms participating in the Program.
(d) Contracting or delegating issuance responsibilities. State agencies may assign to others such as banks, savings and loan associations, and other commercial businesses, the responsibility for the issuance of benefits. State agencies may permit contractors to subcontract assigned issuance responsibilities.
(1) Any assignment of issuance functions shall clearly delineate the responsibilities of both parties. The State agency remains responsible, regardless of any agreements to the contrary, for ensuring that assigned duties are carried out in accordance with these regulations. In addition, the State agency is strictly liable to FNS for all losses of benefits, even if those losses are the result of the performance of issuance, security, or accountability duties by another party.
(2) All issuance contracts shall follow procurement standards set forth in part 277 of this chapter.
(3) The State agency shall not assign the issuance of benefits to any retail food firm.
(e) Ownership rights and procurement requirements. (1) The State agency shall comply with the software and automated data processing equipment ownership rights prescribed under §§ 277.13 and 277.18(1) of this chapter.
(2) The State agency shall comply with the procurement standards prescribed under § 277.18(c)(2)(iii) of this chapter. Under service agreements, the procurement of equipment and services which will be utilized in the SNAP EBT system shall be conducted in accordance with the provisions set forth under § 277.18(e) of this chapter.
(f) Advance planning documentation. State agencies must comply with the procurement requirements of part 277 of this chapter for the acquisition, design, development, or implementation of initial and subsequent EBT systems. With certain exceptions detailed in part 277, State agencies must receive prior approval for the design and acquisition of EBT systems through submission of advance planning documents (APDs).
(1) Pilot project approval requirements. To the extent the State is moving EBT to new technology or incorporating enhancements or upgrades that significantly change the architecture and interface requirements or functionality of issuing benefits electronically:
(i) The State agency shall comply with the two stage approval process for submitting an EBT system proposal to FNS for approval. The Planning APD shall contain the requirements specified under § 277.18(d)(1) of this chapter, including a brief letter of intent, planning budget, cost allocation plan, and schedule of activities and deliverables.
(ii) The State agency shall implement EBT systems in a pilot area prior to expansion statewide or to other project areas. The areas of pilot operation and full scale operation shall be identified in the planning APD when submitted to FNS for approval.
(A) Pilot project site and expanded site descriptions. At a minimum, the proposed pilot project site and expanded site descriptions shall include the geographical boundaries, average number and characteristics of Program participants and households, the number and type of authorized food retailers and authorized retailers bordering the pilot and expanded areas, the SNAP redemption patterns of food retailers, the status of commercial POS deployment and the estimated number of checkout lanes that will require POS equipment; and
(B) A description of major contacts. A description of initial contacts the State agency has made in the proposed pilot area among food retailers, financial institutions and households or their representatives that may be affected by implementation of the EBT system. Written commitments from the retail grocer community (including supermarket chains, independent retailers, and convenience stores) and participating financial institutions in the pilot area shall be provided along with other documentation that demonstrates the willingness to support the proposed EBT system within the pilot area and expanded system area. The State agency shall submit evidence of contacts with recipient organizations and others.
(iii) Pilot project reporting. The State agency is required to report to FNS all issues that arise during the pilot period. Reports to FNS shall be provided as problems occur. In instances where the State agency must investigate the issue, FNS must receive the information no later than 1 month after completion of the pilot operations.
(iv) Expansion requirements. The pilot and expansion schedule must be delineated in the State agency’s approved implementation plan. As part of the plan, the State agency must indicate a suitable pilot area to serve as the basis of the 3-month analysis and reporting, however, expansion can occur simultaneously with pilot operations. Submission of an Advanced Planning Document Update to request FNS approval to implement and operate the EBT system in areas beyond the pilot area is only required in instances where there are substantial changes to the implementation plan. However, if significant problems arise during the pilot period or expansion, the Department can require the roll-out be suspended until such problems are resolved.
(2) EBT Implementation APD. The EBT Implementation APD shall include the completed documents required under § 277.18 of this chapter for implementation APDs, where appropriate. Also, the State agency shall commit to completing and submitting the following documents for FNS approval and obtaining such approval prior to issuance of benefits to eligible households in the project area:
(i) Functional demonstration. A functional demonstration of the functional requirements prescribed in § 274.8 in combination with the system components described by the approved system design is recommended in order to identify and resolve any problems prior to acceptance testing. The Department reserves the right to participate in the functional demonstration if one is conducted. FNS may require that any or all of these tests be repeated in instances where significant modifications are made to the system after these tests are initially completed or if problems that surfaced during initial testing warrant a retest;
(ii) An acceptance test plan. The Acceptance Test Plan for the project shall describe the methodology to be utilized to verify that the EBT system complies with Program requirements and System Design specifications. At a minimum, the Acceptance Test Plan shall address:
(A) The types of testing to be performed;
(B) The organization of the test team and associated responsibilities, test database generation, test case development, test schedule, and the documentation of test results. Acceptance testing shall include functional requirements testing, error condition handling and destructive testing, security testing, recovery testing, controls testing, stress and throughput performance testing, and regression testing;
(C) A “what-if” component shall also be included to permit the opportunity for observers and participants to test possible scenarios in a free-form manner.
(D) The Department reserves the right to participate and conduct independent testing as necessary during the acceptance testing and appropriate events during system design, development, implementation and operation.
(iii) An acceptance test report. The State agency shall provide a separate report after the completion of the acceptance test only in instances where FNS is not present at the testing or when serious problems are uncovered during the testing that remain unresolved by the end of the test session. The report shall summarize the activities, describe any discrepancies, describe the proposed solutions to discrepancies, and the timetable for their retesting and completion. In addition, the report shall contain the State agency’s recommendations regarding implementation of the EBT system.
(iv) A prototype food retailer agreement. The State agency shall enter an agreement with each FNS authorized retailer that complies with the requirements under § 274.3.
(v) An implementation plan. The implementation plan shall include the following:
(A) A description of the tools, procedures, detailed schedules, and resources needed to implement the project;
(B) The equipment acquisition and installation requirements, ordering schedules, and system and component testing;
(C) A phase-in-strategy which permits a measured and orderly transition from one EBT system to another. In describing this strategy, the plan shall address schedules that avoid disruption of normal shopping patterns and operations of participating households and food retailers. Training of SNAP households, State agency personnel and retailers and/or their trainers shall be coordinated with the installation of equipment in retail stores;
(D) A description of on-going tasks associated with fine-tuning the system and making any corrective actions necessary to meet contractual requirements. The description shall also address those tasks associated with ongoing training, document updates, equipment maintenance, on-site support and system adjustments, as needed to meet Program requirements; and,
(E) A plan for orderly phase-out of the project and/or for continuing benefit issuance operations if it is demonstrated during the pilot project or conversion operations that the new system is not acceptable.
(vi) A contingency plan. The State agency shall submit a written contingency plan for FNS approval. The contingency plan shall contain information regarding the back-up issuance system that will be activated in the event of an emergency shut-down which results in short-term or extended system inaccessibility, or total discontinuation of EBT system operations. The contingency plan shall be incorporated into the State system security plan after FNS approval as prescribed at § 277.18(m) of this chapter.
(3) EBT Implementation APD budget. The Implementation APD budget shall be prepared and submitted for FNS approval in accordance with the requirements of paragraph (k) of this section and § 277.18(d)(2) of this chapter.
(g) EBT system administration. (1) The State agency shall be responsible for the coordination and management of the EBT system. The Secretary may suspend or terminate some or all EBT system funding or withdraw approval of the EBT system from the State agency upon a finding that the State agency or its contracted representative has failed to comply with the requirements of this section and/or § 277.18 of this chapter.
(2) All EBT systems within a State must follow a single EBT APD and system architecture submitted by the State agency. Multiple EBT designs will be acceptable only if such designs can be fully justified by the State agency; the system differences are transparent to participating households that move within the State; operating costs are the same or lower; and the different systems have the ability to readily communicate (transaction interchange) with one another.
(3) The State agency shall indicate how it plans to incorporate additional programs into the EBT system if it anticipates the addition of other public assistance programs concurrent with or after implementation of the SNAP EBT system. The State agency shall also consult with the State agency officials responsible for administering the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) prior to submitting the Planning APD for FNS approval.
(4) The State agency shall ensure that a sufficient number of authorized food retailers have agreed to participate throughout the area in which the EBT system will operate to ensure that eligible SNAP households will not suffer a significant reduction in their choice of retail food stores and that a sufficient number of retail food stores serving minority language populations are participating.
(h) Master issuance file. (1) The State agency shall establish a master issuance file which is a composite of the issuance records of all certified SNAP households. The State agency shall establish the master issuance file in a manner compatible with its system used for maintaining case record information and shall separate the information on the master issuance file into active and inactive case file categories. The master issuance file shall contain all the information needed to identify certified households, issue household benefits, record the participation activity for each household and supply all information necessary to fulfill the reporting requirements prescribed in § 274.4.
(i) The master issuance file shall be kept current and accurate. It shall be updated and maintained through the use of documents such as notices of change and controls for expired certification periods.
(ii) Before entering a household’s data on the master issuance file, the State agency shall review the master issuance file to ensure that the household is not currently participating in, or disqualified from, the Program. If benefits are issued under the expedited service requirements of §§ 273.2(i) of this chapter and 274.2(b), the State agency shall complete as much of the master issuance file review as possible prior to issuing the benefits. Any uncompleted reviews shall be completed after issuance and appropriate corrective action shall be taken to recover overissuance.
(2) State agencies should divide issuance responsibilities between at least two persons to prevent any single individual from having complete control over the authorization of issuances and the issuances themselves. Responsibilities to be divided include maintenance of inventory records, the posting of benefits to an EBT account and preparation of EBT cards and PINs for mailing. If issuance functions in an office are handled by one person, a second-party review shall be made to verify card inventory, the reconciliation of the mail log, and the number of mailings prepared.
(3) State agencies shall establish controls to prevent a household from concurrently receiving benefits through expedited and normal issuance services.
(4) State agencies shall clearly identify issuances in their accountability systems as initial, supplemental, replacement, or restored benefits.
(i) State monitoring, examinations, and audits. (1) The State agency’s accountability system shall include procedures for monitoring benefit issuers to assure that the day-to-day operations of all benefit issuers comply with these regulations, to identify and correct deficiencies, and to report violations of the Act or regulations to FNS.
(2) The State agency must obtain an examination by an independent auditor of the transaction processing of the State EBT service provider regarding the issuance, redemption, and settlement of Program benefits. The examination must be done at least annually and the report must be completed ninety days after the examination period ends. Subsequent examinations must cover the entire period since the previous examination. Examinations must follow the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards No. 70, Service Organizations (SAS No. 70), requirements for reports on controls placed in operation and tests of the operating effectiveness of the controls.
(i) The examination report must include a list of all States whose systems operate under the same control environment. Auditors conducting the examination must follow EBT guidance contained in the 2 CFR part 200, subpart F and Appendix XI, Compliance Supplement, and USDA implementing regulations 2 CFR part 400 and part 415 to the extent the guidelines refer to SNAP benefits.
(ii) The State agency must retain a copy of the SAS No. 70 examination report.
(iii) The State agency shall respond to written requests from the Food and Nutrition Service (FNS), USDA Office of the Inspector General (OIG), or the Government Accountability Office (GAO) for completed SAS No. 70 examination reports by providing the report within thirty days of receipt of the written request.
(iv) The State agency shall respond to written requests from FNS, OIG, or GAO to view auditor’s workpapers from SAS No. 70 reports by arranging to have workpapers made available within thirty days of receipt of the written request.
(v) FNS and the USDA OIG shall rely on SAS No. 70 reports on EBT transaction processing services provided by contractors to the State. FNS and USDA OIG reserve the right to conduct other reviews or audits if necessary.
(vi) EBT services provided directly by the State are not subject to SAS No. 70 examination requirements of this section but remain subject to the single audit requirements at 7 CFR 277.7 and 2 CFR part 200, subpart F and Appendix XI, Compliance Supplement and USDA implementing regulations 2 CFR part 400 and part 415.
(j) Compliance Investigations. State agencies shall provide on-line read-only access to State EBT systems for compliance investigations.
(1) The State agency is required to provide software and telecommunications capability as necessary to FNS Retailer Investigation Branch Area offices, Regional offices and Field offices so that FNS compliance investigators, other appropriate FNS personnel and USDA OIG investigators have access to the system in order to conduct investigations of program abuse and alleged violations;
(2) The State agency must ensure that FNS compliance investigators and USDA OIG investigators have access to EBT cards and accounts that are updated as necessary to conduct SNAP investigations.
(k) Federal financial participation. (1) The cost of administering statewide benefit issuance after implementation of the EBT system shall be funded at the regular Federal financial participation rate.
(2) The State agency shall comply with the provisions set forth under § 277.18 of this chapter and 2 CFR part 200, subparts D and E and USDA implementing regulations 2 CFR part 400 and part 415, as applicable.
(3) Access to system documentation, including cost records of contractors or subcontractors shall be made available and incorporated into contractual agreements in accordance with § 277.18(k) of this chapter.
(4) State agencies may receive one hundred percent Federal funding for the costs they incur for switching and settling all SNAP interstate transactions. For purposes of this section, the term “switching” means the routing of an interstate transaction that consists of transmitting the details of a transaction electronically recorded through the use of an EBT card in one State to the issuer of the card that is in another State; and the term “settling” means movement, and reporting such movement, of funds from an EBT card issuer located in one State to a retail food store, or wholesale food concern, that is located in another State, to accomplish an interstate transaction. The total amount of one hundred percent funding available annually is limited to $500,000 nationwide. Once the $500,000 limitation is exceeded, Federal financial participation reverts to the standard fifty percent program reimbursement rate and procedure. To qualify for this funding, the State agency must:
(i) Meet standards of interoperability and portability under § 274.8;
(ii) Sign and submit, in each fiscal year for which the State agency requests enhanced funding, an Interoperability Funding Agreement to comply with the administrative procedures established by the Department. The State agency must submit the signed agreement to the Department before the end of the fiscal year in which costs are incurred in order to qualify for payment for that fiscal year, and
(iii) Submit requests for payment on a quarterly basis after the end of the quarter in which interoperability costs are incurred, in accordance with the Department’s administrative procedures. Requests for payments shall be due February 15 (for the period October through December), May 15 (January through March), August 15 (April through June), and November 15 (July through September). Requests for payment submitted after the required date for a quarter shall not be considered until the following quarter, when such requests for payments are scheduled to be processed.
§ 274.2 Providing benefits to participants.
(a) General. Each State agency is responsible for the timely and accurate issuance of benefits to certified eligible households, including EBT system compliance with the expedited service benefit delivery standard and the normal application processing standards, as prescribed by these regulations. Those households located in rural areas or comprised of elderly or disabled members who have difficulty reaching issuance offices, and households which do not reside in a permanent dwelling or of a fixed mailing address shall be given assistance in obtaining an EBT card. State agencies shall assist these households by arranging for the mailing of EBT cards to them, by assisting them in finding authorized representatives who can act on their behalf, or by using other appropriate means.
(b) Availability of benefits. All newly certified households, except those that are given expedited service, shall be given an opportunity to participate no later than 30 calendar days following the date the application was filed. An opportunity to participate consists of providing households with an active EBT card and PIN, and benefits that have been posted to the household’s EBT account and are available for spending. State agencies, utilizing a centralized mailing system, must mail EBT cards and PINs, if applicable, in time to assure that the benefits can be spent after they are received but before the 30-day standard expires. A household has not been provided an opportunity to participate within the 30-day standard if the EBT card or PIN is mailed on the 29th or 30th day. For households entitled to expedited service, the State agency shall make benefits available to the household not later than the seventh calendar day following the date of application.
(c) Benefit allotments. (1) State agencies shall not issue ongoing monthly benefit allotments to a household in more than one issuance during a month except with respect to the issuance of benefits to a resident of a drug and alcohol treatment and rehabilitation program in accordance with § 273.11(e) of this chapter or when a benefit correction is necessary.
(2) For those households which are to receive a combined allotment, the State agency shall provide the benefits for both months as an aggregate (combined) allotment, or as two separate allotments, made available at the same time in accordance with the timeframes specified in § 273.2 of this chapter.
(d) Ongoing households. State agencies shall establish an availability date for household access to their benefits and inform households of this date. All households shall be placed on an issuance schedule so that they receive their benefits on or about the same date each month. The date upon which a household receives its initial allotment after certification need not be the date that the household must receive its subsequent allotments.
(1) State agencies may stagger issuance throughout the month, or for a shorter period. When staggering benefit delivery, however, State agencies shall not allow more than 40 days to elapse between the issuance of any two allotments provided to a household participating longer than two consecutive, complete months. Regardless of the issuance schedule used, the State agency shall adhere to the reporting requirements specified in § 274.4.
(2) Upon the request of the Tribal organization that exercises governmental jurisdiction over a reservation, the State agency shall stagger the issuance of benefits for eligible households located on reservations for at least 15 days each month.
(3) When a participating household is transferred from one issuance system or procedure to another issuance system or procedure, the State agency shall not permit more than 40 days to elapse between the last issuance under the previous system or procedure, and the first issuance under the new system or procedure. The 40-day requirement does not apply to instances in which actions by recipients, such as failure to submit a monthly report, disrupt benefits. Transfers include, but are not limited to, households being moved into or out of a staggered issuance procedure and households on a fluctuating schedule within a staggered system. If the State agency determines that more than 40 days may elapse between issuances, the State agency shall divide the new issuance into two parts, with one part being issued within the 40-day period, and the second part, or supplemental issuance, being issued on the household’s established issuance date in the new system or procedure. The supplemental issuance cannot provide the household more benefits than the household is entitled to receive.
(4) Notwithstanding the above provisions, in months in which benefits have been suspended under the provisions of § 271.7 of this chapter, State agencies may stagger issuance to certified households following the end of the suspension. In such situations, State agencies may, at their option, stagger issuance from the date issuance resumes through the end of the month or over a five-day period following the resumption of issuance, even if this results in benefits being issued after the end of the month in which the suspension occurred.
(e) Household training. The State agency shall provide training to each household prior to implementation and as needed during ongoing operation of the EBT system. Training functions for an EBT system may be incorporated into certification procedures. At a minimum, the household training shall include:
(1) Content which will familiarize each household with the provisions of this section and §§ 274.6 and 274.7;
(2) Notification to the household of the procedures for manual transactions and re-presentation as described in § 274.8(d);
(3) The appropriate utilization and security of the PIN;
(4) Each household’s responsibilities for reporting loss or damage to the EBT card and who to report them to, both during and outside business hours. Information on a 24 hour hotline telephone number shall be provided to each household during training;
(5) Written materials and/or other information, including the specific rights to benefits in an EBT system, shall be provided as prescribed under 7 CFR 272.4(b) for bilingual households and for households with disabilities. This shall include the statement of non-discrimination found in Departmental Regulation 4300-3 (available from USDA, Office of Civil Rights, Room 326-W, Whitten Building, Washington, DC 20250). Written materials shall be prepared at an educational reading level suitable for SNAP households;
(6) Information on the signs or other appropriate indicators located in checkout lanes that enable the household to identify lanes equipped to accept EBT cards.
(7) Disclosure information regarding adjustments and a household’s rights to notice, fair hearings, and provisional credits. The disclosure must also state where to call to dispute an adjustment and request a fair hearing.
(f) EBT cards and Personal Identification Numbers (PINs). (1) State agencies which issue EBT cards by mail shall, at a minimum, use first class mail and sturdy nonforwarding envelopes or packages to send EBT cards to households.
(2) The State agency shall permit SNAP households to select their PIN.
(i) PIN assignment procedures shall be permitted in accordance with industry standards as long as PIN selection is available to clients if they so desire and clients are informed of this option.
(ii) If assigning a PIN by mail in conjunction with card issuance, State agencies shall mail the PIN separate from the card one business day after the card is mailed.
(g) Adjustments. (1) The State agency may make adjustments to benefits posted to household accounts after the posting process is complete but prior to the availability date for household access in the event benefits are erroneously posted.
(2) A State agency shall make adjustments to an account to correct an auditable, out-of-balance settlement condition that occurs during the redemption process as a result of a system error. A system error is defined as an error resulting from a malfunction at any point in the redemption process: from the system host computer, to the switch, to the third party processors, to a store’s host computer or POS device. These adjustments may occur after the availability date and may result in either a debit or credit to the household.
(i) Client-initiated adjustments. The State agency must act on all requests for adjustments made by client households within 90 calendar days of the error transaction. The State agency has 10 business days from the date the household notifies it of the error to investigate and reach a decision on an adjustment and move funds into the client account. This timeframe also applies if the State agency or entity other than the household discovers a system error that requires a credit adjustment to the household. Business days are defined as calendar days other than Saturdays, Sundays, and Federal holidays.
(ii) Retailer-initiated adjustments. The State agency must act upon all adjustments to debit a household’s account no later than 10 business days from the date the error occurred, by placing a hold on the adjustment balance in the household’s account. If there are insufficient benefits to cover the entire adjustment, a hold shall be placed on any remaining balance that exists, with the difference being subject to availability only in the next future month. The household shall be given, at a minimum, adequate notice in accordance with § 273.13 of this chapter. The notice must be sent at the time the initial hold is attempted on the household’s current month’s remaining balance, clearly state the full adjustment amount, and advise the household that any amount still owed is subject to collection from the household’s next future month’s benefits.
(A) The household shall have 90 days from the date of the notice to request a fair hearing.
(B) Should the household dispute the adjustment and request a hearing within 10 days of the notice, a provisional credit must be made to the household’s account by releasing the hold on the adjustment balance within 48 hours of the request by the household, pending resolution of the fair hearing. If no request for a hearing is made within 10 days of the notice, the hold is released on the adjustment balance, and this amount is credited to the retailer’s account. If there are insufficient funds available in the current month to cover the full adjustment amount, the hold may be maintained and settled at one time after the next month’s benefits become available.
(3) The appropriate management controls and procedures for accessing benefit accounts after the posting shall be instituted to ensure that no unauthorized adjustments are made in accordance with paragraph (j) of this section.
(h) Off-line storage. If a household’s EBT account is inactive for three months (91 days) or longer, State agencies may elect to store all benefits in that account off-line.
(1) An EBT account is inactive if the household has not initiated activity that affects the balance of the household’s SNAP EBT account, such as a purchase or return.
(2) Taking benefits off-line means that the household’s SNAP EBT account, including all existing benefits in the account and any new issuances deposited into the account, is no longer accessible to the household unless and until the account and its benefits are reinstated upon contact by the household.
(3) The State agency shall send written notification to the household up to 10 days prior to or concurrent with the action to store benefits off-line. If an inactive account has a zero balance, a notice to the household is not required. At a minimum, the notice shall include information on:
(i) The steps necessary to bring the benefits back on-line; and
(ii) The State agency’s permanent expungement policy.
(4) Benefits stored off-line that have not been expunged in accordance with paragraph (i) of this section shall be reinstated and made available within 48 hours of reapplication or contact by the household. In addition to a specific request for benefit restoration, household contact shall include, but is not limited to:
(i) Recertification or reapplication for benefits; and
(ii) A general request for assistance.
(i) Expungement. (1) State agencies shall apply SNAP transactions against a household’s SNAP benefits on a first-in-first-out basis. As a result, the oldest SNAP benefits are used first. On a daily basis, the State agency shall expunge benefits from EBT accounts at the monthly benefit allotment level in accordance with either paragraph (i)(1)(i) or (ii) of this section. State agencies must designate which approach will be used in its State plan and use the same approach for all households within the State.
(i) Inactive EBT accounts. Benefits allotments, or portion thereof, shall be expunged from EBT accounts that have been inactive, per paragraph (h)(1) of this section, for a period of nine months (274 days) in accordance with the following:
(A) When the oldest benefit allotment has not been accessed by the household for nine months, the State agency shall expunge benefits from the EBT account or off-line storage at the monthly benefit allotment level as each benefit allotment ages to nine months since the date of issuance or since the last date of account activity, whichever date is later.
(B) The State agency shall not expunge any benefits from active accounts even if there are benefit allotments older than nine months. If at any time after the expungement process begins, the household initiates activity affecting the balance of the account, the State shall stop expunging benefits from the account and start the account aging process over again for the remaining benefits.
(ii) Unused benefits. The State agency shall expunge individual benefit allotments, or portion thereof, that remain in a household’s EBT account nine months (274 days) after the date the allotment was issued to the household, regardless of any account activity that may have taken place.
(2) Not later than 30 days before benefit expungement is scheduled to begin, State agencies shall provide notice to the household that benefits in their EBT account are approaching expungement due to nonuse/inactivity. At a minimum, the notice shall include:
(i) The date upon which benefits are scheduled to be expunged; and
(ii) The steps necessary to prevent the expungement, including an opportunity to request that any benefits stored off-line be restored to the household in accordance with paragraph (h) of this section;
(3) Expunged benefits shall be removed from the Account Management Agent and shall not be reinstated.
(4) Notwithstanding paragraph (i)(1) of this section, in instances when the State agency verifies a death match for all certified members of the household and closes the SNAP case in accordance with § 272.14 of this chapter, the State agency shall expunge the remaining SNAP balance in the household’s EBT account at that time. In accordance with § 273.13(b)(2) of this chapter, expungement notices, per paragraph (i)(2) of this section, are not required for these households.
(j) Procedures to adjust SNAP accounts. Procedures shall be established to permit the appropriate managers to adjust SNAP benefits that have already been posted to an EBT account prior to the household accessing the account, or to remove benefits from inactive accounts for off-line storage or expungement in accordance with paragraphs (h) and (i) of this section.
(1) Whenever benefits are stored off-line or expunged, the State agency shall document the date, amount of the benefits, and storage location in the household case file.
(2) Issuance reports shall reflect the adjustment to the State agency issuance totals to comply with monthly issuance reporting requirements prescribed under § 274.4.
§ 274.3 Retailer management.
(a) Retailer participation. (1) All authorized retailers must be afforded the opportunity to participate in the EBT system. An authorized food retailer shall not be required to participate in an EBT system.
(i) Retailers who do not have immediate access to telephones at the time of authorization shall be accommodated by an alternative system (e.g., manual vouchers with preliminary or delayed telephone verification) for redeeming Program benefits from eligible SNAP customers. These retailers include stationary food stores which opt to make home deliveries to SNAP households, house-to-house trade routes which operate on standing orders from customers, e.g. milk and bread delivery routes, food buying cooperatives authorized to participate as well as other food retailers authorized under § 278.1 of this chapter. Prior to delivery or upon returning to the store, the retailer shall telephone the EBT central computer or hotline number to log the transaction and obtain an authorization number. If authorization cannot be obtained before or at the time of purchase, the retailer assumes the risk for sufficient benefits being available in the household’s account. Any alternate method cannot be burdensome on either the household or the retailer, and it must include acceptable privacy and security features. Such systems shall only be available to retailers that cannot be equipped with a POS terminal at the time of authorization.
(ii) Newly authorized retailers shall have access to the EBT system within 2 weeks after the receipt of the FNS authorization notice. However, whenever a retailer chooses to employ a third party processor to drive its terminals or elects to drive its own terminals, access to the system shall be accomplished within a 30 day period or a mutually agreed upon time to enable the third party interface specifications and any State required functional certification to be performed by the State agency and/or its contractor.
(2) Authorized retailers shall not be required to pay costs essential to and directly attributable to EBT system operations as long as the equipment or services are provided by the State agency or its contractor and are utilized solely for SNAP. In addition, if Program equipment is deployed under contract to the State agency, the State agency may, with USDA approval, share appropriate costs with retailers if the equipment is also utilized for commercial purposes. The State agency may choose to charge retailers reasonable fees in the following circumstances:
(i) Cost for the replacement of lost, stolen or damaged equipment;
(ii) The cost of materials and supplies for POS terminals not provided by the State agency;
(iii) Telecommunication costs for all non-EBT use by retailers when lines are provided by the State agency. In addition, State agencies may remove phone lines from retailers in instances where there is significant misuse of the lines.
(3) The State agency shall ensure that the EBT system provides credits to the financial institution holding the accounts for retailers or third party processors within two business days of the daily cut-over period for retailer settlement. The cut-over period is the time of day established by the system to define the end of a transaction day for settlement and reconciliation.
(b) POS deployment. POS terminals shall be deployed as follows:
(1) For an FNS authorized retailer with Program benefit redemption amounting to 15 percent or more of total food sales, all checkout lanes shall be equipped;
(2) For an FNS authorized retailer with Program benefit redemptions representing less than 15 percent of total food sales, superstores and supermarkets shall, at a minimum, receive one terminal for every $11,000 in monthly redemption activity up to the number of lanes per store. All other food retailers shall receive one terminal for every $8,000 in monthly redemption activity up to the number of lanes per store. However, a State agency may utilize an alternative deployment formula that permits equipment deployment at higher levels than required by this paragraph up to the number of lanes in each store. The State agency shall review terminal deployment on a yearly basis and shall be authorized to remove excess terminals if actual redemption activity warrants a reduction.
(3) For newly authorized retailers, the State agency and retailer shall negotiate a mutually agreed level of terminal deployment up to the number of lanes per store. The State agency may consult with the appropriate FNS field office in order to determine the previous SNAP redemption activity that could be utilized in determining the initial number of terminals to deploy in newly authorized retailer firms. State agencies will also need to make accommodations for border stores that are deemed necessary for client access. To do so, State agencies must ensure that procedures are in place to process manual vouchers in instances when the system is down or for those retailers that do not have POS equipment. Redemption information shall remain confidential. Unauthorized release of redemption information is subject to penalties defined in Section 15 of the Food and Nutrition Act of 2008 (7 U.S.C. 2024).
(4) Any FNS authorized retailer shall be able to submit further evidence that it warrants additional terminals after the initial POS terminals are deployed. SNAP households may also submit evidence to the State agency that additional POS terminals are needed. State agencies may provide retailers with additional terminals above the minimum number required by this paragraph at customer service booths or other locations if appropriate.
(c) Retailer agreements. The State agency shall enter into an agreement with each authorized retailer. The retailer agreement shall describe the terms and conditions of participation in the SNAP EBT system. At a minimum, the agreement shall:
(1) Describe all terms and conditions with respect to equipment ownership, lease arrangements, handling and maintenance for which the State agency and merchant are liable;
(2) Describe the agreed upon procedures and policies for participation and withdrawal from the EBT system;
(3) Comply with all Program regulations with respect to retailer participation in the Program and treatment of SNAP households. This shall include specific requirements with respect to the deployment of terminals and the identification of checkout lanes for SNAP customers;
(4) Delineate the liabilities during system downtime and the associated responsibilities of each party with respect to the use of off-line and/or manually entered data, paper vouchers, and re-presented vouchers.
(d) Third party processors are financial institutions, cardholder authorization processors other than the party with which the State agency has contracted for EBT services, and food retailers driving their own terminals that are capable of relaying electronic transactions to a central database computer for authorization. The State agency shall afford retailers the opportunity to use third party processors and shall provide interface specifications and certification standards in order for the third party processor to participate in the EBT system.
(1) In order to participate in a SNAP EBT system, a third party processor must be able to meet all third party interface specifications and certification standards associated with § 274.8. The State agency shall make available to third party processors the third party interface specifications prior to implementation of the EBT system to enable third party processors to access the database. Third party processors shall undergo functional and acceptance tests as specified by the State agency;
(2) Third party processors shall be liable for transactions until the transaction has been electronically accepted by the contracted vendor or an intermediate processing facility;
(3) The State agency shall ensure that third party processors and food retailers driving their own terminals comply with this section and all applicable Program regulations.
(e) Managing retailer participation. The State agency shall:
(1) Convey retailer authorization information provided by FNS to the system operator using the Retailer EBT Data Exchange (REDE) system. The State agency must access the REDE files to ensure that the FNS retailer files used to authorize valid EBT SNAP transactions are updated on a daily basis.
(2) Follow-up on actions taken regarding any disqualification or withdrawal of an authorized retailer from the Program must occur within two business days after receipt;
(3) Add newly authorized retailers or third party processors to the EBT system as prescribed under paragraph (a)(1)(ii) of this section.
(4) Ensure that only currently authorized retailers can access the system;
(5) Monitor retailers to ensure that equipment deployment complies with paragraph (b) of this section;
(6) Ensure that equipment and supplies are maintained in working order for retail stores equipped by the State agency or its contractor. Equipment shall be replaced or repaired within 48 hours;
(7) Ensure that retail store employees are trained in system operation prior to redeeming benefits. Retailer training shall be offered by the State agency and include the provision of appropriate written and program specific materials. Retailers have the option to waive instruction by the State agency if they desire. State agencies shall direct retailers to confirm in writing that they are waiving their option to training;
(8) Conduct adjustments as prescribed under § 274.2(g) of this chapter;
§ 274.4 Reconciliation and reporting.
(a) Reconciliation. State agencies shall account for all issuance through a reconciliation process. The EBT system shall provide reports and documentation pertaining to the following:
(1) Reconciliation. Reconciliation shall be conducted and records kept as follows:
(i) Reconciliation of benefits posted to household accounts on the central computer against benefits on the Issuance Authorization File;
(ii) Reconciliation of individual household account balances against account activities on a daily basis;
(iii) Reconciliation of each individual retail store’s SNAP transactions per POS terminal and in total to deposits on a daily basis;
(iv) Verification of retailer’s credits against deposit information entered into the automated clearinghouse (ACH) network;
(v) Reconciliation of total funds entered into, exiting from, and remaining in the system each day;
(vi) Maintenance of audit trails that document the full cycle of issuance from benefit allotment posting to the State issuance authorization file through posting to POS transactions at retailers through settlement of retailer credits.
(b) Management reports. The State agency shall require the EBT system to provide reports that enable the State agency to manage the system. The reports shall be available to the State agency or FNS as requested on a timely basis and consist of:
(1) Information on how the system operates relative to its performance standards, the incidence, type and cause of system problems, and utilization patterns.
(2) Retailer transaction data submitted to FNS on a monthly basis. This data must be submitted in the specified format in accordance with the required schedule.
(3) Data detailing by specified category the amount of Program benefits issued or returned through the EBT system shall be provided in a format and mechanism specified by FNS to the FNS Account Management Agent as the benefits become available to recipients. This data will be used to increase or decrease the SNAP EBT benefit funding authorization for the State’s Automated Standard Application for Payment (ASAP) account.
(c) Required reports. The State agency shall review and submit the following reports to FNS on a monthly basis:
(1) Form FNS-46, Issuance Reconciliation Report, shall be submitted by each State agency operating an issuance system. The report shall be prepared at the level of the State agency where the actual reconciliation of posted benefits and the master issuance file occurs.
(i) The State agency shall identify and report the number and value of all issuances which do not reconcile with the master issuance file. All unreconciled issuances shall be identified as specified on this reporting document.
(ii) The report shall be received by FNS no later than 90 days following the end of the report month.
(2) Form FNS-388, State Issuance and Participation Estimates. (i) State agencies shall telephone or transmit by computer the Form FNS-388 data and mail the reports to the FNS regional office no later than the 19th day of each month. When the 19th falls on a weekend or holiday, the Form FNS-388 data shall be reported by telephone or transmitted by computer and mailed on the first work day after the 19th. The Form FNS-388 report shall be signed by the person responsible for completing the report or a designated State agency official.
(ii) The Form FNS-388 report shall provide Statewide estimated or actual totals of issuance and participation for the current and previous month, and actual or final participation totals for the second preceding month. In addition to the participation totals for the second preceding months of January and July, provided on the March and September reports, non-assistance (NA) and public assistance (PA) household and person participation breakdowns shall be provided. As an attachment to the March and September Form FNS-388 reports, State agencies shall provide project area breakdowns of benefit issuance and NA/PA household and person participation data for the second preceding months of January and July.
(iii) State agencies shall submit any proposed changes in their estimation procedures to be used in determining the Form FNS-388 data to the FNS regional office for review and comment. FNS shall monitor the accuracy of the Statewide estimated dollar value of benefits issued and the number of households and persons participating as reported on the Form FNS-388 report against the Statewide actual total participation as reported on succeeding Form FNS-388 reports and against the semiannual project area participation totals attached to the March and September Form FNS-388 reports. The FNS accuracy standards for the issuance and participation estimates are that estimates for the current month be within ( + ) or (−) four (4) percent of actual levels, and the estimates for the previous month be within ( + ) or (−) two (2) percent of actual levels. State agencies shall explain any unusual circumstances that cause benefit issuance and/or participation data to not meet these accuracy standards. If a State agency fails to meet these accuracy standards, FNS shall notify the State agency and assist the State agency in revising its estimating procedures to improve its reporting.
(iv) A participating household is one that is certified and has been, or will be, issued benefits (whether or not the benefits are used), and households that have met the eligibility requirements, but will receive zero benefits.
§ 274.5 Record retention and forms security.
(a) Availability of records. (1) The State agency shall maintain issuance, inventory, reconciliation, and other accountability records for a period of three years as specified in § 272.1(f) of this chapter. This period may be extended at the written request of FNS.
(2) In lieu of the records themselves, easily retrievable microfilm, microfiche, or computer tapes which contain the required information may be maintained.
(b) Control of issuance documents. The State agency shall control all issuance documents which establish household eligibility while the documents are transferred and processed within the State agency. The State agency shall use numbers, batching, inventory control logs, or similar controls from the point of initial receipt through the issuance and reconciliation process.
(c) Accountable documents. (1) EBT cards shall be considered accountable documents. The State agency shall provide the following minimum security and control procedures for these documents:
(i) Secure storage;
(ii) Access limited to authorized personnel;
(iii) Bulk inventory control records;
(iv) Subsequent control records maintained through the point of issuance or use; and
(v) Periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records.
(2) For notices of change which initiate, update or terminate the master issuance file, the State agency shall, at a minimum, provide secure storage and shall limit access to authorized personnel.
§ 274.6 Replacement issuances and cards to households.
(a) Providing replacement issuance. (1) Subject to the restrictions in paragraph (a)(3) of this section, State agencies shall provide replacement issuances to a household when the household reports that food purchased with Program benefits was destroyed in a household misfortune.
(2) Where a Federal disaster declaration has been issued and the household is eligible for disaster SNAP benefits under the provisions of part 280, the household shall not receive both the disaster allotment and a replacement allotment for a misfortune.
(3) Replacement restrictions. (i) Replacement issuances shall be provided only if a household timely reports a loss orally or in writing. The report will be considered timely if it is made to the State agency within 10 days of the date food purchased with Program benefits is destroyed in a household misfortune.
(ii) No limit on the number of replacements shall be placed on the replacement of food purchased with Program benefits which was destroyed in a household misfortune.
(iii) Except for households certified under 7 CFR part 280, replacement issuances shall be provided in the amount of the loss to the household, up to a maximum of one month’s allotment, unless the issuance includes restored benefits which shall be replaced up to their full value.
(4) Household statement of loss. (i) Prior to issuing a replacement, the State agency shall obtain from a member of the household a signed statement attesting to the household’s loss. The required statement may be mailed to the State agency if the household member is unable to come into the office because of age, handicap or distance from the office and is unable to appoint an authorized representative.
(ii) If the signed statement or affidavit is not received by the State agency within 10 days of the date of report, no replacement shall be made. If the 10th day falls on a weekend or holiday, and the statement is received the day after the weekend or holiday, the State agency shall consider the statement timely received.
(iii) The statement shall be retained in the case record. It shall attest to the destruction of food purchased with the original issuance and the reason for the replacement. It shall also state that the household is aware of the penalties for intentional misrepresentation of the facts, including but not limited to, a charge of perjury for a false claim.
(5) Time limits for making issuance replacements. (i) Replacement issuances shall be provided to households within 10 days after report of loss or within two (2) working days of receiving the signed household statement required in paragraph (a)(4) of this section, whichever date is later.
(ii) The State agency shall deny or delay replacement issuances in cases in which available documentation indicates that the household’s request for replacement appears to be fraudulent.
(iii) The household shall be informed of its right to a fair hearing to contest the denial or delay of a replacement issuance. Replacements shall not be made while the denial or delay is being appealed.
(6) Verifying issuance and household misfortune. (i) Upon receiving a request for replacement of an issuance for food destroyed in a household misfortune, the State agency shall determine if the issuance was validly issued. The State agency shall also comply with all applicable provisions in paragraphs (a)(3) through (a)(5)of this section.
(ii) Prior to replacing destroyed food that was purchased with Program benefits, the State agency shall determine that the destruction occurred in a household misfortune or disaster, such as, but not limited to, a fire or flood. This shall be verified through a collateral contact, documentation from a community agency including, but not limited to, the fire department or the Red Cross, or a home visit.
(7) Documentation and reconciliation of replacement issuances. (i) The State agency shall document in the household’s case file each request for replacement, the date, the reason, and whether or not the replacement was provided. This information may be recorded exclusively on the household statement required in paragraph (a)(4) of this section.
(ii) The State agency shall maintain, in readily-identifiable form, a record of the replacements granted to the household, the reason, and the month. The record may be a case action sheet maintained in the case file, notations on the master issuance file, if readily accessible, or a document maintained solely for this purpose.
(iii) When a request for replacement is made late in an issuance month, the replacement will be issued in a month subsequent to the month in which the original benefit was issued. All replacements shall be posted and reconciled to the month of issuance of the replacement and may be posted to the month of issuance of the original benefit, so that all duplicate transactions may be identified.
(b) Providing replacement EBT cards or PINs. The State agency shall make replacement EBT cards available for pick up or place the card in the mail within two business days following notice by the household to the State agency that the card has been lost, stolen or damaged unless the State agency implements a replacement procedure pursuant to paragraph (b)(5) of this section.
(1) The State agency shall ensure that a duplicate account is not established which would permit households to access more than one account in the system.
(2) An immediate hold shall be placed on accounts at the time notice is received from a household regarding the need for card or PIN replacement. The State agency shall implement a reporting system which is continually operative. Once a household reports that their EBT card has been lost or stolen, the State agency shall assume liability for benefits subsequently drawn from the account and replace any lost or stolen benefits to the household. The State agency or its agent shall maintain a record showing the date and time of all reports by households that their card is lost or stolen.
(3) The State agency may impose a replacement fee by reducing the monthly allotment of the household receiving the replacement card; however, the fee may not exceed the cost to replace the card. If the State agency intends to collect the fee by reducing the monthly allotment, it must follow FNS reporting procedures for collecting program income. State agencies currently operating EBT systems must inform FNS of their proposed collection operations. State agencies in the process of developing an EBT system must include the procedure for collection of the fee in their system design document. All plans must specify how the State agency intends to account for card replacement fees and include identification of the replacement threshold, frequency, and circumstances in which the fee shall be applicable. State agencies may establish good cause policies that provide exception rules for cases where replacement card fees will not be collected.
(4) Replacement card. The State agency shall issue replacement cards and PINs in accordance with § 274.2(f) of this chapter.
(5) State option to withhold replacement card. The State agency may require an individual member of a household to contact the State agency to provide an explanation in cases where the number of requests for card replacements is determined excessive. If they so require, the State agency must establish a threshold for the number of card replacements during a specified period of time to be considered excessive. That threshold shall not be less than four cards requested within 12 months prior to the request, unless the State agency has additional evidence indicating a suspected trafficking violation, as defined at § 271.2 of this chapter. If a trafficking violation is suspected prior to the fourth card request, the State agency shall refer the client for investigation and, if deemed appropriate, may provide a notice to the client, requiring the individual or household to contact the State agency to provide an explanation prior to receiving a subsequent replacement card.
(i) The State agency shall notify the household in writing when it has reached the threshold, indicating that the next request for card replacement will require contact with the State agency to provide an explanation for the requests, before the replacement card will be issued. The State agency shall also notify the household in writing once the threshold has been exceeded that the State agency is withholding the card until contact is made. These notices must:
(A) Be written in clear and simple language;
(B) Meet the language requirements described at § 272.4(b) of this chapter;
(C) Specify the number of cards requested and over what period of time;
(D) Explain that the next request, or the current request if the threshold has been exceeded, requires contact with the State agency before another card is issued;
(E) Provide all applicable information on how contact is to be made in order for the client to comply, such as whom to contact, a telephone number and address;
(F) Include a statement that explains what is considered a misuse or fraudulent use of benefits and the possibility of referral to the fraud investigation unit for suspicious activity.
(ii) Following notification, should another card be requested, the State agency shall require that the household contact the State agency to provide an explanation for the requests. If the client makes contact, the State agency shall make the replacement EBT card available for pick up or place the card in the mail in accordance with § 274.2(f) of this chapter within two business days following household contact with the State agency, regardless of whether or not an explanation was provided.
(A) If a household does not contact the State agency in response to the State agency’s notice, the State agency shall not issue a replacement card to the household and the case must be referred for investigation.
(B) The State agency shall educate the client on the proper use of the card if the explanation is deemed appropriate and the State agency shall not require contact upon subsequent requests, unless the pattern of card activity has changed since the initial contact and indicates possible trafficking activity.
(C) The State agency shall refer the individual for investigation in cases where the individual contacts the State agency but refuses to explain the card losses or the explanation provided appears to be indicative of trafficking in accordance with § 271.2 of this chapter. The State agency shall issue a replacement card to any household that makes the required contact so that the household has access to benefits in its EBT account while the investigation is underway and while awaiting a hearing, in accordance with § 273.16(e)(5).
(iii) In all cases, a State agency shall act to protect households containing homeless persons, elderly or disabled members, victims of crimes and other vulnerable persons who may lose EBT cards but are not committing fraud.
(6) Excessive Replacement Card Notice. The State agency shall monitor all client requests for EBT card replacements and send a notice, upon the fourth request in a 12-month period, alerting the household that their account is being monitored for potential, suspicious activity. If another replacement card is subsequently requested and trafficking is suspected, the State agency shall refer that case to the State’s fraud investigation unit.
(i) The State agency shall be exempt from sending the Excessive Replacement Card Notice if they have chosen to exercise the option to withhold the replacement card until contact is made with the State agency, in accordance with paragraph (b)(5) of this section, as long as the State agency has chosen to use the minimum threshold, which requires sending the first warning notice on the fourth card replacement request within 12 months. If the State agency chooses to use a threshold higher than the fourth card replacement request, the State agency must send the Excessive Replacement Card Notice on the fourth card request in accordance with this section.
(ii) The State agency shall notify the household in writing upon their fourth card request that their case is being monitored. This notice shall, at a minimum:
(A) Be written in clear and simple language;
(B) Meet the language requirements described at § 272.4(b) of this chapter;
(C) Specify the number of cards requested and over what period of time;
(D) Explain that the transactions of the cardholder’s account are being monitored for potential trafficking activity;
(E) Include a statement that explains what is considered a misuse or fraudulent use of benefits and the possibility of referral to the State’s fraud investigation unit for suspicious activity.
(F) Provide contact information, including a telephone number, should the household have questions or concerns regarding the notice.
§ 274.7 Benefit redemption by eligible households.
(a) Eligible food. Program benefits may be used only by the household, or other persons the household selects, to purchase eligible food for the household, which includes, for certain households, the purchase of prepared meals, and for other households residing in certain designated areas of Alaska, the purchase of hunting and fishing equipment with benefits.
(b) Prior payment prohibition. Program benefits shall not be used to pay for any eligible food purchased prior to the time at which an EBT card is presented to authorized retailers or meal services. Neither shall benefits be used to pay for any eligible food in advance of the receipt of food, except when prior payment is for food purchased from a nonprofit cooperative food purchasing venture.
(c) Transaction limits. No minimum dollar amount per transaction or maximum limit on the number of transactions shall be established. In addition, no transaction fees shall be imposed on SNAP households utilizing the EBT system to access their benefits.
(d) Access to balances. (1) Households shall be permitted to determine their SNAP account balances without making a purchase or standing in a checkout line.
(2) The State agency shall ensure that the EBT system is capable of providing a transaction history for a period of up to 2 calendar months to households upon request.
(3) Households shall be provided printed receipts at the time of transaction in accordance with § 274.8(b)(7).
(e) Access to retail stores. (1) The EBT system shall provide for minimal disruption of access to and service in retail stores by eligible households.
(2) The EBT system shall not result in a significant increase in the cost of food or cost of transportation to authorized retailers for SNAP households.
(f) Equal treatment. The EBT system shall be implemented and operated in a manner that maintains equal treatment for SNAP households in accordance with § 278.2(b) of this chapter. The following requirements for the equal treatment of SNAP households shall directly apply to EBT systems:
(1) Retailers shall not establish special checkout lanes which are only for SNAP households. If special lanes are designated for the purpose of accepting other electronic debit or credit cards and/or other payment methods such as checks, SNAP customers with EBT cards may also be assigned to such lanes as long as other commercial customers are assigned there as well.
(2) Checkout lanes equipped with POS devices shall be made available to SNAP households during all retail store hours of operation.
(g) Households eligible for prepared meals. (1) Meals-on-wheels. Eligible household members 60 years of age or over or members who are housebound, physically handicapped, or otherwise disabled to the extent that they are unable to adequately prepare all their meals, and their spouses, may use Program benefits to purchase meals prepared for and delivered to them by a nonprofit meal delivery service authorized by FNS.
(2) Communal dining facilities. Eligible household members 60 years of age or over and their spouses, or those receiving SSI and their spouses, may use Program benefits issued to them to purchase meals prepared especially for them at communal dining facilities authorized by FNS for that purpose.
(3) Residents of certain institutions. (i) Members of eligible households who are narcotics addicts or alcoholics and who regularly participate in a drug or alcoholic treatment rehabilitation program may use Program benefits to purchase food prepared for them during the course of such program by a private nonprofit organization or institution or publicly operated community mental health center which is authorized by FNS to redeem benefits in accordance with §§ 278.1 and 278.2(g) of this chapter.
(ii) Eligible residents of a group living arrangement may use Program benefits issued to them to purchase meals prepared especially for them at a group living arrangement which is authorized by FNS to redeem benefits in accordance with §§ 278.1 and 278.2(g) of this chapter.
(iii) Residents of shelters for battered women and children as defined in § 278.1(g) of this chapter may use their Program benefits to purchase meals prepared especially for them at a shelter which is authorized by FNS to redeem benefits in accordance with §§ 278.1 and 278.2(g) of this chapter.
(4) Homeless households. (i) Homeless SNAP households may use their Program benefits to purchase prepared meals from authorized homeless meal providers.
(ii) Eligible homeless households may use Program benefits to purchase meals from restaurants authorized by FNS for such purpose.
(h) Eligible households residing in areas of Alaska determined by FNS as areas where access to authorized retailers is difficult and which rely substantially on hunting and fishing for subsistence may use all or any part of the Program benefits issued to purchase hunting and fishing equipment such as nets, hooks, rods, harpoons and knives, but may not use benefits to purchase firearms, ammunition, and other explosives.
(i) State agencies shall implement a method to ensure that access to prepared meals and hunting and fishing equipment is limited to eligible households as described in paragraphs (g) through (h) of this section.
(j) Container deposit fees. Program benefits may not be used to pay for deposit fees in excess of the amount of the State fee reimbursement required to purchase any food or food product contained in a returnable bottle or can, regardless of whether the fee is included in the shelf price posted for item. The returnable container type and fee must be included in State law in order for the customer to be able to pay for the upfront deposit with SNAP benefits. If a SNAP eligible product has a State deposit fee associated with it, the product remains eligible for purchase with SNAP benefits, and the State deposit fee may be paid with SNAP as well; however, any fee in excess of the State deposit fee must be paid in cash or other form of payment other than with SNAP benefits.
§ 274.8 Functional and technical EBT system requirements.
(a) Functional requirements. The State agency shall ensure that the EBT system is capable of performing the following functional requirements prior to implementation:
(1) Authorizing household benefits. (i) Issuing and replacing EBT cards to eligible households;
(ii) Permitting eligible households to select a personal identification number (PINs) at least four digits in length;
(iii) Establishing benefit cards and accounts with the central computer database;
(iv) Maintaining the master household issuance record file data and current authorization information;
(v) Training households and other users in system usage;
(vi) Authorizing benefit delivery;
(vii) Posting benefits to each household’s account for regular and supplemental issuances;
(viii) Providing households with access to information on benefit availability;
(ix) Ensuring the privacy of household data and providing benefit and data security;
(x) Inventorying and securing accountable documents; and
(xi) Zeroing out benefit accounts and other account authorization activity.
(2) Providing food benefits to households. (i) Verifying the identity of authorized households or authorized household representatives at issuance terminals or POS;
(ii) Verifying the PIN and/or PIN off-set, primary account number (PAN), terminal identification number and retailer identification number;
(iii) Determining the sufficiency of the household’s account balance in order to debit or credit household benefit accounts at the point of sale;
(iv) Sending messages authorizing or rejecting purchases;
(v) Providing back-up purchase procedures when the system is unavailable;
(vi) Ensuring that benefits are available and carried over from month-to-month.
(vii) Responding to issuance problems in a timely manner.
(3) Crediting retailers and financial institutions for redeemed benefits. (i) Verifying electronic transactions flowing to or from participating retailers’ bank accounts;
(ii) Creating and maintaining a file containing the individual records of EBT transactions;
(iii) Totaling all credits accumulated by each retailer;
(iv) Providing balance information to retailers or third party processors from individual POS terminals, as needed;
(v) Providing each retailer information on total deposits in the system on a daily basis;
(vi) Preparing a daily tape in a National Automated Clearinghouse format or other process approved by FNS with information on benefits redeemed for each retailer and in summary;
(vii) Transmitting the ACH tape to a financial institution for transmission through the ACH or other method approved by FNS;
(viii) Transferring the information on the ACH tape or other process approved by FNS containing daily redemption activity of each retailer to the FNS Minneapolis Computer Support Center at least once weekly. Transmittal may be by tape, disc, remote job entry or other means acceptable to FNS.
(4) Managing retailer participation in accordance with § 274.3(e).
(b) Performance and technical standards. The State agency shall ensure that EBT systems comply with POS technical standards established by the American National Standards Institute (ANSI) or International Organization for Standardization (ISO) where applicable. This includes the draft EBT ISO 8583 Processor Interface Technical Specifications contained in the ANSI standards, which delineates a standard message format for retailers and third parties. In addition, the State agency shall ensure that the EBT system meets performance and technical standards in the areas of system processing speeds, system availability and reliability, system security, system ease-of-use, minimum card and terminal requirements, performance bonding, and a minimum transaction set. With prior written approval from FNS, the State agency may utilize the prevailing industry performance standards in its region in lieu of those identified in this section. The standards shall be included in all requests for proposals and contracts.
(1) System processing speeds. (i) For leased line systems, 98 percent of EBT transactions shall be processed within 10 seconds or less and all EBT transactions shall be processed within 15 seconds. Leased line systems rent telecommunications carriers specifically to connect to the central authorizing computer. For dial-up systems, 95 percent of the EBT transactions shall be processed within 15 seconds or less and all EBT transactions shall be processed within 20 seconds or less. Dial-up systems utilize existing telecommunications lines to dial up and connect to the central computer at the time of the transaction. Processing response time shall be measured at the POS terminal from the time the ‘enter’ or ‘send’ key is pressed to the receipt and display of authorization or disapproval information. Third party processors, as defined in paragraph (h)(5) of this section, shall be required by the State agency to comply with the same processing response times required of the primary processor.
(ii) The EBT system shall provide re-ports, as determined by the State agency, that document transaction processing response time and the number and type of problematic transactions that could not be processed within the standard response time.
(2) System availability and reliability. (i) The EBT system central computer shall be available 99.9 percent of scheduled up-time, 24 hours a day, 7 days per week. Scheduled up-time shall mean the time the database is available for transactions excluding scheduled downtime for routine maintenance. The total system, including the system’s central computer, any network or intermediate processing facilities and cardholder authorization processors, shall be available 98 percent of scheduled up-time, 24 hours per day, 7 days per week. Scheduled downtime for routine maintenance shall occur during non-peak transaction periods. State certification procedures shall determine whether intermediate processing facilities and cardholder authorization processors are capable of complying with system availability standards prescribed herein prior to permitting the interface with the central computer system.
(ii) The system central computer shall permit no more than 2 inaccurate EBT transactions for every 10,000 EBT transactions processed. The transactions to be included in measuring system accuracy shall include all types of SNAP transactions permitted at POS terminals and processed through the host computer, manual transactions entered into the system, credits to household accounts, and funds transfers to retailer accounts.
(iii) Reconciliation reports and other information regarding problematic transactions shall be made available to the State agency by the system operator, individual retailers, households or financial institutions as appropriate. Reports on problematic transactions, including inaccurate transactions shall be delineated by the source of the problem such as card failure, POS terminal failure, interruption of telecommunications, or other component failure. Errors shall be resolved in a timely manner.
(3) System security. As an addition to or component of the Security Program required of Automated Data Processing systems prescribed under § 277.18(m) of this chapter, the State agency shall ensure that the following EBT security requirements are established:
(i) Storage and control measures to control blank unissued EBT cards and PINs, and unused or spare POS devices;
(ii) Measures to ensure communication access control. Communication controls shall include the transmission of transaction data and issuance information from POS terminals to work-stations and terminals at the data processing center. The following specific security measures shall be included, as appropriate, in the system design documentation, operating procedures or the State agency Security Program:
(A) Computer hardware controls that ensure acceptance of data from authorized terminals only. These controls shall include the use of mechanisms such as retailer identification codes, terminal identifiers and user identification codes, and/or other mechanisms and procedures recognized by the industry;
(B) Software controls, placed at either the terminal or central computer or both, that establish separate control files containing lists of authorized retailers, terminal identifying codes, and user access and identification codes. EBT system software controls shall include separate checks against the control files in order to validate each transaction prior to authorization and limiting the number of unsuccessful PIN attempts that can be made utilizing standard industry practices before the card is deactivated;
(C) Communications network security that utilizes the Data Encryption Standard algorithm to encrypt the PIN, at a minimum, from the point of entry. Other security may include authentication codes and check-sum digits, in combination with data encoded on the magnetic stripe such as the PIN and/or PIN offset, to ensure data security during electronic transmission. Any of the network security measures may be utilized together or separately and may be applied at the terminal or central computer as indicated in the approved system design to ensure communications control;
(D) Manual procedures that provide for secure access to the system with minimal risk to household or retailer accounts. Manual procedures may include the utilization of manager identification codes in obtaining telephonic authorization from the central computer system; requirements for separate entry with audio response unit verification and authorization number; and/or the utilization of 24 hour hotline telephone numbers to authorize transactions.
(iii) Message validation shall include but shall not be limited to:
(A) Message format checks for completeness of the message, correct order of data, existence of control characters, number and size of data fields and appropriate format standards as specified in the approved system design;
(B) Range checks for acceptable date fields, number and valid account numbers, purchase and refund upper limitations in order to prevent and control damage to the system accounts;
(C) Reversal of messages that are not fully processed and recorded.
(iv) Administrative and operational procedures shall ensure that:
(A) Functions affecting an account balance are separated or dually controlled during processing and when requesting Federal reimbursement through a concentrator bank under the provisions of paragraph (i) of this section. These functions may include but are not limited to the set up of accounts, transmittal of funds to and from accounts, access to files to change account records, and transmittal of retailer deposits to the ACH network or other means approved by FNS for crediting retailer bank accounts;
(B) Passwords, identity codes or other security procedures must be utilized by State agency or local personnel and at data processing centers;
(C) Software programming changes shall be dual controlled to the extent possible;
(D) System operations functions shall be segregated from reconciliation duties;
(v) A separate EBT security component shall be incorporated into the State agency Security Program for Automated Data Processing (ADP) systems where appropriate as prescribed under § 277.18(m) of this chapter. The periodic risk analyses required by the Security Program shall address the following items specific to an EBT system:
(A) EBT system vulnerability to theft and unauthorized use;
(B) Completeness and timeliness of the reconciliation system;
(C) Vulnerability to tampering with or creating household accounts;
(D) Erroneous posting of issuances to household accounts;
(E) Manipulation of retailers’ accounts such as creation of false transactions or intrusion by unauthorized computer users;
(F) Capability to monitor systematic abuses at POS terminals such as debits for a complete allotment, excessive manual issuances, and multiple manual transactions at the same time. Such monitoring may be accomplished through the use of exception reporting;
(G) Tampering with information on the ACH tape or similar information utilized in a crediting method approved by FNS; and,
(H) The availability of a complete audit trail. A complete audit trail shall, at a minimum, be able to provide a complete transaction history of each individual system activity that affects an account balance. The audit trail shall include the tracking of issuances from the Master File and Issuance File, network transactions from POS terminals to EBT central computer database and system file updates.
(vi) The State agency shall incorporate the contingency plan approved by FNS into the Security Program.
(4) System ease-of-use. (i) For all system users, the State agency shall ensure that the system:
(A) Minimizes the number of separate steps required to complete a transaction;
(B) Minimizes the number of codes or commands needed to make use of the system;
(C) Makes available clear and comprehensive account balance information with a minimum number of actions necessary;
(D) Provides training and instructions for all system users especially those persons with disabilities;
(E) Makes available prompts on POS terminals or balance only terminals, where appropriate;
(F) Identifies procedures for problem resolution;
(G) Provides reasonable accommodation for the needs of households with disabilities in keeping with the Americans with Disabilities Act of 1990.
(ii) In addition to the requirements of paragraph (h)(4)(i) of this section, the State agency shall ensure that retailers utilizing the EBT system:
(A) Have available manual backup procedures;
(B) Can obtain timely information on daily credits to their banks;
(C) Have available deposit information in a format readily comparable to information maintained in the store; and
(D) Have available instructions on resolving problems with equipment and retailer accounts.
(5) Minimum card requirements. (i) The address of the office where a card can be returned if found or no longer in use should be printed on the card.
(ii) State agencies that implement the photo EBT card option in accordance with paragraph (f) of this section must print on the EBT cards the text “Any user with valid PIN can use SNAP benefits on card and need not be pictured.” or similar alternative text approved by FNS.
(iii) FNS reserves the right to require State agencies to place a Department logo on the EBT card and/or sleeves or jackets.
(iv) EBT cards and/or sleeves or jackets shall not contain the name of any State or local official. EBT informational materials shall not indicate association with any political party or other political affiliation.
(v) State agencies may require the use of a photograph of one or more household members on the card. If the State agency does require the EBT cards to contain a photo, it must establish procedures to ensure that all appropriate household members or authorized representatives are able to access benefits from the account as necessary.
(6) POS terminals. POS terminals shall meet the following requirements:
(i) Balance information shall not be displayed on the screen of the POS terminal except for balance-only inquiry terminals;
(ii) PINs shall not be displayed at the terminal; and
(iii) PIN encryption shall occur from the point of entry in a manner which prevents the unsecured transmission between any point in the system.
(7) Transaction receipts. Households shall be provided printed receipts at the time of transaction. At a minimum this information shall:
(i) State the date, merchant’s name and location, transaction type, transaction amount and remaining balance for the SNAP account;
(ii) Comply with the requirements of 12 CFR part 205 (Regulation E) in addition to the requirements of this section; and
(iii) Identify the SNAP households member’s account number (the PAN) using a truncated number or coded transaction number. The households’ name shall not appear on the receipt except when a signature is required when utilizing a manual transaction voucher.
(8) Performance bonding. The State agency may require a performance bond in accordance with § 277.8 of this chapter or utilize other contractual clauses it deems necessary to enforce the requirements of this section.
(9) Minimum transaction set. At a minimum, the State agency shall ensure that the EBT system, including third party processors and retailers driving their own terminals, is capable of providing for authorizing or rejecting purchases, refunds or customer credits, voids or cancellations, key entered transactions, balance inquiries and settlement or close-out transactions. The system must be capable of completing this transaction set across State borders nationwide in accordance with standards specified in paragraph (h)(10) of this section.
(10) Interoperability. State agencies must adopt uniform standards to facilitate interoperability and portability nationwide. The term “interoperability” means the EBT system must enable benefits issued in the form of an EBT card to be redeemed in any State. The term “portability” means the EBT system must enable benefits issued in the form of an EBT card to be used in any State by a household to purchase food at a retail food store or a wholesale food concern approved under the Food and Nutrition Act of 2008. The standards must include the following:
(i) EBT system connectivity. State agencies are responsible for establishing telecommunications links, transaction switching facilities and any other arrangements with other State agencies necessary for the routing of interoperable transactions to such other State EBT authorization systems. State agencies are also responsible for facilitating the settlement of such interoperable transactions and the handling of adjustments. These connections need not be direct connections between State authorization systems but may be facilitated through agreements and linkages with other designated agents or third party processors. All State agencies must agree to the timing and disposition of disputes, error resolution, and adjustments in accordance with Department regulations at § 273.13(a) and § 273.15(k) of this chapter and paragraph (f) of this section. State agencies or their designated agents must draw funds from State SNAP accounts for SNAP benefits transacted by that State’s SNAP recipients, regardless of where benefits were transacted.
(ii) Message format. Each authorization system must use the ISO 8583 message format, modified for EBT, in a version mutually agreed to between the authorization agent and the party connected for all transactions. Each authorization system must process each financial transaction as a single message financial transaction, except for pre-authorized transactions and reversals, processed as paired transactions.
(iii) Card Primary Account Number (PAN) Requirements. Track 2 on each card shall contain the PAN. Each Government entity must obtain an Issuer Identification Number (IIN) from the American Banker’s Association (ABA). The IIN should be included as the first six digits of the PAN. The PAN must comply with ISO 7812, Identification Cards—Numbering System and Registration Procedures for Issuer Identifiers. Each State agency must be responsible for generating, updating, and distributing IIN files of all States to each retailer, processor, or acquirer that is directly connected to the State’s authorization system. Each terminal operator that uses a routing table for routing acquired transactions must, within 7 calendar days of receiving an IIN routing table update, modify its routing tables to reflect the updated routing information.
(iv) Third Party Processor requirements. Each Third Party Processor or terminal operator must have primary responsibility and liability for operating the telecommunications and processing system (including software and hardware) through which transactions initiated at POS terminals it owns, operates, controls or for which it has signed an agreement to accept EBT transactions, are processed and routed, directly or indirectly, to the appropriate State authorization system. Each terminal operator must maintain the necessary computer hardware and software to interface either directly with a State authorization system or with a third party service provider to obtain access to one or more State authorization systems. Each terminal operator must also establish a direct or indirect telecommunications connection for the routing of transactions to the State authorization system or to a processor directly or indirectly connected to the State authorization system.
(v) REDE File. The State agency must ensure that their EBT system verifies FNS retailer numbers for all interstate transactions against the National REDE file of all FNS EBT retailers to validate these transactions.
(c) Concentrator bank responsibilities. The concentrator bank shall be a Federally-insured financial institution or other entity acceptable to the Federal Reserve which has the capability to take retailer credits and/or debits, obtained from the EBT system operator, and transmit them to the ACH network operated by the Federal Reserve or through another process for crediting retailers approved by FNS. Transmittal shall be by tape or on-line in a format suitable for the ACH or as approved by FNS.
(1) The minimum functions of the concentrator bank are:
(i) Preparing a daily ACH tape or other crediting process approved by FNS with information on benefits redeemed and creditable to each retailer;
(ii) Transferring the ACH tape or other crediting process approved by FNS to the Federal Reserve or other entity approved by FNS;
(iii) Initiating and accepting reimbursement from the appropriate U.S. Treasury account through the ASAP system or other payment process approved by FNS. At the option of FNS, the State agency may designate another entity as the initiator of reimbursement for SNAP redemptions provided the entity is acceptable to FNS and U.S. Treasury;
(iv) Cooperating in the reconciliation of discrepancies and error resolution when necessary.
(2) With the approval of FNS, another procedure, other than the ACH system, may be utilized to credit retailer accounts and/or debit FNS’ account, if it meets the needs of FNS and the EBT system.
(3) The State agency shall be liable for any errors in the creation of the ACH tape or its transmission. The State agency may transfer the liability associated with creation of the ACH tape, its transmission or another crediting process approved by FNS as appropriate to the EBT system operator or the concentrator bank. Appropriate system security administrative and operational procedures shall be instituted in accordance with paragraph (h)(3) of this section.
(d) Re-presentation. The State agency shall ensure that a manual purchase system is available for use during times when the EBT system is inaccessible.
(1) Under certain circumstances, when a manual transaction occurs due to the inaccessibility of the host computer and the transaction is rejected because insufficient funds are available in a household’s account, the State agency may permit the re-presentation of the transaction during subsequent months. At the State agency’s option, re-presentation may be permitted within the EBT system as follows:
(i) Re-presentation of manual vouchers when there are insufficient funds in the EBT account to cover the manual transaction may be permitted only under the following circumstances:
(A) The manual transaction occurred because the host computer was down and authorization was obtained by the retailer for the transaction; or
(B) The manual transaction occurred because telephone lines were down.
(ii) Re-presentation of manual vouchers shall not be permitted when the EBT card, magnetic stripe, PIN pad, card reader, or POS terminal fails and telephone lines are operational. Manual transactions shall not be utilized to extend credit to a household via re-presentation when the household’s account balance is insufficient to cover the planned purchase.
(iii) The State agency may debit the benefit allotment of a household following the insufficient funds transaction in either of two ways:
(A) Any amount which equals at least $10 or up to 10 percent of the transaction. This amount will be deducted monthly until the total balance owed is paid-in-full. State agencies may opt to re-present at a level that is less than the 10 percent maximum, however, this lesser amount must be applied to all households.
(B) $50 in the first month and the greater of $10 or 10 percent of the allotment in subsequent months until the total balance owed is paid-in-full. If the monthly allotment is less than $50, the State shall debit the account for $10.
(2) The State agency shall establish procedures for determining the validity of each re-presentation and subsequent procedures authorizing a debit from a household’s monthly benefit allotment. The State agency may ask households to voluntarily pay the amount of a represented transaction or arrange for a faster schedule of payment than identified in paragraph (d)(1)(iii) of this section.
(3) The State agency shall ensure that retailers provide notice to households at the time of the manual transaction that re-presentation may occur if there are insufficient benefits in the account to cover the transaction. The statement shall be printed on the paper voucher or on a separate sheet of paper. The State agency shall also provide notice to the household prior to the month when a benefit allotment is reduced when a re-presentation is necessary. Notice shall be provided to the household for each insufficient transaction that is to be re-presented in a future month. The notice shall be provided prior to the month it occurs and shall state the amount of the reduction in the benefit allotment.
(4) The Department shall not accept liability under any circumstances for the overissuance of benefits due to the utilization of manual vouchers, including those situations when the host computer is inaccessible or telecommunications lines are not functioning. However, the State agency, in consultation with authorized retailers and with the mutual agreement of the State agency’s vendor, if any, may accept liability for manual purchases within a specified dollar limit. Costs associated with liabilities accepted by the State agency shall not be reimbursable.
(5) The State agency shall be strictly liable for manual transactions that result in excess deductions from a household’s account.
(e) Store-and-forward. As an alternative to manual transactions:
(1) State agencies may opt to allow retailers, at the retailer’s own choice and liability, to perform store-and-forward transactions when the EBT system cannot be accessed for any reason. The retailer may forward the transaction to the host one time within 24 hours of when the system again becomes available. Should the 24-hour window cross into the beginning of a new benefit issuance period, retailers may draw against all available benefits in the account.
(2) State agencies may also opt, in instances where there are insufficient funds to authorize an otherwise approvable store-and-forward transaction, to allow the retailer to collect the balance remaining in the client’s account, in accordance with the requirements detailed in this section.
(i) State Agencies may elect to allow store-and-forward to provide remaining balances to retailers as follows:
(A) The EBT processor may provide partial approval of the store-and-forward transaction, crediting the retailer with the balance remaining in the account through a one-step process;
(B) The transaction should be in accordance with the standard message format requirements for store and forward; and
(C) Re-presentation, as described in paragraph (d) of this section, to obtain the uncollected balance from current or future months’ benefits shall not be allowed for store-and-forward transactions.
(ii) In States that elect not to give retailers the option described in this paragraph, all store-and-forward transactions with insufficient funds will be denied in full.
(f) State agency requirements for photo EBT card implementation—(1) Minimum requirements. Prior to implementation, State agencies must be performing sufficiently well in program administration to be eligible to implement the photo EBT card option.
Prior to implementation, State agencies must demonstrate to FNS successful administration of SNAP based on SNAP performance standards. Successful program administration will take into account at a minimum the metrics related to program access, the State’s payment error rate, the State’s Case and Procedural Error Rate, application processing timeliness, including both the 7-day expedited processing and the 30-day processing standards, timeliness of recertification actions, and other metrics, as determined by the Secretary, that may be relevant to the State agency’s implementation of photo EBT cards.
(2) Function of issuance. The photo EBT card option is a function of issuance and not a condition of eligibility. Any implementation of the option to place a photo on the EBT card must not impact the certification of households. An application will be considered complete with or without a photo and a case shall be certified regardless of the status of a photo in accordance with timeframes established under 7 CFR 273.2. If a State agency chooses to implement a voluntary photo EBT card policy, issuance shall not be impacted. If a State agency chooses to implement a mandatory photo EBT card policy, a State agency may not deny or terminate a household because a household member who is exempted by paragraph (f)(4) of this section does not comply with the requirement to place a photo on the EBT card.
(3) Mandatory vs. voluntary. (i) State agencies shall have the option to implement a photo on EBT cards on a mandatory or voluntary basis. Regardless of whether the photo is mandatory or voluntary, the certification process must not be altered in order to facilitate photos, and clients must be informed that certification will not be impacted by whether or not a photo is on the card.
(ii) Under mandatory implementation, State agencies must exempt certain clients, as stated in paragraph (f)(4) of this section. State agencies must establish which member(s) of the household would be required to be photographed and the procedures that allow eligible nonexempt household members who do not agree to the photo to come into compliance at a later time.
(iii) Under voluntary implementation, clients must be clearly informed of the voluntary nature of the option. All applicant members of households, whether or not they are in an exempted category, must opt in to have a photo on their EBT card. States shall not require a photo be taken if the State is implementing a voluntary option.
(4) Exemptions. Under a mandatory implementation, the State agency must exempt, at a minimum, the elderly, the disabled, children under 18, homeless households, and victims of domestic violence. A victim of domestic violence shall be able to self-attest and cannot be required to submit documentation to prove domestic violence. The ability to self-attest must be applied equally regardless of if the victim is a female or male. Non-applicants cannot have a photo taken for an EBT card whether or not they desire to have their photo taken. A State agency may establish additional exempted categories.
(5) Serving clients with hardship. State agencies must have sufficient capacity to issue photo EBT cards and a process or procedure in place to address, on a case-by-case basis, household hardship situations as determined by the State agency so that such household benefits are not unduly withheld. Examples of hardship conditions include, but are not limited to: Illness, transportation difficulties, care of a household member, hardships due to residency in a rural area, prolonged severe weather, or work or training hours which prevent the household from being available during the hours that photos are taken in-office. These are households that do not already fall under the mandatory exemptions or other exemptions established by the State under paragraph (f)(4) of this section .
(6) Issuance of photo EBT card. (i) States can require households to come in to be photographed, but cannot do so for the purposes of certification. The amount of time provided to households to come in and be photographed needs to be sufficient and reasonable and be documented in the Implementation Plan as required in paragraph (f)(14) of this section.
(ii) Regardless of whether the State’s photo EBT card policy is voluntary or mandatory, if a household meets expedited criteria, the State must issue the EBT card without a photo and provide the full benefit allotment to the entire household without delay. The State agency may require a nonexempt head of household member to comply at the next recertification.
(iii) Card issuance procedures for new SNAP households must ensure adherence to application processing standards as required at 7 CFR 273.2(g) and (i) and benefit issuance standards at § 274.2(b).
(iv) State agencies shall not store photos that are collected in conjunction with its photo EBT card policy but are not placed on an EBT card.
(v) The process for issuing and activating photo EBT cards must not disrupt, inhibit or delay access to benefits nor cause a gap in access for ongoing benefits for eligible households.
(vi) Any card issued as part of the implementation of the photo EBT card option may not count against the household with respect to card replacement fees or the card replacement threshold defined in § 274.6(b).
(7) Prorating household benefits when photo EBT cards are mandatory. For multi-person households, State agencies shall not withhold benefits for an entire household because nonexempt household members do not comply with the photo EBT card policy. If benefits of the nonexempt household member(s) are to be withheld, a prorated share of benefits shall be issued to the household member(s) that are in compliance with or are exempt from the photo requirement. For example, if there are four household members and one household member is not in compliance with the photo requirement, 3-4 of the household’s monthly benefit allotment must be issued, and 1-4 of the benefit allotment must be held in abeyance and allowed to accrue until the household member complies. For a single person household, the State agency would hold all the benefits in abeyance until the household complies.
(8) Benefits held for noncompliance. Benefits held for noncompliance with the photo EBT card requirement must be withheld from issuance in accordance with paragraph (f)(7) of this section. Benefits withheld for noncompliance shall not remain authorized for perpetuity, and States must treat such benefits in accordance with the same timeframe used for handling expungements under § 274.2(i). If the noncompliant member comes into compliance, the non-expired benefits must be issued within two business days of when the State agency obtains the client photo. Any action to withhold benefits from issuance is subject to fair hearings in accordance with 7 CFR 273.15.
(9) Household and authorized representative card usage. The State agency must establish procedures to ensure that all appropriate household members and authorized representatives (including individuals permitted by the household to purchase food or meals on their behalf, as provided for in 7 CFR 273.2(n)(3) and § 274.7(a)), can access SNAP benefits for the household regardless of who is pictured on the card or if there is no picture. States shall not require households to notify or provide the State information regarding individuals making purchases permitted by the household on an ad-hoc basis.
(10) Client and staff training. State agencies must ensure staff and clients are properly trained on photo EBT card requirements. At a minimum, this training shall include: Whether the State option is voluntary or mandatory, who must comply with the photo requirement, which household members are exempt, and that all appropriate household members and authorized representatives (including individuals permitted by the household to purchase food or meals on its behalf) are able to use the card regardless of who is pictured on the card or if there is no picture.
(i) All staff and client training materials must clearly describe the following statutory and regulatory requirements:
(A) Retailers must allow all appropriate household members and authorized representatives (including individuals permitted by the household to purchase food or meals on its behalf), regardless of whether they are pictured on the card, to utilize the card without having to submit additional verification of identity as long as the transaction is secured by the use of the PIN;
(B) EBT cards with or without a photo are valid in any State; and
(C) Retailers must treat all SNAP clients in the same manner as non-SNAP clients;
(ii) State agencies may not specifically reference which categories of individuals are exempt from the photo EBT requirement in any materials to retailers.
(11) Retailer education and responsibility. State agencies must conduct sufficient education of retailers if photos are used on cards. The State agency must clearly inform all retailers in the State and contiguous areas of implementation. State agency communications with retailers must clearly state:
(i) All household members and authorized representatives (including individuals permitted by the household to purchase food or meals on its behalf) are entitled to use the EBT card regardless of the picture on the card if the EBT card is presented with the valid PIN;
(ii) Retailers must treat all SNAP clients in the same manner as non-SNAP clients in accordance with 7 CFR 278.2(b);
(iii) Retailers must not prohibit individuals who have a EBT card and valid PIN, including but not limited to authorized representatives (including individuals permitted by the household to purchase food or meals on its behalf), from using an EBT card because they are not pictured on the card or there is no picture on the card;
(iv) EBT cards from any State are valid with or without a photo.
(12) Interoperability. Interoperability of EBT cards will remain the same regardless of whether or not there is a photo and regardless of which State issued the card. State agencies must conduct sufficient education of clients and retailers, including retailers in contiguous areas, to inform them that the photo EBT cards remain interoperable and authorized retailers must accept EBT cards from all States as long as the user has a valid PIN.
(13) Advance Planning Document. Appropriate implementation and administration of the photo EBT card consistent with all applicable requirements is an allowable State administrative cost that FNS shall reimburse at 50 percent in accordance with 7 CFR part 277. Increased costs related to placing photos on the EBT card, whether contractual or produced from other sources, require an Implementation Advance Planning Document Update.
(14) Implementation Plan. (i) State agencies must submit an Implementation Plan for approval prior to implementation that delineates how the State agency will operationalize the photo EBT option. FNS shall review the plan and issue an approval, request modifications prior to granting approval or issue an approval subject to conditions. In cases where FNS finds that the steps outlined in the Implementation Plan are not sufficient for a successful implementation, FNS may deny the Implementation Plan or issue an approval subject to conditions, such as requiring the State agency to implement a successful pilot in a selected region of the State before a statewide implementation. Should a State be required to implement a pilot before statewide implementation, that requirement would be documented in the State’s Implementation Plan approval, along with any information the State must report to FNS before expansion approval would be provided by FNS.
(ii) State agencies must demonstrate successful administration of SNAP based on SNAP performance standards as established in paragraph (f)(1) of this section. State agencies shall not issue EBT cards with photos before the State’s Implementation Plan is approved and the State agency has also received FNS authorization to proceed to issue photo EBT cards.
(iii) The Implementation Plan shall include but not be limited to:
(A) A description of card issuance procedures;
(B) The text required at paragraph (b)(5)(ii) of this section;
(C) A detailed description of how client protections and ability to use SNAP benefits will be preserved;
(D) Specific information about exempted recipients, the State agency’s exemption criteria, and how it will address the needs of household members with hardships;
(E) A description of how the State agency will obtain photographs for the EBT card;
(F) The procedures for opting into a voluntary photo EBT card policy and how the State agency will document that a household voluntarily chose to have a photo on its EBT card;
(G) Training materials and training plans for State agency staff;
(H) A description of any planned stakeholder assistance with implementation;
(I) Communication plans for informing clients, retailers and other stakeholders of the State agency’s photo EBT card policy, including copies of letters and other materials communicating the policy to clients, retailers, and other stakeholders. Communication plans must describe compliance with language requirements at 7 CFR 272.4(b);
(J) A timeline for the implementation; and
(K) Draft memoranda of understanding if the State agency plans to share SNAP client data in accordance with 7 CFR 272.1(c) for purposes of implementing its photo EBT card option. The memoranda of understanding must state how any information collected will be securely stored and that the information can only be shared for the purpose of SNAP in accordance with 7 CFR 272.1(c).
(iv) The Implementation Plan shall also address the anticipated timetable with specific action steps for the State agency and contractors, if any, that may be involved regarding implementation of the photo EBT card option, the State agency’s capacity to issue photo EBT cards, and the logistics that shall allow for activation of the photo EBT card simultaneously or followed by deactivation of the active non-photo EBT card. This shall also include the description of the capacity at the facility where the photo EBT cards will be produced, both for transition and ongoing production, and confirmation that the State agency and any contractor will continue to meet regulatory time requirements for all EBT card issuances and replacements, including for expedited households. The Implementation Plan must also include indicators related to the photo EBT card implementation that the State will collect and analyze for the post implementation evaluation required by paragraph (f)(16) of this section in addition to the State’s approach for continued oversight, which may include activities as such as the use of test shoppers.
(v) The State agency shall provide all applicable proposed written policy for staff to implement the photo EBT card option to FNS for review. State agencies shall include copies of all materials that will be used to inform clients, retailers and other stakeholders regarding photo EBT card implementation. In addition, the State agencies shall provide a detailed description of how the notifications, communication, policies, and procedures regarding the implementation of any new photo EBT card option will comply with applicable civil rights laws specified at 7 CFR 272.4(b)and 272.6(a).
(vi) The State agency’s Implementation Plan shall also include: (A) An education component for retailers and clients to ensure all eligible household members and authorized representatives (including individuals permitted by the household to purchase food or meals on their behalf) are able to use the EBT card, and understand the timeframes associated with the implementation and rollout.
(B) A description of the resources that will be in place to handle comments, questions and complaints from clients, retailers, and external stakeholders, and
(C) A description of procedures to address unexpected events related to the photo EBT card option.
(vii) Upon approval of the Implementation Plan by FNS, the State may proceed with tasks described in the Implementation Plan, as modified by the approval, but may not proceed to issuing actual cards until it receives FNS authorization to do so. FNS may also require the State to implement in a phased manner, which may include criteria as determined by the Secretary.
(15) Authorization to issue photo EBT cards. States agencies shall not be permitted to issue EBT cards with photos until FNS provides an explicit authorization to issue photo EBT cards. After an Implementation Plan is approved, FNS will review the State agency’s actions at an appropriate time interval to ensure that the process and steps outlined by the State agency in the Implementation Plan are fulfilled. In cases where the State agency has not acted consistently with the process and steps outlined in its photo EBT card Implementation Plan, FNS may deny authorization for the State agency to issue EBT cards with photos until the State agency has done so successfully.
(16) Post implementation assessment and evaluation. State agencies must submit to FNS a post-implementation assessment that provides FNS with a report of the results of its implementation, including any issues that arose and how they were resolved, the degree to which State agency staff, clients and retailers properly understood and implemented the new provisions.
(i) This report shall be delivered to FNS within 120 days of implementation. This report shall cover the first 90 days of implementation. The Department also reserves the right to conduct its own review of the State agency’s implementation. The State agency’s post-implementation report shall include at a minimum:
(A) A survey of clients conducted by an independent evaluator to demonstrate the clients’ clear understanding of the State agency’s photo EBT policy;
(B) A survey of retailers conducted by an independent evaluator that demonstrates evidence that at least 80 percent of retailers, including smaller independent retailers, demonstrate a full understanding of the policies related to the photo EBT card, which may include the use of test shoppers;
(C) The amount and percent of benefits held for noncompliance if mandatory;
(D) The number and percent of households with photo EBT cards;
(E) The number of households affected by withholding for noncompliance, if mandatory;
(F) The number and percent of households exempt from the photo EBT card requirement if mandatory;
(G) The number and percent of exempted households who opted for photo EBT cards if mandatory;
(H) The number and scope of complaints related to the implementation of the policy;
(I) The State agency’s Case and Procedural Error Rate; and
(J) SNAP performance metrics as established in paragraph (f)(1) of this section and other SNAP performance metrics that may have been adversely affected by the implementation of the State agency’s photo EBT card option, as determined by the Secretary.
(ii) [Reserved]
(17) Ongoing monitoring. FNS will continue to monitor and evaluate the operation of the option. State agencies shall provide FNS additional information upon request or as may be required by other guidelines established by the Secretary to conduct such evaluations.
(18) Modifying implementation of photo EBT card option. If any review or evaluation of a State’s operations, including photo EBT operation implementation, finds deficiencies, FNS may require a corrective action plan consistent with 7 CFR 275.16 to reduce or eliminate deficiencies. If a State does not take appropriate actions to address the deficiencies, FNS would consider possible actions such as requiring an updated photo EBT Implementation Plan, suspension of the photo EBT policy and/or withholding funds in accordance with 7 CFR 276.4.
PART 275—PERFORMANCE REPORTING SYSTEM
Subpart A—Administration
§ 275.1 General scope and purpose.
Under the Food and Nutrition Act of 2008, each State agency is responsible for the administration of SNAP in accordance with the Act, Regulations, and the State agency’s plan of operation. To fulfill the requirements of the Act, each State agency shall have a system for monitoring and improving its administration of the program. The State agency is also responsible for reporting on its administration to FNS. These reports shall identify program deficiencies and the specific administrative action proposed to meet the program requirements established by the Secretary. If it is determined, however, that a State has failed without good cause to meet any of the program requirements established by the Secretary, or has failed to carry out the approved State plan of operation, the Department shall suspend and/or disallow from the State such funds as are determined to be appropriate in accordance with part 276 of this chapter.
§ 275.2 State agency responsibilities.
(a) Establishment of the performance reporting system. (1) The State agency shall establish a continuing performance reporting system to monitor program administration and program operations. The method for establishing each component of the system is identified and explained in subparts B through F of this part. The components of the State agency’s performance reporting system shall be:
(i) Data collection through management evaluation (ME) reviews and quality control (QC) reviews;
(ii) Analysis and evaluation of data from all sources;
(iii) Corrective action planning;
(iv) Corrective action implementation and monitoring; and
(v) Reporting to FNS on program performance.
(2) The State agency must ensure corrective action is effected at the State and project area levels.
(b) Staffing standards. The State agency shall employ sufficient State level staff to perform all aspects of the Performance Reporting System as required in this part of the regulations. The staff used to conduct QC reviews shall not have prior knowledge of either the household or the decision under review. Where there is prior knowledge, the reviewer must disqualify her/himself. Prior knowledge is defined as having:
(1) Taken any part in the decision that has been made in the case; (2) any discussion of the case with staff who participated in the decision; or (3) any personal knowledge of or acquaintance with persons in the case itself. To ensure no prior knowledge on the part of QC or ME reviewers, local project area staff shall not be used to conduct QC or ME reviews; exceptions to this requirement concerning local level staff may be granted with prior approval from FNS. However, local personnel shall not, under any circumstances, participate in ME reviews of their own project areas.
(c) Use of third party contractors. Any State agency procuring services of a contractor for quality control related services, including any project or training that involves the interpretation of SNAP regulations, policies, or handbooks for quality control or payment accuracy purpose, must ensure that all activities and deliverables performed by the contractor within the scope of the contract adhere to Federal law, regulations, and policies. Activities performed or deliverables provided by a contractor that are not in accordance with Federal law, regulations, or policies are unallowable SNAP administrative costs and are not eligible for Federal reimbursement.
(1) For expenses related to the hiring of a contractor for any quality control related work to qualify for SNAP administrative cost reimbursement under § 277.4(b), FNS requires the following:
(i) The State must notify FNS in writing of its intent to hire a contractor at least 30 days prior to entering into the contract to do so. The notification must include a copy of the selected contractor’s complete proposal, which must receive FNS approval before the State may proceed with the procuring the contract.
(ii) Once the contract is procured, the State must submit to FNS a copy of the signed contract and documentation that outlines all tasks and deliverables to be performed or produced by the contractor.
(iii) The State must submit to FNS a copy of all deliverables, including any training materials, provided by the contractor.
(iv) The State must notify FNS of the date, time, and location of any training sessions led by the contractor at least 10 days in advance of the training. FNS shall be allowed to attend any such training session with or without providing prior notice to the State agency or the contractor.
(v) If the State discusses individual sampled cases with the contractor, the State must document, within the case file, the contents of the discussion and any action taken by the State as a result of the discussion. If the discussion occurs orally, FNS shall be given notice 24 hours in advance of the discussion and shall be allowed to participate in the discussion. If the discussion occurs in writing, the State must ensure that FNS is copied on all written correspondence discussing individual sampled cases.
(2) Copies of documentation and notices required in paragraph (c)(1) of this section must be provided to the appropriate FNS Regional SNAP Director.
(3) In accordance with the non-procurement debarment procedures under 2 CFR part 417, or successor regulations, FNS shall debar any person that, in carrying out the quality control system, knowingly submits or causes to be submitted false information to FNS.
(d) FNS Access to State Systems. Subject to data and security protocols agreed to by FNS and a State agency administering SNAP, each State agency shall ensure that FNS has complete access, including remote access for QC purposes, to both the records that are used in the administration of SNAP, including but not limited to the records contained within certification and EBT systems, and the information systems in which such records are contained.
§ 275.3 Federal monitoring.
The Food and Nutrition Service shall conduct the review described in this section to determine whether a State agency is operating SNAP and the Performance Reporting System in accordance with program requirements. The Federal reviewer may consolidate the scheduling and conduction of these reviews to reduce the frequency of entry into the State agency. FNS regional offices will conduct additional reviews to examine State agency and project area operations, as considered necessary to determine compliance with program requirements. FNS shall notify the State agency of any deficiencies detected in program or system operations. Any deficiencies detected in program or system operations which do not necessitate long range analytical and evaluative measures for corrective action development shall be immediately corrected by the State agency. Within 60 days of receipt of the findings of each review established below, State agencies shall develop corrective action addressing all other deficiencies detected in either program or system operations and shall ensure that the State agency’s own corrective action plan is amended and that FNS is provided this information at the time of the next formal semiannual update to the State agency’s Corrective Action Plan, as required in § 275.17.
(a) Reviews of State Agency’s Administration/Operation of SNAP. FNS shall conduct an annual review of certain functions performed at the State agency level in the administration/operation of the program. FNS will designate specific areas required to be reviewed each fiscal year.
(b) Reviews of State Agency’s Management Evaluation System. FNS will review each State agency’s management evaluation system on a biennial basis; however, FNS may review a State agency’s management evaluation system on a more frequent basis if a regular review reveals serious deficiencies in the ME system. The ME review will include but not be limited to a determination of whether or not the State agency is complying with FNS regulations, an assessment of the State agency’s methods and procedures for conducting ME reviews, and an assessment of the data collected by the State agency in conducting the reviews.
(c) Reviews of State Agency’s Quality Control System. FNS will conduct a management evaluation (ME) of at least two State Quality Control systems annually, to the maximum extent practicable. The ME will include, but not be limited to, a determination of whether the State agency is complying with FNS regulations; an assessment of the State agency’s methods and procedures for conducting and managing the Quality Control system; and an assessment of the data collected by the State agency and submitted to the FNS Regional Office for conducting reviews.
(d) Validation of State Agency error rates. FNS shall validate each State agency’s payment error rate, as described in § 275.23(c), during each annual quality control review period. Federal validation reviews shall be conducted by reviewing against the Food and Nutrition Act of 2008 and the regulations, taking into account any FNS-authorized waivers to deviate from specific regulatory provisions. FNS shall validate each State agency’s reported negative error rate. Any deficiencies detected in a State agency’s QC system shall be included in the State agency’s corrective action plan. The findings of validation reviews shall be used as outlined in § 275.23(d)(4).
(1) Payment error rate. The validation review of each State agency’s payment error rate shall consist of the following actions:
(i) FNS will select a subsample of a State agency’s completed active cases, as follows:
(A) For State agencies that determine their active sample sizes in accordance with § 275.11(b)(1)(ii), the Federal review sample for completed active cases is determined as follows:
| Average monthly reviewable caseload (N) | Federal subsample target (n′) |
|---|---|
| 31,489 and over | n′ = 400 |
| 10,001 to 31,488 | n′ = .011634 N + 33.66 |
| 10,000 and under | n′ = 150 |
(B) For State agencies that determine their active sample sizes in accordance with § 275.11(b)(1)(iii), the Federal review sample for completed active cases is determined as follows:
| Average monthly reviewable caseload (N) | Federal subsample target (n′) |
|---|---|
| 60,000 and over | n′ = 400 |
| 10,001 to 59,999 | n′ = .005 N + 100 |
| 10,000 and under | n′ = 150 |
(C) In the above formula, n’ is the minimum number of Federal review sample cases which must be selected when conducting a validation review, except that FNS may select a lower number of sample cases if:
(1) The State agency does not report a change in sampling procedures associated with a revision in its required sample size within 10 days of effecting the change; and/or
(2) The State agency does not complete the number of case reviews specified in its approved sampling plan.
(D) The reduction in the number of Federal cases selected will be equal to the number of cases that would have been selected had the Federal sampling interval been applied to the State agency’s shortfall in its required sample size. This number may not be exact due to random starts and rounding.
(E) In the above formula, N is the State agency’s minimum active case sample size as determined in accordance with § 275.11(b)(1).
(ii) FNS Regional Offices will conduct case record reviews to the extent necessary to determine the accuracy of the State agency’s findings using the household’s certification records and the State agency’s QC records as the basis of determination. The FNS Regional Office may choose to verify any aspects of a State agency’s QC findings through telephone interviews with participants or collateral contacts. In addition, the FNS Regional Office may choose to conduct field investigations to the extent necessary.
(iii) Upon the request of a State agency, the appropriate FNS Regional Office will assist the State agency in completing active cases reported as not completed due to household refusal to cooperate.
(iv) FNS will also review the State agency’s sampling procedures, estimation procedures, and the State agency’s system for data management to ensure compliance with §§ 275.11 and 275.12.
(v) FNS validation reviews of the State agency’s active sample cases will be conducted on an ongoing basis as the State agency reports the findings for individual cases and supplies the necessary case records. FNS will begin the remainder of each State agency’s validation review as soon as possible after the State agency has supplied the necessary information regarding its sample and review activity.
(2) Underissuance error rate. The validation review of each State agency’s underissuance error rate shall occur as a result of the Federal validation of the State agency’s payment error rate as outlined in paragraph (c)(1) of this section.
(3) Negative case error rate. The validation review of each State agency’s negative case error rate shall consist of the following actions:
(i) FNS will select a subsample of a State agency’s completed negative cases, as follows:
| Average monthly reviewable negative caseload (N) | Federal subsample target (n′) |
|---|---|
| 5,000 and over | n′ = 160 |
| 501 to 4,999 | n′ = .0188 N + 65.7 |
| Under 500 | n′ = 75 |
(A) In the above formula, n’ is the minimum number of Federal review sample cases which must be selected when conducting a validation review, except that FNS may select a lower number of sample cases if:
(1) The State agency does not report a change in sampling procedures associated with a revision in its required sample size within 10 days of effecting the change; and/or
(2) The State agency does not complete the number of case reviews specified in its approved sampling plan.
(B) The reduction in the number of Federal cases selected will be equal to the number of cases that would have been selected had the Federal sampling interval been applied to the State agency’s shortfall in its required sample size. This number may not be exact due to random starts and rounding.
(C) In the above formula, N is the State agency’s minimum negative case sample size as determined in accordance with § 275.11(b)(2).
(ii) FNS Regional Offices will conduct case record reviews to the extent necessary to determine whether the household case record contained sufficient documentation to justify the State agency’s QC findings of the correctness of the State agency’s decision to deny, suspend or terminate a household’s participation.
(iii) FNS will also review each State agency’s negative case sampling and review procedures against the provisions of §§ 275.11 and 275.13.
(iv) FNS will begin each State agency’s negative sample case validation review as soon as possible after the State agency has supplied the necessary information, including case records and information regarding its sample and review activity.
(4) Arbitration. (i) Whenever the State agency disagrees with the FNS regional office concerning individual QC case findings and the appropriateness of actions taken to dispose of an individual case, the State agency may request that the dispute be arbitrated on a case-by-case basis by an FNS Arbitrator, subject to the following limitations.
(A) The State agency may only request arbitration when the State agency’s and FNS regional office’s findings or disposition of an individual QC case disagree.
(B) The arbitration review shall be limited to the point(s) within the Federal findings or disposition that the State agency disputes. However, if the arbitrator in the course of the review discovers a mathematical error in the computational sheet, the arbitration shall correct the error while calculating the allotment.
(ii) The FNS Arbitrator(s) shall be an individual or individuals who are not directly involved in the validation effort.
(iii) With the exception of the restrictions contained in paragraph (c)(4)(iii), for an arbitration request to be considered, it must be received by the appropriate FNS regional office within 20 calendar days of the date of receipt by the State agency of the regional office case findings. In the event the last day of this time period falls on a Saturday, Sunday, or Federal or State holiday, the period shall run to the end of the next work day. The State agency shall be restricted in its eligibility to request arbitration of an individual case if that case was not disposed of and the findings reported in accordance with the timeframes specified in § 275.21(b)(2). For each day late that a case was disposed of and the findings reported, the State agency shall have one less day to request arbitration of the case.
(iv) When the State agency requests arbitration, it shall submit all required documentation to the appropriate FNS regional office addressed to the attention of the FNS Arbitrator. The FNS regional office QC staff may submit an explanation of the Federal position regarding a case to the FNS Arbitrator.
(A) A complete request is one that contains all information necessary for the arbitrator to render an accurate, timely decision.
(B) If the State agency’s request is not complete the arbitrator shall make a decision based solely on the available documents.
(v) The FNS Arbitrator shall have 20 calendar days from the date of receipt of a State agency’s request for arbitration to review the case and make a decision.
(5) Household cooperation. Households are required to cooperate with Federal QC reviewers. Refusal to cooperate shall result in termination of the household’s eligibility. The Federal reviewer shall follow the procedures in § 275.12(g)(1)(ii) in order to determine whether a household is refusing to cooperate with the Federal QC reviewer. If the Federal reviewer determines that the household has refused to cooperate, as opposed to failed to cooperate, the household shall be reported to the State agency for termination of eligibility.
(e) Assessment of Corrective Action. (1) FNS will conduct will conduct a comprehensive annual assessment of a State agency’s corrective action process by compiling all information relative to that State agency’s corrective action efforts, including the State agency’s system for data analysis and evaluation. The purpose of this assessment and review is to determine if: identified deficiencies are analyzed in terms of causes and magnitude and are properly included in either the State or Project Area/Management Unit corrective action plan; the State agency is implementing corrective actions according to the appropriate plan; target completion dates for reduction or elimination of deficiencies are being met; and, corrective actions are effective. In addition, FNS will examine the State agency’s corrective action monitoring and evaluative efforts. The assessment of corrective action will be conducted at the State agency, project area, and local level offices, as necessary.
(2) In addition, FNS will conduct on-site reviews of selected corrective actions as frequently as considered necessary to ensure that State agencies are implementing proposed corrective actions within the timeframes specified in the State agency and/or Project Area/Management Unit corrective action plans and to determine the effectiveness of the corrective action. The on-site reviews will provide State agencies and FNS with a mechanism for early detection of problems in the corrective action process to minimize losses to the program, participants, or potential participants.
§ 275.4 Record retention.
(a) The State agency shall maintain Performance Reporting System records to permit ready access to, and use of, these records. Performance Reporting System records include information used in data analysis and evaluation, corrective action plans, corrective action monitoring records in addition to ME review records and QC review records as explained in paragraphs (b) and (c) of this section. To be readily accessible, system records shall be retained and filed in an orderly fashion. Precautions should be taken to ensure that these records are retained without loss or destruction for the 3-year period required by these regulations. Information obtained on individual households for Performance Reporting System purposes shall be safeguarded in accordance with FNS policies on disclosure of information for SNAP.
(b) ME review records consist of thorough documentation of review findings, sources from which information was obtained, procedures used to review SNAP requirements including sampling techniques and lists, and ME review plans. The State agency must submit documented evidence of review findings to the FNS Regional Office upon request for purposes of evaluating State corrective action plans.
(c) QC review records consist of Forms FNS-380, Worksheet for Supplemental Nutrition Assistance Program, FNS-380-1, Quality Control Review Schedule, FNS-245, Negative Quality Control Review Schedule; other materials supporting the review decision, including all correspondence with the household and all case notes, digital or otherwise, taken or used by the eligibility worker that are applicable to the review period; sample lists; sampling frames; tabulation sheets; and reports of the results of all quality control reviews during each review period.
Subpart B—Management Evaluation (ME) Reviews
§ 275.5 Scope and purpose.
(a) Objectives. Each State agency shall ensure that project areas operate SNAP in accordance with the Act, regulations, and FNS-approved State Plan of Operation. To ensure compliance with program requirements, ME reviews shall be conducted to measure compliance with the provisions of FNS regulations. The objectives of an ME review are to:
(1) Provide a systematic method of monitoring and assessing program operations in the project areas;
(2) Provide a basis for project areas to improve and strengthen program operations by identifying and correcting deficiencies; and
(3) Provide a continuing flow of information between the project areas, the States, and FNS, necessary to develop the solutions to problems in program policy and procedures.
(b) Frequency of review. (1) State agencies shall conduct a review once every year for large project areas, once every two years for medium project areas, and once every three years for small project areas, unless an alternate schedule is approved by FNS. The most current and accurate information on active monthly caseload available at the time the review schedule is developed shall be used to determine project area size.
(2) A request for an alternate review schedule shall be submitted for approval in writing with a proposed schedule and justification. In any alternate schedule, each project area must be reviewed at least once every three years. Approval of an alternate schedule is dependent upon a State agency’s justification that the project areas that will be reviewed less frequently than required in paragraph (b)(1) of this section are performing adequately and that previous reviews indicate few problems or that known problems have been corrected. FNS retains the authority for approving any alternate schedule and may approve a schedule in whole or in part. Until FNS approval of an alternate schedule is obtained, the State agency shall conduct reviews in accordance with paragraph (b)(1) of this section.
(3) FNS may require the State agency to conduct additional on-site reviews when a serious problem is detected in a project area which could result in a substantial dollar or service loss.
(4) State agencies shall also establish a system for monitoring those project areas’ operations which experience a significant influx of migratory workers during such migrations. This requirement may be satisfied by either scheduling ME reviews to coincide with such migrations or by conducting special reviews. As part of the review the State agency shall contact local migrant councils, advocate groups, or other organizations in the project area to ensure that migrants are receiving the required services.
§ 275.6 Management units.
(a) Establishment of management units. For the purpose of ME reviews, State agencies may, subject to FNS approval, establish “management units” which are different from project areas designated by FNS for participation in the program. For example, State-established welfare districts, regions or other administrative structures within a State may be so designated. Management units can be designated as either large, medium, or small for purposes of frequency of review. However, establishment of management units solely for the purpose of reducing the frequency of review will not be approved by FNS.
(b) FNS approval of management units. State agencies shall submit requests for establishment of management units to FNS, which shall have final authority for approval of such units as well as any changes in those previously approved by FNS.
(1) The following minimum criteria must be met prior to requesting FNS approval:
(i) The proposed management unit must correspond with existing State-established welfare districts, regions, or other administrative structures; and
(ii) The unit must have supervisory control over SNAP operations within that geographic area and have authority for implementation of corrective action.
(2) In submitting the request for FNS approval, the State agency shall include the following information regarding the proposed management unit:
(i) That the proposed management unit meets the minimum criteria described in paragraphs (b)(1) (i) and (ii) of this section;
(ii) Geographic coverage, including the names of the counties/project areas within the unit and the identification (district or region number) and location (city) of the office which has supervisory control over the management unit;
(iii) SNAP participation, including the number of persons and number of households;
(iv) The number of certification offices;
(v) The number of issuance units;
(vi) The dollar value of allotments issued as reflected in the most recent available data; and
(vii) Any other relevant information.
§ 275.7 Selection of sub-units for review.
(a) Definition of sub-units. Sub-units are the physical locations of organizational entities within project areas responsible for operating various aspects of SNAP and include but are not limited to certification offices, call centers, and employment and training offices.
(b) Selection of Sub-units for Review. State agencies shall select a representative number of sub-units of each category for review in order to determine a project area’s compliance with program standards.
§ 275.8 Review coverage.
(a) During each review period, State agencies shall review the national target areas of program operation specified by FNS. FNS will notify State agencies of the minimum program areas to be reviewed at least 90 days before the beginning of each annual review period, which is the Federal fiscal year. FNS may add additional areas during the review period if deemed necessary. The FNS headquarters office will add national target areas during the review period only for deficiencies of national scope. State agencies have 60 days in which to establish a plan schedule for such reviews.
(b) State agencies shall be responsible for reviewing each national target area or other program requirement based upon the provisions of the regulations governing SNAP and the FNS-approved Plan of Operation. If FNS approves a State agency’s request for a waiver from a program requirement, any different policy approved by FNS would also be reviewed. When, in the course of a review, a project area is found to be out of compliance with a given program requirement, the State agency shall identify the specifics of the problem including: the extent of the deficiency, the cause of the deficiency, and, as applicable, the specific procedural requirements the project area is misapplying.
§ 275.9 Review process.
(a) Review procedures. State agencies shall review the program requirements specified for review in § 275.8 of this part using procedures that are adequate to identify problems and the causes of those problems. As each project area’s operational structure will differ, State agencies shall review each program requirement applicable to the project area in a manner which will best measure the project area’s compliance with each program requirement.
(b) ME review plan. (1) State agencies shall develop a review plan prior to each ME review. This review plan shall specify whether each project area is large, medium, or small and shall contain:
(i) Identification of the project area to be reviewed, program areas to be reviewed, the dates the review will be conducted, and the period of time that the review will cover;
(ii) Information secured from the project area regarding its caseload and organization;
(iii) Identification of the sub-units selected for review and the techniques used to select them;
(iv) At State agency option it may also indicate whether the State agency is using the ME review process to perform non-discrimination reviews; and
(v) A description of the review method(s) the State agency plans to use for each program area being reviewed.
(2) ME review plans shall be maintained in an orderly fashion and be made available to FNS upon request.
(c) Review methods. (1) State agenices shall determine the method of reviewing the program requirements associated with each program area. For some areas of program operation it may be necessary to use more than one method of review to determine if the project area is in compliance with program requirements. The procedures used shall be adequate to identify any problems and the causes of those problems.
(2) State agencies shall ensure that the method used to review a program requirement does not bias the review findings. Bias can be introduced through leading questions, incomplete reviews, incorrect sampling techniques, etc.
(d) Review worksheet. (1) State agencies shall use a review worksheet to record all review findings. For each sub-unit reviewed the State agency shall, on the worksheet, identify:
(i) The sub-unit being reviewed;
(ii) Each program requirement reviewed in the sub-unit;
(iii) The method used to review each program requirement;
(iv) A description of any deficiency detected;
(v) The cause(s) of any deficiency detected, if known;
(vi) The number of casefiles and/or program records selected and examined within the sub-unit, identification of those selected (record case number, household name, etc.), the proportion which were not subject to review, as well as the method used to select the sample;
(vii) Where applicable, the numerical extent of any deficiency detected through examination of program records; and
(viii) Any pertinent comments concerning the sub-unit’s operation.
(2) State agencies shall promptly forward review findings to the appropriate State office for analysis, evaluation, and corrective action planning. Review worksheets shall be retained in an orderly fashion and made available to FNS upon request.
Subpart C—Quality Control (QC) Reviews
§ 275.10 Scope and purpose.
(a) As part of the Performance Reporting System, each State agency is responsible for conducting quality control reviews. For SNAP quality control reviews, a sample of households shall be selected from two different categories: Households which are participating in SNAP (called active cases) and households for which participation was denied, suspended or terminated (called negative cases). Reviews shall be conducted on active cases to determine if households are eligible and receiving the correct allotment of SNAP benefits. The determination of whether the household received the correct allotment will be made by comparing the eligibility data gathered during the review against the amount authorized on the master issuance file. Reviews of negative cases shall be conducted to determine whether the State agency’s decision to deny, suspend or terminate the household, as of the review date, was correct. Quality control reviews measure the validity of SNAP cases at a given time (the review date) by reviewing against SNAP standards established in the Food and Nutrition Act of 2008 and the Regulations, taking into account any FNS authorized waivers to deviate from specific regulatory provisions. FNS and the State agency shall analyze findings of the reviews to determine the incidence and dollar amounts of errors, which will determine the State agency’s liability for payment errors in accordance with the Food and Nutrition Act of 2008, as amended, and to plan corrective action to reduce excessive levels of errors for any State agency.
(b) The objectives of quality control reviews are to provide:
(1) A systematic method of measuring the validity of the SNAP caseload;
(2) A basis for determining error rates;
(3) A timely continuous flow of information on which to base corrective action at all levels of administration; and
(4) A basis for establishing State agency liability for errors that exceed the National performance measure.
(c) The review process is the activity necessary to complete reviews and document findings of all cases selected in the sample for quality control reviews. The review process shall consist of:
(1) Case assignment and completion monitoring;
(2) Case reviews;
(3) Supervisory review of completed worksheets and schedules; and
(4) Transmission of completed worksheets and schedules to the State agency for centralized data compilation and analysis.
§ 275.11 Sampling.
(a) Sampling plan. Each State agency shall develop a quality control sampling plan which demonstrates the integrity of its sampling procedures.
(1) Content. The sampling plan shall include a complete description of the frame, the method of sample selection, and methods for estimating characteristics of the population and their sampling errors. The description of the sample frames shall include: source, availability, accuracy, completeness, components, location, form, frequency of updates, deletion of cases not subject to review, and structure. The description of the methods of sample selection shall include procedures for: estimating caseload size, overpull, computation of sampling intervals and random starts (if any), stratification or clustering (if any), identifying sample cases, correcting over-or undersampling, and monitoring sample selection and assignment. A time schedule for each step in the sampling procedures shall be included.
(2) Criteria. Sampling plans proposing non-proportional or other alternative designs shall document compliance with the approval criteria in paragraph (b)(4) of this section. All sampling plans shall:
(i) Conform to principles of probability sampling;
(ii) Specify and explain the basis for the sample sizes chosen by the State agency;
(iii) If the State agency has chosen an active sample size as specified in paragraph (b)(1)(iii) of this section, include a statement that, whether or not the sample size is increased to reflect an increase in participation as discussed in paragraph (b)(3) of this section, the State agency will not use the size of the sample chosen as a basis for challenging the resulting error rates.
(iv) If the State agency has chosen a negative sample size as specified in paragraph (b)(2)(ii) of this section, include a statement that, whether or not the sample size is increased to reflect an increase in negative actions as discussed in paragraph (b)(3) of this section, the State agency will not use the size of the sample chosen as a basis for challenging the resulting error rates.
(3) Design. FNS generally recommends a systematic sample design for both active and negative samples because of its relative ease to administer, its validity, and because it yields a sample proportional to variations in the caseload over the course of the annual review period. (To obtain a systematic sample, a State agency would select every kth case after a random start between 1 and k. The value of k is dependent upon the estimated size of the universe and the sample size.) A State agency may, however, develop an alternative sampling design better suited for its particular situation. Whatever the design, it must conform to commonly acceptable statistical theory and application (see paragraph (b)(4) of this section).
(4) FNS review and approval. The State agency shall submit its sampling plan to FNS for approval as a part of its State Plan of Operation in accordance with § 272.2(e)(4). In addition, all sampling procedures used by the State agency, including frame composition, construction, and content shall be fully documented and available for review by FNS.
(b) Sample size. There are two samples for the SNAP quality control review process, an active case sample and a negative case sample. The size of both these samples is based on the State agency’s average monthly caseload during the annual review period. Costs associated with a State agency’s sample sizes are reimbursable as specified in § 277.4.
(1) Active cases. (i) All active cases shall be selected in accordance with standard procedures, and the review findings shall be included in the calculation of the State agency’s payment error rate.
(ii) Unless a State agency chooses to select and review a number of active cases determined by the formulas provided in paragraph (b)(1)(iii) of this section and has included in its sampling plan the reliability certification required by paragraph (a)(2)(iii) of this section, the minimum number of active cases to be selected and reviewed by a State agency during each annual review period shall be determined as follows:
| Average monthly reviewable caseload (N) | Minimum annual sample size (n) |
|---|---|
| 60,000 and over | n = 2400 |
| 10,000 to 59,999 | n = 300 + [0.042(N−10,000)] |
| Under 10,000 | n = 300 |
(iii) A State agency which includes in its sampling plan the statement required by paragraph (a)(2)(iii) of this section may determine the minimum number of active cases to be selected and reviewed during each annual review period as follows:
| Average monthly reviewable caseload (N) | Minimum annual sample size (n) |
|---|---|
| 60,000 and over | n = 1020 |
| 12,942 to 59,999 | n = 300 + [0.0153(N−12,941)] |
| Under 12,942 | n = 300 |
(iv) In the formulas in paragraphs (b)(1)(ii) and (iii) of this section n is the required active case sample size. This is the minimum number of active cases subject to review which must be selected each review period. Also in the formulas, N is the average monthly participating caseload subject to quality control review (i.e., households which are included in the active universe defined in paragraph (e)(1) of this section) during the annual review period.
(2) Negative cases. (i) Unless a State agency chooses to select and review a number of negative cases determined by the formulas provided in paragraph (b)(2)(ii) of this section and has included in its sampling plan the reliability certification required by paragraph (a)(2)(iv) of this section, the minimum number of negative cases to be selected and reviewed by a State agency during each annual review period shall be determined as follows:
| Average monthly reviewable negative caseload (N) | Minimum annual sample size (n) |
|---|---|
| 5,000 and over | n = 800 |
| 500 to 4,999 | n = 150 + [0.144(N−500)] |
| Under 500 | n = 150 |
(ii) A State agency which includes in its sampling plan the statement required by paragraph (a)(2)(iv) of this section may determine the minimum number of negative cases to be selected and reviewed during each annual review period as follows:
| Average monthly reviewable negative caseload (N) | Minimum annual sample size (n) |
|---|---|
| 5,000 and over | n = 680 |
| 684 to 4,999 | n = 150 + [ 0.1224(N−683)] |
| Under 684 | n = 150 |
(iii) In the formulas in this paragraph (b)(2), n is the required negative sample size. This is the minimum number of negative cases subject to review which must be selected each review period.
(iv) In the formulas in this paragraph (b)(2), N is the average monthly number of negative cases which are subject to quality control review (i.e., households which are part of the negative universe defined in paragraph (e)(2) of this section) during the annual review period.
(3) Unanticipated changes. Since the average monthly caseloads (both active and negative) must be estimated at the beginning of each annual review period, unanticipated changes can result in the need for adjustments to the sample size. FNS shall not penalize a State agency that does not adjust its sample size if the actual caseload during a review period is less than 20 percent larger than the estimated caseload initially used to determine sample size. If the actual caseload is more than 20 percent larger than the estimated caseload, the larger sample size appropriate for the actual caseload will be used in computing the sample completion rate.
(4) Alternative designs. The active and negative sample size determinations assume that State agencies will use a systematic or simple random sample design. State agencies able to obtain results of equivalent reliability with smaller samples and appropriate design may use an alternative design with FNS approval. To receive FNS approval, proposals for any type of alternative design must:
(i) Demonstrate that the alternative design provides payment error rate estimates with equal-or-better predicted precision than would be obtained had the State agency reviewed simple random samples of the sizes specified in paragraphs (b)(1) and (b)(2) of this section.
(ii) Describe all weighting, and estimation procedures if the sample design is non-self-weighted, or uses a sampling technique other than systematic sampling.
(iii) Demonstrate that self-weighting is actually achieved in sample designs claimed to be self-weighting.
(c) Sample selection. The selection of cases for quality control review shall be made separately for active and negative cases each month during the annual review period. Each month each State agency shall select for review approximately one-twelfth of its required sample, unless FNS has approved other numbers of cases specified in the sampling plan.
(1) Substitutions. Once a household has been identified for inclusion in the sample by a predesigned sampling procedure, substitutions are not acceptable. An active case must be reviewed each time it is selected for the sample. If a household is selected more than once for the negative sample as the result of separate and distinct instances of denial, suspension or termination, it shall be reviewed each time.
(2) Corrections. Excessive undersampling must be corrected during the annual review period. Excessive oversampling may be corrected at the State agency’s option. Cases which are dropped to compensate for oversampling shall be reported as not subject to review. Because corrections must not bias the sample results, cases which are dropped to compensate for oversampling must comprise a random subsample of all cases selected (including those completed, not completed, and not subject to review). Cases which are added to the sample to compensate for undersampling must be randomly selected from the entire frame in accordance with the procedures specified in paragraphs (b), (c)(1), and (e) of this section. All sample adjustments must be fully documented and available for review by FNS.
(d) Required sample size. A State agency’s required sample size is the larger of either the number of cases selected which are subject to review or the number of cases chosen for selection and review according to paragraph (b) of this section.
(e) Sample frame. The State agency shall select cases for quality control review from a sample frame. The choice of a sampling frame shall depend upon the criteria of timeliness, completeness, accuracy, and administrative burden. Complete coverage of the sample universes, as defined in paragraph (f) of this section, must be assured so that every household subject to quality control review has an equal or known chance of being selected in the sample. Since the SNAP quality control review process requires an active and negative sample, two corresponding sample frames are also required.
(1) Active cases. The frame for active cases shall list all households which were: (i) Certified prior to, or during, the sample month; and (ii) issued benefits for the sample month, except for those households excluded from the universe in paragraph (f)(1) of this section. State agencies may elect to use either a list of certified eligible households or a list of households issued an allotment. If the State agency uses a list of certified eligible households, those households which are issued benefits for the sample month after the frame has been compiled shall be included in a supplemental list. If the State agency uses an issuance list, the State agency shall ensure that the list includes those households which do not actually receive an allotment because the entire amount is recovered for repayment of an overissuance in accordance with the allotment reduction procedures in § 273.18.
(2) Negative cases. The frame for negative cases shall list:
(i) All actions to deny an application in the sample month except those excluded from the universe in paragraph (f)(2) of this section. If a household is subject to more than one denial action in a single sample month, each action shall be listed separately in the sample frame; and
(ii) All actions to suspend or terminate a household in the sample month except those excluded from the universe in paragraph (f)(2) of this section. Each action to suspend or terminate a household in the sample month shall be listed separately in the sample frame.
(3) Unwanted cases. A frame may include cases for which information is not desired (e.g., households which have been certified but did not actually participate during the sample month). When such cases cannot be eliminated from the frame beforehand and are selected for the sample, they must be accounted for and reported as being not subject to review in accordance with the provisions in §§ 275.12(g) and 275.13(e).
(f) Sample universe. The State agency shall ensure that its active and negative case frames accurately reflect their sample universes. There are two sample universes for the SNAP quality control review process, an active case universe and a negative case universe. The exceptions noted below for both universes are households not usually amenable to quality control review.
(1) Active cases. The universe for active cases shall include all households certified prior to, or during, the sample month and receiving SNAP benefits for the sample month, except for the following:
(i) A household in which all the members had died or had moved out of the State before the review could be undertaken or completed;
(ii) A household receiving SNAP benefits under a disaster certification authorized by FNS;
(iii) A household which is under investigation for intentional Program violation, including a household with a pending administrative disqualification hearing;
(iv) A household appealing an adverse action when the review date falls within the time period covered by continued participation pending the hearing; or
(v) A household receiving restored benefits in accordance with § 273.17 but not participating based upon an approved application. Other households excluded from the active case universe during the review process are identified in § 275.12(g).
(2) Negative cases. The universe for negative cases shall include all actions taken to deny, suspend, or terminate a household in the sample month except the following:
(i) A household which had its case closed due to expiration of the certification period;
(ii) A household denied SNAP benefits under a disaster certification authorized by FNS;
(iii) A household which withdrew an application prior to the agency’s determination;
(iv) A household which is under active investigation for Intentional Program Violation;
(v) A household which has been sent a notice of pending status but which was not actually denied participation;
(vi) A household which was terminated for failure to file a complete monthly report by the extended filing date, but reinstated when it subsequently filed the complete report before the end of the issuance month;
(vii) Other households excluded from the negative case universe during the review process as identified in § 275.13(e).
(g) Demonstration projects. Households correctly classified for participation under the rules of an FNS-authorized demonstration project which FNS determines to significantly modify the rules for determining households’ eligibility or allotment level, shall be included in the selection and review process. They shall be included in the universe for calculating sample sizes and included in the sample frames for sample selection as specified in paragraphs (b) through (e) of this section. In addition, they shall be included in the quality control review reports as specified in § 275.21(d) and included in the calculation of a State agency’s completion rate as specified in § 275.23(b)(1). The review of these cases shall be conducted in accordance with the provisions specified in §§ 275.12(h) and 275.13(f). FNS shall establish on an individual demonstration project basis whether the results of the reviews of active and negative demonstration project cases shall be included or excluded from the determination of State agencies’ error rates as described in § 275.23(b).
§ 275.12 Review of active cases.
(a) General. A sample of households which were certified prior to, or during, the sample month and issued SNAP benefits for the sample month shall be selected for quality control review. These active cases shall be reviewed to determine if the household is eligible and, if eligible, whether the household is receiving the correct allotment. The determination of a household’s eligibility shall be based on an examination and verification of all elements of eligibility (i.e., basic program requirements, resources, income, and deductions). The elements of eligibility are specified in §§ 273.1 and 273.3 through 273.9 of this chapter. The verified circumstances and the resulting benefit level determined by the quality control review shall be compared to the benefits authorized by the State agency as of the review date. When changes in household circumstances occur, the reviewer shall determine whether the changes were reported by the participant and handled by the agency in accordance with the rules set forth in §§ 273.12, 273.13 and 273.21 of this chapter, as appropriate. For active cases, the review date shall always fall within the sample month, either the first day of a calendar or fiscal month or the day of certification, whichever is later. The review of active cases shall include: a household case record review; a field investigation, except as provided in paragraph (b) of this section; the identification of any variances; an error analysis; and the reporting of review findings.
(b) Household case record review. The reviewer shall examine the household case record to identify the specific facts relating to the household’s eligibility and basis of issuance. If the reviewer is unable to locate the household case record, the reviewer shall identify as many of the pertinent facts as possible from the household issuance record. The case record review shall include all information applicable to the case as of the review month, including the application and worksheet in effect as of the review date. Documentation contained in the case record can be used as verification if it is not subject to change and applies to the sample month. If during the case record review the reviewer can determine and verify the household’s ineligibility the review can be terminated at that point, provided that if the determination is based on information not obtained from the household then the correctness of that information must be confirmed as provided in paragraph (c)(2) of this section. The reviewer shall utilize information obtained through the case record review to complete column (2) of the Form FNS-380, and to tentatively plan the content of the field investigation.
(c) Field investigation. A full field investigation shall be conducted for all active cases selected in the sample month except as provided in paragraph (b) of this section. A full field investigation shall include a review of any information pertinent to a particular case which is available through the State Income and Eligibility Verification System (IEVS) as specified in § 272.8 of this chapter. If during the field investigation the reviewer determines and verifies the household’s ineligibility, the review can be terminated at that point, provided that if the determination is based on information not obtained from the household then the correctness of that information must be confirmed as provided in paragraph (c)(2) of this section. In Alaska an exception to this requirement can be made in those isolated areas not reachable by regularly scheduled commercial air service, automobile, or other public transportation provided one fully documented attempt to contact the household has been made. Such cases may be completed through casefile review and collateral contact. The field investigation will include interviews with the head of household, spouse, or authorized representative; contact with collateral sources of information; and any other materials and activity pertinent to the review of the case. The scope of the review shall not extend beyond the examination of household circumstances which directly relate to the determination of household eligibility and basis of issuance status. The reviewer shall utilize information obtained through the field investigation to complete column (3) of the Form FNS-380.
(1) Personal interviews. Personal interviews shall be conducted in a manner that respects the rights, privacy, and dignity of the participants. Prior to conducting the personal interview, the reviewer shall notify the household that it has been selected, as part of an ongoing review process, for review by quality control, and that a personal face-to-face interview will be conducted in the future. The method of notifying the household and the specificity of the notification shall be determined by the State agency, in accordance with applicable State and Federal laws. The personal interview may take place at the participant’s home, at an appropriate State agency certification office, or at a mutually agreed upon alternative location. The State agency shall determine the best location for the interview to take place, but would be subject to the same provisions as those regarding certification interviews at § 273.2(e)(2) of this chapter. Those regulations provide that an office interview must be waived under certain hardship conditions. Under such hardship conditions the quality control reviewer shall either conduct the personal interview with the participant’s authorized representative, if one has been appointed by the household, or with the participant in the participant’s home. Except in Alaska, when an exception to the field investigation is made in accordance with this section, the interview with the participant may not be conducted by phone. During the personal interview with the participant, the reviewer shall:
(i) Explore with the head of the household, spouse, authorized representative, or any other responsible household member, household circumstances as they affect each factor of eligibility and basis of issuance;
(ii) Establish the composition of the household;
(iii) Review the documentary evidence in the household’s possession and secure information about collateral sources of verification; and
(iv) Elicit from the participant names of collateral contacts. The reviewer shall use, but not be limited to, these designated collateral contacts. If required by the State, the reviewer shall obtain consent from the head of the household to secure collateral information. If the participant refuses to sign the release of information form, the reviewer shall explain fully the consequences of this refusal to cooperate (as contained in paragraph (g)(1)(ii) of this section), and continue the review to the fullest extent possible.
(2) Collateral contacts. The reviewer shall obtain verification from collateral contacts in all instances when adequate documentation was not available from the participant. This second party verification shall cover each element of eligibility as it affects the household’s eligibility and allotment. The reviewer shall make every effort to use the most reliable second party verification available (for example, banks, payroll listings, etc.), in accordance with FNS guidelines, and shall thoroughly document all verification obtained. If any information obtained by the QC reviewer differs from that given by the participant, then the reviewer shall resolve the differences to determine which information is correct before an error determination is made. The manner in which the conflicting information is resolved shall include recontacting the participant unless the participant cannot be reached. When resolving conflicting information reviewers shall use their best judgement based on the most reliable data available and shall document how the differences were resolved.
(d) Variance identification. The reviewer shall identify any element of a basic program requirement or the basis of issuance which varies (i.e., information from review findings which indicates that policy was applied incorrectly and/or information verified as of the review date that differs from that used at the most recent certification action). For each element that varies, the reviewer shall determine whether the variance was State agency or participant caused. The results of these determinations shall be coded and recorded in column (4) of the Form FNS-380.
(1) Variances included in error analysis. Except for those variances in an element resulting from one of the situations described in paragraph (d)(2) of this section, any variance involving an element of eligibility or basis of issuance shall be included in the error analysis. Such variances shall include but not be limited to those resulting from a State agency’s failure to take the disqualification action related to SSN’s specified in § 273.6(c) of this chapter, and related to work requirements, specified in § 273.7(f) of this chapter.
(2) Variances excluded from error analysis. The following variances shall be excluded from the determination of a household’s eligibility and basis of issuance for the sample month:
(i) Any variance resulting from the nonverified portion of a household’s gross nonexempt income where there is conclusive documentation (a listing of what attempts were made to verify and why they were unsuccessful) that such income could not be verified at the time of certification because the source of income would not cooperate in providing verification and no other sources of verification were available. If there is no conclusive documentation as explained above, then the reviewer shall not exclude any resulting variance from the error determination. This follows certification policy outlined in § 273.2(f)(1)(i) of this chapter.
(ii) Any variance in cases certified under expedited certification procedures resulting from postponed verification of an element of eligibility as allowed under § 273.2(i)(4)(i) of this chapter. Verification of gross income, deductions, resources, household composition, alien status, or tax dependency may be postponed for cases eligible for expedited certification. However, if a case certified under expedited procedures contains a variance as a result of a residency deficiency, a mistake in the basis of issuance computation, a mistake in participant identification, or incorrect expedited income accounting, the variance shall be included in the error determination. This exclusion shall only apply to those cases which are selected for QC review in the first month of participation under expedited certification.
(iii) Any variance subsequent to certification in an element of eligibility or basis of issuance which was not reported and was not required to have been reported as of the review date. The elements participants are required to report and the time requirements for reporting are specified in §§ 273.12(a) and 273.21(h) and (i) of this chapter, as appropriate. If, however, a change in any element is reported, and the State agency fails to act in accordance with §§ 273.12(c) and 273.21(j) of this chapter, as appropriate, any resulting variance shall be included in the error determination.
(iv) Any variance in deductible expenses which was not provided for in determining a household’s benefit level in accordance with § 273.2(f)(3)(i)(B) of this chapter. This provision allows households to have their benefit level determined without providing for a claimed expense when the expense is questionable and obtaining verification may delay certification. If such a household subsequently provides the needed verification for the claimed expense and the State agency does not redetermine the household’s benefits in accordance with § 273.12(c) of this chapter, any resulting variance shall be included in the error determination.
(v) Any variance resulting from use by the State agency of information concerning households or individuals from an appropriate Federal source, provided that such information is correctly processed by the State agency. An appropriate Federal source is one which verifies: Income that it provides directly to the household; deductible expenses for which it directly bills the household; or other household circumstances which it is responsible for defining or establishing. To meet the provisions for correct processing, the eligibility worker must have appropriately acted on timely information. In order to be timely, information must be the most current that was available to the State agency at the time of the eligibility worker’s action.
(vi) Two variances relating to the Immigration and Naturalization Service’s (INS) Systematic Alien Verification for Entitlements (SAVE) Program.
(A) A variance based on a verification of alien documentation by INS. The reviewer shall exclude such variance only if the State agency properly used SAVE and the State agency provides the reviewer with:
(1) The alien’s name;
(2) The alien’s status; and
(3) Either the Alien Status Verification Index (ASVI) Query Verification Number or the INS Form G-845, as annotated by INS.
(B) A variance based on the State agency’s wait for the response of INS to the State agency’s request for official verification of the alien’s documentation. The reviewer shall exclude such variance only if the State agency properly used SAVE and the State agency provides the reviewer with either:
(1) The date of request, if the State agency was waiting for an automated response; or
(2) A copy of the completed Form G-845, if the State agency was waiting for secondary verification from INS.
(vii) Subject to the limitations provided in paragraphs (d)(2)(vii)(A) through (d)(2)(vii)(F) of this section, any variance resulting from application of a new Program regulation or implementing memorandum of a mandatory or optional change in Federal law that occurs during the first 120 days from the required implementation date. The variance exclusion shall apply to any action taken on a case directly related to implementation of a covered provision during the 120-day exclusionary period until the case is required to be recertified or acted upon for some other reason.
(A) When a regulation allows a State agency an option to implement prior to the required implementation date, the date on which the State agency chooses to implement may, at the option of the State, be considered to be the required implementation date for purposes of this provision. The exclusion period would be adjusted to begin with this date and end on the 120th day that follows. States choosing to implement prior to the required implementation date must notify the appropriate FNS Regional Office, in writing, prior to implementation that they wish the 120 day variance exclusion to commence with actual implementation. Absent such notification, the exclusionary period will commence with the required implementation date.
(B) A State agency shall not exclude variances which occur prior to the States implementation.
(C) A State agency which did not implement until after the exclusion period shall not exclude variances under this provision.
(D) Regardless of when the State agency actually implemented the regulation, the variance exclusion period shall end on the 120th day following the required implementation date, including the required implementation date defined in paragraph (d)(2)(vii)(A) of this section.
(E) For purposes of this provision, implementation occurs on the effective date of State agency’s written statewide notification to its eligibility workers.
(F) This variance exclusion applies to changes occasioned by final regulations or interim regulations. In the case of a final regulation issued following an interim regulation, the exclusion applies only to significant changes made to the earlier interim regulation. A significant change is one which the final regulation requires the State agency to implement on or after publication of a final rule.
(viii) Any variance resulting from incorrect written policy that a State agency acts on that is provided by a Departmental employee authorized to issue SNAP policy and that the State agency correctly applies. For purposes of this provision, written Federal policy is that which is issued in regulations, notices, handbooks, category three and four Policy Memoranda under the Policy Interpretation Response System, and regional policy memoranda issued pursuant to these. Written Federal policy is also a letter from the Food and Nutrition Service to a State agency which contains comments on the State agency’s SNAP manual or instructions.
(ix) Any variance in a child support deduction which was the result of an unreported change subsequent to the most recent certification action shall be excluded from the error determination.
(3) Other findings. Findings other than variances made during the review which are pertinent to the SNAP household or the case record may be acted on at the discretion of the State agency. Examples of such findings are: an incorrect age of a household member which is unrelated to an element of eligibility; an overdue subsequent certification; no current application on file; insufficient documentation; incorrect application of the verification requirements specified in part 273 of this chapter; and deficiencies in work registration procedural requirements. Such deficiencies include: inadequate documentation of each household member’s exempt status; work registration form for each nonexempt household member not completed at the time of application and every six months thereafter; and the household not advised of its responsibility to report any changes in the exempt status of any household member.
(e) Error analysis. The reviewer shall analyze all appropriate variances in completed cases, in accordance with paragraph (d) of this section, which are based upon verified information and determine whether such cases are either eligible, eligible with a basis of issuance error, or ineligible. The review of an active case determined ineligible shall be considered completed at the point of the ineligibility determination. For households determined eligible, the review shall be completed to the point where the correctness of the basis of issuance is determined, except in the situations outlined in paragraph (g) of this section. In the event that a review is conducted of a household which is receiving restored or retroactive benefits for the sample month, the portion of the allotment which is the restored or retroactive benefit shall be excluded from the determination of the household’s eligibility and/or basis of issuance. A SNAP case in which a household member(s) receives public assistance shall be reviewed in the same manner as all other SNAP cases, using income as received. The determination of a household’s eligibility and the correctness of the basis of issuance shall be determined based on data entered on the computation sheet as well as other information documented on other portions of the Form FNS-380, as appropriate.
(f) Reporting of review findings. All information verified to be incorrect during the review of an active case shall be reported to the State agency for appropriate action on an individual case basis. This includes information on all variances in elements of eligibility and basis of issuance in both error and nonerror cases. In addition, the reviewer shall report the review findings on the Form FNS-380-1, in accordance with the following procedures:
(1) Eligibility errors. If the reviewer determines that a case is ineligible, the occurrence and the total allotment issued in the sample month shall be coded and reported. Whenever a case contains a variance in an element which results in an ineligibility determination and there are also variances in elements which would cause a basis of issuance error, the case shall be treated as an eligibility error. The reviewer shall also code and report any variances that directly contributed to the error determination. In addition, if the State agency has chosen to report information on all variances in elements of eligibility and basis of issuance, the reviewer shall code and report any other such variances which were discovered and verified during the course of the review.
(2) Basis of issuance of errors. If the reviewer determines that SNAP allotments were either overissued or underissued to eligible households in the sample month, the State agency shall code and report any variances that directly contributed to the error determination that were discovered and verified during the course of the review. For fiscal year 2014, only variances that exceed $37.00 (the threshold) shall be included in the calculation of the underissuance error rate, overissuance error rate, and payment error. For fiscal years 2015 and thereafter, this QC tolerance level shall be adjusted annually by the percentage by which the Thrifty Food Plan (TFP) for the 48 contiguous States and the District of Columbia is adjusted. If the State agency has chosen to report information on all variances in elements of eligibility and basis of issuance, the reviewer shall code and report any other such variances that were discovered and verified during the course of the review.
(g) Disposition of case reviews. Each case selected in the sample of active cases must be accounted for by classifying it as completed, not completed, or not subject to review. These case dispositions shall be coded and recorded on the Form FNS-380-1.
(1) Cases reported as not complete. Active cases shall be reported as not completed if the household case record cannot be located and the household itself is not subsequently located; if the household case record is located but the household cannot be located unless the reviewer attempts to locate the household as specified in this paragraph; or if the household refuses to cooperate, as discussed in this paragraph. All cases reported as not complete shall be reported to the State agency for appropriate action on an individual case basis. Without FNS approval, no active case shall be reported as not completed solely because the State agency was unable to process the case review in time for it to be reported in accordance with the timeframes specified in § 275.21(b)(2).
(i) If the reviewer is unable to locate the participant either at the address indicated in the case record or in the issuance record and the State agency is not otherwise aware of the participant’s current address, the reviewer shall attempt to locate the household by contacting at least two sources which the State agency determines are most likely to be able to inform the reviewer of the household’s current address. Such sources include but are not limited to:
(A) The local office of the U.S. Postal Service;
(B) The State Motor Vehicle Department;
(C) The owner or property manager of the residence at the address in the case record; and
(D) Any other appropriate sources based on information contained in the case record, such as public utility companies, telephone company, employers, or relatives. Once the reviewer has attempted to locate the household and has documented the response of each source contacted, if the household still cannot be located and the State agency has documented evidence that the household did actually exist, the State agency shall report the active case as not subject to review. In these situations documented evidence shall be considered adequate if it either documents two different elements of eligibility or basis of issuance, such as a copy of a birth certificate for age and pay status for income; or documents the statement of a collateral contact indicating that the household did exist. FNS Regional Offices will monitor the results of the contacts which State agencies make in attempting to locate households.
(ii) If a household refuses to cooperate with the quality control reviewer and the State agency has taken other administrative steps to obtain that cooperation without obtaining it, the household shall be notified of the penalities for refusing to cooperate with respect to termination and reapplication, and of the possibility that its case will be referred for investigation for willful misrepresentation. If a household refuses to cooperate after such notice, the reviewer must- attempt to complete the case and shall report the household’s refusal to the State agency for termination of its participation without regard for the outcome of that attempt. For a determination of refusal to be made, the household must be able to cooperate, but clearly demonstrate that it will not take actions that it can take and that are required to complete the quality control review process. In certain circumstances, the household may demonstrate that it is unwilling to cooperate by not taking actions after having been given every reasonable opportunity to do so, even though the household or its members do not state that the household refuses to cooperate. Instances where the household’s unwillingness to cooperate in completing a quality control review has the effect of a refusal to cooperate shall include the following:
(A) The household does not respond to a letter from the reviewer sent Certified Mail-Return Receipt Requested within 30 days of the date of receipt;
(B) The household does not attend an agreed upon interview with the reviewer and then does not contact the reviewer within 10 days of the date of the scheduled interview to reschedule the interview; or
(C) The household does not return a signed release of information statement to the reviewer within 10 days of either agreeing to do so or receiving a request from the reviewer sent Certified Mail-Return Receipt Requested. However, in these and other situations, if there is any question as to whether the household has merely failed to cooperate, as opposed to refused to cooperate, the household shall not be reported to the State agency for termination.
(2) Cases not subject to review. Active cases which are not subject to review, if they have not been eliminated in the sampling process, shall be eliminated in the review process. In addition to cases listed in § 275.11(f)(1), these shall include:
(i) Death of all members of a household if they died before the review could be undertaken or completed;
(ii) The household moved out of State before the review could be undertaken or completed;
(iii) The household, at the time of the review, is under active investigation for intentional SNAP violation, including a household with a pending administrative disqualification hearing;
(iv) A household receiving restored benefits in accordance with § 273.17 of this chapter but not participating based upon an approved application for the sample month;
(v) A household dropped as a result of correction for oversampling;
(vi) A household participating under disaster certification authorized by FNS for a natural disaster;
(vii) A case incorrectly listed in the active frame;
(viii) A household appealing an adverse action when the review date falls within the time period covered by continued participation pending the hearing;
(ix) A household that did not receive benefits for the sample month; or
(x) A household that still cannot be located after the reviewer has attempted to locate it in accordance with paragraph (g)(1)(i) of this section.
(h) Demonstration projects. Households correctly classified for participation under the rules of a demonstration project which establishes new FNS-authorized eligibility criteria or modifies the rules for determining households’ eligibility or allotment level shall be reviewed following standard procedures provided that FNS does not modify these procedures to reflect modifications in the treatment of elements of eligibility or basis of issuance in the case of a demonstration project. If FNS determines that information obtained from these cases would not be useful, then they may be excluded from review.
§ 275.13 Review of negative cases.
(a) General. A sample of actions to deny applications, or suspend or terminate a household in the sample month shall be selected for quality control review. These negative actions shall be reviewed to determine whether the State agency’s decision to deny, suspend, or terminate the household, as of the review date, was correct. Depending on the characteristics of individual State systems, the review date for negative cases could be the date of the agency’s decision to deny, suspend, or terminate program benefits, the date on which the decision is entered into the computer system, or the date of the notice to the client. State agencies must consistently apply the same definition for review date to all sample cases of the same classification. The review of negative cases shall include a household case record review; an error analysis; and the reporting of review findings, including procedural problems with the action regardless of the validity of the decision to deny, suspend or terminate. In certain instances, contact with the household or a collateral contact may be permitted.
(b) Household case record review. The reviewer shall examine the household case record and verify through documentation in it whether the reason given for the denial, suspension, or termination is correct. Through the review of the household case record, the reviewer shall complete the household case record sections and document the reasons for denial, suspension or termination on the Negative Quality Control Review Schedule, Form FNS-245.
(c) Error analysis. (1) A negative case shall be considered valid if the reviewer is able to verify through documentation in the household case record that a household was correctly denied, suspended, or terminated from the program in accordance with the reason for the action given by the State agency in the notice. Whenever the reviewer is unable to verify the correctness of the State agency’s decision to deny, suspend, or terminate a household’s participation through such documentation, the QC reviewer may contact the household or a collateral contact to verify the correctness of the specific negative action under review. If the reviewer is unable to verify the correctness of the State agency’s decision to deny, suspend, or terminate the case for the specific reason given for the action, the negative case shall be considered invalid.
(2) The reviewer shall exclude a variance when the State agency erroneously denied, suspended or terminated a household’s participation based on an erroneous verification of alien documentation by the Immigration and Nationalization Services (INS) Systematic Alien Verification for Entitlements (SAVE) Program. The reviewer shall exclude the variance only if the State agency properly used SAVE, and the State agency provides the reviewer with:
(i) The alien’s name;
(ii) The alien’s status; and
(iii) Either the Alien Status Verification Index (ASVI) Query Verification Number or the INS Form G-845, as annotated by INS.
(d) Reporting of review findings. When a negative case is incorrect, this information shall be reported to the State agency for appropriate action on an individual case basis, such as recomputation of the allotment and restoration of lost benefits. In addition, the reviewer shall code and record the error determination on the Negative Quality Control Review Schedule, Form FNS-245.
(e) Disposition of case review. Each case selected in the sample of negative cases must be accounted for by classifying it as completed, not completed, or not subject to review. These case dispositions shall be coded and recorded on the Negative Quality Control Review Schedule, Form FNS-245.
(1) Cases reported as not complete. Negative cases shall be reported as not completed if the reviewer, after all reasonable efforts, is unable to locate the case record. In no event, however, shall any negative case be reported as not completed solely because the State agency was unable to process the case review in time for it to be reported in accordance with the timeframes specified in § 275.21(b)(2), without prior FNS approval. This information shall be reported to the State agency for appropriate action on an individual case basis.
(2) Cases not subject to review. Negative cases which are not subject to review, if they have not been eliminated in the sampling process, shall be eliminated in the review process. In addition to cases listed in § 275.11(f)(2), these shall include:
(i) A household which was dropped as a result of a correction for oversampling;
(ii) A household which was listed incorrectly in the negative frame.
(f) Demonstration projects. A household whose application has been denied or whose participation has been suspended or terminated under the rules of an FNS-authorized demonstration project shall be reviewed following standard procedures unless FNS provides modified procedures to reflect the rules of the demonstration project. If FNS determines that information obtained from these cases would not be useful, then these cases may be excluded from review.
§ 275.14 Review processing.
(a) General. Each State agency shall use FNS handbooks, worksheets, and schedules in the quality control review process.
(b) Handbooks. The reviewer shall follow the procedures outlined in the Quality Control Review Handbook, FNS Handbook 310, to conduct quality control reviews. In addition, the sample of active and negative cases shall be selected in accordance with the sampling techniques described in the Quality Control Sampling Handbook, FNS Handbook 311.
(c) Worksheets. The Form FNS-380, shall be used by the reviewer to record required information from the case record, plan and conduct the field investigation, and record findings which contribute to the determination of eligibility and basis of issuance in the review of active cases. In some instances, reviewers may need to supplement Form FNS-380 with other forms. The State forms for appointments, interoffice communications, release of information, etc., should be used when appropriate.
(d) Schedules. Decisions reached by the reviewer in active case reviews shall be coded and recorded on the Integrated Review Worksheet, Form FNS-380-1. Such active case review findings must be substantiated by information recorded on the Integrated Review Worksheet, Form FNS-380. In negative case reviews, the review findings shall be coded and recorded on the Negative Quality Control Review Schedule, Form FNS-245, and supplemented as necessary with other documentation substantiating the findings.
Subpart D—Data Analysis and Evaluation
§ 275.15 Data management.
(a) Analysis. Analysis is the process of classifying data, such as by areas of program requirements or use of error-prone profiles, to provide a basis for studying the data and determining trends including significant characteristics and their relationships.
(b) Evaluation. Evaluation is the process of determining the cause(s) of each deficiency, magnitude of the deficiency, and geographic extent of the deficiency, to provide the basis for planning and developing effective corrective action.
(c) Each State agency must analyze and evaluate at the State and project area levels all management information sources available to:
(1) Identify all deficiencies in program operations and systems;
(2) Identify causal factors and their relationships;
(3) Identify magnitude of each deficiency, where appropriate (This is the frequency of each deficiency occurring based on the number of program records reviewed and where applicable, the amount of loss either to the program or participants or potential participants in terms of dollars. The State agency shall include an estimate of the number of participants or potential participants affected by the existence of the deficiency, if applicable);
(4) Determine the geographic extent of each deficiency (e.g., Statewide/individual project area or management unit); and,
(5) Provide a basis for management decisions on planning, implementing, and evaluating corrective action.
(d) In the evaluation of data, situations may arise where the State agency identifies the existence of a deficiency, but after reviewing all available management information sources sufficient information is not available to make a determination of the actual causal factor(s), magnitude, or geographic extent necessary for the development of appropriate corrective action. In these situations, the State agency shall be responsible for gathering additional data necessary to make these determinations. This action may include, but is not limited to, conducting additional full or partial ME reviews in one or more project areas/management units or discussions with appropriate officials.
(e) Deficiencies identified from all management information sources must be analyzed and evaluated together to determine their causes, magnitude, and geographic extent. Causes indicated and deficiencies identified must be examined to determine if they are attributable to a single cause and can be effectively eliminated by a single action. Deficiencies and causes identified must also be compared to the results of past corrective action efforts to determine if the new problems arise from the causal factors which contributed to the occurrence of previously identified deficiencies.
(f) Data analysis and evaluation must be an ongoing process to facilitate the development of effective and prompt corrective action. The process shall also identify when deficiencies have been eliminated through corrective action efforts, and shall provide for the reevaluation of deficiencies and causes when it is determined that corrective action has not been effective.
(g) Identification of High Error Project Areas/Counties/Local Offices. FNS may use quality control information to determine which project areas/counties/local offices have reported payment error rates that are either significantly greater than the State agency average or greater than the national error standard of the Program. When FNS notifies a State agency that a “high error” area exists, the State agency shall ensure that corrective action is developed and reported in accordance with the provisions of § 275.17. If FNS identifies a “high error” locality which a State agency has previously identified as error-prone and taken appropriate action, no further State agency shall be required. If a State agency’s corrective action plan fails to address problems in FNS-identified “high error” areas, FNS may require a State agency to implement new or modified cost-effective procedures for the certification of households.
Subpart E—Corrective Action
§ 275.16 Corrective action planning.
(a) Corrective action planning is the process by which State agencies shall determine appropriate actions to reduce substantially or eliminate deficiencies in program operations and provide responsive service to eligible households.
(b) The State agency and project area(s)/management unit(s), as appropriate, shall implement corrective action on all identified deficiencies. Deficiencies requiring action by the State agency or the combined efforts of the State agency and the project area(s)/management unit(s) in the planning, development, and implementation of corrective action are those which:
(1) Result from a payment error rate of 6 percent or greater (actions to correct errors in individual cases, however, shall not be submitted as part of the State agency’s corrective action plan);
(2) Are the causes of other errors/deficiencies detected through quality control, including error rates of 1 percent or more in negative cases (actions to correct errors in individual cases, however, shall not be submitted as part of the State agency’s corrective action plan);
(3) Are identified by FNS reviews, GAO audits, contract audits, reports to FNS regarding the implementation of major changes (as discussed in § 272.15) or USDA audits or investigations at the State agency or project area level (except deficiencies in isolated cases as indicated by FNS); and,
(4) Result from 5 percent or more of the State agency’s QC sample being coded “not complete” as defined in § 275.12(g)(1) of this part. This standard shall apply separately to both active and negative samples.
(5) Result in underissuances, improper denials, improper suspensions, improper termination, or improper systemic suspension of benefits to eligible households where such errors are caused by State agency rules, practices, or procedures.
(c) The State agency shall ensure that appropriate corrective action is taken on all deficiencies including each case found to be in error by quality control reviews and those deficiencies requiring corrective action only at the project area level. Moreover, when a substantial number of deficiencies are identified which require State agency level and/or project area/management unit corrective action, the State agency and/or project area/management unit shall establish an order of priority to ensure that the most serious deficiencies are addressed immediately and corrected as soon as possible. Primary factors to be considered when determining the most serious deficiencies are:
(1) Magnitude of the deficiency as defined in § 275.15(c)(3) of this part;
(2) Geographic extent of the deficiency (e.g., Statewide/project area or management unit);
(3) Anticipated results of corrective actions; and
(4) High probability of errors occurring as identified through all management evaluation sources.
(d) In planning corrective action, the State agency shall coordinate actions in the areas of data analysis, policy development, quality control, program evaluation, operations, administrative cost management, civil rights, and training to develop appropriate and effective corrective action measures.
§ 275.17 State corrective action plan.
(a) State agencies shall prepare corrective action plans addressing those deficiencies specified in § 275.16(b) requiring action by the State agency or the combined efforts of the State agency and the project area(s)/management unit(s). This corrective action plan is an open-ended plan and shall remain in effect until all deficiencies in program operations have been reduced substantially or eliminated. State agencies shall provide updates to their corrective action plans through regular, semiannual updates. These semiannual updates shall be received by FNS by May 1st and November 1st respectively. Such updates must contain:
(1) Any additional deficiencies identified since the previous corrective action plan update;
(2) Documentation that a deficiency has been corrected and is therefore being removed from the plan; and
(3) Any changes to planned corrective actions for previously reported deficiencies.
(b) Content. State corrective action plans shall contain, but not necessarily be limited to, the following, based on the most recent information available:
(1) Specific description and identification of each deficiency;
(2) Source(s) through which the deficiency was detected;
(3) Magnitude of each deficiency, if appropriate, as defined in § 275.15(c)(3) of this part;
(4) Geographic extent of the deficiency (e.g., Statewide/project area or management unit—specific project areas in which the deficiency occurs);
(5) Identification of causal factor(s) contributing to the occurrence of each deficiency;
(6) Identification of any action already completed to eliminate the deficiency;
(7) For each deficiency, an outline of actions to be taken, the expected outcome of each action, the target date for each action, and the date by which each deficiency will have been eliminated; and
(8) For each deficiency, a description of the manner in which the State agency will monitor and evaluate the effectiveness of the corrective action in eliminating the deficiency.
(c) FNS will provide technical assistance in developing corrective action plans when requested by State agencies.
(d) State agencies will be held accountable for the efficient and effective operation of all areas of the program. FNS is not precluded from issuing a warning as specified in part 276 because a deficiency is included in the State agency’s corrective action plan.
§ 275.18 Project area/management unit corrective action plan.
(a) The State agency shall ensure that corrective action plans are prepared at the project area/management unit level, addressing those deficiencies not required to be included in the State corrective action plan. State agencies may elect to prepare these plans for or in cooperation with the project area. These project area/management unit corrective action plans shall be open-ended and shall remain in effect until all deficiencies in program operations have been reduced substantially or eliminated. Any deficiencies detected through any source not previously reported to the State agency which require incorporation into the Project Area/Management Unit Corrective Action Plan shall be submitted to the State agency within 60 days of identification. As deficiencies are reduced substantially or eliminated, the project area/management unit shall notify the State agency in writing. The project area/management unit shall be responsible for documenting why each deficiency is being removed from the Plan. The removal of any deficiency from the Plan will be subject to State agency and FNS review and validation.
(b) Content. Project area/management unit corrective action plans shall contain all the information necessary to enable the State agency to monitor and evaluate the corrective action properly. Also, State agencies shall establish requirements for project area/management units in planning, implementing and reporting corrective action to assist the State agency’s efforts to fulfill its responsibilities for determining which deficiencies must be addressed in the State corrective action plan. States should consider requiring project area/management unit plans to include the following, based on the most recent information available:
(1) Specific description and identification of each deficiency;
(2) Source(s) through which the deficiency was detected;
(3) Magnitude of each deficiency, if appropriate, as defined in § 275.15(c)(3) of this part;
(4) Geographic extent of the deficiency (throughout the project area/management unit or only in specific offices);
(5) Identification of causal factor(s) contributing to the occurrence of each deficiency;
(6) Identification of any action already completed to eliminate the deficiency;
(7) For each deficiency, an outline of actions to be taken, the expected outcome of each action, the target date for each action, the date by which each deficiency will have been eliminated; and
(8) For each deficiency, a description of the manner in which the project area/management unit will monitor and evaluate the effectiveness of the corrective action in eliminating the deficiency.
§ 275.19 Monitoring and evaluation.
(a) The State agency shall establish a system for monitoring and evaluating corrective action at the State and project area levels. Monitoring and evaluation shall be an ongoing process to determine that deficiencies are being substantially reduced or eliminated in an efficient manner and that the program provides responsive service to eligible households.
(b) The State agency shall ensure that corrective action on all deficiencies identified in the State Corrective Action Plan and Project Area/Management Unit Corrective Action Plan is implemented and achieves the anticipated results within the specified time frames. The State agency shall monitor and evaluate corrective action at the State and project levels through a combination of reports, field reviews, and examination of current data available through program management tools and other sources.
(c) In instances where the State agency and/or the project area/management unit determines that the proposed corrective action is not effective in reducing substantially or eliminating deficiencies, the State agency and/or the project area/management unit shall promptly reevaluate the deficiency, causes, and the corrective action taken, and develop and implement new corrective actions.
Subpart F—Responsibilities for Reporting on Program Performance
§ 275.20 ME review schedules.
(a) Each State agency shall submit its review schedule to the appropriate FNS regional office at least 60 days prior to the beginning of the next year’s review period (the Federal fiscal year). These schedules must ensure that all project areas/management units will be reviewed within the required time limits. Each schedule shall identify the project areas/management units in each classification and list each project area to be reviewed by month or by quarter. A State agency may submit a request to use an alternate review schedule at any time. The alternate schedule shall not be effective until approved by FNS in accordance with § 275.5(b)(2).
(b) State agencies shall notify the appropriate FNS regional office of all changes in review schedules.
§ 275.21 Quality control review reports.
(a) General. Each State agency shall submit reports on the performance of quality control reviews in accordance with the requirements outlined in this section. These reports are designed to enable FNS to monitor the State agency’s compliance with Program requirements relative to the Quality Control Review System. Every case selected for review during the sample month must be accounted for and reflected in the appropriate report(s).
(b) Individual cases. The State agency shall report the review findings on each case selected for review during the sample month. For active cases, the State agency shall thoroughly document the Quality Control Review Schedule, Form FNS-380, to ensure any subsequent case reviewers fully understand household circumstances pertaining to the QC review as well as the reasons for the individual case finding and disposition. The State agency shall also code the findings on the Form FNS-380-1. For negative cases, the State agency shall submit a summary report, coded and documented on the Negative Quality Control Review Schedule, Form FNS-245, in enough detail to ensure subsequent case reviewers fully understand the reasons for the individual finding and disposition. The review findings shall be reported as follows:
(1) The State agency shall utilize SNAPQCS, FNS’ automated, web-based QC System, to report all required QC forms, supporting evidence, and information necessary to understand the disposition and final findings for active and negative sampled cases to FNS. Upon State agency request, FNS will consider approval of any technical changes in the review results after they have been reported to FNS.
(2) The State agency shall have at least 115 days from the end of the sample month to dispose of and report the findings of all cases selected in a sample month. FNS may grant additional time as warranted upon request by a State agency for cause shown to complete and dispose of individual cases.
(3) The State agency shall supply the FNS Regional Office with individual household case records and the pertinent information contained in the individual case records, or legible copies of that material, as well as legible hard copies of individual Forms FNS-380, FNS-380-1, and FNS-245 or other FNS-approved report forms, within 10 days of receipt of a request for such information.
(4) For each case that remains pending 115 days after the end of the sample month, the State agency shall immediately submit a report that includes an explanation of why the case has not been disposed of, documentation describing the progress of the review to date, and the date by which it will be completed. If FNS extends the time frames in paragraph (b)(2) of this section, this date will be extended accordingly. If FNS determines that the report in the first sentence of this paragraph (b)(4) does not sufficiently justify the case’s pending status, the case shall be considered overdue. Depending upon the number of overdue cases, FNS may find the State agency’s QC system to be inefficient or ineffective and suspend and/or disallow the State agency’s Federal share of administrative funds in accordance with the provisions of § 276.4.
(c) Monthly status. The State agency shall report in a manner directed by the regional office the monthly progress of sample selection and completion within 125 days after the end of the sample month. Each report shall reflect sampling and review activity for a given sample month. If FNS extends the time frames in paragraph (b)(2) of this section, this date will be extended accordingly.
(d) Demonstration projects. The State agency shall identify the monthly status of active and negative demonstration project (i.e., those cases described in § 275.11(g)) in accordance with paragraph (c) of this section.
§ 275.22 Administrative procedure.
Reports on program performance are intended to provide the State an opportunity to determine compliance with program requirements, identify and resolve emerging problems, and assess the effectiveness of actions that have been taken to correct existing problems. States’ reports enable FNS to assess the nationwide status of eligibility and basis of issuance determinations, to ensure State compliance with Federal requirements, to assist States in improving and strengthening their programs, and to develop Federal policies. Reports must be submitted in duplicate to the appropriate FNS Regional Office according to the time frames established in §§ 275.20, 275.21, and 275.22 of this part.
Subpart G—Program Performance
§ 275.23 Determination of State agency program performance.
(a) Determination of efficiency and effectiveness. FNS shall determine the efficiency and effectiveness of a State’s administration of the Supplemental Nutrition Assistance Program by measuring State compliance with the standards contained in the Food and Nutrition Act, regulations, and the State Plan of Operation and State efforts to improve program operations through corrective action. This determination shall be made based on:
(1) Reports submitted to FNS by the State;
(2) FNS reviews of State agency operations;
(3) State performance reporting systems and corrective action efforts; and
(4) Other available information such as Federal audits and investigations, civil rights reviews, administrative cost data, complaints, and any pending litigation.
(b) State agency error rates. FNS shall estimate each State agency’s active case, payment, and negative case error rate based on the results of quality control review reports submitted in accordance with the requirements outlined in § 275.21. The determination of the correctness of the case shall be based on certification policy as set forth in part 273 of this chapter.
(1) Demonstration projects. FNS shall make a determination for each individual project whether the reported results of reviews of active and negative demonstration project cases shall be included or excluded from the estimate of the active case error rate, payment error rate, and negative case error rate.
(2) Determination of payment error rates. As specified in § 275.3(c), FNS will validate each State agency’s estimated payment error rate by rereviewing the State agency’s active case sample and ensuring that its sampling, estimation, and data management procedures are correct.
(i) Once the Federal case reviews have been completed and all differences with the State agency have been identified, FNS shall calculate regressed error rates using the following linear regression equations.
(A) y
(B) y
(C) The regressed error rates are given by r
(D) After application of the adjustment provisions of paragraph (b)(2)(iii) of this section, the adjusted regressed payment error rate shall be calculated to yield the State agency’s payment error rate. The adjusted regressed payment error rate is given by r
(ii) If FNS determines that a State agency has sampled incorrectly, estimated improperly, or has deficiencies in its QC data management system, FNS will correct the State agency’s payment and negative case error rates based upon a correction to that aspect of the State agency’s QC system which is deficient. If FNS cannot accurately correct the State agency’s deficiency, FNS will assign the State agency a payment error rate or negative case error rate based upon the best information available. After consultation with the State agency, the assigned payment error rate will then be used in the liability determination. After consultation with the State agency, the assigned negative case error rate will be the official State negative case error rate for any purpose. State agencies shall have the right to appeal assessment of an error rate in this situation in accordance with the procedures of Part 283 of this chapter.
(iii) Should a State agency fail to complete 98 percent of its required sample size, FNS shall adjust the State agency’s regressed error rates using the following equations:
(A) r
(B) r
(c) FNS Time frames for completing case review process, arbitration, and issuing error rates. The case review process and the arbitration of all difference cases shall be completed by May 31 following the end of the fiscal year. FNS shall determine and announce the national average payment and negative case error rates for the fiscal year by June 30 following the end of the fiscal year. At the same time FNS shall notify all State agencies of their individual payment and negative case error rates and payment error rate liabilities, if any. FNS shall provide a copy of each State agency’s notice of potential liability to its respective chief executive officer and legislature. FNS shall initiate collection action on each claim for such liabilities before the end of the fiscal year following the reporting period in which the claim arose unless an appeal relating to the claim is pending. Such appeals include administrative and judicial appeals pursuant to Section 14 of the Food and Nutrition Act. While the amount of a State’s liability may be recovered through offsets to their letter of credit as identified in § 277.16(c) of this chapter, FNS shall also have the option of billing a State directly or using other claims collection mechanisms authorized under the Debt Collection Improvement Act of 1996 (Pub. L. 104-134) and the Federal Claims Collection Standards (31 CFR Parts 900-904), depending upon the amount of the State’s liability. FNS is not bound by the time frames referenced in paragraph (c) of this section in cases where a State fails to submit QC data expeditiously to FNS and FNS determines that, as a result, it is unable to calculate the State’s payment error rate and payment error rate liability within the prescribed time frame.
(d) State agencies’ liabilities for payment error rates. At the end of each fiscal year, each State agency’s payment error rate over the entire fiscal year will be computed and evaluated to determine whether the payment error rate goal (national performance measure) established in paragraph (d)(1) of this section has been met. Each State agency that fails to achieve its payment error rate goal during a fiscal year shall be liable as specified in the paragraph (d)(2) of this section.
(1) National performance measure. FNS shall announce a national performance measure not later than June 30 after the end of the fiscal year. The national performance measure is the sum of the products of each State agency’s error rate multiplied by that State agency’s proportion of the total value of national allotments issued for the fiscal year using the most recent issuance data available at the time the State agency is notified of its payment error rate. Once announced, the national performance measure for a given fiscal year will not be subject to administrative or judicial appeal.
(2) Liability. For fiscal year 2003 and subsequent years, liability for payment shall be established whenever there is a 95 percent statistical probability that, for the second or subsequent consecutive fiscal year, a State agency’s payment error rate exceeds 105 percent of the national performance measure. The amount of the liability shall be equal to the product of the value of all allotments issued by the State agency in the second (or subsequent consecutive) fiscal year; multiplied by the difference between the State agency’s payment error rate and 6 percent; multiplied by 10 percent.
(3) Right to appeal payment error rate liability. Determination of a State agency’s payment error rate or whether that payment error rate exceeds 105 percent of the national performance measure shall be subject to administrative or judicial review only if a liability amount is established for that fiscal year. Procedures for good cause appeals of excessive payment error rates are addressed in paragraph (f) of this section. The established national performance measure is not subject to administrative or judicial appeal, nor is any prior fiscal year payment error rate subject to appeal as part of the appeal of a later fiscal year’s liability amount. However, State agencies may address matters related to good cause in an immediately prior fiscal year that impacted the fiscal year for which a liability amount has been established. The State agency will need to address how year 2 was impacted by the event(s) in the prior year.
(4) Relationship to warning process and negligence. (i) States’ liability for payment error rates as determined above in paragraphs (d)(1) through (d)(3) of this section are not subject to the warning process of § 276.4(d) of this chapter.
(ii) FNS shall not determine negligence (as described in § 276.3 of this chapter) based on the overall payment error rate for issuances to ineligible households and overissuances to eligible households in a State or political subdivision thereof. FNS may only establish a claim under § 276.3 of this chapter for dollar losses from failure to comply, due to negligence on the part of the State agency (as defined in § 276.3 of this chapter), with specific certification requirements. Thus, FNS will not use the result of States’ QC reviews to determine negligence.
(iii) Whenever a State is assessed a liability amount for an excessive payment error rate, the State shall have the right to request an appeal in accordance with procedures set forth in part 283 of this chapter. While FNS may determine a State to be liable for dollar loss under the provisions of this section and the negligence provisions of § 276.3 of this chapter for the same period of time, FNS shall not bill a State for the same dollar loss under both provisions. If FNS finds a State liable for dollar loss under both the QC liability system and the negligence provisions, FNS shall adjust the billings to ensure that two claims are not made against the State for the same dollar loss.
(e) Liability amount determinations. (1) FNS shall provide for each State agency whose payment error rate subjects it to a liability amount the following determinations, each expressed as a percentage of the total liability amount. FNS shall:
(i) Require the State agency to invest up to 50 percent of the liability in activities to improve program administration (new investment money shall not be matched by Federal funds) and
(ii) Designate up to 50 percent of the liability as “at-risk” for repayment if a liability is established based on the State agency’s payment error rate for the subsequent fiscal year, or
(iii) Choose any combination of these options.
(2) Once FNS determines the percentages in accordance with paragraphs (e)(1)(i) through (e)(1)(iv) of this section, the amount assigned as at-risk is not subject to settlement negotiation between FNS and the State agency and may not be reduced unless an appeal decision revises the total dollar liability. FNS and the State agency shall settle any waiver percentage amount or new investment percentage amount before the end of the fiscal year in which the liability amount is determined. The determination of percentages for waiver, new investment, and/or at-risk amounts by the Department is not appealable. Likewise, a settlement of the waiver and new investment amounts cannot be appealed.
(f) Good cause. When a State agency with otherwise effective administration exceeds the tolerance level for payment errors as described in this section, the State agency may seek relief from liability claims that would otherwise be levied under this section on the basis that the State agency had good cause for not achieving the payment error rate tolerance. State agencies desiring such relief must file an appeal with the Department’s Administrative Law Judge (ALJ) in accordance with the procedures established under part 283 of this chapter. Paragraphs (f)(1) through (f)(5) of this section describe the unusual events that are considered to have a potential for disrupting program operations and increasing error rates to an extent that relief from a resulting liability amount or increased liability amount is appropriate. The occurrence of an event(s) does not automatically result in a determination of good cause for an error rate in excess of the national performance measure. The State agency must demonstrate that the event had an adverse and uncontrollable impact on program operations during the relevant period, and the event caused an uncontrollable increase in the error rate. Good cause relief will only be considered for that portion of the error rate/liability amount attributable to the unusual event. The following are unusual events which State agencies may use as a basis for requesting good cause relief and specific information that must be submitted to justify such requests for relief:
(1) Natural disasters and civil disorders. Natural disasters such as those under the authority of The Disaster Relief and Emergency Assistance Amendments of 1988 (Pub. L. 100-707), which amended The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Pub. L. 93-288), or civil disorders that adversely affect program operations.
(i) When submitting a request for good cause relief based on this example, the State agency shall provide the following information:
(A) The nature of the disaster(s) (e.g., a tornado, hurricane, earthquake, flood, etc.) or civil disorder(s) and evidence that the President has declared a disaster;
(B) The date(s) of the occurrence;
(C) The date(s) after the occurrence when program operations were affected;
(D) The geographic extent of the occurrence (i.e., the county or counties where the disaster occurred);
(E) The proportion of the Supplemental Nutrition Assistance Program caseload whose management was affected;
(F) The reason(s) why the State agency was unable to control the effects of the disaster on program administration and errors.
(G) The identification and explanation of the uncontrollable nature of errors caused by the event (types of errors, geographic location of the errors, time period during which the errors occurred, etc.).
(H) The percentage of the payment error rate that resulted from the occurrence and how this figure was derived; and
(I) The degree to which the payment error rate exceeded the national performance measure in the subject fiscal year.
(ii) (A) The following criteria and methodology will be used to assess and evaluate good cause in conjunction with the appeals process, and to determine that portion of the error rate/liability amount attributable to the uncontrollable effects of a disaster or civil disorder:
(1) Geographical impact of the disaster;
(2) State efforts to control impact on program operations;
(3) The proportion of Supplemental Nutrition Assistance Program caseload affected; and/or
(4) The duration of the disaster and its impact on program operations.
(B) Adjustments for these factors may result in a waiver of all, part, or none of the liability amount for the applicable period. As appropriate, the waiver amount will be adjusted to reflect States’ otherwise effective administration of the program based upon the degree to which the error rate exceeds the national performance measure. For example, a reduction in the waiver amount may be made when a State agency’s recent error rate history indicates that even absent the events described the State agency would have exceeded the national performance measure in the review period.
(iii) If a State agency has provided insufficient information to determine a waiver amount for the uncontrollable effects of a natural disaster or civil disorder using factual analysis, the waiver amount shall be evaluated using the following formula and methodology which measures both the duration and intensity of the event. Duration will be measured by the number of months the event had an adverse impact on program operations. Intensity will be a proportional measurement of the issuances for the counties affected to the State’s total issuance. This ratio will be determined using issuance figures for the first full month immediately preceding the disaster. This figure will not include issuances made to households participating under disaster certification authorized by FNS and already excluded from the error rate calculations under § 275.12(g)(2)(vi). The counties considered affected will include counties where the disaster/civil disorder occurred, and any other county that the State agency can demonstrate had program operations adversely impacted due to the event (such as a county that diverted significant numbers of Supplemental Nutrition Assistance Program certification or administrative staff). The amount of the waiver of liability will be determined using the linear equation W = Ia/Ib × [M/12 or Mp/18] × L, where Ia is the issuance for the first full month immediately preceding the unusual event for the county affected; Ib is the State’s total issuance for the first full month immediately preceding the unusual event; M/12 is the number of months in the subject fiscal year that the unusual event had an adverse impact on program operations; Mp/18 is the number of months in the last half (April through September) of the prior fiscal year that the unusual event had an adverse impact on program operations; L is the total amount of the liability for the fiscal year. Mathematically this formula could result in a waiver of more than 100 percent of the liability amount; however, no more than 100 percent of a State’s liability amount will be waived for any one fiscal year. Under this approach, unless the State agency can demonstrate a direct uncontrollable impact on the error rate, the effects of disasters or civil disorders that ended prior to the second half of the prior fiscal year will not be considered.
(2) Strikes. Strikes by State agency staff necessary to determine Supplemental Nutrition Assistance Program eligibility and process case changes.
(i) When submitting a request for good cause relief based on this example, the State agency shall provide the following information:
(A) Which workers (i.e., eligibility workers, clerks, data input staff, etc.) and how many (number and percentage of total staff) were on strike or refused to cross picket lines;
(B) The date(s) and nature of the strike (i.e., the issues surrounding the strike);
(C) The date(s) after the occurrence when program operations were affected;
(D) The geographic extent of the strike (i.e., the county or counties where the strike occurred);
(E) The proportion of the Supplemental Nutrition Assistance Program caseload whose management was affected;
(F) The reason(s) why the State agency was unable to control the effects of the strike on program administration and errors;
(G) Identification and explanation of the uncontrollable nature of errors caused by the event (types of errors, geographic location of the errors, time period during which the errors occurred, etc.);
(H) The percentage of the payment error rate that resulted from the strike and how this figure was derived; and
(I) The degree to which the payment error rate exceeded the national performance measure in the subject fiscal year.
(ii) (A) The following criteria shall be used to assess, evaluate and respond to claims by the State agency for a good cause waiver of a liability amount in conjunction with the appeals process, and to determine that portion of the error rate/liability amount attributable to the uncontrollable effects of the strike:
(1) Geographical impact of the strike;
(2) State efforts to control impact on program operations;
(3) The proportion of Supplemental Nutrition Assistance Program caseload affected; and/or
(4) The duration of the strike and its impact on program operations.
(B) Adjustments for these factors may result in a waiver of all, part, or none of the liability amount for the applicable period. For example, the amount of the waiver might be reduced for a strike that was limited to a small area of the State. As appropriate, the waiver amount will be adjusted to reflect States’ otherwise effective administration of the program based upon the degree to which the error rate exceeded the national performance measure.
(iii) If a State agency has provided insufficient information to determine a waiver amount for the uncontrollable effects of a strike using factual analysis, a waiver amount shall be evaluated by using the formula described in paragraph (f)(1) of this section. Under this approach, unless the State agency can demonstrate a direct uncontrollable impact on the error rate, the effects of strikes that ended prior to the second half of the prior fiscal year will not be considered.
(3) Caseload growth. A significant growth in Supplemental Nutrition Assistance Program caseload in a State prior to or during a fiscal year, such as a 15 percent growth in caseload. Caseload growth which historically increases during certain periods of the year will not be considered unusual or beyond the State agency’s control.
(i) When submitting a request for good cause relief based on this example, the State agency shall provide the following information:
(A) The amount of growth (both actual and percentage);
(B) The time the growth occurred (what month(s)/year);
(C) The date(s) after the occurrence when program operations were affected;
(D) The geographic extent of the caseload growth (i.e. Statewide or in which particular counties);
(E) The impact of caseload growth;
(F) The reason(s) why the State agency was unable to control the effects of caseload growth on program administration and errors;
(G) The percentage of the payment error rate that resulted from the caseload growth and how this figure was derived; and
(H) The degree to which the error rate exceeded the national performance measure in the subject fiscal year.
(ii) (A) The following criteria and methodology shall be used to assess and evaluate good cause in conjunction with the appeals process, and to determine that portion of the error rate/liability amount attributable to the uncontrollable effects of unusual caseload growth:
(1) Geographical impact of the caseload growth;
(2) State efforts to control impact on program operations;
(3) The proportion of Supplemental Nutrition Assistance Program caseload affected; and/or
(4) The duration of the caseload growth and its impact on program operations.
(B) Adjustments for these factors may result in a waiver of all, part, or none of the liability amount for the applicable period. As appropriate, the waiver amount will be adjusted to reflect States’ otherwise effective administration of the program based upon the degree to which the error rate exceeded the national performance measure. For example, a reduction in the waiver amount may be made when a State agency’s recent error rate history indicates that even absent the events described the State agency would have exceeded the national performance measure in the review period. Under this approach, unless the State agency can demonstrate a direct uncontrollable impact on the error rate, the effects of caseload growth that ended prior to the second half of the prior fiscal year will not be considered.
(iii) If the State agency has provided insufficient information to determine a waiver amount for the uncontrollable effects of caseload growth using factual analysis, the waiver amount shall be evaluated using the following five-step calculation:
(A) Step 1—determine the average number of households certified to participate Statewide in the Supplemental Nutrition Assistance Program for the base period consisting of twelve consecutive months ending with March of the prior fiscal year;
(B) Step 2—determine the percentage of increase in caseload growth from the base period (Step 1) using the average number of households certified to participate Statewide in the Supplemental Nutrition Assistance Program for any twelve consecutive months in the period beginning with April of the prior fiscal year and ending with June of the current year;
(C) Step 3—determine the percentage the error rate for the subject fiscal year, as calculated under paragraph (b)(2) of this section, exceeds the national performance measure determined in accordance with paragraph (d)(1) of this section;
(D) Step 4—divide the percentage of caseload growth increase arrived at in step 2 by the percentage the error rate for the subject fiscal year exceeds the national performance measure as determined in step 3; and
(E) Step 5—multiply the quotient arrived at in step 4 by the liability amount for the current fiscal year to determine the amount of waiver of liability.
(iv) Under this methodology, caseload growth of less than 15% and/or occurring in the last three months of the subject fiscal year will not be considered. Mathematically this formula could result in a waiver of more than 100 percent of the liability amount; however, no more than 100 percent of a State’s liability amount will be waived for any one fiscal year.
(4) Program changes. A change in the Supplemental Nutrition Assistance Program or other Federal or State program that has a substantial adverse impact on the management of the Supplemental Nutrition Assistance Program of a State. Requests for relief from errors caused by the uncontrollable effects of unusual program changes other than those variances already excluded by § 275.12(d)(2)(vii) will be considered to the extent the program change is not common to all States.
(i) When submitting a request for good cause relief based on unusual changes in the Supplemental Nutrition Assistance Program or other Federal or State programs, the State agency shall provide the following information:
(A) The type of changes(s) that occurred;
(B) When the change(s) occurred;
(C) The nature of the adverse effect of the changes on program operations and the State agency’s efforts to mitigate these effects;
(D) Reason(s) the State agency was unable to adequately handle the change(s);
(E) Identification and explanation of the uncontrollable errors caused by the changes (types of errors, geographic location of the errors, time period during which the errors occurred, etc.);
(F) The percentage of the payment error rate that resulted from the adverse impact of the change(s) and how this figure was derived; and
(G) The degree to which the payment error rate exceeded the national performance measure in the subject fiscal year.
(ii) (A) The following criteria will be used to assess and evaluate good cause in conjunction with the appeals process and to determine that portion of the error rate/liability amount attributable to the uncontrollable effects of unusual changes in the Supplemental Nutrition Assistance Program or other Federal and State programs:
(1) State efforts to control impact on program operations;
(2) The proportion of Supplemental Nutrition Assistance Program caseload affected; and/or
(3) The duration of the unusual changes in the Supplemental Nutrition Assistance Program or other Federal and State programs and the impact on program operations.
(B) Adjustments for these factors may result in a waiver of all, part, or none of the liability amount for the applicable period. As appropriate, the waiver amount will be adjusted to reflect States’ otherwise effective administration of the program based upon the degree to which the error rate exceeded the national performance measure.
(5) Significant circumstances beyond the control of a State agency. Requests for relief from errors caused by the uncontrollable effect of a significant circumstance other than those specifically set forth in paragraphs (f)(1) through (f)(4) of this section will be considered to the extent that the circumstance is not common to all States, such as a fire in a certification office.
(i) The State agency shall provide the following information when submitting a request for good cause relief based on significant circumstances, the State agency shall provide the following information:
(A) The significant circumstances that the State agency believes uncontrollably and adversely affected the payment error rate for the fiscal year in question;
(B) Why the State agency had no control over the significant circumstances;
(C) How the significant circumstances had an uncontrollable and adverse impact on the State agency’s error rate;
(D) Where the significant circumstances existed (i.e. Statewide or in particular counties);
(E) When the significant circumstances existed (provide specific dates whenever possible);
(F) The proportion of the Supplemental Nutrition Assistance Program caseload whose management was affected;
(G) Identification and explanation of the uncontrollable errors caused by the event (types of errors, geographic location of the errors, time period during which the errors occurred, etc.);
(H) The percentage of the payment error rate that was caused by the significant circumstances and how this figure was derived; and
(I) The degree to which the payment error rate exceeded the national performance measure in the subject fiscal year.
(ii) (A) The following criteria shall be used to assess and evaluate good cause in conjunction with the appeals process, and to determine that portion of the error rate/liability amount attributable to the uncontrollable effects of a significant circumstance beyond the control of the State agency, other than those set forth in paragraph (f)(5) of this section:
(1) Geographical impact of the significant circumstances;
(2) State efforts to control impact on program operations;
(3) The proportion of Supplemental Nutrition Assistance Program caseload affected; and/or
(4) The duration of the significant circumstances and the impact on program operations.
(B) Adjustments for these factors may result in a waiver of all, part, or none of the liability amount for the applicable period. As appropriate, the waiver amount will be adjusted to reflect States’ otherwise effective administration of the program based upon the degree to which the error rate exceeded the national performance measure.
(6) Adjustments. When good cause is found under the criteria in paragraphs (f)(1) through (f)(5) of this section, the waiver amount may be adjusted to reflect States’ otherwise effective administration of the program based upon the degree to which the error rate exceeds the national performance measure.
(7) Evidence. When submitting a request to the ALJ for good cause relief, the State agency shall include such data and documentation as is necessary to support and verify the information submitted in accordance with the requirements of paragraph (f) of this section so as to fully explain how a particular significant circumstance(s) uncontrollably affected its payment error rate.
(8) Finality. The initial decision of the ALJ concerning good cause shall constitute the final determination for purposes of judicial review as established under the provisions of § 283.17 and § 283.20 of this chapter.
(g) Results of appeals on liability amount determinations. (1) If a State agency wholly prevails on appeal and, consequently, its liability amount is reduced to $0 through the appeal, and if the State agency began new investment activities prior to the appeal determination, FNS shall pay to the State agency an amount equal to 50 percent of the new investment amount that was expended by the State agency.
(2) If FNS wholly prevails on a State agency’s appeal, FNS will require the State agency to invest all or a portion of the amount designated for new investment to be invested or to be paid to the Federal government.
(3) If neither the State agency nor FNS wholly prevails on a State agency’s appeal, FNS shall apply the original waiver, new investment, and at-risk percentage determinations to the liability amount established through the appeal. If the State agency began new investment prior to the appeal decision and has already expended more than the amount produced for new investment as a result of the appeal decision, the Department will match the amount of funds expended in excess of the amount now required by the Department for new investment.
(h) New investment requirements. Once FNS has determined the percentage of a liability amount to be invested or following an appeal and recalculation by FNS of an amount to be invested, a State agency shall submit a plan of offsetting investments in program administration activities intended to reduce error rates.
(1) The State agency’s investment plan activity or activities must meet the following conditions to be accepted by the Department:
(i) The activity or activities must be directly related to error reduction in the ongoing program, with specific objectives regarding the amount of error reduction, and type of errors that will be reduced. The costs of demonstration, research, or evaluation projects under sections 17(a) through (c) of the Act will not be accepted. The State agency may direct the investment plan to a specific project area or implement the plan on a Statewide basis. In addition, the Department will allow an investment plan to be tested in a limited area, as a pilot project, if the Department determines it to be appropriate. A request by the State agency for a waiver of existing rules will not be acceptable as a component of the investment plan. The State agency must submit any waiver request through the normal channels for approval and receive approval of the request prior to including the waiver in the investment plan. Waivers that have been approved for the State agency’s use in the ongoing operation of the program may continue to be used.
(ii) The program administration activity must represent a new or increased expenditure. The proposed activity must also represent an addition to the minimum program administration required by law for State agency administration including corrective action. Therefore, basic training of eligibility workers or a continuing correction action from a Corrective Action Plan shall not be acceptable. The State agency may include a previous initiative in its plan; however, the State agency would have to demonstrate that the initiative is entirely funded by State money, represents an increase in spending and there are no remaining Federal funds earmarked for the activity.
(iii) Investment activities must be funded in full by the State agency, without any matching Federal funds until the entire amount agreed to is spent. Amounts spent in excess of the settlement amount included in the plan may be subject to Federal matching funds.
(2) The request shall include:
(i) A statement of the amount of money that is a quality control liability claim that is to be offset by investment in program improvements;
(ii) A detailed description of the planned program administration activity;
(iii) Planned expenditures, including time schedule and anticipated cost breakdown;
(iv) Anticipated impact of the activity, identifying the types of error expected to be affected;
(v) Documentation that the funds would not replace expenditures already earmarked for an ongoing effort; and
(vi) A statement that the expenditures are not simply a reallocation of resources.
(3) A State agency may choose to begin expending State funds for any amount of the liability designated as “new investment” in the liability amount determination prior to any appeal. FNS reserves the right to approve whether the expenditure meets the requirements for new investment. Expenditures made prior to approval by the Department will be subject to approval before they are accepted. Once a new investment plan is approved, the State agency shall submit plan modifications to the Department for approval, prior to implementation.
(4) Each State agency which has part of a liability designated for new investment shall submit periodic documented reports according to a schedule in its approved investment plan. At a minimum, these reports shall contain:
(i) A detailed description of the expenditure of funds, including the source of funds and the actual goods and services purchased or rented with the funds;
(ii) A detailed description of the actual activity; and
(iii) An explanation of the activity’s effect on errors, including an explanation of any discrepancy between the planned effect and the actual effect.
(5) Any funds that the State agency’s reports do not document as spent as specified in the new investment plan may be recovered by the Department. Before the funds are withdrawn, the State agency will be provided an opportunity to provide the missing documentation.
(6) If the funds are recovered, the Department shall charge interest on the funds not spent according to the plan in accordance with paragraph (j) of this section.
(i) At-risk money. If appropriate, FNS shall initiate collection action on each claim for such liabilities before the end of the fiscal year following the reporting period in which the claim arose unless an administrative appeal relating to the claim is pending. Such appeals include administrative and judicial appeals pursuant to Section 14 of the Food and Nutrition Act. If a State agency, in the subsequent year, is again subject to a liability amount based on the national performance measure and the error rate issued to the State agency, the State agency will be required to remit to FNS any money designated as at-risk for the prior fiscal year in accordance with either the original liability amount or a revised liability amount arising from an appeal, as appropriate, within 30 days of the date of the final billing. The requirement that the State agency pay the at-risk amount for the prior year will be held in abeyance pending the outcome of any pending appeal for the subsequent liability. If the subsequent year’s liability is reduced to $0, the at-risk money from for the prior fiscal year will not be required to be paid. If the subsequent year’s liability is not reduced to $0, the State agency will be required to pay the at-risk money within 30 days of the date of the appeal decision. The amount of a State’s at-risk money may be recovered through offsets to the State agency’s letter of credit as identified in § 277.16(c) of this chapter. FNS shall also have the option of billing a State directly or using other claims collection mechanisms authorized under the Debt Collection Improvement Act of 1996 (Pub. L. 104-134) and the Federal Claims Collection Standards (31 CFR Parts 900-904), depending upon the amount of the State’s liability.
(j) Interest charges. (1) To the extent that a State agency does not pay an at-risk amount within 30 days from the date on which the bill for collection is received by the State agency, the State agency shall be liable for interest on any unpaid portion of such claim accruing from the date on which the bill for collection was received by the State agency. If the State agency is notified that it failed to invest funds in accordance with an approved new investment plan, the State agency has 30 days from the date of receipt of notification of non-expenditure of new investment funds to pay the Department the amount of funds not so invested. If the State agency does not pay the Department the amount of funds not invested within 30 days from the date of receipt of the notification of non-expenditure, the State agency shall be liable for interest on the non-expended funds from the date on which the notification was received by the State agency. If the State agency agrees to pay the claim through reduction in Federal financial participation for administrative costs, this agreement shall be considered to be paying the claim. If the State agency appeals such claim (in whole or in part), the interest on any unpaid portion of the claim shall accrue from the date of the decision on the administrative appeal, or from a date that is one year after the date the bill is received, whichever is earlier, until the date the unpaid portion of the payment is received.
(2) A State agency may choose to pay the amount designated as at-risk prior to resolution of any appeals. If the State agency pays such claim (in whole or in part) and the claim is subsequently overturned or adjusted through administrative or judicial appeal, any amounts paid by the State agency above what is actually due shall be promptly returned with interest, accruing from the date the payment was received until the date the payment is returned.
(3) Any interest assessed under paragraph (j)(1) of this section shall be computed at a rate determined by the Secretary based on the average of the bond equivalent of the weekly 90-day Treasury bill auction rates during the period such interest accrues. The bond equivalent is the discount rate (i.e., the price the bond is actually sold for as opposed to its face value) determined by the weekly auction (i.e., the difference between the discount rate and face value) converted to an annualized figure. The Secretary shall use the investment rate (i.e., the rate for 365 days) compounded in simple interest for the period for which the claim is not paid. Interest billings shall be made quarterly with the initial billing accruing from the date the interest is first due. Because the discount rate for Treasury bills is issued weekly, the interest rate for State agency claims shall be averaged for the appropriate weeks.
§ 275.24 High performance bonuses.
(a) General rule. (1) FNS will award bonuses totaling $48 million for each fiscal year to State agencies that show high or improved performance in accordance with the performance measures under paragraph (b) of this section.
(2) FNS will award the bonuses no later than September 30th of the fiscal year following the performance measurement year.
(3) A State agency is not eligible for a bonus payment in any fiscal year for which it has a liability amount established as a result of an excessive payment error rate in the same year. If a State is disqualified from receiving a bonus payment under this paragraph (a)(3), and the State is not tied for a bonus, the State with the next best performance will be awarded a bonus payment.
(4) The determination whether, and in what amount, to award a performance bonus payment is not subject to administrative or judicial review.
(5) In determining the amount of the award, FNS will first award a base amount of $100,000 to each State agency that is an identified winner in each category. Subsequently, FNS will divide the remaining money among the States in each category (see paragraph (b) of this section) in proportion to the size of their caseloads (the average number of households per month for the fiscal year for which performance is measured).
(6) A State cannot be awarded two bonuses in the same category; the relevant categories are payment accuracy (which is outlined in paragraph (b)(1) of this section), negative error rate (which is outlined in paragraph (b)(2) of this section), or program access index (which is outlined in paragraph (b)(3) of this section). If a State is determined to be among the best and the most improved in a category, it will be awarded a bonus only for being the best. The next State in the best category will be awarded a bonus as being among the best States.
(7) Where there is a tie to the fourth decimal point for the categories outlined in paragraphs (b)(1) through (b)(4) of this section, FNS will add the additional State(s) into the category and the money will be divided among all the States in accordance with paragraph (a)(5) of this section.
(8) Bonus award money shall be used only on SNAP-related expenses including, but not limited to, investments in technology; improvements in administration and distribution; and actions to prevent fraud, waste and abuse.
(i) Bonus payments shall not be used for household benefits, including incentive payments.
(ii) State agency awardees shall submit their intended spending plans of bonus payments to FNS to verify appropriate use.
(b) Performance measures. FNS will measure performance by and base awards on the following categories of performance measures:
(1) Payment accuracy. FNS will divide $24 million among the 10 States with the lowest and the most improved combined payment error rates as specified in paragraphs (b)(1)(i) and (b)(1)(ii) of this section.
(i) Excellence in payment accuracy. FNS will provide bonuses to the 7 States with the lowest combined payment error rates based on the validated quality control payment error rates for the performance measurement year as determined in accordance with this part.
(ii) Most improved in payment accuracy. FNS will provide bonuses to the 3 States with the largest percentage point decrease in their combined payment error rates based on the comparison of the validated quality control payment error rates for the performance measurement year and the previous fiscal year, as determined in accordance with this part.
(2) Negative error rate. FNS will divide $6 million among the 6 States with the lowest and the most improved negative error rates as specified in paragraphs (b)(2)(i) and (b)(2)(ii) of this section.
(i) Lowest negative error rate. FNS will provide bonuses to the 4 States with the lowest negative error rates based on the validated quality control negative error rates for the performance year as determined in accordance with this part.
(ii) Most improved negative error rate. FNS will provide bonuses to the 2 States with the largest percentage point decrease in their negative error rates, based on the comparison of the performance measurement year’s validated quality control negative error rates with those of the previous fiscal year, as determined in accordance with this part. A State agency is not eligible for a bonus under this criterion if the State’s negative error rate for the fiscal year is more than 50 percent above the national average.
(3) Program access index (PAI). FNS will divide $12 million among the 8 States with the highest and the most improved level of participation as specified in paragraphs (b)(3)(i) through (b)(3)(iii) of this section. The PAI is the ratio of participants to persons with incomes below 125 percent of poverty, as calculated in accordance with paragraph (b)(3)(iii) of this section (the PAI was formerly known as the participant access rate (PAR)).
(i) High program access index. FNS will provide bonuses to the 4 States with the highest PAI as determined in accordance with paragraph (b)(3)(iii) of this section.
(ii) Most improved program access index. FNS will provide bonuses to the 4 States with the most improved PAI as determined in accordance with paragraph (b)(3)(iii) of this section.
(iii) Data. For the number of participants (numerator), FNS will use the administrative annual counts of participants minus new participants certified under special disaster program rules by State averaged over the calendar year. For the number of people below 125 percent of poverty (denominator), FNS will use the Census Bureau’s March Supplement to the Current Population Survey’s (CPS) count of people below 125 percent of poverty for the same calendar year. FNS will reduce the count in each State where a Food Distribution Program on Indian Reservations (FDPIR) program is operated by the administrative counts of the number of individuals who participate in this program averaged over the calendar year. FNS will reduce the count in California by the Census Bureau’s percentage of people below 125% of poverty in California who received Supplemental Security Income in the previous year. FNS reserves the right to use data from the American Community Survey (ACS) in lieu of the CPS, and to use the count of people below 130 percent of poverty, should these data become available in a timely fashion and prove more accurate. Such a substitution would apply to all States.
(4) Application processing timeliness. FNS will divide $6 million among the 6 States with the highest percentage of timely processed applications.
(i) Data. FNS will use quality control data to determine each State’s rate of application processing timeliness.
(ii) Timely processed applications. A timely processed application is one that provides an eligible applicant the “opportunity to participate” as defined in § 274.2 of this chapter, within thirty days for normal processing or 7 days for expedited processing. New applications that are processed outside of this standard are untimely for this measure, except for applications that are properly pended in accordance with § 273.2(h)(2) of this chapter because verification is incomplete and the State agency has taken all the actions described in § 273.2(h)(1)(i)(C) of this chapter. Such applications will not be included in this measure. Applications that are denied will not be included in this measure.
(iii) Evaluation of applications. Only applications that were filed on or after the beginning of the performance measurement (fiscal) year will be evaluated under this measure.
PART 276—STATE AGENCY LIABILITIES AND FEDERAL SANCTIONS
§ 276.1 Responsibilities and rights.
(a) Responsibilities. (1) State agencies shall be responsible for establishing and maintaining secure control over coupons and cash for which the regulations designate them accountable. Except as otherwise provided in these regulations, any shortages or losses of coupons and cash shall strictly be a State agency liability and the State agency shall pay to FNS, upon demand, the amount of the lost or stolen coupons or cash, regardless of the circumstances.
(2) State agencies shall be responsible for preventing losses or shortages of Federal funds in the issuance of benefits to households participating in the Program. FNS shall strictly hold State agencies liable for all losses, thefts and unaccounted shortages that occur during issuance, unless otherwise specified. Issuance functions begin with the State agency’s creation of a record-for-issuance to generate each month’s issuances from the master issuance file. Shortages or losses which result from any functions that occur prior to the creation of the record-for-issuance are subject to either paragraph (a)(3) of this section or subpart C—Quality Control (QC) Reviews, of part 275—Performance Reporting System.
(3) State agencies shall be responsible for preventing losses of Federal funds in the certification of households for participation in the Program. If FNS makes a determination that there has been negligence or fraud on the part of a State agency in the certification of households for participation in the Program, FNS is authorized to bill the State agency for an amount equal to the amount of coupons issued as a result of the negligence or fraud.
(4) State agencies shall be responsible for efficiently and effectively administering the Program by complying with the provisions of the Act, the regulations issued pursuant to the Act, and the FNS-approved State Plan of Operation. A determination by FNS that a State agency has failed to comply with any of these provisions may result in FNS seeking injunctive relief to compel compliance and/or a suspension or disallowance of the Federal share of the State agency’s administrative funds. FNS has the discretion to determine in each instance of noncompliance, whether to seek injunctive relief or to suspend or disallow administrative funds. FNS may seek injunctive relief and suspend or disallow funds simultaneously or in sequence.
(b) Rights. State agencies may appeal all claims brought against them by FNS and shall be afforded an administrative review by a designee of the Secretary as provided in § 276.7. State agencies may seek judicial review of any final administrative determination made by the Secretary’s designee, as provided in § 276.7(j).
§ 276.2 State agency liabilities.
(a) General provisions. Notwithstanding any other provision of this subchapter, State agencies shall be responsible to FNS for any financial losses involved in the acceptance, storage and issuance of coupons. All coupon issuance shall be documented, and the State agency shall make available to the Department all primary documentation (or secondary, if the primary has been inadvertently destroyed) when required to do so. State agencies shall pay to FNS, upon demand, the amount of any such losses.
(b) Coupon shortages, losses, unauthorized issuances, overissuances and undocumented issuances. (1) State agencies shall be strictly liable for:
(i) Coupon shortages and losses that occur any time after coupons have been accepted by receiving points within the State and that occur during storage or the movement of coupons between bulk storage point issuers and claims collection points within the State;
(ii) Losses resulting from authorization documents lost in transit from a manufacturer to the State agency and untransacted authorization documents lost in transit from an issuer to the State agency; and
(iii) The value of coupons overissued and coupons issued without authorization, except for those duplicate issuances in the correct amount that are the result of replacement issuances made in accordance with § 274.6. Overissuances and unauthorized issuances for which State agencies are liable include, but are not limited to: Single unmatched issuances, duplicates made that are not in accordance with § 274.6, and transacted authorization documents that are altered, counterfeit, from out-of-State or expired (including those unsigned by the designated household member and/or not date stamped by the issuer).
(2) Coupon shortages and/or losses for which State agencies shall be held strictly liable include, but are not limited to, the following:
(i) Thefts;
(ii) Embezzlements;
(iii) Cashier errors (e.g., errors by the personnel of issuance offices in the counting of coupon books);
(iv) Coupons lost in natural disasters if a State agency cannot provide reasonable evidence that the coupons were destroyed and not redeemed;
(v) Issuances which cannot be supported by the required documentation;
(vi) Issuances made to households not currently certified;
(vii) Issuance loss during an official investigation, unless the investigation was reported directly to FNS prior to the loss; and
(viii) Unexplained causes.
(3) State agencies shall submit written reports on significant losses unless those losses were investigated by the Office of the Inspector General, USDA.
(4) A State agency shall be held strictly liable for mail issuance losses that are in excess of the tolerance level that corresponds to the preselected reporting unit. Each State agency shall select one of the three following units annually and report the selection as provided in §§ 272.2(a)(2) and 272.2(d)(1)(iii). Where reporting units issue less than $300,000 in mail issuance in a quarter, the State agency shall be liable for all losses in excess of $1,500 for the quarter.
(i) If a State agency elects to report and have liabilities based on an existing county or project area level of mail issuance, then the State agency shall be strictly liable to FNS for the value of all mail issuance losses in excess of five-tenths (.5) percent of the dollar value of each reporting unit’s quarterly mail issuance. This level shall be used if the State agency does not designate one of the three levels herein by May 15, 1989, and by August 15 in years thereafter.
(ii) If a State agency elects to report and have liabilities based on an existing administrative level higher than the county or project area provided in paragraph (b)(4)(i) of this section, but lower than the Statewide level of mail issuance provided in paragraph (b)(4)(iii) of this section, then the State agency shall be strictly liable to FNS for the value of all mail issuance losses in excess of thirty-five hundreths (.35) percent per quarter of the dollar value of each reporting unit’s quarterly mail issuance. State agencies shall not create new administrative units for the sole purpose of reporting mail issuance losses.
(iii) If a State agency elects to report and have liabilities based on a State level of mail issuance, then the State agency shall be strictly liable to FNS for the value of all mail issuance losses in excess of thirty hundreths (.30) percent per quarter of the dollar value of each State agency’s total quarterly mail issuance.
(iv) FNS reserves the right to make all determinations on reporting requirements and on administrative divisions within the State for the purpose of determining and assessing liability for mail issuance losses. FNS also reserves the right to revise such determinations as necessary. Revisions will be communicated to State agencies by FNS. The liability assessment will be based on the revised reporting requirement for the next full fiscal quarter.
(v) For the purpose of this section, “mail issuance” means all original coupon issuances distributed through the mail. “Mail loss” means all replacements of mail issuances except for replacements of returned mail issuances.
(vi) The State agency’s liability shall be computed using data from Form FNS-259, Food Stamp Mail Issuance Report, or alternative reporting document accepted in advance by FNS and the State agency, which is submitted for the quarter for the particular reporting unit agreed to by FNS and the State agency, as provided in §§ 272.2(a)(2) and 272.2(d)(1)(iii).
(5) State agencies shall be held strictly liable for the following overissuances:
(i) The value of overissued coupons issued as a result of a State agency’s failure to comply with a directive issued by FNS in accordance with the provisions of § 271.7, to reduce, suspend or cancel allotments;
(ii) The value of coupons overissued by the State agency as a result of a court order or settlement agreement of a court suit which was not reported to FNS in accordance with the provisions of § 272.4(e); and
(iii) The value of coupons overissued as a result of a State agency entering into an out-of-court settlement of a court suit, the terms of which violate Federal laws or regulations.
(6) Coupon shortages and losses shall be determined from the Form FNS-250, Food Coupon Accountability Report and its supporting documents and from the Form FNS-46, Issuance System Reconciliation Report. Losses of Federal moneys resulting from overissuances shall be determined from sources such as audits, Performance Reporting System Reviews, Federal reviews, investigations and explanatory reports prepared by the State agency.
(7) State agencies shall be held strictly liable for overissuances resulting from Electronic Benefit Transfer system errors and unauthorized account activities. Such overissuances shall include but not be limited to: Overissuances to household accounts that are accessed and used by households, replacement benefits to a household’s account due to unauthorized use of the benefits in a household’s account, benefits drawn from an EBT account after the household has reported that the EBT card is lost or stolen to the State or its agent, overdraft situations due to the use of manual back-up procedures approved by the State agency, overcredits to a retailer account and transfer of funds to an illegitimate account.
(c) Cash Losses. State agencies are liable to FNS for cash losses when money collected by State agencies from recipient claims has been lost, stolen or otherwise not remitted to FNS in accordance with the provision of § 273.18(l). The amount of such losses shall be determined from the sources outlined in paragraph (6) of this section.
(d) State agency payment to FNS. State agencies shall be billed for the exact amount of losses specified in this section. If a State agency fails to pay the billing, FNS shall offset the amount of loss from the State agency’s Letter of Credit in accordance with § 277.16(c).
§ 276.3 Negligence or fraud.
(a) General. If FNS determines that there has been negligence or fraud on the part of the State agency in the certification of applicant households, the State agency shall, upon demand, pay to FNS a sum equal to the amount of coupons issued as a result of such negligence or fraud.
(b) Negligence provisions. (1) FNS may determine that a State agency has been negligent in the certification of applicant households if a State agency disregards SNAP requirements contained in the Food and Nutrition Act of 2008, the regulations issued pursuant to the Act, the FNS-approved State Plan of Operation and a loss of Federal funds results or a State agency implements procedures which deviate from SNAP requirements contained in the Food and Nutrition Act of 2008, the SNAP regulations, the FNS-approved State Plan of Operation without first obtaining FNS approval, and the implementation of the procedures results in a loss of Federal funds.
(2) In computing amounts of losses of Federal funds due to negligence, FNS may use actual, documented amounts or amounts which have been determined through the use of statistically valid projections. When a statistically valid projection is used, the methodology will include a 95 percent, one-sided confidence level.
(3) FNS will base its determinations of negligence on information drawn from any of a number of sources. These information sources include, but are not limited to, State and Federal Performance Reporting reviews, State and Federal audits and investigations, State corrective action plans and any required reports.
(4) Failure by the State agency to remit payment upon demand, within the specified time period, may result in FNS recovering the lost funds through offsets to the State agency’s Letter of Credit, in accordance with § 277.16(c).
(c) Fraud provisions. For purposes of this subsection, the term fraud shall mean the wrongful acquisition or issuance of food coupons by the State agency or its officers, employees or agents, including issuance agents, through false representation or concealment of material facts. State agencies shall be liable to FNS for the amount of loss of Federal funds as a result of fraud. Failure by the State agency to remit payment on demand by FNS, within the time period specified, may result in offsets to the Letter of Credit in accordance with § 277.16(c).
§ 276.4 Suspension/disallowance of administrative funds.
(a) General provisions. (1) FNS shall make determinations of the efficiency and effectiveness of State agencies’ administration of SNAP in accordance with the provisions of § 275.25. When making such determinations, FNS shall use all information that is available relating to State agencies’ administration of the Program. This information includes, but is not limited to, information received from Performance Reporting System reviews, Federal reviews, audits, investigations, corrective action plans, financial management reviews, and the public.
(2) FNS may determine a State agency’s administration of the Program to be inefficient or ineffective if the State agency fails to comply with the SNAP requirements established by the Food and Nutrition Act of 2008, the regulations issued pursuant to the Act, or the FNS-approved State Plan of Operation.
(3) If FNS determines that a State agency’s administration of the Program is inefficient or ineffective, FNS may warn the State agency that a suspension and/or disallowance of administrative funds is being considered. After a State agency receives a warning, FNS may either suspend or disallow administrative funds or take both actions in sequence, depending on the statement in the warning.
(b) Suspension. A suspension of funds is an action by FNS to temporarily withhold all or a portion of the Federal share of one or more of the cost categories of a State agency’s budget for administration of SNAP. Suspensions of funds shall remain in effect until FNS determines that a State agency has taken adequate corrective action to correct the problem causing the suspension, in which event the suspension will be rescinded, or until FNS decides to disallow the suspended funds. FNS shall suspend funds in accordance with § 277.16.
(c) Disallowance. (1) A disallowance of funds is an action by FNS in which reimbursement is denied for otherwise reimbursable administrative costs claimed by a State agency in one or more of the cost categories of a State agency’s budget for Program administration.
(2) In accordance with § 277.16, FNS has the option of disallowing funds in another cost category, or all or a portion of the entire Letter of Credit if the disallowance is based on a finding that the State agency failed to take a required action. FNS may disallow funds after previously suspending such funds or may disallow funds immediately following the expiration of the formal warning under the conditions specified in paragraph (e) of this section.
(d) Warning process. Prior to taking action to suspend or disallow Federal funds, except those funds which are disallowed when a State agency fails to adhere to the cost principles of part 277 and 2 CFR part 200, subparts D and E and USDA implementing regulations 2 CFR part 400 and part 415, FNS shall provide State agencies with written advance notification that such action is being considered. If a State agency does not respond to such an advance notification to the satisfaction of FNS, FNS shall provide the State agency with a formal warning of the possibility of suspension or disallowance action. However, when a State agency fails to meet the objectives in a corrective action plan, FNS may omit the advance notification and immediately issue a formal warning.
(1) Advance notification. Immediately upon becoming aware that a deficiency or deficiencies in a State agency’s administration of the Program may warrant the suspension and/or disallowance of Federal funds, FNS shall advise the State agency in writing of the deficiency and shall provide a specific period of time for correction of such deficiency or deficiencies. The time period allowed the State agency for corrective action will vary according to the nature of the deficiency.
(2) Formal warning. FNS shall issue a formal warning to a State agency if the State fails to correct to the satisfaction of FNS the deficiencies noted in an advance notification within the time specified in the advance notification. FNS may also issue a formal warning to a State agency without first issuing an advance notification if a State agency fails to comply with a corrective action plan.
(i) Formal warnings shall include the following information:
(A) Specific descriptions of the deficiencies, explaining how the State agency is out of compliance with Program requirements;
(B) A Statement as to whether Federal funds will be suspended, disallowed or both, if appropriate;
(C) The amount of Federal funds that will be suspended and/or disallowed or an estimate of the amount if actual cost are unavailable; and
(D) A statement of FNS’ willingness to assist State agencies is resolving the deficiencies.
(ii) A State agency shall have 30 days from receipt of a formal warning to submit evidence that it is in compliance or to submit a corrective action proposal, including the date the State agency will be in compliance.
(iii) When the deficiency cannot be corrected within 30 days of receipt of a formal warning but the State agency submits an acceptable plan for correcting the deficiency, FNS shall hold the formal warning in abeyance pending completion of the actions contained in the plan within the time specified in the plan.
(iv) FNS shall cancel a formal warning when the State agency submits evidence that shows, to the satisfaction of FNS, that the deficiency has been eliminated.
(e) Suspension/disallowance of funds. The Administrator of FNS shall notify State agencies in writing by certified mail or through personal service that administrative funds are being suspended or disallowed. Such action may occur when any of the following situations arise:
(1) A State agency fails to respond to the deficiencies cited in a formal warning within 30 days of receiving the warning;
(2) The response by a State agency to the deficiencies cited in a formal warning is unsatisfactory to FNS; or
(3) A State agency fails to meet the commitments it made in its corrective action proposal and a formal warning had been held in abeyance pending completion of that corrective action.
(f) Appeals. After FNS has taken action to disallow Federal funds the State agency may request an appeal in accordance with the procedures specified in § 276.7.
§ 276.5 Injunctive relief.
(a) General. If FNS determines that a State agency has failed to comply with the Food and Nutrition Act of 2008, the regulations issued pursuant to the Act, or the FNS-approved State Plan of Operations, the Secretary may seek injunctive relief against the State agency to require compliance. The Secretary may request injunctive relief concurrently with negligence billings and sanctions against State agencies affecting administrative funds.
(b) Requesting injunctive relief. Prior to seeking injunctive relief to require compliance, FNS shall notify the State agency of the determination of noncompliance and provide the State agency with a specific period of time to correct the deficiency. The Secretary shall have the discretion to determine the time periods State agencies will have to correct deficiencies. If the State agency does not correct the failure within the specified time period and the Department decides to seek injunctive relief, the Secretary shall refer the matter to the Attorney General with a request that injunctive relief be sought to require compliance.
§ 276.6 Good cause.
(a) When a State agency has failed to comply with provisions of the Act, the regulations issued pursuant to the Act, or the FNS-approved State Plan of Operation, and, thus, is subject to the suspension/disallowance and injunctive relief provisions in §§ 276.4 and 276.5, FNS may determine that the State had good cause for the noncompliance. FNS shall evaluate good cause in these situations on a case-by-case basis, based on any one of the following criteria:
(1) Natural disasters or civil disorders that adversely affect Program operations;
(2) Strikes by State agency staff;
(3) Change in SNAP or other Federal or State programs that result in a substantial adverse impact upon a State agency’s management of the Program; and
(4) Any other circumstances in which FNS determines good cause to exist.
(b) If FNS determines that food cause existed for a State agency’s failure to comply with required provisions and standards, FNS shall not suspend or disallow administrative funds nor seek injunctive relief to compel compliance with the provisions and standards.
§ 276.7 Administrative review process.
(a) General. (1) Whenever FNS asserts a claim against a State agency, the State agency may appeal the claim by requesting an administrative review. FNS claims that may be appealed are billings resulting from financial losses involved in the acceptance, storage, and issuance of coupons (§ 276.2), billings based on charges of negligence or fraud (§ 276.3), and disallowances of Federal funds for State agency failures to comply with the Food and Nutrition Act of 2008, regulations, or the FNS-approved State Plan of Operations (§ 276.4).
(2) A State agency aggrieved by a claim shall have the option of requesting a hearing to present its position in addition to a review of the record and any written submission presented by the State agency. Unless circumstances warrant differently, hearings of appeals of negligence claims and disallowances of Federal funds shall be before an Appeals Board and hearings of appeals of other claims shall be before a single hearing official. In any case, the people reviewing the claim shall be people who were not involved in the decision to file the claim.
(b) Notice of claim. When asserting a claim against a State agency, FNS shall provide the notice to the State agency using any delivery method as long as the method provides evidence of the delivery.
(c) Filing an appeal. A State agency aggrieved by claims asserted against it may file written appeals with the Secretary, U.S. Department of Agriculture, c/o the Executive Secretary, State Food Stamp Appeals Board, Food and Nutrition Service, USDA, Washington, DC 20250, requesting an opportunity to present information in support of its position. The State agency shall attach a copy of the FNS claim to its appeal. Appeals must be filed with the Executive Secretary or postmarked within 10 days of the date of delivery of the notice of claim. If the State agency does not appeal within the prescribed 10-day period, the FNS decision on the claim shall be final. No extension shall be granted in the time allowed for filing an appeal.
(d) Computation of time. In computing any period of time prescribed or allowed under these procedures, the day of delivery of any notice of action, acknowledgment, or reply shall not be included. The last day of the period so computed shall be included unless it is a Saturday, Sunday or Federal or State holiday. In that case, the period runs until the end of the next day which is not a Saturday, Sunday or Federal or State holiday.
(e) Stay of administrative action. With one exception, the filing of a timely appeal and request for administrative review shall automatically stay the action of FNS to collect the claim asserted against the State agency until a decision is reached on the acceptability of the appeal, and in the case of an acceptable appeal, until a final determination has been issued. The exceptions to this provision are those claims that are asserted against State agencies due to State agency failure to comply with an order to reduce, suspend or cancel benefits in accordance with § 271.7. In situations where a State agency does not reduce, suspend or cancel benefits as directed and FNS takes action to disallow administrative funds or bill the State agency, the disallowance and/or billing shall remain in effect during the review process. Should the Appeals Board uphold the State agency, all disallowed funds and/or funds collected as a result of the billing shall be restored to the State agency promptly.
(f) Acknowledging an appeal. Upon receipt of an appeal and request for administrative review, the Executive Secretary shall provide the State agency with a written acknowledgment of the appeal, including a statement of whether or not the appeal is timely and can be accepted. A copy of each acknowledgment shall be provided to FNS. The acknowledgment of a timely and acceptable appeal and request for administrative review shall also include a copy of Secretary’s Memorandum No. 2003, Revised, “State Food Stamp Appeals Board,” and the identity of the Appeals Board member(s) designated by the Secretary to review the claim.
(g) Submitting additional information. (1) State agencies shall have 30 days from their request for an appeal to submit five sets of the following information to the Executive Secretary of the Appeals Board:
(i) A clear, concise identification of the issue or issues in dispute;
(ii) The State agency’s position with respect to the issue or issues in dispute;
(iii) The pertinent facts and reasons in support of the State agency’s position with respect to the issue or issues in dispute;
(iv) All pertinent documents, correspondence and records which the State agency believes are relevant and helpful toward a more thorough understanding of the issue or issues in dispute;
(v) The relief sought by the State agency;
(vi) The identity of the person(s) presenting the State agency’s position when a hearing is involved; and
(vii) A list of prospective State agency witnesses when a hearing is involved.
(2) At the request of the Executive Secretary, FNS shall promptly submit five complete sets of all documents, correspondence and records compiled by FNS in support of its claim.
(3) The Executive Secretary shall provide each person hearing an appeal and FNS with a complete set of the State agency information when it is received. The Executive Secretary shall also provide each person hearing an appeal and the State agency with a complete set of the information supplied by FNS when it is received.
(h) Scheduling and conducting hearings. When a hearing is afforded, the Appeals Board or hearing official has up to 60 days from receipt of the State agency’s information, outlined in paragraph (g) of this section, to schedule and conduct the hearing. The Executive Secretary shall advise the State agency of the time, date and location of the hearing at least 10 days in advance of the hearing. The State agency is solely responsible for ensuring the attendance of all State agency witnesses at the hearing.
(1) A hearing is an informal proceeding designed to permit the State agency an opportunity to present its position before a neutral third party. Because the final determination is subject to judicial review and trial de novo, the Appeals Board and hearing official shall not be bound by the rules of civil procedure applicable in the court or by the adjudicatory requirements of the Administrative Procedures Act.
(2) The Appeals Board Chairman, his designee or the hearing official is the presiding officer at the hearing. The presiding officer shall have full authority to ensure a fair and impartial proceeding, avoid delays, maintain order and decorum, receive evidence, examine witnesses, and otherwise regulate the course of the hearing. The State agency may represent itself at the hearing or be represented by counsel.
(3) The Appeals Board or hearing official shall receive into evidence the oral testimony of State agency witnesses and any documents which are relevant and material. Neither the Department nor FNS is required to present witnesses at the hearing. However, the Department and FNS shall make staff available to provide any information or clarification requested by the Appeals Board or hearing official. Under no circumstances shall the Department or FNS introduce new evidence at the hearing. Departmental and FNS staff, as well as State agency witnesses, shall be subject to examination by the Appeals Board or hearing official. Departmental and FNS staff shall not be subject to cross-examination by State agency representative or counsel. Likewise, State agency witnesses shall not be subject to cross-examination by Departmental or FNS staff. Each side shall be permitted to make a closing statement to the Appeals Board or hearing official upon completion of the taking of evidence and testimony.
(4) FNS and the State agency shall have the opportunity to submit additional written information to the Appeals Board or hearing official within 10 days after the close of the hearing. No new factual material may be introduced except as it directly relates to evidence or testimony presented at the hearing. Five complete sets of such information must be filed with the Executive Secretary or postmarked prior to the expiration of the 10-day deadline for it to be considered.
(5) An official verbatim transcript of each hearing shall be kept on file in the Office of the Executive Secretary for public inspection. A copy shall be furnished to FNS and the State agency. Anyone wishing to purchase a copy may make arrangements to do so with the commercial reporting service involved.
(i) Final determination. (1) When a hearing is afforded, a final determination shall be made within 30 days of the hearing, and the final determination shall take effect 30 days after delivery of the notice of this final decision to the State agency. When a hearing is not held, a final determination shall be made within 30 days after receipt of the State agency’s information. The final determination shall take effect 30 days after delivery of the notice of the final decision to the State agency.
(2) The Appeals Board or hearing official shall either uphold the claim, deny the claim, or adjust the claim downward in such amounts and for such reasons as the Appeals Board or hearing official shall determine and declare. The final determination is not subject to reconsideration.
(j) Judicial review. State agencies aggrieved by the final determination may obtain judicial review and trial de novo by filing a complaint against the United States within 30 days after the date of delivery of the final determination, requesting the court to set aside the final determination. The final determination shall remain in effect during the period the judicial review or any appeal therefrom is pending unless the court temporarily stays such administrative action after a showing that irreparable injury will occur absent a stay and that the State agency is likely to prevail on the merits of the case.
(k) Extension of time. (1) No extension of time shall be permitted a State agency in which to file an initial request for an administrative review. All other requests from the State agency or from FNS for the extension of any deadline contained in § 276.7 of these regulations or imposed by the Appeals Board or hearing official shall be granted only for good cause shown and only when received by the Executive Secretary before the expiration of the particular deadline involved. All requests for an extension shall be in writing. Filing a request for an extension stops the running of the prescribed period of time. When a request for an extension is granted, the requester shall be notified in writing of the amount of additional time granted. When a request is denied for being untimely or for cause, the requester shall be notified and the prescribed period of time shall resume from the date of denial.
(2) The Appeals Board or hearing official may grant itself such additional time as it may reasonably require to complete any of its assigned responsibilities. If the Appeals Board or hearing official does find it necessary to grant itself an extension of time, the Executive Secretary shall notify all parties in writing.
PART 277—PAYMENTS OF CERTAIN ADMINISTRATIVE COSTS OF STATE AGENCIES
§ 277.1 General purpose and scope.
(a) Purpose. This part establishes uniform requirements for the management of administrative funds provided to State agencies and sets forth principles for claiming costs of activities paid with administrative funds under SNAP, and the Food Distribution Program and SNAP on Indian Reservations.
(b) Scope and applicability. Upon compliance with the provisions of this part, payments to State agencies will be made for cost(s) incurred for administration of SNAP and for administration of the Food Distribution Program on Indian Reservations. To ensure maximum practical uniformity, deviation(s) by a State agency from this part may be authorized only when necessary to meet program objectives, to conserve program funds, or when essential to the public interest. However, any deviations from this part must be authorized by the Administrator of FNS.
§ 277.2 Definitions.
For the purpose of this part the term:
Accrued expenditures means the charges incurred by the State agency during a given period for liabilities incurred, benefits received or for goods and services used during this period.
Accrued income means the net value of earnings during a given period resulting from services and goods provided whether or not payment has been realized.
Acquisition cost refers to nonexpendable personal property acquired by purchase and means the net invoice price of the property including any attachments, accessories or auxiliary apparatus necessary to make the property usable for the purpose for which it was acquired. Ancillary charges such as taxes, duty, protection in-transit insurance, freight or installation shall be included in or excluded from acquisition cost in accordance with the State agency’s regular accounting practices.
Approval or authorization by FNS means documentation evidencing consent prior to incurring specific costs.
Applicable credits refer to those receipts or reduction of expenditure-type transactions which offset or reduce expense items allocable to programs as direct or indirect costs. Examples of such transactions are: Purchase discounts; rebates or allowances; recoveries or indemnities on losses; sale of publications, equipment, and scrap; income from personal or incidental services; and adjustments of overpayments or erroneous charges.
Disbursements refers to the transfer of funds by the state agency to pay for Program costs resulting from purchased or expired goods and services.
Expendable personal property means all tangible personal property other than nonexpendable property.
Program funds means money, or property provided in lieu of money, paid for or furnished by FNS to a State agency.
Funds available to the State agency may include contributions from third parties including other Federal agencies.
In-kind contributions refers to the value of noncash contributions. Only when authorized by Federal legislation may property purchased with Federal funds be considered as a State agency’s in-kind contribution. In-kind contributions may be for the value of real and/or nonexpendable personal property or the value of goods and services provided specifically to the project or program.
Nonexpendable personal property means tangible personal property having a useful life of more than one year and an acquisition cost of more than $300 per unit. A State agency may use its own definition of nonexpendable personal property provided that such definition would at least include all tangible personal property as defined herein.
Obligations are the amounts of orders placed, contracts awarded, services received, and similar transactions during a given period which require payment.
Offset means a method to recover funds due FNS through use of the Letter of Credit system. Recovery is accomplished by accounting adjustments to increase Federal funds on hand or disbursed.
OMB means the Office of Management and Budget.
Personal property means property of any kind except real property. It may be tangible (having physical existence) or intangible (having no physical existence) such as patents, inventions and copyrights.
Program means both SNAP and the Food Distribution Program on Indian Reservations.
Program closeout means the process by which FNS determines that all applicable administrative and financial processes have been completed by the State agency and FNS terminates the program in the affected project area or areas.
Project costs are allowable costs as set forth in this part.
Real property means land, land improvements, structure and appurtenances thereto, excluding movable machinery and equipment.
State agency means the organization as defined in 7 CFR 271.1.
State agency costs means the State agency outlays from its funds available for program administration. Unless authorized by Federal legislation, costs charged to other Federal grants or to other Federal contracts may not be considered as State agency costs reimbursable under this authority.
Subagency means the organization or person to which a State agency makes any payment for acquisition of goods, materials or services for use in administering the program and which is accountable to the State agency for the use of funds provided.
Terms and conditions means legal requirements imposed by the Federal Government under statute, regulations, contracts, agreements or otherwise.
Unliquidated obligation represents the amount of obligations not yet paid.
Unobligated balance means the portion of the Federal funds authorized less all allowable costs and unpaid obligations of the State agency.
§ 277.3 Budgets and budget revision procedures.
The preparation, content, submittal, and revision requirements for the State SNAP Budget shall be as specified in § 272.2. The application for funds and budget requirements for the Food Distribution Program on Indian Reservations shall be as specified in § 283.9. State agencies must submit a budget to FNS as part of the State Plan each fiscal year. Upon approval of the budget by FNS, administrative funds will be provided.
§ 277.4 Funding.
(a) General. This section sets allowable cost standards for activities of State agencies in administering the SNAP and Food Distribution Program on Indian Reservations.
(b) Federal reimbursement rate. The base percentage for Federal payment shall be 50 percent of State agencies’ allowable SNAP administrative costs.
(1) Funding of demonstration projects approved by FNS will be at a rate agreed to by FNS in accordance with the requirements outlined in part 282.
(2) The reimbursement of administrative costs to State agencies administering the program on Indian reservations shall be in accordance with the requirements of parts 281 and 283.
(3) The federally funded share of administrative costs, as identified in paragraph (b) of this section may be decreased based upon its payment error rate as described in § 275.23. The rates of Federal funding for the activities identified in paragraphs (b)(1) and (b)(2) of this section shall not be reduced based upon the agency’s payment error rate.
(4) Employment and training program grants, as outlined in § 273.7(d) shall be 100 percent federally-funded.
(5) The Federal reimbursement rate shall include reimbursement for SNAP informational activities, but shall not include the following:
(i) Recruitment activities designed to persuade an individual to apply for SNAP benefits through the use of persuasive practices. Persuasive practices constitute coercing or pressuring an individual to apply, or providing incentives to fill out an application for SNAP benefits. Communicating factual information pertaining to SNAP so that an individual can make an informed choice is not a recruitment activity designed to persuade an individual to apply for SNAP benefits.
(ii) Television, radio or billboard advertisements that are designed to promote SNAP benefits and enrollment, excepting the use of such advertisements for programmatic activities undertaken with respect to benefits provided under § 280.1 of this chapter. This restriction does not apply to radio, television, or billboard advertisements that are not designed to promote SNAP benefits and enrollment and that provide factual information identifying retail food stores where SNAP benefits are accepted.
(iii) Agreements with foreign governments that are designed to promote SNAP benefits and enrollment.
(6) Any entity that receives funding from the programs identified by this section and § 251.4 of this chapter is prohibited from compensating any person for conducting outreach activities relating to participation in, or for recruiting individuals to apply to receive benefits under, the Supplemental Nutrition Assistance Program, if the amount of the compensation would be based on the number of individuals who apply to receive the benefits.
(c) Matching costs. State agency costs for Federal matching funds may consist of:
(1) Charges reported on a cash or accrual basis by the State agency as project costs.
(2) Project costs financed with cash contributed or donated to the State agency by other non-Federal public agencies and institutions.
(3) Project costs represented by services and real or personal property donated by other non-Federal public agencies and institutions.
(d) All cash or in-kind contributions except as provided in paragraph (e) of this section shall be allowable as part of the State agency’s share of program costs when such contributions:
(1) Are verifiable;
(2) Are not contributed for another federally-assisted program, unless authorized by Federal legislation;
(3) Are necessary and reasonable for accomplishment of project objectives;
(4) Are charges that would be allowable under this part;
(5) Are not paid by the Federal Government under another assistance agreement unless authorized under the other agreement and its subject laws and regulations; and
(6) Are in the approved budget.
(e) The value of services rendered by volunteers or the value of goods contributed by third parties, exclusive of the State and Federal agencies, are unallowable for reimbursement purposes under the SNAP. The value of services rendered by volunteers shall be allowable only to meet any matching administrative costs requirements for the Food Distribution Program on Indian Reservations.
(f) The expenses (e.g. travel, lodging, meals) of persons working with volunteer or nonprofit organizations which receive training and assistance pursuant to § 272.4(d)(2) are not allowable.
(g) Investigations of authorized retail or wholesale food concerns when performed in coordination with the USDA Office of Inspector General and FNS shall be funded at the 50 percent Federal reimbursement rate.
§ 277.5 Methods of payment.
(a) This section sets forth FNS methods for authorizing funds for State agencies.
(b) The “Letter of Credit” (LOC) (SF-1193A) is the document by which an official of FNS authorizes a State agency to draw funds from the United States Treasury. This shall be the preferred method of payment for State agencies which receive at least $120,000 per year and meet the requirements prescribed in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(c) State agencies shall request payment(s) by submitting Request for Payment on Letter of Credit and Status of Funds Report (Treasury Form SF-183) to the appropriate United States Treasury Regional Disbursing Office with a copy to FNS.
(d) State agencies not meeting the requirements for the LOC method of payment or failing to meet LOC reporting requirements, including those requiring adjustments to cash balances to liquidate amounts owed to FNS, shall be provided funds by Treasury check in accordance with the provisions of Department of the Treasury Circular 1075.
(e) Payments for proper charges incurred by State agencies will not be withheld unless such payments are suspended or disallowed pursuant to § 277.16. When a payment is withheld, payment adjustments will be made in accordance with § 277.16. When FNS collects an indebtedness, whether due to a disallowance or an offset for amounts which the State agency has been billed but which it has failed to pay without cause acceptable to FNS, FNS shall provide reasonable notice to the State agency, and shall require appropriate accounting adjustment to cash balances for which the State agency is accountable to the Federal government to liquidate the indebtedness.
§ 277.6 Standards for financial management systems.
(a) General. This section prescribes standards for financial management systems in administering program funds by the State agency and its subagencies or contractors.
(b) Responsibilities. Financial management systems for program funds in the State agency shall provide for:
(1) Accurate, current, and complete disclosure of the financial results of program activities in accordance with Federal reporting requirements.
(2) Records which identify the source and application of funds for FNS or State agency activities supporting the administration of the Program. These records shall show authorizations, obligations, unobligated balances, assets, liabilities, outlays and income of the State agency, its sub- agencies and agents.
(3) Records which identify unallowable costs and offsets resulting from FNS or other determinations as specified in § 277.16 and the disposition of these amounts. Accounting procedures must be in effect to prevent a State agency from claiming these costs under ongoing program administrative cost reports.
(4) Effective control and accountability by the State agency for all program funds, property, and other assets acquired with program funds. State agencies shall adequately safeguard all such assets and shall assure that they are used solely for program authorized purposes unless disposition has been made in accordance with § 277.13.
(5) Controls which minimize the time between the receipt of Federal funds from the United States Treasury and their disbursement for program costs. In the Letter of Credit system, the State agency shall make drawdowns from the U.S. Treasury through a U.S. Treasury Regional Disbursing Office as nearly as possible to the time of making the disbursements.
(6) Procedures to determine the reasonableness, allowability, and allocability of costs in accordance with the applicable provisions prescribed in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(7) Support and source documents for costs.
(8) An audit trail including identification of time periods, initial and summary accounts, cost determination and allocation procedures, cost centers or other accounting procedures to support any costs claimed for program administration.
(9) Periodic audits by qualified individuals who are independent of those who maintain Federal program funds as prescribed in § 277.17.
(10) Methods to resolve audit findings and recommendations and to follow up on corrective or preventive actions.
(c) The standards in § 277.6(b) apply to subagencies or contractors involved with program funding.
§ 277.7 Cash depositories.
(a) The term “cash depositories” refers to banks or other institutions which maintain accounts where SNAP funds are deposited and from which withdrawals are made to meet administrative costs of the State agency.
(b) State agencies are encouraged to use minority owned banks to expand opportunities for minority enterprises.
(c) FNS shall not:
(1) Require physical segregation in a cash depository of program funds from other State agency funds.
(2) Establish any eligibility requirements for cash depositories in which program funds are deposited by the State agency.
§ 277.8 Bonding and insurance.
(a) General. In administering FNS program funds, State agencies shall observe their regular requirements and practices with respect to bonding and insurance. FNS will not impose additional bonding and insurance requirements, including fidelity bonding, above those normally required by the State agency.
(b) Loan guarantees. FNS makes no guarantee of any loan or payment of money borrowed by a State agency for administering the program. State agencies shall not make any assurances to any lender or contractor that FNS will furnish funds for loan payments.
§ 277.9 Administrative costs principles.
(a) This section prescribes specific policies and procedures governing State agencies for funding under this part.
(b) The incremental cost of certifying TANF households for SNAP benefits are allowable costs for FNS reimbursement.
(c) When costs for administering the program are claimed for reimbursement, the audit trail must identify the specific activities, locations, or time periods as defined in this section.
(1) Direct cost. Allowable direct costs may be charged to SNAP at the 50 percent or higher funding level as specified in this part.
(2) Indirect cost. Allowable indirect costs may also be claimed at the 50 percent or higher reimbursement funding level as specified in 2 CFR part 200, subpart E, and USDA implementing regulations 2 CFR parts 400 and 415.
(3) Direct and indirect costs claimed for program cost reimbursement must be incurred for the time periods, the activities or for the locations for which the rates are approved by FNS.
(d) All State agency Cost Allocation Plans for determining the costs of administering the program must be approved by the cognizant Federal agency. All Cost Allocation Plans involving program funds shall be submitted to FNS for review.
§ 277.10 Program income.
(a) Program income is gross income resulting from activities financed with program funds. Such earnings exclude interest income but include income from service fees, usage or rental fees, sale of assets purchased with program funds, and royalties on patents and copyrights.
(b) Interest earned on advances of program administrative funds shall be remitted to FNS except for interest earned on advances to States or instrumentalities of a State as provided by the Intergovernmental Cooperation Act of 1968 (Pub. L. 90-577) and advances to tribal organizations under the Indian Self-Determination Act (sections 102 through 104).
(c) Income resulting from the sale of real and personal property whose acquisition cost was borne in whole or in part with Program funds shall be remitted to FNS or applied to the Federal share of current program costs in accordance with § 277.13. All other sales proceeds will be handled in accordance with § 277.13.
(d) Unless there is a prior agreement between FNS and the State agency, the State agency shall have no obligation to FNS with respect to royalties received from copyrights or patents produced as a result of activities financed with program administrative funds.
(e) Any other income earned under activities supported by program administrative funds may be retained by the State agency if they are deducted from the gross program administrative costs for the purposes of determining net costs and FNS’s share of net cost.
(f) State agencies shall record the receipt and expenditure of revenues such as taxes, special assessments, levies, fines, etc., as a part of program fund transactions when such revenues are specifically earmarked for program fund projects.
§ 277.11 Financial reporting requirements.
(a) General. This section prescribes requirements for the State agencies to report financial information to FNS.
(b) Authorized forms and instructions. (1) Only forms specified by this part, or other forms authorized by FNS, may be used for obtaining financial information from State agencies for the program.
(2) All instructions for use in connection with the form specified in § 277.11(c) shall be followed. FNS may prescribe supplementary instructions.
(3) State agencies shall submit the original and two copies of forms required by this section unless FNS approves a waiver of this requirement.
(4) The forms and instructions in this part shall be available to the State agency and to the public upon request to FNS Regional Offices as set out in § 271.6(b).
(c) Financial status report—(1) Form. State agencies shall use the standard Financial Status Report (SF-425, using FNS-778/FNS-778A worksheet) to report program costs.
(2) Frequency. The report (SF-425, using FNS-778/FNS-778A worksheet) shall be required quarterly.
(3) Exceptions. Those State agencies that receive payments under the U.S. Treasury check system shall submit to FNS a Quarterly Report of Federal Cash Transactions (Form SF-272).
(4) Due dates. Quarterly reports shall be due April 30 (for the period January through March), July 30 (April through June), October 30 (July through September), January 30 (October through December). Final reports are due December 30 for all completed Federal fiscal years (October 1 through September 30) or 90 days after termination of Federal financial support. Requests from State agencies for extension of reporting due dates may be approved, if necessary.
(d) Time limit for State agencies to file claims. (1) After the deadline in paragraph (c)(4) of this section for the final SF-425, using FNS-778/FNS-778A worksheet, State agencies shall use the form specified by FNS as needed within three years of the end of the Federal fiscal year to amend a prior expenditure report pertaining to such Federal fiscal year. The three-year reporting deadline may be extended by FNS if litigation, an audit, or a claim is unresolved at the end of the three-year period. The reporting form shall be used to amend prior expenditure reports, and to request reimbursement for any additional funding due, or to pay back to FNS any inadvertent prior overclaim. Requests for reimbursement will only be honored if the claim is filed within the timeframe in paragraph (d)(2) of this section. FNS reserves the right to bill State agencies for amounts due FNS resulting from an overclaim, even if no reporting form has been submitted.
(2) Subject to the availability of funds from the appropriation for the year in which the expenditure was incurred, FNS may reimburse State agencies for an allowable expenditure only if the State agency files a claim with FNS for that expenditure within two years after the calendar quarter in which the State agency (or local agency) incurred the cost. FNS will consider non-cash expenditures such as depreciation to have been made in the quarter the expenditure was recorded in the accounting records of the State agency in accordance with generally accepted accounting principles.
(3) For Automated Data Processing (ADP) expenditures approved under § 277.18(c), subject to the availability of funds and required FNS approval related to the Advance Planning Document, FNS may reimburse State agencies for allowable expenditures at the appropriate rate in effect at the time the equipment or service was received only if the State agency files for a claim with FNS within two years after the calendar quarter in which the cost was incurred. FNS will consider non-cash expenditures such as depreciation to have been made in the quarter the expenditure was recorded in the accounting records of the State agency in accordance with generally accepted accounting principles.
(4) States wishing to request an extension of the deadline in paragraphs (d)(2) and (d)(3) of this section must submit the request in writing to FNS prior to the applicable deadline. The State agency’s request for an extension must include a specific explanation, justification, and documentation of why the claim will be late and when the claim will be filed.
(5) The time limits in paragraphs (d)(2) and (d)(3) of this section will not apply to any of the following:
(i) Any claim for an adjustment to prior year costs previously claimed under an interim rate concept;
(ii) Any claim arising from an audit exception as defined in this section. An audit exception means a proposed adjustment by the Department to any expenditure claimed by a State agency by virtue of a Federal-or State-initiated audit. The audit must comply with the requirements of § 277.17 and 2 CFR part 200, subpart F and Appendix XI, Compliance Supplement and USDA implementing regulations 2 CFR part 400 and part 415, and must have been started within 3 years of the date of submission of the final SF-425, using FNS-778/FNS-778A worksheet of the relevant Federal fiscal year to which it applies.
(iii) Any claim resulting from a court-ordered retroactive payment. However, this provision does not bind FNS to a State or Federal court decision when FNS was not a party to the action;
(iv) Any claim for which FNS determines there was good cause for the State agency’s not filing it within the time limit. Good cause is lateness due to circumstances beyond the State agency’s control such as Acts of God or documented action or inaction of the Federal Government. It does not include neglect or administrative inadequacy on the part of the State, State agency, legislature, or any of their offices or employees.
§ 277.12 Retention and custody of records.
(a) Retention period. All financial records, supporting documents, statistical records, negotiated contracts, and all other records pertinent to program funds shall be maintained for three years from the date of submission of the annual financial status report of the relevant fiscal year to which they apply except that:
(1) If any litigation, claim, or audit is started before the expiration of the three-year period, the applicable records shall be retained until these have been resolved.
(2) In the case of a payment by a State agency to a subagency or contractor using program funds, the State agency, USDA, the Comptroller General of the United States, or any of their duly authorized representatives, shall have access to any book, documents, papers and records of the subagency or contractor which the State agency, USDA, or the Comptroller General of the United States or any of their duly authorized representatives, determine are pertinent to administration of the specific FNS program funds, for the purpose of making audit, examination, excerpts, and transcripts.
(b) Restrictions on public access. Unless required by laws, FNS will not place restrictions on State agencies which limit public access to their records or the records of their subagencies or contractors that are pertinent to the administrative funding provided by FNS except when the State agency can demonstrate that such records must be kept confidential and would have been excepted from disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552) if the records had belonged to FNS.
§ 277.13 Property.
(a) General. This section prescribes policies and procedures governing title, use, disposition of real and personal property for which acquisition costs were borne, in whole or in part, as a direct charge to FNS funds, and ownership rights or intangible personal property developed, in whole or in part, with FNS funds. State agencies may follow their own property management policies and procedures provided they observe the requirements of this section. With respect to property covered by this section, FNS may not impose on State agencies any requirement (including property reporting requirements) not authorized by this section unless specifically required by Federal laws.
(b) Nonexpendable personal property—(1) Title. Title to nonexpendable personal property whose acquisition cost is borne, in whole or in part, by FNS shall vest in the State agency upon acquisition, and shall be subject to the restrictions on use and dispositions set forth in this section.
(2) Use. (i) The State agency shall use the property in the program as long as there is a need for such property to accomplish the purpose of the program.
(ii) When there is no longer a need for the property to accomplish the purpose of the program, the State agency shall use the property where needed in administration of other programs in the following order of priority:
(A) Other federally-funded programs of FNS.
(B) Other federally-funded programs of USDA.
(C) Other federally-funded programs.
(iii) When the State agency no longer has need for such property in any of its federally financed activities, the property may be used for the State agency’s own official activities in accordance with the following standards:
(A) If the property had a total acquisition cost of less than $5,000, the State agency may use the property without reimbursement to FNS.
(B) For all such property not covered under paragraph (b)(2)(iii)(A) of this section, the State agency may retain the property for its own use, provided a fair compensation is made to FNS for the FNS share of the property. The amount of compensation shall be computed by applying the percentage of FNS participation in the cost of the property to the current fair market value of the property.
(3) Disposition. If the State agency has no need for the property, disposition of the property shall be made as follows:
(i) If the property had a total acquisition cost of less than $5,000 per unit, the State agency may sell the property and retain the proceeds.
(ii) If the property had an acquisition cost of $5,000 or more per unit, the State agency shall:
(A) If instructed to ship the property elsewhere, the State agency shall be reimbursed with an amount which is computed by applying the percentage of the State agency’s participation in the cost of the property to the current fair market value of the property, plus any shipping or interim storage costs incurred.
(B) If instructed to otherwise dispose of the property, the State agency shall be reimbursed by FNS for the cost incurred in such disposition.
(C) If disposition or other instructions are not issued by FNS within 120 days of a request from the State agency, the State agency shall sell the property and reimburse FNS an amount which is computed by applying the percentage of FNS participation in the cost of the property to the sales proceeds. The State agency may, however, deduct and retain from FNS’ share $500 or 10 percent of the proceeds, whichever is greater, for the State agency’s selling and handling expenses.
(c) Transfer of title to certain property. (1) Where FNS determines that an item of nonexpendable personal property with an acquisition cost of $5,000 or more which is to be wholly borne by FNS is unique, difficult, or costly to replace, FNS may reserve the right to require the State agency to transfer title of the property to the Federal Government or to a third party named by FNS.
(2) Such reservation shall be subject to the following:
(i) The right to require transfer of title may be reserved only by means of an expressed special condition under which funds were authorized for acquisition of the property, or, if approval for the acquisition of the property is given after the funds are awarded, by means of a written stipulation at the time such approval is given.
(ii) The property must be sufficiently described to enable the State agency to determine exactly what property is involved.
(3) FNS may not exercise the right to reserve until the State agency no longer needs the property in the activity for which it was acquired. Such need shall be assumed to end with termination of the activity in which the property was used unless the State agency continues to use the property in other program-related activities after the termination date and demonstrates to FNS a continued need for such use in the program.
(4) To exercise the right, FNS must issue disposition instructions to the State agency not later than 120 days after the State agency no longer needs the property in the activity for which it was acquired. If instructions are not issued within that time, FNS’s right shall lapse, and the State agency shall act in accordance with the applicable standards in paragraphs (b)(2) and (b)(3) of this section.
(5) The State agency shall be entitled to reimbursement with an amount which is computed by applying the percentages of the State agency’s participation in the acquisition cost of the property to the current fair market value of the property, and for any reasonable shipping and interim storage costs it incurs pursuant to FNS’s disposition instructions.
(d) Property management standards. State agencies’ property management standards for nonexpendable personal property covered by this section shall include the following procedural requirements:
(1) Property records shall be maintained accurately and provide for:
(i) A description of the property.
(ii) Manufacturer’s serial number or other identification number.
(iii) Acquisition date and cost.
(iv) Source of the property.
(v) Percentage of FNS funds used in the acquisition of the property, or sufficient information to be able to compute the percentage, if and when the property is disposed of.
(vi) Location, use and condition of the property.
(vii) Ultimate disposition data including sales price or the method used to determine current fair market value if the State agency reimburses FNS for its share.
(viii) Trade-in value of any property purchased with Federal funds where their trade-in value reduces the acquisition cost of new property.
(2) A physical inventory of property shall be taken and the results reconciled with the property records at least once every two years to verify the existence, current utilization, and continued need for the property.
(3) A control system shall be in effect to ensure adequate safeguards to prevent loss, damage, or theft to the property. Any loss, damage, or theft of nonexpendable personal property shall be investigated and properly documented.
(4) Adequate maintenance procedures shall be implemented to keep the property in good condition.
(5) Proper sales procedures shall be implemented to keep the property in good condition.
(e) Expendable personal property—(1) Title. Title to expendable personal property, whose acquisition cost was borne in whole or in part by FNS, shall vest in the State agency.
(2) Use. The State agency shall use the property in the program as long as there is a need for such property to accomplish the purpose of the program.
(3) Disposition. When there is no longer a need for the property in the program and there is a residual inventory exceeding $5,000 the State agency shall:
(i) Use the property in other federally sponsored projects or programs;
(ii) Retain the property for use on non-federally sponsored activities; or
(iii) Sell it.
(4) Compensation. FNS must be compensated for its share if the alternative in paragraph (e)(3)(i) of this section is not followed. The amount of compensation shall be computed in the same manner as for nonexpendable personal property.
(f) Patents and inventions. If any program activity produced patents, patent rights, processes or inventions in the course of work aided by FNS, such fact shall be promptly and fully reported to FNS. Unless there is prior agreement between the State agency and FNS on disposition of such items, FNS shall determine whether protection on such invention or discovery shall be sought and how the rights in the invention or discovery—including rights under any patent issued thereon—shall be disposed of and administered in order to protect the public interest consistent with “Government Patent Policy” (President’s Memorandum for Heads of Executive Departments and Agencies, August 23, 1971), and State of Government Patent Policy as printed in title 37 CFR, chapters I and II.
(g) Copyrights. When a program activity results in a book or other copyrightable materials, the author or State agency is free to copyright the work, but FNS reserves a royalty-free, nonexclusive and irrevocable right to reproduce, publish or otherwise use and to authorize others to use the work for government purposes. This includes copyrights on ADP software as specified in 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
§ 277.14 Procurement standards.
(a) General. This section establishes standards and guidelines for the procurement of supplies, equipment, construction and other services whose cost is borne in whole or in part by FNS program funds. These standards ensure that such materials are obtained in an effective and economical manner and in compliance with the provisions of applicable Federal law and Executive orders. No additional procurement standards will be imposed by FNS upon State agencies unless specifically required by Federal law, or Executive orders, or authorized by the Administrator for Federal Procurement Policy, Office of Management and Budget.
(1) These standards do not relieve the State agency of any contractual responsibilities under its contracts. The State agency is responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements entered into in support of the program. These include but are not limited to sources evaluations, protests, disputes and claims. FNS shall not substitute its judgment for that of the State agency unless the matter is primarily a Federal concern. Violations of laws shall be referred to the local, State or Federal authority having jurisdiction.
(2) State agencies shall use their own procurement procedures provided that procurements paid in whole or in part with FNS program funds meet the standards set forth in this part.
(b) Review of proposed contracts. State agencies shall submit proposed contracts and related procurement documents to FNS for preaward review and approval when:
(1) The procurement is expected to exceed $10,000 and is to be awarded without competition or only one bid or offer is received in response to solicitation;
(2) The procurement expected to exceed $10,000 specifies a “brand name” product; or
(3) FNS has determined that the State agency’s procurement procedures or operation fails to comply with one or more significant aspects of this section.
(c) Code of conduct. The State agency shall maintain a written code or standards of conduct which shall govern the performance of its officers, employees, or agents engaged in the award and administration of contracts borne in whole or in part with FNS program funds. No employee, officer, or agent of the State agency shall participate in the selection, or in the award or administration of a contract supported in whole or in part by FNS program funds if a conflict of interest, real or apparent, would be involved. Such conflict would arise when:
(1) The employee, officer, or agent;
(2) Any member of his/her immediate family;
(3) His or her partner; or
(4) An organization which employs, or is about to employ, any of the above, has a financial or other interest in the firm selected for award. The State agency’s officers, employees, or agents shall neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, potential contractors, or parties to subagreements. State agencies may set minimum rules where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value. To the extent permitted by State or local law or regulations, such standards of conduct shall provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the State agency’s officers, employees, or agents, or by contractors or their agents.
(d) Procurement procedures. The State agency shall establish procurement procedures which provide that proposed procurement actions shall be reviewed by State agency officials to avoid the purchase of unnecessary or duplicative items. Consideration should be given to consolidation or dividing the purchase into smaller units, to obtain a more economical purchase. Where appropriate, an analysis shall be made of lease versus purchase alternatives, and any other appropriate analyses, to determine which approach would be the most economical. To foster greater economy and efficiency, State agencies are encouraged to enter into State and local intergovernmental agreements for procurement or use of common goods and services.
(e) Contracting with small and minority firms, women’s business enterprises and labor surplus area firms. (1) It is FNS policy to award a fair share of contracts to small and minority business firms. State agencies must take affirmative steps to assure that small and minority businesses are utilized when possible as sources of supplies, equipment, construction and services. State agency affirmative steps shall include the following:
(i) Including qualified small and minority businesses on solicitation lists.
(ii) Assuring that small and minority businesses are solicited whenever they are potential sources.
(iii) When economically feasible, dividing total requirements into smaller tasks or quantities so as to permit maximum small and minority business participation.
(iv) Where the requirement permits, establishing delivery schedules which will encourage participation by small and minority business.
(v) Using the services and assistance of the Small Business Administration, the Office of Minority Business Enterprise of the Department of Commerce and the Community Services Administration, as appropriate.
(vi) If any subcontracts are to be let, requiring the prime contractor to take the affirmative steps in paragraphs (e)(1) (i) through (v) of this section.
(2) State agencies shall take similar appropriate affirmative action in support of women’s business enterprises.
(3) State agencies are encouraged to procure goods and services from labor surplus areas, as defined by the Department of Labor.
(4) FNS shall impose no additional regulations or requirements in the foregoing areas unless specifically mandated by law or Executive order.
(f) Selection procedures. All State agency procurement transactions shall be conducted in a manner that provides maximum open and free competition with this section. Procurement procedures shall not contain features which restrict or eliminate competition. The State agency shall have written selection procedures which shall provide, as a minimum, the following procedural requirements:
(1) Solicitation of offers, whether by competitive sealed bid or competitive negotiation, shall contain a clear and accurate description of the technical requirements for the material, product, or service desired. Descriptions shall not, in competitive procurements, contain features which unduly restrict competition. Descriptions may include a statement of the qualitative nature of the material, product or service desired and, when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. When it is impractical or uneconomical to describe clearly and accurately the technical requirements, a “brand name or equal” description may be used to define the performance or requirements of the material, product or service desired. The specific features of the named brand which must be met by offerors shall be clearly stated. State agencies shall clearly set forth all requirements which offerors must fulfill and all other factors to be used in evaluating bids or proposals.
(2) State agencies shall make awards only to responsible contractors that possess the potential ability to perform successfully under the terms and conditions of a proposed procurement. Consideration shall be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources.
(g) Procurement methods. State agency procurements made in whole or in part with program funds shall be by one of the following methods:
(1) Small purchase procedures are those relatively simple and informal procurement methods that are sound and appropriate for a procurement of services, supplies, or other property, costing in the aggregate not more than $10,000. State agencies shall comply with State or local small purchase dollar limits under $10,000. If small purchase procedures are used for a procurement under the program, price or rate quotations shall be obtained from an adequate number of qualified sources.
(2) In competitive sealed bids (formal advertising), sealed bids are publicly solicited and a firm-fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is lowest in price.
(i) In order for the State agency to use this method of procurement the following conditions, as a minimum, must prevail:
(A) A complete, adequate, and realistic specification or purchase description is available.
(B) Two or more responsible suppliers are willing and able to compete effectively for the State agency’s business.
(C) The procurement lends itself to a firm-fixed-price contract, and selection of the successful bidder can appropriately be made principally on the basis of price.
(ii) If formal advertising is used for a procurement under a grant, the following requirements shall apply:
(A) A sufficient time prior to the date set for opening of bids, bids shall be solicited from an adequate number of known suppliers. In addition, the invitation shall be publicly advertised.
(B) The invitation for bids, including specifications and pertinent attachments, shall clearly define the items or services needed in order for the bidders to properly respond to the invitation.
(C) All bids shall be opened publicly at the time and place stated in the invitation for bids.
(D) A firm-fixed-price contract award shall be made by written notice by the State agency to that responsible bidder whose bid, conforming to the invitation for bids, is lowest. Where specified in the bidding documents, factors such as discounts, transportation costs and life cycle costs shall be considered in determining which bid is lowest. Payment discounts may only be used to determine low bid when prior experience of the State agency indicates that such discounts are generally taken.
(E) Any or all bids may be rejected by the State agency when there are sound documented business reasons in the best interest of the program.
(3) In competitive negotiation, proposals are requested from a number of sources and the Request for Proposal is publicized, negotiations are normally conducted with more than one of the sources submitting offers, and either a fixed-price or cost-reimbursable type contract is awarded, as appropriate. Competitive negotiation may be used if conditions are appropriate for the use of formal advertising. If competitive negotiation is used for procurement under a grant, the following requirements shall apply:
(i) Proposals shall be solicited from an adequate number of qualified sources to permit reasonable competition consistent with the nature and requirements of the procurement. The Request for Proposals shall be publicized and reasonable requests by other sources to compete shall be honored to the maximum extent practicable.
(ii) The Request for Proposal shall identify all significant evaluation factors, including price or cost where required and their relative importance.
(iii) The State agency shall provide procedures for technical evaluation of the proposals received, determinations of responsible offerors for the purpose of written or oral discussions, and selection for contract award.
(iv) Award may be made to the responsible offeror whose proposal will be most advantageous to the State agency, price and other factors considered. Unsuccessful offerors should be notified promptly.
(v) State agencies may utilize competitive negotiation procedures for procurement of architectural/engineering professional services whereby competitors’ qualifications are evaluated and the most qualified competitor is selected subject to negotiation of fair and reasonable compensation.
(4) Noncompetitive negotiation is procurement through solicitation of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate. Noncompetitive negotiation may be used when the award of a contract is infeasible under small purchase, competitive bidding (formal advertising) or competitive negotiation procedures. Awards of contracts by noncompetitive negotiation are limited to the following:
(i) The item is available only from a single source;
(ii) Public exigency or emergency when the urgency for the requirement will not permit a delay incident to competitive procurement;
(iii) FNS authorizes noncompetitive procurement; or
(iv) After solicitation of a number of sources, competition is determined inadequate.
(h) Contract pricing. The cost plus a percentage of cost and percentage of construction cost method(s) of contracting may not be used by a State agency. State agencies shall perform some form of cost or price analysis in connection with every procurement action including contract modifications. Costs or prices based on estimated costs for contracts, paid in whole or in part by FNS program funds, shall be allowed only to the extent that costs incurred or cost estimates included in negotiated prices are consistent with Federal cost principles.
(i) State agency procurement records. State agencies shall maintain records sufficient to detail the significant history of a procurement. These records shall include, but are not necessarily limited to, information pertinent to the rationale for the method of procurement, the selection of contract type, the contract selection or rejection, and the basis for the cost or price.
(j) Contract provisions. In addition to provisions defining a sound and complete procurement contract, State agencies shall include the following contract provisions or conditions in all procurement contracts and subcontracts as required by this provision, Federal law, or FNS:
(1) Contracts other than small purchases shall contain provisions or conditions which will allow for administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as may be appropriate.
(2) All contracts in excess of $10,000 shall contain suitable provisions for termination by the State agency including the manner by which it will be effected and the basis for settlement. In addition, such contracts shall describe conditions under which the contract may be terminated for default as well as conditions where the contract may be terminated because of circumstances beyond the control of the contractor.
(3) All contracts awarded in excess of $10,000 by State agencies and their contractors or subagencies shall contain a provision requiring compliance with Executive Order 11246, entitled “Equal Employment Opportunity,” as amended by Executive Order 11375, and as supplemented in Department of Labor regulations (29 CFR part 60).
(4) All contracts and subcontracts for construction or repair shall include a provision for compliance with the Copeland “Anti-Kickback” Act (18 U.S.C. 874) as supplemented in Department of Labor regulations (29 CFR part 3). This Act provides that each contractor or subagency shall be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he is otherwise entitled. The State agency shall report all suspected or reported violations to FNS.
(5) Where applicable, all contracts awarded by State agencies and subagencies in excess of $2,000 for construction contracts in excess of $2,500 for other contracts which involve the employment of mechanics or laborers shall include a provision for compliance with sections 103 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327 through 330) as supplemented by Department of Labor regulations (29 CFR part 5). Under section 103 of the Act, each contractor shall be required to compute the wages of every mechanic and laborer on the basis of a standard work day of 8 hours and a standard work week of 40 hours. Work in excess of the standard work day or work week is permissible provided that the work is compensated at a rate of not less than 1
(6) The contract shall include notice of FNS requirements and regulations pertaining to reporting and print rights under any contract involving research, developmental, experimental, or demonstration work with respect to any discovery or invention which arises or is developed in the course of or under such contract, and of FNS requirements and regulations pertaining to copyrights and rights to data so derived.
(7) All negotiated contracts (except those awarded by small purchases procedures) awarded by State agencies shall include a provision to the effect that the State agency, FNS, the Comptroller General of the United States, or any of their duly authorized representatives, shall have access to any books, documents, papers, and records of the contractor which are directly pertinent to that specific contract, for the purpose of making audit, examination, excerpts, and transcriptions. State agencies shall require contracts to maintain all required records for three years after the State agency makes final payments or all other pending matters are closed, whichever is last.
(8) Contracts, subcontracts, and subgrants of amounts in excess of $100,000 shall contain a provision which requires compliance with all applicable standards, orders, or requirements issued under section 306 of the Clean Air Act, section 508 of the Clean Water Act, Executive Order 11738, and Environmental Protection Agency (EPA) regulations, which prohibit the use under nonexempt Federal contract, grants, or loans of facilities included on the EPA List of Violating Facilities. The provision shall require reporting of violations to the FNS and to the USEPA Assistant Administrator for Enforcement.
(9) Contracts shall recognize mandatory standards and policies relating to energy efficiency which are contained in the State energy conservation plan issued in compliance with the Energy Policy and Conservation Act (Pub. L. 94-165).
(k) Contract administration. State agencies shall maintain a contract administration system insuring that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.
§ 277.15 [Reserved]
§ 277.16 Suspension, disallowance and program closeout.
(a) Suspension. When a State agency has materially failed to comply with any of the provisions contained in the Act, regulations, or FNS-approved State Plan of Operation, FNS may, after written notification to the State agency, temporarily withhold some or all Federal reimbursements for costs of administration of SNAP in accordance with § 276.4. Adjustments will be made either by adjusting the Letter of Credit authorization or by not allowing the State agency to withdraw funds.
(b) Disallowance. (1) FNS may disallow costs in accordance with part 276 and effect nonpayment for some or all costs incurred by a State agency which are normally allowable but are determined by FNS to be nonreimbursable because the State agency has failed to comply with any of the provisions contained in the Act, regulations, or FNS-approved State Plan of Operation.
(2) FNS may also disallow costs and institute recovery of Federal funds when a State agency fails to adhere to the cost principles of this part and 2 CFR part 200, subpart D and USDA implementing regulations 2 CFR part 400 and part 415.
(c) Offsets to the Letter of Credit. (1) FNS may recover funds when owed by the State agency to FNS through offsets to the Letter of Credit. Offsets shall include:
(i) Costs determined by FNS to be disallowed under the provisions of this part;
(ii) Unallowable costs resulting from audit or investigation findings;
(iii) Amounts owed which have been billed to the State agency and which the State agency has failed to pay without cause acceptable to FNS; or
(iv) Amounts owed to FNS for title IV reimbursements and recipient claims collections which were reported on the FNS-209 and which the State agency has failed to pay.
(2) The amounts recovered through the offset procedure should be in one lump sum. If recovery of funds through the offset procedure is not possible in one lump sum, FNS shall make appropriate adjustments to recover the funds in not more than three fiscal years.
(d) Program transfer or termination. (1) When termination or transfer of a State program has been agreed upon by FNS, the following closeout procedure shall be observed:
(i) Upon request, FNS shall make or arrange for prompt payment to the State agency for allowable costs not covered by previous payments.
(ii) The State agency shall immediately refund to FNS any unobligated balance of cash withdrawn by the State agency for the administration of the program in the affected State or Indian reservation.
(iii) The State agency shall submit to FNS within 90 days after the date of termination of the program, all required financial, performance, and other reports. FNS may grant extensions when requested by the State agency.
(iv) FNS shall adjust the amount authorized by the Letter of Credit in order to effect payment of any amounts due the State agency, and if appropriate, shall bill the State agency for any amounts due to FNS. The amounts of such billings shall be promptly remitted to FNS.
(v) In the event a final audit has not been performed prior to the closeout of the program, FNS shall retain the right to disallow costs or recover funds resulting from the final audit findings.
(2) Provisions of § 277.13 apply for any property acquired with program funds or received from the Federal Government in connection with the program and which was in use in the affected project area or areas.
§ 277.17 Audit requirements.
(a) General. This section sets forth the audit requirements for State agencies that receive FNS program funds. Audits shall be conducted on an organization-wide basis. Such audits are to determine whether:
(1) Financial operations are conducted properly;
(2) The financial statements are presented fairly;
(3) The organization has complied with laws and regulations affecting the expenditure of Federal funds;
(4) Internal procedures have been established to meet the objectives of federally assisted programs; and
(5) Financial reports to the Federal Government contain accurate and reliable information.
(b) Audit standards. (1) State agencies shall use their own procedures to arrange for independent audits, and to prescribe the scope of audits, provided that the audits comply with the requirements set forth in this section. Where contracts are awarded for audit services, the contracts shall include a reference to 2 CFR part 200, subpart F and Appendix XI, Compliance Supplement and USDA implementing regulations 2 CFR part 400 and part 415.
(2) Audits shall be made in accordance with the General Accounting Office “Standards for Audit of Governmental Organizations, Programs, Activities, and Functions, the Guidelines for Financial and Compliance Audits of Federally Assisted Program,” and any compliance supplements approved by OMB, and generally accepted auditing standards established by the American Institute of Certified Public Accountants.
(c) Purpose of audit. Audits will include, at a minimum, an examination of the systems of internal control, systems established to ensure compliance with laws and regulations affecting the expenditure of Federal funds, financial transactions and accounts, and financial statements and reports of State agencies. These examinations are to determine whether:
(1) There is effective control over and proper accounting for revenues expenditures, assets, and liabilities.
(2) The financial statements are presented fairly in accordance with generally accepted accounting principles.
(3) The Federal financial reports (including Financial Status Reports, Cash Reports, and claims for advances and reimbursements) contain accurate and reliable financial data; and are presented in accordance with the terms of applicable agreements, and in accordance with 2 CFR part 200, subpart F and Appendix XI, Compliance Supplement and USDA implementing regulations 2 CFR part 400 and part 415.
(4) Federal funds are being expended in accordance with the terms of applicable agreements and those provisions of Federal law or regulations that could have a material effect on the financial statements or on the awards tested.
(d) Audit coverage. A representative number of charges to Federal funds shall be tested. The test shall be representative of:
(1) The universe of Federal funds received, and
(2) All cost categories that materially affect the award. The test is to determine whether the charges:
(i) Are necessary and reasonable for the proper administration of the program;
(ii) Conform to any limitations or exclusions in the award;
(iii) Were given consistent accounting treatments and applied uniformly to both federally assisted and other activities of the State agency;
(iv) Were net of applicable credits;
(v) Did not include costs property chargeable to other federally assisted programs;
(vi) Were properly recorded (i.e., correct amount, date) and supported by source documentation;
(vii) Were approved in advance, if subject to prior approval in accordance with Financial Management Circular 74-4;
(viii) Were incurred in accordance with competitive purchasing procedures, if covered by 2 CFR part 200, subpart D, and USDA implementing regulations 2 CFR parts 400 and 415; and
(ix) Were allocated equitably to benefiting activities, including non-Federal activities.
(3) Audits usually will be made annually, but not less frequently than every two years.
(4) If the auditors become aware of irregularities in the State agency, subagency or subcontractor, the auditor shall promptly notify the cognizant agency and State agency management officials above the level of involvement. Irregularities include such matters as conflict of interest, falsification of records or reports, and misappropriation of funds and other assets.
(e) Audit report. The audit report shall include:
(1) Financial statements, including footnotes, of the State agency, subagency, or subcontractor organization.
(2) The auditor’s comments on the financial statements which should:
(i) Identify the statements examined and the period covered.
(ii) Identify the various programs under which the organization received Federal funds, and the amounts received for each program.
(iii) State that the audit was done in accordance with paragraph (d) of this section.
(iv) Express an opinion as to whether the financial statements are fairly presented in accordance with generally accepted accounting principles. If an unqualified opinion cannot be expressed, state the nature of the qualification.
(3) The auditor’s comments on compliance and internal control which should:
(i) Include comments on weaknesses in and noncompliance with the systems of internal control, separately identifying material weaknesses.
(ii) Identify the nature and impact of any noted instances of noncompliance with the terms of agreements and those provisions of Federal law or regulation that could have a material effect on the financial statements and reports.
(iii) Contain an expression of positive assurance with respect to compliance with requirements for tested items, and negative assurance for untested items.
(4) Comments on the accuracy and completeness of financial reports and claims for advances or reimbursements to Federal agencies.
(5) Comments on corrective action taken or planned by the State agency.
(f) Record retention. Work paper and reports shall be retained for a minimum of three years from the date of the audit report unless the auditor is notified in writing by the cognizant agency of the need to extend the retention period. The audit workpapers shall be made available upon request to the cognizant agency or its designees and the General Accounting Office or its designees.
(g) Cognizant agency responsibilities. The cognizant agency shall have the following responsibilities:
(1) Obtain or make quality assessment reviews of the work of non-Federal audit organizations, and provide the results to other interested audit agencies. If a non-Federal audit organization is responsible for audits of State agencies that have different cognizant audit agencies, a single quality assessment review will be arranged.
(2) Assure that all audit reports of State agencies that affect federally assisted programs are received, reviewed, and distributed to appropriate Federal audit officials. These officials will be responsible for distributing audit reports to their program officials.
(3) Whenever significant inadequacies in an audit are disclosed, the State agency will be advised and the auditor will be called upon to take corrective action. If corrective action is not taken, the cognizant agency shall notify the State agency and Federal awarding agencies of the facts and its recommendation. Major inadequacies or repetitive substandard performance of independent auditors shall be referred to appropriate professional bodies.
(4) Assure that satisfactory audit coverage is provided in a timely manner and in accordance with the provisions of this section.
(5) Provide technical advice and act as a liaison between Federal agencies, independent auditors and State agencies.
(6) Maintain a followup system on audit findings and investigative matters to assure that audit findings are resolved.
(7) Inform other affected audit agencies of irregularities uncovered. The audit agencies, in turn, shall inform all appropriate officials in their agencies. State or local government law enforcement and prosecuting authorities shall also be informed of irregularities within their jurisdiction.
(8) Recipients shall require subrecipients that are local governments of Indian tribal governments to adopt the requirements in paragraphs (d) through (f) of this section. The recipient shall ensure that the subrecipient audit reports are received as required, and shall submit the reports to the cognizant agency. The cognizant agency will have the responsibility for those reports described in paragraph (g) of this section.
§ 277.18 State Systems Advance Planning Document (APD) process.
(a) Scope and application. This section establishes conditions for initial and continuing authority to claim Federal financial participation (FFP) for the costs of the planning, development, acquisition, installation and implementation of Information System (IS) equipment and services used in the administration of the Supplemental Nutrition Assistance Program (SNAP) and as prescribed by appropriate Food and Nutrition Service (FNS) directives and guidance (i.e., FNS Handbook 901, OMB Circulars, etc.).
(b) Definitions. As used in this section:
Acquisition means obtaining supplies or services through a purchase or lease, regardless of whether the supplies or services are already in existence or must be developed, created or evaluated.
Advance Planning Document for project planning or Planning APD (APD or PAPD) means a brief written plan of action that requests FFP to accomplish the planning activities necessary for a State agency to determine the need for, feasibility of, projected costs and benefits of an IS equipment or services acquisition, plan the acquisition of IS equipment and/or services, and to acquire information necessary to prepare an Implementation APD.
Advance Planning Document Update (APDU) means a document submitted annually (Annual APDU) by the State agency to report the status of project activities and expenditures in relation to the approved Planning APD or Implementation APD; or on an as needed basis (As Needed APDU) to request funding approval for project continuation when significant project changes occur or are anticipated.
Commercial Off-the-Shelf (COTS) means proprietary software products that are ready-made and available for sale to the general public at established catalog or market prices in which the software vendor is not positioned as the sole implementer or integrator of the product.
Enhancement means modifications which change the functions of software and hardware beyond their original purposes, not just to correct errors or deficiencies which may have been present in the software or hardware, or to improve the operational performance of the software or hardware. Software enhancements that substantially increase risk or cost or functionality will require submission of an IAPD or an As Needed IAPDU.
Implementation Advance Planning Document or Implementation APD (IAPD) means a written plan of action requesting FFP to acquire and implement information system (IS) services and/or equipment. The Implementation APD includes the design, development, testing and implementation phases of the project.
Information System (IS) means a combination of hardware and software, data and telecommunications that performs specific functions to support the State agency, or other Federal, State or local organization.
Project means a related set of information technology related tasks, undertaken by a State, to improve the efficiency, economy and effectiveness of administration and/or operation of its human services programs. A project may also be a less comprehensive activity such as office automation, enhancements to an existing system, or an upgrade of computer hardware.
Request for Proposal (RFP) means the document used for public solicitations of competitive proposals from qualified sources as outlined in § 277.14(g)(3).
(c) Requirements for FNS prior approval of IS projects—(1) General prior approval requirements. The State agency shall request prior FNS approval by submitting the Planning APD, the Implementation APD, an APD Update, the draft acquisition instrument, and/or the justification for the sole source acquisition if applicable, as specified in paragraph (c)(2) of this section. A State agency must obtain written approval from FNS to receive FFP of any of the following activities:
(i) When it plans a project to enhance or replace its IS that it anticipates will have total project costs in Federal and State funds of $6 million or more.
(ii) Any IS competitive acquisition that costs $6 million or more in Federal and State funds.
(iii) When the State agency plans to acquire IS equipment or services non-competitively from a nongovernmental source, and the total State and Federal cost is more than $1 million.
(iv) For the acquisition of IS equipment or services to be utilized in an Electronic Benefit Transfer (EBT) system regardless of the cost of the acquisition in accordance with § 274.12 (EBT issuance system approval standards).
(2) Specific prior approval requirements. (i) For IS projects which require prior approval, as specified in paragraph (c)(1) of this section, the State agency shall obtain the prior written approval of FNS for:
(A) Conducting planning activities, entering into contractual agreements or making any other commitment for acquiring the necessary planning services;
(B) Conducting design, development, testing or implementation activities, entering into contractual agreements or making any other commitment for the acquisition of IS equipment or services.
(ii) For IS equipment and services acquisitions requiring prior approval as specified in paragraph (c)(1) of this section, prior approval of the following documents associated with such acquisitions is also required:
(A) Requests for Proposals (RFPs). Unless specifically exempted by FNS, the State agency shall obtain prior written approval of the RFP before the RFP may be released. However, RFPs for acquisitions estimated to cost less than $6 million or competitive procurements from non-governmental sources and that are an integral part of the approved APD, need not receive prior approval from FNS. The State agency shall submit a written request to get prior written approval to acquire IS equipment or services non-competitively from a nongovernmental source when the total State and Federal cost is $1 million or more. State agencies shall submit RFPs under this threshold amount on an exception basis. The State agency shall obtain prior written approval from FNS for RFPs which are associated with an EBT system regardless of the cost.
(B) Contracts. All contracts must be submitted to FNS. Unless specifically exempted by FNS, the State agency shall obtain prior written approval before the contract may be signed by the State agency. However, contracts for competitive procurements costing less than $6 million and for noncompetitive acquisitions from nongovernmental sources costing less than $1 million and that are an integral part of the approved APD need not be submitted to FNS. State agencies shall submit contracts under this threshold amount on an exception basis. The State agency shall obtain prior written approval from FNS for contracts which are associated with an EBT system regardless of the cost.
(C) Contract amendments. All contract amendments must be submitted to FNS. Unless specifically exempted by FNS, the State agency shall obtain prior written approval from FNS of any contract amendments which cumulatively exceed 20 percent of the base contract costs before being signed by the State agency. The State agency shall obtain prior written approval from FNS for contracts which are associated with an EBT system regardless of the cost.
(iii) Procurement requirements. (A) Procurements of IS equipment and services are subject to § 277.14 (procurement standards) regardless of any conditions for prior approval contained in this section, except the requirements of § 277.14(b)(1) and (b)(2) regarding review of proposed contracts. Those procurement standards include a requirement for maximum practical open and free competition regardless of whether the procurement is formally advertised or negotiated.
(B) The standards prescribed by § 277.14, as well as the requirement for prior approval in this paragraph (c), apply to IS services and equipment acquired primarily to support SNAP regardless of the acquiring entity.
(C) The competitive procurement policy prescribed by § 277.14 shall be applicable except for IS services provided by the agency itself, or by other State or local agencies.
(iv) The State agency must obtain prior written approval from FNS, as specified in paragraphs (c)(2)(i) and (c)(2)(ii) of this section, to claim and receive reimbursement for the associated costs of the IS acquisition.
(3) Document submission requirements. (i) For IS projects requiring prior approval as specified in paragraphs (c)(1) and (c)(2) of this section, the State agency shall submit the following documents to FNS for approval:
(A) Planning APD as described in paragraph (d)(1) of this section.
(B) Implementation APD as described in paragraph (d)(2) of this section.
(C) Annual APDU as described in paragraph (d)(3) of this section. The Annual APDU shall be submitted to FNS 60 days prior to the expiration of the FFP approval, unless the submission date is specifically altered by FNS. In years where an As Needed APDU is required, as described in paragraph (c)(3)(i)(D) of this section, FNS may waive or modify the requirement to submit the annual APDU.
(D) As Needed APDU as described in paragraph (d)(4) of this section. As Needed APDU are required to obtain a commitment of FFP whenever significant project changes occur. Significant project changes are defined as changes in cost, schedule, scope or strategy which exceed FNS-defined thresholds or triggers. Without such approval, the State agency is at risk for funding of project activities which are not in compliance with the terms and conditions of the approved APD and subsequently approved APDU until such time as approval is specifically granted by FNS.
(E) Acquisition documents as described in § 277.14(g).
(F) Emergency Acquisition Requests as described in paragraph (i) of this section.
(ii) The State agency must obtain prior FNS approval of the documents specified in paragraph (c)(3)(i) of this section in order to claim and receive reimbursement for the associated costs of the IS acquisition.
(4) Approval by the State agency. Approval by the State agency is required for all documents and acquisitions specified in § 277.18 prior to submission for FNS approval. However, the State agency may delegate approval authority to any subordinate entity for those acquisitions of IS equipment and services not requiring prior approval by FNS.
(5) Prompt action on requests for prior approval. FNS will reply promptly to State agency requests for prior approval. If FNS has not provided written approval, disapproval or a request for additional information within 60 days of FNS’ acknowledgment of receipt of the State agency’s request, the request will be deemed to have provisionally met the prior approval requirement in this paragraph (c). However, provisional approval will not exempt a State agency from having to meet all other Federal requirements which pertain to the acquisition of IS equipment and services. Such requirements remain subject to Federal audit and review.
(d) APD content requirements—(1) Planning APD (PAPD). The PAPD is a written plan of action to acquire proposed services or equipment and to perform necessary activities to investigate the feasibility, system alternatives, requirements and resources needed to replace, modify or upgrade the State agency’s IS. The PAPD shall contain adequate documentation to demonstrate the need to undertake a planning process, as well as a thorough description of the proposed planning activities, and estimated costs and timeline, as specified by FNS in Handbook 901.
(2) Implementation APD (IAPD). The IAPD is a written plan of action to acquire the proposed IS services or equipment and to perform necessary activities to design, develop, acquire, install, test, and implement the new IS. The IAPD shall contain detailed documentation of planning and preparedness for the proposed project, as enumerated by FNS in Handbook 901, demonstrating the feasibility of the project, thorough analysis of system requirements and design, a rigorous management approach, stewardship of federal funds, a realistic schedule and budget, and preliminary plans for key project phases.
(3) Annual APDU content requirements. The Annual APDU is a yearly update to ongoing IS projects when planning or implementation activities occur. The Annual APDU shall contain documentation on the project activity status and a description of major tasks, milestones, budget and any changes, as specified by FNS in Handbook 901.
(4) As Needed APDU content requirements. The As Needed APDU document shall contain the items as defined in paragraph (c)(3)(i)(D) of this section with emphasis on the area(s) where changes have occurred or are anticipated that triggered the submission of the APDU, as detailed by FNS in Handbook 901.
(e) Service agreements. The State agency shall execute service agreements when IS services are to be provided by a State central IT facility or another State or local agency. Service Agreement means the document signed by the State or local agency and the State or local central IT facility whenever an IT facility provides IT services to the State or local agency. Service agreements shall:
(1) Identify the IS services that will be provided;
(2) Include a schedule of rates for each identified IS service, and a certification that these rates apply equally to all users;
(3) Include a description of the method(s) of accounting for the services rendered under the agreement and computing services charges;
(4) Include assurances that services provided will be timely and satisfactory;
(5) Include assurances that information in the IS as well as access, use and disposal of IS data will be safeguarded in accordance with provisions of § 272.1(c) (disclosure) and § 277.13 (property);
(6) Require the provider to obtain prior approval from FNS pursuant to paragraph (c)(1) of this section for IS equipment and IS services that are acquired from commercial sources primarily to support federally aided public assistance programs and require the provider to comply with § 277.14 (procurement standards) for procurements related to the service agreement. IS equipment and services are considered to be primarily acquired to support federally aided public assistance programs when the Programs may reasonably be expected to either be billed for more than 50 percent of the total charges made to all users of the IS equipment and services during the time period covered by the service agreement, or directly charged for the total cost of the purchase or lease of IS equipment or services;
(7) Include the beginning and ending dates of the period of time covered by the service agreement; and
(8) Include a schedule of expected total charges to the Program for the period of the service agreement.
(9) State Agency Maintenance of Service Agreements. The State agency shall maintain a copy of each service agreement in its files for Federal review upon request.
(f) Conditions for receiving Federal financial participation (FFP)—(1) A State agency may receive FFP at the 50 percent reimbursement rate for the costs of planning, design, development or installation of IS and information retrieval systems if the proposed system will:
(i) Assist the State agency in meeting the requirements of the Food and Nutrition Act of 2008, as amended;
(ii) Meet the Automation of Data Processing/Computerization of Information Systems Model Plan program standards specified in § 272.10(b)(1) through (b)(3) of this chapter, except the requirements in § 272.10(b)(2)(vi), (b)(2)(vii), and (b)(3)(ix) of this chapter to eventually transmit data directly to FNS;
(iii) Be likely to provide more efficient and effective administration of the program; and
(iv) Be compatible with such other systems utilized in the administration of other State agency programs including the program of Temporary Assistance for Needy Families (TANF).
(2) State agencies seeking FFP for the planning, design, development or installation of IS shall develop State wide systems which are integrated with TANF. In cases where a State agency can demonstrate that a local, dedicated, or single function (issuance or certification only) system will provide for more efficient and effective administration of the program, FNS may grant an exception to the State wide integrated requirement. These exceptions will be based on an assessment of the proposed system’s ability to meet the State agency’s need for automation. Systems funded as exceptions to this rule, however, should be capable to the extent necessary, of an automated data exchange with the State agency system used to administer TANF. In no circumstances will funding be available for systems which duplicate other State agency systems, whether presently operational or planned for future development.
(g) Basis for continued Federal financial participation (FFP)—(1) FNS will continue FFP at the levels approved in the Planning APD and the Implementation APD provided that project development proceeds in accordance with the conditions and terms of the approved APD and that IS resources are used for the purposes authorized. FNS will use the APDU to monitor IS project development. The submission of the Update as prescribed in § 277.18(d) for the duration of project development is a condition for continued FFP. In addition, periodic onsite reviews of IS project development and State and local agency IS operations may be conducted by or for FNS to assure compliance with approved APDs, proper use of IS resources, and the adequacy of State or local agency IS operations.
(2) Pre-implementation. The State agency must demonstrate through thorough testing that the system meets all program functional and performance requirements. FNS may require a pre-implementation review of the system to validate system functionality prior to State agency testing.
(i) Testing. The State agency must provide a complete test plan prior to the start of the testing phase. The State agency must provide documentation to FNS of the results of User Acceptance Testing (UAT) before the system is piloted in a production environment. FNS concurrence to advance from testing to pilot is a condition for continued FFP. All aspects of program eligibility must be tested to ensure that the system makes accurate eligibility determinations in accordance with federal statutes and regulations and approved State policies, and that system functionality meets the required functional specifications. The State agency shall describe how all system testing will be conducted and the resources to be utilized in order to verify the system complies with SNAP requirements, system design specifications, and performance standards including responsiveness, usability, capacity and security. Testing includes but is not limited to unit testing, integration testing, performance testing, end-to-end testing, UAT and regression testing. During UAT detailed scripts covering all areas of program functionality shall be used so that any errors identified can be replicated, corrected and re-tested. At a minimum, the Test Plan shall address:
(A) The types of testing to be performed;
(B) The organization of the test team and associated responsibilities;
(C) Test database generation;
(D) Test case development;
(E) Test schedule;
(F) Documentation of test results;
(G) Acceptance testing, to include functional requirements testing, error condition handling and destructive testing, security testing, recovery testing, controls testing, stress and throughput performance testing, and regression testing; and
(H) The decision criteria, including specific test results which must be met before the State may exit the testing phase, the roles or titles of the individuals responsible for verifying that these criteria have been met, and the sign-off process which will document that the criteria have been met.
(I) FNS may require any or all of these tests to be repeated in instances where significant modifications are made to the system after these tests are initially completed or if problems that surfaced during initial testing warrant a retest. FNS reserves the right to participate and conduct independent testing, as necessary, during UAT and at appropriate times during system design, development, implementation and operations.
(ii) Pilot. Prior to statewide rollout of the system there must be a test of the fully operational system in a live production environment. Pilots must operate until a state of routine operation is reached with the full caseload in the pilot area. The design of this pilot shall provide an opportunity to test all components of the system as well as the data conversion process and system performance. The duration of the pilot must be for a sufficient period of time to thoroughly evaluate the system (usually a minimum duration of three months). The State agency must provide documentation to FNS of the pilot evaluation. FNS approval to implement the system more broadly is a condition for continued FFP.
(iii) Post-implementation Review. After the system is fully implemented, FNS may conduct a review to validate that program policy is correctly applied, whether project goals and objectives were met, that IS equipment and services are being properly used and accurate inventory records exist, and the actual costs of the project.
(h) Disallowance of Federal financial participation (FFP). If FNS finds that any acquisition approved under the provisions of paragraph (c) of this section fails to comply with the criteria, requirements and other undertakings described in the approved or modified APD, payment of FFP may be suspended or may be disallowed in whole or in part.
(i) Emergency acquisition requirements. The State agency may request FFP for the costs of IS equipment and services acquired to meet emergency situations in which the State agency can demonstrate to FNS an immediate need to acquire IS equipment or services in order to continue operation of SNAP; and the State agency can clearly document that the need could not have been anticipated or planned for and precludes the State from following the prior approval requirements of paragraph (c) of this section. FNS may provide FFP in emergency situations if the following conditions are met:
(1) The State agency must submit a written request to FNS prior to the acquisition of any IS equipment or services. The written request shall include:
(i) A brief description of the IS equipment and/or services to be acquired and an estimate of their costs;
(ii) A brief description of the circumstances which result in the State agency’s need to proceed with the acquisition prior to fulfilling approval requirements at paragraph (c) of this section; and
(iii) A description of the adverse impact which would result if the State agency does not immediately acquire the IS equipment and/or services.
(2) Upon receipt of a written request for emergency acquisition FNS shall provide a written response to the State agency within 14 days. The FNS response shall:
(i) Inform the State agency that the request has been disapproved and the reason for disapproval; or,
(ii) FNS recognizes that an emergency situation exists and grants conditional approval pending receipt of the State agency’s formal submission of the IAPD information specified at paragraph (d)(2) of this section within 90 days from the date of the State agency’s initial written request.
(iii) If FNS approves the request submitted under paragraph (i)(1) of this section, FFP will be available from the date the State agency acquires the IS equipment and services.
(iv) If the complete IAPD submission required by paragraph (d)(2) of this section is not received by FNS within 90 days from the date of the initial written request, costs may be subject to disallowance.
(j) General cost requirements—(1) Cost determination. Actual costs must be determined in compliance with 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415 and an FNS approved budget, and must be reconcilable with the approved FNS funding level. A State agency shall not claim reimbursement for costs charged to any other Federal program or uses of IS systems for purposes not connected with SNAP. The approved APD cost allocation plan includes the methods which will be used to identify and classify costs to be claimed. This methodology must be submitted to FNS as part of the request for FNS approval of funding as required in paragraph (d) of this section. Operational costs are to be allocated based on the statewide cost allocation plan rather than the APD cost plan. Approved cost allocation plans for ongoing operational costs shall not apply to IS system development costs under this section unless documentation required under paragraph (c) of this section is submitted to and approvals are obtained from FNS. Any APD-related costs approved by FNS shall be excluded in determining the State agency’s administrative costs under any other section of this part.
(2) Cost identification for purposes of FFP claims. State agencies shall assign and claim the costs incurred under an approved APD in accordance with the following criteria:
(i) Development costs. Using its normal departmental accounting system, in accordance with the cost principles set forth in 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415, the State agency shall specifically identify what items of costs constitute development costs, assign these costs to specific project cost centers, and distribute these costs to funding sources based on the specific identification, assignment and distribution outlined in the approved APD. The methods for distributing costs set forth in the APD should provide for assigning identifiable costs, to the extent practicable, directly to program/functions. The State agency shall amend the cost allocation plan required by § 277.9 (administrative cost principles) to include the approved APD methodology for the identification, assignment and distribution of the development costs.
(ii) Operational costs. Costs incurred for the operation of an IS shall be identified and assigned by the State agency to funding sources in accordance with the approved cost allocation plan required by § 277.9 (administrative cost principles).
(iii) Service agreement costs. States that operate a central data processing facility shall use their approved central service cost allocation plan required by 2 CFR part 200, subpart E and USDA implementing regulations 2 CFR part 400 and part 415 to identify and assign costs incurred under service agreements with the State agency. The State agency shall then distribute these costs to funding sources in accordance with paragraphs (j)(2)(i) and (ii) of this section.
(3) Capital expenditures. The State agency shall charge the costs of IT equipment having unit acquisition costs or total aggregate costs, at the time of acquisition, of more than $25,000 by means of depreciation or use allowance, unless a waiver is specifically granted by FNS. If the equipment acquisition is part of an APD that is subject to the prior approval requirements of paragraph (c)(2) of this section, the State agency may submit the waiver request as part of the APD.
(4) Claiming costs. Prior to claiming funding under this section the State agency shall have complied with the requirements for obtaining approval and prior approval of paragraph (c) of this section.
(5) Budget authority. FNS approval of requests for funding shall provide notification to the State agency of the budget authority and dollar limitations under which such funding may be claimed. FNS shall provide this amount as a total authorization for such funding which may not be exceeded unless amended by FNS. FNS’s determination of the amount of this authorization shall be based on the budget submitted by the State agency. Activities not included in the approved budget, as well as continuation of approved activities beyond scheduled deadlines in the approved plan, shall require FNS approval of an As Needed APD Update as prescribed in paragraphs (c)(3)(i)(D) and (d)(4) of this section, including an amended State budget. Requests to amend the budget authorization approved by FNS shall be submitted to FNS prior to claiming such expenses.
(k) Access to the system and records. Access to the system in all aspects, including but not limited to design, development, and operation, including work performed by any source, and including cost records of contractors and subcontractors, shall be made available by the State agency to FNS or its authorized representatives at intervals as are deemed necessary by FNS, in order to determine whether the conditions for approval are being met and to determine the efficiency, economy and effectiveness of the system. Failure to provide full access to all parts of the system may result in suspension and/or termination of SNAP funds for the costs of the system and its operation.
(l) Ownership rights—(1) Software. (i) The State or local government shall include a clause in all procurement instruments which provides that the State or local government shall have all ownership rights in any software or modifications thereof and associated documentation designed, developed or installed with FFP under this section.
(ii) FNS reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish or otherwise use and to authorize others to use for Federal Government purposes, such software, modifications and documentation.
(iii) Proprietary operating/vendor software packages which meet the definition of COTS at paragraph (b) of this section shall not be subject to the ownership provisions in paragraphs (l)(1)(i) and (l)(1)(ii) of this section. FFP is not available for development costs for proprietary application software developed specifically for SNAP.
(2) Information Systems equipment. The policies and procedures governing title, use and disposition of property purchased with FFP, which appear at § 277.13 (Property) are applicable to IS equipment.
(m) Information system security requirements and review process—(1) Information system security requirements. State and local agencies are responsible for the security of all IS projects under development, and operational systems involved in the administration of SNAP. State and local agencies shall determine appropriate IS security requirements based on recognized industry standards or compliance with standards governing security of Federal information systems and information processing.
(2) Information security program. State agencies shall implement and maintain a comprehensive Security Program for IS and installations involved in the administration of the SNAP. Security Programs shall include the following components:
(i) Determination and implementation of appropriate security requirements as prescribed in paragraph (m)(1) of this section.
(ii) Establishment of a security plan and, as appropriate, policies and procedures to address the following areas of IS security:
(A) Physical security of IS resources;
(B) Equipment security to protect equipment from theft and unauthorized use;
(C) Software and data security;
(D) Telecommunications security;
(E) Personnel security;
(F) Contingency plans to meet critical processing needs in the event of short- or long-term interruption of service;
(G) Emergency preparedness; and
(H) Designation of an Agency IS Security Manager.
(iii) Periodic risk analyses. State agencies shall establish and maintain a program for conducting periodic risk analyses to ensure that appropriate, cost-effective safeguards are incorporated into new and existing systems. In addition, risk analyses shall be performed whenever significant system changes occur.
(3) IS security reviews. State agencies shall review the security of IS involved in the administration of SNAP on a biennial basis. At a minimum, the reviews shall include an evaluation of physical and data security, operating procedures and personnel practices. State agencies shall maintain reports of their biennial IS security reviews, together with pertinent supporting documentation, for Federal review upon request.
(4) Applicability. The security requirements of this section apply to all IS systems used by State and local governments to administer SNAP.
Appendix A to Part 277—Principles for Determining Costs Applicable to Administration of SNAP by State Agencies
This appendix sets forth the procedures implementing uniform requirements for the negotiations and approval of cost allocation plans with State agencies, in accordance with the provisions of Federal Management Circular (FMC) 74-4 and OASC-10, “Cost Principles and Procedures for Establishing Cost Allocation Plans and Indirect Cost Rates for Grants and Contracts with the Federal Government,” U.S. Department of Health, Education, and Welfare. This material is adapted substantially from the circular; changes have been made only when necessary in order to conform with legislative constraints.
(A) Purpose and scope.
(1) Objectives. This appendix sets forth principles for determining the allowable costs of administering SNAP by State agency under FNS-approved State Plans of Operation. The principles are for the purpose of cost determination and are not intended to identify the circumstances or dictate the extent of Federal and State or local participation in the financing of the Program. They are designed to provide that all federally assisted programs bear their fair share of costs recognized under these principles, except where restricted or prohibited by law. No provision for profit or other increment above cost is intended.
(2) Policy guides. The application of these principles is based on the fundamental premises that:
(a) State agencies are responsible for the efficient and effective administration of SNAP through the application of sound management practice.
(b) The State agency assumes the responsibility for seeing that SNAP funds have been expended and accounted for consistent with underlying agreements and program objectives.
(c) Each State agency, in recognition of its own unique combination of staff facilities and experience, will have the primary responsibility for employing whatever form of organization and management techniques as may be necessary to assure proper and efficient administration.
(3) Application. These principles will be applied by FNS in determining costs incurred by State agencies receiving FNS payments for administering SNAP.
(B) Definitions.
Approval or authorization by FNS means documentation evidencing consent prior to incurring specific costs.
Cognizant Federal Agency means the Federal agency recognized by OMB as having the predominate interest in terms of program dollars.
Cost allocation plan means the documentation identifying, accumulating, and distributing allowable costs of program administration together with the allocation methods used.
Cost, as used herein, means cost as determined on a cash, accrual, or other basis acceptable to FNS as a discharge of the State agency’s accountability for FNS funds.
Cost center means a pool, summary account, objective or area established for the accumulation of costs. Such areas include objective organizational units, functions, objects or items of expense, as well as ultimate cost objective(s) including specific costs, products, projects, contracts, programs and other operations.
Federal agency means FNS and also any department, agency, commission, or instrumentality in the executive branch of the Federal Government which makes grants to or contracts with State or local governments.
Payments for administrative costs means reimbursement or advances for costs to State agencies pursuant to any agreement whereby FNS provides funds to carry out programs, services, or activities in connection with administration of SNAP. The principles and policies stated in this appendix as applicable to program payments in general also apply to any State agency obligations under a cost reimbursement type of agreement performed by a subagency, including contracts and subcontracts.
SNAP administration means those activities and operations of the State agency which are necessary to carry out the purposes of the Food and Nutrition Act of 2008, including any portion of the Program financed by the State agency.
Local unit means any political subdivision of government below the State level.
Other agencies of the State means departments or agencies of the State or local unit which provide goods, facilities, and services to a State agency.
Subagencies means the organization or person to which a State agency makes any payment for acquisition of goods, materials or services for use in administering SNAP and which is accountable to the State agency for the use of the funds provided.
Service, as used herein, means goods and facilities, as well as services.
Supporting services means auxiliary functions necessary to sustain the direct effort of administering the Program. These services may be centralized in the State agency or in some other agency, and include procurement, payroll, personnel functions, maintenance and operation of space, data processing, accounting, budgeting, auditing, mail and messenger service, and the like.
(C) Basic guidelines.
(1) Factors affecting allowability of costs. To be allowable under the Program, costs must meet the following general criteria:
(a) Be necessary and reasonable for proper and efficient administration of the Program, be allocable thereto under these principles, and, except as specifically provided herein, not be a general expense required to carry out the overall responsibilities of State or local governments.
(b) Be authorized or not prohibited under State or local laws or regulations.
(c) Conform to any limitations or exclusions set forth in these principles, Federal Laws, or other governing limitations as to types or amounts of cost items.
(d) Be consistent with policies, regulations, and procedures that apply uniformly to both federally assisted and other activities of the unit of government of which the State agency is a part.
(e) Be accorded consistent treatment through application of generally accepted accounting principles appropriate to the circumstances.
(f) Not be allocable to or included as a cost to any other federally financed program in either the current or a prior period.
(g) Be the net of all applicable credits.
(2) Allocable costs.
(a) A cost allocable to a particular cost objective to the extent of benefits received by such objective.
(b) Any cost allocable to a particular program or cost objective under these principles may not be shifted to other Federal programs to overcome fund deficiencies, avoid restrictions imposed by law or grant agreement, or for other reasons.
(c) Where an allocation of joint cost will ultimately result in charges to the Program, an allocation plan will be required as prescribed in section I of these principles.
(3) Applicable credits.
(a) Applicable credits refer to those receipts or reduction of expenditure-type transactions which offset or reduce expense items allocable to programs as direct or indirect costs. Examples of such transactions are: Purchase discounts; rebates or allowances; recoveries or indemnities on losses; sale of publications, equipment, and scrap; income from personal or incidental services; and adjustments of overpayments or erroneous charges.
(b) Applicable credits may also arise when Federal funds are received or are available from sources other than FNS to finance operations or capital items donated or financed by the Federal Government to fulfill matching requirements under another program. These types of credits should likewise be used to reduce related expenditures in determining the rates or amounts applicable to a given program.
(D) Composition of cost.
(1) Total cost. The total cost of a program is comprised of the allowable direct cost incident to its performance, plus its allocable portion of allowable indirect costs, less applicable credit.
(2) Classification costs. There is no universal rule for classifying certain costs as either direct or indirect under every accounting system. A cost may be direct with respect to some specific service or function, but indirect with respect to a program or other ultimate cost objective. However, it is essential that each item of cost be treated consistently either as a direct or an indirect cost. Specific guides for determining direct and indirect costs allocable under the Program are provided in the section which follows.
(E) Direct costs.
(1) General. Direct costs are those that can be identified specifically with a particular cost objective. These costs may be charged directly to the Program, contracts, or to other programs against which costs are finally lodged. Direct costs may also be charged to cost objectives used for the accumulation of costs pending distribution in the course to programs and other ultimate costs objectives.
(2) Application. Typical direct costs chargeable to the Program are:
(a) Compensation of employees for the time and effort devoted specifically to the administration of the Program.
(b) Cost of materials acquired, consumed, or expended specifically for the purpose of the Program.
(c) Equipment and other approved capital expenditures.
(d) Other items of expense incurred specifically for efficiently and effectively administering the Program.
(e) Service furnished specifically for the Program by other agencies, provided such charges are consistent with criteria outlined in section G of these principles.
(F) Indirect costs.
(1) General. Indirect costs are those (a) incurred for a common or joint purpose benefiting more than one cost objective, and (b) not readily assignable to the cost objectives specifically benefited, without effort disproportionate to the result achieved. The term indirect cost as used herein applies to costs of this type originating in the State agency, as well as those incurred by other departments in supplying goods, services, and facilities, to the State agency. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of indirect costs within a State agency or in other agencies providing services to a State agency. Indirect cost pools should be distributed to benefiting cost objectives on bases which will produce an equitable result in consideration of relative benefits derived.
(2) State agency indirect costs. All State agency indirect costs, including the various levels of supervision, are eligible for allocation to the program provided they meet the conditions set forth in their principles. In lieu of determining the actual amount of State agency indirect cost allocable to the program the following methods may be used:
(a) Predetermined fixed rates for indirect costs. A predetermined fixed rate for computing indirect costs applicable to program administration may be negotiated annually in situations where the cost experience and other pertinent facts available are deemed sufficient to enable the parties to reach an informed judgment (1) as to the probable level of indirect costs in the State agency during the period to be covered by the negotiated rate, and (2) that the amount allowable under the predetermined rate would not exceed actual indirect costs.
(b) Negotiated lump sum for overhead. A negotiated fixed amount in lieu of indirect costs may be appropriate under circumstances where the benefits derived from a State agency’s indirect services cannot be readily determined as in the case of a small self-contained or isolated activity. When this method is used, a determination should be made that the amount negotiated will be approximately the same as the actual indirect cost that may be incurred. Such amounts negotiated in lieu of indirect costs will be treated as an offset to total indirect expenses of the State agency before allocation to remaining activities. The base on which such remaining expenses are allocated should be appropriately adjusted.
(3) Limitation on indirect costs.
(a) Some Federal programs may be subject to laws that limit the amount of indirect cost that may be allowed. Agencies that sponsor programs of this type will establish procedures which will assure that the amount actually allowed for indirect costs under each such program does not exceed the maximum allowable under the statutory limitation or the amount otherwise allowable under these principles, whichever is the smaller.
(b) When the amount allowable under a statutory limitation is less than the amount otherwise allocable as indirect costs under these principles, the amount not recoverable as indirect costs under a program may not be shifted to another federally sponsored program or contract.
(G) Cost incurred by other agencies of the State.
(1) General. The cost of service provided by other agencies may only include allowable direct costs of the service plus a pro rata share of allowable supporting costs and supervision directly required in performing the service, but not supervision of a general nature such as that provided by the head of a department and his staff assistants not directly involved in operations. However, supervision by the head of a department or agency whose sole function is providing the service furnished would be an eligible cost. Supporting costs include those furnished by other units of the supplying department or by other agencies.
(2) Alternative methods of determining indirect cost. In lieu of determining actual indirect cost related to a particular service furnished by other agencies of the State, either of the following alternative methods may be used provided only one method is used for a specific service during the fiscal year involved.
(a) Standard indirect rate. An amount equal to ten percent of direct labor cost in providing the service performed by other agencies of the State (excluding overtime, shift, or holiday premiums, and fringe benefits) may be allowed in lieu of actual allowable indirect cost for that service.
(b) Predetermined fixed rate. A predetermined fixed rate for indirect cost of the unit or activity providing service may be negotiated as set forth in section F(2)(a) of these principles.
(H) Cost incurred by State agency for others. The principles provided in section G will also be used in determining the cost of services provided by the State agency to another agency.
(I) Cost allocation plan.
(1) A cost allocation will be required to support the distribution of any indirect costs. All costs allocable to SNAP under cost allocation plans will be supported by formal accounting records which will substantiate the propriety of eventual charges.
(2) There are two types of cost allocation plans:
(a) Statewide or central service cost allocation plan identifies and distributes the cost of services provided by support organizations to those departments or units participating in Federal programs.
(b) Indirect cost proposals distribute the administrative or joint costs incurred by the State agency and the cost of service allocable to it under the Statewide or central service cost allocation plan in a ratio to all work performed by the State agency. The process involves applying a percentage relationship of indirect cost to direct cost.
(3) Requirements. The cost allocation plan of the State agency shall cover all allocated costs of the department as well as costs to be allocated under plans of other agencies or organizational units which are to be included in the costs of federally sponsored programs. The cost allocation plans of all the agencies rendering services to the State agency, to the extent feasible, should be presented in a single document.
(4) Instructions for preparation of cost allocation plans. The Department of Health and Human Services, in consultation with the other Federal agencies concerned, will be responsible for developing and issuing the instructions for use by State agencies in preparation of cost allocation plans. This responsibility applies to both central support services at the State and local government level and indirect cost proposals of individual State agencies.
(5) Submitting plans for approval.
(a) Responsibility for approving cost allocation plans for individual State agencies has been assigned by the Office of Management and Budget to the cognizant Federal agency.
(b) State cost allocation plans must be submitted to the cognizant Federal agency within six months after the last day of the State’s fiscal year. Upon request by the State agency, an extension of time for submittal of the cost allocation plan may be granted by the cognizant Federal agency. It is essential that cost allocation plans be submitted in a timely manner. Failure to submit the plans when required will cause the State agency to become delinquent. In the event a State becomes delinquent, FNS will not provide for the recovery of central service and indirect costs, and such costs already made and claimed against SNAP funds will be subject to disallowance.
(6) Negotiation and approval of cost allocation plans for States. The cognizant Federal agency, in collaboration with Federal agencies concerned, will be responsible for negotiation, approval, and audit of cost allocation plans.
(7) Negotiation and approval of cost allocation plans for local governments. Cost allocation plans will be retained at the local government level for audit by the cognizant Federal agency except in those cases where that agency requests that cost allocation plans be submitted to it for negotiation and approval.
(8) A current list of cognizant Federal agencies is maintained by the Office of Management and Budget.
(9) Resolution of problems. The Office of Management and Budget will lend assistance in resolving problems encountered by Federal agencies on cost allocation plans.
(10) Approval by FNS. FNS reserves the right to disapprove costs not meeting the general criteria outlined in section C of these principles. FNS shall promptly notify the State agency in writing of the disapproval, the reason for the disapproval and the effective date. Costs incurred by State agencies after disapproval may not be charged to FNS unless if FNS subsequently approves the cost.
A. Allowable cost. Standards for allowability of costs are established by Federal Management Circular 74-4. These standards will apply regardless of whether a particular item of cost is treated as direct or indirect. Failure to mention a particular item of cost in these standards is not intended to imply that it is either allowable or unallowable. Rather, determination of allowability in each case should be based on the treatment of standards provided for similar or related items of cost. The allowability of the selected items of cost is subject to the general policies and principles as stated in Attachment A to Federal Management Circular 74-4.
(1) Accounting. The cost of establishing and maintaining accounting and other information systems required for the management of SNAP is allowable. This includes costs incurred by central service agencies of the State government for these purposes. The cost of maintaining central accounting records required for overall State or local government purposes, such as appropriation and fund accounts by the Treasurer, Comptroller, or similar officials, is considered to be a general expense of government and is not allowable.
(2) Advertising. Advertising media includes newspapers, magazines, radio and television programs, direct mail, trade papers, and the like. The advertising costs allowable are those which are solely for:
(a) Recruitment of personnel required for the Program;
(b) Solicitation of bids for the procurement of goods and services required;
(c) Disposal of scrap or surplus materials acquired in the performance of the agreement; and
(d) Other purposes specifically provided for by FNS regulations or approved by FNS in the administration of SNAP.
(3) Advisory councils. Costs incurred by State advisory councils or committees established to carry out SNAP goals are allowable. The cost of like organizations is allowable when used to improve the efficiency and effectiveness of the Program.
(4) Audit service. The cost of audits necessary for the administration and management of functions related to the Program is allowable.
(5) Bonding. Costs of premiums on bonds covering employees who handle SNAP funds or food coupons are allowable. The amount of allowable coverage shall be limited to the anticipated maximum amount of SNAP funds or food coupons handled at one time by that employee.
(6) Budgeting. Costs incurred for the development, preparation, and execution of budgets are allowable. Costs for services of a central budget office are generally not allowable since these are costs of general government. However, where employees of the central budget office actively participate in the State agency’s budget process, the cost of services identifiable to SNAP are allowable.
(7) Building lease management. The administrative cost for lease management which includes review of lease proposals, maintenance of a list of available property for lease, and related activities is allowable.
(8) Central stores. The cost of maintaining and operating a central stores organization for supplies, equipment, and materials used either directly or indirectly for SNAP is allowable.
(9) Communications. Communication costs incurred for telephone calls or service, telegraph, teletype service, wide area telephone service (WATS), centrex, telpak (tie lines), postage, messenger service and similar expenses are allowable.
(10) Compensation for personal services.
(a) General. Compensation for personal services includes all remuneration, paid currently or accrued, for services rendered during the period of performance in the administration of the program including but not necessarily limited to wages, salaries, and supplementary compensation and benefits as defined in section A.(13) of these principles. The costs of such compensation are allowable to the extent that total compensation for individual employees: is reasonable for the services rendered; follows an appointment made in accordance with State or local government laws and rules and which meets Federal Merit System or other requirements, where applicable; and is determined and supported as provided in section A of these principles. Compensation for employees engaged in federally assisted activities will be considered reasonable to the extent that it is consistent with that paid for similar work in other activities of the State or local government. In cases where the kinds of employees required for SNAP activities are not found in the other activities of the State or local government, compensation will be considered reasonable to the extent that it is comparable to that paid for similar work in the labor market in which the employing government competes for the kind of employees involved. Compensation surveys providing data representative of the labor market involved will be an acceptable basis for evaluating reasonableness.
(b) Payroll and distribution of time. Amounts charged to the program for personal services, regardless of whether treated as direct or indirect costs, will be based on payrolls documented and approved in accordance with the generally accepted practice of the State or local agency. Payrolls must be supported by time and attendence or equivalent records for individual employees. Distribution of salaries and wages of employees chargeable to more than one program or other cost objective will be supported by appropriate time reports or approved time study methodologies. The method used should be included in the cost allocation plan and should be approved by FNS.
(11) Depreciation and use allowance.
(a) State agencies may be compensated for the use of buildings, capital improvements, and equipment through use allowances or depreciation. Use allowances are the means of providing compensation in lieu of depreciation or other equivalent costs. However, a combination of the two methods may not be used in connection with a single class of fixed assets.
(b) The computation of depreciation or use allowances will be based on acquisition cost. Where actual cost records have not been maintained, a reasonable estimate of the original acquisition cost may be used in the computation. The computation will exclude the cost of any portion of the cost of buildings and equipment donated or borne directly or indirectly by the Federal Government through charges to Federal programs or otherwise, irrespective of where title was originally vested or where it presently resides. In addition, the computation will also exclude the cost of acquisition of land. Depreciation or a use allowance on idle or excess facilities is not allowable, except when specifically authorized by FNS.
(c) Where the depreciation method is followed, adequate property records must be maintained, and any generally accepted method of computing depreciation may be used. However, the method of computing depreciation must be consistently applied for any specific asset or class of assets for all affected federally sponsored programs and must result in equitable charges considering the extent of the use of the assets for the benefit of such programs.
(d) In lieu of depreciation, a use allowance for buildings and improvements may be computed at an annual rate not exceeding two percent of acquisition cost. The use allowance for equipment (excluding items properly capitalized as building cost) will be computed at an annual rate not exceeding six and two-thirds percent of acquisition cost of usable equipment.
(e) No depreciation or use charge may be allowed on any assets that would be considered as fully depreciated, provided, however, that reasonable use charges may be negotiated for any such assets if warranted after taking into consideration the cost of the facility or item involved, the estimated useful life remaining at time of negotiation, the effect of any increased maintenance charges or decreased efficiency due to age, and any other factors pertinent to the utilization of the facility or item for the purpose contemplated.
(12) Disbursing service. The cost of disbursing program funds by the State Treasurer or other designated officer is allowable. Disbursing services cover the processing of checks or warrants, from preparation to redemption, including the necessary records of accountability and reconciliation of such records with related cash accounts.
(13) Employee fringe benefits. Costs identified are allowable to the extent that total compensation for employees is reasonable as defined in paragraph (10)(a) of these principles.
(a) Employee benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, sick leave, court leave, military leave, and the like, if they are provided pursuant to an approved leave system, and the cost thereof is equitably allocated to all related activities, including federally assisted programs.
(b) Employee benefits in the form of employers’ contributions or expense for social security, employees’ life and health insurance plans, unemployment insurance coverage, workers’ compensation insurance, pension plans, severance pay, and the like, provided such benefits are granted under approved plans and are distributed equitably to programs and to other activities.
(14) Employee morale, health And welfare costs. The costs of health or first-aid clinics and/or infirmaries, recreational facilities, employees’ counseling services, employee information publications, and any related expenses incurred in accordance with general State or local policy, are allowable. Income generated from any of these activities will be offset against expenses.
(15) Exhibits. Costs of exhibits relating specifically to SNAP are allowable.
(16) Legal expenses. The cost of legal expenses required in the administration of the program is allowable. Legal services furnished by the chief legal officer of a State or local government or his staff solely for the purpose of discharging his general responsibilities as legal officer are unallowable. Legal expenses for the prosecution of claims against the Federal Government is unallowable.
(17) Maintenance and repair. Costs incurred for necessary maintenance, repair, or upkeep of property which neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in an efficient operating condition, are allowable.
(18) Materials and supplies. The cost of materials and supplies necessary to carry out the program is allowable. Purchases made specifically for the program should be charged thereto at their actual prices after deducting all cash discounts, trade discounts, rebates, and allowances received by the State agency. Withdrawals from general stores or stockrooms should be charged at cost under any recognized method of pricing consistently applied. Incoming transportation charges are a proper part of material cost.
(19) Memberships, subscriptions and professional activities.
(a) The cost of membership in civic, business, technical, and professional organizations is allowable, provided:
(i) The benefit from the membership is related to the program,
(ii) The expenditure is for agency membership,
(iii) The cost of the membership is reasonably related to the value of the services or benefits received, and
(iv) The expenditure is not for membership in an organization which devotes a substantial part of its activities to influencing legislation.
(b) Reference material. The cost of books, and subscriptions to civic, business, professional, and technical periodicals is allowable when related to the program.
(c) Meetings and conferences. Costs are allowable when the primary purpose of the meeting is the dissemination of technical information relating to the program and they are consistent with regular practices followed for other activities of the State agency.
(20) Motor pools. The costs of a service organization which provides automobiles to user State agencies at a mileage or fixed rate and/or provides vehicle maintenance, inspection and repair services are allowable.
(21) Payroll preparation. The cost of preparing payrolls and maintaining necessary wage records is allowable.
(22) Personnel administration. Costs for the recruitment, examination, certification, classification, training, establishment of pay standards, and related activities for the program are allowable.
(23) Printing and reproduction. Cost for printing and reproduction services necessary for program administration including but not limited to forms, reports, manuals, and information literature, is allowable. Publication costs of reports or other media relating to program accomplishments or results are allowable.
(24) Procurement service. The cost of procurement service, including solicitation of bids, preparation and award of contracts, and all phases of contract administration in providing goods, facilities and services for the program is allowable.
(25) Prosecution activities. The costs of investigations and prosecutions of intentional SNAP violations are allowable. Costs of investigation, prosecution, or claims collection which are performed by agencies other than the State agency shall be based on a formal agreement between the State or local agency and provider agency. These interagency agreements shall meet the requirements of this part in regard to allowable charges. Funding under these interagency agreements shall be provided by the State agency from their funds and funds made available by FNS.
(26) Taxes. In general, taxes or payments in lieu of taxes which the State agency is legally required to pay are allowable.
(27) Training and education. The cost of in-service training, customarily provided for employee development which directly or indirectly benefits the program is allowable. Out-of-service training involving extended periods of time is allowable only when specifically authorized by FNS.
(28) Transportation. Costs incurred for freight, cartage, express, postage, and other transportation costs relating either to goods purchased, delivered, or moved from one location to another are allowable.
(29) Travel. Travel costs are allowable for expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business incident to the program. Such costs may be charged on an actual basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two. The charges must be consistent with those normally allowed in like circumstances in nonfederally sponsored activities. The difference in cost between first-class air accommodations and less-than-first-class air accommodations is unallowable except when less-than-first-class air accommodations are not reasonably available. Notwithstanding the provisions of paragraphs C (7) and (10), travel costs of officials covered by those paragraphs, when specifically related to grant programs, are allowable with the prior approval of a grantor agency.
B. Costs allowable with approval of FNS.
(1) Automated Data Processing. The costs of acquiring data processing equipment and services used in the administration of SNAP are allowable. The costs of ADP equipment and services acquisitions which exceed the prior approval cost thresholds specified in § 277.18(c) are allowable upon the prior written approval of FNS. Requests for prior approval of such costs shall be in accordance with the provisions of § 277.18.
(2) Building space and related facilities. The cost of space in privately or publicly owned buildings used for the benefit of the Program is allowable subject to the following conditions.
(a) The total cost of space, whether in a privately or publicly owned building, may not exceed the rental cost of comparable space and facilities in a privately owned building in the same locality.
(b) The cost of space may not be charged to FNS for periods of nonoccupancy, without authorization of FNS.
(i) Rental cost. The rental cost of space in a privately-owned building is allowable.
(ii) Maintenance and operation. The cost of utilities, insurance, security, janitorial services, elevator service, upkeep of grounds, normal repairs and alterations and the like, are allowable to the extent they are not otherwise included in rental or other charges for space.
(iii) Rearrangements and alterations. Costs incurred for rearrangement and alteration of facilities required specifically for the program or those that materially increase the value or useful life of the facilities (section B(3) of these principles) are allowable when specifically approved by FNS.
(iv) Depreciation and use allowances on publicly owned buildings. These costs are allowable as provided in paragraph A(11) of these principles.
(v) Occupancy of space under rental-purchase or a lease with option-to-purchase agreement. The cost of space procured under such arrangements is allowable when specifically approved by FNS.
(3) Capital expenditures. The cost, net of any credits, of facilities, equipment, other capital assets, and repairs which materially increase the value or useful life of capital assets, and/or of nonexpendable personal property, having a useful life of more than one year and a net acquisition cost of more than $5,000 per unit after allocation to FNS as projected for one year after purchase, is allowable when such procurement is specifically approved by FNS. No such approval shall be granted unless the State agency shall demonstrate to FNS that such a cost is:
(a) Necessary and reasonable for proper and efficient administration of the program, and allocable thereto under the principles provided herein; and
(b) That procurement of such item or items has been or will be made in accordance with the standards set out in § 277.14. In no case shall such a cost become a program charge against FNS prior to approval in writing by FNS of the procurement and the cost. When assets acquired with SNAP funds are (i) sold, (ii) no longer available for use in a federally sponsored program, or (iii) used for purposes not authorized by FNS, FNS’s equity in the asset will be refunded in the same proportion as Federal participation in its cost. In case any assets are traded on new items, only the net cost of the newly acquired assets is allowable.
(4) Insurance.
(a) Cost of insurance to secure the State agency against financial losses involved in the acceptance, storage, and issuance of food coupons and ATP cards is allowable with FNS approval.
(b) Costs of other insurance in connection with the general conduct of activities are allowable subject to the following limitations:
(i) Types and extent and cost of coverage will be in accordance with general State or local government policy and sound business practice.
(ii) Costs of insurance or contributions to any reserve covering the risk of loss of, or damage to, Federal Government property are unallowable except to the extent that FNS approves such cost.
(5) Management studies. The cost of management studies to improve the effectiveness and efficiency of program management for SNAP is allowable. However, FNS must approve cost in excess of $2,500 for studies performed by outside consultants or agencies other than the State agency.
(6) Preagreement costs. Costs incurred prior to the effective date of approval of the amended indirect cost proposal or the revised Statewide cost allocation plan, whether or not they would have been allowable thereunder if incurred after such date, are allowable only when subsequently provided for in the plan or approved indirect cost proposal.
(7) Professional services. Cost of professional services rendered by individuals or organizations not a part of the State agency is allowable. Prior authorization must be obtained from FNS for cost exceeding a total of $2,500.
(8) Proposal costs. Costs of preparing indirect cost proposals or amendments for allocating, distributing, and implementing provisions for payment of portions of the costs of administering SNAP by the State agency are allowable.
(9) Cost incurred by agencies other than the State. The cost of services provided by other agencies (including municipal governments) may only include allowable direct costs plus a pro rata share of allowable supporting costs and supervision directly required in performing the service. Allowable supporting costs are those services which may be centralized and includes such functions as procurement, payroll, personnel services, maintenance and operation of space, data processing, accounting, budgeting, auditing, mail and messenger service and the like. Supervision costs will not include supervision of a general nature such as that provided by the head of a department and his staff assistants not directly involved in the operation of the program. In lieu of determining actual indirect cost related to a particular service performed by another agency, either of the following alternative methods may be used during the fiscal year involved and is specifically provided for in the indirect cost proposal:
(a) Standard indirect rate equal to ten percent of direct labor cost in providing the service (excluding overtime, shift or holiday premiums, and fringe benefits) may be allowed in lieu of actual allowable cost.
(b) A predetermined fixed rate for indirect cost of the unit or activity providing service may be negotiated.
C. Unallowable costs. The following costs shall not be allowable:
(1) Costs of determining SNAP eligibility incidental to the determination of TANF eligibility are not chargeable to FNS.
(2) Bad debts. Any losses arising from uncollectible accounts or other claims, and related costs, are unallowable.
(3) Contingencies. Contributions to a contingency reserve or any similar provision for unforeseen events are unallowable.
(4) Contributions and donations. Unallowable.
(5) Entertainment. Costs whose purpose is for amusement, social activities, and incidental costs relating thereto, such as meals, beverages, lodgings, rentals, transportation, and gratuities are unallowable.
(6) Fines and penalties. Costs resulting from violations of or failure to comply with Federal, State and local laws and regulations are unallowable.
(7) Governor’s expenses. The salaries and expenses of the Office of the Governor of a State or the chief executive of a political subdivision are considered a cost of general State or local government and are unallowable. However, for a federally-recognized Indian tribal government, only that portion of the salaries and expenses of the office of the chief executive that is a cost of general government is unallowable. The portion of salaries and expenses directly attributable to managing and operating programs is allowable.
(8) Indemnification. The cost of indemnifying the State against liabilities to third parties and other losses not compensated by insurance is unallowable.
(9) Interest and other financial costs. Interest on borrowings, bond discounts, cost of financing and refinancing operations, and legal and professional fees paid in connection therewith, are unallowable.
(10) Legislative expenses. Salaries and other expenses of the State legislature or similar local governmental bodies are unallowable.
(11) Losses. Losses which could have been covered by permissible insurance are unallowable.
(12) Underrecovery of cost under agreements. Any excess of cost over Federal contribution under one agreement is unallowable under another agreement.
(13) The acquisition of land or buildings is an unallowable cost.
PART 278—PARTICIPATION OF RETAIL FOOD STORES, WHOLESALE FOOD CONCERNS AND INSURED FINANCIAL INSTITUTIONS
§ 278.1 Approval of retail food stores and wholesale food concerns.
(a) Application. Any firm desiring to participate or continue to be authorized in the program shall file an application as prescribed by FNS. Such an application shall contain information which will permit a determination to be made as to whether such an applicant qualifies, or continues to qualify, for authorization under the provisions of the program. FNS may require that a retail food store or wholesale food concern be visited to confirm eligibility for program participation prior to such store or concern being authorized or reauthorized in the program. Required visits shall be conducted by an authorized employee of the Department, a designee of the Secretary, or an official of the State or local government designated by the Secretary. FNS shall approve or deny the application within 45 days of receipt of a completed application. A completed application means that all information (other than an on-site visit) that FNS deems necessary in order to make a determination on the firm’s application has been received. This information includes, but is not limited to, a completed application form, all information and documentation from the applicant, as well as any needed third-party verification and documentation.
(b) Determination of authorization. An applicant shall provide sufficient data and information on the nature and scope of the firm’s business for FNS to determine whether the applicant’s participation will further the purposes of the program. Upon request, an applicant shall provide documentation to FNS to verify information on the application. Such information may include, but is not limited to, State and local business licenses, Social Security cards, drivers’ licenses, photographic identification cards, bills of sale, deeds, leases, sales contracts, State certificates of incorporation, sales records, invoice records and business-related tax records. Retail food stores and wholesale food concerns and other entities eligible for authorization also shall be required to sign a release form which will authorize FNS to verify all relevant business related tax filings with appropriate agencies. In addition, they must obtain corroborating documentation from other sources as deemed necessary to ensure the legitimacy of applicant firms, as well as the accuracy of information provided by the stores and concerns. Failure to comply with any request for information or failure to sign a written release form shall result in denial of the application for authorization or withdrawal of a firm or concern from the program. In determining whether a firm qualifies for authorization, FNS shall consider all of the following:
(1) The nature and extent of the food business conducted by the applicant—(i) Retail food store. (A) An establishment or house-to-house trade route shall normally be considered to have food business of a nature and extent that will effectuate the purposes of the program if it sells food for home preparation and consumption and meets one of the following criteria: Offer for sale, on a continuous basis, a variety of qualifying foods in each of the four categories of staple foods as defined in § 271.2 of this chapter, including perishable foods in at least three of the categories (Criterion A); or have more than 50 percent of the total gross retail sales of the establishment or route in staple foods (Criterion B).
(B) A retail food store must meet eligibility determination factors which may be based on, but not limited to, visual inspection, sales records, purchase records, counting of stockkeeping units, or other inventory or accounting recordkeeping methods that are customary or reasonable in the retail food industry. In determining eligibility, such information may be requested for verification purposes, and failure to provide such documentation may result in denial or withdrawal from the program.
(ii) Application of Criterion A. In order to qualify under this criterion, firms shall:
(A) Offer for sale and normally display in a public area, qualifying staple food items on a continuous basis, evidenced by having, on any given day of operation, no fewer than seven different varieties of food items in each of the four staple food categories with a minimum depth of stock of three stocking units for each qualifying staple variety and at least one variety of perishable foods in at least three staple food categories. Documentation to determine if a firm stocks a sufficient amount of required staple foods to offer them for sale on a continuous basis may be required in cases where it is not clear that the firm has made reasonable stocking efforts to meet the stocking requirement. Such documentation can be achieved through verifying information, when requested by FNS, such as invoices and receipts in order to prove that the firm had ordered and/or received a sufficient amount of required staple foods up to 21 calendar days prior to the date of the store visit. Failure to provide verifying information related to stock when requested may result in denial or withdrawal of authorization. Failure to cooperate with store visits shall result in the denial or withdrawal of authorization.
(B) Offer for sale perishable staple food items in at least three staple food categories. Perishable foods are items which are either frozen staple food items or fresh, unrefrigerated or refrigerated staple food items that will spoil or suffer significant deterioration in quality within 2-3 weeks; and
(C) Offer a variety of staple foods which means different types of foods within each staple food category. For example: Apples, cabbage, tomatoes, bananas, pumpkins, broccoli, and grapes in the vegetables or fruits category; or cow milk, almond milk, soy yogurt, soft cheese, butter, sour cream, and cow milk yogurt in the dairy products category; or rice, bagels, pitas, bread, pasta, oatmeal, and whole wheat flour in the bread or cereals category; or chicken, beans, nuts, beef, pork, eggs, and tuna in the meat, poultry, or fish category. Variety of foods is not to be interpreted as different brands, nutrient values (e.g., low sodium and lite), flavorings (e.g., vanilla and chocolate), packaging types or styles (e.g., canned and frozen) or package sizes of the same or similar foods. Similar food items such as, but not limited to, tomatoes and tomato juice, different types of rice, whole milk and skim milk, ground beef and beefsteak, or different types of apples (e.g., Empire, Jonagold, and McIntosh), shall count as depth of stock but shall not each be counted as more than one staple food variety for the purpose of determining the number of varieties in any staple food category. Accessory foods shall not be counted as staple foods for purposes of determining eligibility to participate in SNAP as a retail food store.
(iii) Application of Criterion B. In order to qualify under this criterion, firms must have more than 50 percent of their total gross retail sales in staple food sales. Total gross retail sales must include all retail sales of a firm, including food and non-food merchandise, as well as services, such as rental fees, professional fees, and entertainment/sports/games income. However, a fee directly connected to the processing of staple foods, such as raw meat, poultry, or fish by the service provider, may be calculated as staple food sales under Criterion B.
(iv) Ineligible firms. Firms that do not meet the eligibility requirements in this section or that do not effectuate the purpose of SNAP shall not be eligible for program participation. New applicant firms that are found to be ineligible will be denied authorization to participate in the program, and authorized retail food stores found to be ineligible will be withdrawn from program participation. Ineligible firms under this paragraph include, but are not limited to, stores selling only accessory foods, including spices, candy, soft drinks, tea, or coffee; ice cream vendors selling solely ice cream; and specialty doughnut shops or bakeries not selling bread. In addition, firms that are considered to be restaurants, that is, firms that have more than 50 percent of their total gross sales in foods cooked or heated on-site by the retailer before or after purchase; and hot and/or cold prepared foods not intended for home preparation or consumption, including prepared foods that are consumed on the premises or sold for carryout, shall not qualify for participation as retail food stores under Criterion A orB. This includes firms that primarily sell prepared foods that are consumed on the premises or sold for carryout. Such firms may qualify, however, under the special restaurant programs that serve the elderly, disabled, and homeless populations, as set forth in paragraph (d) of this section.
(v) Wholesale food concerns. Wholesale food concerns, the primary business of which is the sale of eligible food at wholesale, and which meet the staple food requirements in paragraph (b) of this section, shall normally be considered to have adequate food business for the purposes of the program, provided such concerns meet the criteria specified in paragraph (c) of this section.
(vi) Co-located wholesale food concerns. No co-located wholesale/retail food concern with 50 percent or less of its total sales in retail food sales may be authorized to redeem SNAP benefits unless it meets the criteria applicable to all retail firms and:
(A) It is a legitimate retail food outlet. Indicators which may establish to FNS that a firm is a legitimate retail food outlet include, but are not limited to, the following:
(1) The firm’s marketing structure; as may be determined by factors such as, but not limited to:
(i) A retail business license;
(ii) The existence of sales tax records documenting retail food sales; and/or separate bookkeeping records; and
(2) The way the firm holds itself out to the public as evidenced by factors such as, but not limited to:
(i) The layout of the retail sales space;
(ii) The use of retail advertisements;
(iii) The posting of retail prices;
(iv) Offering specials to attract retail customers;
(v) Hours of operation for retail business;
(vi) Parking area for retail customers; and
(B) It has total annual retail food sales of at least $250,000; or
(C) It is a legitimate retail outlet but fails to meet the requirements in paragraph (b)(1)(iv)(B) of this section, and not authorizing such a firm would cause hardship to SNAP households. Hardship would occur in any one of the following circumstances:
(1) Program recipients would have difficulty in finding authorized firms to accept their coupons for eligible food;
(2) Special ethnic foods would not otherwise be available to recipients; or
(3) Recipients would be deprived of an opportunity to take advantage of unusually low prices offered by the firm if no other authorized firm in the area offers the same types of food items at comparable prices.
(2) The volume of coupon business which FNS may reasonably expect the firm to do. The FNS officer in charge may consider such factors as the location of a store and previous food sales volumes in evaluating the ability of an applicant firm to attract SNAP business.
(3) The business integrity and reputation of the applicant. FNS shall deny the authorization of any firm from participation in the program for a period of time as specified in paragraph (k) of this section based on consideration of information regarding the business integrity and reputation of the firm as follows:
(i) Conviction of or civil judgment against the owners, officers or managers of the firm for:
(A) Commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public or private agreement or transaction;
(B) Commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, or obstruction of justice; or
(C) Violation of Federal, State and/or local consumer protection laws or other laws relating to alcohol, tobacco, firearms, controlled substances, and/or gaming licenses;
(ii) Administrative findings by Federal, State or local officials that do not give rise to a conviction or civil judgment but for which a firm is removed from such a program, or the firm is not removed from the program but FNS determines a pattern exists (3 or more instances) evidencing a lack of business integrity on the part of the owners, officers or managers of the firm;
(iii) Evidence of an attempt by the firm to circumvent a period of disqualification, a civil money penalty or fine imposed for violations of the Food and Nutrition Act of 2008 and program regulations;
(iv) Previous SNAP violations administratively and/or judicially established as having been committed by owners, officers, or managers of the firm for which a sanction had not been previously imposed and satisfied;
(v) Evidence of prior SNAP violations personally committed by the owner(s) or the officer(s) of the firm at one or more units of a multi-unit firm, or evidence of prior SNAP violations committed by management at other units of multi-unit firms which would indicate a lack of business integrity on the part of ownership and for which sanctions had not been previously imposed and satisfied; or
(vi) Commission of any other offense indicating a lack of business integrity or business honesty of owners, officers or managers of the firm that seriously and directly affects the present responsibility of a person.
(4) The submission of collateral bonds or irrevocable letters of credit for firms with previous sanctions. (i) If the applicant firm has been sanctioned for violations of this part, by withdrawal, or disqualification for a period of more than six months, or by a civil money penalty in lieu of a disqualification period of more than six months, or if the applicant firm has been previously sanctioned for violations and incurs a subsequent sanction, regardless of the disqualification period, FNS shall, as a condition of future authorization, require the applicant to present a collateral bond or irrevocable letter of credit that meets the following conditions:
(A) The collateral bond must be issued by a bonding agent/company recognized under the law of the State in which the applicant is conducting business and which is represented by a negotiable certificate only. The irrevocable letter of credit must be issued by a commercial bank;
(B) The collateral bond or irrevocable letter of credit must be made payable to the Food and Nutrition Service, U.S. Department of Agriculture;
(C) The collateral bond cannot be canceled by the bonding agent/company for non-payment of the premium by the applicant. The irrevocable letter of credit cannot be canceled by the commercial bank for non-payment by the applicant;
(D) The collateral bond or irrevocable letter of credit must have a face value of $1,000 or an amount equal to ten percent of the average monthly SNAP benefit redemption volume of the applicant for the immediate twelve months prior to the effective date of the most recent sanction which necessitated the collateral bond or irrevocable letter of credit, whichever amount is greater;
(E) The applicant is required to submit a collateral bond or irrevocable letter of credit that is valid for a period of five years when re-entering the program; and
(F) The collateral bond or irrevocable letter of credit shall remain in the custody of FNS unless released to the applicant as a result of the withdrawal of the applicant’s authorization, without a fiscal claim established against the applicant by FNS.
(ii) Furnishing a collateral bond or irrevocable letter of credit shall not eliminate or reduce a firm’s obligation to pay in full any civil money penalty or previously determined fiscal claim which may have been assessed against the firm by FNS prior to the time the bond or letter of credit was required by FNS, and furnished by the firm. A firm which has been assessed a civil money penalty shall pay FNS as required, any subsequent fiscal claim asserted by FNS. In such cases a collateral bond or irrevocable letter of credit shall be furnished to FNS with the payment, or a schedule of intended payments, of the civil money penalty. A buyer or transferee shall not, as result of the transfer or purchase of a disqualified firm, be required to furnish a bond or letter of credit prior to authorization.
(5) Taxpayer identification numbers. At the time of an initial request for authorization as well as reauthorization, an applicant firm must provide its employer identification number and social security numbers as described below:
(i) Employer Identification Number. The firm must provide its employer identification number (EIN) if one has been assigned to the firm by the Internal Revenue Service. The authority to request EINs and the guidelines for requesting EINs are set forth in section 6109(f) of the Internal Revenue Code of 1986 and Treas. Reg. § 301.6109-2 (26 CFR 301.6109-2).
(ii) Social Security Number. In addition to the EIN, the firm must provide the social security numbers (SSNs) of the following individuals:
(A) The SSN of an owner of a sole proprietorship.
(B) The SSNs of general partners of firms which are partnerships.
(C) The SSNs of up to five of the largest shareholders (owners) of privately owned corporations. (For purposes of this section, a privately owned corporation is one which has shares or stock that are not traded on a stock exchange or available for purchase by the general public.)
(6) Need for access. FNS will consider whether the applicant firm is located in an area with significantly limited access to food when the applicant firm fails to meet Criterion A per paragraph (b)(1)(ii) or Criterion B per paragraph (b)(1)(iii) of this section so long as the applicant firm meets all other SNAP authorization requirements. In determining whether an applicant is located in such an area, FNS may consider access factors such as, but not limited to, the distance from the applicant firm to the nearest currently SNAP authorized firm and transportation options. In determining whether to authorize an applicant despite its failure to meet Criterion A and Criterion B, FNS will also consider factors such as, but not limited to, the extent of the applicant firm’s stocking deficiencies in meeting Criterion A and Criterion B and whether the store furthers the purposes of the Program. Such considerations will be conducted during the application process as described in paragraph (a) of this section.
(7) Other factors. Any other factors which the FNS officer in charge considers pertinent to the application under consideration.
(c) Wholesalers. A wholesale food concern may be authorized to accept coupons only from a specified customer or customers if it meets the requirements of paragraphs (a) and (b) of this section, and FNS determines it is required as a redemption outlet:
(1) For one or more specified authorized drug addict or alcoholic treatment programs,
(2) For one or more specified authorized group living arrangements,
(3) For one or more specified authorized shelters for battered women and children,
(4) For one or more specified authorized nonprofit cooperative food-purchasing ventures,
(5) For one or more specified authorized public or private nonprofit homeless meal providers, or
(6) For one or more specified authorized retail food stores which are without access to an insured financial institution which will redeem their coupons.
(d) Meal services. A meal delivery service or communal dining facility desiring to prepare and serve meals to households eligible to use coupons for those meals in addition to meeting the requirements of paragraphs (a) and (b) of this section, must establish that:
(1) It is recognized as a tax exempt organization by the Internal Revenue Service; or
(2) It is a senior citizens’ center or apartment building occupied primarily by elderly persons and SSI recipients, and their spouses; or
(3) It is a restaurant operating under a contract with a State or local agency to prepare and serve (or deliver) low-cost meals to homeless persons, elderly persons and SSI recipients (and in the case of meal delivery services, to elderly persons or handicapped persons) and their spouses. Such a facility must have more than 50 percent of its total sales in food. The contracts of restaurants must specify the approximate prices which will be charged.
(e) Treatment programs. Drug addict or alcoholic treatment and rehabilitation programs wishing to redeem benefits shall in addition to meeting the requirements of paragraphs (a), (b) and (d)(1) of this section, be under Part B of Title XIX of the Public Health Service Act (42 U.S.C. 300x et seq.). Approval to participate is automatically withdrawn once the treatment and rehabilitation program no longer meets the criteria which would make it eligible for funding under part B of Title XIX (in accordance with the definition in Drug addiction or alcoholic treatment and rehabilitation program in § 271.2).
(f) Group living arrangements. FNS shall authorize as retail food stores those group living arrangements wishing to redeem benefits. The group living arrangement must, in addition to meeting requirements of paragraphs (a), (b), and (d)(1) of this section, be certified by the appropriate agency or agencies of the State under regulations issued under section 1616(e) of the Social Security Act or under standards determined by the Secretary to be comparable to standards implemented by appropriate State agencies under section 1616(e) of the Social Security Act. Approval to participate is automatically cancelled at any time that a program loses its certification from the State agency or agencies.
(g) Shelters for battered women and children. FNS shall authorize as retail food stores those shelters for battered women and children wishing to redeem benefits. The shelter must be public or private nonprofit, as defined in paragraph (d)(1) of this section, and meet the requirements of paragraphs (a) and (b) of this section. Shelters which also serve other groups of individuals must have a portion of the facility set aside on a long-term basis to shelter battered women and children. Also required is that the shelter be a residence which serves meals or provides food to its residents.
(h) House-to-house trade routes. FNS shall, in consultation with the Department’s Office of Inspector General, determine those locations where the operation of trade routes damages the program’s integrity. FNS may limit the authorization of house-to-house trade routes to those trade routes whose services are required by participating households in such areas in order to obtain food. The FNS Officer in Charge, in deciding whether households in such areas require a trade route’s services, shall consider the volume of food business the trade route does and the availability of alternate sources of comparable food. An FNS official shall inspect any applicant trade route’s vehicle to ensure that the trade route is a retail food store before authorizing it to accept coupons. An FNS official may require, as a condition of continuing authorization, that the trade route vehicle be reinspected semiannually to ensure that it continues to be a retail food store.
(i) Private homeless meal providers. FNS may authorize as retail food stores those restaurants which contract with the appropriate State agency to serve meals to homeless persons at “concessional” (low or reduced) prices. Restaurants shall be responsible for obtaining contracts with the appropriate State agency as defined in § 272.9 and for providing a copy of the contract to FNS at the time it applies for authorization to accept SNAP benefits. Contracts must specify the approximate prices which will be charged. Examples of reduced prices include, but are not limited to, a percentage reduction, a set dollar amount reduction, a daily special meal, or an offer of a free food item or beverage (excluding alcoholic beverages).
(j) Authorization. Upon approval, FNS shall issue a nontransferable authorization card to the firm. The authorization card shall be valid only for the time period for which the firm is authorized to accept and redeem SNAP benefits. The authorization card shall be retained by the firm until such time as the authorization period has ended, authorization in the program is superseded, or the card is surrendered or revoked as provided in this part. All firms will be authorized in the program for a period of 5 years. The specification of an authorization period in no way precludes FNS from periodically requesting information from a firm for purposes of reauthorization in the program or from withdrawing or terminating the authorization of a firm in accordance with this part.
(k) Denying authorization. FNS shall deny the application of any firm if it determines that:
(1) The firm does not qualify for participation in the program as specified in paragraph (b), (c), (d), (e), (f), (g), (h) or (i) of this section; or
(2) The firm has failed to meet the eligibility requirements for authorization under Criterion A or Criterion B, as specified in paragraph (b)(1)(i) of this section; or, for co-located wholesale/retail firms, the firm fails to meet the requirements of paragraph (b)(1)(vi) of this section. Any firm that has been denied authorization on these bases shall not be eligible to submit a new application for authorization in the program for a minimum period of six months from the effective date of the denial;
(3) The firm has been found to lack the necessary business integrity and reputation to further the purposes of the program. Such firms shall be denied authorization in the program for the following period of time:
(i) Firms for which records of criminal conviction or civil judgment exist that reflect on the business integrity of owners, officers, or managers as stipulated in § 278.1(b)(3)(i) shall be denied authorization permanently;
(ii) Firms which have been officially removed from other Federal, State or local government programs through administrative action shall be denied for a period equivalent to the period of removal from any such programs; or, if the firm is not removed from the program, but FNS determines a pattern (3 or more instances) exists evidencing a lack of business integrity on the part of the owners, officers or managers of the firm, such firm shall be denied for a one year period effective from the date of denial;
(iii) Firms for which evidence exists of an attempt to circumvent a period of disqualification, a civil money penalty, or fine imposed for violations of the Food and Nutrition Act of 2008, as amended, and program regulations shall be denied for a period of three years from the effective date of denial;
(iv) Firms for which evidence exists of prior SNAP violations by owners, officers, or managers of the firm for which a sanction had not been previously imposed and satisfied shall be denied for a period of time equivalent to the appropriate disqualification period for such previous violations, effective from the date of denial;
(v) Firms for which evidence exists of prior SNAP violations at other units of multi-unit firms as specified in § 278.1(b)(3)(v) for which a sanction had not been previously imposed and satisfied shall be denied for a period of time equivalent to the appropriate disqualification period for such previous violations, effective from the date of denial;
(vi) Firms for which any other evidence exists which reflects negatively on the business integrity or business honesty of the owners, officers or managers of the firm as specified in § 278.1(b)(3)(vi) shall be denied for a period of one year from the effective date of denial;
(4) The firm has filed an application that contains false or misleading information about a substantive matter, as specified in § 278.6(e). Such firms shall be denied authorization for the periods specified in § 278.6(e)(1) or § 278.6(e)(3);
(5) The firm’s participation in the program will not further the purposes of the program;
(6) The firm has been found to be circumventing a period of disqualification or a civil money penalty through a purported transfer of ownership;
(7) The firm has failed to pay in full any fiscal claim assessed against the firm under § 278.7, any fines assessed under §§ 278.6(l) or 278.6(m), or a transfer of ownership civil money penalty assessed under § 278.6(f). The FNS officer in charge shall issue a notice to the firm (using any delivery method that provides evidence of delivery) to inform the firm of any authorization denial and advise the firm that it may request review of that determination.
(l) Withdrawing authorization. (1) FNS shall withdraw the authorization of any firm authorized to participate in the program for any of the following reasons.
(i) The firm’s continued participation in the program will not further the purposes of the program;
(ii) The firm fails to meet the specifications of paragraph (b), (c), (d), (e), (f), (g), (h), or (i) of this section;
(iii) The firm fails to meet the requirements for eligibility under Criterion A or B, as specified in paragraph (b)(1)(i) of this section; or, for co-located wholesale/retail firms, the firm fails to meet the requirements of paragraph (b)(1)(vi) of this section, for the time period specified in paragraph (k)(2) of this section;
(iv) The firm fails to maintain the necessary business integrity to further the purposes of the program, as specified in paragraph (b)(3) of this section. Such firms shall be withdrawn for lack of business integrity for periods of time in accordance with those stipulated in paragraph (k)(3) of this section for specific business integrity findings;
(v) The firm has failed to pay in full any fiscal claim assessed against the firm under § 278.7 or any fines assessed under §§ 278.6(l) or 278.6(m) or a transfer of ownership civil money penalty assessed under § 278.6(f); or
(vi) The firm has failed to pay fines assessed under § 278.6(l) or § 278.6(m); or
(vii) The firm is required under State and/or local law to charge tax on eligible food purchased with coupons or to sequence or allocate purchases of eligible foods made with coupons and cash in a manner inconsistent with 272.1 of these regulations.
(2) The FNS officer in charge shall issue a notice to the firm by using any delivery method as long as the method provides evidence of delivery to inform the firm of the determination and of the review procedure. FNS shall remove the firm from the program if the firm does not request review within the period specified in part 279.
(m) Refusal to accept correspondence or to respond to inquiries. FNS may withdraw or deny the authorization of any firm which:
(1) Refuses to accept correspondence from FNS;
(2) Fails to respond to inquiries from FNS within a reasonable time; or
(3) Cannot be located by FNS with reasonable effort.
(n) Periodic reauthorization. At the request of FNS a retail food store or wholesale food concern will be required to undergo a periodic reauthorization determination by updating any or all of the information on the firm’s application form. Failure to cooperate in the reauthorization process will result in withdrawal of the firm’s approval to participate in the program.
(o) Applications containing false information. The filing of any application containing false or misleading information may result in the denial of approval for participation in the program, as specified in paragraph (k) of this section, or disqualification of a firm from participation in the program, as specified in § 278.6, and may subject the firm and persons responsible to civil or criminal action.
(p) Administrative review. Any withdrawal or denial of authorization to participate in the program shall be subject to administrative review under part 279.
(q) Use and disclosure of information provided by firms. With the exception of EINs and SSNs, any information collected from retail food stores and wholesale food concerns, such as ownership information and sales and redemption data, may be disclosed for purposes directly connected with the administration and enforcement of the Food and Nutrition Act of 2008 and these regulations, and can be disclosed to and used by State agencies that administer the Special Supplemental Nutrition Program for Women, Infants and Children (WIC). Such information may also be disclosed to and used by Federal and State law enforcement and investigative agencies for the purpose of administering or enforcing other Federal or State law, and the regulations issued under such other law. Such disclosure and use shall also include companies or individuals under contract for the operation by, or on behalf of FNS to accomplish an FNS function. Such purposes include the audit and examination of such information by the Comptroller General of the United States authorized by any other provision of law. Any person who publishes, divulges, discloses, or makes known in any manner or to any extent not authorized by Federal law or regulations any information obtained under this paragraph shall be fined not more than $1,000 or imprisoned not more than 1 year, or both. Safeguards with respect to employee identification numbers (EINs) are contained in paragraph (q)(2) of this section. Safeguards with respect to Social Security numbers (SSNs) are contained in paragraph (q)(3) of this section.
(1) Criteria for requesting information. FNS shall determine what information can be disclosed and which government agencies have access to that information based on the following criteria:
(i) Federal and State law enforcement or investigative agencies or instrumentalities administering or enforcing specified Federal and State laws, or regulations issued under those laws, have access to certain information maintained by FNS. Such agencies or instrumentalities must have among their responsibilities the enforcement of law or the investigation of suspected violations of law. However, only certain Federal entities have access to information involving SSNs and EINs in accordance with paragraph (q)(1)(ii) of this section;
(ii) Except for SSNs and EINs, information provided to FNS by applicants and authorized firms participating in the FSP may be disclosed and used by qualifying Federal and State entities in accordance with paragraph (q)(1)(i) of this section. The disclosure of SSNs and EINs is limited only to qualifying Federal agencies or instrumentalities which otherwise have access to SSNs and EINs based on law and routine use. Release of information under this paragraph shall be limited to information relevant to the administration or enforcement of the specified laws and regulations, as determined by FNS;
(iii) Requests for information must be submitted in writing, including electronic communication, and must clearly indicate the specific provision of law or regulations which would be administered or enforced by access to requested information, and the relevance of the information to those purposes. If a formal agreement exists between FNS and another agency or instrumentality, individual written requests may be unnecessary. FNS may request additional information if needed to clarify a request;
(iv) Disclosure by FNS is limited to: Information about applicant stores and concerns with applications on file; information about authorized stores participating in the FSP; and information about unauthorized entities or individuals illegally accepting or redeeming SNAP benefits;
(v) Requests for information disclosure by FNS may involve a specific store or concern, or some or all stores and concerns covered by paragraph (q)(1)(iv) of this section. In addition, FNS may sign agreements allowing certain government entities direct access to appropriate FNS data, with access to EINs and SSNs limited only to other Federal agencies and instrumentalities that otherwise have access to such numbers.
(2) Employer identification numbers. (i) The Department may have access to the EINs obtained pursuant to paragraph (b)(5) of this section for the purpose of establishing and maintaining a list of the names and EINs of the stores and concerns for use in determining those applicants who previously have been sanctioned or convicted under sections 12 and 15 of the Food and Nutrition Act of 2008, as amended, (7 U.S.C. 2021 or 2024). The Department also may share EINs with other Federal agencies and instrumentalities that otherwise have access to EINs if the Department determines that such sharing would assist in verifying and matching such information against information maintained by such other agency or instrumentality. Any such information shared pursuant to this paragraph may be used by the Department or such other agency or instrumentality for the purpose of effective administration and enforcement of the Food and Nutrition Act of 2008, as amended, or for the purpose of investigating violations of other Federal laws or enforcing such laws. See Treas. Reg. § 301.6109-2 (b) and (c) (26 CFR 301.6109-2 (b) and (c)).
(ii) The only persons permitted access to EINs obtained pursuant to paragraph (b) of this section are officers and employees of the United States, who otherwise have access and whose duties or responsibilities require access to the EINs for the administration or enforcement of the Food and Nutrition Act of 2008, as amended, or for the purpose of investigating violations of other Federal laws or enforcing such laws. See Treas. Reg. § 301.6109-2(d)(1) (26 CFR 301.6109-2(d)(1)).
(iii) The Department or any agency or instrumentality of the United States shall provide for any additional safeguards that the Secretary of the Treasury determines to be necessary or appropriate to protect the confidentiality of the EINs. The Department may also provide for any additional safeguards to protect the confidentiality of EINs so long as these safeguards are consistent with any safeguards determined by the Secretary of the Treasury to be necessary or appropriate. See Treas. Reg. § 301.6109-2(d)(2) (26 CFR 301.6109-2(d)(2)).
(iv) EINs maintained by the Department or maintained by any agency or instrumentality of the United States pursuant to § 278.1(b)(5) are confidential. Except as provided in paragraph (q)(2)(ii) of this section above, no officer or employee of the United States who has or had access to any such EIN may disclose that number in any manner. For purposes of paragraph (q)(2)(iv) of this section the term officer or employee includes a former officer or employee. See Treas. Reg. § 301.6109-2(e) (26 CFR 301.6109(e)).
(v) Sections 7213(a) (1), (2) and (3) of the Internal Revenue Code of 1986 apply with respect to the unauthorized, willful disclosure to any person of EINs obtained by the Department pursuant to § 278.1(b)(5) in the same manner and to the same extent as sections 7213(a) (1), (2) and (3) apply with respect to unauthorized disclosure of returns and return information described in those sections. Section 7213(a)(4) of the Internal Revenue Code of 1986 applies with respect to the willful offer of any item of material value in exchange for any EIN obtained by the Department pursuant to § 278.1(b)(5) in the same manner and to the same extent as section 7213(a)(4) applies with respect to offers (in exchange for any return or return information) described in that section. See Treas. Reg. § 301.6109-2(f) (26 CFR 301.6109-2(f)).
(3) Social Security numbers. (i) The Department may have access to SSNs obtained pursuant to paragraph (b)(5) of this section for the purpose of establishing and maintaining a list of names and SSNs of stores and concerns for use in determining those applicants who previously have been sanctioned or convicted under section 12 or 15 of the Food and Nutrition Act of 2008, as amended, (7 U.S.C. 2021 or 2024). The Department may use this determination of sanctions and convictions in administering sections 12 and 15 of the Food and Nutrition Act of 2008, as amended, (7 U.S.C. 2018, 2021). The Department also may share SSNs with other Federal agencies and instrumentalities if the Department determines that such sharing would assist in verifying and matching such information against information maintained by the Department or such other agency or instrumentality. Any such information shared pursuant to this paragraph shall be used for the purpose of effective administration and enforcement of the Food and Nutrition Act of 2008, as amended, or for the purpose of investigating violations of other Federal laws or enforcing such laws.
(ii) The only persons permitted access to SSNs obtained pursuant to paragraph (b) of this section are officers and employees of the United States, who otherwise have access, and whose duties or responsibilities require access to the SSNs for the administration or enforcement of the Food and Nutrition Act of 2008, as amended, or for the purpose of investigating violations of other Federal laws or enforcing such laws. Such access shall also include companies or individuals under contract for the operation by, or on behalf of FNS to accomplish an FNS function.
(iii) The Department shall provide for all additional safeguards that the Commissioner of the Social Security Administration determines to be necessary or appropriate to protect the confidentiality of the SSNs. The Department may also provide for any additional safeguards to protect the confidentiality of SSNs so long as these safeguards are consistent with any safeguards determined by the Commissioner of the Social Security Administration to be necessary or appropriate.
(iv) The SSNs and related records that are obtained or maintained by authorized persons are confidential, and no officer or employee shall disclose any such SSN or related record except as authorized. The term “related record” means any record, list, or compilation that indicates, directly or indirectly, the identity of any individual with respect to whom a request for a SSN is maintained. For purposes of paragraph (r)(3)(iv) of this section the term “officer or employee” includes a former officer or employee.
(v) The sanctions under sections 7213(a) (1), (2) and (3) of the Internal Revenue Code of 1986 will apply with respect to the unauthorized, willful disclosure to any person of SSNs and related records obtained or maintained in the same manner and to the same extent as sections 7213(a) (1), (2) and (3) apply with respect to unauthorized disclosures of returns and return information described in those sections. The sanction under section 7213(a)(4) of the Internal Revenue Code of 1986 will apply with respect to the willful offer of any item of material value in exchange for any SSN or related record in the same manner and to the same extent as section 7213(a)(4) applies with respect to offers (in exchange for any return or return information) described in that section.
(4) FNS initiated matches. Under the restrictions noted in paragraph (r) of this section, FNS will periodically initiate cross matches of retailer data with other Federal and State agencies’ files for the purpose of verifying information provided by applicant and participating firms, and for the purposes of administering and enforcing other Federal or State laws. Such matches could involve all firms participating after implementation for the purpose of verifying information such as, but not limited to, SSNs and retail sales data.
(5) Public disclosure of firms sanctioned for SNAP violations. FNS may disclose information to the public when a retail food store has been disqualified or otherwise sanctioned for violations of the Program after the time for administrative and judicial appeals has expired. This information is limited to the name and address of the store, the owner(s’) name(s) and information about the sanction itself. FNS may continue to disclose this information for as long as the duration of the sanction. In the event that a sanctioned firm is assigned a civil penalty in lieu of a period of disqualification, as described in § 278.6(a), FNS may continue to disclose this information for as long as the duration of the period of disqualification or until the civil penalty has been paid in full, whichever is longer.
(r) Public and Private Nonprofit Homeless Meal Providers. FNS shall authorize as retail food stores, those public and private nonprofit homeless meal providers which apply and qualify for authorization to accept SNAP benefits from homless SNAP recipients. Such meal providers must be public or private nonprofit organizations as defined by the Internal Revenue Service (I.R.C. 501(c)(3)), must serve meals that include food purchased by the provider, must meet the requirements of paragraphs (a) and (b) of this section, and must be approved by an appropriate State or local agency, pursuant to § 272.9. Public and private nonprofit homeless meal providers shall be responsible for obtaining approval from an appropriate State or local agency and shall provide written documentation of such approval to FNS prior to approval of the meal provider’s application for authorization. (If such approval is subsequently withdrawn, FNS authorization shall be withdrawn). Public and private nonprofit homeless meal providers serving meals which consist wholly of donated foods shall not be eligible for authorization. In an area in which FNS, in consultation with the Department’s Office of Inspector General, finds evidence that the authorization of a public and private nonprofit homeless meal provider would damage SNAP’s integrity, FNS shall limit the participation of that public and private nonprofit homeless meal provider, unless FNS determines that the establishment or shelter is the only one of its kind serving the area.
(s) Each authorized retail food store shall post in a suitable and conspicuous location in the store a sign designed and provided by FNS which provides information on how persons may report abuses they have observed in the operation of the program. Refusal or repeated failure to display such a sign by an authorized retail food store may result in the withdrawal of the firm’s approval to participate in the program.
(t) Periodic notification. The FNS will issue periodic notification to participating retail stores and wholesale food concerns to clarify program eligibility criteria, including the definitions of “Retail food store”, “Staple foods”, “Eligible foods”, and “Perishable foods”. At a minimum, such information will be provided to stores at the time of authorization, reauthorization and upon request.
§ 278.2 Participation of retail food stores.
(a) Use of coupons. Coupons may be accepted by an authorized retail food store only from eligible households or the households’ authorized representative, and only in exchange for eligible food. Coupons may not be accepted in exchange for cash, except when cash is returned as change in a transaction in which coupons were accepted in payment for eligible food under pargraph (d) of this section. Coupons may not be accepted in payment of interest on loans or for any other nonfood use. An authorized retail food store may not accept coupons from another retail food store, except that public or private nonprofit homeless meal providers may redeem coupons for eligible food through authorized retail food stores.
(b) Equal treatment for coupon customers. Coupons shall be accepted for eligible foods at the same prices and on the same terms and conditions applicable to cash purchases of the same foods at the same store except that tax shall not be charged on eligible foods purchased with coupons. However, nothing in this part may be construed as authorizing FNS to specify the prices at which retail food stores may sell food. However, public or private nonprofit homeless meal providers may only request voluntary use of SNAP benefits from homeless SNAP recipients and may not request such household using SNAP benefits to pay more than the average cost of the food purchased by the public or private nonprofit homeless meal provider contained in a meal served to the patrons of the meal service. For purposes of this section, “average cost” is determined by averaging food costs over a period of up to one calendar month. Voluntary payments by SNAP recipients in excess of such costs may be accepted by the meal providers. The value of donated foods from any source shall not be considered in determining the amount to be requested from SNAP recipients. All indirect costs, such as those incurred in the acquisition, storage, or preparation of the foods used in meals shall also be excluded. In addition, if others have the option of eating free or making a monetary donation, SNAP recipients must be provided the same option of eating free or making a donation in money or SNAP benefits. No retail food store may single out coupon users for special treatment in any way.
(c) Accepting coupons. No authorized retail food store may accept coupons marked “paid,” “canceled,” or “specimen.” Nor may a retail food store accept coupons bearing any cancellation or endorsement, or coupons of other than the 1-dollar denomination which have been detached from the coupon books prior to the time of purchase or delivery of eligible food unless the detached coupons are accompanied by the coupon books which bear the same serial numbers that appear on the detached coupons. However, in the case of public or private nonprofit homeless meal providers, retail food stores may accept detached coupons which have been accepted by the homeless meal provider. It is the right of the household member or the authorized representative to detach the coupons from the book.
(d) Making change. An authorized retail food store shall use, for the purpose of making change, uncanceled and unmarked 1-dollar coupons which were previously accepted for eligible foods. If change in an amount of less than 1-dollar is required, the eligible household shall receive the change in cash. However, in the case of public or private nonprofit homeless meal providers, neither cash change nor credit slips shall be provided under any circumstances when SNAP benefits are used to purchase meals. At no time may cash change in excess of 99 cents be returned in a coupon transaction. An authorized retail food store may not engage in a series of coupon transactions the purpose of which is to provide the same SNAP customer an amount of cash change greater than the maximum 99 cents cash change allowed in one transaction.
(e) Accepting coupons before delivery. Food retailers may not accept coupons before delivering the food, retain custody of any unspent coupons, or in any way prevent an eligible household from using coupons in making purchases from other authorized firms. However, a nonprofit cooperative food purchasing venture may accept coupons from a member of the cooperative at the time the member places a food order. The food ordered must be made available to the member within 14 days from the day the cooperative receives the member’s coupons.
(f) Paying credit accounts. SNAP benefits shall not be accepted by an authorized retail food store in payment for items sold to a household on credit. A firm that commits such violations shall be disqualified from participation in SNAP for a period of one year.
(g)(1) Redeeming coupons. Authorized retail food stores may exchange coupons accepted in accordance with this part for face value upon presentation through the banking system or through a wholesale food concern authorized to accept coupons from that retailer. Authorized drug addict or alcoholic treatment and rehabilitation programs, group living arrangements, and shelters for battered women and children may present coupons for redemption through authorized wholesale food concerns. A drug addict or alcoholic treatment center, group living arrangement, or shelter for battered women and children may purchase food in authorized retail food stores as the authorized representative of its participating households. Public or private nonprofit homeless meal providers may purchase food in authorized retail food stores and through authorized wholesale food concerns. Authorized drug addict and alcoholic treatment and rehabilitation programs, group living arrangements, shelters for battered women and children, and public or private nonprofit homeless meal providers for homeless SNAP households shall not present coupons directly to an insured financial institution for redemption.
(2) Notwithstanding paragraph (g)(1) of this section, authorized drug addict and alcoholic treatment and rehabilitation programs, group living arrangements, shelters for battered women and children, and public or private nonprofit homeless meal providers for homeless SNAP households may be authorized to redeem EBT benefits directly through an insured financial institution in areas where an Electronic Benefit Transfer (EBT) system has been implemented.
(h) Identifying benefit users. Retailers must accept payment from EBT cardholders who have a valid PIN regardless of which State the card is from or whether the individual is pictured on the card. Where photo EBT cards are in use, the person presenting the photo EBT card need not be pictured on the card, nor does the individual’s name need to match the one on the card if the State includes names on the card. However, benefits may not knowingly be accepted from persons who have no right to possession of benefits. If fraud is suspected, retailers shall report the individual to the USDA OIG Fraud Hotline.
(i) [Reserved]
(j) Checking hunting and fishing equipment users. Authorized Alaskan retailers shall require coupon customers wanting to purchase hunting and fishing equipment with coupons to show their ID cards to determine that they live in an area designated by FNS as one in which persons are dependent upon hunting and fishing for subsistence.
(k) [Reserved]
(l) Checking public or private nonprofit homeless meal provider recipients. Public or private nonprofit homeless meal providers shall establish a SNAP patron’s right to purchase meals with coupons.
§ 278.3 Participation of wholesale food concerns.
(a) Accepting coupons. An authorized wholesale food concern may accept endorsed coupons from one or more specified authorized retail food stores, from one or more specified authorized nonprofit cooperative food-purchasing ventures, from one or more specified authorized group living arrangements, from one or more specified authorized drug addict or alcoholic treatment programs, from one or more specified authorized shelters for battered women and children, or, from one or more specified public or private nonprofit homeless meal providers if the coupons are accompanied by a properly filled-out and signed redemption certificate, and are not marked “paid,” “canceled,” or “specimen.” A wholesaler authorized to accept coupons from an authorized drug addict or alcoholic treatment program, or from an authorized group living arrangement, or from an authorized shelter for battered women and children, or from one or more public or private nonprofit homeless meal providers may accept coupons from that treatment program, or group living arrangement, or shelter for battered women and children, or from one or more public or private nonprofit homeless meal providers, only in exchange for food.
(b) Accepting legally obtained coupons. No authorized wholesale food concern may accept coupons if the wholesaler knows or has reasonable cause to believe that the coupons were not legally obtained for eligible food.
(c) Redeeming coupons. An authorized wholesale food concern may redeem coupons, properly accepted from retailers, through the banking system, upon presentation of the coupons with:
(1) The authorized retail food store’s properly filled-out and signed redemption certificate for the coupons; and
(2) The authorized wholesale food concern’s properly filled-out and signed redemption certificate.
(d) Handling retailer redemption certificates. No authorized wholesale food concern may alter, prepare, or complete an authorized retail food store’s redemption certificate.
§ 278.4 Procedure for redeeming coupons.
(a) Coupons accepted without authorization. Coupons accepted by a retail food store or a wholesale food concern before the receipt by the firm of an authorization card from FNS may not be presented for redemption unless the FNS officer in charge has approved the redemption under § 278.7(b). Burned or mutilated coupons shall be presented for redemption to the FNS officer in charge as provided in § 278.7(c).
(b) Endorsing coupons. Each authorized retail food store or authorized wholesale food concern shall mark its authorization number or name on each coupon before it presents the coupons for redemption.
(c) Using redemption certificates. FNS will provide all authorized firms with redemption certificates. Wholesale food concerns and retail food stores, except for drug addict and alcoholic treatment and rehabilitation programs and public or private nonprofit homeless meal providers, shall use the redemption certificates to present coupons to insured financial institutions for credit or for cash. All retail food stores which wish to redeem coupons at wholesale food concerns shall use the redemption certificates for that purpose. An authorized retail firm using redemption certificates to redeem coupons shall fill out the redemption certificate to show the value of the coupons redeemed, the name of the insured financial institution or wholesaler, the date, and the signature and title of the official of the firm redeeming coupons.
§ 278.5 Participation of insured financial institutions.
(a) Accepting coupons. (1) Financial institutions that are insured by the Federal Deposit Insurance Corporation (FDIC) or financial institutions which are insured under the Federal Credit Union Act and which have retail food stores or wholesale food concerns in their field of membership may redeem coupons only from authorized retail food stores, meal services, and wholesale food concerns in accordance with the rules contained in this part and instructions of the Federal Reserve Banks. No financial institution may impose on or collect from a retail food store a fee or other charge for redemption of coupons that are submitted to the financial institution in a manner consistent with the requirements, except for coupon cancellation, for the presentation of coupons by the financial institution to the Federal Reserve banks. Coupons submitted to insured financial institutions for credit or cash must be properly endorsed in accordance with § 278.4 of this part and shall be accompanied by a properly completed and signed redemption certificate. All verified and encoded redemption certificates accepted by insured financial institutions shall be forwarded with the corresponding coupon deposits to the Federal Reserve Bank along with the accompanying Food Coupon Deposit Document (Form FNS-521). In accordance with Federal Reserve requirements, the coupon deposit value entered on the Food Coupon Deposit Document must be equal to the actual value of coupons being deposited and to the total value of verified amounts encoded on the corresponding redemption certificates.
(2) An insured financial institution shall verify the amount of the coupons being redeemed and record the amount in the designated space on the redemption certificate. In order to conform with Federal Reserve requirements, the verified amount shall be recorded in the appropriate field on the redemption certificate using Magnetic Ink Character Recognition (MICR) encoding. Redemption certificates accepted by insured financial institutions shall be forwarded with the corresponding coupon deposits to the Federal Reserve Bank along with the Food Coupon Deposit Document (Form FNS-521).
(3) Redeemed coupons must be indelibly cancelled on the face of the coupon by the first insured financial institution receiving them. If the cancellation on the coupon face does not show the depositing institution’s name or its routing symbol transit number, this identifying information must appear on the straps affixed to each bundle of coupons of like denomination. Deposits not meeting these cancellation requirements may be returned to the depositing institution for reprocessing. Retail food stores may not be required to cancel the coupons by the insured financial institution nor may the insured financial institution charge the retail food stores a fee or other charge for cancellation of coupons. A portion of a coupon consisting of less than three-fifths of a whole coupon may not be redeemed.
(4) Insured financial institutions which are members of the Federal Reserve System, insured nonmember clearing institutions, and insured nonmember institutions which have arranged with a Federal Reserve Bank to deposit coupons for credit to the account of a member institution on the books of a Federal Reserve Bank may forward coupons directly to the Federal Reserve Bank. Other insured financial institutions may forward cancelled coupons through ordinary collection channels.
(b) Role of Federal Reserve Banks. Federal Reserve Banks, acting as fiscal agents of the United States, will receive canceled coupons for collection as cash items from armed forces installations, member insured financial institutions of the Federal Reserve System, nonmember clearing insured financial institutions, and nonmember insured financial institutions which have arranged with a Federal Reserve Bank to deposit coupons for credit to the account of a member insured financial institution on the books of the Federal Reserve Bank, and will charge those items to the general account of the Treasurer of the United States.
(c) FNS liability for losses. FNS shall not be liable for the value of any coupons lost, stolen, or destroyed while in the custody of an insured financial institution or for the value of coupons lost, stolen, or destroyed while in transit from an insured financial institution to a Federal Reserve Bank.
(d) FNS use of coupons to detect violations. Regardless of any other provision in these regulations, coupons may be issued to, purchased by, or redeemed by persons authorized by FNS to use those coupons in examining and inspecting program operations, and for other purposes determined by FNS to be required for proper administration of the program. Coupons which have been so issued and used, as well as any coupons which have been issued under paragraph (g) of this section, or which FNS believes may have been issued, transferred, negotiated, used, or received in violation of this subchapter or of any applicable statute, shall at the request of FNS and on issuance of a receipt for them be turned over to FNS by the insured financial institution receiving the coupons, or by any other person to whom the request is addressed, together with any certificate(s) of redemption accompanying the coupons. Any coupons so requested shall not be eligible for redemption through Federal Reserve Banks or other collection channels. However, FNS may redeem coupons from any insured financial institution or person by payment of the face amount of the coupons upon determination by FNS that this direct redemption of coupons is warranted. FNS shall determine the proper disposition of any coupons held by FNS on completion of the examination or inspection in which the coupons were used. Claims or demands for unredeemed coupons surrendered to FNS may be mailed to the local FNS field office for the project area involved.
(e) Selling coupons to stores for internal checks. FNS may sell coupons at face value to any authorized retail food store which wishes to use coupons to conduct internal checks of coupon transactions. The retail food store must submit a written request to FNS which shall include a certification that the store recognizes that its use of coupons will not affect FNS action to enforce program regulations and that the requested coupons will be used only for internal checks of the store’s employees and only to uncover sales of items other than eligible foods. The request shall also include the name of the city or county in which the stores to be checked through the use of the requested coupons are located and the name and address of any outside agency with which the retail food store has or will have a contract to conduct checks of the store’s employees using coupons. The request shall be directed to the Benefit Redemption Division, FSP, FNS, U.S. Department of Agriculture, 3101 Park Center Drive, Alexandria, VA 22302, and shall be accompanied by a check or money order made payable to the Food and Nutrition Service to cover the face value cost of the coupons requested. Coupons bought by retail food stores for use in internal checks may be later redeemed for full value in accordance with § 278.4, and in redeeming those coupons, retail food stores are authorized to make the certification required for redemption.
(f) Continued participation of households under investigation. Upon the written request of Federal, State, or local government agencies which have authority to investigate, and are investigating, suspected violations of Federal or State statutes concerning the enforcement of the Food and Nutrition Act of 2008 or the regulations, the State agency may allow ineligible households to continue program participation. The State agency may allow the households to continue participation in the program until the earlier of (1) expiration of the period of 90 days after the request is received or any longer period which FNS, upon request of the State agency, may approve in a particular case, or (2) receipt of notification from the investigative agency that participation may be terminated or that the investigation has been completed. Regardless of any other provision of these regulations, FNS may not hold the State agency liable for the value of any coupons issued to households under this paragraph.
§ 278.6 Disqualification of retail food stores and wholesale food concerns, and imposition of civil money penalties in lieu of disqualifications.
(a) Authority to disqualify or subject to a civil money penalty. FNS may disqualify any authorized retail food store or authorized wholesale food concern from further participation in the program if the firm fails to comply with the Food and Nutrition Act of 2008, as amended, or this part. Such disqualification shall result from a finding of a violation on the basis of evidence that may include facts established through on-site investigations, inconsistent redemption data, evidence obtained through a transaction report under an electronic benefit transfer system, or the disqualification of a firm from the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), as specified in paragraph (e)(8) of this section. Disqualification shall be for a period of 6 months to 5 years for the firm’s first sanction; for period of 12 months to 10 years for a firm’s second sanction; and disqualification shall be permanent for a disqualification based on paragraph (e)(1) of this section. Any firm which has been disqualified and which wishes to be reinstated at the end of the period of disqualification, or at any later time, shall file a new application under § 278.1 so that FNS may determine whether reauthorization is appropriate. The application may be filed no earlier than 10 days before the end of the period of disqualification. FNS may, in lieu of a disqualification, subject a firm to a civil money penalty of up to an amount specified in § 3.91(b)(3)(i) of this title for each violation if FNS determines that a disqualification would cause hardship to participating households. FNS may impose a civil money penalty of up to an amount specified in § 3.91(b)(3)(ii) of this title for each violation in lieu of a permanent disqualification for trafficking, as defined in § 271.2 of this chapter, in accordance with the provisions of paragraphs (i) and (j) of this section.
(b) Charge letter—(1) General provisions. Any firm considered for disqualification or imposition of a civil money penalty under paragraph (a) of this section or a fine as specified under paragraph (l) or (m) of this section shall have full opportunity to submit to FNS information, explanation, or evidence concerning any instances of noncompliance before FNS makes a final administrative determination. The FNS regional office shall send the firm a letter of charges before making such determination. The letter shall specify the violations or actions which FNS believes constitute a basis for disqualification or imposition of a civil money penalty or fine. The letter shall specify the violations or actions which FNS believes constitute a basis for disqualification or imposition of a civil money penalty. The letter shall inform the firm that it may respond either orally or in writing to the charges contained in the letter within 10 days of receiving the letter. The firm’s response shall set forth a statement of evidence, information, or explanation concerning the specified violations or acts. The firm shall make its response, if any, to the officer in charge of the FNS field office which has responsibility for the project area in which the firm is located. In the case of a firm for which action is taken in accordance with paragraph (e)(8) of this section, the charge letter shall inform such firm that the disqualification action is not subject to administrative or judicial review, as specified in paragraph (e)(8) of this section.
(2) Charge letter for trafficking. (i) The charge letter shall advise a firm being considered for permanent disqualification based on evidence of trafficking as defined in § 271.2 that the firm must notify FNS if the firm desires FNS to consider the sanction of a civil money penalty in lieu of permanent disqualification. The charge letter shall also advise the firm that the permanent disqualification shall be effective immediately upon the date of receipt of the notice of determination, regardless of whether a request for review is filed in accordance with part 279 of this chapter. If the disqualification is reversed through administrative or judicial review, the Secretary shall not be liable for the value of any sales lost during the disqualification period. Firms that request and are determined eligible for a civil money penalty in lieu of permanent disqualification for trafficking may continue to participate in the program pending review and shall not be required to pay the civil money penalty pending appeal of the trafficking determination action.
(ii) Firms that request consideration of a civil money penalty in lieu of a permanent disqualification for trafficking shall have the opportunity to submit to FNS information and evidence as specified in § 278.6(i), that establishes the firm’s eligibility for a civil money penalty in lieu of a permanent disqualification in accordance with the criteria included in § 278.6(i). This information and evidence shall be submitted within 10 days, as specified in § 278.6(b)(1).
(iii) If a firm fails to request consideration for a civil money penalty in lieu of a permanent disqualification for trafficking and submit documentation and evidence of its eligibility within the 10 days specified in § 278.6(b)(1), the firm shall not be eligible for such a penalty.
(c) Review of evidence. The letter of charges, the response, and any other information available to FNS shall be reviewed and considered by the appropriate FNS regional office, which shall then issue the determination. In the case of a firm subject to permanent disqualification under paragraph (e)(1) of this section, the determination shall inform such a firm that action to permanently disqualify the firm shall be effective immediately upon the date of receipt of the notice of determination from FNS, regardless of whether a request for review is filed in accordance with part 279 of this chapter. If the disqualification is reversed through administrative or judicial review, the Secretary shall not be liable for the value of any sales lost during the disqualification period. Firms that request and are determined eligible to a civil money penalty in lieu of permanent disqualification for trafficking may continue to participate in the program pending review and shall not be required to pay the civil money penalty pending appeal of the trafficking determination action. In the case of a firm for which action is taken in accordance with paragraph (e)(8) of this section, the determination notice shall inform such firm that the disqualification action is not subject to administrative or judicial review, as specified in paragraph (e)(8) of this section.
(d) Basis for determination. The FNS regional office making a disqualification or penalty determination shall consider:
(1) The nature and scope of the violations committed by personnel of the firm,
(2) Any prior action taken by FNS to warn the firm about the possibility that violations are occurring, and
(3) Any other evidence that shows the firm’s intent to violate the regulations.
(e) Penalties. FNS shall take action as follows against any firm determined to have violated the Act or regulations. For the purposes of assigning a period of disqualification, a warning letter shall not be considered to be a sanction. A civil money penalty and a disqualification shall be considered sanctions for such purposes. The FNS regional office shall:
(1) Disqualify a firm permanently if:
(i) Personnel of the firm have trafficked as defined in § 271.2; or
(ii) Violations such as, but not limited to, the sale of ineligible items occurred and the firm had twice before been sanctioned.
(iii) It is determined that personnel of the firm knowingly submitted information on the application that contains false information of a substantive nature that could affect the eligibility of the firm for authorization in the program, such as, but not limited to, information related to:
(A) Eligibility requirements under § 278.1(b), (c), (d), (e), (f), (g) and (h);
(B) Staple food stock;
(C) Annual gross sales for firms seeking to qualify for authorization under Criterion B as specified in the Food and Nutrition Act of 2008, as amended;
(D) Annual staple food sales;
(E) Total annual gross retail food sales for firms seeking authorization as co-located wholesale/retail firms;
(F) Ownership of the firm;
(G) Employer Identification Numbers and Social Security Numbers;
(H) SNAP history, business practices, business ethics, WIC disqualification or authorization status, when the store did (or will) open for business under the current ownership, business, health or other licenses, and whether or not the firm is a retail and wholesale firm operating at the same location; or
(I) Any other information of a substantive nature that could affect the eligibility of a firm.
(2) Disqualify the firm for 5 years if it is to be the firm’s first sanction, the firm had been previously advised of the possibility that violations were occurring and of possible consequences of violating the regulations, and the evidence shows that:
(i) It is the firm’s practice to sell expensive or conspicuous nonfood items, cartons of cigarettes, or alcoholic beverages in exchange for food coupons; or
(ii) The firm’s coupon redemptions for a specified period of time exceed its food sales for the same period of time; or
(iii) A wholesale food concern’s redemptions of coupons for a specified period of time exceed the redemptions of all the specified authorized retail food stores, nonprofit cooperative food-purchasing ventures, group living arrangements, drug addict and alcoholic treatment programs, homeless meal providers, and shelters for battered women and children which the wholesale food concern was authorized to serve during that time; or
(iv) A wholesale food concern’s stated redemptions of coupons for a particular retail food store, nonprofit cooperative food-purchasing venture, group living arrangement, drug addict and alcoholic treatment program, homeless meal providers, or shelters for battered women and children exceeded the actual amount of coupons which that firm or organization redeemed through the wholesaler; or
(v) Personnel of the firm knowingly accepted coupons from an unauthorized firm or an individual known not to be legally entitled to possess coupons.
(3) Disqualify the firm for 3 years if it is to be the first sanction for the firm and the evidence shows that:
(i) It is the firm’s practice to commit violations such as the sale of common nonfood items in amounts normally found in a shopping basket and the firm was previously advised of the possibility that violations were occurring and of the possible consequences of violating the regulations; or
(ii) Any of the situations described in paragraph (e)(2) of this section occurred and FNS had not previously advised the firm of the possibility that violations were occurring and of the possible consequences of violating the regulations; or
(iii) The firm is an authorized communal dining facility, drug addiction or alcoholic treatment and rehabilitation program, group living arrangement, homeless meal provider, meal delivery service, or shelter for battered women and children and it is the firm’s practice to sell meals in exchange for food coupons to persons not eligible to purchase meals with food coupons and the firm has been previously advised of the possibility that violations were occurring and of the possible consequences of violating the regulations; or
(iv) A wholesale food concern accepted coupons from an authorized firm which it was not authorized to serve and the wholesale food concern had been previously advised of the possibility that violations were occurring and of possible consequences of violating the regulations; or
(v) The firm is an authorized retail food store and personnel of the firm have engaged in food coupon transactions with other authorized retail stores, not including treatment programs, group living arrangements, homeless meal providers, or shelters for battered women and children, and the firm had been previously advised of the possibility that violations were occurring and of the possible consequences of violating the regulations.
(vi) Personnel of the firm knowingly submitted information on the application that contained false information of a substantive nature related to the ability of FNS to monitor compliance of the firm with FSP requirements, such as, but not limited to, information related to:
(A) Annual eligible retail food sales;
(B) Store location and store address and mailing address;
(C) Financial institution information; or
(D) Store name, type of ownership, number of cash registers, and non-food inventory and services.
(4) Disqualify the firm for 1 year if:
(i) It is to be the first sanction for the firm and the ownership or management personnel of the firm have committed violations such as the sale of common nonfood items in amounts normally found in a shopping basket, and FNS had not previously advised the firm of the possibility that violations were occurring and of the possible consequences of violating the regulations; or
(ii) The firm has accepted SNAP benefits in payment for items sold to a household on credit.
(5) Disqualify the firm for 6 months if it is to be the first sanction for the firm and the evidence shows that personnel of the firm have committed violations such as but not limited to the sale of common nonfood items due to carelessness or poor supervision by the firm’s ownership or management.
(6) Double the appropriate period of disqualification prescribed in paragraphs (e) (2) through (5) of this section as warranted by the evidence of violations if the same firm has once before been assigned a sanction.
(7) Send the firm a warning letter if violations are too limited to warrant a disqualification.
(8) FNS shall disqualify from SNAP any firm which is disqualified from the WIC Program:
(i) Based in whole or in part on any act which constitutes a violation of that program’s regulation and which is shown to constitute a misdemeanor or felony violation of law, or for any of the following specific program violations:
(A) A pattern of claiming reimbursement for the sale of an amount of a specific food item which exceeds the store’s documented inventory of that food item for a specified period of time;
(B) Exchanging WIC food instruments for cash, credit or consideration other than eligible food; or the exchange of firearms, ammunition, explosives or controlled substances, as defined in section 802 of title 21 of the United States Code, for food instruments;
(C) A pattern of receiving, transacting and/or redeeming WIC food instruments outside of authorized channels;
(D) A pattern of exchanging non-food items for a WIC food instrument;
(E) A pattern of charging WIC customers more for food than non-WIC customers or charging WIC customers more than the current shelf price; or
(F) A pattern of charging for food items not received by the WIC customer or for foods provided in excess of those listed on the food instrument.
(ii) FNS shall not disqualify a firm from SNAP on the basis of a WIC disqualification unless:
(A) Prior to the time prescribed for securing administrative review of the WIC disqualification action, the firm was provided individual and specific notice that it could be disqualified from SNAP based on the WIC violations committed by the firm;
(B) A signed and dated copy of such notice is provided to FNS by the WIC administering agency; and
(C) A determination is made in accordance with paragraph (a) of this section that such action will not cause a hardship for participating SNAP households.
(iii) Such a SNAP disqualification:
(A) Shall be for the same length of time as the WIC disqualification;
(B) May begin at a later date than the WIC disqualification; and
(C) Shall not be subject to administrative or judicial review under SNAP.
(f) Criteria for civil money penalties for hardship and transfer of ownership. (1) FNS may impose a civil money penalty as a sanction in lieu of disqualification when the firm subject to a disqualification is selling a substantial variety of staple food items, and the firm’s disqualification would cause hardship to SNAP households because there is no other authorized retail food store in the area selling as large a variety of staple food items at comparable prices. FNS may disqualify a store which meets the criteria for a civil money penalty if the store had previously been assigned a sanction. A civil money penalty for hardship to SNAP households may not be imposed in lieu of a permanent disqualification.
(2) In the event any retail food store or wholesale food concern which has been disqualified is sold or the ownership thereof is otherwise transferred to a purchaser or transferee, the person or other legal entity who sells or otherwise transfers ownership of the retail food store or wholesale food concern shall be subjected to and liable for a civil money penalty in an amount to reflect that portion of the disqualification period that has not expired, to be calculated using the method found at § 278.6(g). If the retail food store or wholesale food concern has been permanently disqualified, the civil money penalty shall be double the penalty for a ten year disqualification period. The disqualification shall continue in effect at the disqualified location for the person or other legal entity who transfers ownership of the retail food store or wholesale food concern notwithstanding the imposition of a civil money penalty under this paragraph.
(3) At any time after a civil money penalty imposed under paragraph (f) (2) of this section has become final under the provisions of part 279, the Food and Consumer Service may request the Attorney General institute a civil action to collect the penalty from the person or persons subject to the penalty in a district court of the United States for any district in which such person or persons are found, reside, or transact business.
(4) A bona fide transferee of a retail food store shall not be required to pay a civil money penalty imposed on the firm prior to its transfer. A buyer or transferee (other than a bona fide buyer or transferee) may not be authorized to accept or redeem coupons and may not accept or redeem coupons until the Secretary receives full payment of any penalty imposed on such store or concern.
(g) Amount of civil money penalties for hardship and transfer of ownership. FNS shall determine the amount of the civil money penalty as follows:
(1) Determine the firm’s average monthly redemptions of coupons for the 12-month period ending with the month immediately preceding that month during which the firm was charged with violations.
(2) Multiply the average monthly redemption figure by 10 percent.
(3) Multiply the product arrived at in paragraph (g)(2) by the number of months for which the firm would have been disqualified under paragraph (e) of this section. The civil money penalty may not exceed an amount specified in § 3.91(b)(3)(i) of this title for each violation.
(h) Notifying the firm of civil money penalties for hardship and transfer of ownership. A firm has 15 days from the date the FNS regional office notifies the firm in writing in which to pay the civil money penalty, or to notify the regional office in writing of its intent to pay in installments as specified by the regional office. The firm must present to FNS a collateral bond or irrevocable letter of credit as specified in § 278.1(b)(4), within the same 15-day period. The civil money penalty must be paid in full by the end of the period for which the firm would have been disqualified. FNS shall:
(1) Disqualify the firm for the period determined to be appropriate under paragraph (e) of this section if the firm refuses to pay any of the civil money penalty;
(2) Disqualify the firm for a period corresponding to the unpaid part of the civil money penalty if the firm does not pay the civil money penalty in full or in installments as specified by the FNS regional office; or
(3) Disqualify the firm for the prescribed period if the firm does not present a collateral bond or irrevocable letter of credit within the required 15 days. Any payment on a civil money penalty which have been received by FNS shall be returned to the firm. If the firm presents the required bond or irrevocable letter of credit during the disqualification period, the civil money penalty may be reinstated for the duration of the disqualification period.
(i) Criteria for eligibility for a civil money penalty in lieu of permanent disqualification for trafficking. FNS may impose a civil money penalty in lieu of a permanent disqualification for trafficking as defined in § 271.2 if the firm timely submits to FNS substantial evidence which demonstrates that the firm had established and implemented an effective compliance policy and program to prevent violations of the Program. Firms assessed a CMP under this paragraph shall be subject to the applicable penalties included in § 278.6(e) (2) through (6) for the sale of ineligible items. Only those firms for which a permanent disqualification for trafficking took effect on or after October 1, 1988, are eligible for a civil money penalty in lieu of permanent disqualification for trafficking, except that firms that have been disqualified but are awaiting a judicial review decision are eligible for a civil money penalty in lieu of a permanent disqualification. In determining the minimum standards of eligibility of a firm for a civil money penalty in lieu of a permanent disqualification for trafficking, the firm shall, at a minimum, establish by substantial evidence its fulfillment of each of the following criteria:
Criterion 1. The firm shall have developed an effective compliance policy as specified in § 278.6(i)(1); and
Criterion 2. The firm shall establish that both its compliance policy and program were in operation at the location where the violation(s) occurred prior to the occurrence of violations cited in the charge letter sent to the firm; and
Criterion 3. The firm had developed and instituted an effective personnel training program as specified in § 278.6(i)(2); and
Criterion 4. Firm ownership was not aware of, did not approve, did not benefit from, or was not in any way involved in the conduct or approval of trafficking violations; or it is only the first occasion in which a member of firm management was aware of, approved, benefited from, or was involved in the conduct of any trafficking violations by the firm. Upon the second occasion of trafficking involvement by any member of firm management uncovered during a subsequent investigation, a firm shall not be eligible for a civil money penalty in lieu of permanent disqualification. Notwithstanding the above provision, if trafficking violations consisted of the sale of firearms, ammunition, explosives or controlled substances, as defined in 21 U.S.C. § 802, and such trafficking was conducted by the ownership or management of the firm, the firm shall not be eligible for a civil money penalty in lieu of permanent disqualification. For purposes of this section, a person is considered to be part of firm management if that individual has substantial supervisory responsibilities with regard to directing the activities and work assignments of store employees. Such supervisory responsibilities shall include the authority to hire employees for the store or to terminate the employment of individuals working for the store.
(1) Compliance policy standards. As specified in Criterion 1 above, in determining whether a firm has established an effective policy to prevent violations, FNS shall consider written and dated statements of firm policy which reflect a commitment to ensure that the firm is operated in a manner consistent with this part 278 of current FSP regulations and current FSP policy on the proper acceptance and handling of food coupons. As required by Criterion 2, such policy statements shall be considered only if documentation is supplied which establishes that the policy statements were provided to the violating employee(s) prior to the commission of the violation. In addition, in evaluating the effectiveness of the firm’s policy and program to ensure FSP compliance and to prevent FSP violations, FNS may consider the following:
(i) Documentation reflecting the development and/or operation of a policy to terminate the employment of any firm employee found violating FSP regulations;
(ii) Documentation of the development and/or continued operation of firm policy and procedures resulting in appropriate corrective action following complaints of FSP violations or irregularities committed by firm personnel;
(iii) Documentation of the development and/or continued operation of procedures for internal review of firm employees’ compliance with FSP regulations;
(iv) The nature and scope of the violations charged against the firm;
(v) Any record of previous firm violations under the same ownership; and
(vi) Any other information the firm may present to FNS for consideration.
(2) Compliance training program standards. As prescribed in Criterion 3 above, the firm shall have developed and implemented an effective training program for all managers and employees on the acceptance and handling of food coupons in accordance with this part 278. A firm which seeks a civil money penalty in lieu of a permanent disqualification shall document its training activity by submitting to FNS its dated training curricula and records of dates training sessions were conducted; a record of dates of employment of firm personnel; and contemporaneous documentation of the participation of the violating employee(s) in initial and any follow-up training held prior to the violation(s). FNS shall consider a training program effective if it meets or is otherwise equivalent to the following standards:
(i) Training for all managers and employees whose work brings them into contact with SNAP benefits or who are assigned to a location where SNAP benefits are accepted, handled or processed shall be conducted within one month of the institution of the compliance policy under Criterion 1 above. Employees hired subsequent to the institution of the compliance policy shall be trained within one month of employment. All employees shall be trained periodically thereafter;
(ii) Training shall be designed to establish a level of competence that assures compliance with Program requirements as included in this part 278;
(iii) Written materials, which may include FNS publications and program regulations that are available to all authorized firms, are used in the training program. Training materials shall clearly state that the following acts are prohibited and are in violation of the Food and Nutrition Act of 2008 and regulations: the exchange of food coupons, ATP cards or other program access devices for cash; and, in exchange for coupons, the sale of firearms, ammunition, explosives or controlled substances, as the term is defined in section 802 of title 21, United States Code.
(j) Amount of civil money penalty in lieu of permanent disqualification for trafficking. A civil money penalty assessed in accordance with § 278.6(i) shall not exceed the amount specified in § 3.91(b)(3)(ii) of this title for each violation and shall not exceed the amount specified in § 3.91(b)(3)(ii) of this title for all violations occurring during a single investigation. FNS shall determine the amount of the civil money penalty as follows:
(1) Determine the firm’s average monthly redemptions for the 12-month period ending with the month immediately preceding the month during which the firm was charged with violations;
(2) Multiply the average monthly redemption figure by 10 percent;
(3) For the first trafficking offense by a firm, multiply the product obtained in § 278.6(j)(2) by 60 if the largest amount of food coupons, ATP cards, or other benefit instruments involved in a single trafficking transaction had a face value of $99 or less. If the face value of coupons, ATP cards or other benefit instruments involved in the largest single trafficking transaction was $100 or more, the amount of the product obtained in this paragraph shall be doubled;
(4) For a second trafficking offense by a firm, multiply the product obtained in § 278.6(j)(2) by 120 if the largest amount of food coupons, ATP cards, or other benefit instruments involved in a single trafficking transaction had a face value of $99 or less and the same firm has once before been sanctioned for trafficking in food coupons, ATP cards, or other benefit instruments. If the face value of food coupons, ATP cards, or other benefit instruments involved in the largest single trafficking transaction was $100 or more, the amount of the product obtained in this paragraph shall be doubled; and
(5) If a third trafficking offense is committed by the firm, the firm shall not be eligible for a civil money penalty in lieu of disqualification.
(k) Payment of civil money penalty in lieu of a permanent disqualification for trafficking. Payment of the full amount of the civil money penalty in lieu of permanent disqualification for trafficking shall be made within 30 days of the date the final determination was received by the firm. If payment is not made within the prescribed period, the right to the civil money penalty in lieu of a permanent disqualification is forfeited and disqualification shall become effective immediately.
(l) Fines for the acceptance of loose coupons. FNS may impose a fine against any retail food store or wholesale food concern that accepts coupons that are not accompanied by the corresponding book cover, other than the denomination of coupons used for making change as specified in § 278.2(d) or coupons accepted from homeless meal providers as specified in § 278.2(c). The fine to be assessed against a firm found to be accepting loose coupons shall be $500 per investigation plus an amount equal to double the face value of each loose coupon accepted, and may be assessed and collected in addition to any fiscal claim established by FNS. The fine shall be paid in full within 30 days of the firm’s receipt of FNS’ notification to pay the fine. The Attorney General of the United States may institute judicial action in any court of competent jurisdiction against the store or concern to collect the fine. FNS may withdraw the authorization of the store, as well as other authorized locations of a multi-unit firm which are under the same ownership, for failure to pay such a fine as specified under § 278.1(k). FNS may deny the authorization of any firm that has failed to pay such fines as specified under § 278.1(j).
(m) Fines for unauthorized third parties that accept SNAP benefits. FNS may impose a fine against any individual, sole proprietorship, partnership, corporation or other legal entity not approved by FNS to accept and redeem food coupons for any violation of the provisions of the Food and Nutrition Act of 2008 or the program regulations, including violations involving the acceptance of coupons. The fine shall be $1,000 for each violation plus an amount equal to three times the face value of the illegally accepted food coupons. The fine shall be paid in full within 30 days of the individual’s or legal entity’s receipt of FNS’ notification to pay the fine. The Attorney General of the United States may institute judicial action in any court of competent jurisdiction against the person to collect the fine. FNS may withdraw the authorization of any firm that is under the same ownership as an unauthorized firm that has failed to pay such a fine, as specified under § 278.1(k). FNS may deny authorization to any firm that has failed to pay such a fine, as specified under § 278.1(j).
(n) Review of determination. The determination of FNS shall be final and not subject to further administrative or judicial review unless a written request for review is filed within the period stated in part 279 of this chapter.
Notwithstanding the above, any FNS determination made on the basis of paragraph (e)(8) of this section shall not be subject to further administrative or judicial review.
(o) Delivery of notice. The delivery by any method that provides evidence of delivery of any notice required of FNS by this part will constitute notice to the addressee of its contents.
(p) Freedom of Information Act (FOIA) requests and appeals. A FOIA request or appeal for records shall not delay or prohibit FNS from making a determination regarding disqualification or penalty against a firm under paragraphs (c) and (d) of this section, or delay the effective date of a disqualification or penalty listed in paragraph (e) of this section.
§ 278.7 Determination and disposition of claims—retail food stores and wholesale food concerns.
(a) Claims against violators. FNS may establish and pursue claims against firms or other entities which have accepted or redeemed coupons in violation of the Food and Nutrition Act of 2008 or this part regardless of whether the firms or entities are authorized to accept SNAP benefits. If a firm fails to pay a claim, FNS may collect the claim by offsetting against amounts due the firm on redemption of other coupons or by deducting the amounts due from bonds posted by firms in compliance with the provisions of § 278.1(b)(4). FNS shall deny an application for authorization or reauthorization by a firm which has failed to pay a claim.
(b) Forfeiture of a collateral bond or draw down on an irrevocable letter of credit. If FNS establishes a claim against an authorized firm which has previously been sanctioned, collection of the claim may be through total or partial forfeiture of the collateral bond or draw down of the irrevocable letter of credit. If FNS determines that forfeiture or a draw down is required for collection of the claim, FNS shall take one or more of the following actions, as appropriate.
(1) Determine the amount of the bond to be forfeited or irrevocable letter of credit drawn down on the basis of the loss to the Government through violations of the Act, and this Part, as detailed in a letter of charges to the firm;
(2) Send written notification by method of proof of delivery to the firm and the bonding agent or commercial bank of FNS’ determination regarding forfeiture or draw down of all or specified part of the collateral bond or irrevocable letter of credit and the reasons for the forfeiture or draw down action;
(3) Advise the firm and the bonding agent or commercial bank of the firm’s right to administrative review of the claim determination;
(4) Advise the firm and the bonding agent or commercial bank that if payment of the current claim is not received directly from the firm, FNS shall obtain full payment through forfeiture of the bond or draw down of the irrevocable letter of credit;
(5) Proceed with collection of the bond or irrevocable letter of credit in the amount forfeited or drawn down if a request for review is not filed by the firm within the period established in § 279.5 of this chapter, or if such review is unsuccessful; and
(6) Upon the expiration of time permitted for the filing of a request for administrative and/or judicial review, deposit the bond or irrevocable letter of credit in a Federal Reserve Bank account or in the Treasury Account, General. If FNS requires only a portion of the face value of the bond or irrevocable letter of credit to satisfy a claim, the entire bond or irrevocable letter of credit will be negotiated, and the remaining amount returned to the firm.
(c) Coupons accepted without authorization. (1) The FNS officer in charge may approve the redemption under § 278.4 of coupons accepted by firms before the receipt of an authorization card from FNS if the following conditions exist:
(i) The coupons were received in accordance with the requirements of this part governing acceptance of coupons except the requirement that the firm be authorized before acceptance;
(ii) The coupons were accepted by the firm in good faith, and without intent to circumvent this part; and
(iii) The firm receives authorization to participate in the program.
(2) Firms seeking approval to redeem coupons accepted without authorization shall present a written application for approval to the local FNS field office. This application shall be accompanied by a written statement signed by the firm of all the facts about the acceptance of the coupons. The statement shall also include a certification that the coupons were accepted in good faith, and without any intent to circumvent this part.
(d) Burned or mutilated coupons. FNS may redeem burned or mutilated coupons only to the extent that the Bureau of Engraving and Printing of the United States Treasury Department can determine the value of the coupons. The firm presenting burned or mutilated coupons for redemption shall submit the coupons to the local FNS field office with a properly filled-out redemption certificate. In the section of the redemption certificate for entering the amount of coupons to be redeemed, an estimate of the value of the burned or mutilated coupons submitted for redemption shall be entered if the exact value of the coupons is unknown. The phrase “Deputy Administrator for Fiscal Management, FNS, USDA,” should be entered in the section of the redemption certificate for entering the name and address of the insured financial institution or wholesaler.
(e) Old series coupons. FNS may redeem the old series food coupons issued in 50-cent, 2-dollar, and 5-dollar denominations when they are presented for redemption. Firms presenting the coupons for redemption shall submit the coupons to the local FNS field office with a properly completed redemption certificate and a written statement, signed by a representative of the firm, detailing the circumstances of the acceptance of the coupons.
(f) Denials of claims brought by authorized firms against FNS. If a claim brought by a firm against FNS under this section is denied in whole or in part, notification of this action shall be sent to the firm by using any delivery method as long as the method provides evidence of delivery. If the firm is aggrieved by this action, it may seek administrative review as provided in part 279.
(g) Lost or stolen coupons. FNS may not be held liable for claims from retail food stores, meal services, or wholesale food concerns for lost or stolen coupons.
§ 278.8 [Reserved]
§ 278.9 Implementation of amendments relating to the participation of retail food stores, wholesale food concerns and insured financial institutions.
(a) Amendment 224. Retail food stores shall have signs posted as required by this amendment no later than 30 days after distribution of the signs by FNS.
(b) Amendment 257. With the exception of the provisions in § 278.5 requiring redeeming financial institutions to verify that coupons are supported by redemption certificates, the revisions to part 278 shall be effective September 14, 1984. Redeeming financial institutions shall begin verifying coupon deposits as required by § 278.5 in accordance with the schedule determined by the Federal Reserve Board. Insured financial institutions shall adhere to preexisting requirements for handling redemption certificates (at 7 CFR 278.5(a)) until their Federal Reserve District implements the procedures contained in this final rule. FNS shall not be liable for any losses of coupons in transit to Federal Reserve Banks or as a result of a burglary or robbery of an insured financial institution which occur after September 14, 1984.
(c) Amendment 267. The federally insured credit unions authorized to redeem SNAP benefits under this amendment may begin accepting SNAP benefits for redemption not later than March 27, 1986.
(d) The program changes of Amendment 272 at § 278.5(a) (1) and (3) are effective upon publication of the amendment. Financial institutions must implement the provisions no later than April 21, 1986.
(e) Amendment No. 286. The provisions for part 278 of Amendment No. 286 were effective March 11, 1987 for purposes of submitting applications for authorization to accept SNAP benefits. For all other purposes, the effective date was April 1, 1987.
(f) Amendment No. 280. The provisions for part 271 and §§ 278.1(r) and 278.6(f) of No. 280 are effective retroactively to April 1, 1987. The provision for § 278.1(o) is effective May 22, 1987.
(g) Amendment No. 304. The technical amendment for part 278 of Amendment No. 304 was effective August 1, 1988.
(h) Amendment No. 323. The program changes made to § 278.6 by this amendment are retroactively effective October 1, 1988.
(i) Amendment No. 334. The program changes made to §§ 278.1 and 278.6 by this amendment are effective February 1, 1992. The program changes made to § 271.2 and § 271.5 by this amendment are retroactively effective to November 28, 1990, as specified in Pub. L. No. 101-624.
(j) Amendment No. 354. The program changes made to §§ 271.2 and 278.6 by this amendment are effective October 1, 1993.
(k) Amendment No. 331. The program changes made to §§ 271.2 and 278.5 by this amendment are effective December 22, 1994.
(l) Amendment No. 335. Expanded authority to use and disclose information about firms participating in the FSP under CFR 278.1(r) for currently authorized firms is effective and will be implemented beginning February 25, 1997 but not before 60-days after the date of notices to such firms, notifying them of the changes. The only exception to the above is that such disclosure of information shall not apply to firms that are withdrawn or are disqualified from FSP participation prior to implementation, unless such firms participate in the FSP at a future date subsequent to the implementation date.
(m) Amendment No. 383. The program changes made to § 278.1 by this amendment are effective September 29, 2000.
§ 278.10 [Reserved]
PART 279—ADMINISTRATIVE AND JUDICIAL REVIEW—FOOD RETAILERS AND FOOD WHOLESALERS
Subpart A—Administrative Review
A food retailer or wholesale food concern aggrieved by administrative action under § 278.1, § 278.6 or § 278.7 of this chapter may, within a period stated in this Part, file a written request for review of the administrative action with FNS. On receipt of the request for review, the questioned administrative action shall be stayed pending disposition of the request for review, except in the case of a permanent disqualification as specified in § 278.6(e)(1) of this chapter.
(a) Jurisdiction. Reviewers designated by the Secretary shall act for the Department on requests for review filed by food retailers or wholesale food concerns aggrieved by any of the following actions:
(1) Denial of an application or withdrawal of authorization to participate in the program under § 278.1 of this chapter;
(2) Disqualification under § 278.6 of this chapter, except that a disqualification for failure to pay a civil money penalty shall not be subject to administrative review and a disqualification imposed under § 278.6(e)(8) of this chapter shall not be subject to administrative or judicial review;
(3) Imposition of a fine under § 278.6 of this chapter;
(4) Denial of all or part of any claim asserted by a firm against FNS under § 278.7(c), (d), or (e) of this chapter;
(5) Assertion of a claim under § 278.7(a) of this chapter; or
(6) Forfeiture of part or all of a collateral bond or a draw down of part or all of a letter of credit under § 278.1 of this chapter, if the request for review is made by the authorized firm. FNS shall not accept requests for review made by a bonding company or agent or commercial bank.
(b) Authority. The determination of the designated reviewer shall be the final administrative determination of the Department, subject, however, to judicial review under section 14 of the Food and Nutrition Act of 2008 and subpart B of this part.
§ 279.2 Manner of filing requests for review.
(a) Submitting requests for review. Requests for review submitted by firms shall be mailed to or filed with Director, Administrative Review Division, U.S. Department of Agriculture, Food and Nutrition Service, 3101 Park Center Drive, Alexandria, Virginia 22302.
(b) Content of requests. Requests for review shall be in writing and shall state the name and business address of the firm involved, and the name, address and position with the firm of the person who signed the request. The request shall be signed by the owner of the firm, an officer or partner of the firm, or by counsel, and need not be under oath.
(c) Time limit for requesting review. A request for review shall be filed within 10 days of the date of delivery of the notice of the action for which review is requested. For purposes of determining whether a filing date is timely:
(1) The filing date shall be the postmark date of the request, or equivalent if the written request is filed by a means other than mail;
(2) In computing the 10 day period, the day of delivery of the notice of the action for which review is requested may not be included. The last day of the period so computed shall be included, unless it is a Saturday, a Sunday, or a legal holiday. In that case, the period runs until the end of the next day which is not a Saturday, a Sunday, or a legal holiday. As used in this paragraph, “legal holiday” includes New Year’s Day, Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, Christmas Day, and any other day designated as a holiday by the President or the Congress of the United States.
§ 279.3 Content of request for review.
(a) Identifying the request. Requests for review shall clearly identify the administrative action from which the review is requested. This identification shall include the date of the letter or other written communication notifying the firm of the administrative action, the name and title of the person who signed the letter or other communication, and whether the action under appeal concerns a denial of an application or a withdrawal of authorization to participate, a disqualification from further participation, a civil money penalty, or a denial of all or any part of a claim or a fine.
(b) Supporting the request. The request shall include information in support of the request showing the grounds on which review is being sought, or shall state that supporting information will be filed in writing at a later date. In the latter case, the designated reviewer shall notify the firm of the date by which the information must be filed.
§ 279.4 Action upon receipt of a request for review.
(a) Holding action. Upon receipt of a request for review of administrative action, the administrative action shall be held in abeyance until the designated reviewer has made a determination. However, permanent disqualifications for trafficking shall not be held in abeyance and shall be effective immediately as specified in 278.6(b)(2) of this chapter. If the disqualification is reversed through administrative or judicial review, the Secretary shall not be held liable for the value of any sales lost during the disqualification period. If the administrative action in question involves the denial of a claim brought by a firm against FNS, or the forfeiture of a collateral bond or the draw down on an irrevocable letter of credit, the designated reviewer shall direct the firm not be approved for participation, not be paid any part of the disputed claim, or not be reimbursed for any bond forfeiture or irrevocable letter of credit withdrawal, as appropriate until the designated reviewer has made a determination.
(b) Filing supporting information. If the request filed by the firm includes a request for an opportunity to file written information in support of its position at a later date, the designated reviewer shall promptly notify the firm of the date by which the information shall be filed. If the firm fails to file any information in support of its position by the designated date, the information submitted with the original request shall be considered to be the only information submitted by the firm. In that case, if no information in support of the firm’s position was submitted with the original request, the action of the appropriate FNS office shall be final.
(c) Extensions of time. Upon timely written request to FNS by the firm requesting the review, FNS may grant extensions of time if, in FNS’ discretion, additional time is required for the firm to fully present information in support of its position. Additionally, FNS may not grant extensions of time or hold the administrative review process in abeyance solely on the basis of a pending FOIA request or appeal. No extension may be made in the time allowed for the filing of a request for review.
§ 279.5 Determination of the designated reviewer.
(a) Basis for designated reviewer determination. The designated reviewer shall make a determination based upon:
(1) The information submitted by the appropriate FNS office;
(2) Information submitted by the firm in support of its position; and
(3) Any additional information, in writing, obtained by the designated reviewer from any other person having relevant information.
(b) Review of denial or withdrawal of authorization. When the action under review is the denial of an application for authorization or the withdrawal of an existing authorization, the designated reviewer shall sustain the action under review; sustain the action under review, but specify a shorter period of time the action will remain in effect; or direct that the action under review be reversed.
(c) Review of disqualification or civil money penalty or fine. When the action under review is disqualifying a firm from program participation or assessing a civil money penalty or fine against a firm, the designated reviewer shall: Sustain the action under review; specify a shorter period of disqualification; specify a reduced money penalty or fine; direct that an official warning letter be issued to the firm in lieu of a disqualification, civil money penalty or fine; or, direct that the action under review be reversed. The designated reviewer may change a disqualification of a firm to a civil money penalty if the disqualification would cause a hardship to participating households (except in the case of a permanent disqualification). The designated reviewer, working with the appropriate FNS office, shall determine if circumstances warrant a civil money penalty in accordance with § 278.6 of this chapter.
(d) Review of denial of claim. In the case of a request for review of a denial of all or part of a claim of a firm, the determination of the designated reviewer shall sustain the action under review or shall specify the amount of the claim to be paid by FNS.
(e) Determination notifications. FNS shall notify the firm of the determination. Such notification will be sent to the representative of the firm who filed the request for review.
(f) Effective date. The determination of the designated reviewer shall take effect 30 days after the date of delivery of the determination to the firm.
§ 279.6 Legal advice and extensions of time.
(a) Advice from Office of the General Counsel. If any request for review involves any doubtful questions of law, the Benefit Redemption Division shall obtain the advice of the Department’s Office of the General Counsel.
(b) Extensions of time. Upon timely written request to the designated reviewer by the firm requesting the review, the designated reviewer may grant extensions of time if, in the designated reviewer’s discretion, additional time is required for the firm to fully present information in support of its position. Additionally, the designated reviewer may not grant extensions of time or hold the administrative review process in abeyance solely on the basis of a pending FOIA request or appeal. No extensions may be made in the time allowed for the filing of a request for review.
Subpart B—Judicial Review
§ 279.7 Judicial review.
(a) Filing for judicial review. Except for firms disqualified from the program in accordance with § 278.6(e)(8) of this chapter, a firm aggrieved by the determination of the designated reviewer may obtain judicial review of the determination by filing a complaint against the United States in the U.S. district court for the district in which the owner resides or is engaged in business, or in any court of record of the State having competent jurisdiction. The complaint must be filed within 30 days after the date of delivery or service upon the firm of the notice of determination of the designated reviewer in accordance with § 279.5(e); otherwise the determination shall be final.
(b) Summons and complaint. Service of the summons and complaint in any such action shall be made in accordance with the rules of civil procedure for the U.S. district courts. The copy of the summons and complaint required by the rules to be served on the agency whose order is being attacked shall be sent by using any delivery method as long as the method provides evidence of delivery to the person in charge of the applicable regional office of FNS.
(c) Trial de novo. The suit in the U.S. district court or in the State court, as the case may be, shall be a trial de novo by the court in which the court shall determine the validity of the questioned administrative action. If the court determines that the administrative action is invalid, it shall enter a judgment or order which it determines is in accordance with the law and the evidence.
(d) Stay of action. During the pendency of any judicial review, or any appeal therefrom, the administrative action under review shall remain in force unless the firm makes a timely application to the court and after hearing thereon, the court stays the administrative action after a showing that irreparable injury will occur absent a stay and that the firm is likely to prevail on the merits of the case. However, permanent disqualification actions taken in accordance with § 278.6(e)(1) of this chapter shall not be subject to such a stay of administrative action. If the disqualification action is reversed through administrative or judicial review, the Secretary shall not be liable for the value of any sales lost during the disqualification period.
§ 279.8 Implementation of amendments relating to administrative and judicial review.
(a) Amendment No. 257. The program change to § 279.3(a)(4) shall be effective September 14, 1984.
(b) Amendment No. 274. The program change of Amendment No. 274 at § 279.10(d) is effective retroactively to December 23, 1985.
(c) Amendment No. 334. The program changes made to part 279 by this amendment are effective February 1, 1992.
PART 280—EMERGENCY FOOD ASSISTANCE FOR VICTIMS OF DISASTERS
§ 280.1 Interim disaster procedures.
The Secretary shall, after consultation with the official empowered to exercise the authority provided for by section 302(a) of the Disaster Relief Act of 1974, establish temporary emergency standards of eligibility for the duration of the emergency for households who are victims of a disaster which disrupts commercial channels of food distribution, if such households are in need of temporary food assistance and if commercial channels of food distribution have again become available to meet the temporary food needs of such households. Such standards as are prescribed for individual emergencies may be promulgated without regard to section 4(c) of this Act or the procedures set forth in section 553 of Title 5 of the United States Code. In addition to establishing temporary emergency standards of eligibility, the Secretary shall provide for emergency allotments to eligible households to replace food destroyed in a disaster. Such emergency allotments would be equal to the value of the food actually lost in such disaster but not greater than the applicable maximum monthly allotment for the household size. The Secretary may also approve alternate methods for issuing SNAP benefits during a disaster when reliance on Electronic Benefits Transfer (EBT) systems is impracticable.
PART 281—ADMINISTRATION OF SNAP ON INDIAN RESERVATIONS
§ 281.1 General purpose and scope.
(a) These regulations govern the operation of SNAP on Indian reservations either separately or concurrently with the Food distribution program. In order to assure that SNAP is responsive to the needs of Indians on reservations, State agencies are required to consult with Indian tribal organizations about the implementation and operation of SNAP on reservations. Also, under certain specified conditions Indian tribal organizations on reservations can administer SNAP. The Act authorizes the Secretary to pay such amounts for administrative costs as are determined to be necessary for the effective operation of SNAP on Indian reservations.
(b) The operation of SNAP on Indian reservations is governed by all of the terms and conditions set forth in the Food and Nutrition Act of 2008 as amended and the regulations of this chapter.
(c) Additionally, under no circumstances shall any household participate simultaneously in SNAP and the Food Distribution Program. Policy governing this prohibition is found in § 253.7(e).
§ 281.2 Administration.
(a) Qualification. (1) The appropriate ITO of an established Indian reservation will qualify for participation under the provisions of this part, when that ITO files an application which demonstrates the status of an area as an established reservation, unless FNS determines that such area(s) does not qualify as a reservation, as that term is defined in these regulations. For purposes of this part, established reservation means the geographically defined area(s) currently recognized and established by Federal or State treaty or by Federal statute whereby such geographically defined area(s) is set aside for the use of Indians. Where such established areas exist, the appropriate ITO is presumed to exercise governmental jurisdiction, unless otherwise determined by FNS:
(2) The appropriate ITO for other areas, in order to qualify as reservations for the provisions of this part, must show to FNS:
(i) That the ITO exercises governmental jurisdiction over a geographic area(s) which enjoys legal recognition from the Federal or a State government and is set aside for the use of Indians.
(ii) A clear and precise description of the boundaries of such geographic area(s).
(3) Otherwise qualified areas for which the responsible ITO has requested operation of the Food Distribution Program alone in accordance with § 283.4, rather than concurrent operation with SNAP, shall be exempt from the requirements of this part, and shall not be considered SNAP areas for any other purposes of this subchapter. Indian tribal households (households in which at least one adult member is recognized by the appropriate ITO as a tribal member) resident in these areas shall be ineligible for SNAP benefits. However, non-Indian tribal households resident in these areas may apply and be certified for SNAP benefits at the State agency’s certification office which would otherwise service the area. Otherwise qualified areas for which the responsible ITO has requested operation of the food distribution Program concurrently with SNAP or areas within the reservation where FNS has determined that concurrent operation is necessary in accordance with § 283.3(b)(2) shall be subject to all requirements of this part and subchapter.
(b) State plan. In addition to the public comment requirements in § 272.2, the State agency shall submit for comment its service plans, and all other portions of the State plan that directly pertains to the operation of the Program for residents on the reservation to the responsible ITO for reservations that qualify under paragraph (a) of this section. The ITO shall have 30 days to provide comments in writing to the State agency. The State agency shall, if appropriate and to the extent practicable, incorporate into its plans any suggestions made by the ITO. Additionally, the State agency shall administer SNAP in a manner that is responsive to the needs of the Indians on the reservation, as determined by ongoing consultation with the ITO and by other means, regarding such areas of program operation as project area designation, operating procedures, locations and hours of certification and issuance, staffing and corrective action plans. The State agency shall maintain records of consultations on State plans and ongoing consultations held with ITO’s for review by FNS. FNS shall study these records as part of reviews in accord with § 281.3 and Management Evaluation Reviews of the State agency.
(c) Project area designation. (1) An Indian reservation shall be designated as a separate project area or areas for the purpose of improving the accessibility of program services to Indians on the reservation unless:
(i) The State agency demonstrates to FNS that the size or population of the reservation does not warrant such designation;
(ii) The State agency demonstrates to FNS that the tribe can be adequately served by the existing or a planned project area because of the location of certification and issuance offices;
(iii) The State agency demonstrates to FNS that such designation would reduce the availability of certification and issuance offices; or
(iv) The State agency otherwise demonstrates to FNS that such designation would impair its Statewide administration of the Program.
(2) In the case where the Indian reservation boundaries cross State lines, the ITO and the appropriate State agencies may jointly request FNS approval that a single State agency administer SNAP on all or part of the Indian reservation. A single agency of the State government would have to administer the Program under the same terms and conditions applied to all other political subdivisions within its jurisdiction. An ITO designated as a State agency pursuant to § 281.4(d) would have to administer the Program under the same terms and conditions on all areas of the reservation.
(d) Contracts with an Indian tribal organization. The State agency may contract program functions to an ITO. These functions include, but are not limited to, outreach, preparation of bilingual materials on issuance. The State agency may also use the ITO in prescreening, translations, interpretive services and other noncertification functions. The State agency shall not contract responsibility for certification activities such as interviews or eligibility determinations. In all cases, the State agency shall retain full responsibility for program administration.
§ 281.3 Determination of failure.
(a) Request for determination of State government agency failure. FNS shall examine State agency administration of SNAP on all or part of a reservation when requested by the ITO, the State agency or at FNS’ discretion. When FNS determines that a deficiency in a State agency operation of SNAP on all or part of an Indian reservation may be serious enough to warrant a review, FNS shall advise the State agency and the ITO in writing of the alleged deficiencies and of its plans to conduct the review and document deficiencies, if any are found. Subsequent to October 1, 1979 FNS shall complete these reviews within 90 days from receipt of an ITO’s or State agency’s request except under unusual circumstances such as the receipt of a large number of simultaneous requests.
(b) Review—(1) Content of the review for State agency performance. The review shall be designed to determine whether or not the State agency is properly administering SNAP on a specific reservation. When an agency of State government is administering the Program on a reservation, FNS shall as a part of the review consult with the ITO about the operation of the Program on the reservation. The review should, depending on the nature of the complaint, include but not be limited to, an analysis of some or all of the following data:
(i) The records of State agency consultation with the ITO required under § 281.2(a);
(ii) The estimated percentage of all eligible Indians on the reservation who are participating the Program;
(iii) The nature and extent of violations, if any, of the 30-day and other processing standards for Indians;
(iv) The percentage of errors made in determining eligibility and/or the amount of benefits overissued or underissued;
(v) Compliance with standards for location and hours of certification and issuance offices as required in § 272.5;
(vi) Compliance with bilingual requirements of this regulation, where appropriate;
(vii) Compliance with nondiscrimination requirements of this regulation;
(viii) Compliance with other significant program requirements;
(ix) Comparison with services provided in all other areas of the State; and
(x) Any other relevant information that becomes available during the course of reviews including information received through contacts with the Indian tribe.
(2) Finding of no or of minor deficiencies. If after the review FNS determines either that deficiencies do not exist or that only minor deficiencies exist, FNS shall issue a report documenting its findings to both the State agency and the ITO and shall work closely with the State agency to achieve corrective action.
(c) Formal warning. After the review is completed, if FNS determines that major deficiencies exist, a formal warning shall be issued to the State, with a copy to the ITO. At a minimum, such warning shall indicate the State agency deficiencies and shall detail the basis upon which deficiencies were determined. The State shall have 30 days to respond with evidence that it is in compliance or to submit a corrective action proposal under part 276. If satisfactory compliance is achieved by the State agency on deficiencies cited in a formal warning, FNS shall notify the State, with a copy to the ITO, that the warning for those deficiences is satisfied.
(d) Determination of failure and sanctions. If at any time after the formal warning period, or during or after the corrective action period, FNS determines that major deficiencies still exist which the State agency has not satisfactorily addressed or is not satisfactorily addressing, FNS shall determine State failure and may impose appropriate Federal sanctions on the State agency as specified in part 276.
(e) ITO operations. If FNS has determined State failure and FNS has also determined that the ITO is capable of administering a SNAP in accordance with the terms and requirements for participating State agencies as established in the Act and regulations, then the ITO shall assume administration of SNAP on the reservation. The State agency shall continue to administer SNAP on the reservation until an effective termination and transition arrangement has been completed in accordance with § 281.8.
§ 281.4 Determining Indian tribal organization capability.
(a) Determining capability of ITO. If the ITO wishes to administer its own SNAP on the reservation FNS shall determine the ITO’s potential capability for administering SNAP in accordance with the criteria listed in § 281.4(b). FNS shall begin to evaluate the ITO’s capability for all aspects of SNAP administration, allowing for fulfillment of that potential through necessary training and technical assistance, not later than the date of the issuance of the formal warning to the State agency.
(b) ITO responsibility. (1) The ITO must satisfy FNS that it is capable (if provided with any needed training and technical assistance) of administering SNAP effectively and efficiently, and of complying with all provisions of the Food and Nutrition Act of 2008, as amended, and the regulations of this chapter, including provisions governing quality control procedures, fraud determinations, and establishment and collection of claims for both Indian and any non-Indian participants. The ITO shall provide FNS with the following information:
(i) Operation of government programs. The ITO shall provide FNS a list of all government programs that the ITO administers and has recently administered. FNS may ask the ITO to provide the names of appropriate officials of the government organizations having jurisdiction over these programs so FNS can obtain all relevant audits, GAO reports, program evaluations and any other documents pertaining to the effectiveness and efficiency of tribal administration of these programs. The ITO shall also provide FNS a list of its recent contractual responsibilities, if any, for SNAP under § 281.2(b).
(ii) Fiscal capabilities. The ITO shall provide FNS documentation of its bookeeping and accounting procedures, including procedures in use for fiscal accountability under part 277 and for other government programs that the ITO administers.
(iii) Projected certification and issuance facilities. The ITO shall provide FNS with a description of the location of projected certification and issuance facilities.
(iv) Fraud hearings and claims. The ITO shall provide FNS with a description of how it will pursue fraud hearings and claims against Indian and non-Indian participants.
(v) Staffing. The ITO shall provide FNS with sufficient information to determine that personnel who will be used in the certification process will be employed under standards equivalent to current standards for a Merit System of Personnel Administration or any standards later prescribed by the Office of Personnel Management under section 208 of the Intergovernmental Personnel Act of 1970.
(vi) Civil rights assurance. The ITO shall provide FNS an assurance that the ITO shall comply with Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352), the Age Discrimination Act of 1975 (Pub. L. 94-135), the Rehabilitation Act of 1973 (Pub. L. 99-112), section 504), and section 11(c) of the Food and Nutrition Act of 2008 and all pertinent regulations or directives to the effect that no person in the United States shall, on the grounds of sex, race, color, age, political belief, religion, handicap, or national origin, be denied benefits or otherwise be subject to discrimination under SNAP. Where appropriate, FNS shall consider the adequacy of measures taken by the ITO to ensure that there shall be no discrimination.
(2) Prior to the determination of ITO capability, FNS shall consult with other sources such as the Bureau of Indian Affairs (BIA) to obtain any information relevant to the capability determination.
(3) If it is determined by FNS, after consultation with other sources such as the BIA, that the ITO is not capable of operating an efficient and effective SNAP, the agency of the State government shall continue to operate the Program on the reservation in accordance with § 281.3.
(c) Training and technical assistance. Upon determining that the State agency has failed to properly administer SNAP and that the ITO is potentially capable of operating an effective and efficient SNAP, FNS shall determine, based on information provided by the ITO and other sources such as BIA, the training and technical assistance which is necessary to assure efficient and effective program administration. FNS will assure that appropriate training and technical assistance is provided as expeditiously as possible prior to the ITO’s assumption of the administration of SNAP.
(d) Assumption of duties. When FNS is satisfied that the ITO has successfully completed (c) of this section, FNS shall designate the ITO as a State agency, contingent on the following:
(1) State plans. The ITO shall prepare and submit to FNS a Plan of Operation as provided in § 272.2. In completing the Plan of Operation the ITO shall affirm that it will comply with the Civil Rights assurances detailed in (b)(1)(vi) of this section.
(2) Proposed budget. As part of the Plan of Operation, the ITO shall annually submit to FNS a proposed statement which shall provide a summary of program information and amounts budgeted to carry out the various program functions. This information shall be submitted to FNS for approval prior to the commitment of any Federal funds for administrative costs for that year. FNS shall provide the ITO any technical assistance which is necessary to prepare this information.
(3) Termination and transition arrangement. An effective termination and transition arrangement shall be established as required in § 281.8.
§ 281.5 Responsibilities of an Indian tribal organization designated as State agency.
An ITO administering SNAP on a reservation shall adhere to the Food and Nutrition Act of 2008, all subsequent amendments, and all regulations issued pursuant to that law in the same manner as any other State agency. The ITO may contract certain administrative functions to private organizations as provided in parts 274 and 277. The ITO may not, however, contract responsibility for certification activities such as interviews or eligibility determinations. The ITO shall retain full responsibility for program administration.
§ 281.6 Liabilities and sanctions.
An ITO administering SNAP on a reservation is subject to the same liabilities and Federal sanctions as is any other State agency. FNS shall monitor administration of the Program and conduct reviews through the Performance Reporting System described in part 275. When necessary, warning procedures and other Federal sanctions prescribed in part 276 will be implemented.
§ 281.7 Indian tribal organization failure.
When Performance Reporting System reviews indicate that continuing deficiencies exist and corrective action proposals (including training and technical assistance to overcome these deficiencies), and/or appropriate sanctions have not, in the opinion of FNS, resulted in a sufficient degree of improvement, FNS will conduct a review to determine if the ITO has failed to properly administer SNAP. FNS shall examine the relevant factors specified in § 281.3(b)(1) and shall follow the notification and determination procedures set forth in § 281.3 (c) and (d). If ITO failure is determined, FNS shall require the appropriate agency of the State government to resume administration of the Program on the reservation in accordance with an approved termination and transition arrangement.
§ 281.8 Transfer of program administration.
The transfer of program administration from an agency of the State government to an ITO pursuant to a determination of failure as provided for in § 281.3, or from an ITO to an agency of the State government pursuant to § 281.7, shall be contingent on the establishment of an effective termination and transition arrangement and an approved Plan of Operation from the State agency assuming program administration. Grant closeout procedures shall be followed in accordance with part 277. FNS shall approve the transition plan, monitor its implementation and resolve any issues which may arise during the transition and after the transfer of program administration.
§ 281.9 Funding.
(a) Agency of State government. From the funds available to carry out this provision beginning July 1, 1979, FNS may pay to each agency of State government administering a SNAP on a reservation, 75 percent of all approved administrative costs, such as: Certification, issuance, outreach, fair hearings and quality control, incurred on the reservation for residents of the reservation and approved by FNS to meet standards set by the Food and Nutrition Act of 2008. FNS may pay each agency of State government administering a SNAP on a reservation 75 percent of all approved administrative costs incurred off the reservation for activities begun after the effective date of these regulations that are primarily directed at providing better services for Indians on the reservation, such as hiring an interpreter or an Indian outreach worker, or moving a certification or issuance center closer to a reservation. The provisions of part 277 apply to any funds received under this section.
(b) Indian tribal organization acting as State agency. From the funds available to carry out the provisions of this part beginning October 1, 1979, FNS is authorized to pay to each ITO acting as a State agency and administering a SNAP on a reservation 75 percent of all administrative costs approved by FNS as needed for operation of a SNAP on a reservation. Any approval for payment of funds in excess of 75 percent must be based on compelling justification that such additional amounts are necessary for the effective operation of SNAP on the reservation. The provisions of part 277 apply to any funds received under this section.
§ 281.10 Appeals.
(a) Failure/capability. (1) Any State agency or ITO may appeal the determination made by FNS on:
(i) Whether or not the reservation definition is met;
(ii) The failure or absence of failure of an agency of State government to properly administer SNAP;
(iii) The capability or incapability of an ITO to administer SNAP;
(iv) The failure of an ITO to properly administer SNAP;
(v) The Federal matching percentage level of administrative funding made available by FNS. To prevail the State agency must show a compelling justification that additional funding is needed for the effective administration of the Program on the reservation.
(2) At the time FNS advises the State agency or ITO of its determination, FNS shall also advise the State agency or ITO of its right to appeal and, except for appeals of funding determinations, shall advise the State agency or ITO of its right to request either a meeting to present its position in person or a review of the record. On appeals of funding determinations, FNS shall advise the State agency or ITO that it may indicate if it wishes a meeting, however, FNS need schedule a meeting only if FNS determines a meeting is warranted to reach a proper adjudication of the matter. Otherwise, FNS shall review supportive information submitted by the State agency or ITO in paragraph (b)(2) of this section.
(b) Procedures—(1) Time limit. Any State agency or ITO which wants to appeal an initial FNS determination under paragraph (a) of this section must notify the Administrator of FNS, in writing within 15 days from the date of the determination and must advise FNS if it wishes a meeting or a review of the record.
(2) Acknowledgment. Within five days of receipt by the Administrator of FNS of a request for review, FNS shall provide the State agency or ITO by certified mail, return receipt requested, with a written acknowledgement of the request. The acknowledgment shall include the name and address of the official designated by the Administrator to review the appeal. The acknowledgment shall also notify the State agency or ITO that within ten day of receipt of the acknowledgment, the State agency or ITO shall submit written information in support of its position.
(3) Scheduling a meeting. If the Administrator, FNS, grants a meeting FNS shall advise the State agency or ITO by certified mail, return receipt requested, of the time, date and location of the meeting at least ten days in advance of the meeting. FNS shall schedule and conduct the meeting and make a decision within 60 days of the receipt of the information submitted in response to paragraph (b)(2) of this section.
(4) Review. If no meeting is conducted, the official designated by the Administrator, FNS, shall review information presented by a State agency or ITO which requests a review, and shall make a final determination in writing within 45 days of the receipt of the State agency’s or ITO’s information submitted in response to paragraph (b)(2) of this section setting forth in full the reasons for the determination.
(5) Final decision. The official’s decision after a meeting or a review shall be final.
(c) Funding and other sanctions. Any State agency or ITO that wishes to appeal a funding determination made by FNS other than under (a)(5) of this section, or the application of a Federal sanction, shall follow the Administrative Review Procedures set forth in part 276.
PART 282—DEMONSTRATION, RESEARCH, AND EVALUATION PROJECTS
(a) Legislative authority. Section 17 of the Act authorizes the Secretary to conduct demonstration, research, and evaluation projects. In conducting such projects, the Secretary may waive all or part of the requirements of the Act and implementing regulations necessary to conduct such projects, except that no project, other than a project involving the payment of the average value of allotments by household size in the form of cash to eligible households or a project conducted to test improved consistency or coordination between the SNAP employment and training program and the Job Opportunities and Basic Skills program under Title IV of the Social Security Act, may be undertaken which would lower or further restrict the established income and resource standards or benefit levels.
(b) Notices. At least 30 days prior to the initiation of a demonstration project, FNS shall publish a General Notice in the
§ 282.2 Funding.
Federal financial participation may be made available to demonstration, research, and evaluation projects awarded by FNS through grants and contracts. Funds may not be transferred from one project to another. FNS will pay all costs incurred during the project, up to the level established in the grant, or in the terms and conditions of the contract. FNS may grant time extensions of the project upon approval. Funding for additional costs is subject to existing Federal grant and contract procedures.
PART 283—APPEALS OF QUALITY CONTROL (“QC”) CLAIMS
Subpart A—General
§ 283.1 Meaning of words.
As used in this part, words in the singular form shall be deemed to import the plural, and vice versa, as the case may require.
§ 283.2 Scope and applicability.
The rules of practice in this part, shall be applicable to appeals by State agencies of Food and Nutrition Service quality control (QC) claims for Fiscal Year (“FY”) 1986 and subsequent fiscal years pursuant to sections 14(a) and 16(c) of the Food and Nutrition Act of 2008, as amended, 7 U.S.C. 2023(a) and 2025(c).
§ 283.3 Definitions.
As used in this part, the terms as defined in the Food and Nutrition Act of 2008, as amended, 7 U.S.C. 2011-2032 (“Act”), and in the regulations, standards, instructions or orders issued thereunder, shall apply with equal force and effect. In addition, and except as may be provided otherwise in this section:
Administrator means the Administrator, Food and Nutrition Service, U.S. Department of Agriculture (“USDA”).
ALJ means any Administrative Law Judge in USDA appointed pursuant to 5 U.S.C. 3105 or detailed to the USDA pursuant to 5 U.S.C. 3344 and assigned to the appeal.
Appeal means the appeal to the ALJ.
Ex parte communication means an oral or written communication not on the public record with respect to which reasonable prior notice to all parties is not given, but it shall not include procedural matters.
Filing. A pleading or other document allowed or required to be filed in accordance with this part shall be considered filed when postmarked, if mailed, or when received, if hand delivered.
FNS means the Food and Nutrition Service, USDA.
Hearing means that part of the appeal which involves the submission of evidence before the ALJ for the record in the appeal.
Hearing Clerk means the Hearing Clerk, USDA, Washington, DC 20250.
Judicial Officer means an official of the USDA delegated authority by the Secretary of Agriculture, pursuant to the Act of April 4, 1940 (7 U.S.C. 450c-459g) and Reorganization Plan No. 2 of 1953 (5 U.S.C. 1970 ed., Appendix, P. 550), as amended by Public Law 97-35, title I, sec. 125, 95 Stat. 357, 369 (1981) (7 U.S.C. 2201 note), to perform the adjudicating function involved (7 CFR 2.35(a)), or the Secretary of Agriculture if the authority so delegated is exercised by the Secretary.
OC claim means a claim made pursuant to 7 U.S.C. 2025(c).
Secretary means the Secretary of the USDA.
State agency means:
(1) The agency of State government, including the local offices thereof, which is responsible for the administration of the federally aided public assistance programs within the State, and in those States where such assistance programs are operated on a decentralized basis, it includes the counterpart local agencies which administer such assistance programs for the State agency; and
(2) The Indian tribal organization of any Indian tribe determined by the Secretary to be capable of effectively administering a SNAP in accordance with the Food and Nutrition Act of 2008, as amended, 7 U.S.C. 2011-2032.
Subpart B—Appeals of QC Claims of $50,000 or More
§ 283.4 Filing appeals for QC claims of $50,000 or more.
(a) Time. A State agency may appeal the bill for collection from FNS for a QC claim of $50,000 or more for a SNAP QC error rate in excess of the tolerance level. A State agency shall file a written notice of appeal, in accordance with this subpart, within 10 days of receipt of the bill for collection from FNS for a QC claim of $50,000 or more. The State agency may request an extension to the 10-day filing requirement in accordance with § 283.22(f). FNS shall issue the bill for collection by certified mail or personal service.
(b) Exhaustion of administrative remedies. The State agency must appeal the bill for collection to the ALJ, pursuant to this subpart, and exhaust the available administrative remedies before filing suit in the Federal District Courts.
(c) Filing. The notice of appeal shall be filed with the Hearing Clerk in accordance with § 283.22(b).
(d) Content of the notice. (1) A notice of appeal, in order to be considered acceptable, must contain the following information:
(i) A brief and clear statement that it is an appeal from a QC claim of $50,000 or more identifying the period the claim covers, the date and amount of the bill for collection, and the date of receipt of the bill for collection;
(ii) Identification of the State agency as the appellant and FNS as the appellee;
(iii) A statement that the notice of appeal is filed pursuant to section 14(a) of the Food and Nutrition Act of 2008;
(iv) A copy of the bill for collection which constitutes the basis for the filing of the notice of appeal shall be attached to the notice.
(2) Failure to file an acceptable notice of appeal may result in a challenge by FNS to the notice, dismissal of the notice by the ALJ and a waiver of the opportunity for further appeal or review by the Judicial Officer unless the State agency pursues the options as discussed in §§ 283.17(d) and 283.20.
(e) Receipt of notice of appeal and assignment of docket number. Upon receipt of a notice of appeal, the Hearing Clerk shall assign the appeal a docket number. The Hearing Clerk shall:
(1) Send the State agency a letter which shall include the following information:
(i) Advice that the notice of appeal has been received and the date of receipt;
(ii) The docket number assigned to the appeal and instructions that all future communications related to the appeal shall reference the docket number, and;
(iii) Advice that the State agency must file and serve its appeal petition, as set forth in § 283.22, not later than 60 days after receiving a notice of the claim. Failure to file a timely appeal petition may result in a waiver of further appeal rights.
(2) Send FNS a copy of the notice of appeal and a copy of the letter to the State agency.
(f) Stay of collection. The filing of a timely notice of appeal shall automatically stay the action of FNS to collect the QC claim asserted against the State agency until a decision is reached on the acceptability of the appeal, and in the case of an acceptable appeal, until a final administrative determination has been issued. However, interest will accrue on the outstanding claim amount during the stay as provided in section 13(a)(1) of the Food and Nutrition Act of 2008, as amended (7 U.S.C. 2022(a)(1)).
(g) Content of the appeal petition. The appeal petition shall include:
(1) A brief statement of the allegations of fact and provisions of law that constitute the basis for the appeal including a statement as to whether a factual basis for good cause relief exists;
(2) The nature of the relief sought, and;
(3) A request for an oral hearing, if desired by the State agency. Failure to request an oral hearing will result in a forfeiture of the opportunity for such a hearing, except as provided in § 283.15(a).
(h) FNS answer. Upon service of the State agency appeal petition, FNS shall:
(1) File an answer, in accordance with § 283.6, not later than 60 days after the State agency submits its appeal petition and;
(2) Advise the Hearing Clerk if FNS wishes to have an oral hearing.
(i) Oral hearing not requested. If no oral hearing has been requested, the appeal shall proceed in accordance with the procedures set forth under subpart C of this part.
§ 283.5 Motion to dismiss.
(a) Filing of motion to dismiss. Prior to or at the same time as filing the answer, FNS may file a motion to dismiss. The appeal may be challenged on the basis that the notice of appeal was not filed within 10 days or as that time may have been extended by the ALJ, the appeal petition was not filed in accordance with § 283.4, or that the appeal petition is substantially incomplete and could not be quickly and easily cured by amendment. The motion must be accompanied by clear and convincing proof of any of these factors alleged as grounds for dismissal.
(b) Service of motion to dismiss. FNS shall serve the State agency with a copy of the motion to dismiss. The State agency will have 10 days from date of service to submit objections to the motion.
(c) Ruling on a motion to dismiss. The ALJ will rule on the motion to dismiss before any further action proceeds on the basis of the merits of the appeal. The basis of the ruling will be clearly documented and will become part of the official record. If the ALJ denies the motion, FNS shall file its answer in accordance with § 283.6 within 60 days of service of the ALJ’s ruling, unless there is a motion for reconsideration filed pursuant to § 283.17(d) or review by the Judicial Officer is sought pursuant to § 283.20.
(d) Dismissal of appeal. If the ALJ finds the basis for the motion to have merit, the appeal may be dismissed. The initial decision of the ALJ shall become final and effective 30 days after service in accordance with § 283.17(c)(2) unless either party pursues the options as discussed in §§ 283.17(d) and 283.20.
(e) Waiver. Failure to file for dismissal of the appeal by the time the answer is required to be filed will result in waiver of the right to request dismissal.
§ 283.6 Answer.
(a) Filing and service. Not later than 60 days after the State agency submits its appeal petition, or within 60 days following service of a ruling in accordance with § 283.5, FNS shall file an answer signed by the FNS Administrator or authorized representative or the attorney of record in the appeal. The attorney may file an appearance of record prior to or simultaneously with the filing of the answer.
(b) Contents. The answer shall clearly admit, deny, or explain each of the allegations of the appeal petition and shall:
(1) Clearly set forth any defense asserted by FNS; or
(2) State that FNS admits all the facts alleged in the appeal petition; or
(3) State that FNS admits the jurisdictional allegations of the appeal petition and neither admits nor denies the remaining allegations and consents to the issuance of an order without further procedure.
(c) Default. Failure to file a timely answer shall be deemed, for purposes of the appeal, an admission of the allegations in the appeal petition and failure to deny or otherwise respond to an allegation of the appeal petition shall be deemed for purposes of the appeal, an admission of said allegation, unless FNS and the State agency have agreed to a consent decision pursuant to § 283.10.
§ 283.7 Procedures upon failure to file an answer.
The failure by FNS to file an answer shall constitute a waiver of hearing. Upon such failure to file, the State agency shall file a proposed decision, along with a motion for adoption thereof, both of which shall be served upon FNS by the State agency. Within 10 days after service of such motion and proposed decision, FNS may file objections thereto. If the ALJ finds that meritorious objections have been filed, the State agency’s motion shall be denied with supporting reasons. If meritorious objections are not filed, the ALJ shall issue an initial decision without further procedures or hearing. Copies of the initial decision or denial of the State agency’s motion shall be served on each of the parties and shall be included as part of the official record. Where the decision as proposed by the State agency is adopted as the ALJ’s initial decision, such decision of the ALJ shall become final and effective 30 days after service in accordance with § 283.17(c)(2) unless reconsideration or review by the Judicial Officer is sought as discussed in §§ 283.17(d) and 283.20.
§ 283.8 Rebuttal or amendment of appeal or answer.
(a) Not later than 30 days after FNS submits an answer in accordance with § 283.6, the State agency may submit rebuttal evidence.
(b) At any time prior to the filing of a motion for a hearing pursuant to § 283.15(b), the appeal petition or the answer may be amended without prior authorization by the ALJ. Thereafter, such an amendment may only be made as authorized by the ALJ upon a showing of cause.
§ 283.9 Withdrawal of appeal.
At any time before the ALJ files an initial decision, the State agency may withdraw its appeal and agree to pay the full amount of the claim. By withdrawing an appeal, the State agency waives all opportunity to appeal or seek further administrative or judicial review on the claim or related matters.
§ 283.10 Consent decision.
At any time before the ALJ files an initial decision, FNS and the State agency may agree to entry of a consent decision. Such decision shall be filed in the form of a decision signed by the parties with appropriate space for signature by the ALJ and shall contain an admission of at least the jurisdictional facts, consent to the issuance of the agreed decision without further procedure and such other admissions or statements as may be agreed between the parties. The ALJ shall enter such decision without further procedures, unless an error is apparent on the face of the document. Such decision shall be final and shall take effect 30 days after the date of the delivery or service of such decision and is not subject to further administrative or judicial.
§ 283.11 Prehearing conference and procedure.
(a) Time and place. The ALJ shall direct the parties or their counsel to participate in a prehearing conference at any reasonable time prior to the hearing. The prehearing conference shall be held at the U.S. Department of Agriculture, Washington, DC. Reasonable notice of the time, place of the prehearing conference and if personal attendance will be necessary shall be given. Prehearing conferences may be conducted telephonically. The ALJ shall order each of the parties to furnish at the prehearing conference or at another time prior to the hearing the following:
(1) An outline of the appeal or defense;
(2) The legal theories upon which the party will rely;
(3) Copies of or a list of documents that the party anticipates relying upon at the hearing; and
(4) A list of witnesses who will testify on behalf of the party. At the discretion of the party furnishing such list of witnesses, the names of the witnesses need not be furnished if they are otherwise identified in some meaningful way, such as a short statement of the type of evidence they will offer.
(b) Procedures. The ALJ shall not order any of the foregoing procedures that a party can show are inappropriate or unwarranted under the circumstances of the particular appeal.
(c) Matters to be considered. At the prehearing conference, the following matters shall be considered:
(1) The simplification of issues;
(2) The necessity of amendments to pleadings;
(3) The possibility of obtaining stipulations of facts and of the authenticity, accuracy, and admissibility of documents, which will avoid unnecessary proof;
(4) The limitation of the number of expert or other witnesses;
(5) Negotiation, compromise, or settlement of issues;
(6) The exchange of copies of proposed exhibits;
(7) The nature of and the date by which discovery, as provided in § 283.12, must be completed;
(8) The identification of documents or matters of which official notice may be requested;
(9) A schedule to be followed by the parties for the completion of the actions decided at the conference; and
(10) Such other matters as may expedite and aid in the disposition of the appeal.
(d) Reporting. (1) A prehearing conference will not be stenographically reported unless so directed by the ALJ.
(2) Any party to the appeal may, upon motion, request the ALJ to allow for a stenographic transcript of a prehearing conference. The party requesting the transcript shall bear the transcription cost of producing the transcript and the duplication cost for one transcript provided to the ALJ and to the other parties to the appeal.
(e) Order. Actions taken as a result of a conference shall be reduced to an appropriate written order, unless the ALJ concludes that a stenographic report, if available, shall suffice, or, in the event the conference takes place within 7 days of the beginning of the hearing, the ALJ elects to make a statement on the record at the hearing summarizing the actions taken.
§ 283.12 Discovery.
(a) Dispositions—(1) Motion for taking deposition. Only upon a finding by the ALJ that a deposition is necessary to preserve testimony as provided in this subparagraph, upon the motion of a party to the appeal, the ALJ may, at any time after the filing of the answer, order the taking of testimony by deposition. The motion shall set forth:
(i) The name and address of the proposed deponent;
(ii) The name and address of the person (referred to hereafter in this section as the “officer”) qualified under the regulations in this part to take depositions, before whom the proposed examination is to be made;
(iii) The proposed time and place of the examination, which shall be at least 15 days after the date of service of the motion; and
(iv) The reasons why such deposition should be taken, which shall be solely for the purpose of eliciting testimony which otherwise might not be available at the time of the hearing, for use as provided in accordance with paragraph (a)(7) of this section.
(2) ALJ’s order for taking depositions. If the ALJ finds that the testimony may not otherwise be available at the hearing, the taking of the deposition may be ordered. The order shall be served upon the parties, and shall state:
(i) The time and place of the examination;
(ii) The name of the officer before whom the examination is to be made; and
(iii) The name of the deponent. The officer and the time and place need not be the same as those suggested in the motion.
(3) Qualifications of officer. The deposition shall be made before an officer authorized by the law of the United States or by the law of the place of the examination to administer oaths, or before an officer authorized by the Secretary to administer oaths.
(4) Procedure on examination. (i) The deponent shall be examined under oath or affirmation and shall be subject to cross-examination. Objections to questions or documents shall be in the short form, stating the grounds of objections relied upon. The questions propounded, together with all objections made (but not including argument or debate), shall be recorded verbatim. In lieu of oral examination, parties may transmit written questions to the officer prior to the examination and the officer shall propound such questions to the deponent.
(ii) The party taking the deposition shall arrange for the examination of the witness either by oral examination, or by written questions upon agreement of the parties or as directed by the ALJ. If the examination is conducted by means of written questions, copies of the questions shall be served upon the other party to the appeal and filed with the officer at least 10 days prior to the date set for the examination unless otherwise agreed, and the other party may serve cross questions and file them with the officer at any time prior to the time of the examination.
(iii) The parties may stipulate in writing or the ALJ may upon motion order that a deposition be taken by telephone. A deposition taken by telephone is to be taken at the place where the deponent is to answer questions propounded to the deponent.
(iv) The parties may stipulate in writing or the ALJ may upon motion order that a deposition be recorded by other than stenographic means. The stipulation or the order shall designate the manner of recording, preserving and filing of the deposition, and may include other provisions to assure that the recorded testimony is accurate and trustworthy.
(5) Certification by the officer. The officer shall certify on the deposition that the deponent was duly sworn and that the deposition is a true record of the deponent’s testimony. The officer shall then securely seal the deposition, together with one copy thereof (unless there are more than two parties in the appeal, in which case there should be another copy for each additional party), in an envelope and mail the same by registered or certified mail to the Hearing Clerk.
(6) Corrections to the transcript. (i) At any time prior to the hearing, any party may file a motion proposing corrections to the transcript of the deposition.
(ii) Unless a party files such a motion in the manner prescribed, the transcript shall be presumed to be a true, correct, and complete transcript of the testimony given in the deposition proceeding and to contain an accurate description or reference to all exhibits in connection therewith, and shall be deemed to be certified correct without further procedure.
(iii) At any time prior to the use of the deposition in accordance with paragraph (a)(7) of this section and after consideration of any objections filed thereto, the ALJ may issue an order making any corrections in the transcript which the ALJ finds are warranted, and these corrections shall be entered onto the original transcript by the Hearing Clerk (without obscuring the original text).
(7) Use of depositions. A deposition ordered and taken in accordance with the provisions of this section may be used in an appeal under these rules if the ALJ finds that the evidence is otherwise admissible and
(i) That the witness is deceased;
(ii) That the witness is unable to attend or testify because of age, sickness, infirmity, or imprisonment;
(iii) That the party offering the deposition has endeavored to procure the attendance of the witness by subpoena, but has been unable to do so; or
(iv) That such exceptional circumstances exist as to make it desirable, in the interests of justice, to allow the deposition to be used. If the party upon whose motion the deposition was taken refuses to offer it in evidence, any other party may offer the deposition or any part thereof in evidence. If only part of a deposition is offered in evidence by a party, any other party may require the introduction of any other part which is relevant be considered with the part introduced, and any party may introduce any other parts.
(b) Interrogatories, requests for admissions and requests for production of documents—(1) Interrogatories. A party may submit written interrogatories to any other party to an appeal. The time for submitting and responding to written interrogatories shall be set by the ALJ at the pre-hearing conference, but in no event shall the time for response be less than 20 days from the date of service or within such time as determined upon motion to the ALJ. The number of interrogatories submitted by each party shall not exceed twenty-five questions including subparts, unless additional interrogatories are authorized by the ALJ. Each interrogatory should be answered separately and fully in writing, unless it is objected to, in which event the reasons for objection should be stated in lieu of an answer. The answers are to be signed under penalty of perjury by the person making them. Objections shall be signed by the attorney of record in the appeal or by the responding party’s authorized representative.
(2) Request for admissions. A party may submit a written request for admission of the truth of any matters relevant to the appeal to any other party to the appeal. The time for submitting a written request for admission shall be set by the ALJ at the pre-hearing conference. The number of admissions contained in a request submitted by a party shall not exceed twenty-five unless additional admissions are authorized by the ALJ. The matter is admitted unless, within 20 days after service thereof, or within such time as determined upon motion to the ALJ, the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter signed by the party, counsel or designated representative. If objection is made, the reasons therefor should be stated. The answer should specifically deny the matter or set forth in detail why the answering party cannot truthfully admit or deny the matter. An answering party may not give lack of information or knowledge as a reason for the failure to admit or deny unless it is stated that reasonable inquiry has been made and that the information known or readily obtainable is insufficient to enable the party to admit or deny. A party who considers that a matter for which an admission has been requested presents a genuine issue for hearing may not, on that ground alone, object to the request; the party may deny the matter or set forth reasons why the matter cannot be admitted or denied.
(3) Request for production of documents. (i) Any party may serve upon any other party to the appeal a request for production of documents which are in the possession or control of the party upon whom the request is served. The time for service and response to such a request shall be set by the ALJ at the pre-hearing conference. Upon payment of fees for search and duplication of documents, any party to the appeal may obtain copies of such documents.
(ii) Parties may request production of any documents regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action. Grounds for objection will not exist if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.
(iii) If such documents include privileged information or information the disclosure of which is proscribed by the Food and Nutrition Act of 2008, as amended, such documents need not be produced.
(c) Supplementation of response. A party who knows or later learns that a response is incorrect is under a duty to correct such response as soon as possible. A party who has responded to a request for discovery with a response that was complete when made is under a duty to supplement the response to include information thereafter acquired. A party is under a duty to supplement responses with respect to any question directly addressed to:
(1) The identity and location of persons having knowledge of discoverable matters, and
(2) The identity of each person expected to be called as an expert witness at the hearing, the subject matter on which such expert(s) is expected to testify, and the substance of the testimony.
(d) Frequency and use of discovery. The ALJ shall limit, upon motion of a party, the frequency or extent of discovery if the ALJ determines that:
(1) The discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive;
(2) The party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or
(3) The discovery is unduly burdensome or expensive, taking into account the needs of the case, the amount in controversy, limitations on the parties’ resources, and the importance of the issues at stake in the litigation.
(e) Protective orders—(1) Request for protective order. A party served with such a request may file a motion for a protective order before the date on which a response to the discovery request is due, stating why discovery should be limited or should not be required.
(2) Issuance of protective order. In issuing a protective order, the ALJ may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression or undue burden or expense, including one or more of the following:
(i) That discovery not be had;
(ii) That the discovery may be had only through a method of discovery other than that requested;
(iii) That certain matters not be inquired into, or that the scope of discovery be limited to certain matters;
(iv) That discovery be conducted with no one present except persons designated by the ALJ; and
(v) That the contents of discovery or evidence be sealed.
(f) Failure to respond to discovery—(1) Motions to compel. If a deponent fails to respond or gives an evasive or incomplete answer to a question propounded at a deposition pursuant to paragraph (a) of this section or a party fails to respond or gives evasive or incomplete answers to written interrogatories or admissions, or fails to respond, in full or in part, to a request for production of documents served pursuant to paragraph (b) of this section, the party seeking discovery may apply for an order compelling an answer by filing and serving a motion on all parties and deponents.
(2) Filing motion to compel. (i) Such motion must be filed within 20 days following the service of the unresponsive answer upon deposition or within 20 days after expiration of the period allowed for answers to interrogatories or production of documents.
(ii) On matters related to an oral examination, the proponent of the question may complete or adjourn the examination before he applies for an order.
(3) Responding to motion to compel. A response to the motion may be filed in accordance with § 283.18(d).
(g) Decision of the ALJ. (1) The ALJ may grant a motion to compel production or deny a motion for a protective order only if the ALJ finds that the discovery sought is necessary for the expeditious, fair, and reasonable consideration of the issues; it is not unduly costly or burdensome; it will not unduly delay the proceeding; and the information sought is not privileged.
(2) The initial decision of the ALJ regarding the motion to compel the production of privileged documents or the motion for a protective order shall become final and effective 10 days after service unless either party pursues the options as discussed in §§ 283.17(d) and 283.20.
(h) Failure to comply with an order. (1) If a party or other witness refuses to be sworn or refuses to answer any question after being directed to do so by order of the ALJ, such refusal may subject the refusing party to proceedings to compel compliance with the ALJ’s order in the appropriate United States district court.
(2) If any party or other person refuses to obey an order made under this section requiring an answer to designated questions or production of documents, the ALJ may order that the matters regarding which questions were asked or the contents of the document or documents or any other designated facts should be taken to be established for the purposes of the proceeding in accordance with the claim of the party obtaining the order.
(i) Postponements or delays. No hearing, proceeding or other matter under this part shall be postponed or otherwise delayed pending the response or resolution of issues pertaining to a request for information pursuant to the Freedom of Information Act, 5 U.S.C. 552.
§ 283.13 Subpoenas.
(a) Issuance of subpoenas. The attendance and testimony of witnesses and the production of documentary evidence from any place in the United States on behalf of any party to the appeal may be required by subpoena at the designated place of hearing. Except for cause shown, requests for subpoenas shall be filed at least 15 days prior to the date of the hearing. Subpoenas shall be issued by the ALJ, over the facsimile signature of the Secretary, upon a reasonable showing by the applicant of the grounds, necessity and reasonable scope thereof.
(b) Service of subpoenas. (1) When the ALJ issues a subpoena under this section, the party who requested such subpoena shall serve all other parties with a copy of the subpoena, notice of the names and addresses of the individuals subpoenaed and specify any documents required to be produced.
(2) Subpoenas may be served:
(i) By a U.S. Marshal or deputy marshal,
(ii) By any other person who is not less than 18 years of age, or
(iii) By registering and mailing a copy of the subpoena addressed to the person to be served at the last known principal place of business or residence.
(3) Proof of service may be made:
(i) By the return of service on the subpoena by the U.S. Marshal or deputy marshal,
(ii) If served by an employee of the Department, by a certificate stating that he personally served the subpoena upon the person named therein,
(iii) If served by another person, by an affidavit of such person stating that he personally served the subpoena upon the person named therein, or
(iv) If service was by registered mail, by an affidavit made by the person mailing the subpoena that it was mailed as provided herein and by the signed return post-office receipt. Where the subpoena is issued on behalf of the Secretary and service is by mail, the return receipt without an affidavit or certificate of mailing shall be sufficient proof of service.
(4) In making personal service, the person making service shall leave a copy of the subpoena with the person subpoenaed, or, if such person is not immediately available, with any other responsible person authorized to accept service residing or employed at the place of residence or business of the person subpoenaed.
(5) The original of the subpoena, bearing or accompanied by the required proof of service, shall be returned to the official who issued the same. The party at whose request the subpoena is issued shall be responsible for the service thereof.
§ 283.14 Fees of witnesses.
Witnesses summoned under these rules shall be paid the same fees and expenses that are paid witnesses in the courts of the United States. Fees shall be paid by the party at whose request the witness appears. Current Federal, State, or local government employees shall not be eligible to receive witness fees.
§ 283.15 Procedure for hearing.
(a) Request for hearing. A party may request a hearing on the facts by including such request in its Appeal Petition or Answer, whichever is appropriate. Failure to request a hearing within the time specified shall constitute a waiver of the opportunity for such a hearing, except as provided for under § 283.4(i). In the event FNS denies any material facts and fails to request a hearing, the matter may be set down for hearing on motion of the State agency or upon the ALJ’s own motion.
(b) Time and place. If any material issue of fact is joined by the pleadings, the ALJ, upon motion of any party, stating that the matter is ready for hearing, shall set a time for the hearing, as soon as feasible thereafter, with due regard for the public interest and the convenience and necessity of the State agency and FNS. The hearing shall be held at the U.S. Department of Agriculture, Washington, DC. Upon a showing of unusual or extraordinary circumstances, the ALJ may order that the hearing be held at another location. The ALJ shall file a notice stating the time and place of the hearing. If any change in the time of the hearing is made, the ALJ shall file a notice of such change, which notice shall be served upon the parties, unless it is made during the course of an oral hearing and made a part of the transcript or actual notice given to the parties.
(c) Appearances. The parties may appear in person or by attorney of record in the appeal or by any other designated representative. Any person who appears as attorney or as a party’s designated representative must conform to the standards of ethical conduct required by practitioners before the courts of the United States.
(d) Exchange of witness and rebuttal witness lists, statements and exhibits. (1) Witness and rebuttal witness lists, copies of prior statements of proposed witnesses, and copies of proposed hearing exhibits, including copies of any written statements or depositions that a party intends to offer in lieu of live testimony in accordance with § 283.12(a)(7), shall be exchanged at least 15 days in advance of the hearing or at such other time as may be set by the ALJ.
(2) A witness whose name does not appear on the witness list shall not be permitted to testify and exhibits which were not provided to the opposing party as provided above shall not be admitted into evidence at the hearing absent a showing of cause and as authorized by the ALJ.
(e) Deparment of attorney or representative. (1) Whenever an ALJ finds that a person acting as attorney or designated representative for any party to the appeal is guilty of unethical or contumacious conduct in, or in connection with an appeal, the ALJ may order that such person be precluded from further acting as attorney or representative in the appeal. Review by the Judicial Officer may be taken on any such order, but no appeal of the QC claim shall be delayed or suspended pending disposition of the debarment review by the Judicial Officer. Provided, however, that the ALJ shall suspend the appeal of the QC claim for a reasonable time for the purpose of enabling the party to obtain another attorney or representative.
(2) Whenever it is found, after notice and opportunity for hearing, that a person who is acting or who has acted as attorney or representative for another person in any proceeding before the U.S. Department of Agriculture, is unfit to act as such counsel because of such unethical or contumacious conduct, such person will be precluded from acting as the attorney or representative in any or all proceedings before the Department as found to be appropriate.
(f) Failure to appear. (1) If FNS or the State agency, after being duly notified, fails to appear at the hearing without cause, that party shall be deemed to have waived the opportunity for an oral hearing and to have admitted any facts which may be presented at the hearing. Such failure by either party shall also constitute an admission of all the material allegations of fact contained in any pleadings submitted by the other party. The party who appears shall have the option of whether to follow the procedure under § 283.7 or to present evidence, in whole or in part, in the form of declarations or by oral testimony before the ALJ.
(2) Failure to appear at a hearing shall not be deemed to be a waiver of the right to be served with a copy of the ALJ’s initial decision, to file a motion for reconsideration pursuant to § 283.17(d) or to seek review by the Judicial Officer in accordance with § 283.20.
(g) Order of proceeding. Except as may be decided otherwise by the ALJ, FNS shall proceed first at the hearing. FNS has the burden of proving, by a preponderance of the evidence, the QC claim against the State agency for a QC error rate in excess of the tolerance level. The State agency will proceed second and must prove, by a preponderance of the evidence, the facts upon which it bases its appeal.
(h) Evidence. (1) The testimony of witnesses at a hearing shall be on oath or affirmation and subject to cross-examination.
(2) Upon a finding of cause, the ALJ may order that any witness be examined separately and apart from all other witnesses except those who may be parties to the appeal or whose presence is shown by a party to be essential to the presentation of the party’s cause.
(3) After a witness called by either party has testified on direct examination, any other party may request and obtain the production of any statement, or part thereof, of such witness in the possession of the opposing party which relates to the subject matter as to which the witness has testified. Such production shall be made according to the procedures and subject to the definitions and limitations prescribed in the Jencks Act (18 U.S.C. 3500).
(4) Evidence which is immaterial, irrelevant, or unduly repetitious, or which is not of the sort upon which responsible persons are accustomed to rely, shall be excluded by order of the ALJ insofar as practicable.
(i) Inclusion in the record. At the oral hearing or as ordered by the ALJ, depositions to the extent deemed admissible, written interrogatories, written requests for admission and respective responses may be offered in evidence by the party at whose instance they were taken. If not offered by such party, they may be offered in whole or in part by any other party. If only part of a deposition, written interrogatory, written request for admission or response thereto is offered in evidence by a party, any other party may require that all of it, which is relevant to the part introduced, be offered, and any party may introduce any other parts. Such depositions, written interrogatories, written requests for admission and respective responses thereto shall be admissible in evidence subject to such objections as to relevancy, materiality or competency of the testimony as were noted at the time of their taking or are made at the time they are offered in evidence.
(j) Objections. (1) If a party objects to the admission of any evidence or to the limitation of the scope of any examination or cross examination or to any other ruling by the ALJ, the party shall state briefly the grounds of such objection, whereupon an automatic exception will follow if the objection is overruled by the ALJ.
(2) Only objections made before the ALJ may be subsequently relied upon on review by the Judicial Officer.
(k) Exhibits. Four copies of each exhibit shall be filed with the ALJ. However, where there are more than two parties in the appeal, an additional copy shall be filed for each additional party. A true copy of an exhibit may be substituted for the original.
(l) Official records or documents. An official government record or document or entry therein, if admissible for any purpose, shall be admissible in evidence without the production of the person who made or prepared the same, and shall be prima facie evidence of the relevant facts stated therein. Such record or document shall be evidenced by an official publication thereof or by a copy certified by a person having legal authority to make such certification.
(m) Official notice. Official notice shall be taken of such matters as are judicially noticed by the courts of the United States and of any other matter of technical, scientific, or commercial fact of established character. Provided, that the parties shall be given adequate opportunity to show that such facts are erroneously noticed.
(n) Offer of proof. Whenever evidence is excluded by the ALJ, the party offering such evidence may make an offer of proof, which shall be included in the transcript. The offer of proof shall consist of a brief statement describing the evidence excluded. If the evidence consists of a brief oral statement, it shall be included in the transcript in toto. If the evidence consists of a document or other exhibit, it shall be marked for identification and inserted in the hearing record. In either event, if the Judicial Officer, upon review, determines that the ALJ’s ruling excluding the evidence was erroneous and prejudicial, the evidence shall be considered a part of the transcript and hearing record. If the Judicial Officer determines that the ALJ’s ruling excluding the evidence was erroneous and prejudicial, and that it would inappropriate to have such evidence considered a part of the hearing record without reopening the hearing, the Judicial Officer may direct that the hearing be reopened to permit the taking of such evidence or for any other purpose in connection with the excluded evidence.
(o) Transcript. Hearings shall be recorded and transcribed verbatim. The party requesting the hearing shall bear the transcription cost of producing the transcript and the duplication cost for one transcript provided to the ALJ and to the other parties to the appeal.
§ 283.16 Consolidation of issues.
Similar issues involved in appeals by two or more State agencies may be consolidated upon motion by the State agencies, FNS, or at the discretion of the ALJ if it is decided that consolidation would help to promote administrative efficiency.
(a) Disposition of consolidated issues. If the ALJ orders consolidation, the issues consolidated will be considered first. If a hearing has been requested by any of the parties that have had issues consolidated, arguments on the consolidated issues will be heard before arguments on dissimilar issues. The ALJ will take the information into consideration along with arguments on other issues in preparing initial decisions for QC appeals in which some issues have been consolidated.
(b) Initial decision. (1) If the ALJ decides the evidence and arguments by the State agencies on the consolidated issues cannot be overcome by the evidence presented by FNS and are sufficient to grant the relief requested by a State agency or all State agencies in which the issue is involved, the ALJ shall prepare an initial decision as provided in § 283.17(c).
(2) FNS may file a motion for reconsideration pursuant to § 283.17(d) or seek review by the Judicial Officer in accordance with § 283.20.
§ 283.17 Post-hearing procedure.
(a) Corrections to transcript. (1) At any time, but not later than the time fixed for filing proposed findings of fact, conclusions of law, order and briefs, any party may file a motion proposing corrections to the transcript.
(2) Unless a party files such a motion in the matter prescribed, the transcript shall be presumed to be a true, correct, and complete transcript of the testimony given at the hearing and to contain an accurate description or reference to all exhibits received in evidence and made part of the hearing record. The transcript shall be deemed to be certified without further action by the ALJ.
(3) At any time prior to the filing of the ALJ’s initial decision and after consideration of any objections filed as to the transcript, the ALJ may issue an order making any corrections in the transcript that the ALJ finds are warranted. Such corrections shall be entered into the original transcript by the Hearing Clerk (without obscuring the original text).
(b) Proposed findings of fact, conclusions of law, order, and briefs. The parties may file proposed findings of fact, conclusions of law and orders based solely upon the record and on officially noticed matters, and briefs in support thereof. briefs may be filed at the discretion of the ALJ. The ALJ shall announce at the hearing the time within which these documents may be filed.
(c) ALJ’s initial decision. (1) The ALJ shall decide the appeal not later than 60 days after receipt of rebuttal evidence submitted by the State agency or, if the State agency does not submit rebuttal evidence, not later than 90 days after the State agency submits the notice of appeal and evidence in support of the appeal. In accordance with § 283.22(f), the ALJ may, upon motion or sua sponte, extend this deadline for cause shown.
(2) The ALJ shall prepare, upon the basis of the record and officially noticed matters, and shall file, an initial decision which shall include a decision on a request for good cause relief, a copy of which shall be served upon each of the parties.
(3) Such initial decision shall be considered final for purposes of judicial review without further proceedings, unless there is a motion for reconsideration filed pursuant to § 283.17(d) or review by the Judicial Officer is sought pursuant to § 283.20.
(4) If no motion for reconsideration or review by the Judicial Officer is filed, the initial decision shall constitute the final notice of determination for purposes of judicial review and shall become effective 30 day after service.
(d) Motion for reconsideration. (1) Except as provided in paragraph (d)(4) of this section, any party may file a motion for reconsideration of the initial decision within 30 days of service of the initial decision. If served by mail, the time for filing a motion for reconsideration will be 5 days longer in accordance with § 283.22.
(2) Every such motion must set forth the mattes claimed to have been erroneously decided and the basis of the alleged errors. Such motion shall be accompanied by a supporting brief.
(3) Responses to such motions shall be filed in accordance with § 283.18(d).
(4) No party may file a motion for reconsideration of an initial decision that has been revised in response to a previous motion for reconsideration.
(5) The ALJ may dispose of a motion for reconsideration by denying it or by issuing a revised initial decision.
(6) If the ALJ denies a motion for reconsideration, the initial decision shall constitute the final notice of determination for purposes of judicial review and shall become effective 30 days after service unless review by the Judicial Officer is sought in accordance with § 283.20.
(7) If the ALJ issues a revised initial decision, that decision shall constitute the final notice of determination for purposes of judicial review and shall become effective 30 days after service unless review by the Judicial Officer is sought in accordance with § 283.20.
§ 283.18 Motions and requests.
(a) Filing. All motions and requests shall be filed with the Hearing Clerk, and served upon all the parties by the moving or requesting party, except motions and requests made on the record during the oral hearing. The ALJ assigned to the appeal or the Chief Judge shall rule upon all motions and requests filed or made prior to seeking review of the ALJ’s initial decision pursuant to § 283.20, except motions directly relating to such review. Thereafter, the Judicial Officer shall rule on any motions and requests as well as the motions directly relating to the review of the ALJ’s initial decision.
(b) Time for filing. Any motion or request may be filed at any time, except that:
(1) Motions to dismiss pursuant to § 283.5 must be filed within the time allowed for filing an answer; and
(2) Motions for reconsideration must be filed within 30 days of service of the ALJ’s initial decision pursuant to § 283.17(d).
(c) Contents. All written motions and requests shall state the particular order, ruling, or action desired and the grounds therefor.
(d) Response to motions and requests. Within 10 days after service of any written motion or request or within such shorter or longer period as may be fixed by the ALJ or Judicial Officer, an opposing party may file a response to the motion or request. The moving party shall have no right to reply to the response; however, the ALJ or Judicial Officer may order that a reply be filed.
(e) Certification to the Judicial Officer. The submission or certification of any motion, request, objection, or other question to the Judicial Officer prior to the seeking of review pursuant to § 283.20 shall be made by and in the discretion of the ALJ. The ALJ may either rule upon or certify the motion, request, objection, or other question to the Judicial Officer, but not both.
§ 283.19 ALJs.
(a) Assignment. No ALJ shall be assigned to serve in any appeal who:
(1) Has any pecuniary interest in any matter or business involved in the appeal,
(2) Is related by blood or marriage to any party in the appeal, or
(3) Has any conflict of interest which might impair the ALJ’s objectivity in the appeal.
(b) Disqualification of ALJ. (1) Any party to the appeal may, by motion, request that the ALJ withdraw from the appeal on one or more of the grounds set out in paragraph (a) of this section. Such motion shall set forth with particularity the alleged grounds for disqualification. The ALJ may then either rule upon or certify the motion to the Judicial Officer, but not both.
(2) The ALJ may withdraw from any appeal for any reason deemed by the ALJ to be disqualifying.
(c) Powers. (1) Subject to review as provided elsewhere in this part, the ALJ, in any assigned appeal, shall have the power to:
(i) Rule upon motions and requests;
(ii) Set the time and place of a pre-hearing conference and the time of the hearing, adjourn the hearing from time to time, and change the time of the hearing;
(iii) Administer oaths and affirmations;
(iv) Regulate the scope and timing of discovery;
(v) Issue and enforce subpoenas as authorized under 7 U.S.C. 2023(a) and these rules;
(vi) Summon and examine witnesses and receive evidence at the hearing;
(vii) Appoint expert witnesses in accordance with the provisions of Rule 706 of the Federal Rules of Evidence;
(viii) Admit or exclude evidence;
(ix) Hear oral argument on facts or law;
(x) Upon motion of a party, decide cases, in whole or in part, by non-oral hearing procedures under subpart C of this part where there is no disputed material issue of fact;
(xi) Perform all acts and take all measures necessary for the maintenance of order, including the exclusion of contumacious counsel or other persons;
(xii) Take all other actions authorized under the Act and these rules, including the extension of time upon motion of a party or sua sponte for cause shown.
(2) The ALJ may not rule upon the validity of Federal statutes or regulations.
(d) Who may act in the absence of the ALJ. In case of the absence of the ALJ or the ALJ’s inability to act, the powers and duties to be performed by the ALJ under these rules of practice in connection with any assigned appeal may, without abatement of the appeal, unless otherwise directed by the Chief Judge, be assigned to any other ALJ.
§ 283.20 Review by the Judicial Officer.
(a) Filing of review petition. (1) Within 30 days after service of the ALJ’s initial decision, or any part thereof, any party may seek Judicial Officer review of such decision by filing a review petition with the Hearing Clerk. However, if another party files a motion for reconsideration under § 283.17(d), consideration of the review petition shall be stayed automatically pending resolution of the motion for reconsideration. If a motion for reconsideration is timely filed, a review petition may be filed within 30 days after the ALJ denies the motion or issues a revised initial decision, whichever applies.
(2) As provided in § 283.15(h), objections made before the ALJ regarding evidence or regarding a limitation on examination or cross-examination or other ruling may be relied upon in a Judicial Officer review.
(3) Each issue set forth in the review petition, and the arguments thereon, shall be plainly and concisely stated; and shall contain detailed citations to the record, statutes, regulations or authorities being relied upon in support thereof. A brief in support may be filed simultaneously with the review petition.
(b) Response to review petition. Within 30 days after service of a copy of a review petition and any brief in support thereof, any other party to the proceedings may file a response in support of or in opposition to the review petition and in such response any relevant issue, not presented in the review petition, may be raised.
(c) Transmittal of the record. (1) Whenever a review petition of an ALJ’s initial decision is filed and a response thereto has been filed or time for filing a response has expired, the Hearing Clerk shall transmit to the Judicial Officer the record of the appeal.
(2) Such record shall include: The pleadings; motions and requests filed and rulings thereon; the transcript of the testimony taken at the hearing, together with the exhibits filed in connection therewith; any documents or papers filed in connection with a prehearing conference; such proposed findings of fact, conclusions of law, orders, and briefs in support thereof, as may have been filed in connection with the appeal; the ALJ’s initial decision; the motion for reconsideration of the ALJ’s initial decision; the ALJ’s initial decision on the motion for reconsideration and the review petition, and such briefs in support thereof and responses thereto as may have been filed.
(d) Oral argument. A party filing a review petition may request, within the prescribed time for filing such review petition, an opportunity for oral argument before the Judicial Officer. Within the time allowed for filing a response, the responding party may file a request for such oral argument. Failure to make such request to appear before the Judicial Officer, within the prescribed time period, shall be deemed a waiver of the opportunity for oral argument. There is no right to appear personally before the Judicial Officer. The Judicial Officer may grant, refuse, or limit any request for oral argument. Oral argument shall not be transcribed unless so ordered in advance by the Judicial Officer for cause shown upon request of a party or upon the Judicial Officer’s own motion.
(e) Scope of argument. Argument to be heard by the Judicial Officer on review, whether oral or on brief, shall be limited to the issues raised in the review petition to the Judicial Officer or in the response to such petition, except that if the Judicial Officer determines that additional issues should be argued, the parties shall be given reasonable notice of such determination, so as to permit adequate preparation on all issues to be argued.
(f) Notice of argument; postponement. The Hearing Clerk shall advise all parties of the time and place at which oral argument will be heard. A request for postponement of the argument must be made by motion filed within a reasonable time in advance of the date fixed for argument.
(g) Order of argument. The appellant is entitled to commence and conclude the argument.
(h) Submission of briefs. By agreement of the parties, a review may be submitted for decision on the briefs, but the Judicial Officer may direct that the review be argued orally.
(i) Additional evidence. If any party demonstrates to the satisfaction of the Judicial Officer that additional evidence not presented to the ALJ is material, not cumulative, and that there were reasonable grounds for the failure to present such evidence to the ALJ, the Judicial Officer shall remand the matter to the ALJ for consideration of such additional evidence.
(j) Decision of the Judicial Officer on review. (1) As soon as practicable after the receipt of the record from the Hearing Clerk, or, in case oral argument was had, as soon as practicable thereafter, the Judicial Officer, upon the basis of the record and any matter of which official notice is taken, shall rule on the review.
(2) The Judicial Officer may adopt, reduce, reverse, compromise, remand or approve settlement of any claim initially decided by the ALJ under this part.
(3) The Judicial Officer shall promptly serve each party to the appeal with a copy of the ruling of the Judicial Officer which shall be considered the final determination and contain a statement describing the right to seek judicial review.
(4) Judicial review must be sought within 30 days of service of the final notice of determination by the Judicial Officer pursuant to 7 U.S.C. 2023(a).
§ 283.21 Ex parte communications.
(a) ALJ; Judicial Officer. At no time prior to the issuance of the final decision shall the ALJ or Judicial Officer discuss ex parte the merits of the appeal or review with any person who is connected with the appeal or review in an advocative or in an investigative capacity, or with any representative of such person. However, procedural matters shall not be included within this limitation; and furthermore, the ALJ or Judicial Officer may discuss the merits of the case with such a person if all parties to the appeal or review, or their attorneys have been given notice and an opportunity to participate. A memorandum of such discussion shall be included in the record.
(b) Parties; interested persons. No party or other interested person shall make or knowingly cause to be made to the ALJ or Judicial Officer an ex parte communication relevant to the merits of the appeal or review.
(c) Procedure. If the ALJ or Judicial Officer receives an ex parte communication in violation of this section, the one who receives the communication shall place in the public record of the appeal or review:
(1) All such written communications;
(2) Memoranda stating the substance of all such oral communications; and
(3) Copies of all written responses, and memoranda stating the substance of all oral responses thereto.
(4) Upon receipt of a communication knowingly made or knowingly caused to be made by a party in violation of this section, the ALJ or Judicial Officer may, to the extent consistent with the interests of justice and the policy of the underlying statute, require the party to show cause why its claim or interest in the appeal or review should not be dismissed, denied, disregarded or otherwise adversely affected on account of such violation.
(d) Decision. To the extent consistent with the interests of justice and the policy of the underlying statute, a violation of this section shall be sufficient grounds for a decision adverse to the party who knowingly commits a violation of this section or who knowingly causes such a violation to occur.
§ 283.22 Form; filing; service; proof of service; computation of time; and extensions of time.
(a) Form. (1) The original and two copies of all papers in a proceeding conducted under this subpart shall be filed with the Hearing Clerk.
(2) Every pleading and paper filed in the proceeding shall contain a caption setting forth the title of the action, the docket number assigned by the Hearing Clerk, and a descriptive title (e.g., Motion for Extension of Time).
(3) Every pleading and paper shall be signed by and contain the address and telephone number of the representative for the party on whose behalf the paper was filed.
(b) Filing. Papers are considered filed when they are postmarked, or, received, if hand delivered. Date of mailing may be established by a certificate from the party or representative or by proof that the document was sent by certified or registered mail.
(c) Service. A party filing a document with the ALJ shall, at the time of filing, serve a copy of such document on every other party. Service upon any party of any document shall be made by delivering or mailing a copy to the party’s last known address. When a party is represented by an attorney or designated representative, service shall be made upon such attorney or representative in lieu of the actual party.
(d) Proof of service. A certificate of the person serving the document by personal delivery or by mail, setting forth the date, time and manner of service, shall be proof of service.
(e) Computation of time. (1) In computing any period of time under this part or in an order issued thereunder, the time begins with the day following the act, event, or default, and includes the last day of the period, unless it is a Saturday, Sunday or legal holiday observed by the Federal Government, in which event it includes the next business day.
(2) When a document has been served by mail, an additional five days will be added to the time permitted for any response.
(f) Extensions of time. Requests for extensions of time shall be submitted to the ALJ, Chief Judge or the Judicial Officer prior to the expiration of the original due date. The time for the filing of any document or paper required or authorized under the rules in this part may be extended by the ALJ, Chief Judge or the Judicial Officer, if, in the judgment of the ALJ, Chief Judge or the Judicial Officer, there is cause for the extension. In instances where the time permits notice of the request for extension, time shall be given to the other party to submit views concerning the request.
§ 283.23 Procedural matters.
(a) Communications from Hearing Clerk. In order to expedite the appeal process, the Hearing Clerk may develop form letters and transmittal forms to be used for notices, service of papers, requests for information, and all other communications between the Hearing Clerk’s Office and the parties.
(b) Representation. All parties may be represented by attorneys or by designated representatives. Attorneys or designated representatives appearing for the parties shall file formal notices of appearances and withdrawals with the Hearing Clerk.
Subpart C—Summary Procedure for Appeals of QC Claims of Less Than $50,000
§ 283.24 Incorporation of procedures by reference.
Except as otherwise provided, the following procedures detailed in subpart B of this part shall apply to appeals of QC claims of less than $50,000: §§ 283.5 Motion to Dismiss; 283.6 Answer; 283.8 Rebuttal or Amendment of Appeal or Answer; 283.9 Withdrawal of Appeal; 283.10 Consent Decision; 283.18 Motions and Requests; 283.19 ALJ’s; 283.20 Review by the Judicial Officer; 283.21 Ex Parte Communications; 283.22 Filings; Service; Extensions of Time; and Computations of Time; and 283.23 Procedural Matters.
§ 283.25 Filing appeals for QC claims of less than $50,000.
(a) Time. A State agency may appeal the bill for collection from FNS for a QC claim of less than $50,000 for a SNAP QC error rate in excess of the tolerance level. A State agency must file a written notice of appeal, in accordance with this section, within 10 days of receipt of the bill for collection from FNS for a QC claim of less than $50,000. The State agency may request an extension to the 10-day filing requirement in accordance with § 283.22(f). FNS shall issue the bill for collection by certified mail or personal service.
(b) Exhaustion of administrative remedies. The State agency must appeal the bill for collection to the ALJ, pursuant to this subpart, and exhaust the available administrative remedies before filing suit in the Federal District Courts.
(c) Filing. The notice of appeal shall be filed with the Hearing Clerk.
(d) Content of the notice of appeal. (1) A notice of appeal, in order to be considered acceptable must contain the following information:
(i) A brief and clear statement that it is an appeal from a QC claim of less than $50,000 identifying the period the claim covers, the date and amount of the bill for collection, and the date of receipt of the bill for collection;
(ii) Identification of the State agency as the appellant and FNS as the appellee;
(iii) A statement that the notice of appeal is filed pursuant to section 14(a) of the Food and Nutrition Act of 2008;
(iv) A true copy of the bill for collection which constitutes the basis for the filing of the notice of appeal shall be attached to the notice.
(2) Failure to file an acceptable notice of appeal may result in a challenge by FNS to the notice and dismissal of the notice by the ALJ and a waiver of the opportunity for further appeal or review by the Judicial Officer unless the State agency pursues the options as discussed in §§ 283.17(d) and 283.20.
(e) Receipt of notice of appeal and assignment of docket number. Upon receipt of a notice of appeal, the Hearing Clerk shall assign the appeal a docket number. The Hearing Clerk shall:
(1) Send the State agency a letter which shall include the following information:
(i) Advise that the notice of appeal has been received and the date of receipt;
(ii) The docket number assigned to the appeal and instructions that all future communications related to the appeal shall reference the docket number, and;
(iii) That the State agency must file and serve its appeal petition, as set forth in § 283.22 not later than 60 days after receiving a notice of the claim. Failure to file a timely appeal petition may result in a waiver of further appeal rights.
(2) Send FNS a copy of the notice of appeal and a copy of the letter to the State agency.
(f) Stay of collection. The filing of a timely notice of appeal shall automatically stay the action of FNS to collect the QC claim asserted against the State agency until a decision is reached on the acceptability of the appeal, and in the case of an acceptable appeal, until a final administrative determination has been issued. However, interest will accrue on the outstanding claim amount during the stay as provided in section 13(a)(1) of the Food and Nutrition Act of 2008, as amended (7 U.S.C. 2022(a)(1)).
(g) Content of appeal petition. The appeal petition shall include:
(1) A brief statement of the allegations of fact and provisions of law that constitute the basis for the appeal including a statement as to whether a factual basis for good cause relief exists, and
(2) The nature of the relief sought.
(h) FNS answer. Upon service of the State agency appeal petition, FNS shall file an answer, pursuant to § 283.6, not later than 60 days after the State agency submits its appeal petition.
§ 283.26 Request that appeals be handled under procedures in subpart B for appeals of QC claims of $50,000 or more.
(a) If, after the filing of its appeal petition, the State agency does not believe that the summary procedure provided in this subpart is adequate for handling the appeal and that an oral hearing is necessary, the State agency may file, no later than the date established for the conclusion of any discovery pursuant to § 283.29, a motion that its appeal be handled under the procedures in subpart B of this part.
(b) The motion shall specify why the State agency believes that the summary procedure is inadequate and what harm will result if an oral hearing is not held.
(c) FNS will have 10 days from service of the State agency’s motion that the appeal be handled under subpart B of this part to submit arguments either in support of or against the State agency’s position.
(d) The ALJ will review the State agency’s motion and the information submitted by FNS and decide which procedures shall be used in the appeal.
§ 283.27 Procedures upon failure to file an answer.
The failure by FNS to file an answer shall constitute a waiver of the opportunity to file a cross motion for summary judgment pursuant to § 283.30. Upon such failure to file, the State agency shall file a proposed decision, along with a motion for adoption thereof, both of which shall be served upon FNS by the State agency. Within 10 days after service of such motion and proposed decision, FNS may file with the Hearing Clerk objections thereto. If the ALJ finds that meritorious objections have been filed, the State agency’s motion shall be denied with supporting reasons. If meritorious objections are not filed, the ALJ shall issue an initial decision without further procedures. Copies of the decision or denial of State agency’s motion shall be served on each of the parties and shall be included as part of the official record. Where the decision as proposed by the State agency is adopted as the ALJ’s initial decision, such decision of the ALJ shall become final and effective 30 days after service unless reconsideration or review by the Judicial Officer is sought as discussed in §§ 283.17(d) and 283.20.
§ 283.28 Discovery.
Upon motion and as ordered by the ALJ, written interrogatories, written requests for admissions and written requests for the production of documents, may be served by any party to the appeal upon any other party and used in accordance with § 283.12(b).
§ 283.29 Scheduling conference.
(a) Time and place. The ALJ shall direct the parties or their counsel to attend a scheduling conference following the filing of a notice of appeal pursuant to § 283.25. The scheduling conference shall be held at the U.S. Department of Agriculture, Washington, DC. Reasonable notice of the time and place of the scheduling conference shall be given. The ALJ may order each of the parties to furnish at the scheduling conference the following:
(1) An outline of the appeal or defense;
(2) The legal theories upon which the party will rely;
(3) Copies of or a list of documents that the party anticipates relying upon;
(b) Procedures. The ALJ shall not order any of the foregoing procedures that a party can show are inappropriate or unwarranted under the circumstances of the particular appeal.
(c) Scheduling conference. At the scheduling conference, the following matters shall be considered:
(1) The simplification of issues;
(2) The necessity of amendments to pleadings;
(3) Stipulations of facts and of the authenticity, accuracy, and admissibility of documents;
(4) Negotiation, compromise, or settlement of issues;
(5) The exchange of copies of proposed exhibits;
(6) The nature of and the date by which discovery, as provided in § 283.28, must be completed;
(7) The identification of documents or matters of which official notice may be requested;
(8) A schedule to be followed by the parties for the filing of cross-motions for summary judgment and completion of other actions decided at the conference; and
(9) Such other matters as may expedite and aid in the disposition of the appeal.
(d) Reporting. A scheduling conference will not be stenographically reported unless so directed by the ALJ.
(e) Attendance at scheduling conference. In the event the ALJ concludes that personal attendance by the ALJ and the parties or counsel at a scheduling conference is unwarranted or impractical, but decides that a conference would expedite the appeal, the ALJ may conduct such conference by telephone.
(f) Order. Actions taken as a result of a conference shall be reduced to an appropriate written order, unless the ALJ concludes that a stenographic report shall suffice.
§ 283.30 Cross motions for summary judgment.
Appeals filed pursuant to this subpart shall be determined upon cross motions for summary judgment unless the matter is heard under subpart B of this part in accordance with § 283.26. Cross motions for summary judgment shall be filed by the parties along with the appeal petition and answer or in accordance with the schedule established by the ALJ pursuant to § 283.29. Motions for summary judgment shall address the issues raised by the pleadings and may be supported by declarations. Motions and accompanying briefs in support of summary judgment shall not exceed 35 pages excluding exhibits unless otherwise authorized by the ALJ. Reply briefs may be filed by the parties in accordance with the schedule established by the ALJ. Reply briefs may not exceed 15 pages in length, excluding exhibits.
§ 283.31 Review of the record.
(a) The ALJ shall review the cross motions for summary judgment, briefs, reply briefs and supporting materials submitted by both FNS and the State agency.
(b) If the ALJ decides that additional information or briefing is required from a party, a request for such information or briefing shall be submitted to such party with a copy to the other party. The request shall identify the additional information or specific issues to be addressed and shall specify the date(s) by which such information or briefing must be provided. Upon receipt of such additional information or briefing, the ALJ shall provide the other party an opportunity to submit responsive information or briefing.
(c) If the party to whom a request for additional information or briefing is made fails to submit the information or brief the issue(s) as requested, the ALJ may decide the appeal based on the existing record.
(d) If the ALJ decides that oral argument is necessary on legal issues, the ALJ shall set a time for the oral arguments as soon as feasible thereafter, with due regard for the public interest and the convenience and necessity of the State agency and FNS. The oral arguments shall be held at the U.S. Department of Agriculture, Washington, DC. Upon a showing of unusual or extraordinary circumstances, the ALJ may order that the argument be held at another location. The ALJ shall file a notice stating the time and place of the oral arguments. If any change in the time of the oral arguments is made, the ALJ shall file a notice of such change, which notice shall be served upon the parties, unless it is made during the course of the oral arguments and made a part of the transcript or actual notice given to the parties.
(e) Oral argument shall not be transcribed unless so ordered in advance by the ALJ for cause shown upon request of a party or upon the ALJ’s own motion.
§ 283.32 ALJ’s initial decision.
(a) The ALJ shall decide the appeal not later than 60 days after receipt of rebuttal evidence submitted by the State agency pursuant to § 283.8 or, if the State agency does not submit rebuttal evidence, not later than 90 days after the State agency submits the notice of appeal and evidence in support of the appeal. The ALJ may extend this deadline for cause shown.
(b) The ALJ shall prepare, upon the basis of the record, and shall file an initial decision which shall include a decision on a request for good cause relief, a copy of which shall be served upon each of the parties.
(c) Such initial decision shall constitute the final notice of determination for purposes of judicial review without further proceedings, unless there is a motion for reconsideration filed pursuant to § 283.17(d) or review by the Judicial Officer is sought pursuant to § 283.20.
PART 284—MISCELLANEOUS
§ 284.1 Pandemic Electronic Benefits Transfer (P-EBT).
(a) Overview. Section 1101 of the Families First Coronavirus Response Act (FFCRA; Pub. L. 116-127), as amended, authorized supplemental allotments to certain households. These benefits shall be referred to as Pandemic Electronic Benefits Transfer (P-EBT) benefits throughout this section. This section establishes the retailer integrity regulations for P-EBT for retailers in any State as defined in Section 3(r) of the Food and Nutrition Act.
(b) Definitions. For this section:
(1) Trafficking means the activities described in the definition of trafficking at § 271.2 of this chapter when such activities involve P-EBT benefits.
(2) Firm’s practice means the activities described in the definition of firm’s practice at § 271.2 of this chapter when such activities involve P-EBT benefits.
(3) Involving P-EBT benefits or involve P-EBT benefits means activities involving P-EBT benefits as well as supplemental nutrition assistance program (SNAP) benefits, or only P-EBT benefits.
(c) Participation of retail food stores and wholesale food concerns, and redemption of P-EBT benefits. Requirements and restrictions on the participation of retail food stores and wholesale food concerns and the redemption of coupons described at §§ 278.2, 278.3 and 278.4 of this chapter, including the acceptance of coupons for eligible food at authorized firms, also apply to activities involving P-EBT benefits.
(d) Firm eligibility standards. A firm may be subject to the following actions described at § 278.1 of this chapter for noncompliance or violations involving P-EBT benefits:
(1) The requirements described at § 278.1(b)(4) of this chapter regarding a collateral bond or irrevocable letter of credit for applicant firms with certain sanctions apply to applicant firms with sanctions imposed for violations involving P-EBT benefits. The amount of the collateral bond or irrevocable letter of credit shall be calculated in accordance with § 278.1(b)(4)(i)(D) and shall also include the amount of P-EBT benefit redemptions when calculating the average monthly benefit redemption volume.
(2) Authorization shall be denied or withdrawn based on a determination by the Food and Nutrition Service (FNS) that a firm lacks or fails to maintain necessary business integrity and reputation, in accordance with the standards and time periods described at § 278.1(b)(3), (k)(3), and (l)(1)(iv) of this chapter. When making such determinations, FNS shall consider the criteria referred to in § 278.1(b)(3), (k)(3), and (l)(1)(iv) where the underlying activities involve P-EBT benefits.
(3) Firm authorization shall be denied or withdrawn for failure to pay any claims, fines, or civil money penalties in the manner described at § 278.1(k)(7) and (l)(1)(v) and (vi) of this chapter where such sanctions were imposed for violations involving P-EBT benefits.
(e) Penalties. For firms that commit certain violations described at §§ 278.6 and 278.2 of this chapter where such violations involve P-EBT benefits, FNS shall take the corresponding action prescribed at § 278.6 or § 278.2 for that violation. For the purposes of assigning a period of disqualification, a warning letter shall not be considered to be a sanction. Specifically, FNS shall:
(1) Disqualify a firm permanently, as described at § 278.6(e)(1)(i) of this chapter, for trafficking, as defined at § 284.1(b)(1) of this chapter, or impose a civil money penalty in lieu of permanent disqualification, as described at § 278.6(i) of this chapter, where such compliance policy and program is designed to prevent violations of regulations of this section;
(2) Disqualify a firm permanently, as described at § 278.6(e)(1)(ii) of this chapter, for any violation involving P-EBT benefits committed by a firm that had already been sanctioned at least twice before under this section or part 278 of this chapter;
(3) Disqualify the firm for 5 years, as described at § 278.6(e)(2)(v) of this chapter, or for 3 years, as described at § 278.6(e)(3)(iv) of this chapter, for unauthorized acceptance violations involving P-EBT benefits, and impose fines, as described at § 278.6(m) of this chapter, for unauthorized acceptance violations involving P-EBT benefits;
(4) Disqualify the firm for 5 years in circumstances described at § 278.6(e)(2) of this chapter when the amount of redemptions, which shall also include the amount of P-EBT redemptions, exceed food sales for the same period of time, as described at § 278.6(e)(2)(ii), (iii), and (iv);
(5) Disqualify the firm for 3 years as described at § 278.6(e)(3)(ii) of this chapter for situations described at § 278.6(e)(2) of this chapter involving P-EBT benefits;
(6) Disqualify the firm for 1 year for credit account violations as described at §§ 278.6(e)(4)(ii) and 278.2(f) of this chapter, where such violations involve P-EBT benefits;
(7) Disqualify the firm for ineligibles violations for such circumstances and corresponding time periods as described at § 278.6(e)(2)(i), (e)(3)(i), (e)(4)(i), and (e)(5) of this chapter, where such violations involve P-EBT benefits;
(8) Double the appropriate period of disqualification for a violation, as described at § 278.6(e)(6) of this chapter, where such violation involves P-EBT benefits, when the firm has once before been assigned a sanction under this section or part 278 of this chapter;
(9) Issue a warning letter to the violative firm when violations are too limited to warrant a period of disqualification, as described at § 278.6(e)(7) of this chapter, where such violations involve P-EBT benefits;
(10) Impose a civil money penalty for hardship or transfer of ownership, as described at § 278.6(g) of this chapter, in amounts calculated using the described formula at § 278.6(g), which shall also include the relevant amount of P-EBT redemptions when calculating the average monthly benefit redemptions; and
(11) Impose a civil money penalty in lieu of permanent disqualification for trafficking as described at § 278.6(j) of this chapter in an amount calculated using the described formula at § 278.6(j), which shall also include the relevant amount of P-EBT redemptions when calculating the average monthly benefit redemptions.
(f) Claims. The standards for determination and disposition of claims described at § 278.7 of this chapter apply to P-EBT benefits.
(g) Administrative and Judicial review. Firms aggrieved by administrative action under paragraphs (d), (e), and (f) of this section may request administrative review of the administrative action with FNS in accordance with part 279, subpart A, of this chapter. Firms aggrieved by the determination of such an administrative review may seek judicial review of the determination under 5 U.S.C. 702 through 706.
§ 284.2 [Reserved]
PART 285—PROVISION OF A NUTRITION ASSISTANCE GRANT FOR THE COMMONWEALTH OF PUERTO RICO
§ 285.1 General purpose and scope.
This part describes the general terms and conditions under which grant funds shall be provided by the Food and Nutrition Service (FNS) to the government of the Commonwealth of Puerto Rico for the purpose of designing and conducting a nutrition assistance program for needy persons. The Commonwealth of Puerto Rico is authorized to establish eligibility and benefit levels for the nutrition assistance program. In addition, with FNS approval, the Commonwealth of Puerto Rico may employ a small proportion of the grant funds to finance projects that the Commonwealth of Puerto Rico believes likely to improve or stimulate agriculture, food production, and food distribution.
§ 285.2 Funding.
(a) FNS shall, consistent with the plan of operation required by § 285.3 of this part, and subject to availability of funds, provide nutrition assistance grant funds to the Commonwealth of Puerto Rico to cover 100 percent of the expenditures related to food assistance provided to needy persons and 50 percent of the administrative expenses related to the food assistance. The amount of the grant funds provided to the Commonwealth of Puerto Rico shall not exceed amounts appropriated for this purpose for each fiscal year.
(b) FNS shall, subject to the provisions in §§ 285.3 and 285.5 in this part, and limited by the provisions of paragraph (a) of this section, pay to the Commonwealth of Puerto Rico for the applicable fiscal year, the amount estimated by the Commonwealth of Puerto Rico pursuant to § 285.3(b)(4). Payments shall be made no less frequently than on a monthly basis prior to the beginning of each month consistent with the Treasury Fiscal Requirement Manual, Volume I, part 6, section 2030; these letters of credit shall be drawn on an as-needed basis. The amount shall be reduced or increased to the extent of any prior overpayment or underpayment which FNS determines has been made and which has not been previoulsy adjusted. The payment(s) received by the Commonwealth of Puerto Rico for a fiscal year shall not exceed the total authorized for the grant, or the total cost for the nutrition assistance program eligible for funding, whichever is less, for that fiscal year.
(c) FNS may recover from the Commonwealth of Puerto Rico, through offsets to funding during any fiscal year, funds previously paid to the Commonwealth of Puerto Rico and later determined by the Secretary to have been overpayments. Funds which may be recovered include, but are not limited to:
(1) Costs not included in the approved plan of operation;
(2) Unallowable costs discovered in audit or investigation findings;
(3) Funds allocated to the Commonwealth of Puerto Rico which exceeded expenditures during the fiscal year for which the funds were authorized; or
(4) Amounts owed to FNS as a result of the nutrition assistance grant which have been billed to the Commonwealth of Puerto Rico and which the Commonwealth of Puerto Rico has failed to pay without cause acceptable to FNS.
(d) Funds for payment of any prior fiscal year expenditures shall be claimed from the funding for that prior year. The payment of funds shall not exceed the authorization for that prior fiscal year.
§ 285.3 Plan of operation.
(a) To receive payments for any fiscal year the Commonwealth of Puerto Rico shall have a plan of operation for that fiscal year approved by FNS. Each plan of operation shall be sumitted for FNS approval by the July 1 preceding the fiscal year for which the plan of operation is to be effective.
(b) The plan of operation shall include the following information:
(1) Designation of the agency or agencies directly responsible for administration, or supervision of the administration, of the nutrition assistance program.
(2) A description of the needy persons residing in the Commonwealth of Puerto Rico and an assessment of the food and nutrition needs of these persons. The description and assessment shall demonstrate that the nutrition assistance program is directed toward the most needy persons in the Commonwealth of Puerto Rico.
(3) A description of the program for nutrition assistance including:
(i) A general description of the nutrition assistance to be provided the needy persons who will receive assistance, and any agencies designated to provide such assistance; and
(ii) To the extent grant funds are not used for direct nutrition assistance payments to needy persons, the plan of operation must demonstrate that the grants funds will provide nutrition assistance benefiting needy persons in the Commonwealth of Puerto Rico.
(4) A budget and an estimate of the monthly amounts of expenditures necessary for the provision of the nutrition assistance and related administrative expenses up to the monthly amounts provided for payment in § 285.2.
(5) Other reasonably related information which FNS may request.
(6) An agreement signed by the governor or other appropriate official to conduct the nutrition assistance program in accordance with the FNS-approved plan of operation and in compliance with all pertinent Federal rules and regulations. The Commonwealth of Puerto Rico shall also agree to comply with any changes in Federal law and regulations.
(c) Any amendments to those provisions of the plan of operation specified in paragraph (b) of this section, must be submitted to FNS for approval.
(d) FNS shall approve or disapprove any plan of operation no later than August 1 of the year of its submission. FNS approval of the plan of operation shall be based on an assessment that the nutrition assistance program, as defined in the plan of operation, is:
(1) Sufficient to permit analysis and review;
(2) Reasonably targeted to the most needy persons as defined in the plan of operation;
(3) Supported by an assessment of the food and nutrition needs of needy persons;
(4) Reasonable in terms of the funds requested;
(5) Structured to include safeguards to prevent fraud, waste, and abuse in the use of grant funds; and
(6) Consistent with all applicable Federal laws.
(e) FNS shall approve or disapprove any amendments to those provisions of the plan of operation specified in paragraph (b) of this section. If FNS fails either to approve or deny the amendment, or to request additional information within 30 days, the amendment to the plan of operation is approved. If additional information is requested, the Commonwealth of Puerto Rico shall provide this as soon as possible, and FNS shall approve or deny the amendment to the plan of operation. Payment schedules and other program operations may not be altered until an amendment to the plan of operation is approved. The Commonwealth of Puerto Rico shall, for informational purposes, submit to FNS any amendments to those provisions of the plan of operation not specified in paragraph (b) of this section. Such submittal shall be made at least 30 days prior to the effective date of the amendment. If circumstances warrant a waiver of the 30-day requirement, the Commonwealth of Puerto Rico shall submit a waiver request to FNS for consideration. Should FNS determine that such an amendment relates to the provisions of paragraph (b) of this section, FNS approval as established above will be necessary for the amendment to be implemented.
(f) FNS may approve part of any plan of operation or amendment submitted by the Commonwealth of Puerto Rico contingent on appropriate action by the Commonwealth of Puerto Rico with respect to the problem areas in the plan of operation.
(g) If all or part of the plan of operation is disapproved, FNS shall notify the appropriate agency in the Commonwealth of Puerto Rico of the problem area(s) in the plan of operation and the actions necessary to secure approval.
(h) In accordance with the provisions of § 285.5, funds may be withheld or denied when all or part of a plan of operation is disapproved.
§ 285.4 Audits.
(a) The Commonwealth of Puerto Rico shall provide an audit of expenditures in compliance with the requirements in part 3015 of this title at least once every two years. The findings of such audit shall be reported to FNS no later than 120 days from the end of each fiscal year in which the audit is made.
(b) Within 120 days of the end of each fiscal year, the Commonwealth of Puerto Rico shall provide FNS with a statement of: (1) Whether the grant funds received for that fiscal year exceeded the valid obligations made that year for which payment is authorized, and if so, by how much, and (2) such additional related information as FNS may require.
§ 285.5 Failure to comply.
(a) Grant funds may be withheld in whole or in part, or denied if there is a substantial failure by the Commonwealth of Puerto Rico to comply with the requirements of § 285.4, or to bring into compliance a plan of operation disapproved by FNS, or to comply with program requirements detailed in the plan of operation approved for that fiscal year. (For example, funds shall be paid to the Commonwealth of Puerto Rico to cover only the costs of the part or parts of the plan of operation receiving FNS approval. Withheld payments shall be paid when the unapproved part(s) of the plan are modified and approved.) FNS shall notify the Commonwealth of Puerto Rico that further payments shall not be made until FNS is satisfied that there will no longer be any such failure to comply.
(b) Upon a finding of a substantial failure to comply with the requirements of § 285.4 or the plan of operation, FNS may, in addition to or in lieu of actions taken in accordance with paragraph (a) of this section, refer the matter to the Attorney General with a request that injunctive relief be sought from the appropriate district court of the United States to require compliance with these regulations by the Commonwealth of Puerto Rico.
PART 292—SUMMER ELECTRONIC BENEFITS TRANSFER PROGRAM
Subpart A—General
§ 292.1 General purpose and scope.
(a) This part establishes the regulations under which the Secretary will administer the Summer Electronic Benefits Transfer (Summer EBT) Program. Section 13A of the Richard B. Russell National School Lunch Act authorizes the Secretary to establish a Program under which States, and Indian Tribal Organizations (ITOs) that administer the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), electing to participate in the Summer EBT Program must, beginning in Summer 2024 and annually thereafter, issue to each eligible household Summer EBT benefits.
(b) This program was established for the purpose of providing nutrition assistance during the summer months for each eligible child, to ensure continued access to food when school is not in session for the summer.
§ 292.2 Definitions.
2 CFR part 200 means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards published by the Office of Management and Budget (OMB). The part reference covers applicable: Acronyms and Definitions (subpart A), General Provisions (subpart B), Post Federal Award Requirements (subpart D), Cost Principles (subpart E), and Audit Requirements (subpart F).
Act means the Richard B. Russell National School Lunch Act, as amended.
Acquisition means obtaining supplies or services through a purchase or lease, regardless of whether the supplies or services are already in existence or must be developed, created, or evaluated.
Administrative costs means costs incurred by a Summer EBT agency, LEA, or local agencies operating in a formal agreement with a Summer EBT agency related to planning, organizing, and managing a Summer EBT Program.
Adult means, for the purposes of completing an application for eligibility for Program benefits, any individual 18 years of age or older.
Advance Planning Document for project planning or Planning APD (APD or PAPD) means a brief written plan of action that requests Federal financial participation to accomplish the planning activities necessary for a Summer EBT agency to determine the need for, feasibility of, projected costs and benefits of an IS equipment or services acquisition, plan the acquisition of IS equipment and/or services, and to acquire information necessary to prepare an Implementation APD.
Advance Planning Document Update (APDU) means a document submitted annually (Annual APDU) by the Summer EBT agency to report the status of project activities and expenditures in relation to the approved Planning APD or Implementation APD; or on an as needed basis (As Needed APDU) to request funding approval for project continuation when significant project changes occur or are anticipated.
Cash-Value Benefit (CVB) means a type of benefit that is a fixed-dollar amount used to obtain supplemental foods by participants served by an ITO Summer EBT agency for the purposes of the Summer EBT Program.
Categorically eligible means considered income eligible for Summer EBT, as applicable, based on documentation that a child is a member of a household, as defined in this section, and one or more children in that household are receiving assistance under SNAP, TANF, or FDPIR, or another means tested program, as approved by the Secretary. A foster child, homeless child, a migrant child, a Head Start child and a runaway child, as defined in § 245.2 of this chapter, are also categorically eligible. Categorical eligibility and automatic eligibility may be used synonymously.
Commercial Off-the-Shelf (COTS) means proprietary software products that are ready-made and available for sale to the general public at established catalog or market prices in which the software vendor is not positioned as the sole implementer or integrator of the product.
Continuous school calendar means a situation in which all or part of the student body of a school is:
(1) On a vacation for periods of 15 continuous school days or more during the period October through April; and
(2) In attendance at regularly scheduled classes during most of the period May through September.
Current income means income received during the month prior to application for Summer EBT benefits. If such income does not accurately reflect the household’s annual income, income must be based on the projected annual household income. If the prior year’s income provides an accurate reflection of the household’s current annual income, the prior year may be used as a base for the projected annual income.
Department means the U.S. Department of Agriculture.
Direct verification means the process of verifying household income or categorical eligibility by matching against data sources or other records without the need to contact households for documentation.
Disclosure means reveal or use individual children’s program eligibility information obtained through the Summer EBT eligibility process for a purpose other than for the purpose for which the information was obtained. The term refers to access, release, or transfer of personal data about children by means of print, tape, microfilm, microfiche, electronic communication or any other means.
Dual participation means a child simultaneously receiving benefits from more than one State or ITO-administered Summer EBT Program, or simultaneously receiving multiple allotments from the same State or ITO-administered Summer EBT Program.
Electronic Benefit Transfer (EBT) account means a set of records containing demographic, card, benefit, transaction, and balance data for an individual household within the EBT system that is maintained and managed by a Summer EBT agency or its contractor as part of the client case record.
Electronic Benefit Transfer (EBT) card means a method to access EBT benefits issued to a household member or authorized representative through the EBT system by a benefit issuer. This method may include an on-line magnetic stripe card, an off-line smart card, a chip card, a contactless digital wallet with a stored card, or any other similar benefit access technology approved by USDA.
Electronic Benefit Transfer (EBT) contractor or vendor means an entity that is selected to perform EBT-related services for the Summer EBT agency.
Electronic Benefit Transfer (EBT) system means an electronic payments system under which benefits are issued from and stored in a central databank, maintained and managed by a Summer EBT agency or its contractor, and uses electronic funds transfer technology for the delivery and control of food and other public assistance benefits.
Eligible child means a child who meets the requirements to receive Summer EBT benefits as provided in §§ 292.5 and 292.6.
Eligible household means a household that includes at least one eligible child.
Enhancement means modifications which change the functions of software and hardware beyond their original purposes, not just to correct errors or deficiencies which may have been present in the software or hardware, or to improve the operational performance of the software or hardware. Software enhancements that substantially increase risk or cost or functionality will require submission of an IAPD or an As Needed IAPDU.
Enrolled students means students who are enrolled in and attending schools participating in the NSLP/SBP and who have access to a meal service (breakfast or lunch) on a regular basis.
Expungement means the removal of Summer-EBT benefits from the EBT account to which they were issued, typically by an EBT processor on behalf of a Summer EBT agency.
FDPIR means the food distribution program for households on Indian reservations operated under 7 CFR part 253, and the food distribution program for Indian households in Oklahoma under 7 CFR part 254.
FNS means the Food and Nutrition Service, United States Department of Agriculture.
FNSRO means an FNS Regional Office.
Firm, as used in this part:
(1) Means:
(i) A retail food store that is authorized to accept or redeem Summer EBT benefits;
(ii) A retail food store that is not authorized to accept or redeem Summer EBT benefits; or
(iii) An entity that does not meet the definition of a retail food store in § 271.2 of this chapter.
(2) For purposes of the regulations in this part the terms firm, entity, retailer, and store may be used interchangeably.
Food instrument, as applicable to ITO Summer EBT agencies, means the definition set forth in WIC regulations at § 246.2 of this chapter.
Household means a group of related or nonrelated individuals, who are not residents of an institution or boarding house, but who are living as one economic unit.
Implementation Advance Planning Document or Implementation APD (IAPD) means a written plan of action requesting Federal financial participation (FFP) to acquire and implement Electronic Benefit Transaction services. The Implementation APD includes the general design, development, testing, and implementation phases of the project during its initiation. Once the Summer EBT process becomes more routine (e.g., after its initial implementation), the IAPD will be streamlined to include one the following documents as outlined in this section and in FNS Handbook 901:
(1) Transmittal letter.
(2) Cost Allocation Plan.
(3) Pre-conversion outlays (where applicable).
(4) Brief schedule of events and payments, and budget.
Income eligibility guidelines means the household-size and income standards prescribed annually by the Secretary for determining income eligibility for reduced price meals under the National School Lunch Program and the School Breakfast Program.
Indian Tribal Organization (ITO) means an Indian Tribe, band, or group recognized by the Department of the Interior or an intertribal council or group which is an authorized representative of Indian Tribes, bands or groups recognized by the Department of the Interior and which has an ongoing relationship with such Tribes, bands or groups. For the purposes of the Summer EBT Program, this definition only includes those Indian Tribal Organizations which administer the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC Program) established under section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786). For the purposes of the Summer EBT Program, an administering Indian Tribal Organization is also referred to as a “Summer EBT agency”.
Information System (IS) means a combination of hardware and software, data and telecommunications that performs specific functions to support the Summer EBT agency, or other Federal, State, or local organization.
Instructional year means the period from July 1 of the prior year through one day prior to the summer operational period.
ITO Service Area means the geographic area served by an ITO Summer EBT agency.
Local Education Agency (LEA) means a public board of education or other public or private nonprofit authority legally constituted within a State for either administrative control or direction of, or to perform a service function for, public or private nonprofit elementary schools or secondary schools in a city, county, township, school district, or other political subdivision of a State, or for a combination of school districts or counties that is recognized in a State as an administrative agency for its public or private nonprofit elementary schools or secondary schools. The term also includes any other public or private nonprofit institution or agency having administrative control and direction of a public or private nonprofit elementary school or secondary school, including residential child care institutions, Bureau of Indian Affairs schools, and educational service agencies and consortia of those agencies, as well as the State educational agency in a State or territory in which the State educational agency is the sole educational agency for all public or private nonprofit schools.
NSLP/SBP means the National School Lunch Program established under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.) and/or the School Breakfast Program established under the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.).
NSLP/SBP application means an application for free and reduced price meals, submitted by a household for a child or children enrolled at an NSLP- or SBP-participating school(s). Eligibility determinations based on NSLP/SBP applications may be used to confer eligibility for Summer EBT.
OIG means the Office of Inspector General of the Department.
Period of eligibility means the period of time from the first day of instructional year, as defined in this section, immediately preceding the summer operational period, as defined in this section, through the last day of the summer operational period.
Planning Advanced Planning Document (PAPD) means a brief written plan of action that requests FFP to accomplish the planning activities necessary for a Summer EBT agency to determine the need for, feasibility of, projected costs and benefits of EBT service acquisitions, plan the acquisition of EBT services, and to acquire information necessary to prepare an Implementation APD when there is a change or an enhancement to the EBT technology.
Program means the Summer Electronic Benefits Transfer for Children Program authorized by section 13A of the Richard B. Russell National School Lunch Act, 42 U.S.C. 1762.
Program funds means Federal financial assistance made available to Summer EBT agencies for the purpose of making Program payments.
Project means a related set of information technology related tasks, undertaken by a Summer EBT agency, to improve the efficiency, economy and effectiveness of administration and/or operation of its human services programs. A project may also be a less comprehensive activity such as office automation, enhancements to an existing system, or an upgrade of computer hardware.
Request for Proposal (RFP) means the document used for public solicitations of competitive proposals from qualified sources as outlined in paragraphs (1) through (7) of this definition:
(1) In competitive negotiation, proposals are requested from a number of sources and the Request for Proposal is publicized, negotiations are normally conducted with more than one of the sources submitting offers, and either a fixed-price or cost-reimbursable type contract is awarded, as appropriate.
(2) Competitive negotiation may be used if conditions are appropriate for the use of formal advertising. If competitive negotiation is used for procurement under a grant, the following requirements must apply:
(i) Proposals must be solicited from an adequate number of qualified sources to permit reasonable competition consistent with the nature and requirements of the procurement. The Request for Proposals must be publicized and reasonable requests by other sources to compete must be honored to the maximum extent practicable.
(ii) The Request for Proposal must identify significant evaluation factors, including price or cost where required and their relative importance.
(iii) The Summer EBT agency must provide procedures for technical evaluation of the proposals received, determinations of responsible offerors for the purpose of written or oral discussions, and selection for contract award.
(iv) Award may be made to the responsible offeror whose proposal will be most advantageous to the Summer EBT agency, price and other factors considered. Unsuccessful offerors should be notified promptly.
(v) State agencies may utilize competitive negotiation procedures for procurement of architectural/engineering professional services whereby competitors’ qualifications are evaluated, and the most qualified competitor is selected subject to negotiation of fair and reasonable compensation.
Rolling verification means sampling applications for verification on a rolling basis from the beginning of the instructional year immediately preceding the summer operational period.
School aged means the years in which a child is required to attend school, or an equivalent program as defined by State or Tribal law. Also known as the age requirement for compulsory education.
Secretary means the Secretary of Agriculture.
SNAP means the program operated pursuant to the Food and Nutrition Act of 2008.
SNAP eligible foods means any food or food product that meets the definition of eligible foods at § 271.2 of this chapter.
SNAP retail food store means an establishment that meets the definition of retail food store at § 271.2 of this chapter.
Special provision school means, for the purposes of Summer EBT, those schools which do not collect NSLP/SBP applications annually described in section 11(a)(1)(B)-(F) of the Richard B. Russell National School Lunch Act (NSLA) which are provision 1 at § 245.9(a) of this chapter, provision 2 at § 245.9(b) and (c) of this chapter, provision 3 at § 245.9(d) and (e) of this chapter, and the community eligibility provision codified at § 245.9(f) of this chapter.
State means any of the fifty States, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands.
Streamlined certification means automatically enrolling an eligible child for Summer EBT, without need for further application or confirmation of school enrollment.
Summer EBT agency, as used in this part:
(1) Means:
(i)(A) Any agency of State government that has been designated by the Governor or other appropriate executive or legislative authority of the State which is responsible for the administration of the Summer EBT Program within the State and enters into a written agreement with USDA to administer Summer EBT. In those States where such assistance programs are operated on a decentralized basis, it includes all State agencies that assist with administration of the Summer EBT Program unless otherwise specified.
(B) Coordinating Summer EBT agencies have an inter-agency written agreement with partnering Summer EBT agencies to administer the Program, as applicable.
(ii) An ITO that is responsible for the administration of the Summer EBT Program and has entered into a written agreement with USDA to administer Summer EBT.
(2) Summer EBT agencies may be further described to clarify roles and requirements, as necessary, including:
(i) Coordinating Summer EBT agency means the Summer EBT agency within a State that is designated as the primary point of contact for USDA for the Summer EBT Program within the State or ITO and is responsible for the effective and efficient administration of the Program.
(ii) Partnering Summer EBT agency means a Summer EBT agency other than the coordinating Summer EBT agency that has a role in administration of the Program.
(iii) ITO Summer EBT agency means an agency of an ITO that administers the Program on behalf of the ITO.
(iv) State Summer EBT agency means an agency of a State that administers the Program on behalf of the State.
Summer EBT application means an application submitted to a Summer EBT agency or an NSLP/SBP-participating school by a household for a child or children who are enrolled at a NSLP/SBP-participating school for Summer EBT benefits. Eligibility determinations based on Summer EBT applications may not be used to confer eligibility for the NSLP/SBP.
Summer operational period means the benefit period that generally reflects the period between the end of classes during the current school year and the start of classes for the next school year, as determined by the Summer EBT agency.
Supplemental foods means, for the purposes of ITOs administering the Summer EBT Program, foods—
(1) Containing nutrients determined by nutritional research to be lacking in the diets of children; and
(2) Promoting the health of the population served by the program under this section, as indicated by relevant nutrition science, public health concerns, and cultural eating patterns, as determined by FNS; and
(3) Supplemental foods authorized for the WIC Program by the applicable WIC ITO meet the requirements set forth in this definition, excluding infant foods and infant formula.
System error means an error resulting from a malfunction at any point in the redemption process. These adjustments may occur after the availability date and may result in either a debit or credit to the household.
TANF means the State funded program under part A of title IV of the Social Security Act that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995. This program is commonly referred to as Temporary Assistance for Needy Families, although States may refer to the program by another name.
Trafficking means:
(1)(i) The buying, selling, stealing, or otherwise effecting an exchange of Summer EBT benefits issued and accessed via Electronic Benefit Transfer (EBT) cards, card numbers, and personal identification numbers (PINs), or by manual voucher and signature, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone;
(ii) The exchange of firearms, ammunition, explosives, or controlled substances, as defined in 21 U.S.C. 802, for Summer EBT benefits;
(iii) Purchasing a product with Summer EBT benefits that has a container requiring a return deposit with the intent of obtaining cash by intentionally discarding the product and intentionally returning the container for the deposit amount;
(iv) Purchasing a product with Summer EBT benefits with the intent of obtaining cash or consideration other than eligible food by reselling the product, and subsequently intentionally reselling the product purchased with Summer EBT benefits in exchange for cash or consideration other than eligible food; or
(v) Intentionally purchasing products originally purchased with Summer EBT benefits in exchange for cash or consideration other than eligible food.
(2) Attempting to buy, sell, steal, or otherwise affect an exchange of Summer EBT benefits issued and accessed via Electronic Benefit Transfer (EBT) cards, card numbers and personal identification numbers (PINs), or by manual voucher and signatures, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone.
Vendor means a sole proprietorship, partnership, cooperative association, corporation, or other business entity operating one or more stores enrolled by an ITO for the purposes of the Summer EBT Program to provide supplemental foods in areas approved for service. To be eligible for the Summer EBT Program, the vendor must be authorized by the WIC ITO to provide authorized supplemental foods to WIC participants under a retail food delivery system.
Verification means confirmation of eligibility for the Summer EBT Program when a child’s eligibility is established through a Summer EBT application. Verification includes confirmation of income eligibility and, at State or local discretion, may also include confirmation of any other information required in the application. Direct verification, as outlined in § 292.14(e), must be attempted prior to contacting the household. If such efforts are unsuccessful, verification may be accomplished by examining information provided by the household such as wage stubs, or by other means as specified in § 292.14(f)(3). If a SNAP or TANF case number or a FDPIR case number or other identifier is provided for a child, verification for such child must only include confirmation that the child is a member of a household receiving SNAP, TANF, or FDPIR benefits.
Verification for cause means verification of questionable applications, on a case-by-case basis, such as an instance when the Summer EBT agency is made aware of conflicting or inconsistent information than what was provided on the application.
WIC or WIC Program means the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) established under section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786).
§ 292.3 Administration.
(a) Delegation to FNS. FNS must act on behalf of USDA in the administration of the Program.
(b) Delegation to a State or ITO. The Governor or other appropriate executive or legislative authority of the State or ITO will designate one or more Summer EBT agencies to be responsible for the administration of the Summer EBT Program within the State or ITO. If more than one Summer EBT agency is named within a State or ITO, a coordinating Summer EBT agency must be named. All other Summer EBT agencies will be partnering Summer EBT agencies.
(1) Coordinating Summer EBT agency. (i) Each coordinating Summer EBT agency must enter into a written agreement with USDA for the administration of the Program in accordance with the applicable requirements of this part.
(ii) The coordinating Summer EBT agency is:
(A) The primary point of contact for the Summer EBT Program within the State or ITO;
(B) Responsible for the complete and timely submission of any required plans, forms, and reports;
(C) Responsible for activities as outlined in the inter-agency written agreement; and
(D) Responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department’s regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F, and USDA implementing regulations in 2 CFR parts 400 and 415); governing non-procurement debarment/suspension (2 CFR part 180 and USDA implementing regulations in 2 CFR part 417); governing restrictions on lobbying (2 CFR part 200, subpart E, and USDA implementing regulations in 2 CFR parts 400, 415, and 418); and governing the drug-free workplace requirements (2 CFR part 182); FNS guidelines; and, instructions issued under the FNS Directives Management System.
(2) Partnering Summer EBT agencies. (i) Each partnering Summer EBT agency must enter into a written agreement with USDA for the administration of the Program in accordance with the applicable requirements of this part.
(ii) The partnering Summer EBT agency is:
(A) Responsible for activities as outlined in the inter-agency written agreement. If only one Agency will be responsible for the administration of Summer EBT, designation of partnering agencies is not applicable.
(B) Responsible for the effective and efficient administration of the Program in accordance with the requirements of this part; the Department’s regulations governing nondiscrimination (7 CFR parts 15, 15a, and 15b); governing administration of grants (2 CFR part 200, subparts A through F, and USDA implementing regulations in 2 CFR parts 400 and 415); governing non-procurement debarment/suspension (2 CFR part 180 and USDA implementing regulations in 2 CFR part 417); governing restrictions on lobbying (2 CFR part 200, subpart E, and USDA implementing regulations in 2 CFR parts 400, 415, and 418); and governing the drug-free workplace requirements (2 CFR part 182); FNS guidelines; and, instructions issued under the FNS Directives Management System.
(c) Designation of responsibility among Summer EBT agencies and requirements for written inter-agency agreements. To ensure clear roles and responsibilities, the coordinating Summer EBT agency and any partnering Summer EBT agency or agencies must enter into an inter-agency written agreement that defines the roles and responsibilities of each, as well as the administrative structure and lines of authority, if applicable.
(1) The inter-agency written agreement should outline the Summer EBT agencies assignment of responsibilities including, but not limited to:
(i) Certification and enrollment of children;
(ii) Issuance, control, and accountability of Summer EBT benefits and EBT cards;
(iii) Developing and maintaining complaint procedures;
(iv) Developing, conducting, and evaluating training;
(v) Keeping records necessary to determine whether the program is being conducted in compliance with the requirements in this part for the proper storage and use of data. The records must survive the duration of this agreement;
(vi) Submitting accurate and timely financial and program plans, forms, and reports; and
(vii) Public notification and participant support.
(2) [Reserved]
(d) Suspension, termination, and closeout procedures. Whenever it is determined that a Summer EBT agency has materially failed to comply with the provisions of this part, FNS may suspend or terminate the agreement between FNS and the Summer EBT agency or agencies or take any other action as may be available and appropriate. A Summer EBT agency may also terminate the agreement, but must provide FNS at least 60 days advance written notice, including a detailed explanation and the proposed effective date of the change. FNS and the Summer EBT agency shall comply with the provisions of 2 CFR part 200, subpart D, and USDA implementing regulations in 2 CFR parts 400 and 415 concerning grant suspension termination and closeout procedures.
(e) Authority to waive statute and regulations for State Summer EBT agencies. (1) As authorized under section 12(l) of the Richard B. Russell National School Lunch Act, 42 U.S.C. 1760(l), FNS may waive provisions of such Act or the Child Nutrition Act of 1966, as amended, and the provisions of this part with respect to a State or eligible service provider. The provisions of this part required by other statutes may not be waived under this authority. FNS may only approve requests for a waiver that are submitted by a State Summer EBT agency and comply with the requirements at section 12(l)(1) and the limitations at section 12(l)(4), including that FNS may not grant a waiver that increases Federal costs.
(2) A State Summer EBT agency may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l)(2) and the provisions of this part.
(3) A State Summer EBT agency may submit a request to waive specific statutory or regulatory requirements on behalf of eligible service providers that operate in the State. Any waiver where the State concurs must be submitted to the appropriate FNSRO.
(4) An eligible service provider may submit a request for a waiver under paragraph (e)(1) of this section in accordance with section 12(l) and the provisions of this part.
(i) Any waiver request submitted by an eligible service provider must be submitted to the State Summer EBT agency for review.
(ii) A State Summer EBT agency must act promptly on such a waiver request and must deny or concur with a request submitted by an eligible service provider.
(iii) If a State Summer EBT agency concurs with a request from an eligible service provider, the Summer EBT agency must promptly forward to the appropriate FNSRO the request and a rationale, consistent with section 12(l)(2), supporting the request.
(iv) By forwarding the request to the FNSRO, the State Summer EBT agency affirms:
(A) The request meets all requirements for waiver submissions; and,
(B) The State Summer EBT agency will conduct all monitoring requirements related to regular Program operations and the implementation of the waiver.
(v) If the State Summer EBT agency denies the request, the State Summer EBT agency must notify the requesting eligible service provider and state the reason for denying the request in writing within 30 calendar days of the State Summer EBT agency’s receipt of the request. The State Summer EBT agency response is final and may not be appealed to FNS.
(f) Waivers for ITO Summer EBT agencies. (1) The Secretary may waive or modify specific regulatory provisions of this part for one or more ITO Summer EBT agency. Waivers may be issued following an ITO Summer EBT agency request or at the discretion of USDA.
(2) To be approvable, a waiver must:
(i) Address a specific regulatory provision which cannot be implemented effectively by the requesting ITO operation;
(ii) Result in more effective and efficient administration of the Program;
(iii) Be consistent with the provisions of the Act; and
(iv) Not result in material impairment of any statutory or regulatory rights of participants or potential participants.
(3) When submitting requests for waivers, ITO Summer EBT agencies must provide compelling justification for the waiver in terms of how the waiver will improve the efficiency and effectiveness of the administration of the Program. At a minimum, requests for waivers must include, but not necessarily be limited to:
(i) Reasons why the waiver is needed;
(ii) Anticipated impact on service to participants or potential participants who would be affected;
(iii) Anticipated time period for which the waiver is needed; and
(iv) A thorough description of the proposed waiver and how it would be implemented.
§ 292.4 [Reserved]
Subpart B—Eligibility Standards and Criteria
§ 292.5 General purpose and scope.
(a) Summer EBT eligibility is based on the eligibility standards for the NSLP/SBP, which includes children who are income eligible for free or reduced-price school meals based on the Income Eligibility Guidelines published by the Department by notice in the
(b) The Income Eligibility Guidelines are published annually and change on July 1. The guidelines in effect on the date of application must be used to determine eligibility.
§ 292.6 Eligibility.
Children eligible for Summer EBT include those who, at any time during the period of eligibility, are:
(a) School-aged and categorically eligible.
(b) Enrolled in an NSLP/SBP-participating school, except for special provision schools, and:
(1) Categorically eligible;
(2) Meet the requirements to receive free or reduced price meals at § 292.5(a), as determined through an NSLP/SBP application;
(3) Otherwise are determined eligible to receive a free or reduced price meal; or
(4) Determined eligible through a Summer EBT application, consistent with § 292.13.
(c) Enrolled in a special provision school, and:
(1) Categorically eligible;
(2) Otherwise meet the requirements to receive free or reduced price meals at § 292.5(a), as determined through an NSLP/SBP application; or
(3) Determined eligible through a Summer EBT application, consistent with § 292.13.
§ 292.7 Period to establish eligibility.
(a) Eligibility for Summer EBT, as determined through an application or by streamlined certification, may be established from the first day of the instructional year immediately preceding the summer operational period through the last day of the summer operational period, as defined by the Summer EBT agency in the Plan for Operations and Management (POM).
(b) Households are not required to report changes in circumstances during the instructional year or summer operational period, but a household may voluntarily contact the State or LEA to report any changes in income, household composition, or program participation.
(c) The carryover period in the school meal programs, as required at § 245.6(c)(1) of this chapter, may not be used to confer eligibility for Summer EBT benefits during the summer operational period following the instructional year in which the carryover benefit was provided as it is outside of the period to establish eligibility, as described in paragraph (a) of this section.
Subpart C—Requirements of Summer EBT Agencies
§ 292.8 Plan for Operations and Management.
(a) Not later than August 15 of each year, the Summer EBT agency must submit to the FNS Regional Office its intent to administer the Summer EBT Program the following summer, along with an interim Plan for Operations and Management (POM) and expenditure plan for the Summer EBT Program for the upcoming fiscal year. For 2024 only, the Summer EBT agency must submit to the FNS regional office its intent to administer the Summer EBT Program by January 1, 2024, and the interim POM and expenditure plan as soon as is practicable. The interim POM must:
(1) Include the Summer EBT agency’s forecasted program participation, anticipated administrative funding needs as part of an expenditure plan, and other programmatic information required in paragraphs (e) and (f) of this section, if applicable, to the extent that such information has been determined at the time of submission.
(2) Be approved by FNS before the Summer EBT agency may draw Federal administrative funds for the fiscal year.
(b) Not later than February 15 of each year, the Summer EBT agency must submit to the FNS Regional Office a final POM. The final POM must:
(1) Address all the requirements of paragraphs (e) and (f) of this section, if applicable.
(2) Be approved by FNS before the Summer EBT agency may draw Federal food benefit funds for the fiscal year.
(c) USDA will respond to the interim and final POM, respectively, within 30 calendar days of receipt. If the plan initially submitted is not approved, the Summer EBT agency and USDA will collaborate to ensure changes to the plan are submitted for approval.
(d) At any time after approval, the Summer EBT agency may amend an interim or final POM to reflect changes. The Summer EBT agency must submit the amendments to USDA for approval. The amendments must be signed by the Summer EBT agency-designated official responsible for ensuring that the Program is operated in accordance with the POM.
(e) Summer EBT agencies must include the following in their final POM, at a minimum:
(1) A copy of the inter-agency written agreement between the Summer EBT coordinating agency and each partnering agency that outlines the roles and responsibilities of each as required in § 292.3(e) if applicable.
(2) An estimate of the number of participants who will be served for the coming year.
(3) The administrative budget on behalf of the State’s or ITO’s entire program operations which reflects the comprehensive needs of the Summer EBT agencies and local education agencies. The budget must include the Summer EBT agency’s plan to comply with any standards prescribed by the Secretary for the use of these funds, as well as an expenditure plan reflecting planned administrative cost requirements for the year. Should administrative fund needs change, an amended expenditure plan is required.
(4) A plan for timely and effective action against program violators.
(5) A plan to comply with the Summer EBT agency requirements in §§ 292.12 through 292.14.
(6) A plan to ensure that Summer EBT benefits are issued to children based on their enrollment at the end of the instructional year immediately preceding each summer.
(7) A description of enrollment procedures including, but not limited to, applications, NSLP enrollment database, direct verification and verification, as applicable.
(8) The plan to coordinate with an ITO Summer EBT Program or State Summer EBT Program, as applicable, in accordance with § 292.9.
(9) The procedures to detect and prevent dual participation including a child simultaneously receiving benefits from more than one Summer EBT Program, or simultaneously receiving multiple allotments from the same State or ITO-administered Summer EBT Program as required in § 292.9(b)(3).
(10) A description of the issuance process including:
(i) The start and end dates of the summer operational period;
(ii) Date(s) when benefits will be issued;
(iii) Benefit issuance dates for LEAs operating on a continuous school calendar, as applicable;
(iv) Whether benefits will be added to an existing EBT card or other mobile payment instrument used to deliver SNAP or WIC benefits or, instead, whether benefits will be issued on a unique Summer EBT card or instrument;
(v) Whether benefits will be issued to each eligible child or to households, as applicable;
(vi) How the Summer EBT agency will provide access to households experiencing homelessness and other vulnerable populations; and
(vii) Claims procedures in cases of erroneous payments in accordance with requirements at § 292.16(g).
(11) Customer service plans including:
(i) A single point of contact for all customer service information and inquiries including a hotline and website;
(ii) How eligible households will be informed of the availability of program benefits and the process to apply for benefits, if necessary; and
(iii) A simplified process for households to opt out of the program.
(12) A copy of the fair hearing procedure for participants.
(f) In addition to the items listed in paragraph (e) of this section, an ITO Summer EBT agency must include in its POM:
(1) The service area of the ITO, a map or other visual reference aid, and a description of any Tribal areas outside of the ITO’s jurisdiction that they propose to serve;
(2) A plan and procedures to enroll children already deemed eligible by a State Summer EBT agency serving the same geographic area, without further application;
(3) A plan and procedures to determine eligibility for and enroll children who must apply through the ITO Summer EBT agency to receive benefits because they have not already been identified as eligible, e.g., by a State Summer EBT agency serving the same geographic area. The ITO Summer EBT agency must use the eligibility criteria under § 292.6;
(4) A description of the benefit delivery model to be used. The ITO Summer EBT agency may use a cash-value benefit (CVB) model, a food package model, a combination of the two, or an alternate model. The ITO Summer EBT agency must use the same benefit model for all participants throughout its service area;
(i) For ITOs using a CVB-only benefit delivery model, a description of how the benefit level equal to the amount set forth in § 292.15(e); or
(ii) For ITOs using a food package benefit delivery model, a combination CVB and food package benefit delivery model, or an alternate benefit delivery model, a description of how the benefit level will not exceed the amount set forth in § 292.15(e);
(5) The list of supplemental foods for which participants can transact upon enrollment, excluding infant formula and infant foods;
(6) Procedures for enrolling applicable vendors to transact and redeem Summer EBT Program benefits. As a prerequisite, such vendors must be approved for participation in the WIC Program;
(7) A plan for providing technical assistance and training to vendors enrolled to transact and redeem Summer EBT Program benefits; and
(8) A plan for vendor integrity and monitoring, pursuant to § 292.19.
§ 292.9 Coordination between State-administered and ITO-administered Summer EBT Programs.
(a) The ITO Summer EBT agency must receive priority consideration to serve eligible individuals within its service area, as identified in its FNS-approved Plan for Operations and Management (POM) per § 292.8.
(b) An ITO Summer EBT agency and State Summer EBT agency serving proximate geographic areas must coordinate Summer EBT Program services, which may include a written agreement between both parties. ITO Summer EBT agency and State Summer EBT agency coordination must, at minimum, include the following:
(1) The State Summer EBT agency must share data, including household contact information, indicating those individuals deemed eligible in the ITO Summer EBT agency’s service area in a manner and timeframe that will allow the ITO Summer EBT agency to issue program benefits timely;
(2) The ITO Summer EBT agency and the State Summer EBT agency must each provide notice to eligible individuals or households that they may choose to receive Summer EBT Program benefits from either Summer EBT agency, in addition to referral information upon individual or household request; and
(3) The ITO Summer EBT agency and State Summer EBT agency must coordinate to detect and prevent dual participation in the same summer operational period when serving proximate service areas in accordance with § 292.15(d). For all student data exchanged applicable to the Summer EBT Program, the ITO Summer EBT agency and State Summer EBT agency must ensure the confidentiality of such data and data must only be used for program purposes in accordance with § 292.13(o).
(c) Eligible households choosing to participate in either the ITO-operated Summer EBT Program or the State-operated Summer EBT Program must participate in the same program for the duration of the summer operational period in any given year.
§ 292.10 Coordinated Services Plan.
(a) Each State Summer EBT agency must establish, and update annually as needed, a plan to coordinate the statewide availability of services offered through the Summer EBT Program described in this part and the Summer Food Service Program established in 7 CFR part 225. Each ITO Summer EBT agency is encouraged to develop a plan coordinating summer services available to the children and households they serve.
(b) Only one plan must be established for each State in which both the Summer Food Service Program and the Summer EBT Program is administered. If more than one agency administers the Summer Food Service Program and Summer EBT within a respective State, they must work together to develop and implement the plan. States should also ensure that plans include the National School Lunch Program’s Seamless Summer Program if appropriate.
(c) The plan must include, at minimum, the following information:
(1) A description of the roles and responsibilities of each Summer Food Service Program and Summer EBT agency, and, as applicable, any other agencies, ITOs, or public or private organizations which will be involved in administering the Programs;
(2) A description of how the Summer EBT agency and any other organizations included in the plan will coordinate outreach and programmatic activities to maximize the reach of the Summer Food Service Program and Summer EBT Program; metrics to assess program reach and coverage; and
(3) The Summer EBT agency’s plans to partner with other Federal, State, Tribal, or local programs to aid participants in accessing all Federal, State, Tribal, or local programs for which they are eligible.
(d) States must notify the public about their plan and make it available to the public through a website, and should, to the maximum extent practicable, solicit and consider input on plan development and implementation from other State agencies, ITOs, and local agencies; organizations involved in the administration of nutrition and human services programs; participants; and other stakeholders.
(e) States must consult with FNS on the development of and any significant subsequent updates to their plan. Initial plans must be submitted to FNS no later than January 1, 2025. States must submit updates annually when significant changes are made to the plan, and otherwise no less than every 3 years.
§ 292.11 Advance Planning Document (APD) processes.
(a) APD process for State agencies and ITOs. As a condition for the initial and continued ability to claim Federal financial participation (FFP) for the costs of the planning, development, acquisition, installation, and implementation of Information System (IS) equipment and services used in the administration of the Summer EBT Program, Summer EBT agencies must adhere to the APD process in this section (see guidance in Food and Nutrition Service’s (FNS’ Handbook 901 for more information), the State Systems APD process in paragraph (b) of this section, and for SNAP and WIC ITOs the existing APD process requirements for Management Information Systems and/or Information Systems as outlined in 7 CFR parts 246, 274, and 277, respectively. Summer EBT Projects have the option to include the Summer EBT Program in an existing SNAP or WIC EBT APD or to create a separate APD specific to Summer EBT services. Where the Summer EBT agency is a SNAP or WIC agency, changes to the Management Information System to support Summer EBT follow the APD processes as outlined in §§ 246.12 and 277.18 of this chapter (see guidance within FNS’ Handbook 901 for more information). Child Nutrition Programs do not have a similar requirement for Management Information Systems, so the APD requirements will only apply the EBT services projects associated with the Summer EBT Program.
(b) APD process for States. Requirements for FNS prior approval of IS projects—
(1) For the acquisition of IS equipment or services to be utilized in an EBT system regardless of the cost of the acquisition in accordance with the Summer EBT issuance standards (subpart D of this part). For Summer EBT agencies that administer SNAP and are planning changes to their SNAP information systems to incorporate the Summer EBT requirements, refer to § 277.18 of this chapter.
(2) Specific prior approval requirements. (i) For IS projects which require prior approval, as specified in paragraph (b)(1) of this section, the State Summer EBT agency must obtain the prior written approval of USDA for:
(A) Conducting planning activities, entering into contractual agreements or making any other commitment for acquiring the necessary planning services for the development of an initial Summer EBT services project; and
(B) Conducting design, development, testing or implementation activities, entering into contractual agreements or making any other commitment for the acquisition of IS equipment or services.
(ii) For IS equipment and services acquisitions requiring prior approval as specified in paragraph (b)(1) of this section, prior approval of the following documents associated with such acquisitions is also required:
(A) Requests for Proposals (RFPs). Unless specifically exempted by FNS, the State Summer EBT agency must obtain prior written approval of the RFP before the RFP may be released. The State Summer EBT agency must obtain prior written approval from FNS for RFPs which are associated with an EBT system regardless of the cost.
(B) Contracts. All contracts must be submitted to FNS. The State Summer EBT agency must obtain prior written approval from FNS for contracts which are associated with an EBT system regardless of the cost.
(C) Contract amendments. All contract amendments must be submitted to FNS. Unless specifically exempted by FNS, the State Summer EBT agency must obtain prior written approval from FNS of any contract amendments which cumulatively exceed 20 percent of the base contract costs before being signed by the State Summer EBT agency.
(3) Procurement requirements. (i) Procurements of IS equipment and services are subject to § 277.14 of this chapter (procurement standards) regardless of any conditions for prior approval contained in this section, except the requirements of § 277.14(b)(1) and (2) of this chapter regarding review of proposed contracts. The procurement standards in § 277.14(b)(1) and (2) include a requirement for maximum practical open and free competition regardless of whether the procurement is formally advertised or negotiated.
(ii) The standards prescribed by § 277.14 of this chapter, as well as the requirement for prior approval in this paragraph (b), apply to IS services and equipment acquired primarily to support Summer EBT regardless of the acquiring entity.
(iii) The competitive procurement policy prescribed by § 277.14 of this chapter must be applicable except for IS services provided by the agency itself, or by other State or local agencies.
(iv) The following FNS-required provisions as required under 2 CFR part 200, appendix II, apply to Summer EBT procurements as well:
(A) Compliance with Executive Order 11246 related to equal employment opportunity.
(B) Compliance with Clean Air Act (42 U.S.C. 7401-7671q).
(C) Compliance with Clean Water Act (33 U.S.C. 1251-1387).
(D) Compliance with Anti-Lobbying Act.
(E) Compliance with Americans with Disabilities Act.
(F) Compliance with drug-free workplace requirements.
(G) Compliance with suspension/debarment requirements.
(H) USDA has royalty-free rights to use software and documentation developed.
(I) The State Summer EBT agency must obtain prior written approval from FNS, as specified in paragraphs (b)(1) and (2) of this section, to claim and receive reimbursement for the associated costs of the IS acquisition.
(4) Document submission requirements. (i) For IS projects requiring prior approval as specified in paragraphs (b)(1) and (2) of this section, the State Summer EBT agency must submit the following documents to FNS for approval:
(A) Planning APD as described in § 292.2.
(B) Implementation APD as described in § 292.2.
(C) Annual APDU as described in § 292.2 for the initial Summer EBT implementation.
(ii) The Annual APDU must be submitted to FNS 60 days prior to the expiration of the FFP approval, unless the submission date is specifically altered by USDA. In years where an As Needed APDU is required, as described in § 292.2, FNS may waive or modify the requirement to submit the annual APDU. The requirement in this paragraph (b)(4)(ii) will only apply to the initial implementation of Summer EBT.
(iii) As Needed APDU as described in § 292.2. As Needed APDU are required to obtain a commitment of FFP whenever significant project changes occur. Significant project changes are defined as changes in cost, schedule, scope or strategy which exceed FNS-defined thresholds or triggers. Without such approval, the Summer EBT agency is at risk for funding of project activities which are not in compliance with the terms and conditions of the approved APD and subsequently approved APDU until such time as approval is specifically granted by FNS.
(iv) Acquisition documents as described in § 277.14(g) of this chapter for Summer EBT agencies that administer SNAP (see guidance within in FNS Handbook 901 for more information), or for Summer EBT services projects utilizing an existing or new SNAP EBT services contract for Summer EBT.
(v) Emergency acquisition requests as described in paragraph (j) of this section.
(c) Prior approval. The State Summer EBT agency must obtain prior FNS approval of the documents specified in paragraph (b)(4)(i) of this section in order to claim and receive reimbursement for the associated costs of the IS acquisition.
(d) Approval by the State Summer EBT agency. Approval by the State Summer EBT agency is required for all documents and acquisitions specified in this subpart prior to submission for FNS approval. However, the State Summer EBT agency may delegate approval authority to any subordinate entity for those acquisitions of IS equipment and services not requiring prior approval by FNS.
(e) Prompt action on requests for prior approval. FNS will reply promptly to State Summer EBT agency requests for prior approval. If FNS has not provided written approval, disapproval, or a request for additional information within 60 days of FNS’ acknowledgment of receipt of the State Summer EBT agency’s request, the request will be deemed to have provisionally met the prior approval requirement in paragraph (b) of this section. However, provisional approval will not exempt a State Summer EBT agency from having to meet all other Federal requirements which pertain to the acquisition of IS equipment and services. Such requirements remain subject to Federal audit and review.
(f) APD content requirements—(1) Planning APD (PAPD). The PAPD is a written plan of action to acquire proposed services or equipment and to perform necessary activities to investigate the feasibility, system alternatives, requirements and resources needed to replace, modify, or upgrade the State Summer EBT agency’s IS. The PAPD must contain adequate documentation to demonstrate the need to undertake a planning process, as well as a thorough description of the proposed planning activities, and estimated costs and timeline (see guidance within FNS’ Handbook 901 for more information).
(2) Implementation APD (IAPD). The IAPD is a written plan of action to acquire the proposed IS services or equipment and to perform necessary activities to design, develop, acquire, install, test, and implement the new IS. The IAPD must contain detailed documentation of planning and preparedness for the proposed project, (see guidance within FNS’ Handbook 901 for more information), demonstrating the feasibility of the project, thorough analysis of system requirements and design, a rigorous management approach, stewardship of Federal funds, a realistic schedule and budget, and preliminary plans for key project phases. The IAPD must be submitted and approved prior to incurring any costs under the new EBT service contract.
(3) Annual APDU content requirements. The Annual APDU is a yearly update to ongoing IS projects when planning or implementation activities occur. The Annual APDU must contain documentation on the project activity status and a description of major tasks, milestones, budget, and any changes (see guidance within FNS’ Handbook 901 for more information).
(4) As Needed APDU content requirements.
The As Needed APDU document must contain the items as defined in paragraph (b)(4)(ii) of this section with emphasis on the area(s) where changes have occurred or are anticipated that triggered the submission of the APDU (see guidance within FNS’ Handbook 901 for more information).”
Paragraph (d) should read: (q) APD process for ITOs. For the acquisition of IS equipment or services to be utilized in an EBT system regardless of the cost of the acquisition in accordance with the Summer EBT issuance standards in subpart D to this part, WIC EBT coordinating Summer EBT agencies, administering WIC, that are planning changes to their ITO Management Information Systems to incorporate the Summer EBT requirements should refer to the APD process requirements outlined in 7 CFR 246.12, 2 CFR part 200, appendix XI, and the APD process in this section (see guidance within FNS’ Handbook 901 for more information).
(g) Service agreements. (1) The State Summer EBT agency must execute service agreements when IS services are to be provided by a State central IT facility or another State or local agency. Service agreement means the document signed by the State or local agency and the State or local central IT facility whenever an IT facility provides IT services to the State or local agency. Service agreements must:
(i) Identify the IS services that will be provided;
(ii) Include a schedule of rates for each identified IS service, and a certification that these rates apply equally to all users;
(iii) Include a description of the method(s) of accounting for the services rendered under the agreement and computing services charges;
(iv) Include assurances that services provided will be timely and satisfactory;
(v) Include assurances that information in the IS as well as access, use and disposal of IS data will be safeguarded in accordance with provisions of §§ 272.1(c) (disclosure) and 277.13 (property) of this chapter;
(vi) Require the provider to obtain prior approval from FNS pursuant to paragraph (b) of this section for IS equipment and IS services that are acquired from commercial sources primarily to support federally aided public assistance programs and require the provider to comply with § 277.14 of this chapter (procurement standards) for procurements related to the service agreement. IS equipment and services are considered to be primarily acquired to support federally aided public assistance programs when the Programs may reasonably be expected to either be billed for more than 50 percent of the total charges made to all users of the IS equipment and services during the time period covered by the service agreement, or directly charged for the total cost of the purchase or lease of IS equipment or services;
(vii) Include the beginning and ending dates of the period of time covered by the service agreement; and
(viii) Include a schedule of expected total charges to the Program for the period of the service agreement.
(2) The State Summer EBT agency must maintain a copy of each service agreement in its files for Federal review upon request.
(h) Basis for continued Federal financial participation (FFP)—(1) General. FNS will continue FFP at the levels approved in the Planning APD and the Implementation APD provided that project development proceeds in accordance with the conditions and terms of the approved APD and that IS resources are used for the purposes authorized. FNS will use the APDU to monitor IS project development. The submission of the update as prescribed in paragraph (b)(4) of this section for the duration of project development is a condition for continued FFP. In addition, periodic onsite reviews of IS project development and State and local agency IS operations may be conducted by or for FNS to assure compliance with approved APDs, proper use of IS resources, and the adequacy of State or local agency IS operations.
(2) Pre-implementation. The State Summer EBT agency must demonstrate through thorough testing that the system meets all program functional and performance requirements. FNS may require a pre-implementation review of the system to validate system functionality prior to Summer EBT agency testing.
(3) Testing. The State Summer EBT agency must commit to completing and submitting the following documents for FNS approval and obtaining such approval prior to issuance of benefits to eligible households in the project area:
(i) Functional demonstration. A functional demonstration of the functional requirements prescribed in this part in combination with the system components described by the approved system design is recommended in order to identify and resolve any problems prior to acceptance testing. The Department reserves the right to participate in the functional demonstration if one is conducted. FNS may require that any or all of these tests be repeated in instances where significant modifications are made to the system after these tests are initially completed or if problems that surfaced during initial testing warrant a retest.
(ii) An Acceptance Test Plan. The Acceptance Test Plan for the project must describe the methodology to be utilized to verify that the EBT system complies with Program requirements and System Design specifications. At a minimum, the Acceptance Test Plan must address:
(A) The types of testing to be performed;
(B) The organization of the test team and associated responsibilities, test database generation, test case development, test schedule, and the documentation of test results. Acceptance testing must include functional requirements testing, error condition handling and destructive testing, security testing, recovery testing, controls testing, stress and throughput performance testing, and regression testing; and
(C) A “what-if” component must also be included to permit the opportunity for observers and participants to test possible scenarios in a free-form manner.
(iii) Independent testing. The Department reserves the right to participate and conduct independent testing as necessary during the acceptance testing and appropriate events during system design, development, implementation, and operation.
(iv) An acceptance test report. The State Summer EBT agency must provide a separate report after the completion of the acceptance test only in instances where FNS is not present at the testing or when serious problems are uncovered during the testing that remain unresolved by the end of the test session. The report must summarize the activities, describe any discrepancies, describe the proposed solutions to discrepancies, and the timetable for their retesting and completion. In addition, the report must contain the State Summer EBT agency’s recommendations regarding implementation of the EBT system.
(v) A prototype food retailer agreement. The State Summer EBT agency must enter an agreement with each FNS authorized retailer that complies with the requirements under § 274.3 of this chapter.
(vi) An implementation plan. (A) The implementation plan must include the following:
(1) A description of the tools, procedures, detailed schedules, and resources needed to implement the project;
(2) The equipment acquisition and installation requirements, ordering schedules, and system and component testing;
(3) A phase-in-strategy which permits a measured and orderly transition from one EBT system to another. In describing this strategy, the plan must address schedules that avoid disruption of normal shopping patterns and operations of participating children and food retailers. Training of Summer EBT eligible children, State Summer EBT agency personnel and retailers and/or their trainers must be coordinated with the installation of equipment in retail stores;
(4) A description of on-going tasks associated with fine-tuning the system and making any corrective actions necessary to meet contractual requirements. The description must also address those tasks associated with ongoing training, document updates, equipment maintenance, on-site support and system adjustments, as needed to meet Program requirements; and,
(5) A plan for orderly phase-out of the project and/or for continuing benefit issuance operations if it is demonstrated during the pilot project or conversion operations that the new system is not acceptable.
(B) The State Summer EBT agency must submit a written contingency plan for FNS approval. The contingency plan must contain information regarding the back-up issuance system that will be activated in the event of an emergency shut-down which results in short-term or extended system inaccessibility, or total discontinuation of EBT system operations. The contingency plan must be incorporated into the Summer EBT State system security plan after FNS approval as specified in paragraph (p) of this section.
(i) Disallowance of Federal financial participation (FFP). If FNS finds that any acquisition approved under the provisions of paragraph (b) of this section fails to comply with the criteria, requirements and other undertakings described in the approved or modified APD, payment of FFP may be suspended or may be disallowed in whole or in part.
(j) Emergency acquisition requirements. The State Summer EBT agency may request FFP for the costs of IS equipment and services acquired to meet emergency situations in which the agency can demonstrate to FNS an immediate need to acquire IS equipment or services in order to continue operation of Summer EBT; and the State Summer EBT agency can clearly document that the need could not have been anticipated or planned for and precludes the State from following the prior approval requirements of paragraph (c) of this section. FNS may provide FFP in emergency situations if the following conditions are met:
(1) The State Summer EBT agency must submit a written request to FNS prior to the acquisition of any IS equipment or services. The written request must include:
(i) A brief description of the IS equipment and/or services to be acquired and an estimate of their costs;
(ii) A brief description of the circumstances which result in the State Summer EBT agency’s need to proceed with the acquisition prior to fulfilling approval requirements at paragraph (c) of this section; and
(iii) A description of the adverse impact which would result if the State Summer EBT agency does not immediately acquire the IS equipment and/or services.
(2) Upon receipt of a written request for emergency acquisition FNS must provide a written response to the State Summer EBT agency within 14 days. The FNS response must:
(i) Inform the State Summer EBT agency that the request has been disapproved and the reason for disapproval.
(ii) If FNS approves the request submitted under paragraph (j)(1) of this section, FFP will be available from the date the State Summer EBT agency acquires the IS equipment and services.
(iii) FNS recognizes that an emergency situation exists and grants conditional approval pending receipt of the State Summer EBT agency’s formal submission of the IAPD information specified at paragraph (b)(4) of this section within 90 days from the date of the agency’s initial written request.
(iv) If the complete IAPD submission required by paragraph (b)(2) of this section is not received by FNS within 90 days from the date of the initial written request, costs may be subject to disallowance.
(k) General cost requirements—(1) Cost determination. Actual costs must be determined in compliance with 2 CFR part 200, subpart E, and USDA implementing regulations in 2 CFR parts 400 and 415 and an FNS approved budget and must be reconcilable with the approved FNS funding level. A State Summer EBT agency must not claim reimbursement for costs charged to any other Federal program or uses of IS systems for purposes not connected with Summer EBT. The approved APD cost allocation plan includes the methods which will be used to identify and classify costs to be claimed. This methodology must be submitted to FNS as part of the request for FNS approval of funding as required in this section. Operational costs are to be allocated based on the statewide cost allocation plan rather than the APD cost plan. Approved cost allocation plans for ongoing operational costs must not apply to IS system development costs under this section unless documentation required under paragraph (b) of this section is submitted to and approvals are obtained from FNS. Any APD-related costs approved by FNS must be excluded in determining the Summer EBT agency’s administrative costs under any other section of this part.
(2) Cost identification for purposes of FFP claims. State Summer EBT agencies must assign and claim the costs incurred under an approved APD in accordance with the following criteria:
(i) Development costs. Using its normal departmental accounting system, in accordance with the cost principles set forth in 2 CFR part 200, subpart E, and USDA implementing regulations in 2 CFR parts 400 and 415, the State Summer EBT agency must specifically identify what items of costs constitute development costs, assign these costs to specific project cost centers, and distribute these costs to funding sources based on the specific identification, assignment and distribution outlined in the approved APD. The methods for distributing costs set forth in the APD should provide for assigning identifiable costs, to the extent practicable, directly to program/functions. The State Summer EBT agency must amend the cost allocation plan required by 2 CFR part 200, subpart E, to include the approved APD methodology for the identification, assignment, and distribution of the development costs.
(ii) Operational costs. Costs incurred for the operation of an IS must be identified and assigned by the State Summer EBT agency to funding sources in accordance with the approved cost allocation plan required by 2 CFR part 200, subpart E.
(iii) Service agreement costs. States that operate a central data processing facility must use their approved central service cost allocation plan required by 2 CFR part 200, subpart E, and USDA implementing regulations in 2 CFR parts 400 and 415 to identify and assign costs incurred under service agreements with the State Summer EBT agency. The State Summer EBT agency must then distribute these costs to funding sources in accordance with the development and operational costs outlined in this section.
(iv) Claiming costs. Prior to claiming funding under this section the State Summer EBT agency must have complied with the requirements for obtaining approval and prior approval of paragraph (b) of this section.
(v) Budget authority. FNS approval of requests for funding must provide notification to the State Summer EBT agency of the budget authority and dollar limitations under which such funding may be claimed. FNS must provide this amount as a total authorization for such funding which may not be exceeded unless amended by FNS. FNS’s determination of the amount of this authorization must be based on the budget submitted by the State Summer EBT agency. Activities not included in the approved budget, as well as continuation of approved activities beyond scheduled deadlines in the approved plan, must require FNS approval of an As Needed APDU as prescribed in paragraphs (b)(4) and (f)(4) of this section, including an amended State budget. Requests to amend the budget authorization approved by FNS must be submitted to FNS prior to claiming such expenses.
(l) Access to the system and records. Access to the system in all aspects, including but not limited to design, development, and operation, including work performed by any source, and including cost records of contractors and subcontractors, must be made available by the State Summer EBT agency to FNS or its authorized representatives at intervals as are deemed necessary by FNS, in order to determine whether the conditions for approval are being met and to determine the efficiency, economy and effectiveness of the system. Failure to provide full access to all parts of the system may result in suspension and/or termination of Summer EBT funds for the costs of the system and its operation.
(m) Ownership rights. The State Summer EBT agency must comply with the requirements under this part and the requirement for intangible property in 2 CFR 200.315.
(n) Software. (1) The State or local government must include a clause in all procurement instruments which provides that the State or local government must have all ownership rights in any software or modifications thereof and associated documentation designed, developed, or installed with FFP under this section.
(2) FNS reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use and to authorize others to use for Federal Government purposes, such software, modifications, and documentation.
(3) Proprietary operating/vendor software packages which meet the definition of COTS in § 292.2 must not be subject to the ownership provisions in paragraph (m) of this section. FFP is not available for development costs for proprietary application software developed specifically for Summer EBT.
(o) Information Systems equipment. The policies and procedures governing title, use and disposition of property purchased with FFP, which appear at 2 CFR 200.315 are applicable to IS equipment.
(p) Information system security requirements and review process-(1) Information system security requirements. State and local agencies are responsible for the security of all IS projects under development, and operational systems involved in the administration of Summer EBT. State and local agencies must determine appropriate IS security requirements based on recognized industry standards or compliance with standards governing security of Federal information systems and information processing.
(2) Information security program. State Summer EBT agencies must implement and maintain a comprehensive Security Program for IS and installations involved in the administration of the Summer EBT. Security Programs must include the following components:
(i) Determination and implementation of appropriate security requirements as prescribed in paragraph (p)(1) of this section.
(ii) Establishment of a security plan and, as appropriate, policies and procedures to address the following areas of IS security:
(A) Physical security of IS resources;
(B) Equipment security to protect equipment from theft and unauthorized use;
(C) Software and data security;
(D) Telecommunications security;
(E) Personnel security;
(F) Contingency plans to meet critical processing needs in the event of short- or long-term interruption of service;
(G) Emergency preparedness; and
(H) Designation of an Agency IS Security Manager.
(3) Periodic risk analyses. State Summer EBT agencies must establish and maintain a program for conducting periodic risk analyses to ensure that appropriate, cost-effective safeguards are incorporated into new and existing systems. In addition, risk analyses must be performed whenever significant system changes occur.
(4) IS security reviews. State Summer EBT agencies must review the security of IS involved in the administration of Summer EBT on a biennial basis. At a minimum, the reviews must include an evaluation of physical and data security, operating procedures and personnel practices. State Summer EBT agencies must maintain reports of their biennial IS security reviews, together with pertinent supporting documentation, for Federal review upon request.
(5) Applicability. The security requirements of this section apply to all IS systems used by State and local governments to administer Summer EBT.
(q) APD process for ITOs. For the acquisition of IS equipment or services to be utilized in an EBT system regardless of the cost of the acquisition in accordance with the Summer EBT issuance standards in subpart D of this part, WIC EBT coordinating Summer EBT agencies, administering WIC, that are planning changes to their ITO Management Information Systems to incorporate the Summer EBT requirements should refer to the APD process requirements outlined in 7 CFR 246.12, 2 CFR part 200, appendix XI, and the APD process (see guidance within FNS’ Handbook 901 for more information).
(r) ITO EBT management and reporting. (1) The Summer EBT agency must follow the Department APD requirements in this section and submit Planning and Implementation APDs and appropriate updates, for Department approval, for planning, development, and implementation of initial and subsequent EBT systems.
(2) If an ITO plans to incorporate additional programs in its EBT system, the ITO must consult with ITO officials responsible for administering the programs prior to submitting the Planning APD (PAPD) document and include the outcome of those discussions in the PAPD submission to the Department for approval.
(3) Annually as part of the State plan, the Summer EBT agency must submit EBT project status reports. At a minimum, the annual status report must contain:
(i) Any information on future EBT changes and procurement updates affecting present operations; and
(ii) Such other information the Secretary may require.
(4) The ITO must be responsible for EBT coordination and management for planning, implementation and ongoing operations of Summer EBT.
(s) ITO Summer EBT procurements. The following procurement requirements from title 2 of the Code of Federal Regulations apply to ITO Summer EBT agencies:
(1) 2 CFR 200.315;
(2) 2 CFR 200.317;
(3) 2 CFR 200.326;
(4) 2 CFR part 200, appendix II:
(i) Remedies for violation or breach;
(ii) Termination for cause and for convenience;
(iii) Equal employment opportunity (EEO) provisions;
(iv) Clean Air Act and Federal Water Pollution Control Act;
(v) Debarment and suspension requirements; and
(vi) Anti-lobbying requirements; and
(5) 2 CFR part 400.
(t) ITO Program costs. (1) The two kinds of allowable costs under the Program are “food costs” and “nutrition services and administration costs.” In general, costs necessary to the fulfillment of Program objectives are to be considered allowable costs. The two types of nutrition services and administration costs are:
(i) Direct costs. Those direct costs that are allowable under 2 CFR part 200, subpart E, and USDA implementing regulations in 2 CFR parts 400 and 415.
(ii) Indirect costs. Those indirect costs that are allowable under 2 CFR part 200, subpart E, and USDA implementing regulations in 2 CFR parts 400 and 415. When computing indirect costs, food costs may not be used in the base to which the indirect cost rate is applied. In accordance with the provisions of 2 CFR part 200, subpart E, and USDA implementing regulations in 2 CFR parts 400 and 415, a claim for indirect costs must be supported by an approved allocation plan for the determination of allowable indirect costs.
(2) Program funds may not be used to pay for retroactive benefits.
§ 292.12 Enrolling eligible children.
(a) Minimum requirements for Program informational activities. Summer EBT agencies must comply with the following minimum information requirements for applicants and recipients.
(1) Summer EBT agencies must inform participant and applicant households of their Program rights and responsibilities. This information may be provided through whatever means the Summer EBT agency deems appropriate.
(2) All Program informational material must:
(i) Be in an understandable and uniform format, and to the maximum extent practicable, in a language that parents and guardians can understand;
(ii) Include the USDA nondiscrimination statement; and
(iii) Be provided in alternate formats for individuals with disabilities, as practicable.
(3) All program information material should be provided by households’ preferred method of contact, to the maximum extent practicable.
(b) General requirements. In enrolling eligible children, Summer EBT agencies must:
(1) Establish procedures to ensure correct eligibility determinations;
(2) Establish procedures to allow households to provide updated contact information for the purpose of receiving Summer EBT; and
(3) Establish procedures to enable anyone who has been determined to be eligible for Summer EBT benefits to confirm their eligibility status and unenroll, or opt out, of the Program, if they do not want to receive benefits; and
(4) Provide assistance to households that seek help in applying for benefits.
(c) NSLP/SBP enrollment database. By 2025, Summer EBT agencies must establish and maintain a State- or ITO-wide database of all children enrolled in NSLP- or SBP-participating schools within the State or ITO service area, as applicable, for the purposes of enrolling children for Summer EBT benefits and detecting and preventing duplicate benefit issuance. If an ITO, in consultation with FNS, determines that establishing and maintaining a database meeting the requirements of this section is not feasible or is unnecessary based on their method of enrolling children, the ITO may submit a waiver request under § 292.3(h).
(1) Database elements. At a minimum, the database must contain the following information for these children:
(i) Name;
(ii) Date of birth;
(iii) School/school district where enrolled;
(iv) Mailing address;
(v) Individual free or reduced price eligibility status, as applicable; and
(vi) Any other information needed to issue benefits timely and with integrity.
(2) Data use and confidentiality. Summer EBT agencies must ensure the confidentiality of all such data, and the data must be used only for the purposes of the Summer EBT Program, or to provide other social service benefits to eligible children.
(3) Data sharing across Summer EBT Programs. State Summer EBT agencies must make this data available to ITO Summer EBT agencies for children within an ITO’s Summer EBT service area, in a timeframe that allows ITO Summer EBT agencies to issue timely benefits. ITO Summer EBT agencies must ensure confidentiality of the data in accordance with paragraph (c)(2) of this section.
(d) Automatic enrollment with streamlined certification. (1) Summer EBT agencies must enroll eligible children through streamlined certification, including those who, during the period of eligibility were:
(i)(A) Individually certified for free or reduced price school meals through the NSLP/SBP, per § 245.6 of this chapter; or
(B) School aged and:
(1) Members of a household receiving assistance under SNAP, as defined in § 292.2;
(2) Members of a household receiving assistance under FDPIR and TANF, if data for these programs are available at the State level; or
(3) A foster, homeless, migrant, runaway, or Head Start child, as defined in § 245.2 of this chapter, if data for these programs are available at the State level.
(ii) Not enrolled in a special provision school but are otherwise determined eligible for a free or reduced priced meal through the NSLP/SBP.
(2) Summer EBT agency may enroll eligible children through streamlined certification who are members of a household receiving assistance under other means-tested programs, as approved by the Secretary.
(3) Streamlined certification does not require further confirmation of school enrollment.
(4) If an ITO, in consultation with FNS, determines that any element of automatic enrollment with streamlined certification is not feasible or is unnecessary based on available resources or circumstances to the population served, the ITO may submit a waiver request under § 292.3(h).
(e) Enrollment by Summer EBT application. (1) Summer EBT agencies must enroll eligible children in Summer EBT if it is determined that they meet the requirements to receive free or reduced price meals at § 292.5(a), as determined through a complete Summer EBT application. A Summer EBT application is considered complete if the following information is provided:
(i) Names of children and other household members;
(ii) Amount, source, and frequency of income for each household member; and
(iii) Signature of an adult household member, including electronic signatures, as described in § 292.13(h).
(2) Confirmation of enrollment in an NSLP/SBP- participating school during the immediately preceding instructional year is required for children who apply by Summer EBT application. This can be accomplished by matching against the State or ITO-wide NSLP/SBP enrollment database, as required in paragraph (c) of this section, prior to benefit issuance.
(3) Children who are not in an NSLP or SBP-participating school in the immediately preceding instructional year cannot be certified as eligible, and therefore cannot be deemed eligible for Summer EBT through submission of an application for Summer EBT benefits.
(4) Summer EBT agencies are prohibited from requiring income documentation at the time of application.
(f) Notice of approval—(1) Income applications. The Summer EBT agency must notify (or place notification in the mail) eligible households of a child’s approved status within 15 operational days of receipt of a complete application. This may be included in the mailing containing the EBT card, if applicable, or other communication informing the household about the issuance or use of benefits.
(2) Streamlined certification. Households approved for benefits based on information provided by the appropriate State or local agency responsible for the administration of a means-tested program that has been approved by the Secretary must be notified, in writing, that their children are eligible for Summer EBT and that no application is required. The notice of approval must also inform the household how to opt-out if they do not want their children to receive Summer EBT benefits.
(3) Households declining benefits. Children from households that notify the Summer EBT agency that they do not want Summer EBT benefits must not be issued benefits, or have their benefits expunged as soon as possible if already issued. Any notification from the household declining benefits must be documented and maintained on file, as required under § 292.23, to substantiate the change in benefits. Because any expungement in this instance is at the request of the household, the 30 day household notice typically required for expunging benefits is not required in this instance.
(4) Duplicate benefit issuance. Summer EBT agencies must include in the notice of approval a statement communicating that households that are erroneously issued duplicate benefits from more than one State or ITO should only use benefits from the State or ITO where their child(ren) completed the instructional year immediately preceding the summer operational period. Under no circumstances may they use both.
(g) Denied applications and the notice of denial. When the application furnished by a household is not complete or does not meet the eligibility criteria for Summer EBT benefits, the Summer EBT agency must document and retain the reasons for ineligibility and must retain the denied application. In addition, the Summer EBT agency must provide written notice to each household denied benefits within 15 operational days of receipt of a complete application. At a minimum, this notice must include:
(1) The specific reason or reasons for the denial of benefits, e.g., income in excess of allowable limits or incomplete application;
(2) Notification of the right to appeal;
(3) Instructions on how to appeal; and
(4) A statement reminding households that they may reapply for benefits at any time.
(h) Appeals of denied benefits. A household that wishes to appeal an application that was denied may do so in accordance with the procedures established by the Summer EBT agency as required by § 292.26. However, prior to initiating the hearing procedure, the household may request a conference to provide the opportunity for the household to discuss the situation, present information, and obtain an explanation of the data submitted in the application or the decision rendered. The request for a conference must not in any way prejudice or diminish the right to a fair hearing. The Summer EBT agency must promptly schedule a fair hearing, if requested.
(i) Confidential nature of streamlined certification information. Information about children or their households obtained through the streamlined certification process must be kept confidential and is subject to the limitations on disclosure of information in section 9 of the Richard B. Russell National School Lunch Act, 42 U.S.C. 1758.
§ 292.13 Application requirements.
(a) Statewide application. By 2025, the Summer EBT agency must make a Summer EBT application available to households whose children are enrolled in NSLP- or SBP-participating schools and who do not already have an individual eligibility determination.
(b) Contracting application processes. Summer EBT agencies may not delegate to LEAs the responsibility of making a Summer EBT application available. However, a Summer EBT agency may contract with another entity into order to fulfill the requirement in this paragraph (b).
(c) Household applications. The application must be clear and simple in design and the required information must be limited to what is required to demonstrate that the household does, or does not, meet the eligibility criteria for Summer EBT benefits at § 292.5(a). The application or associated instructions must also include the income eligibility guidelines and an explanation that households with incomes at or below the income limit may be eligible for Summer EBT. Summer EBT agencies are encouraged to include optional questions on the application to improve customer service including, but not limited to:
(1) Preferred method of communication (e.g., mail, email, phone, text message);
(2) Preferred contact information;
(3) Preferred language of communication;
(4) Preferred method of benefit issuance (e.g., EBT card, electronic benefit);
(5) Interest in receiving information about how to access other assistance program benefits (e.g., Summer Food Service Program, NSLP/SBP, Child and Adult Care Food Program, SNAP, WIC, TANF, FDPIR, Medicaid);
(6) Membership in an ITO; and
(7) Other program options where a household may have preferences, receipt of information that households may find useful, or information that would aid Summer EBT agencies in successful program implementation.
(d) Understandable communications. Any communication with households for eligibility determination purposes must be in an understandable and uniform format and, to the maximum extent practicable, in a language that parents and guardians can understand.
(e) Availability of applications. Summer EBT agencies must ensure that a Summer EBT application is available throughout the period of eligibility, as defined in § 292.2.
(f) Timely certifications. Summer EBT agencies must follow-up with a household that submits an incomplete application within 10 operational days of receipt of the application. See notice of approval at § 292.12(f) for additional requirements for complete applications that are approved for benefits, and providing benefits to participants at § 292.15(c) for requirements around timely issuance of benefits for eligible children.
(g) Deadline for applications. Households must submit an application for Summer EBT benefits by the last day of the summer operational period in order to receive benefits for that summer. Applications that are submitted after the last day of the summer operational period may be used to establish eligibility for the following summer. Summer EBT agencies may encourage households to apply prior to the application deadline, however applications must be accepted and processed up until the application deadline, and benefits must be issued if the application is approved.
(h) Electronic applications. In addition to the distribution of information, applications, and descriptive materials in paper form, the Summer EBT agency may establish a system for executing household applications electronically and using electronic signatures. The electronic submission system must comply with the same requirements as paper applications. Descriptive materials may also be made available electronically by the Summer EBT or local educational agency. If the application is made available electronically, a paper version must also be available.
(i) Application content requirements. Summer EBT applications must contain the following elements:
(1) Required income information. The information requested on the application with respect to the current income of the household must be limited to:
(i) The income received by each member identified by the household member who received the income or an indication which household members had no income; and
(ii) The source of the income (such as earnings, wages, welfare, pensions, support payments, unemployment compensation, social security and other cash income). Other cash income includes cash amounts received or withdrawn from any source, including savings, investments, trust accounts, and other resources which are available to pay for a child’s meals.
(2) Household members. The application must require applicants to provide the names of all household members. However, the application must allow the household to provide a case number if they participate in SNAP, or another means-tested program that has been approved by the Secretary, in lieu of names of all household members and household income information.
(3) Name of school where child is enrolled. A State- or ITO-wide application must contain a space for the household to indicate the name of the school or district where each eligible child is enrolled.
(4) Mailing address. The application must contain a space for the household to list their mailing address. However, the application must be accepted and processed as complete even if the field was not completed by the applicant. The instructions should communicate that it will be used to mail their EBT card, as applicable, and therefore should be the address that will be used by the household at the time the Summer EBT agency issues benefits.
(5) Adult member’s signature. The application must be signed by an adult member of the household.
(j) Attesting to information on the application. The application must also include a statement, immediately above the space for signature, that the person signing the application certifies that all information furnished in the application is true and correct, that the application is being made in connection with the receipt of Federal funds, that the applicant is not already receiving Summer EBT benefits in another State or ITO, that Summer EBT agencies may verify the information on the application, and that deliberate misrepresentation of the information may subject the applicant to prosecution under applicable State and Federal criminal statutes.
(k) Race and ethnicity. The application must contain space for collection of information on race and ethnicity of applicants. The questions should be labeled as optional, and incomplete responses cannot be used as the basis for the denial of benefits.
(l) Accompanying instructions. The application must contain clear instructions is with respect to the completion and submission of the application to the Summer EBT agency to make eligibility determinations. The instructions should inform households that if they intend to move, or have recently moved, that they should apply for benefits in the State where their child will complete or completed the school year immediately preceding the summer operational period.
(m) Required statements for the application. The application and descriptive materials must include substantially the following statements:
(1) “The Richard B. Russell National School Lunch Act requires that we use information from this application to determine who qualifies for Summer EBT benefits. We can only approve complete forms. We may share your eligibility information with education, health, and nutrition programs to help them deliver program benefits to your household. Inspectors and law enforcement may also use your information to make sure that program rules are met. Some children qualify for Summer EBT without an application. Please contact your State or ITO to get Summer EBT for a foster child, and children who are homeless, migrant, or runaway.”
(2) When either the Summer EBT agency or the LEA plans to use or disclose children’s eligibility information for non-program purposes, additional information, as specified in § 245.6(h) of this chapter, must be added to this statement. State agencies and LEAs are responsible for drafting the appropriate statement.
(3) The application must contain the USDA nondiscrimination statement for Child Nutrition Programs.
(4) The Summer EBT agency must inform applicants and prospective applicants that a non-household member may be designated as the authorized representative for application processing purposes if they have difficulty completing the application process.
(n) Calculating income. The Summer EBT agency must use the income information provided by the household on the application to calculate the household’s total current income. When a household submits a complete application, and the household’s total current income is at or below the eligibility limits specified in the Income Eligibility Guidelines, the children in that household must be approved for Summer EBT benefits.
(o) Persons authorized to receive eligibility information. Only persons directly connected with the administration or enforcement of a program or activity listed in this section may have access to children’s eligibility information, without parent or guardian consent. Persons considered directly connected with administration or enforcement of a program or activity are Federal, State, ITO, or local program operators responsible for the ongoing operation of the program or activity or responsible for program compliance. Program operators may include persons responsible for carrying out program requirements and monitoring, reviewing, auditing, or investigating the program. Program operators may include contractors, to the extent those persons have a need to know the information for program administration or enforcement. Contractors may include evaluators, auditors, and others with whom Federal or State agencies, ITOs, and program operators contract with to assist in the administration or enforcement of their program in their behalf.
(p) Disclosure of all eligibility information in addition to eligibility status. In addition to children’s names and eligibility status, the Summer EBT agency, as appropriate, may disclose, without parental consent, all eligibility information obtained through the Summer EBT eligibility process (including all information on the application or obtained through streamlined certification) to:
(1) Persons directly connected with the administration or enforcement of programs authorized under the Richard B. Russell National School Lunch Act, the Child Nutrition Act of 1966, or the Food and Nutrition Act of 2008. This means that all eligibility information obtained for the Summer EBT Program may be disclosed to persons directly connected with administering or enforcing regulations under the Summer EBT Program, National School Lunch or School Breakfast Programs (7 CFR parts 210 and 220, respectively), Child and Adult Care Food Program (7 CFR part 226), Summer Food Service Program (7 CFR part 225), the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) (7 CFR part 246), and the Supplemental Nutrition Assistance Program (SNAP) (7 CFR parts 271 through 285);
(2) Federal, State, and local law enforcement officials for the purpose of investigating any alleged violation of the programs listed in § 292.16(b)(1)(iii); and
(3) The Comptroller General of the United States for purposes of audit and examination.
(q) Phase-in flexibility. For 2024, alternative income applications that do not meet the criteria in paragraph (i) of this section can be used to confer eligibility for Summer EBT if the information provided on the alternative application is sufficient for the Summer EBT agency or LEA to determine that the household meets the income eligibility guidelines for Summer EBT. In 2024, Summer EBT agencies may delegate application processing to LEAs. If a Summer EBT agency delegates application processing to LEAs, then it must cover all administrative costs incurred by the LEAs with respect to Summer EBT application processing.
§ 292.14 Verification requirements.
(a) Summer EBT applications are subject to the following verification requirements:
(1) Verification for cause. (i) The Summer EBT agency must verify for cause applications, on a case-by-case basis, such as in an instance when the agency is aware of conflicting or inconsistent information from what was provided on the application.
(ii) The Summer EBT agency may verify an application for cause at any time during the instructional year or summer operational period, but verification must be completed within 30 days of receipt of the application.
(iii) Applications verified for cause are not considered part of three (3) percent sample size described in paragraph (a)(2) of this section.
(iv) Applications do not need to be selected for verification for cause during initial application processing. A Summer EBT agency may become aware of a questionable application after the initial certification was completed and benefits were issued. In this case, the Summer EBT agency must verify the application for cause at the time they learn of the questionable or conflicting information.
(v) All verification procedures in this section must be followed for applications selected for verification for cause in the same manner as an application randomly selected as part of the sample described in paragraph (a)(2) of this section.
(2) Verification sample. (i) The Summer EBT agency must verify eligibility of children in a sample of household Summer EBT applications approved for benefits for the summer.
(ii) The sample size for the Summer EBT agency must equal three (3) percent of all applications approved by the Summer EBT agency from the start of the instructional year through April 1 of the school year immediately preceding the summer operational period, selected randomly from all applications.
(3) Verification alternatives. (i) In lieu of carrying out provisions in paragraph (a)(2) of this section, Summer EBT agencies may propose alternative methods for verification that strengthen program integrity and preserve participant access.
(ii) Summer EBT agencies that intend to propose alternative procedures must include a detailed description of their plan in their POM submission. Proposals are subject to USDA approval.
(b) Replacing applications. The Summer EBT agency may, on a case-by-case basis, replace up to ten percent of applications that are randomly selected as part of the verification sample. Applications may be replaced if the Summer EBT agency determines that the household would be unable to satisfactorily respond to the verification request.
(c) Rolling verification sample selection. Summer EBT agencies may choose to conduct verification on a rolling basis, as long as the sample size requirements in paragraph (a)(3) of this section are met. (1) If conducting rolling verification, the Summer EBT agency must:
(i)(A) Include in each sample pool only applications approved since the last sample was selected; and
(B) Select three (3) percent of approved applications, as required by the sampling method, each time, but round down to the nearest whole number to prevent over-sampling. If rounding down results in a zero, no applications should be verified for the sample period, and the applications received in that sample period should be included in the next sample pool.
(ii) Select the final sample on April 1.
(A) Selecting only from the applications approved since the last sampling;
(B) Summing the number of applications selected for verification to date (including the final, April 1 sample); and
(C) Calculating three (3) percent of all applications approved as of April 1, and rounding up to the next whole number.
(2) If the number of applications summed per paragraph (c)(1)(ii)(B) of this section is less than the three (3) percent calculated per paragraph (c)(1)(ii)(C) of this section, the Summer EBT agency must fill the remainder of the sample by selecting randomly from all applications.
(3) Summer EBT agencies may choose to sample at any frequency prior to April 1, but may not sample any applications after April 1.
(d) Verification after April 1. Applications that come in after April 1 are still subject to verification for cause, on a case-by-case basis, per paragraph (a)(1) of this section.
(e) Direct verification. Summer EBT agencies must conduct direct verification activities with the programs eligible for use in streamlined certification, as defined in § 292.12(d), as well as records from other assistance programs and administrative data, where available. Data records are subject to the timeframe specified in paragraph (e)(2) of this section.
(1) Direct verification must be conducted prior to contacting the household for documentation.
(2) For the purposes of direct verification, documentation may indicate participation in an applicable program or income at any point during the period of eligibility. The information provided only needs to indicate eligibility at a single point in time during the period of eligibility, not that the child was eligible at the time of application or verification.
(3) Summer EBT agencies must include in their POM submission all sources of administrative data that is intended to be used for direct verification.
(f) Verification procedures and assistance for households—(1) Exceptions from verification. Verification is not required of households if all children in the household are determined eligible based on documentation provided by the State or local agency responsible for the administration of the SNAP, FDPIR, TANF, or another means tested program, as approved by the Secretary, or if all children in the household are determined to be foster, homeless, migrant, or runaway, as defined in § 245.2 of this chapter.
(2) Notification of selection. Households selected for verification must be notified in writing that their applications were selected for verification. The written statement must include a telephone number to contact for assistance. Any communications with households concerning verification must be in an understandable and uniform format and, to the maximum extent practicable, in a language that parents and guardians can understand. These households must be advised of the type of information or documents that will be expected. Households selected for verification must be informed that:
(i) They are required to submit the requested information to verify eligibility for Summer EBT benefits, by the date determined by the Summer EBT agency.
(ii) They may, instead, submit proof that the children receive assistance under SNAP, FDPIR, TANF, or another means tested program, as approved by the Secretary.
(iii) They may, instead, request that the Summer EBT agency contact the appropriate officials to confirm that their children are foster, homeless, migrant, or runaway.
(iv) Failure to cooperate with verification efforts will result in the termination of benefits.
(3) Sources of information. For the purposes of this section, sources of information for verification may include, but are not limited to, written evidence, individuals outside of the child’s household who can verify the child’s circumstances, and systems of records as follows:
(i) Written evidence must be used as the primary source of information for verification. Written evidence includes written confirmation of a household’s circumstances, such as wage stubs, award letters, and letters from employers. Whenever written evidence is insufficient to confirm income information on the application or current eligibility, the verifying agency may require confirmation from a person outside of the child’s household, or accept a statement from an adult member of the child’s household.
(ii) Verbal confirmations of a household’s circumstances by a person outside of the household may be made in person or by phone. The verifying official may select a person to contact if the household fails to designate one or designates one which is unacceptable to the verifying official. If the verifying official designates a person, contact must not be made without providing written or oral notice to the household. At the time of this notice, the household must be informed that it may consent to the contact or provide acceptable documentation in another form. If the household refuses to choose one of these options, its eligibility must be terminated in accordance with the normal procedures for failure to cooperate with verification efforts. Individuals outside of the child’s household who can verify the child’s circumstances could include but are not limited to: employers, social service agencies, school officials, and migrant agencies.
(iii) Agency records to which the verifying agency may have access are not considered to be the same as a person outside of the child’s household who can verify their circumstances. Information concerning income, household size, or SNAP, FDPIR, or TANF eligibility, maintained by other government agencies to which the verifying agency can legally gain access, must be used to confirm a household’s income, size, or receipt of benefits, as applicable. Information may also be obtained from individuals or agencies serving categorically eligible children, as defined in § 292.2, including foster, homeless, migrant, or runaway children.
(iv) Households which dispute the validity of income information acquired through an individual outside of the child’s household or a system of records must be given the opportunity to provide other documentation.
(4) Documentation timeframe. Households selected and notified of their selection for verification must provide documentation of income. The documentation must indicate the source, amount and frequency of all household income and may indicate eligibility at any point during the period of eligibility. The information provided only needs to indicate eligibility for participation in the program at a single point in time during the period of eligibility, not that the child was certified for that program’s benefits at the time of application or verification.
(5) Household cooperation. If a household refuses to cooperate with efforts to verify, eligibility for Summer EBT benefits must be terminated.
(6) Telephone assistance. The Summer EBT agency must provide a telephone number to households selected for verification to call free of charge to obtain information about the verification process. The telephone number must be prominently displayed on the letter to households selected for verification.
(7) Follow-up attempts. The Summer EBT agency must make at least two attempts, at least one week apart, to contact any household that does not respond to a verification request. The attempt may be through a telephone call, email, or mail, and must be documented. Non-response to the initial request for verification includes no response and incomplete or ambiguous responses that do not permit the Summer EBT agency to resolve the children’s eligibility for Summer EBT benefits.
(8) Eligibility changes. The Summer EBT agency must complete the following activities if there is an eligibility change as a result of verification:
(i) Make appropriate modifications to the initial eligibility determinations.
(ii) Notify the household of any change in eligibility as a result of verification.
(iii)(A) The notice must advise the household of:
(1) The change;
(2) The reasons for the change;
(3) Notification of the right to appeal and when the appeal must be filed;
(4) Instructions on how to appeal; and
(5) The right to reapply at any time during the instructional year or summer operational period.
(B) Properly document and retain on file at the Summer EBT agency the reasons for ineligibility.
(9) Issuance of benefits. Benefits cannot be issued for applications selected for verification until the verification process is completed with the exception of verification for cause, as described in paragraph (a)(1) of this section.
(10) Timing of verification for continuous school calendars. In the case of children who are enrolled in a school operating on a continuous school calendar, the Summer EBT agency must receive approval from USDA for any alternative plans for the timing of conducting verification, in accordance with the State or ITO’s approved POM.
(11) Verification after benefit issuance. If a Summer EBT agency is alerted to a questionable application after initial approval or issuance of benefits, no further benefits should be issued until verification for cause, as outlined in paragraph (a)(1) of this section is complete and eligibility is confirmed.
(12) Nondiscrimination. The verification efforts must be applied without regard to race, sex, color, national origin, age, or disability.
(g) Verification of alternative income applications in 2024. In 2024, Summer EBT agencies or LEAs should, on a case-by-case basis, verify for cause any questionable Summer EBT application or alternate income applications used to confer Summer EBT eligibility and follow the procedures in paragraphs (e) and (f) of this section.
Subpart D—Issuance and Use of Program Benefits
§ 292.15 General standards.
(a) Timing. Summer EBT benefits are intended for use during the summer operational period, in accordance with the Summer EBT agency’s approved POM.
(b) Continuous school calendar. In the case of children who attend a school operating on a continuous school calendar, the Summer EBT agency must receive approval from USDA for any alternative plans for the periods during which Summer EBT benefits must be issued and used, in accordance with the State or ITO’s approved POM.
(c) Benefit issuance-(1) Providing benefits to participants. (i) The Summer EBT agency shall ensure the timely and accurate issuance of benefits.
(A) For children who can be streamline certified or who have an approved Summer EBT application on file, benefits must be issued and available for participants to use at least seven calendar days and not more than 14 calendar days before the start of the summer operational period. When the Summer EBT agency does not have sufficient data to issue a benefit to an eligible child, the agency must work to resolve the case and issue the benefit as expeditiously as possible.
(B) For eligible children who apply after the summer operational period begins, benefits must be issued and available to spend not later than 15 operational days after a complete application is received by the Summer EBT agency, so that participants may use their benefits during the summer.
(ii) If the Summer EBT agency issues benefits after the summer operational period, the Summer EBT agency must submit to FNS a corrective action plan outlining the reasons benefits were not issued in a timely manner, and steps the Summer EBT agency will take to ensure timely issuance in the future.
(iii) The Summer EBT agency’s issuance schedule does not need to align with the start of calendar months and may include staggered benefit issuance across multiple days. Regardless of the issuance schedule, Summer EBT agencies may only issue a full three months of benefits for the summer operational period.
(iv) Children on applications that are selected for verification must not be issued benefits until verification is complete and eligibility is confirmed. Additional information about the verification requirements for Summer EBT applications can be found at § 292.14.
(v) Summer EBT agencies must aid households with eligible children who do not reside in a permanent dwelling or have a fixed mailing address in obtaining Summer EBT benefits by assisting them in finding authorized representatives who can act on their behalf, or by using other appropriate means.
(2) Method of issuance. Benefits may be issued:
(i) In the form of an EBT card;
(A) Into an existing EBT account associated with an existing EBT card; or
(B) Into a new EBT account associated with a new EBT card;
(ii) Through other electronic methods, as determined by the Secretary; or
(iii) In the case of a Summer EBT agency that does not issue nutrition assistance program benefits electronically, using the same methods by which that Summer EBT agency issues benefits under the nutrition assistance program of that State.
(d) Dual participation. (1) Dual participation in Summer EBT in the same summer operational period is not allowed.
(2) Summer EBT agencies must develop procedures to detect and prevent dual participation across multiple States and/or ITOs, and must describe these procedures in their POMs, as explained in § 292.8(e)(9).
(e) Benefit amount. (1) In 2024, the benefit will be $40 per month in the summer operational period for each eligible child, and will be adjusted in subsequent years to reflect changes in the cost of food as measured by the Thrifty Food Plan (TFP). Any year-to-year decrease of the TFP will not be implemented.
(2) In Alaska, Hawaii, Guam, American Samoa, Puerto Rico, the Virgin Islands of the United States, and the Commonwealth of the Northern Mariana Islands, the Secretary may establish appropriate adjustments for each such State to the national average payment rates to reflect the differences between the costs of foods in those States and the costs of foods in all other States.
(3) Benefit amounts will be issued in an amount equal to the unrounded benefit amount from the prior year, adjusted to the nearest lower dollar increment to reflect changes to the cost of the diet described in section 3(u) of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(u)) for the 12-month period ending on November 30 of the preceding calendar year and rounded to the nearest lower dollar increment. Rates will be effective January 1 through December 31 of each year.
(4) Summer EBT agencies may not prorate benefits for partial months and must issue the full three months of summer benefits to each eligible child.
(f) Benefit allotments. (1) The Summer EBT agency may issue benefit allotments to a child in a single issuance prior to the start of the summer operational period, or multiple issuances provided that the first issuance occurs before the start of the summer operational period.
(2) In providing benefit allotments Summer EBT agencies:
(i) May stagger issuance throughout the month.
(ii) Must establish an availability date for household access to their benefits and inform households of this date.
(iii) Must issue the full benefit amount for all summer months to each eligible child who applies before the last day of the summer period, independent of the date of application submission or eligibility determination.
(iv) Must adhere to the reporting requirements specified by USDA, regardless of the issuance schedule used.
(g) Participant support—(1) Household training. The Summer EBT agency must provide written training materials to each eligible household prior to Summer EBT benefit issuance and as needed during ongoing operation of the Summer EBT Program. At a minimum, the household training must include:
(i) Content which will familiarize each eligible household with:
(A) Where benefits can be used;
(B) What benefits can be used to purchase; and
(C) Unallowable uses of benefits, and penalties for misuse;
(ii) The appropriate utilization and security of the personal identification number (PIN);
(iii) The established procedures to provide customer service during non-business hours that enable participants or proxies to report a lost, stolen, or damaged card, report other card or benefit issues, receive information on the EBT food balance, and receive the current benefit end date;
(iv) Eligibility criteria for the Program;
(v) Written materials and other information, including the specific rights to benefits. This must include the USDA statement of non-discrimination. Written materials must be prepared at an educational reading level suitable for participant households; and
(vi) Disclosure information regarding adjustments and a household’s rights to notice, fair hearings, and provisional credits. The disclosure must also state where to call to dispute an adjustment and request a fair hearing.
(2) EBT cards and PINs. Summer EBT agencies which issue EBT cards by mail must, at a minimum, use first class mail and sturdy non-forwarding envelopes or packages to send Summer EBT cards to households.
(i) The Summer EBT agency must permit a Summer EBT eligible household to select their PIN.
(ii) PIN assignment procedures must be permitted in accordance with industry standards as long as PIN selection is available to households if they so desire and households are informed of this option.
(iii) If assigning a PIN by mail in conjunction with card issuance, Summer EBT agencies must mail the PIN separate from the card one business day after the card is mailed.
(3) Adjustments. The Summer EBT agency:
(i) May make adjustments to benefits posted to household accounts after the posting process is complete but prior to the availability date for household access in the event benefits are erroneously posted.
(ii) Must make adjustments to an account to correct an auditable, out-of-balance settlement condition that occurs during the redemption process as a result of a system error.
(4) Providing replacement EBT cards or PINs. The Summer EBT agency must make replacement EBT cards available for pick up or place the card in the mail within two business days following notice by the household to the Summer EBT agency that the card has been lost, stolen or damaged.
(i) The Summer EBT agency must ensure a duplicate account is not established which would permit households to access more than one account in the system.
(ii) An immediate hold must be placed on accounts at the time notice is received from a household regarding the need for card or PIN replacement. The Summer EBT agency must implement a reporting system which is continually operative. Once a household reports their EBT card has been lost or stolen, the agency must assume liability for benefits subsequently drawn from the account and replace any lost or stolen benefits to the household. The Summer EBT agency must maintain a record showing the date and time of all reports by households that their card is lost or stolen.
(5) Providing replacement EBT benefits. The Summer EBT agency must make replacement EBT benefits available to a household when the household reports that food purchased with Summer EBT benefits was destroyed in a household misfortune or disaster.
(h) Expungement—(1) General expungement procedures—(i) Summer EBT agencies shall expunge Summer EBT benefits 122 calendar days after their issuance.
(ii) No less than 30 days before benefit expungement is scheduled to begin, Summer EBT agencies must provide notice to the household of the expungement date and amount that is scheduled for expungement.
(iii) Expunged benefits shall not be reinstated.
(2) Procedures to adjust Summer EBT accounts. The Summer EBT agency shall establish procedures to adjust Summer EBT benefits that have already been posted to an EBT account prior to the household accessing the account, or to remove benefits from inactive accounts for expungement.
(i) Whenever benefits are expunged, the Summer EBT agency must document the date and amount of the benefits in the household case file.
(ii) Issuance reports must reflect the adjustment to the Summer EBT agency issuance totals to comply with reporting requirements in § 292.23.
(i) Expungement Procedures specific to States that administer the supplemental nutrition assistance program (SNAP). (1) Summer EBT agencies that load Summer EBT benefits onto existing SNAP accounts must draw down Summer benefits prior to drawing from the household’s SNAP benefits.
(2) Expunged benefits must be returned to the State’s Summer EBT account and must not be co-mingled with SNAP funds.
§ 292.16 Issuance and adjustment requirements specific to States that administer SNAP.
(a) Basic issuance requirements. State Summer EBT agencies must establish issuance and accountability systems which ensure that only certified eligible households receive benefits; that Program benefits are timely distributed in the correct amounts; and that benefit issuance and reconciliation activities are properly conducted and accurately reported to FNS.
(1) On-line issuance of electronic benefits. State Summer EBT agencies may issue benefits to households through an on-line EBT system in which Program benefits are stored in a central computer database and electronically accessed by households at the point of sale via reusable plastic cards.
(2) Alternative benefit issuance system. (i) If the Secretary, in consultation with the Office of the Inspector General, determines that Program integrity would be improved by changing the issuance system of a State, the Secretary shall require the State Summer EBT agency to issue or deliver benefits using another method.
(ii) The cost of documents or systems which may be required as a result of a permanent alternative issuance system must not be imposed upon retail food firms participating in the Program.
(3) Contracting or delegating issuance responsibilities. State Summer EBT agencies may assign to others such as banks, savings and loan associations, and other commercial businesses, the responsibility for the issuance of benefits. State Summer EBT agencies may permit contractors to subcontract assigned issuance responsibilities.
(i) Any assignment of issuance functions must clearly delineate the responsibilities of both parties. The State Summer EBT agency remains responsible, regardless of any agreements to the contrary, for ensuring that assigned duties are carried out in accordance with these regulations. In addition, the State Summer EBT agency is strictly liable to FNS for all losses of benefits, even if those losses are the result of the performance of issuance, security, or accountability duties by another party.
(ii) All issuance contracts must follow procurement standards set forth in § 292.27.
(iii) The State Summer EBT agency must not assign the issuance of benefits to any retail food firm.
(4) EBT system administration. (i) The State Summer EBT agency must be responsible for the coordination and management of the EBT system. The Secretary may suspend or terminate some or all EBT system funding or withdraw approval of the EBT system from the State Summer EBT agency upon a finding that the State Summer EBT agency or its contracted representative has failed to comply with the requirements of this part.
(ii) The State Summer EBT agency must indicate how it plans to incorporate additional programs into the EBT system if it anticipates the addition of other public assistance programs concurrent with or after implementation of the EBT system. The State Summer EBT agency must also consult with the State agency officials responsible for administering the WIC prior to submitting the Planning APD for FNS approval.
(5) Master issuance file. (i) The State Summer EBT agency must establish a master issuance file which is a composite of the issuance records of all eligible children. The master issuance file must contain all the information needed to identify eligible children, issue Summer EBT benefits, record the participation activity for each household, and supply all information necessary to fulfill the reporting requirements in § 292.23.
(ii) The master issuance file must be kept current and accurate. It must be updated and maintained through the use of documents such as notices of change and controls for expired certification periods.
(iii) Before entering an eligible child’s data on the master issuance file, the State Summer EBT agency must review the master issuance file to ensure that the child is not currently participating in, or disqualified from, the Program.
(6) Shared responsibility of issuance activities. State Summer EBT agencies may divide issuance responsibilities between at least two persons to prevent any single individual from having complete control over the authorization of issuances and the issuances themselves. Responsibilities to be divided include maintenance of inventory records, the posting of benefits to an EBT account, and preparation of EBT cards and PINs for mailing. If issuance functions in an office are handled by one person, a second-party review must be made to verify card inventory, the reconciliation of the mail log, and the number of mailings prepared.
(7) Summer EBT monitoring, examinations, and audits. State Summer EBT agency’s accountability system monitoring procedures must be included in the monitoring procedures for SNAP as described at § 274.1(i) of this chapter.
(8) Compliance investigations. State Summer EBT agencies must provide on-line read-only access to State EBT systems for compliance investigations.
(i) The State Summer EBT agency is required to provide software and telecommunications capability as necessary to FNS Retailer Investigation Branch Area offices, Regional offices, and Field offices so that FNS compliance investigators, other appropriate FNS personnel, and USDA OIG investigators have access to the system in order to conduct investigations of program abuse and alleged violations; and
(ii) The State Summer EBT agency must ensure that FNS compliance investigators and USDA OIG investigators have access to EBT cards and accounts that are updated as necessary to conduct SNAP investigations.
(9) Federal financial participation. Access to system documentation, including cost records of contractors or subcontractors shall be made available and incorporated into contractual agreements.
(b) Disclosure. (1) Use or disclosure of information obtained from Summer EBT recipients must be restricted to:
(i) Persons directly connected with the administration or enforcement of the provisions of section 13A of the Richard B. Russell National School Lunch Act, the Food and Nutrition Act of 2008, or regulations in this chapter, other Federal assistance programs, or federally-assisted State programs providing assistance on a means-tested basis to low income individuals;
(ii) Employees of the Comptroller General’s Office of the United States for audit examination authorized by any other provision of law; and
(iii) Local, State, or Federal law enforcement officials, upon their written request, for the purpose of investigating an alleged violation of the NSLA, Food and Nutrition Act of 2008, or regulations in this chapter. The written request shall include the identity of the individual requesting the information and their authority to do so, violation being investigated, and the identity of the person on whom the information is requested.
(2) Local educational agencies administering the National School Lunch Program established under the Richard B. Russell National School Lunch Act or the School Breakfast Program established under the Child Nutrition Act of 1966, for the purpose of directly certifying the eligibility of school-aged children for receipt of free and reduced price meals under the School Lunch and School Breakfast programs.
(3) Recipients of information released under this section must adequately protect the information against unauthorized disclosure to persons or for purposes not specified in this section.
(4) If there is a written request by a responsible member of the household, its currently authorized representative, or a person acting on its behalf to review material and information contained in its casefile, the material and information contained in the casefile shall be made available for inspection during normal business hours. However, the Summer EBT agency may withhold confidential information, such as the names of individuals who have disclosed information about the household without the household’s knowledge, or the nature or status of pending criminal prosecutions.
(5) Copies of regulations, plans of operation, State Summer EBT agency manuals, State Summer EBT agency corrective action plans, and Federal procedures may be obtained from FNS in accordance with 7 CFR part 295.
(c) Program administration—(1) Automation of Summer EBT operations. All State Summer EBT agencies are required to sufficiently automate their Summer EBT operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning Summer EBT.
(2) Requirements. In order to safeguard certification and issuance records from unauthorized creation or tampering, the Summer EBT agencies must establish an organizational structure which divides the responsibility for eligibility determinations and benefit issuance among certification, data management, and issuance units within coordinating or partnering Summer EBT agencies.
(3) Court suit reporting—(i) State Summer EBT agency responsibility. (A) In the event that a State Summer EBT agency is sued by any person(s) in a State or Federal Court in any matter which involves the State Summer EBT agency’s administration of Summer EBT, the Summer EBT agency shall immediately notify FNS that suit has been brought and shall furnish FNS with copies of the original pleadings. Summer EBT agencies involved in suits shall, upon request of FNS, take such action as is necessary to join the United States and/or appropriate officials of the Federal Government, such as the Secretary of USDA or the Administrator of FNS, as parties to the suit. FNS may request to join the following types of suits:
(1) Class action suits;
(2) A suit in which an adverse decision could have a national impact;
(3) A suit challenging Federal policy such as a provision of the NSLA, Food and Nutrition Act of 2008, or regulations in this part or an interpretation of the regulations in this part; or,
(4) A suit based on an empirical situation that is likely to recur.
(B) FNS may advise a Summer EBT agency to seek a settlement agreement of a court suit if the Summer EBT agency is being sued because it misapplied Federal policy in administering the Summer EBT Program.
(C) State Summer EBT agencies shall notify FNS when court cases have been dismissed or otherwise settled. State Summer EBT agencies shall also provide FNS with information that is requested regarding the State Summer EBT agency’s compliance with the requirements of court orders or settlement agreements.
(4) Notification of lawsuits. FNS shall notify all Summer EBT agencies of any suits brought in Federal court that involve FNS’ administration of the Program and which have the potential of affecting many Summer EBT agencies’ Program operations. Summer EBT agencies may not be notified of suits brought in Federal Court involving FNS’ administration of the Program which may only affect Program operations in one or two States or ITOs. The notification provided to Summer EBT agencies shall contain a description of the Federal policy that is affected.
(d) Procedures for program administration in Alaska—(1) Purpose. To achieve the efficient and effective administration of Summer EBT in rural areas of Alaska, FNS has determined that it is necessary to develop additional regulations which are specifically designed to accommodate the unique demographic and climatic characteristics which exist in these rural areas. The regulations established in this paragraph (d) apply only in those areas of Alaska designated as “rural” in § 272.7(b) of this chapter. All regulations in this part not specifically modified by this paragraph (d) shall remain in effect.
(2) Fee agents. Fee agent means a paid agent who, on behalf of the State Summer EBT agency, is authorized to make applications available to low-income households, assist in the completion of applications, conduct required interviews, secure required verification, forward completed applications and supporting documentation to the State Summer EBT agency, and provide other services as required by the State Summer EBT agency. Such services shall not include making final decisions on household eligibility or benefit levels.
(3) Application processing. The State Summer EBT agency may modify the application processing requirements in this part as necessary to insure prompt delivery of services to eligible households. The following restrictions apply:
(4) Fee agent processing. If the signed application is first submitted by a household to a fee agent, the fee agent shall mail the application to the State Summer EBT agency within 5 days of receipt.
(5) Application filing date. An application is considered filed for purposes of timely processing when it is received by an office of the State Summer EBT agency.
(6) Expedited service. (i) If the signed application is first submitted by a household to a fee agent, the fee agent shall mail the application to the State Summer EBT agency within 5 days of receipt. If the household is eligible for expedited service, the State agency will mail the benefits no later than the close of business of the second working day following the date the application was received by the State Summer EBT agency.
(ii) If the signed application is submitted directly to the State Summer EBT agency in person by a rural resident or its authorized representative or by mail, the State Summer EBT agency shall process the application and issue benefits to households eligible for expedited service in accordance with the time standards contained in this part.
(iii) If an incomplete application is submitted directly to the State Summer EBT agency by mail, the State Summer EBT agency shall conduct the interview by the first working day following the date the application was received if the fee agent can contact the household or the household can be reached by telephone or radio-phone and does not object to this method of interviewing on grounds of privacy. Based on information obtained during the interview, the State Summer EBT agency shall complete the application and process the case. Because of the mailing time in rural areas, the State Summer EBT agency shall not return the completed application to the household for signature. The processing standard shall be calculated from the date the application was filed.
(7) Social Security insurance (SSI) joint processing. Social Security Administration (SSA) workers shall mail all jointly processed applications to the appropriate Summer EBT agency office within 5 days of receipt of the application. A jointly processed application shall be considered filed for purposes of timely processing when it is received by an office of the State Summer EBT agency. The household, if determined eligible, shall receive benefits retroactive to the first day of the month in which the jointly processed application was received by the SSA worker.
(8) Fair hearings, fraud hearings, and agency conferences. The Summer EBT agency shall conduct fair hearings, administrative fraud hearings, and agency conferences with households that wish to contest denial of expedited service in the most efficient manner possible, either by face-to-face contact, telephone, radiophone, or other means of correspondence including written correspondence, in order to meet the respective time standards contained in this part.
(e) Disqualification. (1) The Summer EBT agency shall be responsible to investigate cases of alleged intentional Program violation, and to ensure that appropriate cases are acted upon The State Summer EBT agency must ensure investigations are consistent with § 273.16(a) of this chapter.
(2) The penalties for intentional Summer EBT Program violations specified at § 273.16(b) of this chapter as well as the definition of intentional program violations at § 273.16(c) of this chapter are applicable to individuals 18 years of age or over who:
(i) Allegedly committed an intentional Summer EBT Program violation; or
(ii) Allegedly ordered, coerced, persuaded, encouraged, or otherwise induced a person under the age of 18 to commit an intentional Summer EBT Program violation.
(3) Requirements for notifying households about disqualification penalties that are specified at § 273.16(d) of this chapter apply to Summer EBT.
(4) Disqualification hearing procedures for individuals accused of intentional Program violation specified at § 273.16(e)(f) through (h) of this chapter also apply to Summer EBT.
(5) Each State Summer EBT agency must report to FNS information concerning individuals disqualified for an intentional Program violation in accordance with § 273.16(i) of this chapter for Summer EBT.
(6) In cases where the determination of intentional program violation is reversed by a court of appropriate jurisdiction, the State agency must reinstate the individual in the program if the household is eligible.
(f) Restoration of lost benefits—(1) Entitlement. (i) The Summer EBT agency must restore benefits which were lost whenever the loss was caused by an error by the Summer EBT agency or by an administrative disqualification for intentional Program violation which was subsequently reversed, or if there is a statement elsewhere in the regulations specifically stating that the household is entitled to restoration of lost benefits. Furthermore, unless there is a statement elsewhere in this part that a household is entitled to lost benefits for a longer period, benefits shall be restored for not more than twelve months prior to whichever of the following occurred first:
(A) The date the Summer EBT agency receives a request for restoration from a household; or
(B) The date the Summer EBT agency is notified or otherwise discovers that a loss to a household has occurred.
(ii) The Summer EBT agency must restore benefits which were found by any judicial action to have been wrongfully withheld. If the judicial action is the first action the recipient has taken to obtain restoration of lost benefits, then benefits must be restored for a period of not more than twelve months from the date the court action was initiated. When the judicial action is a review of a Summer EBT agency action, the benefits must be restored for a period of not more than twelve months from the first of the following dates:
(A) The date the Summer EBT agency receives a request for restoration.
(B) If no request for restoration is received, the date the fair hearing action was initiated; but
(C) Never more than one year from when the Summer EBT agency is notified of, or discovers, the loss.
(D) Benefits must be restored even if the child is currently ineligible.
(2) Errors discovered by the Summer EBT agency. If the Summer EBT agency determines that a loss of benefits has occurred, and the household is entitled to restoration of those benefits, the Summer EBT agency must automatically take action to restore any benefits that were lost. No action by the household is necessary. However, benefits must not be restored if the benefits were lost more than 12 months prior to the month the loss was discovered by the State agency in the normal course of business, or were lost more than 12 months prior to the month the State agency was notified in writing or orally of a possible loss to a specific household. The State agency shall notify the household of its entitlement, the amount of benefits to be restored, any offsetting that was done, the method of restoration, and the right to appeal through the fair hearing process if the household disagrees with any aspect of the proposed lost benefit restoration.
(3) Disputed benefits. (i) If the Summer EBT agency determines that a household is entitled to restoration of lost benefits, but the household does not agree with the amount to be restored as calculated by the Summer EBT agency or any other action taken by the Summer EBT agency to restore lost benefits, the household may request a fair hearing within 90 days of the date the household is notified of its entitlement to restoration of lost benefits. If a fair hearing is requested prior to or during the time lost benefits are being restored, the household shall receive the lost benefits as determined by the Summer EBT agency pending the results of the fair hearing. If the fair hearing decision is favorable to the household, the Summer EBT agency must restore the lost benefits in accordance with that decision.
(ii) If a household believes it is entitled to restoration of lost benefits but the Summer EBT agency, after reviewing the case file, does not agree, the household has 90 days from the date of the Summer EBT agency determination to request a fair hearing. The Summer EBT agency must restore lost benefits to the household only if the fair hearing decision is favorable to the household. Benefits lost more than 12 months prior to the date the Summer EBT agency was initially informed of the household’s possible entitlement to lost benefits shall not be restored.
(4) Lost benefits to individuals disqualified for intentional Program violation. Individuals disqualified for intentional Program violation are entitled to restoration of any benefits lost during the months that they were disqualified, not to exceed twelve months prior to the date of Summer EBT agency notification, only if the decision which resulted in disqualification is subsequently reversed.
(5) Method of restoration. Regardless of whether a household is currently eligible or ineligible, the Summer EBT agency must restore lost benefits to a household by issuing an allotment equal to the amount of benefits that were lost. The amount restored shall be issued in addition to the allotment currently eligible households are entitled to receive.
(6) Accounting procedures. The Summer EBT agency shall be responsible for maintaining an accounting system for documenting a child’s entitlement to restoration of lost benefits and for recording the balance of lost benefits that must be restored. The Summer EBT agency must at a minimum, document how the amount to be restored was calculated and the reason lost benefits must be restored. The accounting system must be designed to readily identify those situations where a claim against a household can be used to offset the amount to be restored.
(g) Retailers. Retail food operations authorized to participate as a SNAP retailer must also accept State Summer EBT benefits.
(h) Record retentions and forms of security. The State Summer EBT agency must maintain issuance, inventory, reconciliation, and other accountability records related to Summer EBT.
(1) Availability of records. (i) The State Summer EBT agency shall maintain issuance, inventory, reconciliation, and other accountability records for a period of three years. This period may be extended at the written request of FNS.
(ii) In lieu of the records themselves, easily retrievable microfilm, microfiche, or computer tapes which contain the required information may be maintained.
(2) Control of issuance documents. The State Summer EBT agency shall control all issuance documents which establish household eligibility while the documents are transferred and processed within the State Summer EBT agency. The State Summer EBT agency shall use numbers, batching, inventory control logs, or similar controls from the point of initial receipt through the issuance and reconciliation process.
(3) Accountable documents. (i) EBT cards shall be considered accountable documents. The State Summer EBT agency shall provide the following minimum security and control procedures for these documents:
(A) Secure storage;
(B) Access limited to authorized personnel;
(C) Bulk inventory control records;
(D) Subsequent control records maintained through the point of issuance or use; and
(E) Periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records.
(ii) For notices of change which initiate, update or terminate the master issuance file, the State Summer EBT agency shall, at a minimum, provide secure storage and shall limit access to authorized personnel.
(i) Benefit redemption by eligible households—(1) Eligible food. Program benefits may be used only by the household, or other persons the household selects, to purchase eligible food for the household from SNAP-authorized retailers, which includes, for certain households, the purchase of prepared meals, and for other households residing in certain designated areas of Alaska, the purchase of hunting and fishing equipment with benefits.
(2) Prior payment prohibition. Program benefits must not be used to pay for any eligible food purchased prior to the time at which an EBT card is presented to authorized retailers or meal services. Benefits must not be used to pay for any eligible food in advance of the receipt of food, except when prior payment is for food purchased from a nonprofit cooperative food purchasing venture.
(3) Transaction limits. No minimum dollar amount per transaction or maximum limit on the number of transactions can be established. In addition, no transaction fees can be imposed on Summer EBT households utilizing the EBT system to access their benefits.
(4) Access to balances. (i) Households shall be permitted to determine their Summer EBT account balances without making a purchase or standing in a checkout line.
(ii) The Summer EBT agency must ensure that the EBT system is capable of providing a transaction history for a period of up to 2 calendar months to households upon request.
(iii) Households must be provided printed receipts at the time of transaction. At a minimum this information must:
(A) State the date, merchant’s name and location, transaction type, transaction amount and remaining balance for the Summer EBT account;
(B) Comply with the requirements of 12 CFR part 205 (Regulation E) in addition to the requirements of this section; and
(C) Identify the Summer EBT households member’s account number using a truncated number or coded transaction number. The child’s name must not appear on the receipt except when a signature is required when utilizing a manual transaction voucher.
(5) Equal treatment. The EBT system must be implemented and operated in a manner that maintains equal treatment for Summer EBT households. Summer EBT benefits must be accepted for eligible foods at the same prices and on the same terms and conditions applicable to cash purchases of the same foods at the same store. However, nothing in this part may be construed as authorizing FNS to specify the prices at which retail food stores may sell food. However, public or private nonprofit homeless meal providers may only request voluntary use of Summer EBT benefits from homeless Summer EBT recipients and may not request such household using Summer EBT benefits to pay more than the average cost of the food purchased by the public or private nonprofit homeless meal provider contained in a meal served to the patrons of the meal service. For purposes of this section, “average cost” is determined by averaging food costs over a period of up to one calendar month. Voluntary payments by Summer EBT recipients in excess of such costs may be accepted by the meal providers. The value of donated foods from any source must not be considered in determining the amount to be requested from Summer EBT recipients. All indirect costs, such as those incurred in the acquisition, storage, or preparation of the foods used in meals shall also be excluded. In addition, if others have the option of eating free or making a monetary donation, Summer EBT recipients must be provided the same option of eating free or making a donation in money or Summer EBT benefits. No retail food store may single out Summer EBT recipients for special treatment in any way. The following requirements for the equal treatment of Summer EBT households must directly apply to EBT systems:
(i) Retailers must not establish special checkout lanes which are only for Summer EBT households. If special lanes are designated for the purpose of accepting other electronic debit or credit cards and/or other payment methods such as checks, Summer EBT customers with EBT cards may also be assigned to such lanes as long as other commercial customers are assigned there as well.
(ii) Checkout lanes equipped with POS devices shall be made available to Summer EBT households during all retail store hours of operation.
(6) Households eligible for prepared meals—(i) Meals-on-wheels. Eligible guardians of Summer EBT recipients 60 years of age or over or guardians who are housebound, physically handicapped, or otherwise disabled to the extent that they are unable to adequately prepare meals may use Summer EBT benefits to purchase meals for the participant that are prepared for and delivered to them by a nonprofit meal delivery service authorized by FNS.
(ii) Communal dining facilities. Eligible guardians of Summer EBT recipients 60 years of age or over may use Summer EBT benefits issued to purchase meals for the participant that are prepared at communal dining facilities authorized by FNS for that purpose.
(iii) Residents of certain institutions. (A) Eligible residents of a group living arrangement may use Summer EBT benefits issued to them to purchase meals prepared especially for them at a group living arrangement which is authorized by FNS to redeem Summer EBT benefits in accordance with paragraph (g) of this section.
(B) Residents of shelters for battered women and children may use their Program benefits to purchase meals prepared especially for the participant at a shelter which is authorized by FNS to redeem benefits in accordance with paragraph (g) of this section.
(iv) Homeless households. (A) Homeless Summer EBT households may use their benefits to purchase prepared meals for the participant from authorized homeless meal providers.
(B) Eligible homeless Summer EBT households may use their benefits to purchase meals for the participant from restaurants authorized by FNS for such purpose.
(7) Allowable purchase of equipment for hunting and fishing. Eligible Summer EBT households residing in areas of Alaska determined by FNS as areas where access to authorized retailers is difficult and which rely substantially on hunting and fishing for subsistence may use all or any part of their benefits issued to purchase hunting and fishing equipment such as nets, hooks, rods, harpoons and knives, but may not use benefits to purchase firearms, ammunition, and other explosives.
(8) Limiting hunting and fishing purchases to eligible households. State Summer EBT agencies shall implement a method to ensure that access to prepared meals and hunting and fishing equipment is limited to eligible households as described in paragraphs (i)(6) and (7) of this section.
(9) Container deposit fees. Program benefits may not be used to pay for deposit fees in excess of the amount of the State fee reimbursement required to purchase any food or food product contained in a returnable bottle or can, regardless of whether the fee is included in the shelf price posted for item. The returnable container type and fee must be included in State law in order for the customer to be able to pay for the upfront deposit with Summer EBT benefits. If a Summer EBT eligible product has a State deposit fee associated with it, the product remains eligible for purchase with Summer EBT benefits, and the State deposit fee may be paid with Summer EBT benefits as well; however, any fee in excess of the State deposit fee must be paid in cash or other form of payment other than with Summer EBT benefits.
(j) Reconciliation. State Summer EBT agencies must account for all issuance through a reconciliation process as described by USDA.
§ 292.17 Retailer integrity requirements specific to States that administer SNAP.
(a) Participation of retail food stores and wholesale food concerns, and redemption of Summer EBT benefits. Requirements and restrictions on the participation of retail food stores and wholesale food concerns and the redemption of benefits described at §§ 278.2, 278.3 and 278.4 of this chapter, including the acceptance of benefits for eligible food at authorized firms, also apply to activities involving Summer EBT benefits.
(b) Firm eligibility standards. A firm may be subject to the following actions described at § 278.1 of this chapter for noncompliance or violations involving Summer EBT benefits:
(1) The requirements described at § 278.1(b)(4) of this chapter regarding a collateral bond or irrevocable letter of credit for applicant firms with certain sanctions apply to applicant firms with sanctions imposed for violations involving Summer EBT benefits. The amount of the collateral bond or irrevocable letter of credit shall be calculated in accordance with § 278.1(b)(4)(i)(D) and shall also include the amount of Summer EBT benefit redemptions when calculating the average monthly benefit redemption volume.
(2) Authorization shall be denied or withdrawn based on a determination by the Food and Nutrition Service (FNS) that a firm lacks or fails to maintain necessary business integrity and reputation, in accordance with the standards and time periods described at § 278.1(b)(3), (k)(3), and (l)(1)(iv) of this chapter. When making such determinations, FNS shall consider the criteria referred to in § 278.1(b)(3), (k)(3), and (l)(1)(iv) where the underlying activities involve Summer EBT benefits.
(3) Firm authorization shall be denied or withdrawn for failure to pay any claims, fines, or civil money penalties in the manner described at § 278.1(k)(7) and (l)(1)(v) and (vi) of this chapter where such sanctions were imposed for violations involving Summer EBT benefits.
(c) Penalties. For firms that commit certain violations described at §§ 278.6 and 278.2 of this chapter where such violations involve Summer EBT benefits, FNS shall take the corresponding action prescribed at § 278.6 or § 278.2 for that violation. For the purposes of assigning a period of disqualification, a warning letter shall not be considered to be a sanction. Specifically, FNS shall:
(1) Disqualify a firm permanently, as described at § 278.6(e)(1)(i) of this chapter, for trafficking, as defined at § 284.1(b)(1) of this chapter, or impose a civil money penalty in lieu of permanent disqualification, as described at § 278.6(i) of this chapter, where such compliance policy and program is designed to prevent violations of the regulations in this section;
(2) Disqualify a firm permanently, as described at § 278.6(e)(1)(ii) of this chapter, for any violation involving Summer EBT benefits committed by a firm that had already been sanctioned at least twice before under this section or 7 CFR part 278;
(3) Disqualify the firm for 5 years, as described at § 278.6(e)(2)(v) of this chapter, or for 3 years, as described at § 278.6(e)(3)(iv) of this chapter, for unauthorized acceptance violations involving Summer EBT benefits, and impose fines, as described at § 278.6(m) of this chapter, for unauthorized acceptance violations involving Summer EBT benefits;
(4) Disqualify the firm for 5 years in circumstances described at § 278.6(e)(2) of this chapter when the amount of redemptions, which shall also include the amount of Summer EBT redemptions, exceed food sales for the same period of time, as described at § 278.6(e)(2)(ii) through (iv);
(5) Disqualify the firm for 3 years as described at § 278.6(e)(3)(ii) of this chapter for situations described at § 278.6(e)(2) of this chapter involving Summer EBT benefits;
(6) Disqualify the firm for 1 year for credit account violations as described at §§ 278.6(e)(4)(ii) and 278.2(f) of this chapter, where such violations involve Summer EBT benefits;
(7) Disqualify the firm for ineligibles violations for such circumstances and corresponding time periods as described at § 278.6(e)(2)(i), (e)(3)(i), (e)(4)(i), and (e)(5) of this chapter, where such violations involve Summer EBT benefits;
(8) Double the appropriate period of disqualification for a violation, as described at § 278.6(e)(6) of this chapter, where such violation involves Summer EBT benefits, when the firm has once before been assigned a sanction under this section or 7 CFR part 278;
(9) Issue a warning letter to the violative firm when violations are too limited to warrant a period of disqualification, as described at § 278.6(e)(7) of this chapter, where such violations involve Summer EBT benefits;
(10) Impose a civil money penalty for hardship or transfer of ownership, as described at § 278.6(g) of this chapter, in amounts calculated using the described formula at § 278.6(g), which shall also include the relevant amount of Summer EBT redemptions when calculating the average monthly benefit redemptions; and
(11) Impose a civil money penalty in lieu of permanent disqualification for trafficking as described at § 278.6(j) of this chapter in an amount calculated using the described formula at § 278.6(j), which shall also include the relevant amount of Summer EBT redemptions when calculating the average monthly benefit redemptions.
(d) Claims. The standards for determination and disposition of claims against retail food stores and wholesale food concerns described at § 278.7 of this chapter apply to Summer EBT benefits.
(e) Administrative and Judicial review. Firms aggrieved by administrative action under 7 CFR parts 271, 278, and 279 may request administrative review of the administrative action with USDA in accordance with 7 CFR part 279, subpart A. Firms aggrieved by the determination of such an administrative review may seek judicial review of the determination under 5 U.S.C. 702 through 706.
§ 292.18 Requirements specific to States that administer Nutrition Assistance Program (NAP) programs.
Summer EBT benefits issued by a Territory that administers the Nutrition Assistance Program in lieu of SNAP may only be used by the eligible household that receives such summer benefits to purchase eligible foods from retail food stores that have been approved for participation in the Nutrition Assistance Program in American Samoa, the Commonwealth of Puerto Rico, and the Commonwealth of the Northern Mariana Islands. States that administer NAP shall establish issuance and accountability systems which ensure that only certified eligible households receive Summer EBT benefits.
§ 292.19 Requirements specific to ITO Summer EBT agencies.
(a) The ITO Summer EBT Agency must ensure that Summer EBT Program benefits are used by the eligible household that receives such benefits to transact for supplemental foods from retailers that have been approved for participation in the WIC Program. The ITO Summer EBT agency must:
(1) Use the same benefit delivery model for all participants throughout its service area, in accordance with its FNS-approved POM:
(i) For ITOs using a CVB-only benefit delivery model, issue a benefit level equal to the amount set forth in § 292.15(e); and
(ii) For ITOs using a food package benefit delivery model, a combination CVB and food package benefit delivery model, or an alternate benefit delivery model, issue a benefit not to exceed the amounts set forth in § 292.15(e);
(2) Ensure vendors charge prices for eligible food items which are reasonable for the area(s) served and are at the current price or less than the current price charged to other customers. Vendors may not charge Summer EBT participants more for an item than the price in the retail environment for all other customers;
(3) Provide participants supplemental foods deemed eligible for Summer EBT via an FNS-approved POM. Supplemental foods authorized for the WIC Program by the applicable WIC ITO must meet the requirements set forth in this paragraph (a)(3). The POM must identify a list of supplemental foods that:
(i) Contain nutrients determined by nutritional research to be lacking in the diets of children, and promote the health of the population served by the program, as indicated by relevant nutrition science, public health concerns, and cultural eating patterns; and
(ii) Do not include infant formula and infant foods.
(b) ITO Summer EBT procedures and operations related to basic issuance requirements, reconciliation, benefit redemption, and functional and technical EBT system requirements, should be consistent with WIC regulations at § 246.12 of this chapter as applicable to the benefit delivery model used, to the extent such requirements do not conflict with the requirements set forth for ITO Summer EBT agencies in this part.
(c) To ensure effective vendor integrity, the ITO Summer EBT agency must set forth a system which ensures:
(1) Requirements and restrictions on the participation of vendors and the transaction of food benefits described at § 246.12 of this chapter, apply to activities involving Summer EBT benefits; and
(2) Vendors are subject to the actions and penalties described at § 246.12 of this chapter for noncompliance or violations involving Summer EBT benefits; and
(3) The standards for determination and disposition of claims against vendors described at § 246.12 of this chapter apply to Summer EBT benefits; or
(4) Set forth an alternate system to ensure effective vendor management and vendor integrity.
Subpart E—General Administrative Requirements
§ 292.20 Payments to Summer EBT agencies and use of administrative program funds.
(a) General requirements for grant awards. Grant awards are all subject to procedures established by USDA in accordance with 2 CFR part 200, subpart D, and USDA implementing regulations in 2 CFR parts 400 and 415.
(b) Program benefit funds. FNS shall provide a grant to the Summer EBT agency that administers the EBT benefit issuance in an amount equal to 100 percent of issued eligible benefit funds as reflected in the final POM. Summer EBT benefits must be tracked separately from SNAP benefits, or other benefit types.
(c) State administrative funds. FNS must pay to each Summer EBT agency an amount equal to 50 percent of the administrative expenses incurred by the Summer EBT agency in operating the program under this section, including the administrative expenses of LEAs and other agencies in each State or ITO, as applicable, relating to the operation of the program under this section. Summer EBT agencies will report their incurred administrative expenses on a financial status report. Generally, Summer EBT agencies must cover the balance of their administrative costs, i.e., their “match,” with non-Federal funds.
(d) Applicable terms and conditions on grant awards. All grant awards described in paragraphs (a) through (c) of this section shall be subject to terms and conditions and standard reporting requirements of the Federal grant and Federal-State Agreement.
(e) Use of State administrative funds—(1) Matching funds. Summer EBT agency costs for Federal matching funds may consist of:
(i) Charges reported on a cash or accrual basis by the Summer EBT agency as project costs.
(ii) Project costs financed with cash contributed or donated to the Summer EBT agency.
(iii) Project costs represented by services and real or personal property donated to the Summer EBT agency.
(2) Cash and in-kind contributions. All cash or in-kind contributions except as provided in paragraph (f) of this section must be allowable as part of the Summer EBT agency’s share of program costs when such contributions:
(i) Are verifiable;
(ii) Are not contributed for another federally assisted program, unless authorized by Federal legislation;
(iii) Are necessary and reasonable for accomplishment of project objectives;
(iv) Are charges that would be allowable under this part;
(v) Are not paid by the Federal Government under another Federal award, except where the Federal statute authorizing a program specifically provides that Federal funds made available for such program can be applied to matching or cost sharing requirements of other Federal programs; and
(vi) Are in the approved budget.
(f) Volunteer services. The value of services rendered by volunteers is unallowable for reimbursement purposes.
(g) Recovery of funds. The Summer EBT agency must return any Federal funds made available under this part which are in excess of obligations reported at the end of each fiscal year, in accordance with the reconciliation procedures specified in paragraph (h) of this section. The Summer EBT agency shall reflect such recoveries by a related adjustment in the Summer EBT agency’s Letter of Credit.
(h) Substantiation and reconciliation process. The Summer EBT agency must maintain Program records necessary to support administrative costs claimed and the reports submitted to USDA under this paragraph (h). The Summer EBT agency must ensure such records are retained for a period of 3 years or as otherwise specified in § 292.23. Partnering agencies must also meet these requirements consistent with the inter-agency agreement with the Summer EBT agency.
§ 292.21 Standards for financial management systems.
(a) General. This section prescribes standards for financial management systems in administering program funds by the Summer EBT agency and its subagencies or contractors.
(b) Responsibilities. Financial management systems for program funds in Summer EBT must provide for the following. The standards in this paragraph (b) also apply to subagencies or contractors involved with program funding.
(1) Accurate, current, and complete disclosure of the financial results of program activities in accordance with Federal reporting requirements in § 292.23.
(2) Records which identify the source and application of funds for FNS or Summer EBT agency activities supporting the administration of the Program. These records must show authorizations, obligations, unobligated balances, assets, liabilities, outlays and income of the Summer EBT agency, its sub-agencies and agents.
(3) Records which identify unallowable costs and offsets resulting from FNS or other determinations and the disposition of these amounts. Accounting procedures must be in effect to prevent a Summer EBT agency from claiming these costs under ongoing program administrative cost reports.
(4) Effective control and accountability by the Summer EBT agency for all program funds, property, and other assets acquired with program funds. Summer EBT agencies must adequately safeguard all such assets and must assure that they are used solely for program-authorized purposes unless disposition has been made in accordance with paragraph (b)(3) of this section.
(5) If necessary, Summer EBT agencies will be expected to complete an Automated Standard Application for Payment (ASAP) setup form so that FNS may set up a Letter of Credit by which Summer EBT funds will be made available.
(6) Controls which minimize the time between the receipt of Federal funds from the United States Treasury and their disbursement for program costs. In the Letter of Credit system, the Summer EBT agency must make drawdowns from the U.S. Treasury through a U.S. Treasury Regional Disbursing Office as nearly as possible to the time of making the disbursements.
(7) Procedures to determine the reasonableness, allowability, and allocability of costs in accordance with the applicable provisions prescribed in 2 CFR part 200, subpart D, and USDA implementing regulations in 2 CFR parts 400 and 415.
(8) Support and source documents for costs.
(9) An audit trail including identification of time periods, initial and summary accounts, cost determination and allocation procedures, cost centers or other accounting procedures to support any costs claimed for program administration.
(10) Periodic audits by qualified individuals who are independent of those who maintain Federal program funds as prescribed in § 292.24(a).
(11) Methods to resolve audit findings and recommendations and to follow up on corrective or preventive actions.
(12) The standards in this paragraph (b) also apply to subagencies, or contractors involved with program funding.
(13) Identification in Summer EBT agency accounts of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any.
§ 292.22 Performance criteria.
The Summer EBT agency must monitor and document data on each of the following performance criteria:
(a) Performance Criteria 1—Percentage of children eligible for Summer EBT benefits who participated by using their benefits at least once.
(b) Performance Criteria 2—Percentage of Summer EBT benefits that are issued to children not eligible for Summer EBT.
(c) Performance Criteria 3—Percentage of children issued benefits who receive their first issuance before the start of the summer operational period.
(d) Performance Criteria 4—Percentage of eligible children who can be identified through streamlined certification who are enrolled without further application.
§ 292.23 Records and reports.
(a) Summer EBT agencies and LEAs may retain necessary records in their original or electronic form.
(b) Summer EBT agency records must be retained for a period of 3 years after the date of submission of the final Financial Reports for the fiscal year. If audit and investigation findings have not been resolved, the records must be retained beyond the 3-year period as long as is required for the resolution of the issues raised by the audit or investigation.
(c) Summer EBT agencies receiving Federal awards will be required to submit periodic financial management planning and reporting documentation in the Food Program Reporting System (FPRS), on standard schedules that will be announced annually.
(d) For Summer EBT Administrative Grants, Summer EBT agencies will be required to submit an expenditure plan for State expenditure planning by August 15th, prior to the beginning of each fiscal year. Regional approval for those documents will set funding levels for the Summer EBT agency. These documents may be amended on a rolling basis throughout the year as agency needs evolve.
(e) State Administrative Grant expenditures will be reported to FNS quarterly on a Summer EBT financial status report.
(f) Summer EBT agencies must report participation and issuance on a monthly basis.
§ 292.24 Audits and management control evaluations.
(a) Audits. Summer EBT agencies must arrange for audits of their own operations to be conducted in accordance with 2 CFR part 200, subpart F, and USDA implementing regulations in 2 CFR parts 400 and 415. Unless otherwise exempt, LEAs must arrange for audits to be conducted in accordance with 2 CFR part 200, subpart F, and USDA implementing regulations in 2 CFR parts 400 and 415. Summer EBT agencies must provide the USDA Office of the Inspector General (OIG) with full opportunity to audit the Summer EBT agency and LEAs. Unless otherwise exempt, audits at the Summer EBT agency and LEA levels must be conducted in accordance with 2 CFR part 200, subpart F and appendix XI, and USDA implementing regulations in 2 CFR parts 400 and 415. While OIG must rely to the fullest extent feasible upon Summer EBT agency-sponsored or LEA-sponsored audits, it must, when considered necessary:
(1) Make audits on a State or ITO-wide basis;
(2) Perform on-site test audits; and
(3) Review audit reports and related working papers of audits performed by or for Summer EBT agencies.
(b) Management control evaluations. Summer EBT agencies must provide USDA with full opportunity to conduct management control evaluations of all operations of the Summer EBT agency and must provide OIG with full opportunity to conduct audits of all Summer EBT agency Program operations. The Summer EBT agency must make available its records, including records of the receipts and expenditures of funds, upon a reasonable request by USDA.
(c) Error reduction strategies. USDA may omit designated areas of review, in part or entirely, where a Summer EBT agency has implemented FNS-approved error reduction strategies.
§ 292.25 Investigations.
The Summer EBT agency must promptly investigate complaints received or irregularities noted in connection with the operation of the Program and must take appropriate action to correct any irregularities. The Summer EBT agency must maintain on file all evidence relating to such investigations and actions. The Summer EBT agency must inform the appropriate FNSRO of any suspected fraud or criminal abuse in the Program which would result in a loss or misuse of Federal funds. The Department may make investigations at the request of the Summer EBT agency, or where the Department determines investigations are appropriate.
§ 292.26 Hearing procedure for families and Summer EBT agencies.
(a) Each Summer EBT agency must establish a fair hearing procedure that is applicable to the State or ITO program as a whole. Fair hearing procedures must:
(1) Allow a household to appeal, within 90 days after the end of the summer operational period, a decision made with respect to:
(i)(A) An application the household has made for Summer EBT benefits;
(B) A streamlined certification for Summer EBT benefits; or
(C) A verification process or procedure.
(ii) Any adverse action taken against the household by the Summer EBT agency.
(2) Require the State to provide a household with back-benefits for Summer EBT if the fair hearing determines that the Summer EBT agency erroneously failed to issue such benefits in the correct amount to an eligible family, an administrative disqualification for intentional Program violation was subsequently reversed, or if there is a statement elsewhere in this part specifically stating that the household is entitled to restoration of lost benefits.
(b) In response to an appeal, the Summer EBT agency may defend its initial decision to deny the eligibility of the child for Summer EBT benefits or take an adverse action against a household. The fair hearing procedure must provide for both the household and the Summer EBT agency:
(1) A simple, publicly announced method to make an oral or written request for a hearing;
(2) An opportunity to be assisted or represented by an attorney or other person;
(3) An opportunity to examine, prior to and during the hearing, any documents and records presented to support the decision under appeal;
(4) That the hearing must be held with reasonable promptness and convenience, and that adequate notice must be given as to the time and place of the hearing;
(5) An opportunity to present oral or documentary evidence and arguments supporting a position without undue interference;
(6) An opportunity to question or refute any testimony or other evidence and to confront and cross-examine any adverse witnesses;
(7) That the hearing must be conducted and the decision made by a hearing official who did not participate in making the decision under appeal or in any previously held conference;
(8) That the decision of the hearing official must be based on the oral and documentary evidence presented at the hearing and made a part of the hearing record;
(9) That the parties concerned and any designated representative must be notified in writing of the decision of the hearing official;
(10) That a written record must be prepared with respect to each hearing, which must include the challenge or the decision under appeal, any documentary evidence and a summary of any oral testimony presented at the hearing, the decision of the hearing official, including the reasons therefor, and a copy of the notification to the parties concerned of the decision of the hearing official; and
(11) That the written record of each hearing must be preserved for a period of 3 years and must be available for examination by the parties concerned or their representatives at any reasonable time and place during that period.
(12) That the household may request a conference to provide the opportunity for the household to discuss the situation, present information, and obtain an explanation of the data submitted in the application or the decision rendered. The request for a conference must not in any way prejudice or diminish the right to a fair hearing. The Summer EBT agency must promptly schedule a fair hearing, if requested.
(13) Any communication with households related to fair hearings must be in an understandable and uniform format and, to the maximum extent practicable, in a language that parents and guardians can understand.
§ 292.27 Claims.
(a) Basis for claims. Summer EBT agencies are responsible to ensure that program benefits are provided only to eligible children and in the correct amount in accordance with program regulations in this part. Erroneous issuances include, but are not limited to:
(1) Benefits issued to ineligible children or in the incorrect amount.
(2) Duplicate benefit issuances, including situations where the Summer EBT agency allows an eligible household to access more than one Summer EBT account for the same time period, or an eligible household receives program benefits from more than one State or ITO for the same time period.
(b) Claims against Summer EBT agencies. (1) USDA may hold Summer EBT agencies liable for erroneous payments. USDA may pursue erroneous claims in the aggregate when merited, based on the nature of the error that gave rise to the over-issuance, the size of the error, and whether such action would advance program purposes.
(2) Summer EBT agencies must develop a process to allow households to submit a claim for benefits that were not issued or issued in the incorrect amount.
(c) Claims against households. (1) Summer EBT agencies must develop a process to manage cases of erroneous issuances and pursue claims against a household, as appropriate.
(2) Summer EBT agencies have the discretion to determine when to pursue a claim based on cost effectiveness or the individual circumstances. To the maximum extent practicable, Summer EBT agencies should limit claims against households to situations where there is evidence that the household knowingly obtained benefits through fraudulent activities.
(i) Summer EBT agencies must include in their POM submission a proposed plan for identifying instances of fraudulent activity for use in pursuing claims against households.
(ii) Procedures described in paragraph (c)(2)(i) of this section must outline steps the Summer EBT agency will take to ensure that Civil Rights provision at § 292.29(a) are upheld.
(3) Summer EBT agencies must not reclaim Summer EBT benefits by reducing a household’s SNAP, NAP, or WIC benefit.
§ 292.28 Procurement standards.
(a) Applicability of the Advance Planning Document (APD) process. If an EBT services contract established for the purpose of benefit issuance includes Summer EBT, the State Systems Advance Planning Document (APD) process must be followed in accordance with § 292.11(b)(3) for States and § 292.11(u) for ITOs, respectively.
(b) General requirements on the procurement of goods and services with Federal funds. All other Summer EBT agency and local agency costs, including eligibility systems, must comply with the requirements of this part and 2 CFR part 200, subpart D, and USDA implementing regulations in 2 CFR parts 400 and 415, as applicable, which implement the applicable requirements concerning the procurement of all goods and services with Federal funds.
(c) Contractual responsibilities. The standards contained in this part and 2 CFR part 200, subpart D, and USDA implementing regulations in 2 CFR parts 400 and 415, as applicable, do not relieve any Summer EBT agency or local agency of any contractual responsibilities under its contracts. The Summer EBT agency or local agency is the responsible authority, without recourse to USDA, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the Program. This includes, but is not limited to, source evaluation, protests, disputes, claims, or other matters of a contractual nature. Matters concerning violation of law are to be referred to the local, State, or Federal authority that has proper jurisdiction.
(d) Procedures. The Summer EBT agency must follow either the State or ITO laws, policies and procedures as authorized by 2 CFR 200.317, or the procurement standards for other governmental grantees and all governmental subgrantees in accordance with 2 CFR 200.318 through 200.326. Regardless of the option selected, Summer EBT agencies must ensure that all contracts include any clauses required by Federal statutes and Executive orders and that the requirements in 2 CFR 200.236 and 2 CFR part 200, appendix II, are followed.
§ 292.29 Miscellaneous administrative provisions.
(a) Civil rights. In the operation of the Program, no child may be denied benefits or be otherwise discriminated against because of race, color, national origin, age, sex, or disability. Summer EBT agencies and LEAs must comply with the requirements of: Title VI of the Civil Rights Act of 1964; title IX of the Education Amendments of 1972; section 504 of the Rehabilitation Act of 1973; the Age Discrimination Act of 1975; and Department of Agriculture regulations on nondiscrimination (7 CFR parts 15, 15a, and 15b).
(b) Program evaluations. States, ITOs, Summer EBT agencies, LEAs, schools, and contractors must cooperate in studies and evaluations conducted by or on behalf of the Department related to programs authorized under the Richard B. Russell National School Lunch Act or the Child Nutrition Act of 1966.
(c) General responsibilities. The criminal penalties and provisions established in section 12(g) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1760(g)) provide that whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property that are the subject of a grant or other form of assistance under the Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.), whether received directly or indirectly from the United States Department of Agriculture, or whoever receives, conceals, or retains such funds, assets, or property to personal use or gain, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud must, if such funds, assets, or property are of the value of $100 or more, be fined not more than $25,000 or imprisoned not more than five years, or both, or, if such funds, assets, or property are of a value of less than $100, must be fined not more than $1,000 or imprisoned for not more than one year, or both.
§ 292.30 Severability.
Any provision of this part held to be invalid or unenforceable as applied to any person or circumstance shall be construed so as to continue to give the maximum effect to the provision permitted by law, including as applied to persons not similarly situated or to dissimilar circumstances, unless such holding is that the provision of this part is invalid and unenforceable in all circumstances, in which event the provision shall be severable from the remainder of this part and shall not affect the remainder thereof.
§ 292.31 [Reserved]
SUBCHAPTER D—GENERAL REGULATIONS
PART 295—AVAILABILITY OF INFORMATION AND RECORDS TO THE PUBLIC
§ 295.1 General statement.
This part is issued in accordance with the regulations of the Secretary of Agriculture at 7 CFR 1.1-1.23, and appendix A, implementing the Freedom of Information Act (5 U.S.C. 552). The Secretary’s regulations, as implemented by the regulations in this part, govern the availability of records of FNS to the public.
§ 295.2 Organizational description.
The description of the central and field organization of FNS is published as a notice in the
§ 295.3 Informational and educational publications.
FNS publishes a wide variety of informational and educational periodicals, pamphlets, brochures, leaflets, guides, and educational aids explaining the operation of FNS food assistance programs. For more information concerning FNS publications and how to obtain them, write the Director, Public Information Staff, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, VA 22302-1500.
§ 295.4 Program evaluation status reports.
FNS also publishes summaries of objectives and findings of completed studies and projects concerning evaluation of FNS food assistance programs. A copy of the current status report on completed studies may be obtained by writing the Director, Office of Analysis and Evaluation, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, VA 22302-1500.
§ 295.5 Program statistical reports.
Current and historical information on FNS food assistance program size, monetary outlays, geographic distribution, racial and ethnic participation rates, and other data is published throughout the year. Limited supplies are available for public distribution upon request. Write the Director, Program Information Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, VA 22302-1500.
§ 295.6 Public inspection and copying.
5 U.S.C. 552(a)(2) requires that certain informational materials be made available for public inspection and copying. Such materials maintained by FNS may be inspected and copied during regular office hours (currently 8:30 a.m. to 5 p.m.). Interested parties may submit requests to the FNS Records Management Officer, Information Technology Division, 3101 Park Center Drive, Alexandria, VA 22302-1500.
§ 295.7 Indexes.
5 U.S.C. 552(a)(2) also requires an index of the materials required to be made available for public inspection and copying be published quarterly. Copies of this Index for FNS materials will be maintained for public inspection and copying during regular office hours in FNS Library, Room 810, 3101 Park Center Drive, Alexandria, Va. 22302-1500. Free copies of the current index may be obtained by writing or visiting any of the FNS offices listed in the local telephone directory or those listed below:
(a) Records Management Officer, Information Technology Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, Va. 22302-1500.
(b) Director, Financial Management, Food and Nutrition Service, USDA, 300 Corporate Blvd., Mercer Corporate Park, Robbinsville, NJ 08691-1518.
(c) Director, Financial Management, Food and Nutrition Service, USDA, 77 Forsyth Street, SW, Atlanta, GA 30303-3427.
(d) Director, Financial and Administrative Management, Food and Nutrition Service, USDA, 77 W. Jackson Blvd., Chicago, Illinois 60604-3507.
(e) Director, Financial Management, Food and Nutrition Service, USDA, 1100 Commerce St., Dallas, Texas 75242-9980.
(f) Director, Financial Management, Food and Nutrition Service, USDA, 550 Kearney St., San Francisco, CA 94108-2518.
(g) Director, Financial Management, Food and Nutrition Service, USDA, 10 Causeway Street, Boston, MA 02222-1069.
(h) Director, Financial and Administrative Management, Food and Nutrition Service, USDA, 1244 Speer Blvd., Denver, CO 80204-3581.
§ 295.8 Requests.
(a) Requests for FNS program records under 5 U.S.C. 552(a)(3) shall be made in accordance with USDA Administrative Regulations 7 CFR 1.6 and addressed to the appropriate FNS official listed below:
(1) Food Stamp program records—Requests for Food Stamp information should be addressed to the Director of the appropriate Division (Program Development Division, Benefit Redemption Division, or Program Accountability Division) at the following address: Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, VA, 22302-1500.
(2) Child Nutrition Program records—Director, Child Nutrition Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, VA 22302-1500.
(3) Food Distribution Program records—Director, Food Distribution Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, VA 22302-1500.
(4) Supplemental Food Program records—Director, Supplemental Food Programs Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, VA 22302-1500.
(b) If the requester is unable to determine the official to whom his request should be addressed, he should address it to: Freedom of Information Act Officer, Information Technology Division, 3101 Park Center Drive, Alexandria, VA 22302. The Freedom of Information Act Officer will refer such requests to the appropriate official.
(c) The officials outlined in paragraph (a) are authorized to make determinations in accordance with USDA Administrative Regulations at 7 CFR 1.8.
§ 295.9 Appeals.
(a) Any person whose request for records is denied shall have the right to appeal that denial in accordance with USDA Administrative Regulations 7 CFR 1.13. All appeals shall be addressed to: Administrator, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, VA 22302-1500.
(b) The following officials are delegated authority to make decisions on Freedom of Information Act appeals at the address above:
(1) Food Stamp program (general)—Deputy Administrator, Food Stamp Program;
(2) Food Stamp program (appeals on names of Food Stamp Investigators and Investigative aids)—Director, Benefit Redemption Division;
(3) Child Nutrition program—Deputy Administrator, Special Nutrition Programs;
(4) Food Distribution program—Deputy Administrator, Special Nutrition Programs;
(5) Supplemental Food program—Deputy Administrator, Special Nutrition Programs;
(6) Management offices—Deputy Administrator, Management;
(7) Financial Management offices—Deputy Administrator, Financial Management;
(8) Appeals not covered above—Associate Administrator, FNS.