7 CFR 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 (<0.5) to the nearest whole number.
(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 (<0.5) to the nearest whole number. Percentage of error is calculated for each step as follows:
(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).