Performance-based Reimbursment

1Certification of Compliance with New Meal Pattern RequirementsFNS published an interim rule entitled Certification of Compliance with Meal Pattern Requirements for the NSLP, April 27, 2012

This interim rule establishes the requirements for the certification of SFAs for an additional 6 cents per lunch reimbursement.

The rule becomes effective July 1, 2012

USDA is accepting public comments for 90 days1Agenda2BackgroundCertification - SFA ResponsibilitiesCertification - State Agency ResponsibilitiesSY 2012-13 Validation ReviewsAdministrative Reviews and Ongoing ComplianceReporting RequirementsImplementation Funding QuestionsThese are the topics we will discuss today: We will give some background on this rule Certification - SFA Responsibilities Certification - State Agency Responsibilities SY 2012-13 Validation Reviews a new requirement to validate 25% of the SFAs certified Administrative Reviews and ongoing compliance what this means Reporting Requirements Implementation Funding Questions

23BackgroundBackground - HHFKA4Requires SFAs follow the updated meal patterns (rule published January 26, 2012)

Provides performance-based reimbursement for SFAs that demonstrate compliance with updated meal pattern this includes both lunch and breakfast

Additional reimbursement is available October 1, 2012

6 cents reimbursement will be adjusted beginning July 2013

Section 201 of the HHFKA makes an additional 6 cents reimbursement available for meals meeting the updated meal pattern requirements on October 1, 2012, and no earlier. In order to be eligible to receive this new performance-based reimbursement, the State agency must certify that the SFA is in compliance with the requirements of the final meal pattern rule published in the Federal Register on January 26, 2012.

section 201 of the HHFKA limits the 6 cents per lunch reimbursement to only those SFAs certified by the State agency to be in compliance with the updated lunch and breakfast meal patterns.

FNS will prescribe annual adjustments to the 6 cents reimbursement at the same time adjustments are made to the national average payment rates

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 the Notice in July in the Federal Register

The first adjustment to the 6 cents will occur in July 2013

4Background - Interim Rule5The interim rule lays out the requirements and framework for certification for the performance-based reimbursementThe certification process works as follows:SFA submits certification documentation to State agency State agency makes a certification determination within 60 daysState agencies conduct validation review of at least 25 percent of certified SFAs in SY 2012-13Ongoing compliance with the meal pattern requirements is monitored during administrative reviews (CRE)State agencies will not be required to conduct administrative reviews (CRE) in SY 2012-13

The interim rule lays out the requirements and framework for certification for the performance based reimbursement

The 6 cents certification process works as follows:

First, SFA submits certification documentation to State agency (TDA)

Then, TDA makes a certification determination within 60 days

After that, in FY2012-13, TDA conducts a validation review of at least 25 percent of the certified SFAs.

Finally, Ongoing compliance with the meal pattern requirements is monitored during the normal administrative review process.

State agencies will not be required to conduct administrative reviews (CRE) in SY 2012-13 there are a couple of exceptions to this that I will discuss later

5Background - Interim Rule 6Some aspects of the meal pattern are phased in over several years

SFAs must demonstrate compliance with those requirements in effect at time of certification

SFAs must demonstrate compliance with both breakfast and lunch if SFA offers breakfast

SFAs must demonstrate compliance with those meal pattern requirements in effect at the time the SFA applies for certification. While most of the updated requirements are effective SY 2012-2013, several requirements are phased in later.

So, an SFA applying in SY 2012-2013 would need to demonstrate compliance with all of the SY 2012-2013 requirements in order to be certified.

An SFA applying for certification in SY 2013-2014 would need to demonstrate compliance with all of the SY 2012-2013 requirements and all requirements phased in for SY 2013-2014.

And again, SFAs must demonstrate compliance with both breakfast and lunch if the SFA offers breakfast6Certification - Definition7Paper or electronic documentation submitted to the State agency by the SFA to demonstrate compliance with new meal pattern requirements

Documentation must include both breakfast and lunch if SFA offers breakfast

Representative of meal service for all schools within the SFA

State agency reviews and approves or denies documentation for certification

Certification is a term I will use throughout the presentation

Certification includes paper or electronic documentation submitted to the State agency by the SFA to demonstrate compliance with new meal pattern requirements

Certification documentation must include both breakfast and lunch if SFA offers breakfast

All schools within the SFA must be in compliance with the meal pattern requirements for the SFA to be certified for the 6 cents per lunch reimbursement. If the SFA participates in the SBP, the schools must also be in compliance with the updated breakfast requirements in effect at the time of certification.

This means that if one school is not in compliance with the new meal pattern, the whole SFA will be denied the 6 cent reimbursement

State agency are the ones who review and approve or deny documentation for certification

Certification is a one-time process. SFAs will only need to submit certification documentation once to receive the 6 cents reimbursement

7Technical Assistance8Q & As

Prototype contract

Tools to support certification will be issued in late May

Before getting into the details of the rule, I want to mention that FNS is providing the following technical assistance to help SFAs and State agencies with the certification process:

Q&As issued 4-27-2012

Prototype solicitation contract will be ready for release early in May

Finally, tools to support certification will be issued in late May

I will talk about these tools in more detail later in the presentation

89Certification SFA Responsibilities I first want to talk about responsibilities of SFAs in the certification process9Certification Options10Option 1: SFA submits one week menus, menu worksheet and nutrient analysis

Option 2: SFA submits one week menus, menu worksheet and simplified nutrient assessment

Option 3: State agency on-site review

Per the rule, SFAs can request certification through one of 3 options. Texas will only be offering Options 1 & 2 to schools (Sharon can talk more about that later) which is a state agency prerogative. But well go through all three in more detail so you are aware.

Wanted to point out that all three options include one week of menus, a menu worksheet and some sort of nutrient assessment

The basic differences between the options are in what type of nutrient assessment is conducted and who completes the assessment

These options were designed to use, to the maximum extent practicable, existing processes and information. 10Certification Option 111SFAs must submit: One week of menus for each menu type offered Detailed menu worksheet Nutrient analysis of calories and saturated fat for each menu type

Menu worksheet includes food items and quantities used to assess compliance

Option 1 allows SFAs to submit one week of menus, detailed menu worksheets showing food items and quantities for breakfast and lunches, and a nutrient analysis of calories and saturated fats.

SFAs that choose this option must submit one week of each distinct menu type, by age grade group, and a detailed menu worksheet for each menu showing food components and quantities by reimbursable meal.

I will explain what we mean by menu type after I go through all of the options

SFAs that chose this option must use FNS approved nutrient analysis software

This option acknowledges that a large number of SFAs use nutrient analysis software to monitor the nutrient levels in their meals.

11Certification Option 212SFAs must submit:One week of menus for each menu type offered Detailed menu worksheet Simplified Nutrient Assessment of calories and saturated fat for each menu type

Simplified nutrient assessment will serve as a proxy for a nutrient analysis Option 2 allows SFAs to submit one week of menus, detailed menu worksheets showing food items and quantities for breakfasts and lunches, and a simplified nutrient assessment.

SFAs that choose this option must submit (same as option 1) one week of each distinct menu type, by age grade group, and a detailed menu worksheet for each menu showing food components and quantities by reimbursable meal.

This option acknowledges that not all SFAs use nutrient analysis software. The simplified nutrient assessment is intended to be a proxy for the nutrient analysis.

The simplified assessment assumes certain nutrient values for milk, vegetables and fruit. SFAs enter information about entrees including grains to assess compliance

12Certification Option 313State agencies may document SFA compliance during an on-site review

Menus, menu worksheets with food items and quantities, nutrient analyses are required as part of the materials used to demonstrate compliance

The final option for certification is left to the discretion of the State agency

Option 3 allows State agencies to certify a SFA during a an on-site review. If the State agency offers this option, the SFA would need to have menus, detailed menu worksheets (same as options 1 and 2), and all information needed for the State agency to conduct a nutrient analysis of calories saturated fat.

TDA will not be offering Option 3.

13Certification Documentation14Menu Type: For each certification option SFAs must submit one week of each menu offered (for both breakfast and lunch) within the SFA, by age grade group

Example: If an SFA serves an elementary, middle and high school menu for lunch and one menu for breakfast, the SFA must submit four menus and four menu worksheets I mentioned that each option requires the SFA to submit each type of menu offered within the SFA

This means for each certification option SFAs must submit one week of each menu offered (for both breakfast and lunch) within the SFA, by age grade group

For example: If an SFA serves an elementary, middle and high school menu for lunch and one menu for all three age grade groups for breakfast, the SFA must submit four menus and four menu worksheets

If the SFA serves multiple, distinct menus within one age grade group, the SFA must submit all menus served.

This is an area where will have more information to come. We have more examples in the Q&As that will be issued tomorrow and will have additional information in the near future.

Refer to Question 16 in the FAQs that clarifies a distinct menu as having different entrees.

14Certification Documentation15Documentation must reflect current meal service:

Meals served in the calendar month the certification materials are submittedMeals served in the month preceding the calendar month of submission

SFAs must submit documentation that reflects current SFA practices. This means documentation must reflect meal service in the calendar month that certification materials are submitted, or in the month preceding the calendar month of submission.

For example, if a SFA submits documentation in March 2013, the menus must reflect meal service in either March or February 2013.

SFAs should be reminded that the materials provided are a snapshot of meal service activity and are considered representative of the on-going meal service.

15Certification Documentation 16FNS will provide State agencies and SFAs a prototype menu worksheet and simplified nutrient assessment tool

FNS will provide guidance and training for these materials FNS will provide State agencies and SFAs a prototype menu worksheets and simplified nutrient assessment in May

As I mentioned before, the prototype menu worksheet will take into account food items and quantities to assess compliance

The simplified nutrient assessment will serve as a proxy for a full nutrient analysis and will assess saturated fat and calories

FNS will provide guidance and training for these materials including a webinar to demonstrate how to use the tools

16Certification Documentation17Early submission (before Sept 30, 2012)

SFAs may submit documentation for compliance reflecting planned meal service for October or November 2012

An exception to this is for the time period prior to availability of funds (July 1 through Sept, 2012),

In this time period, SFAs seeking certification must submit documentation for compliance reflecting planned meal service for October or November 2012

17Certification Documentation18Example: If an SFA submits certification documentation in August 2012, the documentation for compliance must reflect meals planned for October or November 2012So, if an SFA submits certification documentation in August 2012, the documentation for compliance must reflect meals planned for October or November 2012.

The reason for this exception is that only meals served on or after October 1, 2012 are eligible for the 6 cents reimbursement

This also allows State agency flexibility in managing the certification process

18Certification Documentation- Attestation19As part of certification, SFAs must attest that:They are in compliance with all current meal pattern requirements Documentation is representative of the ongoing meal service within the SFA The minimum required food quantities for all meal components are available to students in every serving line As part of certification, SFAs must attest that:

1. They are in compliance with all current meal pattern requirements

2. Documentation is representative of the ongoing meal service within the SFA

3. The minimum required food quantities for all meal components are available to students in every serving line

19Annual Attestation20Certified SFAs must annually attest, through SY 2014-15, to compliance with the meal pattern requirements, as new requirements are phased-in

The attestation must be provided to the State agency as an addendum to the permanent agreement between States and SFAs

Subsequent to the initial attestation at the time of certification, SFAs must also annually attest through SY 2014-15 to compliance with the meal pattern requirements, as new requirements are phased-in. The attestation must be provided to the State agency as an addendum to the permanent written agreement between States and SFAs.

2021Certification State Agency ResponsibilitiesCertification State Agency Responsibilities22Establish process for certification in the State based on interim rule and FNS guidance

Train and disseminate information to SFAs

Receive, review and approve/deny SFA certification documentation within 60 days of receipt

Disburse 6 cents reimbursement to certified SFA

Now I will talk about State agency responsibilities in the certification process

State agencies (TDA) must establish a process for certification in the State based on the information in the interim rule and guidance provided by FNS

States (Texas) must also train and disseminate information about certification to SFAs

TDA must review certification materials and, for documentation submitted after October 1, 2012, make certification determinations within 60 days of receipt of the certification request from the SFA.

For example, if a SFA submits documentation on November 1, 2012 the State agency must make a certification determination by January 1, 2013 60 days. Finally, TDA must disburse 6 cents reimbursement to certified SFAs

22Certification State Agency Responsibilities23State agencies may not approve/deny certification until July 1, 2012

SFAs can start earning 6 cents reimbursement October 1,2012 The earliest an SFA can start earning the 6 cents reimbursement is when funds become available on October 1, 2012

So meals served in September, even at a certified SFA, can not earn the 6 cents reimbursement until October 1, 2012

23Certification State Agency Responsibilities24For applications submitted on or before September 30, 2012, the State agency has 60 days from October 1, 2012 to review certification materials and make a determination

I just mentioned that State agencies have 60 days from the time of receipt to make a certification determination

Recognizing a large number of SFAs may request certification prior to October 1, 2012, an exception to the 60 day requirement is provided for any certification documentation request submitted prior to September 30, 2012. For certification requests submitted on or before September 30, 2012, the State agency has 60 days from October 1, 2012 to review certification materials and make certification determinations.

24Certification State Agency Responsibilities25Example: If an SFA submits certification materials on August 15, 2012 with planned menus for October 1, 2012, the State agency has 60 days from October 1, 2012 to make a certification determination For example, a SFA submits certification materials on August 15, 2012 with planned menus for October 1, 2012. The State agency has 60 days from October 1st to make a certification determination

So basically, we are giving State agencies more time upfront to certify SFAs because we realize there may be more certification requests during this time25Certification State Agency Responsibilities26Promptly disburse 6 cents reimbursement to the certified SFA for each lunch served beginning at the start of the month in which the certified menus are served

Upon certification, the State agency must reimburse the certified SFA with the 6 cents reimbursement for each lunch served beginning in the start of the month in which the certified lunches are served. 26Certification State Agency Responsibilities27Example: If menus for the week of March 15-19, 2013 are certified in May 2013, the State agency must retroactively reimburse the additional 6 cents for all lunches served on or after March 1, 2013 For example, if menus for the week of March 15-19, 2013 are certified in May 2013 (within the 60 days) , the State agency must retroactively reimburse the additional 6 cents for all lunches served on or after March 1, 2013.

In other words, the SFA is entitled to the 6 cents reimbursement starting in the beginning of the month in which the certified menus are served2728SY 2012-13 Validation ReviewsSY 2012-13 Validation Reviews29SY 2012-13 Validation Review: An on-site visit conducted by the State agency to affirm that a certified SFA has been and continues to meet the updated meal patterns

For purposes of the 6 cents rule, a validation review is an on-site visit conducted by the State agency

The purpose of the validation review is to affirm that a certified SFA has been and continues to meet the updated meal patterns from the beginning of the certification through the validation review

The validation review must also ensure that the meal service at the time of the validation review is consistent with the certification documentation submitted by the SFA.

29SY 2012-13 Validation Reviews30Validation reviews are only required in SY 2012-13

During a validation review, State agencies must:Observe a meal service for each type of menu certifiedReview the school production records for observed mealsReview the documentation submitted for certification Validation reviews are a one year requirement and must only be conducted in SY 2012-13 During a validation review, State agencies must:

1. observe a meal service for each type of menu certified,

2. review the production records for observed meals to ensure they are consistent with the menus on which the certification determination was based and that observed meals meet updated meal pattern requirements, and

3. review the documentation submitted for certification to ensure that ongoing meal service operations are consistent with certification documentation.

30SY 2012-13 Validation Reviews31State agencies must conduct random on-site validation reviews of at least 25 percent of SFAs certified via documentation (Options 1 and 2)25 percent must include all large SFAs

SFAs that receive certification through an onsite review (Option 3) are not required to receive a validation review

Review one school representing each type of menu certifiedRandomly selected by State

State agencies must conduct random on-site validation reviews of at least 25 percent of SFAs certified via documentation (Options 1 and 2 which I discussed earlier) all large SFAs must be included in 25 percent

SFAs who are certified by the State agency during an on-site review (option 3) are exempt from a validation review in SY 2012-13 since the State agency-conducted administrative review provides an independent validation of the menus, the detailed menu worksheet and includes a nutrient analysis, there is no further need for a validation review.

One school representing each type of certified menu by the SFA should be randomly selected for a validation review by the State agency

For example, if a SFA submits 3 lunch menus for certification (one for each age grade group), the State agency would randomly select one school representing each type of menu submitted to visit during the validation review (three total).

31SY 2012-13 Validation Reviews32Draw sample during three time periods October DecemberJanuary MarchApril June

The total number of validation reviews at the end of SY 2012-13 must be at least 25 percent of certified SFAs in the StateMust be completed by June 30, 2013

State agencies should select certified SFAs for validation reviews throughout the school year because certification is a rolling process and State agencies do not know at the beginning of the school year how many SFAs will be certified

State agencies are encouraged to randomly select at least 25 percent of the SFAs certified during the periods October-December, January-March, and April-June. Any SFA not selected for a validation review during one period is automatically in the pool for possible selection during the next time period.

The total number of validation reviews at the end of SY 2012-13 must be at least 25 percent of certified SFAs in the State

Since an erroneous certification could lead to the recovery of improperly paid funds, State agencies are strongly encouraged to conduct validation reviews prior to certification or to the SFAs submission of first Claim for Reimbursement including the 6 cents, if possible.

Validation reviews must occur during periods when meal service is in operation so State agencies can confirm the documentation submitted reflects actual program operation.

All validation reviews must be completed by June 30, 2013

32SY 2012-13 Validation Reviews33All large certified SFAs in State must have a validation review

A large SFA (210.18) includes:All SFAs with 40,000 or more childrenIf there are less than 2 SFAs with 40,000 or more children, the 2 largest SFAs with at least 2,000 children

SFAs that the State agency select for a validation review must include all large certified SFAs in State

A large SFA, as defined in CRE regulations at 210.18, includes: All SFAs with 40,000 or more children enrolled

If there are less than 2 SFAs with 40,000 or more children, the 2 largest SFAs with at least 2,000 children enrolled

33SY 2012-13 Validation Reviews34Two types of fiscal action:

Fiscal action associated with 6 centsFiscal action associated with free/reduced/paid reimbursement

For validation reviews, just fiscal action associated with 6 cents Throughout this presentation I will talk about two types of fiscal action:Fiscal action associated with the 6 centsFiscal action associated with the free/reduced/paid reimbursement

For purposes of the validation reviews, I will only be referring to fiscal action associated with the 6 cents

Later I will discuss fiscal action associated with free/reduced/paid reimbursement

34SY 2012-13 Validation Reviews35If the State agency is unable to validate the certification documentation, the State agency must assess:

Whether corrective action can occur immediately; andThe longevity and severity of the problems

These assessments determine whether an SFA can earn the 6 cents in the future and what fiscal action occurs in the current month and prior periods

If the State agency is unable to validate the certification documentation, the State agency must assess: Whether corrective action can occur immediately; and The longevity and severity of the problems.

These assessments determine whether an SFA can earn the 6 cents in the future and what fiscal action occurs in the current month and prior periods

This applies to violations in both breakfast and lunch. The HHFKA makes it clear that only those SFAs meeting both the updated lunch and breakfast requirements are eligible for the 6 cents

During a validation review a State agency may recover improperly paid 6 cents funds for a breakfast or lunch violation because the SFA cannot validate an SFAs eligibility for the 6 cents reimbursement

35SY 2012-13 Validation Reviews36If corrective action does occur immediately6 cents is not turned off for future months

If corrective action does not occur immediately6 cents must be turned off for future months If during a validation review:

Corrective action does occur immediately6 cents is not turned off for future months

Corrective action does not occur immediately6 cents must be turned off for future months

36SY 2012-13 Validation Reviews37The longevity and severity of the violation determines fiscal action for the 6 cents

States have discretion to determine proper fiscal action The longevity and severity of the violation and whether it is systematic determines fiscal action for the 6 cents

States have discretion to determine proper fiscal action So, whether they want to take back the 6 cents for the week or month or all the way back to the time of certification

37SY 2012-13 Validation Reviews38SFAs whose 6 cents is turned off for future months as a result of the validation review must re-apply for certification

SFAs whose 6 cents is turned off as a result of the validation review must re-apply for certification and will be subject to an administrative review early in the SY 2013-2014 administrative review cycle.

SFAs may re-apply for certification at any time

3839Administrative Reviews (CRE) and Ongoing ComplianceSY 2012-13 Administrative Reviews40State agencies will not be required to conduct administrative reviews (CRE) in SY 2012-13 except for:

Additional Administrative ReviewsAdministrative reviews of any at-risk SFAsPlanned follow up reviews

FNS 640 reporting is required for any administrative reviews conducted in SY 2012-13

State agency administrative reviews scheduled for SY 2012-2013 may be postponed until SY 2013-2014, the first year of the new administrative review cycle.

However, if the State agency is aware of an SFA at risk for improper payments, the State agency must conduct the administrative review in SY 2012-13.

State agencies must also conduct Additional Admin Reviews and planned follow up reviews in SY 2012-13

FNS 640 reporting is still required for any administrative reviews conducted in SY 2012-13

40SY 2013-14 Administrative ReviewFinal Meal Pattern Rule3 year State agency review cycleBegins School Year 2013-14 (July 1, 2013)Breakfast included in administrative review

SMI reviews eliminated

Modified Performance Standard 2 (CRE) Nutrition Provisions41 This slide highlights the monitoring provisions in the final meal pattern rule. These provisions are based in part on the requirements of section 207 of HHFKA, which requires that USDA establish a unified accountability system for monitoring compliance in the NSLP and SBP, and that reviews be conducted on a 3-year cycle.

The final meal pattern rule establishes a framework for State agency administrative reviews in the coming years.

The rule includes a 3-year State agency review cycle, beginning School Year 2013-14. In addition, the State administrative review now includes breakfast as well as lunch, beginning the same year.

Finally, the rule eliminated the School Meal Initiative Reviews effective July 1, 2012, and made modifications to CREs Performance Standard 2.

41SY 2013-14 Administrative Review42First year of new 3 year cycle State agency must review any SFA whose review was postponed in SY 2012-13

In addition, State agencies are required to conduct an administrative review of non-certified SFAs early in the review cycle As part of the 6 cents rule, States must include in the 1st year of the three year cycle (which is SY 2013-14):

1. Any SFA scheduled for review in SY 2012-2013 but whose review was postponed

In addition, State agencies are required to conduct an administrative review of non-certified SFAs earlier in the review cycle

42Administrative Review Fiscal Action (6 cents)43Ongoing compliance assessed during administrative reviews

Any violation of Performance Standard 2 requirements set forth in the new lunch pattern will result in a turning off of the 6 cents reimbursement unless immediate corrective action occurs

Since 6 cents reimbursement is earned for lunches, SFAs cannot lose 6 cents for breakfast violations during an administrative review Now I want to talk about if a problem is found during an administrative review

SFAs may not earn the 6 cents per lunch reimbursement if the State agency finds, during an administrative review, that the certified SFA has violated any requirement of Performance Standard 2 set forth in the new lunch meals unless corrective action can occur immediately .

As Ive already mentioned, the HHFKA requires SFAs to be in compliance with both the breakfast and lunch meal pattern requirements at the time of certification.

Subsequently, the 6 cents reimbursement is earned for lunches only. Thus, if any violations of the updated lunch meal pattern are found, the 6 cents per lunch reimbursement would be subject to fiscal action

After that, the 6 cents reimbursement is earned for lunches only. Thus, if an SFA is found out of compliance with the breakfast requirements during an administrative review, the State agency would pursue corrective action, follow-up review activity, and as appropriate, fiscal action as required under 210.18; however, the SFA would continue to receive the 6 cents per lunch reimbursement.

It is important to note that while a SFA can lose the 6 cent reimbursement for a breakfast violation during a SY 2012-13 validation review, a SFA cannot lose the 6 cent reimbursement for a breakfast violation during an administrative review

43Administrative Review Fiscal Action (6 cents)44If the SFA is able to correct a Performance Standard 2 violation by the end of the week in which the administrative review is conducted, the State agency need not turn off the 6 cents reimbursement

For example, if the school is missing a vegetable subgroup during the administrative review and is able to change its food order to include the missing vegetable subgroup during the week of review, then the SFA would not lose the 6 cents reimbursement If the SFA is able to correct the identified problem by the end of the week in which the review is conducted, the State agency need not turn off the 6 cents reimbursement.

For example, if the a school is missing a vegetable subgroup during the review and is able to change its food order to include the missing vegetable subgroup during the week of review, then the SFA would not lose the 6 cents reimbursement.

44Administrative Review Fiscal Action45As always, State agencies must recover improperly paid funds Includes free/reduced price/paid reimbursement plus 6 cents

States have discretion in determining longevity and severity of violations As always, the State agency must recover any improperly paid funds for current and prior periods this includes the free/reduced price/paid reimbursement plus the 6 cents.

States have discretion in determining longevity and severity of violations

States also have discretion in proper fiscal action and how far back they wish to recover funds

45Administrative Review Fiscal Action46Missing Menu Items/Food ItemsMilk Type and Vegetable SubgroupWhole Grain Rich, Food Quantities and Dietary SpecsStandard Fiscal Action for F/R/P (from updated Meal Pattern rule)Immediate fiscal action required Fiscal action required for unresolved, repeat violations (after technical assistance and corrective action have taken place)State agencies may take fiscal action for unresolved, repeated violations (after technical assistance and corrective action have taken place)New Fiscal Action for 6 centsStandard fiscal action includes 6 cents Standard fiscal action includes 6 centsStandard fiscal action includes 6 centsAbsent immediate corrective action, must turn off 6 cents for future months Absent immediate corrective action, must turn off 6 cents for future monthsAbsent immediate corrective action, must turn off 6 cents for future months This is a chart explaining fiscal action for Performance Standard 2 violation during an administrative review you probably recognize the top row from the Meal Pattern webinar

State agencies should use this as a guide when making fiscal action determinations on administrative reviews

As I mentioned earlier, we now have two types of fiscal action: fiscal action associated with the free/reduced/paid reimbursement (referred to standard fiscal action in chart) and fiscal action associated with the 6 cents.

This chart shows what fiscal action is required by State agencies depending on the nature PS2 violation

You will see that when standard fiscal action is taken by the State agency, it must include the 6 cents reimbursement as well

Discretion is left to States to determine the appropriate recovery period of funds based on the longevity and severity of the violation

State agencies should note that while not all situations require fiscal action associated with the free/reduced/paid reimbursement, the 6 cents must be turned off for future months in all situations, unless immediate corrective action can occur 46Ongoing Compliance47State agencies must provide technical assistance to SFAs who violate the lunch and breakfast requirements after certification

6 cents reimbursement can be turned back on when SFA demonstrates they are back into compliance with the lunch requirements

An on-site review is not required for the 6 cents to be turned back on

State agencies must provide technical assistance to SFAs who violate the lunch and breakfast requirements after certification The State agency may re-start the 6 cent per lunch reimbursement beginning with the first full month the SFA demonstrates to the satisfaction of the State agency that they have corrected the violation identified during the administrative review.

An on-site review is not required for the 6 cents to be turned back on as long as the SFA has provided sufficient documentation that they are now in compliance

47Noncompliance 48It is important to note that when non-compliance with the new meal pattern is found during a SY 2012-13 validation review, the SFA must re-apply for certification

When non-compliance is found during an administrative review, the 6 cents reimbursement is turned off but the SFA need not go through the entire certification process again they only must demonstrate when they come back into compliance It is important to note that when non-compliance with the new meal pattern is found during a validation review and immediate corrective action is not possible, the SFA must re-apply for certification

When non-compliance is found during an administrative review and immediate corrective action is not possible, the 6 cents reimbursement is turned off but the SFA need not go through the entire certification process again -they need only demonstrate when they come back into compliance and the 6 cents can be turned back on

48Ongoing Compliance49Persistent or repeated failure to meet standards should be dealt with on a case-by-case basis

Could result in withholding of reimbursement until compliance is achieved

The State agency should assess the reasons for non-compliance on a case by case basis.

State agencies have a number of tools to deal with non-compliance ranging from technical assistance, corrective action, follow up reviews, and fiscal action resulting from administrative review activity, to withholding reimbursement and ultimately termination.

49Appeals50SFAs cannot appeal the State agencys denial of certification

SFAs can appeal the State agency turn off of the 6 cents reimbursement An SFA cannot appeal a State agency denial of certification since the SFA has not been deemed eligible to receive the additional reimbursement. While the SFA does not have appeal rights in this situation, the State agency should provide technical assistance to the SFA to assist them getting certified

An SFA can appeal the State agency turn off of the 6 cents reimbursement. In this scenario the State agency has made payments to the SFA and therefore the SFA can appeal the decision. Standard appeal procedures must be followed.

5051Reporting RequirementsReporting Requirement52State agencies must:include meal counts earning 6 cents reimbursement on the FNS-10include 6 cent reimbursement on FNS-777 quarterly reportsubmit an additional quarterly report detailing the disbursement of 6 cents reimbursement including:Total number of SFAs in the StateNames and locations of certified SFAsFor each SFA, total number of lunches earning the 6 cents reimbursement for each month The 6 cents interim rule does include a reporting requirement

State agencies must:include meal counts earning 6 cent reimbursement on the FNS-10

include 6 cents reimbursement on FNS-777 quarterly report (report is not changing)

submit an additional quarterly report detailing the disbursement of 6 cent reimbursement including:Total number of SFAs in the StateNames and locations of certified SFAsFor each SFA, total number of lunches earning the 6 cent reimbursement for each month

52Reporting Requirement53FNS-10 is currently being updated

Prototype reporting template is being created for quarterly report The FNS-10 is currently being updated and will include a column, similar to the column for reporting meals earning the 2 cent for serve need, for State agencies to report meals earning the 6 cents

Look for a Federal Notice very soon for the updated FNS-10

FNS is also creating a prototype reporting template for the other information that is required on a quarterly basis.

State agencies should keep in mind that because funds are not available until October 1, 2012, the first reporting on the FNS-10 will occur in November 2012.

The first required quarterly report would not be due until January 20135354Implementation Funding Finally, Im going to talk about Implementation Funding.54Implementation Funding55The HHFKA provides $47 million in each of fiscal years 2012 and 2013 for State agencies to support implementation activities for the new meal patternThese funds may be used for the following activities associated with the implementation of the new meal pattern and the 6 cents reimbursement:Training for SFAsTechnical AssistanceCertification activitiesOversight activities

The HHFKA provided $47 million to assist State agencies with State-level costs associated with certification and training activities associated with implementing the updated meal patterns and providing the 6 cents per lunch reimbursement to certified SFAs.

FNS expects State agencies to use these funds to support training, certification, and oversight activities.

State agencies can refer to policy memo SP 07-2012 issued on December 29, 2011 for more information

55Certification Contractor56State agencies may use these funds to procure a contractor to conduct certification activities on behalf of the State agencyThe contractor could also be used to conduct validation reviews on behalf of the State agencyFNS is working to finalize a prototype request for proposal for State agencies to use to procure a contractor to provide certification services Last thing to mention:

State agencies may use these implementation funds to procure a contractor to conduct certification activities on behalf of the State agency

In addition to certification, the contractor could also be used to conduct validation reviews on behalf of the State agency

FNS is working to finalize a prototype request for proposal for State agencies to use to procure a contractor to provide certification services

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