Welcome and thank you all for attending todays
Webinar on Cafeteria Funds, Part 4 – Paid Lunch Equity and Nonprogram Foods. Today’s Webinar provides a general overview
of Paid Lunch Equity (PLE) and Revenue from Nonprogram Food requirements. I am Andrea Tayo, School Nutrition Programs
Specialist with the California Department of Education, Nutrition Services Division.
I will be presenting today with Joan Davis, School Nutrition Programs Specialist. We will begin by discussing the federal laws
and regulations that govern Paid Lunch Equity (PLE) and Nonprogram foods. Specifically,
the U.S. Department of Agriculture (USDA) Interim Rule entitled, “National School
Lunch Program: School Food Service Account Revenue Amendments Related to the Healthy,
Hunger-Free Kids Act of 2010” implements sections 205 and 206 of the Healthy, Hunger-Free
Kids Act (HHFKA) (Public Law 111-296). These provisions established requirements
for school food authorities (SFA) regarding: – Revenue from paid reimbursable lunches
Title 7 Code of Federal Regulations (CFR) 210.14[e]; and
– Revenue from foods sold outside of reimbursable meals when those foods are purchased with
school food service account funds (7 CFR 210.14 [f]) Today’s Webinar will provide the following: A general overview of PLE including federal
law and regulations – How to use the USDA PLE Calculation tool
– How to apply for an exemption to the PLE requirements And an overview of revenue from nonprogram
foods – How to use the USDA’s nonprogram food
revenue tool We will now discuss PLE and provide you with
a general overview of the USDA’s PLE requirements. So, what do we mean by Paid Lunch Equity (PLE)? Equity is the difference in dollar amount
between the Free reimbursement rate and the Paid reimbursement rate. The USDA Policy Memorandum SP 01-2014 states
that for School Year (SY) 2014-15, SFA’s need to meet the PLE requirement of $2.65. We arrive
at this number by taking the Free reimbursement rate for the SY 2013-14 ($2.93) and subtract
the Paid reimbursement rate ($0.28), which equals $2.65. Background on the PLE provision
Effective July 1, 2011, the USDA published an Interim Rule regarding new requirements
for PLE in Section 205 of the HHFKA. 7 CFR Section 210.14(e) provides the regulatory
requirements of Section 205 of the HHFKA. The intent of Paid Lunch Equity is to ensure
that sufficient funds are provided to the food service account from paid lunches. This
in turn will ensure that federal reimbursement for free and reduced priced meals is used
to provide quality meals that meet the new standards. Under the Interim Rule, the HHFKA requires
School Food Authorities (SFA) to annually calculate the Weighted Average Price (WAP)
for paid lunches and compare to the difference between the per meal federal reimbursement
for free and paid lunches. Per USDA Policy Memo SP 39-2011 paid lunch
participation at schools that participate in Provisions 2 or 3 are not included in the
calculation of a WAP. SFAs charging less for a paid lunch than the
difference between the federal reimbursement for free and paid lunches must increase revenue
by 2 percent plus inflation, by either adopting one of two options: 1. Either gradually increase their average
paid lunch price; or 2. Provide a nonfederal funding contribution
to the Cafeteria Fund to cover the difference Requiring SFAs to price paid lunches at an
amount that covers their costs will help ensure that over time, the appropriate additional
revenues are provided to the nonprofit school food service account (i.e., the Cafeteria
Fund) and help to meet the potential additional costs for the increased nutrition standards. In addition to the PLE WAP calculation requirement,
Subsection 12 (p) of the Richard B. Russell National School Lunch Act and 7 CFR Section
210.14 (e)(7) require that SFAs annually report their most frequently charged paid lunch price
for each of these categories: elementary, middle/junior high and high school levels
to their State Agency (i.e., California Department of Education [CDE]). However, the CDE, on behalf of the SFAs, will
capture the most frequently charged lunch prices based on the data they report in the
Child Nutrition Information and Payment System (CNIPS). To ensure the CDE and SFA compliance
with this part of the law, SFAs must keep their lunch prices current in the CNIPS.
The CDE consolidates these frequently charged prices from CNIPS and reports them annually
to the USDA, using USDA’s form FNS-828, School Food Authority Paid Lunch Price Report. There seems to be some confusion as to the
difference between the annual PLE WAP calculation requirement for SFAs, and the annual FNS-828
reporting requirement for an SFA to report its frequently charged paid lunch prices to
the USDA. There are two parts of the PLE provision requirement:
1. The FNS-828 form reports the most frequently charged prices for SFAs and the CDE will annually
submit it to the USDA on behalf of the SFAs, based on data provided in CNIPS
2. SFAs are also required to annually calculate their PLE WAP and determine if they need to
raise their lunch prices or contribute nonfederal funds to meet the PLE requirements. The CDE will verify that SFAs are making accurate
price calculations and modifications during their Administrative Review (AR). Therefore,
it is important for the SFA to keep all copies of the PLE calculations for future reference. Have you ever wondered how to calculate your
annual PLE requirement? If so, great! Let’s review the options for calculating the PLE.
For others, this will be a great review. 7 CFR Section 210.14(e)(1) requires SFAs to:
Step 1 – Calculate the Weighted Average Price (WAP) for paid lunches Step 2 – Calculate the difference between
the per meal federal reimbursement for paid and free lunches, which is the federal reimbursement
rate provided annually in USDA Policy Memoranda for PLE. After calculating your WAP and determining
the federal reimbursement rate for the current school year: Step 3 – Compare WAP to the federal reimbursement
rate Step 4 – If the WAP is greater than or equal to federal reimbursement
rate, then “No Further Action is Required.” Step 5 – If the WAP is less than federal reimbursement
rate, then “Further Action is Required.” HOW TO DETERMINE THE WAP
The weighted average price of paid lunches shall be determined based on the total number
of paid lunches claimed for the month of October in the previous SY, at each different price
charged by the school food authority per 7 CFR Section 210.14(e)(1)(i). Before you can start any calculations to determine
the WAP for paid lunches, you will need to collect the number of paid lunches claimed
for the month of October from the previous school year for each school site. The claim
data from the previous school year of total paid lunches served for each site can be pulled
from CNIPS or your account files. After you have collected October data for
each site, you will need to do the following math calculation:
Step 1. Add the number of paid lunches served for each site to get the Total # of Paid Lunches
Served districtwide. Continue on to the next steps using the same
October data from the previous School Year: Step 2. Multiply the number of Paid Lunches
Served for each site by the Paid Lunch Price charged at that site to get the total Paid
Lunch Revenue Per Site. Step 3. Add each site’s Paid Lunch Revenue
totals to get the Total District Revenue for paid lunches. Step 4. Divide the total District Paid Lunch
Revenue by the Total Number of Paid Lunches Served districtwide (from Step 1), to get
to the Weighted Average Price of paid lunches. We now have a WAP poll question for you to
answer. For this and all other poll questions during
this Webinar, after the question has been read, we encourage you to pause the recording,
answer the question, and then resume the recording. A school district has three sites with different
paid lunch prices. Site A charges $2.00 per lunch for the 50 students that pay full price;
Site B charges $1.50 per lunch for the 100 students that pay full price; and Site C charges
$4.00 per lunch for the 75 students that pay full price. What is the Weighted Average Price? A. $1.37
B. $2.44 C. $3.67
D. None of the above I will give you a moment to pause the recording
and answer the question. The answer to the question is “B-$2.44” Slide
13 and 14 show you the correct steps in how to calculate your WAP; however, we will go
over the question for further review in the next few slides. To determine each site’s Paid Lunch revenue,
begin by multiplying the number of paid lunches served by the paid lunch prices charged at
that site. Site A’s Paid Lunch revenue is $100.00
Site B’s Paid Lunch revenue is $150.00 Site C’s Paid Lunch revenue is $300.00 Next, you will need to add together each site’s
paid lunch revenue to get the Total District revenue for paid lunches. In this case, the
Total District Paid Lunch Revenue equals $550.00 Finally, you will need to divide the Total
District Paid Lunch Revenue by the Total Number of Paid Lunches served districtwide to get
to the Weighted Average Price of paid lunches. Given the data provided in the Poll Question: Site A: 50
Site B: 100 Site C: 75 Add the total number of paid lunches served
for each site to get the total number of paid lunches served districtwide, which equals
225. Divide the Total District Paid Lunch Revenue you calculated in the previous slide
of $550.00 by the total number of paid lunches served (225) and you will get a WAP of $2.44. The next step is to compare your WAP to the
federal reimbursement rate. The USDA provides you with the current federal reimbursement
rate information in their annual USDA Policy Memoranda (For SY 2014-15, USDA Policy Memo
SP 1-2014) For SY 2013-14, the difference between free
and paid federal reimbursement rates is $2.59. For SY 2014-15, the difference between free
and paid federal reimbursement rates is $2.65. When you compare your WAP of $2.44 to the
reimbursement rates above, you can see whether or not you are below the minimum price requirements.
SFAs with an average price less than the difference between free and paid reimbursements, must
increase revenue by 2% plus inflation by either increasing average prices charged for paid
meals or contributing nonfederal revenue sources to make up the difference. Now that you know how to manually calculate
your WAP, we have great news: the USDA annually provides SFAs the USDA PLE Calculator Tool.
The tool is an excel spreadsheet for SFAs to complete to assist with the WAP calculations.
The PLE tool helps SFAs determine whether or not they need to raise their paid lunch
prices or contribute nonfederal funds to the Cafeteria Fund to cover the difference.
The USDA PLE Calculator Tool is available on the USDA School Meals Policy Memos Web
page listed on this slide. If eligible, an SFA that would like to request
an exemption to the PLE requirement must provide a copy of the USDA PLE Calculator Tool used
to calculate the WAP. In addition, during an Administrative Review, the SFA must provide
documentation that they have calculated the WAP using the USDA PLE Calculator Tool. Therefore,
the CDE highly encourages SFAs to read the current USDA Policy Memo SP 15-2014 on Paid
Lunch Equity, access the USDA PLE Calculator tools and become familiar with the calculations. SFAs with a WAP that is out of compliance
after completing the USDA PLE calculations must take action to address the difference. Per USDA Policy Memo SP 1-2014, SFAs which,
on a weighted average, charged less than $2.65 for paid lunches in SY 2013-14 must adjust
their average price or provide additional nonfederal funds to the Cafeteria Fund. Please
refer to the USDA Policy Memo SP 1-2014 as provided on this slide. The amount of the
per meal increase is calculated using 2 percent plus 2.27 percent, or 4.27 percent total. Increasing Paid Meal Prices.
SFAs that choose to increase their paid lunch prices have the option to round down the new
WAP for lunch to the nearest $0.05. This options gives SFAs a $0.05 range which would be considered
an acceptable price increase. SFAs are not required to increase their paid
lunch prices by more than $0.10 per School Year; However, SFAs may opt to raise their prices
by more than $0.10 at their discretion. In addition, SFAs have some flexibility to
determine how they plan to distribute the average price increase among their school
sites to reach the new WAP. SFAs that increase their paid lunch prices
by more than the SY PLE requirement, will receive a credit to be used toward the next
School Year PLE requirement amount. Here is a screenshot of the USDA PLE Calculator
Tool. This tab of the School Year 2014-15 Nonfederal Contribution Calculator shows SFAs
the required amount that needs to be contributed to the Cafeteria Fund if they opt not to increase
their paid lunch prices to meet the PLE requirement. Credit for Excess Nonfederal Funds If an SFA’s SY 2013-14 estimate of the required
contribution exceeded the actual level, that excess contribution may be subtracted from
the total SY 2014-15 contribution requirement. Further, if the School Year 2013-14 nonfederal fund
contribution was less than required, additional funds from nonfederal sources must be added. Nonfederal Funding Sources
SFAs that need to increase their paid lunch prices but choose not to, must contribute
nonfederal funds to make up the difference. Some examples of nonfederal sources include:
– Per meal reimbursements for paid breakfast and lunches from states, counties and school
districts – Any funds provided by (external or student)
organizations to support any paid meal – Any portion of state revenue matching
funds that exceed the minimum requirement and that’s provided for paid meals USDA Policy Memo SP 34-2013 expanded the definition
of allowable nonfederal funds for SY 2013-14 to include support for all paid meals, including
breakfast. SFAs must document nonfederal revenue as a transfer to the Cafeteria Fund for paid
lunches. PLE Exemption Requests
The Net Cash Resources (NCR) of a nonprofit school food service account is prohibited
from exceeding a three-month operating balance per 7 CFR Section 210.9(b)(2), 210.14(b),
and 210.19(a)(1). The goal of this federal limitation is to ensure that SFAs spend these
funds only on school meal operations and do not profit from the receipt of federal funds. Several SFAs in a strong financial position
reported to USDA that requiring SFAs to raise their average paid lunch price would result
in a NCR violation. Since the intention of the PLE requirements is to financially strengthen
SFAs, the USDA recognized that there are occasions where the PLE requirements create an unintended
regulatory consequence. Therefore, the USDA now allows SFAs in a strong financial position
to be exempt from the PLE pricing requirements if they meet specific criteria. For SY 2013-14, SFAs can request an exemption
from the PLE requirement if the SFA: – Has received approval from the CDE as
meeting the new meal pattern requirements – Can demonstrate that the required increase
to paid lunch prices or revenue contributions would cause the SFA to exceed the three-month
operating balance limitation; and, – There are no other clearly necessary or
desirable uses for the funds to meet Program requirements and goals, or to address deficiencies
in Program operations such as increased quality for fresh fruits and vegetables, etc. Please note: All SFAs, regardless of whether
or not they are seeking an exemption, must annually calculate their WAP to meet the PLE
requirements and show proof of the calculation (whether by using the USDA PLE Calculator
Tool or by another calculating format) during their Administrative Review.
At this time, USDA has issued an extension for SY 2014-15 PLE exemption. If an SFA believes that raising the average
price for paid lunches will result in an NCR violation, and that the additional revenue
would not be better spent improving the school meal program, the SFA must submit a request
to waive the PLE requirements to the CDE. SFAs must submit their request by e-mail to
the [email protected] The e-mail subject line must state, “PLE Exemption Request.” The SFA must attach the following documents
to the e-mail request: – Copy of the CDE certification letter confirming
meal pattern requirements are met – Balance sheet demonstrating the SFA’s
NCR before and after the price increase – Copy of the SFA’s completed USDA Calculator Tool – Copy of the SFAs responses to the PLE
Exemption Request: Factors for Consideration document. More information and the attachments listed on this slide are available on the NSD’s Management
Bulletin (MB) USDA-SNP-18-2013. After the CDE receives the SFA’s complete PLE exemption
request, the CDE will review and advise the SFA of its determination. Joan will now go over Revenue from Nonprogram
Foods. We will now discuss Revenue from Nonprogram
Foods and provide you with a general overview of the USDA requirements and how to use the
USDA Nonprogram Foods Calculator Tool. Section 206 of the HHFKA, is codified under
7 CFR Section 210.14(f) of the Interim Rule and defines Nonprogram foods. Nonprogram foods are foods and beverages sold
in a participating school other than reimbursable meals and meal supplements, such as:
– A la carte and other food items which are sold in competition with the reimbursable
meal programs and; – Purchased using funds from the nonprofit
school food service account (i.e., Cafeteria Fund). The provisions for Revenue from Nonprogram
Foods is to ensure that revenues from the sales of nonprogram foods generate at least
the same proportion of SFA revenues as they contribute to SFA food costs. 7 CFR Section 210.14(f):
Requires all revenue from the sale of nonprogram foods purchased with school food service account
(Cafeteria Fund), and sold in schools at any time or location on the school campus, must
accrue only to the Cafeteria Fund and is not allowed to benefit student organizations or
school programs. Current law strictly prohibits the use of
any revenue sharing agreements from the nonprofit school food service. However, per USDA SP 13-2014, the Cafeteria
Fund can still contract with other entities (student or parent organizations) to purchase
any goods as long as the purchase cost is paid in full by the other entity including
labor costs associated with purchasing and processing those goods. If the school food service is used to provide
goods and/or services for entities officially sanctioned by the school, the school food
service must be fully reimbursed for any and all costs under these arrangements. The CDE
advises SFAs to be cautious when entering into these types of agreements as estimating
costs may be difficult. All risk relating to revenue losses must be covered by the outside
entity and not the school food service. SFAs must calculate their nonprogram food
revenues and make all documentation of such calculations available upon request and/or
during their Administrative Review to ensure compliance.
To implement the Revenue from Nonprogram Foods requirement and ensure that the nonprogram
revenues meet or exceed nonprogram food costs, SFAs must identify and track the following
for the entire school year: – Total food costs in proportion to nonprogram
food costs; and – Total food revenues in proportion to nonprogram
food revenues In September 2012, the CDE published MB USDA-SNP-36-2012
Revenue From Nonprogram Foods. Updated Guidance highlighting the key components of USDA’s
Nonprogram Food Revenue requirements. The MB provides SFAs with an example to demonstrate
how to calculate compliance with the provisions and a link to the USDA Nonprogram Foods Revenue
Tool. Please note that this is a sample, so you may develop your own method of tracking
such costs and revenue. Your method of tracking will be reviewed during your AR.
Here is a screenshot of the USDA Nonprogram Foods Revenue Tool.
The hyperlink on this slide will take you directly to the USDA Nonprogram Food Revenue
Tool from the USDA Policy Memo SP 39-2011. The first tab provides detailed instructions
on how to complete the Nonprogram Foods Revenue Tool.
To use the Nonprogram Foods Revenue Tool, an SFA must collect the cost of both program
and nonprogram food and the total revenue for the previous school year.
Please note, Food Service Management Contract (FSMC) and vending contracts should include
contract language that require the FSMC or vendor to provide the SFAs with this data.
The tool will calculate the minimum amount of revenue from Nonprogram food sales that
is required to meet the USDA’s Nonprogram Food Costs requirement.
The calculator tool provides opportunities for the SFA to play around with figures to
determine what best meets their needs. PLE and Revenue from Nonprogram Foods Summary
Based on this presentation, we hope you were able to obtain further knowledge and understanding
of the USDA’s requirements for PLE and revenue from nonprogram foods. For PLE:
– The intent is to ensure that SFAs provide sufficient funds to the nonprofit school food
service (Cafeteria Fund) from paid lunches. – The FNS-828 requirement is a report of
an SFA’s most frequently charged paid lunch prices and will be submitted annually to USDA
by the CDE on behalf of the SFAs based on data that SFAs provide in CNIPS.
– SFAs are required to calculate the PLE Weighted Average Price (WAP) and determine
if they need to raise their prices or contribute nonfederal funds to meet the PLE requirements.
– The USDA PLE Calculator Tool is provided to you on the CDE Cafeteria Fund Guidance
Web page or the USDA School Meals Web sites. You must retain copies of your calculation
whether manually or by using the USDA PLE Calculator Tool for the Administrative Review. For Revenue from Nonprogram Foods: – The intent is to ensure that revenues
from the sales of nonprogram foods generate at least the same proportion of revenues as
they contribute to nonprogram food costs. – Requires that revenue from the sale of
nonprogram foods purchased by the school food service account, sold in schools at any time
or location on the school campus, must accrue only to the school food service account (Cafeteria
Fund) and is not allowed to benefit student organizations or school programs. However,
the Cafeteria Fund can still contract with other entities (student or parent organizations)
to purchase any goods as long as the purchase cost is paid in full by the other entity including
labor costs associated with purchasing and processing those goods.
– SFAs may calculate their Nonprogram Foods Revenue using the USDA Nonprogram Foods Revenue
Tool. The CDE has been working closely with the
USDA to obtain additional guidance to assist NSD staff and SFAs with implementation the
PLE and Revenue from Nonprogram Foods requirements. There are several resources available to you
on our CDE Cafeteria Fund Guidance Web page as well as hyperlinks to the USDA’s Policy
Memorandums. Due to the complexity of the requirements,
the CDE strongly encourages SFAs to read the USDA Policy Memos and the links have been
provided to you on this slide. Send questions related to the SNP Cafeteria
Fund to the School Nutrition Program Cafeteria Fund Team. The e-mail address is provided
on the top of this slide. In your e-mail please include the following
information: – In the subject line include what you are
requesting assistance with (i.e. paid lunch equity, nonprogram revenue, or capital expenditure)
and your district or agency’s name – In the body of the e-mail please include:
– SFA name – CNIPS identification number
– Description of the issue and – If this is a capital expenditure request,
also include an explanation as to why the equipment is necessary for the operation of
the nonprofit school food service We would like to thank you for your participation
in today’s Webinar. This concludes the Cafeteria Fund Webinar series.