Policy Memo 160

DOH-CACFP: Number 160 (06/11)

TO: CACFP Sponsoring Organizations of Day Care Homes

FROM: Lynne Oudekerk, State Director, Child and Adult Care Food Program

SUBJECT: Carry Over of Unused CACFP Administrative Payments

I. Purpose and Scope

The Healthy, Hunger-Free Kids Act of 2010, Public Law 111-296, modified the basis for making administrative payments to Sponsoring Organizations of Day Care Homes (Sponsors) in the Child and Adult Care Food Program (CACFP). Sponsors are now allowed to carry over up to 10 percent of unused administrative payments into the next fiscal year. For example, Sponsors will be allowed to carry forward up to 10 percent of their current Federal Fiscal Year (FFY) 2011 administrative payments to cover expenses that will be incurred in FFY 2012. This memorandum describes the procedures CACFP will follow to ensure no more than 10 percent of administrative funds are carried over to the next fiscal year, Sponsors adequately budget for the carryover amount, and the remaining unspent funds are recovered.

II. Background Information

  1. As of October 1, 2010, the "lesser of three or four" regulatory requirement no longer applies. Sponsors will be paid on the total number of homes multiplied by the reimbursement rates throughout the FFY, October through September. The new provision allowing the carry over of unspent funds will be applied starting with the FFY 2011 close-out of the Sponsor's administrative funds.
  2. CACFP will review the Sponsor's reported year-to-date expenditures after processing the September claim for reimbursement. No action will be required for Sponsors with reported expenditures exceeding their total administrative reimbursement for the FFY.
  3. If a Sponsor's administrative reimbursement exceeds their reported year-to-date expenditures for the FFY, CACFP will contact the Sponsor to determine the action to be taken, as follows:
    1. If the unspent administrative amount is equal to or less than 10 percent of the reported year-to-date expenditures, Sponsors will be given the option to carry over all or part of the amount into the next FFY. Sponsors will be required to include the excess amount in the next fiscal year budget. This action may include a budget amendment if the Sponsor's budget has already been approved for the new fiscal year. Carryover funds must be accounted for on a first-in-first-out basis to ensure the funds are expended timely. Sponsors are not required to carry over the unspent administrative funds and may choose to return the funds to CACFP.
    2. If the excess administrative amount is greater than 10 percent of the reported year-to-date expenditures, Sponsors will be required to immediately return the full amount exceeding the maximum 10 percent limit. Sponsors that decide to carry over all or part of the 10 percent will be required to include the excess amount in the next fiscal year budget, which may include a budget amendment if the Sponsor's budget has already been approved for the new fiscal year. Carryover funds must be accounted for on a first-in-first-out basis to ensure the funds are expended timely. Sponsors are not required to carry over the excess administrative funds and may choose to return all of the excess administrative funds to CACFP.
    3. Sponsors remain responsible for correctly accounting for costs, and maintaining records and sufficient supporting documentation to demonstrate that costs claimed have been incurred, are allowable, and comply with all applicable CACFP regulations and policies. It is still necessary for Sponsors to use accrual accounting for the final claim of the fiscal year so that the end-of-year reconciliation and close-out can be performed. CACFP must approve the use of carryover funds into the next FFY and may require documentation to support the planned expense for such funds.

III. Summary of Changes

The Healthy, Hunger-Free Act of 2010 now allows Sponsors to carry over up to 10 percent of unused CACFP administrative payments into the next FFY. The new provision replaces the "lesser of three or four" regulatory requirement. This provision will be effective beginning with the FFY 2011 close-out.

After a final determination is made by CACFP through the close-out process, Sponsors will be required to immediately return the full amount of the administrative funds exceeding the allowed 10 percent carryover amount. Those Sponsors whose unspent administrative amount is equal to or less than 10 percent of the reported year-to-date expenditures will be given the option to carry over all or part of the amount into the next fiscal year.

Any amount carried forward into the next fiscal year will be included in the next year's budget and may require a budget amendment. Carryover funds must be accounted for on a first-in-first-out basis to ensure the funds are expended timely. Sponsors are not required to carry over the excess administrative funds and may choose to return all of the unspent administrative funds to CACFP.