Rule2022-20084
Streamlining Program Requirements and Improving Integrity in the Summer Food Service Program (SFSP)
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Published
September 19, 2022
Issuing agencies
Agriculture DepartmentFood and Nutrition Service
Abstract
This rulemaking amends the Summer Food Service Program (SFSP) regulations to strengthen program integrity by clarifying, simplifying, and streamlining program administration to facilitate compliance with program requirements. Through this final rule, USDA is codifying changes to the regulations that will streamline requirements among Child Nutrition Programs, simplify the application process, enhance monitoring requirements, offer more clarity on existing requirements, and provide more discretion at the State agency level to manage program operations.
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[Federal Register Volume 87, Number 180 (Monday, September 19, 2022)]
[Rules and Regulations]
[Pages 57304-57366]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20084]
[[Page 57303]]
Vol. 87
Monday,
No. 180
September 19, 2022
Part III
Department of Agriculture
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Food and Nutrition Service
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7 CFR Parts 210, 215, et al.
Streamlining Program Requirements and Improving Integrity in the Summer
Food Service Program (SFSP); Final Rule
Federal Register / Vol. 87, No. 180 / Monday, September 19, 2022 /
Rules and Regulations
[[Page 57304]]
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DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 210, 215, 220, 225, and 226
RIN 0584-AE72
Streamlining Program Requirements and Improving Integrity in the
Summer Food Service Program (SFSP)
AGENCY: Food and Nutrition Service (FNS), USDA.
ACTION: Final rule.
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SUMMARY: This rulemaking amends the Summer Food Service Program (SFSP)
regulations to strengthen program integrity by clarifying, simplifying,
and streamlining program administration to facilitate compliance with
program requirements. Through this final rule, USDA is codifying
changes to the regulations that will streamline requirements among
Child Nutrition Programs, simplify the application process, enhance
monitoring requirements, offer more clarity on existing requirements,
and provide more discretion at the State agency level to manage program
operations.
Effective date:
This rule is effective October 1, 2022.
Compliance date: Compliance with the provisions of this rule must
begin May 1, 2023.
FOR FURTHER INFORMATION CONTACT: Anne Fiala, 703-305-2590,
<a href="/cdn-cgi/l/email-protection#d6b7b8b8b3f8b0bfb7bab796a3a5b2b7f8b1b9a0"><span class="__cf_email__" data-cfemail="e1808f8f84cf8788808d80a194928580cf868e97">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
II. Public Comments
III. Section-by-Section Discussion of the Regulatory Provisions
A. Reorganization of Section 225.6
B. Streamlining Program Requirements
i. Application Procedures for New Sponsors
ii. Demonstration of Financial and Administrative Capability
iii. Clarifying Performance Standards for Evaluating Sponsor
Viability, Capability, and Accountability
C. Facilitating Compliance With Program Monitoring Requirements
i. First Week Site Visits
ii. Establishing the Initial Maximum Approved Level of Meals for
Sites of Vended Sponsors
iii. Statistical Monitoring Procedures, Site Selection, and Meal
Claim Validation for Site Reviews
D. Providing a Customer-Service Friendly Meal Service
i. Meal Service Times
ii. Off-Site Consumption of Food Items
iii. Offer Versus Serve
E. Clarification of Program Requirements
i. Reimbursement Claims for Meals Served Away From Approved
Locations
ii. Timeline for Reimbursements to Sponsors
iii. Requirements for Media Release
iv. Annual Verification of Tax-Exempt Status
F. Important Definitions in the SFSP
i. Self-Preparation Versus Vended Sites
ii. Eligibility for Closed Enrolled Sites
iii. Roles and Responsibilities of Site Supervisors
iv. Unaffiliated Sites
v. Unanticipated School Closure
vi. Nonprofit Food Service, Nonprofit Food Service Account, Net
Cash Resources
G. Miscellaneous
i. Authority To Waive Statute and Regulations
ii. Duration of Eligibility
iii. Methods of Providing Training
iv. Meal Preparation Facility Reviews
v. Technical Changes
IV. Procedural Matters
I. Background
The Summer Food Service Program (SFSP) is authorized under section
13 of the Richard B. Russell National School Lunch Act (NSLA), 42
U.S.C. 1761. Its primary purpose is to provide free, nutritious meals
to children from low-income areas during periods when schools are not
in session.
USDA published the proposed rule Streamlining Program Requirements
and Improving Integrity in the Summer Food Service Program (SFSP) on
January 23, 2020 (85 FR 4064) in order to streamline requirements for
program operators and enhance the customer experience for participating
children and their families. Although this final rule primarily affects
the SFSP, it also makes changes to the regulations related to waiver
authority for the National School Lunch Program (NSLP), School
Breakfast Program (SBP), Special Milk Program, Fresh Fruit and
Vegetable Program, and the Child and Adult Care Food Program (CACFP).
This rulemaking is the culmination of many years of stakeholder and
community engagement, which informed the development of these policies.
Many of the provisions codified through this final rule are
currently allowed as program flexibilities and have been shown to
improve program administration and enhance service delivery for
participating children and their families. These flexibilities were
previously indicated through policy memoranda and will now have the
full force and effect of law. In addition, this rule will codify key
aspects of four nationwide waivers that were available in the past but
have been rescinded in response to an audit by the USDA Office of the
Inspector General (OIG), entitled ``FNS Controls Over the Summer Food
Service Program'' (27601-0004-41). This report led USDA to determine
that offering waivers under 42 U.S.C. 1760(l) on a nationwide basis is
not supported by the statute. However, beginning in 2019, USDA allowed
States and sponsors to request, on an individual basis, four of the
rescinded waivers: first week site visits, meal service times, offer
versus serve, and eligibility for closed enrolled sites. Such
individual waivers are authorized under section 12(l) of the NSLA,
which provides USDA authority to waive certain provisions of the Child
Nutrition Programs if a waiver would facilitate the ability of the
State or eligible service provider to carry out the purpose of the
affected program while also meeting public notice and federal cost
requirements. States and eligible service providers were approved for
more than 230 individual section 12(l) waivers under this authority for
summer 2019, related primarily to the four rescinded waivers. In March
2020, Congress passed the Families First Coronavirus Response Act
(FFCRA) (Pub. L. 116-127), which authorized USDA to establish
nationwide waivers for all States for the purposes of providing meals
under the Child Nutrition Programs with appropriate safety measures
with respect to the novel coronavirus (COVID-19) pandemic. Under
section 2202(a) of this authority, USDA issued nationwide waivers for
first week site visits, meal service times, offer versus serve, and
eligibility for closed enrolled sites. Therefore, States and eligible
service providers did not need to request these same waivers under
section 12(l) of the NSLP on an individual basis in summers 2020 or
2021. Prior to issuance of the nationwide waivers under section 2202(a)
of FFCRA, USDA received 189 requests for individual waivers under
section 12(l) of the NSLP related to the four rescinded waivers for
summer 2020. The large number of individual waiver requests received
from States and sponsors related to the rescinded waivers demonstrates
the value of the policies allowed through the waivers, and the benefit
of codifying key aspects of the waivers so that these policies are
available to all States and sponsors without the need to request a
waiver. Through the process of evaluating waiver requests and outcomes
for summer 2019, USDA gained valuable insight into challenges and best
practices of using the waivers, which informed changes in this final
rule to provisions impacted by the waivers. As a result, this final
rule codifies, with modifications that will promote better program
integrity, the four most requested SFSP waivers.
[[Page 57305]]
Codifying existing flexibilities and key aspects of the four
rescinded nationwide waivers will facilitate sponsor and site
participation, decrease paperwork burdens on State agencies and
sponsors, and provide certainty that these options will continue to be
available. The following table, entitled FNS Policy Memoranda Addressed
in This Rule, details USDA policy memoranda that are discussed in this
rule, the specific provision(s) from each memorandum that is discussed,
the status of the impacted waiver or flexibility, and the section of
the rule in which it is addressed.
This final rule also codifies additional provisions to streamline
program administration, enhance monitoring requirements, and provide
needed clarity on existing provisions. In their totality, these changes
will improve the customer experience, and facilitate the ability of
States and sponsors to implement the program with fidelity.
BILLING CODE 3410-30-P
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[GRAPHIC] [TIFF OMITTED] TR19SE22.000
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[GRAPHIC] [TIFF OMITTED] TR19SE22.001
BILLING CODE 3410-30-C
II. Public Comments
USDA received 163 comments during a 90-day comment period, which
was originally 60-days, then extended another 30 days to April 22,
2020. Commenters were generally representative of SFSP stakeholders and
offered a diversity of viewpoints. Of the comments received, 16
responses were associated with five form letter campaigns, 16 responses
were non-germane or duplicates, and 131 responses were unique. One
hundred of the 131 unique comments were substantive and supported by
detailed reasoning and explanations for the commenters' positions.
These comments represented 59 individuals and commenters who
remained anonymous, 29 State agencies (47 total comments), 12 advocacy
or nonprofit organizations, nine sponsoring organizations, seven food
banks, six school districts, three nutritionists, two professional
associations, and one Federal elected official. A few State agencies
submitted multiple comments, some of which were unique and are counted
as individual submissions, and some of which were the same or virtually
the same and are considered to be form letters for the purpose of this
comment analysis. FNS received comments from four additional form
letter campaigns comprised of 12 total comments from sponsors, food
banks, and general advocacy or nonprofit organizations. Comments
associated with these four campaigns were detailed and provided
explanations for their responses and recommendations.
Nearly two-thirds of all comments were generally supportive of this
rulemaking and many commenters offered substantive and detailed
recommendations. The provisions that garnered the most comments were:
first week site visits (67), off-site consumption of food items (63),
offer versus serve (62), eligibility for closed enrolled sites (52),
meal service times (47), and clarifying performance standards for
evaluating sponsor viability, capability, and accountability (40).
Except for a small number of non-germane responses, the comments
are posted at <a href="http://www.regulations.gov">http://www.regulations.gov</a> under docket ID FNS-2019-0034-
0001, Streamlining Program Requirements and Improving Integrity in the
Summer Food Service Program.
III. Section-by-Section Discussion of the Regulatory Provisions
A. Reorganization of Section 225.6
USDA proposed to reorganize and streamline Sec. 225.6. This
proposal would not change any existing requirements; rather, it would
more clearly present current requirements for sponsor and site
applications by reorganizing Sec. 225.6(c), Content of sponsor
application. The provisions found in current Sec. 225.6(c)(2) would
move to a new paragraph (g) and the provisions in current Sec.
225.6(c)(4) would move to a new paragraph (f). In addition, Sec.
225.6(d) through (i) would be reordered to make space for a new
paragraph (d), related to performance standards for determining
financial and administrative capability, and a new paragraph (e),
related to sponsor submission of a management plan. These new sections
are described in more detail in the next section of this preamble. The
table below provides an outline of the proposed revisions:
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Current outline Proposed outline
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a. General Responsibilities............ a. General responsibilities.
b. Approval of sponsor applications.... b. Approval of sponsor
applications.
c. Content of sponsor application...... c. Content of sponsor
application.
1. Application forms............... 1. Application form.
2. Requirements for new sponsors, 2. Application requirements
new sites, and, as determined by for new sponsors and
the State agency, sponsors and sponsors that have
sites which have experienced experienced significant
significant operational problems operational problems in the
in the prior year. prior year.
3. Application requirements for
experienced sponsors.
3. Requirements for experienced 4. Application requirements
sponsors and experienced sites. for school food authorities
and Child and Adult Care
Food Program institutions.
d. Performance standards.
1. Performance standard 1.
2. Performance standard 2.
3. Performance standard 3.
e. Management plan.
4. Free meal policy statement...... f. Free meal policy statement.
5. Hearing procedures statement.... 1. Nondiscrimination
statement.
2. Hearing procedures
statement.
[[Page 57308]]
g. Site information sheets.
1. New sites.
2. Experienced sites.
d. Approval of sites................... h. Approval of sites.
e. State-sponsor agreement............. i. State-sponsor agreement.
f. Special account..................... j. Special account.
g. Food service management company k. Food service management
registration. company registration.
h. Monitoring of food service l. Monitoring of food service
management company procurements. management company
procurements.
i. Meal pattern exceptions............. m. Meal pattern exceptions.
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Public Comments
USDA received one comment on this provision. The commenter
expressed support for the proposed changes and suggested that USDA
further divide the information in Sec. 225.6 into shorter sections
that are easier to use.
USDA Response
USDA appreciates the comment and agrees that various portions of
Sec. 225.6 could benefit from further reorganization. However, USDA
prefers to propose any additional significant organizational changes to
the regulations through notice and comment rule making and receive
public comments before finalizing such changes. For that reason, USDA
will codify this provision as proposed.
B. Streamlining Program Requirements
i. Application Procedures for New Sponsors
All sponsors are required to submit an annual application to
participate in the SFSP. In accordance with current Sec. 225.6(c), new
applicants and sponsors that have experienced significant operational
problems in the previous year must submit detailed information
sufficient to demonstrate their ability to successfully operate the
SFSP in compliance with program requirements and with integrity. This
includes, but is not limited to, information on sites, arrangements for
meeting health and safety standards, and a program budget. Experienced
sponsors that have operated the SFSP in a prior year without
significant operation problems may use a streamlined application
process described in current Sec. 225.6(c)(3). To reduce duplicative
work, these sponsors submit updates on the types of information that
are most likely to change from year to year.
Sponsors that have successfully operated other Child Nutrition
Programs are likely to perform well in the operation of the SFSP. For
example, school food authorities (SFA), which are the governing bodies
that have the legal authority to operate the school meal programs in
one or more schools, and CACFP institutions, which have agreements with
a State agency to assume final administrative and financial
responsibility for CACFP operations, have already demonstrated their
ability to operate a food service and comply with State and Federal
nutrition program requirements. In order to encourage participation of
sponsors with Child Nutrition Program experience, USDA extended
flexibilities through policy memoranda which allow SFAs operating the
NSLP or SBP, and CACFP institutions in good standing to use the
application procedures for experienced sponsors in certain
circumstances (SFSP 05-2012, Simplifying Application Procedures in the
Summer Food Service Program, October 31, 2011 and SFSP 04-2013, Summer
Feeding Options for School Food Authorities, November 23, 2012).
The aforementioned flexibilities apply to SFAs and CACFP
institutions in good standing that are applying for the SFSP for the
first time and will serve meals at the same sites where they provide
meal services through the NSLP, SBP, or CACFP during the school year.
Such institutions are allowed to follow the application requirements
for experienced sponsors found in current Sec. 225.6(c)(3). The
institution must also provide site information that is necessary for
the State agency to evaluate each proposed site, including whether it
is rural or non-rural, self-preparation or vended, and certification
from a migrant organization if it will primarily serve the children of
migrant families.
In accordance with these memoranda, an SFA or CACFP institution may
be considered `in good standing' if it has been reviewed by the State
agency in the last 12 months and had no major findings or program
violations, or completed and implemented all corrective actions from
the last compliance review. In addition, an SFA or CACFP institution
may be considered in good standing if it has not been found to be
seriously deficient by the State agency in the past two years and has
never been terminated from another Child Nutrition Program.
USDA proposed to codify the flexibilities currently extended
through policy guidance and proposed to allow State agencies the
discretion to determine whether or not to implement this streamlined
application process.
Public Comments
USDA received 31 comments about application procedures for new
sponsors, including three form letter copies. Of these, 24 were
supportive, three offered partial support, none were opposed, and four
were mixed. Proponents of this provision included all types of
commenters, many of whom stated that offering the streamlined process
is a proven strategy to reduce administrative burden and encourage
participation among operators of other Child Nutrition Programs. Two
State agencies and a general advocacy organization noted the importance
of maintaining State agency discretion to request additional
documentation if the State has reason to conduct a more thorough review
of an application. A few other State agencies had suggestions or
questions related to making a determination of `good standing' for an
applicant. These commenters suggested additional criteria to consider
when making this determination, such as debts owed to the State agency,
contractual arrangements for purchasing meals, and where the sponsor is
in the serious deficiency process for the CACFP. One State agency
pointed out that sponsors are not reviewed annually and so they may not
have major findings or program violations recorded in the last 12
months as the proposed rule recommended. A State agency noted that this
flexibility is only for sites at which the sponsor offers meal service
during the school year and stated that this arrangement is often not
the case. Another commenter stated that it would be burdensome for some
States to make changes to their current automated application system.
USDA Response
This final rule codifies as proposed the flexibility for SFAs
operating the NSLP or SBP and CACFP institutions in
[[Page 57309]]
good standing applying to the SFSP as new sponsors to use the
application procedures for experienced sponsors in certain
circumstances. However, USDA recognizes that States are in the best
position to determine how and when to implement this flexibility.
Therefore, States are encouraged to request additional evidence of
administrative capability or require submission of a new sponsor
application if they have reason to believe that a new SFA or CACFP
sponsor may have difficulty operating the SFSP. States may also
consider additional factors when determining if a sponsor applicant is
`in good standing.' The rule allows the State agency the latitude to
use its discretion in this way.
With regard to determining if an applicant is in good standing in
the NSLP, SBP, or CACFP, the proposed rule included standards found in
existing policy guidance. However, USDA agrees with the commenter who
pointed out that not all sponsors are reviewed annually, and it is not
appropriate to say that they should, within the last 12 months, have no
major findings or program violations. Instead, USDA suggests that an
SFA or CACFP institution is considered to be in `good standing' if it
has been reviewed by the State agency and had no major program
violations or has completed and implemented all corrective actions from
the last compliance review. The same commenters asked for clarification
on determining good standing for an applicant that has been found
seriously deficient in the CACFP. A CACFP institution applicant in good
standing should have completed and implemented all corrective actions
outlined in its serious deficiency corrective action plan, if
applicable. In addition, State agencies should carefully consider the
capabilities of any sponsor that has been found seriously deficient
when reviewing application materials. USDA understands that providing
further clarification to determine good standing for program operators
across all Child Nutrition Programs would benefit States and program
operators. The Department intends to address this issue through a
separate rulemaking that will allow the public to comment specifically
on proposals related to determining good standing for Child Nutrition
Program operators.
This flexibility has long been limited to SFAs and CACFP
institutions applying to operate the SFSP at the same sites where they
provide meal services during the school year. A commenter noted that
this is not the arrangement in all cases, which USDA interprets to mean
that some SFAs and CACFP institutions operate the SFSP at sites where
they do not provide a meal service during the school year. Although
SFAs and CACFP institutions may serve additional sites during the
summer, this provision is limited to existing sites for which a new SFA
or CACFP sponsor has demonstrated that they have the resources and
capability to provide a meal service. After a year of operating the
SFSP at their existing sites, an SFA or CACFP sponsor will be
considered `experienced' and can apply using the experienced
application procedures for all of its sites, including those at which
they will only offer a summer meal service through the SFSP.
Alternatively, the new SFA or CACFP institution could apply to serve
additional sites using the application process for new sponsors.
Accordingly, USDA will codify as proposed in Sec. 225.6(c)(4) the
flexibilities extended through policy guidance for NSLP and SBP SFAs
and CACFP institutions to use application procedures for experienced
sponsors.
ii. Demonstration of Financial and Administrative Capability
SFSP sponsors must have the financial and administrative capacity
to support program operations and be able to accept full financial
responsibly for all of their meal sites. The ability to meet these
requirements is assessed through the application process, during which
the State agency may consider budget submissions, financial records,
documentation of organizational structure, menu planning, or other
indicators of financial and administrative capability.
NSLP and SBP SFAs and CACFP institutions already undergo a rigorous
application process to participate in the NSLP, SBP, and the CACFP, and
have demonstrated that they have the financial and organizational
viability, capability, and accountability necessary to operate a Child
Nutrition Program. USDA extended several flexibilities to these
sponsors when they participate in the SFSP through policy memoranda
(SFSP 05-2012, Simplifying Application Procedures in the Summer Food
Service Program, October 31, 2011, and SFSP 04-2013, Summer Feeding
Options for School Food Authorities, November 23, 2012). This guidance
provided that SFAs and CACFP institutions in good standing applying to
participate in the SFSP are not required to submit further evidence of
financial and administrative capability, as required in Sec.
225.14(c)(1). However, if the State agency has reason to believe that
operation of the SFSP would pose significant challenges for an SFA or
CACFP institution, the State agency may request additional evidence of
financial and administrative capacity sufficient to ensure that the
sponsor has the ability and resources for successful administration of
the SFSP. USDA proposed to codify these flexibilities in a revised
Sec. 225.14(c)(1).
In some States, the SFSP, school meals programs, and the CACFP are
operated by different State agencies. USDA proposed that, in these
situations, State agencies must develop an information sharing process
so that information on the financial and administrative capability of
sponsors will be shared across State agencies to protect the integrity
of the SFSP. State agencies would be required to share relevant sponsor
information, including, but not limited to:
<bullet> Demonstration of fiscal resources and financial history;
<bullet> Budget documents;
<bullet> Demonstration of appropriate and effective management
practices; and
<bullet> Demonstration of adequate internal controls and other
management systems in effect to ensure fiscal accountability.
USDA requested specific comments on the proposed information
sharing requirement, including:
<bullet> Would the sharing of information help improve the
integrity of the program?
<bullet> Would developing an information sharing process create
undue burden on State agencies?
<bullet> What are the potential costs of developing an information
sharing process?
Public Comments
USDA received 34 comments on this provision, including three form
letter copies. Commenters were primarily State agencies, but also
included a general advocacy organization, industry associations,
sponsors, and individuals. Of those who commented on the proposal to
not require additional evidence of financial and administrative
capability for certain sponsors, 19 commenters were supportive, none
were opposed, and 15 were mixed, including those who commented only on
the specific requests for comment. Of those who commented on State
agency information sharing requirements, six were supportive, two were
opposed, and five were mixed. Eleven commenters, including three form
letter copies, also provided information in response to the request for
specific comments.
With regard to not requiring additional evidence of financial and
administrative capability for certain sponsors, proponents and those
with mixed feedback voiced that this provision would reduce
administrative
[[Page 57310]]
burden and improve efficiency without compromising program integrity.
It would also encourage participation by sponsors that have a proven
track record of successfully operating other Child Nutrition Programs.
However, some State agencies said that States should have the
discretion to apply this flexibility as they deem most appropriate. For
example, requesting additional documentation if needed to determine a
sponsor's capability to operate the Program, or applying additional
scrutiny based on sponsor characteristics, such as their method of
procuring meals. One State agency commenter worried that it would not
be able to accept the good standing determination of another State
agency unless their protocols were aligned. A State agency also raised
similar issues regarding determining good standing as were addressed in
section III. B. i. of this final rule. Another commenter wanted to know
how this provision would fit with the proposal to require submission of
a management plan demonstrating sponsor viability, capability, and
accountability found in section III. B. iii. of this final rule.
With regard to a State agency information sharing requirement,
proponents said that the proposal would reduce burden at the State
agency and sponsor level, and would spur States to improve existing
informal information sharing relationships. Opponents expressed concern
that establishing an information sharing process could be burdensome,
costly, or unnecessary in States where the various Child Nutrition
agencies already communicate effectively.
Eight State agencies responded to the requests for specific
comments. In general, these State agencies said sharing information
across agencies would improve integrity, although developing an
information sharing process could be costly or burdensome depending on
the requirements. Many of those who expressed concern about the costs
cited development or modification of State information technology (IT)
systems as a driver of the costs.
USDA Response
This final rule codifies as proposed the flexibility outlined in
guidance that SFAs and CACFP institutions in good standing applying to
operate the SFSP do not have to provide further evidence of financial
and administrative capabilities. The final rule will also clarify that
these sponsor applicants are not required to submit a management plan
unless requested by the State agency. In addition, the final rule will
codify as proposed the requirement that State agencies develop an
information sharing process if programs are administered by separate
agencies within the State.
USDA appreciates the comment that inquired about how this provision
would fit with the requirement found in section III. B. iii. of this
rule for sponsors to submit a management plan demonstrating financial
and administrative capability. It was not intended that NSLP and SBP
SFAs and CACFP institutions in good standing would be required to
submit a management plan because they have already demonstrated the
qualifications to be addressed in the management plan through their
operation of another Child Nutrition Program. Accordingly, this final
rule will revise the regulations to clarify that submission of a
management plan is not required for these applicants unless requested
by the State agency. Although SFAs and CACFP institutions have already
demonstrated their financial and administrative capability through
successful operation of another Child Nutrition Program, USDA agrees
with commenters who expressed that States should have the discretion to
require more documentation, including a management plan, if needed to
evaluate an applicant's ability and resources to operate the Program if
the State agency has reason to believe that this would pose significant
challenges for the applicant.
Similar to the response provided in section III. B. i. of this
final rule, USDA suggests that an SFA or CACFP institution is
considered to be in `good standing' if it has been reviewed by the
State agency and had no major program violations, or has completed and
implemented all corrective actions from the last compliance review,
including actions outlined in its serious deficiency corrective action
plan, if applicable. State agencies should carefully consider the
capabilities of any applicant that has been found seriously deficient
when reviewing application materials. As previously noted, USDA
recognizes the benefit of providing more clarity to determine good
standing for Child Nutrition Program operators and will solicit public
comments on this specific issue in a separate rulemaking.
USDA will codify as proposed the requirement for States to share
information on the financial and administrative capability of sponsors.
USDA does not intend for this provision to require States to invest in
new IT systems or modify existing IT systems. Information can be shared
through any method that is mutually agreed upon by the participating
agencies. For example, the SFSP State agency may have an agreement with
a school meals or CACFP State agency to share the outcome of reviews,
corrective actions, or other monitoring activities upon request. In
developing this information sharing process, State agencies can clarify
what information each agency uses to determine good standing and how it
can best be applied for this purpose. This type of arrangement would
require no more investment than establishing a contact with partnering
State agencies.
Accordingly, this final rule amends regulations found at Sec.
225.14(c)(1) to include the flexibility outlined in guidance that SFAs
and CACFP institutions in good standing applying to operate the SFSP do
not have to provide further evidence of financial and administrative
capabilities. This rule also amends the regulations to clarify that
SFAs and CACFP institutions are not required to submit a management
plan unless requested by the State agency. In addition, this final rule
adds a requirement that State agencies develop an information sharing
process if programs are administered by separate agencies within the
State.
iii. Clarifying Performance Standards for Evaluating Sponsor Viability,
Capability, and Accountability
Current regulations at Sec. 225.14(c)(1) require any organization
applying to be an SFSP sponsor to demonstrate financial and
administrative capability for program operations and accept final
financial and administrative responsibility for total program
operations at all sites at which it proposes to conduct a food service.
However, the regulations do not provide metrics or methods for
evaluating an applicant's potential to be viable, capable, and
accountable for operating the SFSP with program integrity. USDA has
provided technical assistance to States to aid in this process and has
received requests from State agencies to provide additional clarity on
the requirements in Sec. 225.14(c)(1).
USDA proposed to add a new Sec. 225.6(d) with performance
standards for organizations applying to participate as SFSP sponsors
that correspond to standards currently in place at Sec. 226.6 for
organizations applying to participate as CACFP sponsors. These
standards are not new requirements; they are intended to clarify
existing SFSP requirements and provide support and guidance to State
agencies when evaluating sponsor applications.
Although this proposal would require some State agencies to modify
their process for evaluating applications, the
[[Page 57311]]
intended effect of these changes is to provide clarity sought by
States, streamline requirements across programs, and increase program
integrity by supporting the ability of State agencies to more
efficiently and consistently evaluate an applicant sponsor's financial
and administrative capability. While there are operational and
monitoring differences between the SFSP and the CACFP, the standards
set forth in Sec. 226.6 are intended to help State agencies identify
whether an organization is able to meet the basic requirements for
operating a Child Nutrition Program. In addition, the rule proposed
that sponsors must demonstrate compliance with these performance
standards as part of their management plan (Sec. 225.6(c)(2)(i) and
new Sec. 225.6(e)).
The proposed standards addressed: (1) financial viability and
financial management, (2) administrative capability, and (3) internal
controls and management systems that ensure program accountability. The
proposed regulations included criteria for assessing each performance
standard.
Finally, USDA proposed to amend Sec. 225.14(a) and (c)(1) and (4)
to reference application requirements, performance standards, and the
management plan, respectively, in the reorganized Sec. 225.6.
Public Comments
USDA received 40 comments on this provision, including 10 form
letter copies. Of those who commented on the proposed performance
standard, 19 were supportive, two offered partial support, three
opposed, and 15 shared mixed feedback. Of those who commented on the
proposed requirement for submission of a management plan demonstrating
compliance with the performance standards, three were supportive and
one comment was mixed.
Proponents and those who offered partial support for the
performance standards were State agencies and one individual. These
commenters appreciated that this change would create consistency across
Child Nutrition Programs and provide State agencies and sponsors with
objective standards for assessing a sponsor's potential to be viable,
capable, and accountable for operating the SFSP with program integrity.
Some commenters said that this would strengthen program integrity and
result in more capable sponsors that stick with the Program over the
long term. A few State agencies indicated that they already use the
proposed standards or suggested that the proposal be strengthened. One
State agency recommended that USDA further align SFSP requirements with
other integrity measures used in the CACFP such as disqualification of
individuals and organizations.
Opponents and several commenters with mixed feedback included State
agencies and general advocacy organizations, a few sponsors, and an
industry association. These commenters suggested that the SFSP is
sufficiently different from the CACFP that USDA should develop unique
performance standards for the SFSP. However, commenters did not provide
specific suggestions for performance standards that would be suited for
the SFSP. These commenters noted that the SFSP operates in a short
timeframe and sponsors include small organizations with less
administrative capacity than CACFP sponsors, such as faith-based
organizations and local youth program providers. Some commenters
expressed concern that increasing administrative burden would deter
smaller organizations and private nonprofits from participating as
sponsors, and would require additional paperwork and systems changes
for State agencies.
Several commenters suggested that the requirements in this
provision be waived or streamlined in certain circumstances, such as
for SFAs and CACFP institutions, or experienced sponsors in good
standing. A few commenters inquired about the frequency with which
management plans must be submitted or updated, and some suggested that
the State should have the discretion to determine how often to re-
verify information provided in a sponsor's management plan.
Several commenters requested training and technical support from
USDA to aid in implementation, and a few suggested allowing at least
two years between publication of this rule and the effective date for
this requirement. One State agency noted that they would need to make
changes to their IT systems to accommodate this change.
USDA Response
This final rule codifies the performance standards as proposed and
provides a streamlined option for experienced sponsors to comply with
this requirement.
USDA understands the concerns of commenters who suggested that the
proposed performance standards could be a deterrent to smaller
sponsors. The addition of specific performance standards will improve
program integrity by providing a consistent benchmark for determining
financial and administrative capability; for this reason, the standards
will be codified as proposed. However, USDA has determined that the
process for sponsors to demonstrate financial and administrative
capability can be streamlined without negatively impacting program
integrity. Therefore, the final rule will allow experienced sponsors
that have not demonstrated significant operational problems in the
prior year to submit a simplified management plan. The simplified plan
must include a certification that any information previously submitted
to the State as part of a sponsor's management plan is current, or that
the sponsor has submitted any changes or updates to the State. This
certification must be submitted annually with the sponsor's application
and must address all required elements of each performance standard.
However, a full management plan must be submitted at least once every
three years to ensure that State agencies periodically conduct a full
review and assessment of a sponsor's financial and administrative
capability. The State agency may require submission of a full plan more
frequently if it determines that more information is needed to evaluate
the sponsor's capabilities. New sponsors and those that have
experienced significant operational problems in the prior year must
submit a full management plan that thoroughly addresses all three
performance standards.
In addition, another group of sponsors is largely exempt from the
requirements in this provision. As discussed in section III. B. ii.,
under this final rule, SFAs and CACFP institutions in good standing
applying to operate the SFSP do not have to provide further evidence of
financial and administrative capabilities and are not required to
submit a management plan unless requested by the State agency. These
sponsors have already demonstrated their financial and administrative
capability through operation of another Child Nutrition Program, and it
is not necessary for them to duplicate that effort in order to
participate in the SFSP.
USDA sees the value of finding more options to streamline
requirements across Child Nutrition Programs, as suggested by a State
agency that recommended the SFSP adopt more CACFP requirements related
to disqualification of individuals and organizations. However, adding
such requirements to the SFSP is beyond the scope of this rulemaking.
In response to commenters who requested a year or more to implement
these provisions,
[[Page 57312]]
this final rule will go into effect on October 1, 2022, which should
provide sufficient time to update current systems in advance of May 1,
2023, when compliance with the provisions of this rule is required. As
previously noted, this rulemaking is clarifying existing SFSP
requirements, so States should already have systems in place to
evaluate an applicant's potential to be viable, capable, and
accountable for operating the SFSP. In addition, SFAs and CACFP
institutions in good standing are not required to submit management
plans, which will limit the number of plans that States must review.
Accordingly, this rule adds performance standards for determining
sponsor financial viability, administrative capability, and program
accountability in a new Sec. 225.6(d) against which State agencies
must evaluate an applicant sponsor's financial and administrative
capabilities and clarifies the circumstances under which a full or
simplified plan is required. This rule also requires in Sec.
225.6(c)(2)(i) and (c)(3)(i) and the new Sec. 225.6(e) the submission
of a management plan demonstrating compliance with the performance
standards in the new Sec. 225.6(d) and describes the requirements for
the full and simplified plans. Finally, this rule amends Sec.
225.14(a) and (c)(1) and (4) to reference application requirements,
performance standards, and the management plan, respectively, in the
reorganized Sec. 225.6.
C. Facilitating Compliance With Program Monitoring Requirements
i. First Week Site Visits
Section 225.15(d)(2) of the current regulations requires sponsors
to visit each of their sites at least once during the first week of
program operation. However, in response to consistent feedback from
State agencies and sponsors that some sponsors lack sufficient
resources to conduct monitoring visits during the first week of
operation at all site locations, USDA issued policy guidance to waive
the requirement in its entirety for:
<bullet> Sponsors in good standing in the NSLP or CACFP (SFSP 04-
2013, Summer Feeding Options for School Food Authorities, November 23,
2012, and SFSP 06-2014, Available Flexibilities for CACFP At-Risk
Sponsors and Centers Transitioning to SFSP, November 12, 2013,
respectively); and
<bullet> Sites that had operated successfully the previous summer
(or other most recent period of operation) and had no serious
deficiency findings (SFSP 12-2011, Waiver of Site Monitoring
Requirements in the Summer Food Service Program, April 5, 2011).
However, the nationwide waivers noted above were rescinded in 2018,
as discussed in the background section of this final rule. Beginning in
summer 2019, State agencies and sponsors were permitted to request a
waiver of these regulations on an individual basis. Between 2019 and
2020, 38 States requested individual waivers related to first week site
visits. Through implementation of these individual waivers and waivers
provided on a nationwide basis through policy memoranda prior to 2019,
USDA learned that waiving the first week site visit requirement eased
the burden for the sponsors and sites that met the requirements of the
waiver. However, USDA also determined that site visits during the first
weeks of operation are an important monitoring tool that can help
ensure effective and compliant program operations. Therefore, USDA
proposed amending current requirements to provide flexibility in the
timeframe during which first monitoring visits must take place for
larger sponsors while still requiring an early visit for all sites. The
proposed rule:
<bullet> Creates a tiered framework in which sponsors responsible
for the management of 10 or fewer sites are required to conduct the
first site monitoring visit within the first week of operations, and
sponsors responsible for the management of more than 10 sites are
required to conduct the first site monitoring visit within the first
two weeks of program operations.
<bullet> Requires that, if a site operates for one week or less,
the site visit will be conducted during the period of operation.
<bullet> Allows sponsors to conduct a first monitoring visit and a
food service review at the same time.
Public Comments
In total, USDA received 67 comments on the proposed changes to
first week site visit requirements. The summary below discusses these
commenters' responses to the proposed tiered framework, proposed
changes to the timing of first monitoring visits, including the food
service review, and the specific requests for comment, respectively.
Tiered Framework for the First Monitoring Visit
USDA received 66 comments addressing the proposed tiered framework
for the first monitoring visit requirement. Of these, nine were
supportive, six were opposed, and six were mixed. The remaining 45
comments, including 10 form letters, supported amending current
regulations, but voiced concerns over the tiered framework's ability to
alleviate the problems it was designed to address. Multiple respondents
suggested alternative formulations to the tiered framework; however,
the majority of those comments requested a return to the flexibilities
provided under the rescinded nationwide waivers. Commenters in support
of reinstating previous policy guidance cited it as an effective
monitoring approach that was responsive to the challenges that many
sponsors faced in meeting the first week site visit requirement.
Commenters also wrote that the previous policy guidance allowed
sponsors to better target their monitoring resources to sites in
greatest need of the monitoring.
In general, respondents who expressed concerns with or opposition
to the tiered framework maintained that sponsors will still struggle to
meet the requirements under the proposed rule. Multiple commenters
wrote that the number of sites a sponsor manages is not always an
indicator of their ability to administer the program, and that both
small and large sponsors have similar difficulties in fulfilling these
requirements. The logistical and administrative challenges commenters
listed to visiting all sites in the given timeframe included:
insufficient staff, time, and resources to conduct site visits; the
inability to visit multiple sites with meal services occurring at the
same time; sites operating fewer than seven days per week; and large
distances between sites, particularly in rural areas. Several
commenters wrote that sponsors may choose to support fewer sites if
they cannot meet the proposed monitoring requirements.
Proponents of the tiered framework were appreciative of the
flexibility in the timeframe afforded to larger sponsors, stating that
the additional time to conduct the visit recognizes the administrative
difficulties for larger sponsors, and allows larger sponsors greater
flexibility in ensuring compliance and managing their resources.
Concurrent First Monitoring Visit and Food Service Review
USDA received 38 comments about the proposed change to allow the
food service review to occur at the same time as the first monitoring
visit. Of these, 18 were supportive, 12 provided partial support, six
were opposed, and two were mixed. The 12 comments (including form
letters) that provided
[[Page 57313]]
partial support expressed concern over the time constraints for first
monitoring visits if sponsors are required to visit all sites. The
commenters stated that the proposed change was a positive step for
program administration; however, the timeframe for the first monitoring
visit may not provide sponsors an adequate amount of time to conduct a
full review early in operations if required to visit all sites.
Opponents of the proposed change wrote that it would increase the
program's administrative burden without providing any benefit to
oversight of operations, stating it is only a duplication of paperwork
and recordkeeping. However, proponents of the proposal stated that it
would provide more flexibility for sponsors to manage resources.
Finally, USDA received four comments specifically addressing the
provision, which requires that, if a site operates for a week or less,
the site visit must be conducted during the period of operation. One
comment was in support, and the remaining comments were mixed. Two of
the mixed comments requested that the first monitoring visit be
eliminated for sites that operate for a week or less. One commenter
wrote that the food service review is sufficient to ensure program
integrity, while another commenter reasoned there is no opportunity for
follow up and technical assistance given the short period of operation,
particularly those sites that operate for only one day.
Specific Requests for Comments
USDA asked respondents to the proposed rule to address how the
tiers would affect sponsors of different sizes and that operate under
varying conditions. Specifically, USDA requested comments on the:
<bullet> Number of sites that sponsors manage;
<bullet> Number of staff available to conduct site visits;
<bullet> Logistics of conducting site visits;
<bullet> Time and resources necessary, as well as any other
factors, that impact the ability of sponsors to fulfill this
requirement;
<bullet> Proposed tiers and whether they provide sufficient
flexibilities for sponsors; and
<bullet> Benefits of requiring first monitoring visits at all sites
versus those sites that are new to the program or experienced
operational or administrative difficulties in the past.
Eight State agencies provided specific feedback on all or some of
the request for comments. The feedback to these specific comments
varied among respondents. Overall, comments indicated there is a large
variation in the number of sites a sponsor manages, and the number of
staff available to conduct site visits. One State agency wrote that a
sponsor may have up to 64 sites, while another said a sponsor may have
up to 250 sites. Likewise, the average number of sites that sponsors
have also varied. Several commenters wrote that typically one or two
monitoring staff conduct site visits, but numbers as high as ten were
also cited. Another State agency wrote that the number of staff
available to conduct site visits is proportional to the number of sites
the sponsor manages.
Respondents agreed that conducting a site visit takes a significant
amount of time, taking into consideration that site visits also include
travel, follow up, and technical assistance. Limited time, in addition
to minimal staff, funding, and resources, were all given as factors
that impact the ability of sponsors to conduct site visits and fulfill
these monitoring requirements within the given timeframe. Commenters
also wrote that sponsors often resort to rushing through site visits or
staggering their sites' dates of operation to meet these requirements.
Commenters cited multiple benefits to requiring site visits for all
sites. Requiring sponsors to monitor their sites helps ensure that
sites are following program requirements, allows sponsors to identify
and correct site issues early, and fosters open communication between
sponsors and sites. A State agency wrote that visiting all sites would
ensure that a well-run site continues to maintain standards, but added
that the monitoring resources would be better spent on sites with
operational issues.
Submissions were generally split on whether the tiered framework
provided sufficient flexibility for sponsors. A State agency wrote that
the tiered framework does not provide an adequate amount of flexibility
and will remove the sponsor's ability to address sites with the most
risk. Two State agencies wrote that there are sites that have
successfully operated the program for years, and few, if any, of these
sites, or sites managed by experienced sponsors, have any findings in
the first week site visit. A State agency wrote that new sites or sites
that experience operational or administrative difficulties require more
technical assistance and training. Requiring site visits for only those
sites empowers sponsors to determine where to focus monitoring
resources.
USDA Response
This final rule revises the changes to first week site visit
requirements in response to the comments received on the proposed rule.
As a result, this final rule requires that sponsors must conduct a site
visit in the first two weeks of operation for all new sites and sites
that had operational problems in the prior year. State agencies may
require a site visit during the first two weeks of program operations
for any or all other sites in the State, at their discretion. In
addition, each State agency must establish criteria for what
constitutes operational problems in order to help sponsors determine
which of their returning sites are required to receive a site visit
during first two weeks of program operations. Operational problems may
include, but are not limited to, deficiencies related to:
<bullet> Meal preparation;
<bullet> Meal service (components);
<bullet> Food safety issues; and
<bullet> Verification of meal counts at point of service.
Through the process of requesting individual waivers authorized
under section 12(l) of the NSLA for summers 2019 and 2020, many State
agencies expressed the need for significant flexibilities related to
first week site visit requirements, which was echoed in a majority of
the comments received for this rulemaking. In developing this final
rule, USDA revised its initial proposal in a way that balances program
integrity and administrative flexibilities. USDA recognizes the
concerns of State agencies, sponsors, and other respondents about
whether the proposed changes would provide a manageable monitoring
schedule that ensures compliance with program requirements for all
sponsors and sites. The proposed tiered framework was based on
currently available data from studies conducted by USDA, which showed
that over 80 percent of sponsors operate 10 sites or fewer. However,
given the number of varying conditions under which sponsors operate the
program, USDA agrees with respondents that the number of sites a
sponsor manages is not always indicative of its ability to fulfill this
requirement. The changes under the proposed rule only provided
flexibility in the timeframe for larger sponsors and were not
sufficiently responsive to the needs of smaller sponsors that face
logistical challenges with completing monitoring requirements within
the first week of operations. In response, the final rule extends the
flexibility in the timeframe to conduct site visits to all sponsors in
[[Page 57314]]
an effort to alleviate the logistical challenges and other factors that
impact the ability of sponsors to meet this requirement.
USDA learned through many years of implementing the nationwide
waiver of first week site visit requirements that this flexibility
eased the burden for sponsors in good standing in the NSLP, SBP, or
CACFP, and sites that had operated successfully the previous summer.
While experienced multi-program sponsors in good standing have
demonstrated that they can operate Child Nutrition Programs
successfully and with integrity, site visits facilitate good sponsor
management and ensure that site supervisors and staff are receiving the
technical assistance needed to operate the SFSP in compliance with all
program requirements, particularly among new sites and sites with prior
operational problems. Therefore, this final rulemaking codifies a risk-
based approach that incorporates a modification to the flexibilities
previously provided by the nationwide waiver. This approach allows
sponsors to prioritize monitoring resources and technical assistance to
sites most at risk of operational issues while reducing the
administrative burden of operating the SFSP.
Furthermore, in an effort to be responsive to the need for
significant flexibilities without compromising program integrity, this
final rulemaking codifies the State agency's discretion to require a
site visit during the first two weeks of program operations for any or
all sites under any sponsor the State agency deems necessary. The rule
also requires that sponsors must follow criteria established by the
State agency to identify sites with operational problems that require a
site visit during the first two weeks of operation. Commenters
emphasized concerns about the administrative burden associated with
visiting all sites and noted that monitoring resources would be better
spent on sites at higher risk of operational problems. Accordingly,
USDA believes that establishing criteria in advance will reduce this
concern and improve regulatory certainty by providing sponsors notice
of relevant criteria for determining which of their returning sites are
required to receive a site visit so that they can plan how best to use
their monitoring resources. In addition, these changes empower State
agencies to set the appropriate level of monitoring that balances
administrative flexibility with consideration of sponsor operations and
capability. For example, State agencies may require a site visit for
sites that have significant staff turnover, had findings on prior
monitoring reviews, are under a sponsor that has had significant
issues, or exhibit anything else of concern to the State agency. By
permitting State agencies to set a responsive and manageable monitoring
schedule in the State, sponsors may be encouraged to take on additional
sites, thereby increasing program access without compromising
integrity.
Sponsors are still required to conduct a full review of food
service operations at each site within the first four weeks of
operation, and thereafter, maintain a reasonable level of site
monitoring. Consistent with the proposed rule, this final rule allows
the food service review to occur at the same time as the site visit
during the first two weeks of operation. This option provides sponsors
with the opportunity to manage their resources in a way that best suits
their program operations. Combining reviews allows sponsors to focus
resources on site reviews where more aspects of the site and meal
service can be assessed. In addition, given the nature of the program
and the short duration under which many sites operate, a full review
earlier in the start of program operations would be most effective at
identifying and promptly addressing all operational issues that may
arise, thereby protecting program integrity. A few comments point to
concerns that combining reviews only results in a duplication of
paperwork and recordkeeping. While Sec. 225.15(d)(3) requires that
sponsors complete a monitoring form developed by the State agency
during the conduct of these reviews, this rulemaking gives State
agencies the discretion to use their resources in the most efficient
way, and State agencies have the option to streamline systems and
documentation as they deem appropriate.
Under this final rule, in cases where the site operates for seven
calendar days or fewer, the site visit must be conducted during the
period of operation, as applicable. USDA acknowledges the challenges of
conducting site visits for sites that operate for a short duration.
However, monitoring is an effective tool for program management, and
direct observation of certain operational activities is necessary to
ensure compliance with program requirements.
With this final rule, USDA establishes minimum monitoring
requirements while empowering State agencies to determine the
appropriate level of monitoring that balances administrative
flexibility and program integrity. If follow up is required, additional
visits may be necessary to verify whether corrective action has been
implemented. Even for sites that are not required to receive a site
visit during the first two weeks of program operations under this final
rule, as a best practice, USDA encourages sponsors to maintain a
partnership that fosters open communication with all sites in order to
identify and correct issues early and share best practices from sites
that are operating successfully and within program requirements.
Accordingly, this rule amends Sec. 225.15(d)(2) of the regulations
to require a site visit during the first two weeks of program
operations for all new sites, sites with operational problems in the
prior year, and any site for which the State agency determines a visit
is needed. In addition, this rule adds a new Sec. 225.7(o) which
provides that State agencies must establish criteria for sponsors to
use in determining which sites with operational problems noted in the
prior year are required to receive a site visit during the first two
weeks of program operations. This rule also amends Sec. 225.15(d)(3)
to allow sponsors to conduct the site visit and a food service review
at the same time.
ii. Establishing the Initial Maximum Approved Level of Meals for Sites
of Vended Sponsors
Current regulations at Sec. 225.6(d) require that each site must
have an approved level for the maximum number of children's meals which
may be served under the Program. This limit, which is commonly known as
a `site cap' is intended to encourage sponsors and State agencies to
work closely together to develop reasonable estimates of anticipated
site attendance. Site caps for sites that prepare their own meals may
be no more than the number of children for which its facilities are
adequate. Sponsors of vended sites determine the site cap using
historical attendance, or another procedure developed by the State
agency if no accurate record from prior years is available.
The process of determining the site caps provides State agencies
and sponsors the opportunity to work together to assess a site's
capacity and the needs of the community. Effective site caps prevent
sites from purchasing or producing more meals than the site will serve
or has the capacity to handle, and are an important tool for State
agencies to monitor program management and determine if there is need
for technical assistance or corrective action to ensure program
integrity. In some cases, the capability of a site or the full needs of
a community may be difficult to accurately assess before operations
[[Page 57315]]
begin, historical data needed to accurately forecast participation
levels may be unavailable, or participation may change over the summer.
If necessary, site caps can be adjusted based upon information
collected during site reviews or other evidence presented to the State
agency by the site's sponsor. Current requirements at Sec.
225.11(e)(3) provide that State agencies must disallow payment on any
meals served over the site cap at vended sites.
In recognition of the fact that site caps are sometimes revised to
respond to conditions at the site, USDA issued policy guidance
clarifying that sponsors may request an increase to an existing site
cap at any time prior to the submission of the meal claim for
reimbursement that includes meals served in excess of the site cap
(SFSP 16-2015, Site Caps in the Summer Food Service Program--Revised,
April 21, 2015). Under this guidance, State agencies have the
discretion to approve such a request.
USDA proposed to amend Sec. 225.6(h)(2)(iii) of the regulations,
as redesignated through this rule, to clarify that sponsors of vended
sites may request an adjustment to the maximum approved level of meal
service at any time prior to submitting a claim for reimbursement. USDA
also proposed to amend Sec. 225.6(h)(2)(i), as redesignated through
this rule, to clarify that State agencies may consider participation at
other similar sites located in the area, documentation of programming
taking place at the site, or statistics on the number of children
residing in the area when determining the site cap.
Public Comments
USDA received 24 comments on this provision, including three form
letter copies. Of those who commented specifically on the timing of a
sponsor's request to adjust a site cap, 18 were supportive and two were
opposed. Of those who commented specifically on the proposed guidance
for determining the site cap for sites lacking accurate historic
records, all six were supportive, one of whom offered additional
recommendations.
Proponents of the proposal to allow an adjustment to the site cap
at any time prior to submitting a claim for reimbursement were largely
State agencies who appreciated that the change would allow sponsors to
be responsive to the needs of their communities. Some offered
suggestions to improve the process, such as providing advance notice of
special events that could temporarily increase participation.
Two State agencies opposed this provision, saying that adjustments
to the site cap should be approved by the State agency because site
caps are an important tool for the State agency to monitor program
integrity. One of these opponents said that sponsors should be aware of
their site operations and able to update their site cap during the same
month that the adjustment is needed. Four State agencies also
questioned why self-prep sites are not subject to the same site cap
rules as vended sites.
Proponents of the proposal to provide guidance for determining the
site cap for sites lacking accurate records from prior years
appreciated this guidance and said that it would be helpful because
making such determinations can be difficult. One State agency requested
the flexibility to allow the sponsor to initially self-certify their
site cap and revise the caps after operations begin based on meal
counts from the first week of meal service.
USDA Response
This final rule codifies the proposed changes with one
clarification. This rulemaking adds criteria for establishing the site
cap for sites with no accurate historical information in order to aid
State agencies and sponsors in determining appropriate site caps.
However, USDA did not intend for the criteria provided to be finite.
The regulations are revised to make clear that States may consider
other relevant information when determining the site cap for sites
lacking accurate historical information.
The site cap should be based on the State agency and the sponsor's
mutual understanding of the true capacity and capability of its sites,
while allowing for potential participation growth. When done correctly,
a site cap is a key tool to prevent sponsors and sites from purchasing
or producing meals outside the capability of the site and the need of
the community. This type of early planning is especially important for
vended sites, which may enter into contracts to purchase meals before
program operations begin. There is nothing to prevent a sponsor from
requesting an adjustment to a site cap after operations begin. However,
an initial site cap must still be established at the time that the
sponsor's application is approved, in accordance with Sec. 225.6(h)(2)
of the regulations, as redesignated through this rule.
USDA agrees that State agencies should have discretion whether to
approve a sponsor's request to adjust an established site cap; the
current regulations and the policy memoranda that initially allowed
this flexibility are clear on this point. This final regulation
provides that sponsors may request a revision to a site cap, which
requires approval, as opposed to notifying the State agency, which
would not require approval.
With regard to site caps for self-preparation sites, current
regulations require site caps for these sites to be based on the
capacity of the site to prepare and distribute meals, and on the number
of children for which their facilities are adequate. It is possible
that the site's capacity to prepare meals and accommodate a meal
service could change during the summer, but this is less likely to
occur and poses less of a risk to program integrity than with a vended
site. A self-preparation site should have a stronger basis for
establishing a site cap--its own capacity--and should be able to
correct production to meet demand in real time, as opposed to a vended
sponsor that may already have contracted for food. As such, holding
self-preparation sites to these requirements would be burdensome and
would not have a significant impact on program integrity.
USDA understands the concerns of the commenter who said that
sponsors should be required to request an adjustment to a site cap
within the same month as the claim for which the cap must be adjusted.
This final rule allows the flexibility for requests to be approved up
until a claim is submitted for the impacted reimbursement period.
However, the State agency may determine that it is in the best interest
of the Program to require a sponsor to submit a request during the
impacted month if, for example, the State has concerns about the
sponsor's operations.
Accordingly, this final rule amends Sec. 225.6(h)(2)(iii) of the
regulations, as redesignated through this rule, to clarify that
sponsors of vended sites may request an adjustment to the maximum
approved level of meal service at any time prior to submitting a claim
for reimbursement. This rule would also amend Sec. 225.6(h)(2)(i), as
redesignated through this rule, to include further guidance for
determining the maximum approved level of meal service for sites
lacking accurate records from prior years.
iii. Statistical Monitoring Procedures, Site Selection, and Meal Claim
Validation for Site Reviews
Current regulations in Sec. 225.7(d) provide requirements for how
State agencies review sponsors to ensure their compliance with program
requirements. This section includes the requirement that States
conducting a sponsor review must review at least 10 percent of the
[[Page 57316]]
sponsor's sites or one site, whichever number is greater (current Sec.
225.7(d)(2)(ii)(E)). Further, USDA guidance instructs State agencies to
validate 100 percent of all meal claims from all sites under a sponsor
that is being reviewed. USDA proposed three changes to these
requirements, which are related to site selection criteria, the method
for conducting meal claim validations, and the option for statistical
monitoring. In addition, USDA proposed to renumber and rephrase
portions of Sec. 225.7 to make the regulations easier to understand.
Section 225.7(d)(8) allows State agencies the option to use
statistical monitoring procedures in lieu of the site monitoring
requirements found in Sec. 225.7(d)(2). USDA is not aware of any
States that currently use this option and has determined through
research and feedback from State agencies that it is not possible to
create standard statistical monitoring procedures that will meet the
needs of the Program. Accordingly, USDA proposed to remove the
provision in Sec. 225.7(d)(8) that allows the use of statistical
monitoring for site reviews.
USDA also proposed to provide guidance in Sec. 225.7(e)(5), as
redesignated in this rule, to assist State agencies and sponsors in
selecting a sample of sites to review that will be generally reflective
of the variety of all a sponsor's sites. Site characteristics that will
be reflected in a sponsor's sample include:
<bullet> The maximum number of meals approved to serve under
Sec. Sec. 225.6(h)(1)(iii) and 225.6(h)(2), as redesignated through
this rule;
<bullet> Method of obtaining meals (i.e., self-preparation, vended
meal service);
<bullet> Time since last review by the State agency;
<bullet> Site type (i.e., open, closed enrolled, camp);
<bullet> Type of physical location (e.g., school, outdoor area,
community center);
<bullet> Rural designation (i.e., rural, as defined in Sec. 225.2,
non-rural);
<bullet> Affiliation with the sponsor, as defined in Sec. 225.2;
and
<bullet> Additional criteria that the State agency finds relevant
including, but not limited to: recommendations from the sponsoring
organization, findings of other audits or reviews, or any indicators of
potential error in daily meal counts (e.g., identical or very similar
claiming patterns, or large changes in meal counts).
Finally, USDA proposed a new, incremental approach for conducting
meal claim validations as a part of the sponsor review in Sec.
225.7(e)(6). This approach is intended to use State agency resources
more efficiently and provide State agencies with a more targeted method
for review. USDA requested specific comments on this process, including
the anticipated impact on State agencies and burden, the accuracy of
claim validations under this process, and the stepped increases and the
percentage expanded at each step.
Rather than requiring that State agencies validate 100 percent of
meal claims for all sites under the sponsor being reviewed, which may
be burdensome for some State agencies, USDA proposed a multi-step
approach to site-based meal claim validation. State agencies would
initially validate a small sample of claims and would only be required
to validate additional claims if they detect errors over the threshold.
Included as part of the approach, USDA explained how State agencies
should calculate the error percentage which would trigger the expanded
validation sample.
Public Comments
USDA received 34 comments on these proposals. Of these comments, 13
were generally supportive, three offered partial or conditional
support, three were opposed, and 15 had mixed opinions. Specific
comments are addressed in the respective sections below.
Statistical Monitoring
USDA received 15 comments, including three form letter copies that
addressed statistical monitoring procedures in lieu of site monitoring
requirements. Of these comments, nine were supportive and six,
including three form letters, were opposed.
Overall, proponents wholly supported the elimination of this
provision and stated that they were not aware of the provision being
used by State agencies. A commenter wrote that their agency had opted
to review a minimum of 10% of each sponsor's sites or one site,
whichever number is greater instead of using the statistical monitoring
option.
Opponents of this provision included three unique comments and one
form letter, all from one State agency. Commenters opposed these
changes, writing that their State has used statistical monitoring for
over 10 years and removing these requirements would hinder State
agencies' ability to review sponsors in good standing through
statistical monitoring. They further suggested that USDA provide
guidance for how to develop and implement statistical monitoring
procedures to provide State agencies this monitoring option.
Site Selection
USDA received 21 comments, including three form letter copies about
site selection criteria. Of these, 16 were supportive of the proposal,
two offered partial support, one was opposed, and two were mixed.
Proponents supported the addition of site selection criteria as
proposed to assist State agencies in selecting a sample of sites that
would be reflective of the variety of a sponsor's sites when completing
sponsor reviews. Two States offered partial support, agreeing in part
to the characteristics put forth, but stated that some of the
characteristics such as rural designation and sponsor affiliation are
not as important as other indicators when selecting a site for review.
These commenters stated that the proposed list of site selection
criteria was a good-faith effort to compel States to incorporate
diversity into their site review selection decisions. However, they
further added that the most effective way to identify fraud would be to
incorporate a review of questionable site claiming patterns, previous
findings, and other irregularities in site claiming. These commenters
also stated that it is a good idea to allow States the discretion to
use additional site characteristics in their site selection decisions.
One commenter was opposed to this provision and stated that the
provision would cause an additional burden on the State agency by
creating additional labor and technology expenses. The commenter
further stated that the site characteristics proposed are not
information that State agencies are required to collect and are
insignificant as indicators of risk to the Program. In addition, while
neither expressing support nor opposition to the site selection
criteria as proposed, one commenter stated that they were currently
using a similar set of characteristics to determine which sites are
selected for review. Another commenter stated that the list of site
characteristics could be viewed as targeting certain sponsors or sites.
Meal Claim Validation
USDA received 33 comments, including three form letter copies,
about the proposed meal claim validation methodology. Of these, 18 were
supportive, three provided partial support, six were mixed or other,
and six were in opposition. Overall, proponents supported the meal
claim validation method, but requested training materials and tools to
support the implementation of a new process.
Proponents that supported the meal claim validation methodology
cited the
[[Page 57317]]
decrease in administrative burden in comparison to validating 100
percent of a sponsor's claim. Two States offered partial support,
agreeing in part to the validation of meals based on reviewing a sample
of sites as opposed to all sites, but stated the desire to add an
additional step of validation all claims for 75 percent of the
sponsor's sites.
Of the six commenters with mixed support or other comments, one
commenter stated that the proposed methodology would not add additional
burden as the State already completes a similar process during the
sponsor review. One commenter stated that if minimal errors are
initially identified in the process, the proposed methodology would
provide accuracy for the review. A commenter also noted the desire to
address errors discovered in the review without validating additional
sites. In addition, one commenter noted that the error rate of five
percent was too low and use of the step increases should be at the
State's discretion. An additional comment stated that the stepped
increases and percentages were appropriate.
Of the six commenters in opposition, three opposed the sampling
approach and instead supported continuing to validate 100 percent of a
sponsor's claim during the sponsor review. Two commenters in opposition
stated that the multistep approach was complicated and unnecessary to
determine integrity of a sponsor. The commenters were also opposed
continuing to validate 100 percent of a sponsor's sites if issues were
observed. One State agency noted that the proposed methodology would
create additional labor and technology costs. One State agency
referenced aligning the reviews in the SFSP to characteristics in the
NSLP in order to reduce burden.
USDA Response
Statistical Monitoring
This final rule codifies as proposed the removal of the option for
statistical monitoring in lieu of site monitoring requirements.
Commenters overwhelmingly supported the removal of this option and USDA
found through feedback from States agencies that this option is not
being used by any State agency. USDA determined that the State agency
opposed to the option's removal because they were using this method,
was not in fact using statistical monitoring as outlined in Sec.
225.7(d)(8).
Accordingly, this final rule removes the option at Sec.
225.7(d)(8) for statistical monitoring in lieu of site monitoring
requirements.
Site Selection
This final rule codifies the proposed site selection criteria with
one change to specify that State agencies must develop criteria for
site selection. USDA recognizes that State agencies are in the best
position to identify which sponsors' sites to review based on a wide
variety of characteristics. Although one State agency was opposed to
this provision due to concerns over burden and costs, creating criteria
for site selection will increase program integrity by ensuring States
select a variety of sites to review. Therefore, USDA codifies the
proposed approach to site selection which emphasizes identifying a
variety of sites to be reviewed. In order to promote diversity among
sites that are reviewed, States must create criteria for site selection
using the site characteristics suggested by USDA as a guide.
Additionally, State agencies may, in selecting sites for review, use
additional criteria including, but not limited to, findings of other
audits or reviews, or any indicators of potential error in daily meal
counts (e.g., identical, questionable, or very similar claiming
patterns, or large changes in meal counts).
Accordingly, Sec. 225.7(e)(5), as redesignated in this rule,
includes site selection criteria.
Meal Claim Validation
This final rule codifies the proposed changes to meal claim
validation requirements, and adds additional clarifications to confirm
that State agencies have the discretion to exceed the minimum number of
required claim validations, and to provide a chart to aid State
agencies in complying with this provision.
Most commenters affirmed that USDA's proposal to initially validate
a small sample of claims and expand the validation sample if errors
over the threshold are detected would decrease administrative burden in
comparison to requiring that State agencies validate 100 percent of
meal claims for all sites under the sponsor being reviewed. While some
State agencies stated that the proposed approach would increase their
administrative burden when deficiencies are found, USDA believes it is
in the best interest of program integrity to provide a standardized
method to complete meal claim validations and decrease administrative
burden for a majority of sponsor reviews.
Based on comments on the proposed rule, USDA is providing several
clarifications. First, if the meal claim validation sample is expanded,
it does not require the State agency to complete an additional review
of the sites included in the expanded validation sample. The State
agency may complete a more thorough review at their discretion.
Second, when expanding the sample size, the State agency is only
required to validate the claims of the additional number of sites to
reach 25, 50, and 100 percent of the sponsor's sites, and can count the
sites reviewed in the initial sample toward the number of sites needed
to be reviewed in the expanded sample. For example: A sponsor has 35
sites. The State agency is required by Sec. 225.7(e)(4)(v) to review
10 percent of the sponsor's sites. The State agency calculates the
sample size required for the initial validation by multiplying the
total number of sites (35) by 10 percent (.10), which equates to 3.5;
after rounding up, the number of sites required to be reviewed is 4.
Step 1 of the meal claim validation process requires that the State
agency validate all meals served by these 4 sites during the month of
review. After step 1 of validation, it is determined that the
percentage of error is over 5 percent. The State agency must now
validate 25 percent of the sponsor's total sites. In order to satisfy
this requirement, the State agency only needs to review the additional
number of sites in the expanded sample. To determine the sample size
required in the next step of validation, the State agency multiplies 35
by .25, which equates to 8.75. After rounding up, the number of sites
to be reviewed is 9. To reach 25 percent of the total number of sites,
or 9 sites, the State agency would only need to validate 5 additional
sites (9 minus the 4 sites validated in step 1).
Third, the percentage of error is not a rolling average and is
calculated based on the sample of sites included in each step of the
validation. To ensure clarity, USDA has revised the explanation of how
to calculate percentage error included in the proposed rule. USDA has
also provided additional formulas to clarify how to calculate: the
total meals claimed for the validation sample in each step, the
individual meal count validation discrepancies for each site, total
meal count validation discrepancy for the validation sample in each
step, and the percentage of error. The clarifications below are meant
to ensure all discrepancies in meal counting and claiming, whether an
overclaim or underclaim, are equally accounted for in the percentage of
error as both are signs of potential problems in the operation and
administration of the Program.
To calculate the percentage error for each step, first determine
the meal
[[Page 57318]]
counting and claiming discrepancy for each site validated by
subtracting the total meals validated from the total meals claimed by
the sponsor for each reviewed site. Then, determine the absolute value
of each discrepancy. By using the absolute value, the numbers will be
expressed as positive numbers. Add together all discrepancies from each
site to calculate the total discrepancies for sites reviewed in the
given step. Divide the total discrepancies by the total meals claimed
by the sponsor for all reviewed sites within the validation sample for
the given step and multiply by 100 to calculate the percentage of error
in the given step. In determining the percentage of error, fractions
must be rounded up (>=0.5) or down (<0.5) to the nearest whole number.
Refer to the equations below for clarification.
BILLING CODE 3410-30-P
[[Page 57319]]
[GRAPHIC] [TIFF OMITTED] TR19SE22.002
[[Page 57320]]
[GRAPHIC] [TIFF OMITTED] TR19SE22.003
BILLING CODE 3410-30-C
Finally, USDA recognizes that States agencies have their own best
practices to ensure integrity during the sponsor review and has
included in this final rule that the codified methodology is the
minimum requirement and that sampling steps can be forgone at any point
to reach 100 percent validation of the sponsor's claim. This provides
the flexibility requested by commenters to use the step increases or to
continue validating the entirety of a sponsor's claim for reimbursement
without utilizing a sampling methodology.
Accordingly, USDA is codifying in section 225.7(e)(6), as
redesignated in this rule, a method for conducting meal claim
validations along with a chart to explain the validation process. In
addition, this final rule renumbers and rephrases portions of Sec.
225.7 to make the regulations easier to understand.
D. Providing a Customer-Service Friendly Meal Service
i. Meal Service Times
Section 225.16(c) of the current regulations sets forth
restrictions on when meals can be served in the SFSP. Three hours are
required to elapse between the beginning of one meal service, including
snacks, and the beginning of another, with the exception that four
hours must elapse between the service of a lunch and supper when no
snack is served between lunch and supper. Further, the regulations
state that the service of supper cannot begin later than 7 p.m., unless
the State agency has granted a waiver of this requirement due to
extenuating circumstances; however, in no case may the service of
supper extend beyond 8 p.m. The duration of the meal service is limited
to two hours for lunch or supper
[[Page 57321]]
and one hour for all other meals. These restrictions do not apply to
residential camps.
These strict requirements did not provide sufficient control at the
State agency and sponsor level to allow for planned meal services that
meet the needs of the community. Dating as far back as 1998, USDA has
issued guidance that waives these requirements at certain sites where
the requirements proved to create significant barriers to efficient
program operations and good customer service for the communities
served. USDA heard consistent feedback from stakeholders that the
restrictions presented challenges to aligning meal services with access
to public transportation and community services. Therefore, in 2011,
USDA published guidance that waived the meal service time restrictions
for all SFSP sites while still requiring sponsors to submit meal
service times to the State agency for approval (originating guidance
has since been superseded and incorporated into SFSP 06-2017, Meal
Service Requirements in the Summer Meal Programs, with Questions and
Answers--Revised, December 05, 2016). These waivers were rescinded in
2018, as discussed in the background section of this final rule.
Between 2019 and 2020, 51 States requested an individual waiver under
section 12(l) of the NSLA of meal time restrictions to allow them to
continue implementation of what had previously been in effect through
guidance. Of those that applied in 2019, 39 asserted that the waiver
would result in improved program operations and, therefore, efficient
use of resources. Because increased flexibility in setting meal times
proved to be a useful tool for program operations, USDA proposed to
remove existing meal service time restrictions, and add a requirement
that a minimum of one hour must elapse between the end of a meal
service and the beginning of another.
Sponsors have also expressed the need for flexibilities to conduct
meal services in the event of an unforeseen circumstance, such as a
delayed delivery. Therefore, USDA also proposed allowing a State agency
to approve for reimbursement meals served outside of the approved meal
service time if an unanticipated event, outside of the sponsor's
control, occurs. The State agency may request documentation to support
approval of meals claimed when unanticipated events occur.
In recent years, it has come to USDA's attention that some sponsors
have served a meal, which meets the meal pattern requirements for
breakfast, in the afternoon after a lunch service was provided and
claimed this meal as a reimbursable ``breakfast.'' The SFSP is
statutorily designed to support ``programs providing food service
similar to food service made available to children during the school
year'' under the NSLP and SBP (42 U.S.C. 1761(a)(1)(D)). Currently,
regulations governing the SBP define breakfast as a meal which is
served to children in the morning hours and must be served ``at or
close to the beginning of the child's day at school'' (7 CFR 220.2). As
such, the service of a reimbursable, three component meal, or
``breakfast,'' in the afternoon following the service of lunch is not
supported by the statute. Therefore, USDA proposed that a meal
otherwise meeting the requirements for a breakfast meal is not eligible
for reimbursement as a breakfast if it is served after any lunch or
supper has been served and claimed for reimbursement.
Finally, USDA proposed to amend Sec. 225.16(c) to make it easier
for users to locate and understand key information. Section
225.16(c)(1) will consolidate meal service time requirements currently
referenced in other sections of part 225. This would specify that meal
service times must be established by the sponsor for each site, be
included in the sponsor's application, and be approved by the State
agency. Current regulations at Sec. 225.16(c)(6), which specifies that
a sponsor may claim for reimbursement only the type(s) of meals for
which it is approved to serve, will move to Sec. 225.16(b). In
addition, a reference to approved meal service times will be added to
the State-sponsor agreement information in redesignated Sec.
225.6(i)(7)(iv).
Public Comments
USDA received 47 comments about meal service times, including three
form letter copies. Of these, 31 were supportive, 10 expressed partial
support, and six comments had mixed or neutral opinions regarding the
proposal.
Proponents stated that a one-hour time gap would support sponsors
in providing meal services at times that better align with community
needs, as opposed to four hours. Additionally, proponents asserted that
the proposed change in meal service time requirements would help SFSP
meal services to mirror NSLP meal service times, so that children eat
at similar intervals throughout the year. These commenters also
expressed support for the reimbursement of meals served outside of the
approved meal times, and disapproval of serving a reimbursable
breakfast after lunch has been served.
Proponents who partially supported the provision stated that a one-
hour limit between a lunch and supper when no snack is served was still
too restrictive. These commenters asserted that a time limit of 30
minutes or less would grant more flexibility to sponsors that offer a
variety of summer activity programs during similar hours. Additionally,
commenters requested clarification on what circumstances would
constitute an ``unanticipated event'' for the purposes of serving meals
outside of the approved meal service time. Further, one comment from a
sponsor organization stated that USDA's clarifications on breakfast
meal services would create limitations on their ability to serve meals
because their site opens in the afternoon.
Mixed comments on the proposal expressed an opinion that was
unclear based on a common reading of the language used in the comment.
For example, some of these comments expressed disagreement with the
rule, but requested actions that the provision proposed as a remedy.
Other comments requested clarification on the meaning of
``unanticipated event'' and whether the requirement for one-hour to
elapse between meals will apply to camps.
USDA Response
This final rule codifies changes to meal service times as proposed.
The waiver of meal time restrictions has helped decrease administrative
burden and provided more local level control to sponsors to plan the
most effective meal services, thereby improving program operations and
better serving the community. USDA seeks to balance these benefits with
the maintenance of program purpose and integrity. The purpose of the
SFSP is to provide children with meal services when school is not in
session. Further, to uphold program integrity, meal services should be
clearly distinguishable from each other to enable accurate claiming and
recordkeeping. USDA has determined that it would be beneficial to SFSP
participants and sponsors for the timing of meals that students have
when school is not in session to more closely align with the meal
service that students have when school is in session. USDA recognizes
that some sponsors have found it useful to serve breakfast at
unconventional hours. However, having summer meal services that mirror
those held during the school year, such as holding breakfast service
before lunch, reduces confusion in program operations and provides
program participants with a consistent meal service experience year-
round.
[[Page 57322]]
USDA also recognizes that State agencies would benefit from further
examples of what may constitute an unanticipated event for the purposes
of providing meals outside of the approved meal time. Examples of such
events include, but are not limited to: delayed meal deliveries,
inclement weather that delays the start of the meal service, delayed
public transportation utilized by participants, and other incidents as
deemed appropriate by the State agency.
Additionally, comments requested clarification on whether the one-
hour requirement between meals will apply to camps. This rulemaking
will not modify the exemption at Sec. 225.16(b)(1)(ii) which excludes
residential camps from meal service time restrictions.
Accordingly, this final rule modifies Sec. 225.16(c) to remove
existing meal service requirements, and codifies the requirement that
all sites, except residential camps, must allow a minimum of at least
one hour to elapse between the end of one meal and the beginning of
another. Additionally, this final rule allows a State agency to approve
for reimbursement meals served outside of the approved meal service
time if an unanticipated event occurs. This rule will also clarify that
meals claimed as a breakfast must be served at or close to the
beginning of a child's day, and prohibit a three component meal from
being claimed for reimbursement as a breakfast if it is served after a
lunch or supper is served. Finally, this rule will reorganize Sec.
224.16(c) to improve the clarity of the regulations.
ii. Off-Site Consumption of Food Items
Providing a meal service for children in a group setting, a concept
known as ``congregate feeding,'' has been a part of the SFSP since its
inception. Congregate feeding has many benefits, including providing an
opportunity for children to socialize, creating time for sites to offer
activities, and allowing adults to monitor food safety and encourage
healthy eating practices. Current SFSP regulations provide that
sponsors must agree to ``maintain children on site while meals are
consumed'' (Sec. 225.6(e)(15)).
However, over the years, USDA has heard from stakeholders that,
because the SFSP operates in a wide variety of settings, including
sites that do not offer activities or programming separate from the
meal service, keeping children on site for consumption of the entire
meal offered is sometimes challenging. Some children, particularly
those who are younger, are unable to eat all of the meal components in
one sitting, which sponsors note can result in children not receiving
vital nutrition and contributes to plate waste. Thus, USDA proposed to
amend Sec. 225.16 to codify the previously granted flexibility to
allow participants to take one item (i.e., either a fruit, vegetable or
grain item) off-site for later consumption.
Public Comments
USDA received 63 comments regarding the codification of the
flexibility to allow off-site consumption of certain food items,
including nine form letter copies. There were 41 comments in support of
the proposal, six comments in partial support of the proposal, 16
comments with mixed or neutral opinions, and zero comments opposing the
proposal.
USDA also received responses to specific questions posed in the
proposed rule. Ten comments addressed State agencies' ability to
monitor the effective implementation of the provision, and 12 comments
addressed whether States agencies would prohibit certain sponsors from
utilizing the option.
Proponents of the proposal stated that allowing participants to
take food off-site increased State agencies' and sponsors' ability to
administer and operate the SFSP more effectively, and would increase
program access. Several sponsors also asserted that the proposal would
minimize food waste, and support children eating portions that are
appropriate for their appetite at meal services. Sponsors further noted
that taking food off-site would allow children to derive the health
benefits from being able to eat the entire meal, rather than needing to
throw a portion away. Supportive comments from State agencies
highlighted that training and technical assistance for successfully
implementing this provision is available to eligible sponsors in their
State. State agency comments further noted that sponsors need to ensure
that they have adequate staffing available to monitor the provision.
Proponents who partially supported the provision expressed a desire
for all shelf-stable milk options to be permitted to be taken off-site,
or suggested that participants be permitted to take multiple items off-
site. A State agency commenter requested the authority to prohibit a
sponsor from utilizing this option if the State agency finds that the
sponsor is incapable of adequately monitoring its implementation.
Opponents of the provision requested removal of the congregate
feeding requirement due to a belief that it hinders program access.
Other comments expressed concerns regarding the ability of State
agencies and sponsors to effectively monitor the implementation of the
provision. These comments noted that the provision may be difficult to
monitor, particularly in rural areas with transportation limitations.
However, other State agencies stated that they had successfully
monitored the use of the flexibility in the past, and found that
sponsors were implementing it correctly.
State agency comments on whether they would prohibit certain
sponsors from allowing an item to be taken off-site centered on if the
State agency anticipated patterns of non-compliance from a sponsor, and
if a sponsor was in good standing. State agencies that had observed
patterns of non-compliance from a particular sponsor would prohibit
that sponsor from utilizing the provision. Other State agencies noted
that they would not prohibit sponsors from using the flexibility, but
would assign corrective action to sponsors as needed if the provision
was not implemented correctly. A commenter requested a delay in
implementation to update training and resources necessary to
successfully utilize this provision.
USDA Response
This final rule codifies, as proposed, the flexibility for off-site
consumption of food items. USDA appreciates the attention to program
integrity provided by comments on the feasibility of monitoring this
provision. It is important for program integrity and the safety of
children that site staff appropriately monitor this flexibility to
ensure that children only bring home the correct types and quantities
of food items, and that such items are not at risk of spoiling before
they can be consumed. Previously published USDA guidance on the
implementation of this flexibility permitted State agencies to approve
sponsors to use this provision on a case-by-case basis, and also
provided State agencies with a non-appealable decision-making authority
to prohibit sponsors from using this option when there are concerns
about adequate site monitoring. This final rule does not change that
authority; therefore, State agencies retain the discretion to prohibit
sponsors from using this flexibility if the State finds that the
provision cannot be adequately monitored. However, USDA encourages
State agencies to explore options for successfully implementing this
provision including updating training, procedures, and relevant
systems.
USDA seeks to ensure that program meals are accessible to even the
youngest of the SFSP demographic,
[[Page 57323]]
while still ensuring that participants can enjoy their meals in a safe,
supervised setting in accordance with program requirements. USDA
appreciates that some commenters would like children to be permitted to
take multiple items off-site for later consumption. However, taking a
single item off-site is the amount already allowed through policy
memoranda for the SFSP and the at-risk afterschool component of the
CACFP, in part because it is straightforward for a site to monitor
children taking home a single non-perishable item, and more complex to
oversee children taking other combinations of items off-site. In
addition, this rulemaking proposed to allow children to take a single
item off-site for later consumption, and solicited comments
specifically on this programmatic option. Therefore, suggestions to
allow more food items or entire meals to be consumed off-site are
outside the scope of this rulemaking.
Accordingly, this final rule codifies the flexibility for sponsors
to allow children to take a single fruit, vegetable, or grain item off-
site for later consumption by amending Sec. 225.6(i)(15), as
redesignated through this rule, and adding a new Sec. 225.16(h).
iii. Offer Versus Serve
Current regulations in Sec. 225.16(f)(1)(ii) allow SFAs that are
program sponsors to ``permit a child to refuse one or more items that
the child does not intend to eat.'' This provision is known as ``Offer
versus Serve'' (OVS). The regulations also require that an SFA using
the OVS option must follow the meal pattern requirements for the NSLP,
as set out in Sec. 210.10. Finally, the regulations state that the
sponsor's reimbursement must not be reduced if children do not take all
required food components of the meal that is offered.
The goals of OVS are to simplify program administration and reduce
food waste and costs while maintaining the nutritional integrity of the
SFSP meal that is served. The use of OVS was first extended to SFSP
operations through the Personal Responsibility and Work Opportunity Act
of 1996 (Pub. L. 104-193), which permitted SFAs sponsoring the SFSP to
use OVS on school grounds. Because the option is regularly implemented
during the school year, it was thought that these sponsors could
successfully implement the option during the summer. Recognizing that
OVS was a useful tool to reduce food waste and food costs, the William
F. Goodling Child Nutrition Reauthorization Act of 1998 (Pub. L. 105-
336) extended the use of OVS to all SFSP sites sponsored by SFAs. In
the years since, OVS has proved to be a useful tool for program
operators.
After observing SFA sponsors successfully utilizing the option for
many years and receiving significant feedback from stakeholders,
including Congressional testimony about the positive effects of OVS on
reducing food waste and containing program costs, USDA extended the
option to use OVS to non-SFA sponsors through policy guidance in 2011
(SFSP 11-2011, Waiver of Meal Time Restrictions and Unitized Meal
Requirements in the Summer Food Service Program, October 31, 2011).
USDA continued to clarify policies surrounding OVS, including
guidelines for required meal service components under the SFSP meal
pattern (SFSP 08-2014, Meal Service Requirements, November 12, 2013)
and extending the use of the SFSP OVS meal pattern guidelines to SFA
sponsors that had previously been required to follow the OVS
requirements for the NSLP (SFSP 05-2015 (v.2), Summer Meal Programs
Meal Service Requirements Q&As--Revised, January 12, 2015). This
guidance highlighted the distinguishing aspects of the SFSP and NSLP,
including variations in settings and resources, and adjusted the OVS
requirements for use in the SFSP accordingly.
As mentioned in the background of this rule, these waivers of
statutory and regulatory requirements pertaining to OVS were rescinded
in 2018. Between 2019 and 2020, 39 States requested individual waivers
of program requirements through section 12(l) of the NSLA to allow them
to continue utilizing OVS as had previously been permitted through
guidance. FNS granted these requests to provide continuity to States
and sponsors while the agency completed this rulemaking.
The proposed rule sought to retain the regulatory requirement that
only SFA sponsors may utilize the OVS option. In addition, the rule
proposed to allow SFA sponsors electing to use the SFSP meal pattern to
use SFSP OVS guidelines. This would align the regulations with the
NSLA, which only authorizes SFA sponsors to use OVS. Through on-site
reviews, USDA has also observed meal pattern violations tied to the
improper use of the OVS guidelines specifically at sites sponsored by
non-SFAs. In light of these observations, maintaining OVS for the types
of sponsors that are most likely to implement it correctly would
promote program integrity while also operating the program in
accordance with statutory intent.
Finally, the proposed rule sought the following specific comments
on OVS:
<bullet> What level of training do non-SFA sponsors receive in
order to be able to properly implement OVS?
<bullet> Do non-SFA sponsors have the resources needed to properly
implement OVS?
<bullet> What level of technical assistance do non-SFA sponsors
receive?
<bullet> How would non-SFA sponsors be impacted if OVS were no
longer an available option?
<bullet> What are the specific benefits to sponsors that use OVS?
Public Comments
USDA received 62 comments regarding OVS, including nine form letter
copies. Of the 62 comments, seven supported the proposal as written, 49
expressed support for OVS as an option and for the use of the SFSP meal
pattern, while also expressing concerns with the overall proposal, six
held a mixed opinion, and zero opposed it entirely. Thirteen
stakeholders also submitted comments directly responding to all or some
of the specific questions posed in the proposed rule.
Proponents of this provision included State agencies that have
observed improper implementation of OVS from non-SFAs, or otherwise
believed that SFAs are better equipped with the knowledge and resources
to correctly utilize OVS. Additionally, these comments supported
allowing SFA sponsors that elect to use OVS during SFSP operations to
follow the SFSP meal pattern.
The majority of commenters supported continuing the flexibility for
SFAs, but requested that this meal service option also be extended to
non-SFA sponsors, including those that operate the CACFP and use OVS
during the school year in their At-Risk Afterschool Meals programs.
These comments highlighted that OVS benefits sponsors through decreased
operation and administrative costs and reduced food waste. Commenters
noted that training and technical assistance are generally offered to
all SFSP sponsors that wished to use OVS and some stated that they have
not witnessed implementation errors from non-SFA sponsors. Multiple
State agencies said that not all non-SFA sites are equipped to
successfully use OVS, and thus recommended it should be limited to
those sponsors that have adequate resources or on a case-by-case basis.
Other commenters echoed the suggestion that the use of OVS by non-SFA
sponsors could be limited to those that are capable of using it
correctly.
Mixed comments largely offered general support for OVS or focused
on answering the specific questions posed
[[Page 57324]]
in the proposed rule. In response to USDA's questions about the level
of OVS training and technical assistance that non-SFA sponsors receive
and whether non-SFA sponsors have the resources needed to properly
implement OVS, State agencies said that OVS is included in their
regular training regimen, with non-SFAs receiving as much training as
SFA sponsors. These commenters also expressed that sponsors presently
have the resources needed to properly implement OVS, and are provided
technical assistance by request or when needs are identified by State
agency representatives. In response to USDA's questions about the
benefits of OVS and the impact of it no longer being available for non-
SFA sponsors, commenters said that OVS decreases program waste and
cost, while providing more food choices to program participants. Non-
SFA sponsors who previously implemented OVS would not realize these
benefits and would need to retrain staff if OVS is no longer available
to them. A few indicated that this change could have a negative impact
on sponsor participation. These commenters included State agencies,
sponsor organizations, and school districts.
USDA Response
This final rule codifies the proposed changes to OVS regulations.
USDA understands that OVS has been a popular flexibility among SFSP
sponsors and, for many years, sponsors of all types have used OVS to
increase cost efficiency and provide more food choice for children
during meal services. However, section 13(f)(7) of the NSLA only
authorizes SFAs to use OVS. The flexibilities that allowed non-SFAs to
utilize OVS were pursuant to policy guidance that was rescinded in
2018, or COVID-19-related waiver authority which was not permanent and
was intended to aid program operators during the public health
emergency and as they transition back to normal operations. As
previously discussed in the background section of this rule, a 2018 OIG
report led USDA to determine that offering waivers under 42 U.S.C.
1760(l) on a nationwide basis is not supported by the statute. As such,
the use of nationwide waivers is no longer a viable option to address
OVS. USDA exercised its discretion in 2019 to issue individual waivers
under section 12(l) of the NSLA for 37 State agencies in order to
bridge the gap between when the nationwide waiver was rescinded and
this rulemaking was completed. As discussed in the proposed rule, the
operation of OVS by non-SFA sponsors has also raised some program
integrity concerns. Information obtained from site visits, and some
State agency comments have indicated improper OVS implementation among
non-SFA sponsors. Therefore, limiting OVS to only SFA sponsors, which
generally have experience with OVS in the NSLP, will ensure that
program regulations and operations remain in agreement with the statute
and promote program integrity. As a result, this final rule continues
the current regulatory requirement that only SFA sponsors may utilize
the OVS option, while revising the regulations to allow the use of the
SFSP meal pattern with OVS.
USDA does not expect a significant impact on program participation
as OVS is an optional flexibility that functions to modify meal
component offerings at meal services; SFA and non-SFA sponsors alike
may operate meal services without OVS. USDA stands ready to provide
technical assistance, as needed, to support this transition. Further,
FNS data indicate that a relatively small share of all sponsors will be
affected; fewer than 10% of SFSP sponsors are non-SFAs that used OVS
under the waivers.\1\ With regard to food waste, section D ii of this
rule codifies the option for participants to take one fruit, vegetable,
or grain item off-site for later consumption. Similarly, the use of
share tables, where children may return whole food or beverage items
they choose not to eat for other children to take, is also an option
for sponsors to reduce food waste.
---------------------------------------------------------------------------
\1\ According to the most recently available USDA administrative
data, approximately 60% of sites were SFA sites in July 2021.
According to the Summer Meals Study (Report Volume 3, page 3-15),
only 24% of non-SFA sites used OVS in 2018. This gives a total of
9.6% of all sites who will need to transition to meal service
without the use of OVS as a result of this rule (40% x 24% = 9.6%).
The Summer Meals Study is available online at <a href="https://www.fns.usda.gov/cn/usda-summer-meals-study">https://www.fns.usda.gov/cn/usda-summer-meals-study</a>.
---------------------------------------------------------------------------
Accordingly, this final rule retains the requirement at Sec.
225.16(f)(1)(ii) that only SFA sponsors may utilize the OVS option.
Further, this rule allows SFA sponsors electing to use the SFSP meal
pattern to use SFSP OVS guidelines.
E. Clarification of Program Requirements
i. Reimbursement Claims for Meals Served Away From Approved Locations
Under current regulations, meals are reimbursable only when served
at sites approved by the State agency. As defined in Sec. 225.2, a
site is ``a physical location at which a sponsor provides a food
service for children and at which children consume meals in a
supervised setting.'' Site approval applies only to the specific
location approved, not to meals removed from that site for service at
another location that has not been approved. The State agency must
approve any changes in site service time or location after the initial
site approval. However, USDA granted State agencies the flexibility to
approve exceptions to this requirement for the operation of field trips
under USDA Instruction 788-13: Sub-Sites in the Summer Food Service
Program and policy guidance, Field Trips in the Summer Food Service
Program (SFSP), February 3, 2003.
USDA proposed codifying the flexibility to allow sponsors the
option to receive reimbursement for meals served away from the approved
site without requiring formal approval from the State agency, and
establishing conditions that must be met in order for sponsors to
receive reimbursement for these meals. The proposed rule:
<bullet> Requires sponsors to notify the State agency in advance
that meals will be served away from the site.
<bullet> Permits State agencies to set time limits for how far in
advance of the field trip sponsors would send notification to the
administering agency.
<bullet> Requires sponsors of open sites to continue operating at
the approved open site location while the field trip occurs, if
feasible, or notify the community of the change in meal service and
provide information about alternative open sites where community
children can receive free summer meals.
Under these proposed changes, sponsors must be capable of meeting
program requirements and local health, safety, and sanitation standards
during the field trip, and meals are required to be served at the
approved meal service times.
Public Comments
USDA received 29 comments addressing the proposal to allow
reimbursement claims for meals served away from approved locations,
including three form letter copies. Of these comments, 27 were
supportive, and two were mixed. None of the comments USDA received for
this provision were opposed. Thirteen of the comments received
specifically addressed the condition that sponsors of open sites
continue operating during field trips, or alert the public where
children can access meals during those times. Of those, one was
opposed, one was mixed, and the remaining were supportive of the
condition as proposed.
Proponents wrote that the proposed changes would simplify the
process for State agencies and local program operators. A few
respondents in support also provided recommendations for different
aspects of the provision for
[[Page 57325]]
USDA to consider. An advocacy group wrote that proposed changes should
not put undue burden on sites or allow State agencies to set
unreasonable limits. Another commenter requested that USDA set time
limits for notice and notification to the community.
Several proponents also voiced concerns over the condition that
sponsors of open sites should remain open. These commenters expressed
concern for children who frequent open sites and rely on the
availability of meals at these sites, while also acknowledging the
burden on sponsors, particularly small sponsors, of maintaining a meal
service at the site while administering a field trip. One of the
commenters opposed the condition as written, stating that allowing
sponsors to close sites during field trips would limit access for
children who lack transportation to alternative sites. A State agency
suggested that USDA consider a limitation that sites can close for
field trips for no more than half of their weekly operation. Another
respondent wrote that sponsors should be able to make the determination
as to whether a site will remain open while field trips occur. A State
agency requested clarification on several aspects of this proposal,
including the appropriate amount of advanced notice, allowable
circumstances for an open site to close, parameters for selecting
alternative sites, State agency responsibility in monitoring sponsor
compliance with this provision, and the requirement for advanced
notification without formal approval.
USDA also received two comments that provided suggestions that were
out of scope for this proposal. One commenter recommended USDA consider
expanding the definition of site to include a vehicle in order to
assist in the expansion of the SFSP to rural sites. Another respondent
wrote that it would be helpful for staff of smaller sites if SFSP staff
did not necessarily have to attend a field trip to administer a meal.
USDA Response
Consistent with the proposed rule, this final rule codifies the
flexibility to allow sponsors the option to receive reimbursement for
meals served away from the approved site. However, the final rule
adjusts the requirements for maintaining a meal service at the site
during a field trip and provides points of clarification in response to
comments received.
Sponsors must notify the State agency in advance that meals will be
served away from the site, but formal approval of the alternative meal
service is not required. If the State agency is not notified prior to
the SFSP field trip, meals served may be considered ``consumed off-
site'' and the State agency has the discretion to not reimburse those
meals. This procedure is similar to the notification requirements for
field trips in the CACFP, where providers must notify either their
sponsoring organization or the State agency in advance of a planned
field trip. However, while obtaining formal approval of the off-site
meal service for a field trip is not a requirement in order for the
sponsor to receive reimbursement under this final rulemaking, the State
agency has the discretion to require formal approval if deemed
necessary.
In addition, this final rule gives State agencies the discretion to
set time limits for how far in advance of the field trip sponsors would
send notification to the administering agency, as proposed. Though
comments pointed to concerns over the time limit for advanced
notification, including one commenter who requested that USDA set the
limit for the amount of advanced notice needed, USDA prefers to allow
State agencies to determine their individual notification deadlines in
this instance.
This final rule modifies a condition that must be met in order for
sponsors of open sites to receive reimbursement for meals served away
from approved locations. This rule requires sponsors of open sites to
continue operating at the approved open site location while a field
trip occurs. If this is not possible (for example, if there is limited
staff coverage), the State agency may permit the sponsor to close the
open site. In this case, the sponsor must notify the community of the
change in meal service and provide information about alternative open
sites that are likely to be accessible to community children so that
they have continued access to free summer meals.
In response to comments, USDA modified the condition to allow State
agencies the discretion to permit sponsors of open sites to close
operations at the approved location while the field trip occurs. USDA
acknowledges that field trips are widely supported at sites and by
sponsors as they are a fun, educational tool for children. On the other
hand, open sites are intended to serve the community at large and
closing open sites due to circumstances related to a field trip could
prevent children in the community from receiving meals. USDA
understands the importance of this flexibility for the occasional field
trip, but emphasizes that this flexibility should not be used in a
manner that habitually impacts operations at the approved open site
location. While USDA recognizes the additional burden this stipulation
may place on some sponsors, sponsors enter into a written agreement
with State agencies that attests they are capable of operating the
Program, and the site type they oversee. In consideration of this
change, administering agencies should work closely with sponsors
electing to operate a field trip and exercise special care to ensure
that the sponsors of open sites have developed adequate procedures to
resolve any potential issues. When it is not possible to continue
operating at the approved site location, sponsors should have plans to
ensure that children in the community are provided ample notification
of changes in meal service and are directed to appropriate alternate
sites to obtain a meal. In accordance with 7 CFR 225.7(g) and FNS
Instruction 113-1, State agencies should take reasonable steps to
assure meaningful access to the program, including providing
notification of alternate site location in the languages of the
individuals in the community that the site serves and in alternative
formats for persons with disabilities. Furthermore, State agencies
should consider site type during application to make sure sites are
correctly classified and serving the community as intended.
Finally, consistent with the proposed rule, in order to operate
field trips in the SFSP, the sponsor must be capable of successfully
operating the Program during an outing. When considering if sponsors
are eligible to receive reimbursement for meals served away from
approved sites, State agencies must determine that all program
requirements, including all applicable State and local health, safety,
and sanitation standards will be met while traveling and at the field
trip meal service location.
Accordingly, the final rule addresses meals served away from the
approved site location during a field trip at redesignated Sec.
225.6(i)(7)(v) and in a new Sec. 225.16(g).
ii. Timeline for Reimbursements to Sponsors
Current regulations in Sec. 225.9(d)(4) require that State
agencies must forward reimbursements to sponsors within 45 calendar
days of receiving a valid claim. The regulations also require that if a
sponsor submits a claim for reimbursement that is incomplete or
invalid, the State agency must return the claim to the sponsor within
30 calendar days with an explanation of the reason for disapproval. If
the sponsor submits a complete revised claim, the State agency must
take final action within 45
[[Page 57326]]
calendar days of receipt. These requirements are necessary to ensure
that sponsors receive reimbursement for meals served in a timely
manner.
However, in recent years, USDA has received numerous inquiries and
waiver requests to extend the timeline for taking final action on a
claim for reimbursement beyond 45 calendar days of receiving a revised
claim, due to concerns that the sponsor may have engaged in unlawful
acts such as fraud. State agencies have stated that the 45 calendar day
timeline to complete a final action is not sufficient to conduct a
thorough review of all the sponsor's records and make a determination
that the claim is valid.
While Sec. 225.9(d)(10) of the regulations provides State agencies
with the ability to use evidence found in audits, reviews, or
investigations as the basis for nonpayment of a claim for
reimbursement, the State agency may not be able to make this
determination within the given timeframe. Therefore, the proposed rule
exempted the State agency from requirements in Sec. 225.9(d)(4) to
take final action on a claim within 45 calendar days of receipt of a
revised claim if the State agency has reason to believe that the
sponsor has engaged in unlawful acts that would necessitate an expanded
review. In addition, the proposed rule clarified that even if a State
agency determines, in accordance with Sec. 225.9(d)(10), that there is
reason to believe the sponsor has engaged in unlawful acts, the State
agency must still return the claim to the sponsor within 30 calendar
days with an explanation of the reason for disapproval.
Public Comments
USDA received 21 comments on the proposed changes to the timeline
for reimbursement to sponsors, including three form letter copies. Of
these, 18 were supportive, and three were mixed. Proponents stated that
the exemption would allow State agencies the flexibility to further
investigate questionable sponsor claims, particularly in instances
requiring thorough and complex reviews.
Several of the respondents provided comments on specific aspects of
the provision. One commenter expressed concern about the 30 calendar
day timeline to disapprove a sponsor's claim, stating that it may lead
States to deny claims that may be valid and as a result increase
appeals. Another commenter wrote that the 30 calendar day timeline
would put State agencies in the position of processing a claim they are
concerned is invalid to meet a regulatory timeframe. One respondent
suggested that the State agency be given 45 days from receipt of the
original claim to approve or deny the claim, rather than 30 days. The
commenter also suggested that the disapproval be included in the
exemption as well.
Two State agencies supported the proposal, but requested
clarification on the process for requesting an exemption. Another State
agency asked if State agencies must take final action within the 30
days of receipt, and if appeal rights must be issued within the 30 day
timeframe as well even when the State agency elects to conduct an
expanded review.
USDA Response
This final rule codifies the proposed changes to the timeline for
reimbursement to sponsors and adds additional clarity on providing
notification to the sponsor and to USDA. Consistent with the proposed
rule, the final rule exempts the State agency from requirements in
Sec. 225.9(d)(4) to take final action on a claim within 45 calendar
days of receipt of a revised claim if the State agency has reason to
believe that the sponsor has engaged in unlawful acts that would
necessitate an expanded review. In addition, the final rule clarifies
that even if a State agency determines, in accordance with Sec.
225.9(d)(10), that there is reason to believe the sponsor has engaged
in unlawful acts, the State agency must still return the claim to the
sponsor within 30 calendar days with an explanation of the reason for
disapproval, and allow the sponsor to submit a revised claim as allowed
by Sec. 225.9(d)(4). The State agency must complete final action on
the revised claim once the review has concluded. Once final action is
taken, the final rule specifies that the State agency must advise the
sponsor of its rights to appeal consistent with the due process
provided by the regulations in Sec. 225.13(a).
In addition, the final rule provides more clarity on the process
for a State agency to request an exemption provided under this
provision. Consistent with current guidance on other one-time
exceptions for claims, State agencies must notify the appropriate FNS
Regional Office (FNSRO) that they suspect fraud and will be taking the
exemption to the 45 day timeline to conduct an expanded review by
submitting to the FNSRO a copy of the claim disapproval at the same
time as it is provided to the sponsor.
Some comments expressed concerns that the 30 calendar day timeframe
forces State agencies to incorrectly process a claim. However, it
appears that these commenters misunderstood the proposal. The proposed
rule did not seek to make changes to the current regulations seen at
Sec. 225.4(d)(4), but rather to clarify the responsibility of the
State agency in this process, even when they suspect fraud. While USDA
understands the commenters concerns, the process is consistent with
other Child Nutrition Programs where the administering agency has a
period of time in which they must notify the institution of an
incomplete or incorrect claim that must be revised for payment. The
purpose of this timeframe is to prevent withholding of a claim without
notifying the sponsor that the claim is invalid or allowing the sponsor
to submit a revised claim in a timely manner. After notifying the
sponsor of disapproval of the claim within 30 calendar days of receipt,
the State agency can extend the review and meal claims validations to
determine if it is incomplete or invalid, and if the claim should be
denied, in order to prevent the potential payment of a suspected
unlawful claim. To aid sponsors whose claims are initially disapproved,
this final rule adds additional language to clarify that, when
returning the claim to the sponsor with an explanation of the reason
for disapproval, the State agency must indicate how the claim must be
revised in order for it to be payable.
Accordingly, this rule amends regulations found in Sec.
225.9(d)(4) to indicate that if a claim is determined to be potentially
unlawful based on Sec. 225.9(d)(10), the State agency must still
disapprove the claim within 30 calendar days with an explanation of the
reason for disapproval and how the claim must be revised for payment.
Additional changes to Sec. 225.9(d)(4) specify that the State agency
notify the sponsor of its right under Sec. 225.13(a) to appeal a
denied claim. This rule also amends Sec. 225.9(d)(10) to clarify that
State agencies may be exempt from the 45 calendar day timeframe for
final action in Sec. 225.9(d)(4) if more time is needed to complete a
thorough examination of the sponsor's claim. In addition, this rule
clarifies in Sec. 225.9(d)(10) that a State agency must provide
notification to the FNSRO that it is taking the exemption to the 45
calendar day timeframe at the same time as the sponsor's claim is
disapproved.
iii. Requirements for Media Release
Current regulations at Sec. 225.15(e) require all sponsors
operating the SFSP, including sponsors of open sites, camps, and closed
enrolled sites, to annually announce the availability of free meals in
the media serving the area from
[[Page 57327]]
which the sponsor draws its attendance. The regulations specify that
media releases issued by sponsors of camps or closed enrolled sites
must include income eligibility standards, a statement about automatic
eligibility to receive free meal benefits at eligible program sites,
and a civil rights statement. However, USDA received questions from
State agencies and analyzed data from management evaluations that show
the current requirements are difficult to understand and implement
correctly, leaving some State agencies and sponsors to make inadvertent
errors in fulfilling the requirements. To assist sponsors, USDA issued
guidance and resources encouraging State agencies to complete this
requirement on behalf of all sponsors of open sites in their State
through an all-inclusive Statewide media release (SFSP 07-2014,
Expanding Awareness and Access to Summer Meals, November 12, 2013).
USDA proposed codifying current guidance allowing State agencies
the discretion to issue a media release on behalf of all sponsors
operating SFSP sites, including camps, in the State. The proposed rule
clarifies that, in the absence of a Statewide notification, sponsors of
camps and other sites not eligible under Sec. 225.2, sub-sections (a)
through (c), in the definition of ``areas in which poor economic
conditions exist,'' are only required to notify participants or
enrolled children of the availability of free meals and do not need to
issue a media release to the public at large. Finally, the proposed
rule renames the section, ``Notification to the Community,'' to more
accurately describe the types of activities required of sponsors.
Public Comments
USDA received 28 comments addressing the proposed changes to
requirements for media release, including three form letter copies. Of
these, 21 were supportive, and two were mixed. The remaining five
comments supported the proposed changes, but expressed concerns with
certain aspects of the provision.
Proponents stated that the proposed changes would relieve
administrative burden for State agencies and sponsors. Proponents also
agreed that sponsors of camps and other sites not eligible under the
definition of ``areas in which poor economic conditions exist'' must
only notify participants or enrolled children of the availability of
free meals. One respondent wrote that restructuring the language to
clearly identify that sponsors of closed enrolled and camp sites only
need to notify participants or enrolled children of the availability of
free meals would help alleviate some of the current confusion around
the media release requirement for these types of sites. However,
several comments expressed concern about aspects of the proposed
changes for sponsors of closed enrolled sites. One commenter wrote that
the stipulation should be required for sponsors of all closed enrolled
sites and not just those that are not eligible under Sec. 225.2, sub-
sections (a) through (c), in the definition of ``areas in which poor
economic conditions exist.'' Several commenters supported the statewide
media release, but requested that State agencies be able to use a
statewide media release without being required to include closed
enrolled sites and camps since the release is for the public at large.
Several respondents voiced concerns over the public receiving the
correct information if site information is released at the state level.
Two State agencies wrote that a media release should still be required
for open sites in some format. One State agency reasoned that State
agencies do not have knowledge of local media outlets needed for a
successful media release campaign. Another State agency supported the
proposed provision, but would want to train sponsors on the benefit of
submitting individual media releases to assist with local level
promotion efforts.
USDA Response
In accordance with the proposed rule, this final rule codifies
current guidance allowing State agencies the discretion to issue a
media release on behalf of all sponsors operating SFSP sites in the
State, including camps and closed enrolled sites. In addition, this
final rule modifies the proposed language to make clear that closed
enrolled sites are only required to notify participants or enrolled
children of the availability of free meals and if a free meal
application is needed. Finally, this final rule renames this section,
``Notification to the Community,'' to more accurately describe the
types of activities required of sponsors.
This final rule requires State agencies using the option to issue a
statewide media release to ensure that all notification requirements
for camps and closed enrolled sites are met. USDA acknowledges
commenters' concerns regarding State agencies' ability to effectively
communicate information for particular site types in a statewide media
release, and emphasizes that this is an optional flexibility. State
agencies have the discretion to require sponsors to follow the
requirements for notification to the community if deemed appropriate.
As a best practice, USDA encourages sponsors to maintain promotion and
outreach efforts at the local level, even when the State agency elects
to issue a statewide notification. In all cases, State agencies and
sponsors have a responsibility to take reasonable steps to ensure
meaningful access to their programs and activities by people with
limited English proficiency and those with disabilities, in accordance
with 7 CFR 225.7(g) and FNS Instruction 113-1. This includes providing
notification in the languages of the individuals in the community that
a site will serve, and in alternative formats for persons with
disabilities.
USDA understands the concerns of commenters who said that it would
be confusing to require closed enrolled sites that are eligible under
Sec. 225.2, sub-sections (a) through (c), in the definition of ``areas
in which poor economic conditions exist,'' (i.e., those that use
community data to determine area eligibility) to provide notification
to the public at large in the same manner as an open site. Such
notifications would not benefit the public because the advertised meal
service at these sites is not open to the public. The final rule
clarifies that, in the absence of a Statewide notification, sponsors of
camps and all closed enrolled sites are only required to notify
participants or enrolled children of the availability of free meals and
do not need to issue a media release to the public at large. However,
closed enrolled sites must also notify participants or enrolled
children if a free meal application is needed so that the participants
or their families know if they are expected to submit a free meal
application. These modifications limit the sponsor's responsibility to
notify only those who could potentially receive meals at the site.
A State agency suggested modifying the press release that State
agencies are required to submit prior to February 1st each year (7 CFR
225.6(a)(2)) to fulfill the requirement in Sec. 225.15(e) to announce
the availability of free meals in the media serving the area from which
the sponsor draws its attendance. While USDA appreciates the
suggestion, the two releases serve different, but equally important
purposes, and therefore, it is necessary to issue these releases
separately. The February 1st press release is used to actively seek
eligible applicant sponsors to serve priority outreach areas. The
notification to the community alerts the community about the
availability of meals, and may provide information about sites that is
generally unavailable or unknown prior to the February 1st press
release.
[[Page 57328]]
Finally, the final rule renames this section, ``Notification to the
Community,'' to more accurately describe the types of activities
required of sponsors, including sponsors of camps and closed enrolled
sites that will no longer be required to issue a media release.
Accordingly, this rule amends Sec. 225.15(e) by renaming the
subsection ``Notification to the Community,'' specifying that State
agencies may issue a media release on behalf of all sponsors operating
open SFSP sites in the State, and clarifying that sponsors of camps and
closed enrolled sites must only notify participants or enrolled
children of the availability of free meals.
iv. Annual Verification of Tax-Exempt Status
In order to be eligible to participate in the SFSP, sponsors must
maintain their nonprofit status (Sec. Sec. 225.2 and 225.14(b)(5)). In
2011, the Internal Revenue Service (IRS) changed its filing
requirements for some tax-exempt organizations. Failure to comply with
these requirements could result in the automatic revocation of an
organization's tax-exempt status. Due to this change, USDA released
guidance for confirming sponsors' tax-exempt status, which requires
that State agencies annually review a sponsor's tax-exempt status (SFSP
04-2017, Automatic Revocation of Tax-Exempt Status--Revised, December
1, 2016).
To ensure compliance with the filing requirements, the proposed
rule amends Sec. 225.14(b)(5) to codify the requirement for annual
confirmation of tax-exempt status at the time of application.
Public Comments
USDA received 18 comments addressing the annual verification of
sponsors' tax-exempt status including three form letter comments. All
of the comments were supportive of the proposal. One respondent
supported the proposed provision, but suggested that USDA work with the
IRS to streamline the process for State agencies to determine an
applicant's nonprofit status.
USDA Response
All comment submissions expressed support for the proposal without
opposition. Thus, this final rule makes no changes from the proposed
rule. USDA acknowledges that annually verifying the tax-exempt status
of nonprofit organizations may be time consuming for State agencies,
however, modifying filing requirements is outside the scope of USDA's
authority. State agencies are responsible for approving and overseeing
sponsors to operate the SFSP, and thus play an integral part in
maintaining program integrity. This requirement is necessary to ensure
program compliance, protection of Federal funds, and fiscal
responsibility. Accordingly, this rule codifies the requirement for
annual confirmation of tax-exempt status at the time of application by
amending Sec. 225.14(b)(5).
F. Important Definitions in the SFSP
i. Self-Preparation Versus Vended Sites
Current regulations in Sec. 225.2 define the terms ``self-
preparation sponsor'' and ``vended sponsor.'' These definitions are
critical to the proper administration of the SFSP because reimbursement
rates are determined, in part, by the sponsor's classification as
either self-preparation or vended. Per statutory requirements,
reimbursement rates are calculated using operating and administrative
costs (42 U.S.C. 1761(b)(1) and 42 U.S.C. 1761(b)(3)) to determine a
reimbursement rate for each meal served. Rates are higher for sponsors
of sites located in rural areas and for ``self-preparation'' sponsors
that prepare their own meals at sites or at a central facility instead
of purchasing from vendors. This is due to the higher administrative
costs associated with program operation in rural areas and preparing
meals rather than contracting with a food service management company.
Therefore, correct classification of self-preparation or vended
sponsors is necessary for proper program management and maintaining the
fiscal integrity of the Program when site-based claiming is not
feasible.
Advances in technology have allowed State agencies and sponsors to
develop increasingly sophisticated reporting systems that are capable
of collecting detailed information on the number and type of meals
being served. Many State agencies have developed the ability to
classify individual sites as self-preparation or vended, rather than
classifying a sponsor and all of its sites as one type or the other.
USDA is aware that some State agencies that have these capabilities
also provide reimbursements based on the classification of the
individual sites. This is significant because providing reimbursements
to sponsors that operate a mix of sites based on the individual site
classification is more accurate and helps protect the integrity of the
SFSP.
In recognition of the advances being made at the State agency and
local level, USDA proposed to add definitions for ``self-preparation
site'' and ``vended site,'' and to require that sponsors and sites
include information about how meals will be obtained for each site in
their application to participate in the SFSP.
Further, to better understand the current state of claiming systems
nationwide and the implications for policy development, including
potential changes to regulatory requirements, USDA requested specific
comments on the following questions:
<bullet> How many State agencies have systems that are capable of
receiving claims at the site level? Are any State agencies currently
receiving claims at the site level and providing reimbursement based on
the individual site classification?
<bullet> What are the costs and benefits of implementing systems
that can receive claims at the site level?
<bullet> How common or uncommon is it for a site to use two
different methods of obtaining meals (e.g., offering a self-prepared
breakfast and a vended lunch)?
<bullet> Do any State agencies have systems that are able to
account for different methods of obtaining meals within the same site?
<bullet> What would be the impact on claiming and monitoring of
collecting and paying claims at the site level?
Public Comments
USDA received 29 comments regarding the addition of these
definitions, including three form letter copies. Of these comments, 11
were supportive, two were partially supportive, and 16 comments had
mixed or neutral opinions regarding the proposal.
Stakeholders also submitted comments responding to specific
questions posed in the proposed rule. USDA received:
<bullet> 22 comments regarding how many State agencies have systems
that are capable of receiving claims at the site level, and whether any
State agencies are currently receiving claims at the site level and
providing reimbursement based on the individual site classification.
<bullet> 12 comments regarding the costs and benefits of
implementing systems that can receive claims at the site level.
<bullet> 17 comments regarding how common or uncommon is it for a
site to use two different methods of obtaining meals (e.g., offering a
self-prepared breakfast and a vended lunch).
<bullet> 17 comments regarding whether any State agencies have
systems that are able to account for different methods of obtaining
meals within the same site.
<bullet> 13 comments regarding the potential the impact on claiming
and monitoring of collecting and paying claims at the site level.
[[Page 57329]]
Proponents of these definitions included an advocacy group and
State agencies, who stated that their systems are already equipped to
process reimbursement for site-level claims.
Proponents that partially supported the definitions voiced concerns
about some of the terminology used. Specifically, these commenters
highlighted that use of the term ``food service management company''
could generate confusion because it is used in other Child Nutrition
Programs where the meaning is slightly different. A State agency also
believed that the proposed definition overlooked instances in which a
self-preparation site received meals that were prepared at a sponsor
organization's central kitchen.
State agencies also submitted mixed or neutral opinions on the
definitions. While some of these comments echoed concerns about the use
of the term ``food service management company,'' other comments
centered on the specific requests for comments presented in the
proposed rule. Most of the responses indicated that State agency
systems already include mechanisms to receive reimbursement claims at
the site level. Few State agencies provided information on the cost to
upgrade systems because many State agencies noted that there would be
zero cost as their systems can currently collect site-level claims.
However, others estimated that it could be costly, but that actual
expenses would ultimately be determined by whether the system is
developed in-house or by an external entity. Responses also indicated
that it was not common for sites to utilize two different methods of
attaining meals, and thus very few State agencies reported having
systems capable of making this sort of distinction. Finally, State
agencies noted that they did not anticipate an impact on claiming and
monitoring from collecting and paying claims at the site level because
these State agencies already had site-level claiming mechanisms. A
State agency also expressed that the impact would be positive because
collecting and paying claims at the site level would increase
integrity. However, two State agencies wrote that site-level claiming
posed a significant administrative burden as the agencies would need to
update their systems and increase monitoring. These comments further
noted that there may be an increase in claim processing costs due to
the increase in entities that would need to be paid directly.
USDA Response
This final rule codifies the definitions of self-preparation and
vended sites with revisions to provide additional clarity, and codifies
as proposed the requirement that sponsors provide a summary of how
meals will be obtained at each site when applying to participate in the
SFSP.
USDA seeks to increase program integrity through this rulemaking.
To satisfy this goal, any added definitions must be as clear as
possible. In order to avoid the potential terminology confusion cited
by the comments, USDA re-examined the proposed definitions and has
modified the language to better reflect the types of arrangements found
in SFSP operations. While the term ``food service management company''
is still used in the definitions, the revised language clarifies its
applicability. Likewise, the definition of a self-prep site has been
amended to indicate that these sites may receive meals prepared at
their sponsor's central kitchen. Establishing clear definitions of
self-prep and vended sites will help ensure that site-based claims are
accurate for States that provide reimbursements based on the
classification of the individual sites.
Commenters and USDA's own monitoring activities have indicated that
all but several State agencies have systems that are equipped with
site-level claiming mechanisms. USDA appreciates the efforts that State
agencies have made to employ technological advances to modernize agency
systems. Comments also indicated that there would be no impact on
program operations in most States to implement site-level claiming
because of this. However, among several State agencies with systems
that are not currently configured for site-level claiming, State
agencies noted a belief that implementation would result in increased
costs due to additional monitoring and system requirements.
Collecting information about how sites will obtain their meals as
part of the sponsor's application will aid State agencies to ensure
proper accounting during claims processing. States that process claims
at the site level need this information to determine the rate at which
meals will be reimbursed for each site. For States that process claims
at the sponsor level, information on the sponsor's sites is critical to
determining whether the sponsor should be deemed self-prep or vended.
Thus, although USDA is not requiring State agencies to collect site-
level claims at this time, sponsors will be required to submit a
summary of how meals will be obtained by a site as part of their
application for program participation.
Finally, USDA is aware that most States are currently able to
process site-based claims for SFSP sponsors, which makes the
classification of sponsors as being either self-prep or vended no
longer relevant for those States. However, sponsor classifications are
still needed for State agencies that are not yet able to process claims
at the site level. Therefore, although this rule establishes
definitions for self-prep and vended sites, USDA is retaining the
sponsor level definitions, which apply for States that are claiming at
the sponsor level. However, because site-level claiming is a more
accurate and efficient means of determining reimbursements, USDA
encourages all State agencies to work toward adopting that method. USDA
has created these site definitions to complement existing site-level
claiming processes and ensure that State agencies categorize sites
accurately and consistently.
Accordingly, this rule adds definitions to Sec. 225.2 for ``self-
preparation site'' and ``vended site.'' In addition, this rule amends
Sec. Sec. 225.6(c)(2)(viii) and 225.6(c)(3)(vi) to require a summary
of how meals will be obtained at each site as part of the sponsor
application.
ii. Eligibility for Closed Enrolled Sites
The current definition of closed enrolled sites included in Sec.
225.2 requires that at least 50 percent of the enrolled children at the
site are eligible for free or reduced-price meals under the NSLP and
the SBP, as determined by approval of applications in accordance with
Sec. 225.15(f). This provision outlines the requirement to use income
eligibility forms to ``determine the eligibility of children attending
camps and the eligibility of sites that are not open sites as defined
in paragraph (a) of the definition of `areas in which poor economic
conditions exist' in Sec. 225.2''. To reduce administrative burden on
sponsors, USDA published guidance in 2002 that permitted closed
enrolled sites to establish eligibility based on data of children
eligible for free and reduced-priced meals in the area where the site
was located (Summer Food Service Program (SFSP) Waiver for Closed
Enrolled Sites, November 17, 2002). During the 15 years in which this
nationwide waiver was active, this flexibility was shown to reduce
administrative burden on sponsors of closed enrolled sites and
eliminate barriers to participation for children and families enrolled
at these sites.
The waiver noted above was rescinded in 2018, as discussed in the
background section of this final rule. Beginning in summer, 2019 State
agencies and program operators were allowed to request a waiver on an
individual basis. Between summers
[[Page 57330]]
2019 and 2020, 43 States requested waivers for area eligibility for
closed enrolled sites. Feedback received during the waiver process
confirms that a reduction in administrative burden and elimination of
barriers to participation remain the principal benefits of permitting
closed enrolled sites to rely on area eligibility rather than
applications. Requests from 36 out of 40 State agencies that requested
waivers in 2019 noted that the reduction in administrative costs can be
more productively invested in technical assistance and oversight to
improve the quality of services provided to participants. Further, the
Healthy, Hunger-Free Kids Act of 2010, Public Law 111-296, amended the
definition of ``areas in which poor economic conditions exist'' in the
NSLA. This revised definition allows for enrolled sites to demonstrate
eligibility through ``other means approved by the Secretary.'' As a
result, USDA proposed to codify the flexibility allowing use of area
eligibility to determine eligibility for closed enrolled sites.
Public Comments
USDA received 52 comments on this provision, including nine form
letter copies. Of these, 45 were in support, three expressed partial
support, three were in opposition, and one expressed a mixed opinion.
Proponents of the provision cited the benefits to program
participants and administrators, including reduced administrative
burden and increased program access. Commenters who partially supported
the provision requested that the 50 percent threshold required in the
definition of ``area in which poor economic conditions exist'' be
decreased to 40 percent. A commenter also stated that the proposed
description of closed enrolled sites in subpart (d) of the definition
of ``areas in which poor economic conditions exist'' could be confusing
because closed enrolled sites do not need to be located in such an
area.
Opponents voiced concerns that the provision could increase
incidence of sites that would otherwise have operated as an open site,
electing to operate as a closed enrolled site, thereby decreasing
program access for children who live in the community but are not
enrolled at the site. The commenters also expressed apprehension that
the reference population used to qualify for closed enrolled status
would not be the population that is ultimately served by the site.
USDA Response
This final rule codifies, as proposed, changes allowing closed
enrolled sites to use area eligibility to determine site eligibility.
This rule also includes additional changes which require State agencies
to have criteria for approving closed enrolled sites to ensure
operation of a site as closed enrolled does not limit access to the
community at large.
USDA strives to streamline and reduce administrative burden where
possible. Codifying guidance permitting closed enrolled sites to
establish eligibility based on data of local children eligible for free
and reduced-price meals supports that goal.
In response to commenters who suggested lowering the threshold for
area eligibility to 40 percent, changes to how area eligibility is
determined are beyond the scope of this rulemaking. Further, the 50
percent threshold outlined in the definition of ``areas where poor
economic conditions exist'' is a statutory limit found at 42 U.S.C.
1761(a)(1)(i). USDA is not permitted to regulate against the authority
delegated to the Department through statute. USDA is obligated to
observe this threshold and cannot lower it. Therefore, this rule
codifies previous guidance with no further modifications.
USDA also understands the concerns associated with the correlation
between potential increases in closed enrolled site locations and
decreases in program access. However, in approving sponsor applications
for SFSP participation, State agencies play a central role in
safeguarding program access. State agencies should closely examine each
closed enrolled site application, and assess the effect that approving
the application could have on program access in the area the site is
located. Operating as an open site should be encouraged where possible,
thus State agencies should discuss with the respective sponsoring
organization whether a closed enrolled designation for a potential site
is absolutely necessary. As such, USDA is requiring that State agencies
establish criteria for approving closed enrolled sites to ensure
operation of a site as closed enrolled does not limit program access to
the community at large.
Accordingly, this final rule amends the definitions of ``areas in
which poor economic conditions exist'' and ``closed enrolled site'' in
Sec. 225.2 to clarify eligibility requirements and include eligibility
determination based on area data of children eligible for free and
reduced-price meals. This final rule also updates redesignated
Sec. Sec. 225.6(g)(1)(ix) and 225.6(g)(2)(iii) to establish the
frequency at which the site must re-establish eligibility, if based on
area data as described in section III. G. ii of this final rule.
Further, this rule makes a technical correction to Sec. 225.15(f) to
reflect changes made to the definition of ``areas in which poor
economic conditions exist.'' Finally, this rule amends Sec.
225.6(a)(2) to require State agencies to establish criteria for closed
enrolled sites.
iii. Roles and Responsibilities of Site Supervisors
The site supervisor plays a critical role in managing and
maintaining quality at an SFSP site. Although USDA has provided
technical assistance to aid site supervisors to perform their jobs,
regulations did not include a definition of site supervisor that
clearly addresses their core responsibilities, including the
requirement that the site supervisor is on site during the meal
service. Providing such a definition would help sponsors and sites
comply with program requirements and improve program integrity.
Therefore, USDA proposed to add a definition of ``site supervisor'' to
clarify this role and its relationship to program operations.
Public Comments
USDA received 19 comments on this provision, including three form
letter copies. Of these, 14 were in support, four expressed partial
support, and one was in opposition.
Proponents expressed that the addition of this definition would
provide clarity for State agencies and sponsors. Comments that
partially supported the provision stated that the proposed definition
presumed that one person undertakes all activities listed for the site
supervisor, which may not be the case at some sites. Specifically,
commenters noticed that the definition requires site supervisors to
order meals, and noted that, in some instances, meal counts are handled
by the sponsor or the sponsor's central kitchen. Another commenter
recommended adding a reference to the term ``site supervisor'' in Sec.
225.14 of the regulations to prevent relevant parties from failing to
notice the addition of the definition.
A State agency opposed the provision citing their belief that the
requirement that the site supervisor remain on site for the duration of
the meal service is burdensome. A State agency also expressed concern
that the definition precluded the site supervisor's ability to delegate
functions as needed, and asserted that supervisors may be in charge of
multiple sites with similar meal times that require their attention.
[[Page 57331]]
USDA Response
This final rule codifies the definition of site supervisor as
proposed, with a minor change added to the regulations to support the
definition's inclusion.
USDA agrees that the roles and responsibilities of sponsor and site
staff vary across different sites. However, in all cases, the site
supervisor plays an integral role in supporting the SFSP, and provides
front-line assistance in maintaining program integrity and efficient
operations. USDA recognizes that the duties that are included in the
definition of site supervisor may need to be performed by more than one
staff member at the site. The site supervisor is the individual
ultimately responsible for overseeing operations at the site and must
be on site for the duration of every meal service. However, the site
supervisor may delegate tasks to another staff member so long as that
staff member is overseen by the site supervisor and has appropriate
training for the role that the individual is expected to fill. It is at
the State agency's discretion whether the sponsor must inform that
State agency when a site supervisor delegates their duties to another
staff member.
Additionally, USDA understands that the site supervisor may not be
the individual responsible for ordering meals, and has revised the
definition to more accurately reflect the site supervisor's duties
including maintaining documentation of meal deliveries, ensuring that
all meals served are safe, and maintaining accurate point of service
meal counts.
USDA also recognizes the usefulness of having a reference to the
term ``site supervisor'' in a portion of the regulation that is likely
to be reviewed by relevant parties. Therefore, USDA had added such a
reference to Requirements for sponsor participation at Sec.
225.14(c)(4).
Accordingly, this final rule adds a definition of ``site
supervisor'' at Sec. 225.2 and adds a reference to ``site supervisor''
at Sec. 225.14(c)(4).
iv. Unaffiliated Sites
SFSP sponsors often have a legal affiliation with their sites, such
as a Department of Parks and Recreation sponsoring the SFSP at one of
its recreation centers. However, a sponsor may have no legal
affiliation with a site that it is sponsoring other than an agreement
to conduct a meal service at the site. For example, a Department of
Parks and Recreation sponsoring the SFSP at a church. Section III. C.
iii. of this final rule codifies new site selection criteria for State
agencies to use during sponsor reviews, and includes affiliation with
the sponsor as a characteristic that will be reflected in a sponsor's
sample of sites. The regulations lacked a definition of an unaffiliated
site, and so USDA proposed to add a definition that an ``unaffiliated
site'' means a site that is legally distinct from the sponsor.
Public Comments
USDA received 29 comments on this provision, including 10 form
letter copies. Of these, 13 were supportive, one was opposed, and 15
were mixed. Proponents, all of whom were State agencies, appreciated
the clarification provided by defining an unaffiliated site. Opponents
included sponsoring organizations, general advocacy groups, and a few
State agencies. These commenters expressed concern that the proposal
would change the way that unaffiliated sites are approved or monitored,
making it more difficult for sponsors to serve them. Some cited
challenges for unaffiliated centers to participate in the CACFP, and
expressed concerns that unaffiliated sites in the SFSP may face similar
challenges. Commenters noted that the SFSP has many small sites which
are not capable of administering the Program on their own, but can
offer a vital service to their communities with the help of sponsors
with which they have no legal affiliation. A few commenters asked for
more information about the relationship between unaffiliated sites and
their sponsors, and how to distinguish unaffiliated sites. One State
agency that opposed the provision expressed concern about USDA adding
this definition before publishing a final Child Nutrition Program
Integrity rule, since the proposed rule included provisions related to
unaffiliated centers in the CACFP.
USDA Response
This final rule codifies the definition of ``unaffiliated site'' as
proposed. The purpose of adding this definition is simply to provide a
name for a type of business arrangement that currently exists in the
SFSP. The addition of this definition does not change anything about
how unaffiliated sites may participate in the SFSP or how they are
monitored. There are many different ways that a sponsor and the
unaffiliated sites that it sponsors may structure their relationship,
none of which will change with the addition of this definition. In
response to the commenters who asked for guidance on identifying an
unaffiliated site, in general, affiliated sites are part of the same
legal entity as the sponsoring organization, while an unaffiliated site
is not generally part of the same legal entity as its sponsoring
organization.
Although the term `unaffiliated site' is used in the CACFP to
describe a similar type of business arrangement, the CACFP has
different program requirements that affect a sponsor's relationship
with its centers. As a result, it does not follow that unaffiliated
SFSP sites will have the same challenges as unaffiliated centers in the
CACFP, nor it is necessary for USDA to wait for publication of a final
Child Nutrition Integrity rule to codify this definition.
Accordingly, this rule codifies the following definition in Sec.
225.2 for ``unaffiliated site:'' a site that is legally distinct from
the sponsor.
v. Unanticipated School Closure
The primary purpose of the SFSP is to maintain meal service for
children during the summer months when school is not in session.
However, the SFSP also plays an important role in serving children
during the school year in times of emergency or unexpected incidents
that disrupt school meals programs. The NSLA permits service
institutions to provide meal services to children who are not in school
for a period during the months of October through April due to a
natural disaster, building repair, court order, or similar cause. The
statute further requires that the meal service must take place at non-
school sites. While the regulations provided requirements for approving
sponsors to serve during unanticipated school closures, there was not a
specific regulatory definition of unanticipated school closure. USDA
proposed adding a definition of ``unanticipated school closure'' that
aligns with statutory requirements outlined in section 13(c)(1) of the
NSLA, 42 U.S.C. 1761(c)(1), and existing regulatory provisions related
to unanticipated school closures. Including this definition would also
allow regulatory text to be streamlined and remove duplicative and
repetitive references throughout the regulations. It is important to
note that the proposed rule was published in January 2020, before the
COVID-19 public health emergency triggered school closures nationwide,
causing schools to serve SFSP meals during unanticipated school
closures, in conjunction with Families First Coronavirus Response Act
(FFCRA) Nationwide Waiver authority, on a scale and for a duration that
was without precedent. However, the COVID-19 public health emergency
was declared at the beginning of the comment period, so some commenters
discussed the
[[Page 57332]]
impacts of COVID-19 in their submissions.
Public Comments
USDA received 22 comments on this provision, including four form
letter copies. Of these, five were in support, 15 expressed partial
support, and two held a mixed or unclear position.
Proponents, all of whom were State agencies, expressed a belief
that the definition aligns with existing policy and would provide
clarity for program operators and administrators.
Commenters who partially supported the definition included State
agencies, sponsors, general advocacy groups, individuals, and a Federal
elected official. These commenters and a State agency whose comment was
mixed voiced a desire for schools to be permitted to operate as sites
during unanticipated school closures. The commenters placed particular
emphasis on sites sponsored by SFAs in good standing, and schools that
were not affected by the cause of the school closure. Additionally,
these commenters suggested that, in recognition of the ongoing pandemic
and the potential for similar events to occur in the future, the
definition be modified to include public health emergencies, and State-
level disasters or emergencies as justification for SFSP use.
One commenter whose feedback was mixed suggested that USDA
reconsider the proposed definition because it is ill suited for the
circumstances, without offering specific recommendations for
improvements.
USDA Response
This final rule codifies the definition of ``unanticipated school
closure'' as proposed.
USDA understands why some commenters requested that sponsors be
able to serve meals at school sites during unanticipated school
closures. In some situations, the school site is safe for a meal
service and would be an efficient place for children to receive a meal.
However, the NSLA clearly limits meal service locations during an
unanticipated school closure to ``non-school sites.'' USDA has, at
times, allowed implementation practices that are contrary to the
statute. When such practices are discovered, USDA revises program
guidance and provides training and technical assistance to ensure that
State agencies and program operators implement the Program in
accordance with the law. In the past, USDA issued guidance permitting
SFA sites to serve meals during unanticipated school closures, which
was inconsistent with the law; this guidance has since been corrected.
Due to the exceptional circumstances of the COVID-19 pandemic, USDA
used the authority provided by the Families First Coronavirus Response
Act (FFCRA), as amended, to allow meal service during unanticipated
school closures at schools. Likewise, USDA has the ability to issue
similar waivers on an individual basis through its waiver authority in
section 12(l) of the NSLA (42 U.S.C. 1760(l)). However, USDA intends
for SFSP regulations to remain in agreement with the statue and will
not codify a rule allowing meal service at school sites during
unanticipated school closures because this practice is not supported by
the NSLA.
Some commenters suggested that the definition of ``unanticipated
school closure'' should be revised to reference public health
emergencies and State-level disasters or emergencies. USDA does not
find this specificity is needed as the ``similar cause'' clause of the
proposed definition provides State agencies the discretion to approve
program operators to serve SFSP meals during unanticipated school
closures in circumstances including public health emergencies and
State-level disasters or emergencies. Therefore, these references are
not necessary for continued use of the SFSP in this manner. Further,
FNS did not propose substantive changes to the regulatory requirements
for meal service during unanticipated school closures in this
rulemaking. Given the public's strong interest in meal service options
during school closures after the COVID-19 public health emergency
caused nationwide school disruptions, USDA has determined that it would
not be appropriate to make changes to policies on meal service during
unanticipated school closures without first proposing and soliciting
comments on such changes. For this reason, USDA is codifying the
proposed changes, which add a new definition, but otherwise maintaining
current policy for meal service during unanticipated school closures.
State agencies and program operators may refer to current guidance on
meal service during unanticipated school closures (SFSP 04-2020, Meal
Service During Unanticipated School Closures, November 5, 2019) and on
the process for requesting a waiver of these requirements as discussed
in section G.i of this rule. Accordingly, this rule adds to Sec. 225.2
a definition of ``unanticipated school closure.'' In addition, this
final rule revises all references to unanticipated school closures in
Sec. 225.
vi. Nonprofit Food Service, Nonprofit Food Service Account, Net Cash
Resources
The proposed rule included definitions of ``nonprofit food
service,'' ``nonprofit food service account,'' and ``net cash
resources.'' Proper administration of a nonprofit food service and
appropriate management of program funds are critical to the integrity
of the SFSP. Therefore, providing clear and consistent definitions for
these terms will promote program integrity. To create consistency
across Child Nutrition Programs, the proposed definitions also align
with the terms already defined under the NSLP in 7 CFR 210.2.
Public Comments
USDA received 16 comments on this provision, including three form
letter copies. Of these, 15 were supportive, one was opposed, and none
were mixed. Proponents said that State agencies and sponsors will
benefit from the addition of consistent definitions. However, one State
Agency asked for additional resources to train sponsors on these
concepts.
Several commenters, including one who was opposed, expressed
concern that the addition of these definitions would impact existing
requirements related to excess funds and allowable levels of net cash
resources. One commenter wrote that the proposed definition for net
cash resources implies that only zero net cash resources are allowable
and asked USDA to retain the current requirements for net cash
resources limits.
One commenter pointed out an inconsistency with the proposed
definitions: the definition of ``nonprofit food service'' references
``schoolchildren,'' while the definition of ``nonprofit food service
account'' references ``children.''
USDA Response
This final rule codifies the definitions of ``nonprofit food
service account'' and ``net cash resources'' as proposed. The
definition of ``nonprofit food service'' is codified with a technical
correction.
USDA appreciates the commenter who pointed out that the definition
of ``nonprofit food service account'' references ``schoolchildren.''
This definition should reference ``children'' since the SFSP is not
available to children when they are in school. This final rule corrects
the definition.
The addition of these definitions does not change the requirement
for a sponsor to maintain a nonprofit food service in accordance with
redesignated
[[Page 57333]]
Sec. 225.6(i)(1), nor does it change the requirement in Sec.
225.15(a)(4) that a sponsor 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. Likewise, the requirements in
Sec. 225.9(c)(6) related to excess advanced payments remain unchanged.
Accordingly, this final rule amends regulations found at Sec.
225.2 to add definitions for ``nonprofit food service,'' ``nonprofit
food service account,'' and ``net cash resources.''
G. Miscellaneous
i. Authority To Waive Statute and Regulations
Section 12(l) of the NSLA (42 U.S.C 1760(l)) provides the Secretary
with the authority to waive program requirements for States or eligible
service providers if it is determined that the waiver would facilitate
the ability of the States or eligible service provider to carry out the
purpose of the Program, and the waiver will not increase the overall
cost of the Program to the Federal Government. This waiver authority
applies to statutory requirements under the NSLA or the Child Nutrition
Act of 1966 (CNA) (42 U.S.C. 1771 et seq.) and any regulations issued
under either Act. The Secretary does not have the authority to waive
certain requirements including, but not limited to, the nutritional
content of the meals served, Federal reimbursement rates, or the
enforcement of any statutory right of any individual. In addition, the
Secretary may not waive program requirements that originate in other
laws such as the Civil Rights Act of 1964. It is important to note
that, although this rule primarily affects the SFSP, the Secretary's
waiver authority applies to all Child Nutrition Programs including the
SFSP, NSLP, SBP, Special Milk Program, Fresh Fruit and Vegetable
Program, and the CACFP. Although regulations are not needed to continue
implementing waivers, adding waiver authority to the regulations
provides clarity for States and program operators.
The State is responsible for the overall administration of Child
Nutrition Programs and is in the best position to understand the needs
of its service providers and communities with regard to the need for a
waiver of statutory or regulatory requirements. In addition, the State
is responsible for monitoring program implementation and determining
when programmatic changes or corrective actions are needed to ensure
the Child Nutrition Programs are operated with high levels of
integrity. As such, the State agency plays a critical role in
requesting and overseeing implementation of a waiver. USDA has long
relied on State agencies to determine when and how waiver authority can
best be applied to improve program operations, and if a waiver can be
implemented with integrity. The responsibilities of the State agency
were outlined in technical assistance issued in 1996, and again in 2018
guidance on the process for requesting a waiver and data reporting
requirements for approved waivers (SFSP 05-2018, Child Nutrition
Program Waiver Request Guidance and Protocol--Revised, May 24, 2018).
Under current guidance, State agencies are responsible for
requesting waivers for the State and submitting waiver requests on
behalf of eligible service providers. State agencies do not have the
discretion to deny or approve waivers submitted on behalf of eligible
service providers but are expected to recommend a course of action to
USDA. The Department does not have a direct relationship with eligible
service providers and does not have a reliable means to make final
determinations on waiver requests absent the input of the State agency.
As a practical matter, USDA denies waiver requests from eligible
service providers when the State agency determines that the request
does not meet the requirements for a waiver or cannot be implemented
effectively. Therefore, USDA proposed to grant the States the maximum
administrative discretion possible regarding waiver requests from
eligible service providers. The proposed rule stated that the State
agency should review waiver requests from eligible service providers
and make its own determination as to whether a request meets the
requirements for a waiver as described in section 12(l) of the NSLA,
can be implemented with a high level of integrity, can be effectively
monitored, and will provide data on the impacts of the waiver.
Concurring requests must be forwarded to the FNSRO with a rationale
supporting the request for USDA to consider when making the final
determination.
USDA also proposed to provide the State agency the discretion to
deny a waiver submitted by an eligible service provider. In some
instances, a waiver request may not meet the requirements outlined in
section 12(l) of the NSLA. In these cases, the State agency must deny
the request, and should work with the eligible service provider and the
FNSRO, if necessary, to improve the request, or identify other options
to meet their programmatic needs without the use of a waiver. In other
instances, the State agency may deny a waiver request if it determines
that the waiver could not be properly implemented or monitored, or if
other measures could be taken to meet the needs of the Program without
the use of a waiver. USDA relies on State agencies to recommend whether
a waiver meets statutory requirements and can be implemented
effectively. If the State determines that a request does not meet this
standard, there is no reason for USDA to review it.
To ensure the waiver process is efficient and adheres to the
statutory requirements for a waiver, USDA specifically requested
comments on the process of requesting a waiver, monitoring
implementation of the waiver, and reporting data on waivers issued
through this authority.
Accordingly, USDA proposed to add the following new paragraphs to
codify USDA's authority to waive statutory and regulatory requirements
for all Child Nutrition Programs:
<bullet> Sec. 210.3(d);
<bullet> Sec. 215.3(e);
<bullet> Sec. 220.3(d);
<bullet> Sec. 225.3(d); and
<bullet> Sec. 226.3(e).
Public Comments
USDA received 35 comments on this provision, including nine form
letter copies. Of these, 11 offered support, six partially supported
the proposal, 10 opposed, and eight were mixed. Proponents, who were
all State agencies, supported the inclusion of USDA's waiver authority
in the regulations, and several voiced specific support for providing
State agencies the discretion to deny a waiver request from an eligible
service provider. These commenters said that State agencies are in the
best position to assess a service provider's ability to properly
implement a waiver and provide necessary program data, as well as the
State's own ability to monitor program operations under a waiver. One
proponent requested that USDA specify that waiver authority is limited
to requirements under the NSLA and CNA, and not to other laws affecting
the Child Nutrition Programs.
Commenters who offered partial support included a State agency,
sponsors, a general advocacy organization, and an individual. These
commenters were pleased to see waiver authority added to the
regulations and generally supported the role of State agencies in
monitoring and reporting on waivers. However, most expressed opposition
to providing State agencies the authority to deny waiver requests from
eligible service providers.
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Opponents were primarily sponsor and general advocacy
organizations, and expressed concern about the ability of State
agencies to deny a waiver request from an eligible service provider.
Some worried that State agencies could interpret the regulations
differently, leading to inconsistent implementation within and across
States. Commenters suggested that the regulations should include
additional guidelines and specific criteria for States to use when
evaluating waiver requests, a timeline for State agency reviews, and
the requirement that States provide objective evidence to support a
waiver denial. Some requested an appeal process that is decided or
reviewed by USDA. One commenter objected to providing States the
discretion to deny a waiver, stating that this authority is not found
in the statute.
In response to USDA's request for specific comments, several State
agencies also remarked on the process of requesting and reporting on a
waiver. Some of these commenters said that the process for requesting a
waiver is straightforward and appreciated the template USDA has
provided, while others found the process to be burdensome and time
consuming, especially when multiple waivers are being requested. Those
who commented on monitoring of waivers stated that monitoring is
conducted during the Administrative Review, technical assistance
visits, and at the time of data collection. Several commenters said
that completing data reporting requirements is burdensome and
difficult. Some requested that USDA simplify reporting requirements and
provide templates ahead of time to facilitate compliance. One commenter
suggested that waivers should be renewable for multiple year to reduce
burden.
USDA Response
The final rule codifies USDA's waiver authority for Child Nutrition
Programs with several revisions. In response to a commenter who
suggested that USDA specify that waiver authority only applies to
requirements under the NSLA and CNA, the regulations are amended to
clarify that waivers issued pursuant to these regulations must be
consistent with current 12(l) requirements, which includes a
prohibition on waivers relating to the Civil Rights Act of 1964. In
addition, program requirements that derive from other statutes or
regulations may not be waived under this authority. For example, USDA
may not waive standards for financial and program management that are
required in 2 CFR part 200. With regard to a commenter who requested
that States provide objective evidence to support a waiver denial, this
final rule is revised to require that, when States provide written
notice to an eligible service provider that a waiver is denied, they
must include the reason for denying the request. USDA is also adding
language clarifying that the Department 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 USDA may not grant a waiver that increases
Federal costs. Finally, other minor revisions will ensure continuity
with section 12(l).
As discussed in the background section of this rule, in 2018, USDA
rescinded several nationwide waivers in response to an audit by the
USDA OIG. Following that action, USDA approved more than 230 individual
requests in 2019 from States and eligible service providers for waivers
primarily related to first week site visits, meal service times, OVS,
and eligibility for closed enrolled sites. Through this process, USDA
gained critical insight into the use of these waivers and the ability
of individual States and eligible service providers to comply with
waiver requirements. USDA developed the proposed rule based on these
lessons learned, including the importance of State agency input on the
viability of waiver requests from eligible service providers.
Historically, waivers approved through section 12(l) of the NSLA
have been rare. The statute and regulations are intended to govern all
Child Nutrition Program operators in a consistent manner. Exceptions to
the statute and regulations should be limited to exceptional
circumstances that were not contemplated during development of the
statute and regulations and for which a timely remedy is needed. USDA
has approved a large number of waivers of SFSP requirements over the
last few years to support States and SFSP sponsors that had previously
used the nationwide waivers that were rescinded in 2018 to administer
their programs. The four most commonly requested of these waivers are
being addressed through this rulemaking. Once this rule is finalized,
the majority of Child Nutrition Program waivers requested in the last
few years related to typical program operations will no longer be
needed. USDA anticipates that waivers of statute and regulations will
again become a rare occurrence.
USDA understands the concerns of commenters who said that State
agencies could apply 12(l) wavier regulations inconsistently and
without recourse for program operators. Many of these commenters
requested additional guidelines for State agencies and an appeals
process decided at the Departmental level. State agencies play a
critical role in vetting requests from eligible service providers and
USDA relies on their input to determine if a request could be properly
implemented and appropriately monitored. State agencies are solely
responsible for approving and monitoring eligible service providers
such as SFAs, CACFP institutions, and SFSP sponsors. USDA has no direct
connection with these program operators except through the State agency
and is not in a position to assess the appropriateness of an eligible
service provider's waiver request without input from the State agency.
Because the Department lacks a relationship with, or firsthand
information about, the service provider, it would be unproductive for
USDA to review applications that the State does not support. If a State
agency concludes that a waiver should not be approved, USDA typically
would not have a basis for determining otherwise, and as such, will
honor the State's determination. State agencies are required to forward
concurring requests to the FNSRO with a rationale supporting the
request, at which point USDA will make the final determination on the
request. Although the USDA has determined that this approach will best
enable the Department to fulfill the requirements of the statute, we
recognize that we must remain actively involved with program
implementation to ensure the regulations are carried out as intended
and consistent with the regulations. When used appropriately, section
12(l) is a tool that allows States and service providers to respond to
local conditions and meet the needs of the communities they serve. For
this reason, it is important that States and service providers have
access to waivers through a transparent and consistent waiver request
process. USDA is responsible for providing technical assistance to, and
monitoring of, the State agencies. FNSROs are in regular contact with
the States to provide support and oversight and are generally aware of
trends in program implementation at the State level. As with other
regulatory requirements, FNSROs will work with the State agency to
correct any misapplication of this provision and support correct and
consistent implementation of these waiver requirements.
As stated above, the number of waiver requests is anticipated to
reduce substantially once this rule goes into
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effect and flexibilities that were previously made available through
individual section 12(l) waivers are codified. With fewer waiver
requests from eligible service providers, State agencies should be able
to provide more technical assistance to the requester to help them
improve their request or determine alternative approaches to meet the
needs of the programs without the use of a waiver; technical assistance
of this type is a core requirement of State agencies. USDA already
provides a waiver request template and instructions that include the
type of information USDA needs in order to approve a request. State
agencies may choose to use that as a guide when reviewing waiver
requests from eligible service providers. As stated above, waivers are
intended to provide exemptions from statute and regulations in limited
circumstances; State agencies and eligible service providers are not
entitled to waivers of program requirements. Therefore, State agencies
are not entitled to appeal a waiver denial by USDA, nor are eligible
service providers entitled to appeal a waiver denial by the State
agency. In response to commenters who requested timelines for States to
review waiver requests, the proposed regulatory text already includes
the requirement that States must forward a waiver request from an
eligible service provider to USDA within 15 calendar days of receipt,
or notify the requesting eligible service provider in writing within 30
calendar days of receipt of the request if the request is denied.
USDA agrees that improving the process for requesting and reporting
on waivers will reduce burden at all levels and support proper program
administration. Processing a high volume of waiver requests and
collecting data on approved waivers in 2019 highlighted the need to
refine the waiver process. USDA is using the lessons learned since 2019
to inform ongoing efforts to streamline the waiver process
[…truncated; see source link]Indexed from Federal Register on September 19, 2022.
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