Nonprogram Foods Revenue Compliance Tool: 7 CFR Part 210

In the administration of the National School Lunch Program (NSLP), school food authorities (SFAs) must ensure that the financial integrity of the nonprofit school food service account is maintained. A critical aspect of this oversight is the management of nonprogram foods. According to federal regulations outlined in 7 CFR Part 210, SFAs are required to ensure that revenue from nonprogram foods is sufficient to cover the costs of those foods.

What are Nonprogram Foods?

Nonprogram foods are defined as foods and beverages purchased with funds from the nonprofit school food service account, other than those designated as reimbursable meals served under the NSLP or the School Breakfast Program (SBP). Examples include a la carte items, adult meals, catering services, vending machine items, and competitive food sales. Because these items are not subsidized by federal reimbursements, the revenue generated from their sale must be proportional to their production and procurement costs.

The Compliance Requirement

The core objective of the nonprogram food revenue requirement is to prevent the subsidization of non-reimbursable food sales using federal funds intended for student meals. Under 7 CFR 210.14(f), SFAs must ensure that the percentage of total revenue from the sale of nonprogram foods is greater than or equal to the percentage of total food costs associated with those nonprogram foods.

The Role of the Compliance Tool

To assist SFAs in meeting these complex regulatory requirements, the United States Department of Agriculture (USDA) and various state agencies provide a Nonprogram Foods Revenue Compliance Tool. This tool serves as a calculator and auditing aid that allows administrators to input financial data, such as food costs and revenue streams, to determine if they are in compliance.

By utilizing this tool, SFAs can identify if their pricing for a la carte items or adult meals is adequate. If the tool indicates that the revenue is insufficient, the SFA is required to make adjustments to their pricing structures to ensure that nonprogram food sales are covering their own costs.

Key Benefits of Compliance

Adherence to 7 CFR Part 210 serves several vital purposes:

• Financial Sustainability: It protects the nonprofit school food service account by ensuring that money intended for student nutrition is not lost on items that do not receive federal reimbursement.
• Audit Preparedness: During Administrative Reviews (AR), state agencies examine the revenue records for nonprogram foods. Maintaining a record of having used the compliance tool provides documentation of due diligence.
• Transparency: Using standardized tools helps school districts maintain clear financial records that are easily explainable to school boards and the public.

Steps to Ensure Compliance

1. Categorize Costs: Maintain accurate records that separate the costs of food used for reimbursable meals from the costs of food used for nonprogram items.
2. Track Revenue: Ensure that point-of-sale systems or manual ledger entries clearly distinguish revenue generated from nonprogram food sales.
3. Annual Evaluation: Perform an annual assessment using the USDA compliance tool. Even if an SFA does not change its prices frequently, the costs of food procurement (wholesale prices) change, which necessitates periodic review.
4. Price Adjustment: If the tool shows a deficit, adjust the pricing of nonprogram items to align with the required revenue ratios.

By following these guidelines and consistently utilizing the Nonprogram Foods Revenue Compliance Tool, school food authorities can effectively manage their financial operations, remain compliant with federal regulations, and focus on the primary goal of providing nutritious meals to students.