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1. Provisions 2 & 3 USDA published a proposed rule concerning Provisions 2 and 3 on February 7, 2000. Comments were due April 7, 2000. 12 comments were received from State agencies, local school food authorities and advocate groups. In general, commenters supported the proposed rule. The majority of comments suggested clarifications. However a few new elements were added to the final rule, as a way to remove some burdens, as a result of comments. The final rule was published on September 20, 2001 and was effective October 22, 2001. Before we start discussing the rule, it is often helpful to go over all of the Provisions (1, 2, and 3), in general. So we will begin with a bit of history, then an overview of each provision and then discuss the new regulation. USDA published a proposed rule concerning Provisions 2 and 3 on February 7, 2000. Comments were due April 7, 2000. 12 comments were received from State agencies, local school food authorities and advocate groups. In general, commenters supported the proposed rule. The majority of comments suggested clarifications. However a few new elements were added to the final rule, as a way to remove some burdens, as a result of comments. The final rule was published on September 20, 2001 and was effective October 22, 2001. Before we start discussing the rule, it is often helpful to go over all of the Provisions (1, 2, and 3), in general. So we will begin with a bit of history, then an overview of each provision and then discuss the new regulation.

2. Why special provisions? Reduce paperwork Reduce meal count burdens Provision 1 & 2 in NSLA since 1977 Provision 3 since 1994 Found in 7 CFR 245.9 Two provisions have been available for local school food authority use since 1977. Provision 1 and Provision 2 have been in the National School Lunch Act since 1977. The original goals of the Provisions have not changed, which are: to reduce paperwork, and to reduce meal count burdens. Please note that these burden reductions are intended to benefit BOTH the schools and households. When the provisions are in place, families as well as schools should experience a reduction in burden. The regulatory citation for the Provisions is not in the NSLP regulations of 210, they are found in the 245 regulations. Two provisions have been available for local school food authority use since 1977. Provision 1 and Provision 2 have been in the National School Lunch Act since 1977. The original goals of the Provisions have not changed, which are: to reduce paperwork, and to reduce meal count burdens. Please note that these burden reductions are intended to benefit BOTH the schools and households. When the provisions are in place, families as well as schools should experience a reduction in burden. The regulatory citation for the Provisions is not in the NSLP regulations of 210, they are found in the 245 regulations.

3. Provision 1 Simplified Applications Schools where 80% of students eligible for free and reduced price Children eligible for FREE meals are certified every 2 years Do not have to serve all meals at no charge This session is about Provisions 2 and 3, but let’s recall that Provision 1 exists even though it is not widely used. Provision 1 is basically a paperwork reduction process. It allows for applications for free students to provide for a two-year eligibility. However, unlike Provisions 2 and 3, it does not change the daily meal counting and claiming procedures. The burden reduction for Provision 1 comes in the form of less paperwork. Provision 1 is the only Provision where schools must meet a threshold in order to qualify. Such schools must have at least 80% of their students eligible for free and reduced price meals. Provision 1 also does not require that all meals be served at no charge. Again, this provision only impacts the paperwork aspect of determining eligibility so meal counts by type continue to be required at the point of service and meals are claimed based on daily counts by type. This session is about Provisions 2 and 3, but let’s recall that Provision 1 exists even though it is not widely used. Provision 1 is basically a paperwork reduction process. It allows for applications for free students to provide for a two-year eligibility. However, unlike Provisions 2 and 3, it does not change the daily meal counting and claiming procedures. The burden reduction for Provision 1 comes in the form of less paperwork. Provision 1 is the only Provision where schools must meet a threshold in order to qualify. Such schools must have at least 80% of their students eligible for free and reduced price meals. Provision 1 also does not require that all meals be served at no charge. Again, this provision only impacts the paperwork aspect of determining eligibility so meal counts by type continue to be required at the point of service and meals are claimed based on daily counts by type.

4. Provision 2 No minimum % of free or reduced price ALL MEALS AT NO CHARGE Base year: Eligibility determinations and daily meal counts by type claim reimbursement from these counts Subsequent years: Count daily total meals claim reimbursement by type using base year percentages Provision 2 simplifies the procedures related to determining eligibility and the counting and claiming system. There is no threshold for schools to participate. However, it is somewhat self limiting because schools generally need to have a relatively high percentage of students eligible for free and reduced price meals. This is because school food authorities need to cover the loss of student payments which would have been received from full price and reduced price meals. All meals must be served at no charge. This is true even for the base year. Note that the meals are served at no charge, not “free”. Even though all participating students go through the serving line and appear to be “free”, the school is claiming meals at the free, reduced price and paid rates. During the base year, the students pass through the serving line and all student meals are provided at no charge. However, behind the scenes the school is still taking DAILY COUNTS BY TYPE. These actual counts by type are used to generate the monthly Claim for Reimbursement just like a standard operating school year. In subsequent or non-base years, the students pass through the serving line and all student meals are provided at no charge. During the non-base years, the school counts TOTAL meals on a daily basis at the point of service. These meal counts are totaled and the claiming percentages developed from the base year are applied. This process allocates the meals to free, reduced price, and paid which are then submitted with the monthly Claim for Reimbursement. Provision 2 simplifies the procedures related to determining eligibility and the counting and claiming system. There is no threshold for schools to participate. However, it is somewhat self limiting because schools generally need to have a relatively high percentage of students eligible for free and reduced price meals. This is because school food authorities need to cover the loss of student payments which would have been received from full price and reduced price meals. All meals must be served at no charge. This is true even for the base year. Note that the meals are served at no charge, not “free”. Even though all participating students go through the serving line and appear to be “free”, the school is claiming meals at the free, reduced price and paid rates. During the base year, the students pass through the serving line and all student meals are provided at no charge. However, behind the scenes the school is still taking DAILY COUNTS BY TYPE. These actual counts by type are used to generate the monthly Claim for Reimbursement just like a standard operating school year. In subsequent or non-base years, the students pass through the serving line and all student meals are provided at no charge. During the non-base years, the school counts TOTAL meals on a daily basis at the point of service. These meal counts are totaled and the claiming percentages developed from the base year are applied. This process allocates the meals to free, reduced price, and paid which are then submitted with the monthly Claim for Reimbursement.

5. Provision 3 No minimum % of free or reduced price Base year meals either at no charge or regular pricing program Count daily meals by type in the base year claim reimbursement from these counts Claim same level of reimbursement as adjusted in non-base years Provision 3 also simplifies the procedures related to determining eligibility and the counting and claiming system. There is no threshold for schools to participate. However, Provision 3 (like Provision 2) is self-limiting because schools generally need to have a relatively high percentage of students eligible for free and reduced price meals. Also, like Provision 2, school food authorities need to cover the loss of student payments which would have been received from full price and reduced price meals. One difference from Provision 2 is that in the base year schools choose whether to offer all meals at no charge or continue charging students for reduced price and paid meals. During the 4-year cycle of Provision 3, schools MUST offer all meals at no charge. Even though all participating students go through the serving line and appear to be “free,” the school is claiming meals at the free, reduced price and paid rate. During the base year, the students pass through the serving line and the school is still taking DAILY COUNTS BY TYPE. These actual counts by type are used to generate the monthly Claim for Reimbursement just like a standard operating school year. During the subsequent or non-base years, the students pass through the serving line and all student meals are provided at no charge. The school is eligible for the base year level of assistance with adjustments. In simplest terms, schools earn the same level of reimbursement as they did during the base year with adjustments for enrollment, inflation and operating days. Provision 3 also simplifies the procedures related to determining eligibility and the counting and claiming system. There is no threshold for schools to participate. However, Provision 3 (like Provision 2) is self-limiting because schools generally need to have a relatively high percentage of students eligible for free and reduced price meals. Also, like Provision 2, school food authorities need to cover the loss of student payments which would have been received from full price and reduced price meals. One difference from Provision 2 is that in the base year schools choose whether to offer all meals at no charge or continue charging students for reduced price and paid meals. During the 4-year cycle of Provision 3, schools MUST offer all meals at no charge. Even though all participating students go through the serving line and appear to be “free,” the school is claiming meals at the free, reduced price and paid rate. During the base year, the students pass through the serving line and the school is still taking DAILY COUNTS BY TYPE. These actual counts by type are used to generate the monthly Claim for Reimbursement just like a standard operating school year. During the subsequent or non-base years, the students pass through the serving line and all student meals are provided at no charge. The school is eligible for the base year level of assistance with adjustments. In simplest terms, schools earn the same level of reimbursement as they did during the base year with adjustments for enrollment, inflation and operating days.

6. Provision 2 Changes Delayed Implementation Annual Percentages Now we will discuss the changes to Provision 2 and 3 resulting from the September, 2001 final rule. For Provision 2 there are two unique additions: an allowance for delayed implementation and the ability to use annual claiming percentages. Now we will discuss the changes to Provision 2 and 3 resulting from the September, 2001 final rule. For Provision 2 there are two unique additions: an allowance for delayed implementation and the ability to use annual claiming percentages.

7. Provision 3 Changes Meal Counts at POS Adjustment for Operating Days Provision 3 includes the following additional requirements: to obtain meal counts at the point of service and an adjustment for operation days (to the extent that it impacts the number of meals served). Provision 3 includes the following additional requirements: to obtain meal counts at the point of service and an adjustment for operation days (to the extent that it impacts the number of meals served).

8. Changes/Clarification Both Provisions Edit Checks Verification Duration of Base Year Negligible Improvement Streamlined Base Year Statistical Requirements Recordkeeping A number of changes affected both Provisions. We will go through these after covering the specific changes for each provision. So lets turn now to Provision 2. A number of changes affected both Provisions. We will go through these after covering the specific changes for each provision. So lets turn now to Provision 2.

9. Provision 2 Changes Delayed Implementation SA may approve delayed implementation for 1st claim period School may charge students in reduced price and paid meal categories GOAL: Elicit public response to application request Over the years concerns were expressed that there is no incentive for households to submit applications when meals are offered at no charge. Delayed implementation allows schools to begin a school year using standard meal counting and claiming procedures, including charging students eligible for reduced price and paid meals. The reduced price charge limit remains at 40 cents. Delayed implementation is allowed for the first claiming period. NOTE: It is not the first thirty operating days, or the first “month”. The timing is specifically limited to the first claiming period. So if a school begins with less than 10 operating days and combines them with the next month this would be the first claiming period. If the first claiming period is 11 days, combining claims is not allowed and these 11 days become the first claiming period. Presenter’s notes: Remember that schools MAY use a student’s prior year eligibility for the first 30 operating days; however, to do so would potentially defeat the purpose of the delayed implementation option, i.e., to motivate households to submit current applications. If asked about the first claiming period, it may be valuable to confirm that when a school operates for 11 or more days they must file a claim for reimbursement for such a period, these are the only days the school may charge students for meals. Over the years concerns were expressed that there is no incentive for households to submit applications when meals are offered at no charge. Delayed implementation allows schools to begin a school year using standard meal counting and claiming procedures, including charging students eligible for reduced price and paid meals. The reduced price charge limit remains at 40 cents. Delayed implementation is allowed for the first claiming period. NOTE: It is not the first thirty operating days, or the first “month”. The timing is specifically limited to the first claiming period. So if a school begins with less than 10 operating days and combines them with the next month this would be the first claiming period. If the first claiming period is 11 days, combining claims is not allowed and these 11 days become the first claiming period. Presenter’s notes: Remember that schools MAY use a student’s prior year eligibility for the first 30 operating days; however, to do so would potentially defeat the purpose of the delayed implementation option, i.e., to motivate households to submit current applications. If asked about the first claiming period, it may be valuable to confirm that when a school operates for 11 or more days they must file a claim for reimbursement for such a period, these are the only days the school may charge students for meals.

10. Provision 2 Changes Annual claiming percentages School may add meal counts by category for the entire base year and convert to claiming percentages for F/RP/P School then uses the annual claiming percentage for each category for each month of the non-base year GOAL: Simplify application of claiming percentages The second change to Provision 2 is the ability to use annual claiming percentages. Previously, schools used the base year meal counts and developed monthly claiming percentages for free, reduced price and paid. These percentages were then applied to the total meal counts for each corresponding month in the non-base year. Now, annual claiming percentages allow schools to develop an annual claiming percentage for each meal category (i.e., free, reduced price and paid) which are applied to each month’s total meal count during the non-base years. To calculate the annual claiming percentage, the base year annual meal counts must be used. Percentages may not be added together. The goal of this provision is to simplify the process of applying claiming percentages to the monthly meal counts since schools do not have to vary the percentages each month. However, annual claiming percentages are an option: schools or SA may continue to use the current month-by-month method. The second change to Provision 2 is the ability to use annual claiming percentages. Previously, schools used the base year meal counts and developed monthly claiming percentages for free, reduced price and paid. These percentages were then applied to the total meal counts for each corresponding month in the non-base year. Now, annual claiming percentages allow schools to develop an annual claiming percentage for each meal category (i.e., free, reduced price and paid) which are applied to each month’s total meal count during the non-base years. To calculate the annual claiming percentage, the base year annual meal counts must be used. Percentages may not be added together. The goal of this provision is to simplify the process of applying claiming percentages to the monthly meal counts since schools do not have to vary the percentages each month. However, annual claiming percentages are an option: schools or SA may continue to use the current month-by-month method.

11. Provision 3 Changes Meal Counts at POS Require meal counts of reimbursable meals at the POS 2. Failure to maintain service level requires corrective action, possible return to standard meal service GOAL: To ensure a quality food service with high participation does not degrade (with drop in participation) The Provision 3 changes include some additions to the procedures: The first is the requirement to take a count of reimbursable meals at the point of service during the non-base years. Remember that during the base year, all Provision 3 schools must take meal counts by type to establish the level of reimbursement. Now, for the first time, Provision 3 schools are also required to take a total daily meal count of reimbursable meals at the point of service. Please note that these counts are not the foundation of the Claim for Reimbursement. These meal counts are used for comparison and oversight purposes. Failure to maintain service level requires corrective action, perhaps even returning the school to standard meal counting and claiming procedures. The goal of this requirement is to ensure that a school which conducts their base year while offering a high quality food service does not significantly decrease quality during non-base years – thereby serving fewer students due to low acceptability – all the while continuing to collect Federal reimbursement at the base year level. It is interesting to note that several State commenters supported this requirement for Provision 3 meal counts. The Provision 3 changes include some additions to the procedures: The first is the requirement to take a count of reimbursable meals at the point of service during the non-base years. Remember that during the base year, all Provision 3 schools must take meal counts by type to establish the level of reimbursement. Now, for the first time, Provision 3 schools are also required to take a total daily meal count of reimbursable meals at the point of service. Please note that these counts are not the foundation of the Claim for Reimbursement. These meal counts are used for comparison and oversight purposes. Failure to maintain service level requires corrective action, perhaps even returning the school to standard meal counting and claiming procedures. The goal of this requirement is to ensure that a school which conducts their base year while offering a high quality food service does not significantly decrease quality during non-base years – thereby serving fewer students due to low acceptability – all the while continuing to collect Federal reimbursement at the base year level. It is interesting to note that several State commenters supported this requirement for Provision 3 meal counts.

12. Provision 3 Changes Operating Days Adjustments based on enrollment, inflation and operating days Operating day adjustment when it impacts the number of meals served Can be done monthly/annually GOAL: To ensure reimbursement reflects meal service operations The second change to Provision 3 is the requirement to make adjustments to the base year level of assistance for operating days along with the adjustments to enrollment and inflation. This adjustment must be made when it impacts the number of meals served. For example, if there is a 2 day teacher strike during the first week of September, but the school system makes up those days by holding school on two Saturdays, which include meals, it does not require an adjustment. Schools can make monthly adjustments to serving days or may wait until the end of the year to make an annual adjustment. For example, schools might experience closures due to snow days during the winter. However, these days may be added to the school calendar at the end of the year in order to provide 180 instruction days for students. If the base year and non-base year both included 180 operating days, an annual adjustment would not be necessary for operating days even though the actual number of serving days by month varied between the base year and the non-base year. Another example is when a traditional school converts to a year-round site. For example, a school under Provision 3 operates for 180 days during the school year while serving approximately 500 students per day. Then the school changes to a year round school where they operate for 240 days. However, the school now has 4 “tracks” of students where only 3 tracks are in session at a time and the average number of meals per day is 375. Even though the school moved from 180 to 240 operating days, there is not an automatic adjustment to operating days since it did not impact the number of meals served. (500 meals per day x 180 days = 90,000 total meals; 375 meals per day x 240 days = 90,000 total meals) The second change to Provision 3 is the requirement to make adjustments to the base year level of assistance for operating days along with the adjustments to enrollment and inflation. This adjustment must be made when it impacts the number of meals served. For example, if there is a 2 day teacher strike during the first week of September, but the school system makes up those days by holding school on two Saturdays, which include meals, it does not require an adjustment. Schools can make monthly adjustments to serving days or may wait until the end of the year to make an annual adjustment. For example, schools might experience closures due to snow days during the winter. However, these days may be added to the school calendar at the end of the year in order to provide 180 instruction days for students. If the base year and non-base year both included 180 operating days, an annual adjustment would not be necessary for operating days even though the actual number of serving days by month varied between the base year and the non-base year. Another example is when a traditional school converts to a year-round site. For example, a school under Provision 3 operates for 180 days during the school year while serving approximately 500 students per day. Then the school changes to a year round school where they operate for 240 days. However, the school now has 4 “tracks” of students where only 3 tracks are in session at a time and the average number of meals per day is 375. Even though the school moved from 180 to 240 operating days, there is not an automatic adjustment to operating days since it did not impact the number of meals served. (500 meals per day x 180 days = 90,000 total meals; 375 meals per day x 240 days = 90,000 total meals)

13. Changes/Clarifications Both Provisions Edit Checks Verification Duration of Base Year Negligible Improvement Streamlined Base Year Statistical Requirements Recordkeeping The following items reflect changes and clarifications to both provisions and we will go through each one in more detail. Some of these items are not actual changes, for example the verification policy, they simply spell out in the regulations what has always been expected. We will begin with the edit check requirements. The following items reflect changes and clarifications to both provisions and we will go through each one in more detail. Some of these items are not actual changes, for example the verification policy, they simply spell out in the regulations what has always been expected. We will begin with the edit check requirements.

14. Changes – Both Provisions Edit Checks Base Year – Complete edits Non-base year – Simplified edits Provision 2 = Attendance adjusted enrollment compared to daily total meals Provision 3 = SFA designed system to ensure level of service considering attendance adjusted enrollment During the base year, the internal control procedures remain the same as for any other school year for schools under Provision 2 and Provision 3. During the non-base years, a simplified edit check is required. Under Provision 2, instead of comparing daily meal counts by type to the attendance adjusted eligibility data, schools simply compare the total daily meal count to the attendance adjusted enrollment. For Provision 3, the SFA may use a system to edit the meal program operation that ensures the level of service while considering total enrollment and attendance data. Often, the simplest method will be to use the Provision 2 edit check methodology. During the base year, the internal control procedures remain the same as for any other school year for schools under Provision 2 and Provision 3. During the non-base years, a simplified edit check is required. Under Provision 2, instead of comparing daily meal counts by type to the attendance adjusted eligibility data, schools simply compare the total daily meal count to the attendance adjusted enrollment. For Provision 3, the SFA may use a system to edit the meal program operation that ensures the level of service while considering total enrollment and attendance data. Often, the simplest method will be to use the Provision 2 edit check methodology.

15. Changes/Clarifications– Both Provisions Verification Base Year – Complete full verification process Non-base year – No verification in Provision 2/3 schools when: School offers only one meal program (e.g., NSLP) & participates as Provision 2/3 School offers NSLP and SBP and both programs under Provision 2/3 During the base year, schools operating under Provision 2 and Provision 3 must be in the verification pool to be part of the SFA’s normal verification procedures. During the non-base year, schools under Provision 2 and 3 are not required to be part of the SFA’s verification process when all programs are under the Provisions. If a school is only operating the NSLP and it operates under Provision 2 or 3, the schools applications are not considered for verification during non-base years. When the school offers both the NSLP and the SBP and both are under Provision 2 or 3, the schools applications are not considered for verification during non-base years. However, when schools offers both the NSLP and the SBP and only one program is under Provision 2 or 3, these schools’ applications must be considered eligible for verification during non-base years. For example, if the school operates the NSLP under standard eligibility determination and counting and claiming procedures but offers the SBP under Provision 2, this school’s applications would continue to be in the pool for verification during the non-base years. During the base year, schools operating under Provision 2 and Provision 3 must be in the verification pool to be part of the SFA’s normal verification procedures. During the non-base year, schools under Provision 2 and 3 are not required to be part of the SFA’s verification process when all programs are under the Provisions. If a school is only operating the NSLP and it operates under Provision 2 or 3, the schools applications are not considered for verification during non-base years. When the school offers both the NSLP and the SBP and both are under Provision 2 or 3, the schools applications are not considered for verification during non-base years. However, when schools offers both the NSLP and the SBP and only one program is under Provision 2 or 3, these schools’ applications must be considered eligible for verification during non-base years. For example, if the school operates the NSLP under standard eligibility determination and counting and claiming procedures but offers the SBP under Provision 2, this school’s applications would continue to be in the pool for verification during the non-base years.

16. Changes/Clarifications– Both Provisions Duration of Base Year Base year must start at the beginning* of a school year *except for Provision 2 delayed implementation sites Both Provisions have seen some clarification and definition regarding the base year. In order to allow the most flexibility when Provision 3 was first introduced, schools could begin operation at times other than the beginning of the school year. As a result of comments and since the initial implementation period is over, the final rule requires schools to start the operation of a Provision at the start of the school year. The obvious exception is for Provision 2 sites that employ a delayed implementation for the first claiming period. Both Provisions have seen some clarification and definition regarding the base year. In order to allow the most flexibility when Provision 3 was first introduced, schools could begin operation at times other than the beginning of the school year. As a result of comments and since the initial implementation period is over, the final rule requires schools to start the operation of a Provision at the start of the school year. The obvious exception is for Provision 2 sites that employ a delayed implementation for the first claiming period.

17. Changes/Clarifications– Both Provisions Extensions - Income level of the school population has remained stable, declined or had only negligible improvement Defines “negligible improvement” as 5% or less improvement in the income level of the school’s population. To grant an extension using socioeconomic data sources, State agencies must review and evaluate the socioeconomic data submitted by the school food authority to ensure that it is: reflective of the school’s population, provides equivalent data for both the base year and the last year of the current cycle and demonstrates that the income level of the school’s population, as adjusted for inflation, has remained stable, declined or had only negligible improvement. All data sources used for extensions must meet the above 3 criteria. The final rule sets the standard for “negligible improvement” at 5%. The next few slides will show a simplified example of calculating the 5% figure. (Presenter’s Note: Pre-approved socioeconomic data includes: local data collected by the city or county zoning and economic planning office; unemployment data; local Food Stamp certification data, including direct certification; FDPIR data; statistical sampling of the school’s population using the application data. Alternative source data may be used only if approved by FNS). To grant an extension using socioeconomic data sources, State agencies must review and evaluate the socioeconomic data submitted by the school food authority to ensure that it is: reflective of the school’s population, provides equivalent data for both the base year and the last year of the current cycle and demonstrates that the income level of the school’s population, as adjusted for inflation, has remained stable, declined or had only negligible improvement. All data sources used for extensions must meet the above 3 criteria. The final rule sets the standard for “negligible improvement” at 5%. The next few slides will show a simplified example of calculating the 5% figure. (Presenter’s Note: Pre-approved socioeconomic data includes: local data collected by the city or county zoning and economic planning office; unemployment data; local Food Stamp certification data, including direct certification; FDPIR data; statistical sampling of the school’s population using the application data. Alternative source data may be used only if approved by FNS).

18. Extension using Direct Certification In this example, the base year had about 250 students directly certified, indicated by the dark green bar. They had a total of 350 students eligible for free meals since additional students were approved through applications Their total enrollment was 450 students. In the extension year, they ran the direct certification match again and found that 250 students were again eligible for free meals based on direct certification. Note that these are not necessarily the same kids. Over the 4 years, some students left, new ones joined the school. But the percentage of students directly certified remained the same. This is an indication that the income level of the school’s population remained the same. In this example, the base year had about 250 students directly certified, indicated by the dark green bar. They had a total of 350 students eligible for free meals since additional students were approved through applications Their total enrollment was 450 students. In the extension year, they ran the direct certification match again and found that 250 students were again eligible for free meals based on direct certification. Note that these are not necessarily the same kids. Over the 4 years, some students left, new ones joined the school. But the percentage of students directly certified remained the same. This is an indication that the income level of the school’s population remained the same.

19. Extension using Direct Certification Base Year: 250dc / 450enrl = 55.5% Final Year: 278dc / 500enrl = 55.6% In this example, the same dynamics were apparent in the base year. However in the extension year, the enrollment increased. Once again the school ran a direct certification match and found out the number of students eligible. When converted to a percentage, the direct certification for the extension year compared to the base year indicated that the income level of the school’s population was stable (in fact it declined slightly since the percentage of student directly certified declined from 55.5% to 55.6%). Presenter Note: “dc” refers to direct certification, “enrl” refers to enrollment.In this example, the same dynamics were apparent in the base year. However in the extension year, the enrollment increased. Once again the school ran a direct certification match and found out the number of students eligible. When converted to a percentage, the direct certification for the extension year compared to the base year indicated that the income level of the school’s population was stable (in fact it declined slightly since the percentage of student directly certified declined from 55.5% to 55.6%). Presenter Note: “dc” refers to direct certification, “enrl” refers to enrollment.

20. Changes/Clarifications– Both Provisions Streamlined base year Only after a completed cycle Enrollment based – Determine eligibility based on statistical sample of enrollment - Calculate percentages Participation based – Determine eligibility based on statistical sample of participating students over multiple days - Calculate percentages One of the barriers to participating in the Provisions has always been the concern of sites that operate the provision for several years and then for some reason have to re-do a base year. In the event that schools do not receive an extension, the final rule allows for two options to conduct a Streamlined Base year. The first option is to develop a new set of claiming percentages based on the eligibility of currently enrolled students for free, reduced price and paid meals. The second method is to develop a new set of claiming percentages based on the eligibility of currently participating students for free, reduced price and paid meals. One of the barriers to participating in the Provisions has always been the concern of sites that operate the provision for several years and then for some reason have to re-do a base year. In the event that schools do not receive an extension, the final rule allows for two options to conduct a Streamlined Base year. The first option is to develop a new set of claiming percentages based on the eligibility of currently enrolled students for free, reduced price and paid meals. The second method is to develop a new set of claiming percentages based on the eligibility of currently participating students for free, reduced price and paid meals.

21. Changes/Clarifications– Both Provisions Statistical Sampling Sets standards for conducting streamlined base year calculations Each of these methods, enrollment based and participation based, allow for the use of statistical sampling. Details for statistical sampling will be provided in guidance, however, the final rule establishes the parameters such as confidence intervals and response rates.Each of these methods, enrollment based and participation based, allow for the use of statistical sampling. Details for statistical sampling will be provided in guidance, however, the final rule establishes the parameters such as confidence intervals and response rates.

22. Changes/Clarifications – Both Provisions Recordkeeping Base year – Retain eligibility determinations, counting and claiming records for duration of Provision plus extensions and 3+ years Non-base year – Retain counting and claiming records for 3+ years The reporting and recordkeeping requirements for the NSLP and SBP are summarized in 210.15 and 220.7 of the regulations. Some additional requirements apply to Provision 2 and 3. School food authorities must retain some of their base year records during the period the Provision is in effect, including all extensions. In addition, such records must be retained for 3 fiscal years after the submission of the last Claim for Reimbursement of the final fiscal year which employed base year data. Base year records that must be retained beyond the 3 year period include, but are not limited to, the policy statement as well as those records which support subsequent year earnings, such as participation data, approved and denied free and reduced price applications, direct certification and verification records, calculations of claiming percentages. Non-base year records must be retained for 3 years after submission of the final Claim for Reimbursement for the fiscal year to which they pertain. Non-base year records include, but are not limited to, total daily meal counts of reimbursable meals, claims by category for schools on Provision 2, edit checks and on-site base year reviews, and in the case of Provision 3, annual enrollment data which was used to adjust the level of assistance. Provision 2 guidance provides more detail on recordkeeping requirements. School food authorities which receive an extension must retain records of the socioeconomic data used to determine the income level of the school’s population for the base year and the years in which extensions were made. The reporting and recordkeeping requirements for the NSLP and SBP are summarized in 210.15 and 220.7 of the regulations. Some additional requirements apply to Provision 2 and 3. School food authorities must retain some of their base year records during the period the Provision is in effect, including all extensions. In addition, such records must be retained for 3 fiscal years after the submission of the last Claim for Reimbursement of the final fiscal year which employed base year data. Base year records that must be retained beyond the 3 year period include, but are not limited to, the policy statement as well as those records which support subsequent year earnings, such as participation data, approved and denied free and reduced price applications, direct certification and verification records, calculations of claiming percentages. Non-base year records must be retained for 3 years after submission of the final Claim for Reimbursement for the fiscal year to which they pertain. Non-base year records include, but are not limited to, total daily meal counts of reimbursable meals, claims by category for schools on Provision 2, edit checks and on-site base year reviews, and in the case of Provision 3, annual enrollment data which was used to adjust the level of assistance. Provision 2 guidance provides more detail on recordkeeping requirements. School food authorities which receive an extension must retain records of the socioeconomic data used to determine the income level of the school’s population for the base year and the years in which extensions were made.

23. State Agency Changes - Both Provisions Notification States must notify SFAs when 4-year cycle is ending Requirements In writing Sent not later than Feb. 15 4th year of cycle SA may choose other date State agencies must notify school food authorities of schools implementing Provision 2 and or 3 that each Provision 2/3 school must return to standard eligibility determination and meal counting procedures or apply for an extension under Provision 2 or 3. The notification must be in writing and sent no later than February 15 or other date established by the State agency in the fourth year of a school’s current cycle.State agencies must notify school food authorities of schools implementing Provision 2 and or 3 that each Provision 2/3 school must return to standard eligibility determination and meal counting procedures or apply for an extension under Provision 2 or 3. The notification must be in writing and sent no later than February 15 or other date established by the State agency in the fourth year of a school’s current cycle.

24. State Agency Changes - Both Provisions State Approval Prior to approval for Provision, States must ensure program compliance Compliance with 210.19 = NSLP General program Management 220.13 = Special responsibilities of State agencies Prior to approval for participation under Provision 2 or 3, State agencies must ensure school or school food authority program compliance under 210.19(a)(4) and 220.13(k). 210.19(a)(4) mandates that each State agency ensure that school food authorities comply with the applicable provisions of Part 210 (NSLP regulations). The State agency is to ensure compliance through audits, administrative reviews, technical assistance, training, guidance materials or through other means. 220.13(k) mandates that each State agency ensure that school food authorities comply with the applicable provisions of Part 220 (SBP regulations).Prior to approval for participation under Provision 2 or 3, State agencies must ensure school or school food authority program compliance under 210.19(a)(4) and 220.13(k). 210.19(a)(4) mandates that each State agency ensure that school food authorities comply with the applicable provisions of Part 210 (NSLP regulations). The State agency is to ensure compliance through audits, administrative reviews, technical assistance, training, guidance materials or through other means. 220.13(k) mandates that each State agency ensure that school food authorities comply with the applicable provisions of Part 220 (SBP regulations).

25. State Agency Changes – All Provisions When State finds: SFA incorrectly implemented Provision 1,2,3 Meal quality has declined because of the Provision Participation has declined over time Eligibility process or verification incorrect, or Meal counts incorrectly taken or applied State must: Provide technical assistance Adjust level of financial assistance Return SFA to standard procedures (As Appropriate) If the State agency finds: The school or school food authority has not correctly implemented Provision 1, 2 or 3 Meal quality has declined because of implementation of the provision Participation in the program has declined over time Eligibility determinations or the verification procedures were incorrectly conducted Meal counts were incorrectly taken or incorrectly applied. Then, the State agency must provide the following, as appropriate: Technical assistance, Adjustments to levels of financial assistance for the current year and Return the school to standard eligibility determination and meal counting procedures. If the State agency finds: The school or school food authority has not correctly implemented Provision 1, 2 or 3 Meal quality has declined because of implementation of the provision Participation in the program has declined over time Eligibility determinations or the verification procedures were incorrectly conducted Meal counts were incorrectly taken or incorrectly applied. Then, the State agency must provide the following, as appropriate: Technical assistance, Adjustments to levels of financial assistance for the current year and Return the school to standard eligibility determination and meal counting procedures.

26. FNS Guidance Implementation Guidance for Provision 2 Drafted – Working copy Implementation Guidance for Provision 3 Decision Guidance after grant States submit reports State agency CRE Guidance for non-base years Several guidance packages are scheduled to assist in the operation of the Provisions: The first set of material to be produced will be the guidance for Provision 2. It has been drafted and is in clearance. Provision 2 was chosen as the first guidance topic since there are approximately 3,500 sites in Provision 2. The second set of material will be for Provision 3. The third set will be a collection of material to assist schools in deciding whether to operate under Provision 2 or Provision 3. Most of this material will come from the work conducted by State agencies that received the Provision 2 and 3 grants. Finally, a set of materials will be produced to assist State reviewers conducting a CRE in schools operating under the Provisions. Several guidance packages are scheduled to assist in the operation of the Provisions: The first set of material to be produced will be the guidance for Provision 2. It has been drafted and is in clearance. Provision 2 was chosen as the first guidance topic since there are approximately 3,500 sites in Provision 2. The second set of material will be for Provision 3. The third set will be a collection of material to assist schools in deciding whether to operate under Provision 2 or Provision 3. Most of this material will come from the work conducted by State agencies that received the Provision 2 and 3 grants. Finally, a set of materials will be produced to assist State reviewers conducting a CRE in schools operating under the Provisions.

27. Thank You

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