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Ladies and gentlemen, thank you for standing by and welcome to the Administrative Review
Training Webinar on Resource Management. At this time all lines are in a listen-only mode,
so if you should require assistance from an operator please press *0. I'd also like to
remind you that today's conference is being recorded. I'll now turn the conference over
to your host, Lynn Rodgers-Kuperman. Please go ahead. Good afternoon, everyone, and thank
you for joining us today. I'm joined today by Eleanor Thompson and Eric Lai, Eleanor's
out of our Midwest Regional Office and has been a member of the SMARRT team, as well
as Eric, he's here at Headquarters with us, and they will be taking a turn speaking and
going over the Q&As with me today. Thank you for joining us for the Webinar and, as she
indicated, we're going to be going over the area of Resource Management. This is one of
two Webinars that we're holding on the area of Resource Management in the new Administrative
Review process. Our hope today is that the Webinar will provide you with a basic understanding
of the federal cost principles, direct and indirect costs, and the concept of cost allowability
in the Child Nutrition Programs, as well as how State agencies should conduct an Administrative
Review that examines these things at the School Food Authority level. We recognize that we
have a variety of different participants on the webinar: some of you who may be more familiar
with this area, and others who are just getting up to speed in the area of cost allowability
and direct cost and those things. For those of you who are in the beginning stages of
the learning about this area and the overall review process, please note that this webinar
is really aimed at trying to give you a better understanding of these areas, but it cannot
substitute for practical experience and learning from your peers and from other State members.
So as you delve into the cost allowability and direct and indirect cost, you will likely
find that you have questions that come up occasionally about the allowability of certain
expenditures that perhaps don't fit neatly into one category or another. Cost allowability
isn't always a black-and-white issue or area, and many allowable costs can be treated as
either direct or indirect. Our hope and our goal for this webinar is that, at the end
of the webinar, we can provide you with some basic training and some additional resources
for where you can look if you do need assistance. Let's talk about why is monitoring Resource
Management important. As you are well aware, the financial pressures on the School Food
Authority are just numerous and significant, and we all know that. We're doing more with
less. School Food Authorities are taxed with providing nutritious, well-balanced meals
efficiently and effectively to all students. They must abide by a number of different Resource
Management requirements and principles designed to safeguard Program resources and to ensure
that sufficient funds are available to meet the nutritional needs of students. Why is
it important that you understand allowable costs and indirect costs? The money that is
spent out of the non-profit school food service account is for the operation and maintenance
of school meal programs. We have to recognize that we're the stewards of the taxpayers'
money, and we need to ensure that these monies are provided to the programs for their intended
purpose, and to provide nutritious meals to students and not for unrelated reasons. It's
key to understanding allowable costs and indirect costs so that you can safeguard those funds,
and to recognize that those funds are being used in accordance with cost allowability
rules to pay for expenses that are necessary and reasonable. Before we discuss direct and
indirect costs, it would be helpful to briefly summarize how reimbursement works in the school
meal programs. You know we talked, when we put these together, about how there were so
many different directions we could have gone with these slides and different orders that
we could have put the slides in, but we're hoping that the way we've laid them out for
you today will be the best approach in providing you with that basic understanding. I do want
to note that this section's going to provide information on how the SFA, the School Food
Authority, is reimbursed for providing meals to enrolled students in the Child Nutrition
Programs, such as buying food, preparing meals, and serving meals. For the purpose of this
Webinar today, we'll primarily use the term "School Food Authority," or "SFA," which is
usually the school district, or the entity within the school district that operates the
school food service. We will, however, talk about local education agencies, or LEAs, when
we cover indirect costs, and we all know that these terms are often used interchangeably
so we're doing our best to be as clear as possible. Reimbursement in other programs:
In many federal programs, local administrators bill the Federal Government for reimbursement
of the costs they incur to administer the program. The Federal Child Nutrition Programs
work a bit differently, however, the SFA does not bill USDA for costs associated with running
these programs. So unlike many other programs that are also subject to the circulars in
terms of cost allowability, you have to recognize that in our programs it is not a pure, straight
reimbursable program. Instead, School Food Authority reimbursement is driven by a meals
times rate reimbursement formula rather than the reimbursement of actual costs. As you
know, School Food Authorities claim a number of free, reduced-price and paid meals to their
State agency, in order to receive reimbursement the meals must meet all federal requirements.
And the graphic, hopefully, will provide you with a visual understanding of how that takes
place. Now, the amount of reimbursement a School Food Authority receives for the meals
is based on the number of free, reduced-price, and paid meals it served. In order to be reimbursable,
the meals must, again, abide by federal government wide and program-specific regulations such
as the federal cost principles, which I'm going to talk about a bit more in a minute,
procurement rules, and other requirements. As this slide notes, School Food Authorities
receive certain monies for each meal served. This is not free money, we all know this,
there are strings attached, and those strings are that the meals must conform to Program
regulations and that they need to adhere to Federal Government-wide rules. One of the
most significant responsibilities a local education agency has when participating in
the Federal Child Nutrition Programs is the management of the non-profit school food service
account. What is the account? For those who don't know, let's just talk about what that
is. Well, the non-profit school food service is the account in which all reimbursements
and revenues from all food service operations conducted by the School Food Authority are
deposited. In addition, the account may accumulate non-federal funds used to support paid lunches
and revenue from non-program foods which are foods that effectively compete with reimbursable
meals. Program regulations require a School Food Authority to establish a non-profit school
food service account in which all reimbursements from all food service operations conducted
by the School Food Authority, principally for the benefit of the schoolchildren, and
that includes state reimbursement and other revenues, such as student meal payments and
non-program food revenues, are retained, and not only retained in the account, they are
supposed to be used only for the operation or improvement of the non-profit school food
service. So regardless of the varied nature of the revenues coming into the account, once
those funds are deposited into the account they commingle and take on a federal identity
and are then subject to federal rules. We do want to make you aware that the Food and
Nutrition Service Agency is in the process of developing further guidance to State agencies
on revenue from non-program funds such as a la carte items and adult meals, and its
treatment is part of the non-profit school food service account. So that should be coming
out sometime in the next month or so. Non-profit school food service revenues may be used for
food, equipment, and personal use to operate the meal program. These revenues cannot be
used for the purchase of land, buildings, or general purpose equipment such as office
equipment, information technology equipment in systems and motor vehicles, or for the
improvement of land, buildings, or general purpose equipment unless those purchases were
approved by ... in advance. We will talk more about allowable costs shortly. Now, before
I jump into, and I know I keep saying we're going to talk about allowable cost in more
detail, but before I jump into that I want to provide you with a brief description of
what direct and indirect costs are and give you some more examples of each type of cost.
In general, the total cost of a program, function, or activity includes both indirect cost and
direct cost. Many of you may be familiar with the federal regulations in Title 7 which encompass
the school meal programs, but you may be less familiar with Title 2 of the U.S. Code of
Federal Regulations, 2 CFR Part 225, which provides a central location for the Office
of Management and Budget and federal agency policies on grants and agreement. It specifically
focuses on principles and standards for determining costs for federal awards carried out through
grants, cost reimbursement contracts, and other agreements with states, local governments,
and federally recognized Indian Tribal governments to include the treatment of direct and indirect
cost; 2 CFR Part 225 is the resource for State agencies and School Food Authorities who want
to learn more about direct and indirect costs as well as allowable costs, which we're going
to discuss in a moment. Let's talk about what direct costs are. Direct costs are costs incurred
specifically for a program or other cost objective. A cost objective basically refers to a function,
organizational subdivision, contract, grant, or other activity for which cost data is needed
and for which costs are incurred. Further, direct costs must also be readily identified
for a particular objective or goal, such as a school food service. If a cost cannot be
easily attributed to one function or organizational subdivision and is instead incurred for the
benefit of multiple programs or functions, it should be considered as an indirect cost.
A good question to ask when trying to determine if a cost is direct or indirect is who's benefiting
from the SFA having incurred the cost. Was it just the school food service? Now, this
next slide shows some examples of direct costs under the school meals program, such as food
costs, wages, and staff salaries of School Food Authority employees, food service supplies,
and promotional materials related to food service. These costs are borne by the school
food service to accomplish its mission of feeding children, and are not attributable
to other functions within the LEA. Indirect costs, though, on the other hand, are costs
that are generated for the benefit of multiple programs or functions. They cannot be easily
identified specifically with one program, but they are necessary for the general operation
of the School Food Authority. Indirect costs must be assigned to the programs that they
benefit through an allocation process, which we're going to talk about shortly. What distinguishes
a direct cost from an indirect cost is the extent to which it can be identified with
a specific program, function, or activity that benefits from the SFA, having incurred
the cost, rather than the nature of the goods or services themselves. In terms of indirect
cost, you might typically see costs that support administrative overhead functions, such as
fringe benefits, accounting, payroll, purchasing, facility management, and utilities. You may
have accounting staff that provide accounting services not just for the school meal operation,
but across the district, it may be district wide, it may be school wide, but again, those
accounting services may be provided to more than our specific program. Look at this next
chart. This gives you examples of typical costs, and you can see on the left we have
direct costs and on the right indirect costs. This is just to show you some typical School
Food Authority costs and how they may be categorized. You'll see wages, the cost of food and supplies,
and maybe a material specifically related to food service are all direct costs. Capital
expenditures are direct costs, but there are special rules that apply to these costs, such
as prior approval by the State agency of capital expenses above 5,000. Land and buildings must
also receive approval before funds can be spent. Indirect costs include items such as
human resources, utilities, and trash, so think of human resources as a function that
would support more than one program. Please keep in mind that you can treat almost any
cost as direct as long as you can find a clear, measurable and meaningful way to attribute
the expenditure to a specific cost objective. For instance, some LEAs may install a separate
meter to capture how much power is used specifically for the lunchroom and kitchen, allowing the
LEA to treat these utility costs as direct as long as the LEA consistently treats them
as direct costs. We're going to talk a bit in a moment about what we mean by consistent
treatment of direct and indirect cost. But I do want to, at this juncture, give a quick
disclaimer, and that is that the examples that we're going to be using in this presentation
may not, and most likely will not apply to every state or every School Food Authority.
This can be an area where there are exceptions to every example. What the examples are intended
to do here is to illustrate the concepts we're presenting, and that's what we want you to
really focus on. So if a particular example doesn't apply to your particular state or
School Food Authority, don't focus on that. The main takeaway for us, for you guys, is
that you learn the principle and the context of what the examples are attempting to demonstrate.
Now, I had mentioned that we were going to talk a little bit more about allowable costs
in more depth, and so let's talk now and let me give you some background about several
cost principles and how they impact cost allowability. Again, we wanted to talk a bit about direct
and indirect cost because you need to understand the nature of the cost, as opposed to whether
or not they're just allowable. So what are the federal cost principles? Well, for our
programs the federal cost principles provide the ground rules for how funds from the non-profit
school food service account may be spent. The Federal Government has published uniform
administrative requirements for grantees and sub-grantees. which in the school meals programs
refers to states and School Food Authorities. These uniform administrative rules set forth
general guidelines on how administrative matters such as, but not limited to, procuring goods
and services, how to assess costs to ensure they are allowable, and how to properly dispose
of equipment. These government wide rules are codified for USDA at 7 CFR Part 3016 and
7 CFR Part 3019. A good question would be: where do I find these federal cost principles?
Well, as you see from the chart, the organization receiving the award at the state, local, or
Indian Tribal organization or government, the source of the applicable cost principles
would be 2 CFR Part 225, which formerly for most people they think of this as OMB Circular
A87 and also 3016 are the uniform administrative wide rules. For non-profits it would be 2
CFR Part 230, folks probably know it as formerly OMB Circular A122 for the cost principle part
of it, and also the uniform administrative requirements ... 3019. It's important to know
where to look for them to understand why are these cost principles important. The reason
it's important to be familiar with them is because they provide helpful information to
a State agency or a School Food Authority about the applicability and allowability of
different types of costs and expenditures. And this is critical because direct and indirect
costs may only be charged to the non-profit school food service account if they are allowable.
So these documents provide good guidance and many examples about what types of costs fall
into the allowable and un-allowable categories. Not only do they, though, provide useful information
about the allowability of direct or indirect costs, but they also provide the general criteria
and various allocation methodologies an LEA may use for charging or billing costs as direct
or indirect. An easy way, maybe, to wrap your arms around the federal cost principles is
to understand that the non-profit school food service account is basically like the SFA
bank account. The SFA has a debit card for this account, so it may access the monies
that are held there. However, the SFA may only charge for goods and services that adhere
to the federal cost principles. Now, we talked about 2 CFR 225, and within that there's something
called Appendix A, which details the general principles for determining allowable costs.
This criteria list for allowable costs helps the SFA determine which costs may be allowable
and thus reimbursable through the non-profit school food service account. And we're going
to talk more about these requirements shortly, but you can see from the slide that there
is a list of things that need to be considered, whether they're necessary, reasonable, allocable,
legal net of certain rebates, discounts, and credits, etc. In addition to Appendix A, the
federal cost principles are also driven by Appendix B of 2 CFR 225, and Appendix B details
the principles to be applied in establishing the allowability or un-allowability of certain
expenditures. These principles apply whether a cost is treated as indirect or direct. Appendix
B classifies costs as falling under one of three categories: allowable, allowable with
prior State agency approval, or unallowable. Appendix B lists 43 cost items, such as audit
costs, bad debt, communication costs, maintenance, operations and repair costs, traveling, and
training. However, the list is by no means exhaustive. The failure of Appendix B to mention
a particular cost item is not intended to imply that the omitted cost is allowable or
un-allowable. The SFA must make a determination of the allowability of a cost not listed in
Appendix B by studying the treatment of similar or related cost items. Really, School Food
Authorities should use both Appendix A and B to determine if specific costs are allowable.
Even if Appendix B classified the cost as allowable, the cost still must meet the criteria
in Appendix A, which include is the cost necessary, reasonable, or allowable. The cost must also
abide by Child Nutrition Programs specific limitations on activities, for which funds
must be made. And we're going to look at some examples shortly, but the key thing there,
again, is to recognize that Appendix B may identify costs as allowable, but it also must
meet the test of being reasonable, necessary, and allocable. You can have a cost that's
necessary to the program, but it's not reasonable in terms of cost. Now we're going to talk
a little bit more about allowable cost, and I'm going to turn this part over to Eleanor
Thompson, who I had introduced earlier, and she is from our Midwest regional office. So,
take it away, Eleanor. Thank you, Lynn. Good afternoon, everyone. Now, let's talk about
the process for determining cost allowability, in other words what does an SFA need to consider
when determining if a cost is allowable or not. To determine the allowability of a particular
cost an SFA must follow a multi-step process before it charges the non-profit school food
service account for that cost. First, the SFA should check 2 CFR Part 225 or 2 CFR Part
230 if it's a private non-profit school, including Appendix A that provides the basic guidelines
pertaining to a determination of a cost allowability or reimbursement from the non-profit school
food service account, and Appendix B, which provides a list of different types of costs
and whether or not they may be considered allowable, and Lynn talked about Appendix
A and Appendix B in her previous slides. Next, the SFA should review the federal program
regulations, such as 7 CFR 210, that pertain to the National School Lunch Program, as well
as FNS policy guidelines that may provide more detail about the allowability of certain
costs. Finally, the SFA must apply these collective principles to the cost that is incurred and
make a determination as to whether or not the costs may be reimbursed through the non-profit
school food service account. If it's not, other funding sources outside of the account,
such as the LEA's general fund, may be used to pay for the cost. We showed you this slide
earlier with the information from Appendix A of 2 CFR 225, which again provides the criteria
a direct or indirect cost must meet before it may be considered allowable. A cost must
meet all of the cost allowability requirements included in this list. Now, I'm going to highlight
a few of these provisions in a little more detail. First, a cost may be allowable if
it's necessary. A cost is necessary if the laws, program regulations, or FNS policies
pertaining to the program make it clear that the non-profit school food service cannot
operate without incurring the cost. For instance, a school food service cannot operate without
incurring the cost for food for reimbursable meals. In order for a cost to be allowable,
the cost must also be reasonable, meaning that it passes the prudent layperson standard.
This standard means that the cost of the product purchased is no more than what a reasonable
person would pay under the same circumstances. The cost must be the result of sound business
practices and competitive prices. Now, the criteria to help determine necessary
and reasonable costs, in order to determine that, an SFA should ask the following questions
to help determine whether a cost is necessary and reasonable. How does the cost contribute
to achieving an objective of the Child Nutrition Programs? Is the cost recognized as ordinary
and reasonable for the operation of the Child Nutrition Programs? And would a prudent person
find the costs to be reasonable under the circumstances? Additional criteria to help
determine necessary and reasonable costs include would a taxpayer deem the cost to be reasonable
in light of the Child Nutrition Programs' objectives? Is the cost charged at a fair
rate, or do alternatives exist that may be more cost effective? And finally, could the
School Food Authority defend the purchase to the State agency, to the media, auditor,
or other stakeholders? The answers to these questions should help the SFA determine if
a program cost is necessary and reasonable. Now, before we move on, let's talk about one
example to further assess where a cost is necessary or reasonable. For instance, school
A needs a water cooler to meet the new water requirements under the Healthy Hunger Free
Kids Act. The cost is reasonable compared with those out on the market. There's also
a different model, however, with the school food service director's favorite sports team
logo on the door. That model costs an extra $500. In this example purchasing the more
expensive model with the logo is both unnecessary and unreasonable. Now, let's discuss some
additional criteria for allowable costs. One component of cost allowability is whether
the cost is allocable to the program. This means that the SFA is able to estimate, for
example, how much the food service benefits from the expenditure and how much may benefit
a different cost objective. When thinking about costs and ensuring that only allowable
costs are charged to the program, one needs to consider cost allocation. Cost allocation
encompasses the idea that costs are charged to programs that benefit from them. In order
to be allocable, a cost must enhance or support a program. Depending on which program functions
and/or activities benefit from the cost and the extent to which each benefited, a cost
may be allocated to its cost objectives through direct or indirect cost allocation. Let's
consider an example. Here's an example in which joint space is being used by two programs.
The School Food Authority serves meals in the gym, and the LEA also uses the gym for
physical education classes. It would be unallowable for the LEA to charge the School Food Authority
100% for the electricity and for heating and cooling costs used in the gym during school
hours since other programs also use the space and also incur costs. In this example the
LEA could charge the SFA for one-third of the total utility costs to the food service
as a direct cost. Again, the wages and salaries of school food service employees who are employed
by the SFA solely for the meal service are typically classified as direct costs in this
example number two. Their salaries and wages are 100% attributable to the costs associated
with running a school food service, so in this example we're talking simply about the
salary of an employee who only prepares and serves school meals. In this case their salary,
again, is 100% allocable to the SFA's school food service account. In this additional example,
a school secretary helps all programs, functions, and activities of the LEA. We know that in
many school districts the school secretary is the employee who distributes free and reduced
price applications and collects the completed applications. However, those school food related
activities make up only a small portion of the school secretary's responsibilities, which
are typically much broader and involve greeting visitors, answering phones, supporting the
work of the principal, and many other tasks. In this example the amount of time the school
secretary spends on collecting and distributing free and reduced price applications is allocable
through the use of a mathematical formula, which we'll talk about shortly. The cost of
the school secretary's time in this example would be classified as an indirect cost. An
SFA's non-profit school food service account may not be used as an open-ended bank account
to support the other cost objectives at an LEA. Let's take the example I provided earlier
for Harry Potter Elementary. The SFA at Harry Potter Elementary can't be charged for all
of the utilities used in the gymnasium if other entities also use this area of the school
for non-food service related activities. The SFA should not be billed more for electricity
and gas for the purpose of reducing the cost other school functions or departments must
pay for the services. The bottom line is an LEA cannot charge a school food service indirect
costs unless it also charges them to its other departments. A school district cannot single
out the school food service for special treatment and charging costs, but rather must treat
the food service the same as all its other departments. Now, as previously mentioned,
in order for a cost to be considered allowable and reimbursable through the non-profit school
food service account the cost must be treated consistently across all federal programs,
not just the Child Nutrition Programs. A cost may not be treated as a direct cost under
the Child Nutrition Programs if similar costs incurred for the same purpose in similar circumstances
has been allocated to other federal programs as an indirect cost. Now, let's look at an
example. In this example the school food service staff conducts particular functions, such
as procurement, that are also conducted by the LEA for other departments. In this instance
the food service staff conducts a procurement for food products, the time spent on procurement
activities are treated as a direct cost, the LEA, however, conducts procurement for paper
products for all departments, including the school food service. However, the time the
LEA staff spends on procuring paper products is treated as an indirect cost. The question
then arises from this example, is whether the SFA is treated consistently, because the
salaries of food service workers conducting procurement for food products is a direct
expense to the non-profit school food service, while the LEA bills the non-profit school
food service account for the salaries, or a prorated portion of them, of the staff procuring
paper products as an indirect cost. What we know is that there's no inconsistent treatment
in this case, because the school food service is charged directly for the procurement of
food products, which benefits only the school food service, and indirectly for the procurement
of paper products, which benefit school food service and other departments within the school
district. So the costs are treated consistently in this example. Applicable credits, and in
this case another requirement of cost allowability, is net of applicable credits. And what this
means is applicable credits refer to reductions of expenditure type transactions that offset
or reduce expense items allocable to federal awards as direct or indirect costs. Examples
of applicable credits include, but are not limited to, purchase discounts, rebates, credits,
or allowances and adjustments of overpayments or erroneous charges. To the extent that such
credit accruing to or received by the SFA relates to an allowable cost, they must be
deducted from the costs charged to the non-profit school food service account. For instance,
Child Nutrition Program regulations require that an SFA may only pay for costs in a cost
reimbursable contract that are net of all rebates, discounts, and other applicable credits.
Allowable costs must also be adequately documented. This criterion for an allowable cost does
not imply the existence of a one-size-fits-all definition of adequately, it simply means
that the record of the Child Nutrition Program's operation must be able to stand on its own
without depending on augmentation, interpretation, or spin by the program operator. Now, let's
look at some examples of allowable and unallowable costs. One of the challenges of determining
allowability of costs is that in some instances a cost may not be allowable, while in others
it would be acceptable. This is why the reviewer must look at Appendices A and B of 2 CFR 225
to first determine if the cost is reasonable, necessary, and allocable, and meets additional
criteria included in Appendix A. The first item we have on this list is food, and on
this particular list, as we know, hamburger patties are allowable because food costs are
necessary as part of the SFA's operation. So food would be considered an allowable cost.
Under the category of labor, for the school secretary costs associated with the school
secretary may be allowable if the secretary's work benefits the school meal programs, and
we talked a little bit about this in a previous example. In such cases the SFA would need
to prorate costs for the time the secretary spends on program tasks. The secretary's time
could also be paid as an indirect cost. Also under labor, the time spent by a food service
assistant, this is an allowable cost as part of the meal service, because it directly benefits,
again, the meal service and the goal of providing meals. Then we have the other category of
expenses. Our first example is Unpaid Charges and Bad Debt. In terms of allowable and unallowable,
the non-profit school food service funds cannot be used to pay bad debt arising from uncollectable
accounts and other claims. Also under the other category is, for example, is a school
board dinner and whether or not that's allowable or unallowable it really depends. For instance,
if the cost of the dinner, including the cost of staff to prepare and serve the meal, is
reimbursed to the non-profit school food service account by the school board or another entity,
the cost may be allowable. If the School Food Authority, however, is expected to swallow
the cost of all or part of the dinner, the cost would likely be unallowable even if the
board is discussing SFA business. A dinner would not be considered a necessary expense
in order for the board to address SFA issues. A new refrigerator would fall under the capital
equipment as general purpose equipment. The SFA would need to secure prior approval for
this item if its cost is $5,000 or more in order for this expense to be considered allowable.
And then finally, renovating a kitchen would fall under the maintenance operations and
repairs category of Appendix B of 2 CFR 225. These are the costs associated with normal
repairs and alterations. Maintenance and repair costs are allowable as long as they keep property
in an efficient operating condition, don't add to the permanent value of the property,
or significantly prolong its intended life and are not otherwise included in rental costs
or other space charges. FNS has allowed limited renovations within the inside perimeter of
a kitchen or cafeteria space, with the required prior State agency approval. Renovations purely
for aesthetic reasons would not be considered an allowable cost. Those were just some examples
of common allowable and unallowable costs that may come up. Next we're going to talk
about how to develop and apply an indirect cost rate to ensure costs are allowable and
properly qualified as direct or indirect costs. The U.S. Department of Education requires
each State Educational Agency or SEA, to negotiate an indirect cost methodology for any local
education agency or LEA under its jurisdiction that requests the methodology. LEA will be
used in this section of today's Webinar, so here we'll talk a little bit more about the
local education agency. Allowable costs, both direct and indirect, must be identified in
a consistent manner. An LEA must identify indirect costs by using the same methodology
to allocate certain shared costs across the entire spectrum of its federal programs. For
instance, an LEA may participate in a number of federal programs, such as Title 1, to help
educational agencies improve teaching and learning in high poverty schools, and federal
funding under the Individuals with Disabilities Education Act, as well as in the Federal Child
Nutrition Programs and multiple programs in which it may participate. The state educational
agency and LEA would have to determine how to allocate these indirect costs from multiple
programs to the applicable federal programs. The solution for how to do this is that federal
cost principles exist in part because the local education agency or other program operators
would find it difficult to use a different method of allocating shared costs to grants
from each of its federal awarding agencies. To prevent the need for multiple allocation
methods a single federal agency known as the cognizant agency, speaks for all the federal
awarding agencies in negotiating across the board allocation methodology for LEAs receiving
federal grants from multiple programs. The cognizant federal agencies for all state education
agencies that oversee the federal meal programs is the U.S. Department of Education. The U.S.
Department of Education requires each state education agency to negotiate an indirect
cost methodology for every LEA under its jurisdiction that requests one. Not all LEAs charge indirect
costs, but for those that wish to the state education agency must provide a methodology
that the LEA may use to calculate its indirect costs. The state education agency is thus
the de facto cognizant agency for the purpose of providing indirect cost methodologies for
each of the LEAs under its jurisdiction that request one. Now, how are indirect costs assigned?
Allocation is a mathematical exercise used to assign indirect cost to particular programs
and other cost objectives so that each program or other cost objective bears a portion of
the indirect cost that is commensurate with the benefit received from the cost. Use of
this methodology provides a short hand approach to determining, in a reasonable manner, the
proportion of indirect costs each program or other cost objective should incur. Allocation
is a method to assign to the SFA its fair share of indirect costs, such as its portion
of utility bills attributable to the use of the kitchen and cafeteria. The mathematical
exercise used to determine how to allocate the indirect costs entails applying a calculated
indirect cost rate to a direct cost base. Let me explain what I mean by this. Again,
an allocation methodology normally entails applying a calculated indirect cost rate to
a direct cost base. An indirect cost rate is the method for determining the proportion
of indirect costs individual programs like the school food service should be charged.
It is the ratio, expressed as a percentage, of the indirect costs to a direct cost base.
An indirect cost pool is the sum of allowable indirect costs. The direct cost base is the
sum of allowable and unallowable costs that receive a benefit from the costs in the pool.
The resulting indirect cost rate is the device for determining, in a reasonable manner, the
proportion of indirect costs each program should bear. As you can see from the equation
on this slide, the indirect costs are included in the numerator, and the direct costs are
included in the denominator. The result is expressed as a percentage or rate of the indirect
costs to direct costs. The U.S. Department of Education, as we noted, negotiates an agreement
with each state education agency to establish the methodology the state education agency
will use in negotiating indirect cost methodologies with local education agencies. Once the U.S.
Department of Education approves the state education agency's LEA methodology, a delegation
agreement is signed by the U.S. Department of Education and by the state education agency.
Under this agreement the state education agency generally distributes an indirect cost rate
proposal form to its LEAs and uses the data collected to develop each LEA's indirect cost
rate. The indirect cost rate proposal should identify all of the activities carried on
by the department or unit and their attendant costs. All activities must be included regardless
of the source of funds used to pay for them. The indirect cost rate proposal should also
incorporate those costs allocated to the departments or units, it should classify activities and
their costs as direct or indirect, and it should also eliminate from indirect costs
capital expenditures and those stipulated as unallowable under 2 CFR 225. And finally,
the indirect cost rate proposal should also compute the indirect cost rate by dividing
the total remaining in direct costs by the direct cost base selected for distribution
of the indirect costs. The indirect cost rate proposal documents the development of the
LEA's indirect cost rate and direct cost base, and must be developed before the LEA can receive
reimbursements for indirect costs. It is absolutely necessary before indirect costs may be charged
for any expenses. Now, once the state education agency approves the indirect cost rate proposal,
the end result is an indirect cost rate agreement. There are a few ways in which a state education
agency might inform our local education agency of the approved indirect cost rate. Some SEAs,
or state education agencies, issue a letter to each local education agency, while other
state education agencies post the approved indirect cost rates to their Web site. One
key piece of information that's included in the indirect cost rate agreement is the time
frame for which the agreement is valid. Indirect cost rate agreements expire annually, so local
education agencies must use the most current approved rate for each fiscal year when determining
its indirect costs. An indirect cost rate is simply a mechanism for determining fairly
and conveniently within the boundaries of sound administrative principles what proportions
of departmental or organizational administration costs each program should bear. As previously
mentioned, an indirect cost rate represents the ratio between the total indirect costs
and benefiting direct costs after excluding and/or reclassifying unallowable costs and
extraordinary or distorting expenditures, for instance, capital expenditures and major
contracts and sub-grants. The indirect costs in the numerator of the equation should bear
a reasonable relationship to the direct costs from the denominator. This will allow for
each program or activity represented in the direct cost base to assume their fair share
of indirect costs when the rate is applied. Now, why is this information important? School
Food Authorities that are charged indirect costs must be familiar with the information
included in their indirect cost rate agreement, and they need to understand how it's applied.
An SFA must have both its indirect cost rate and the corresponding direct cost base. We
understand from talking with State agencies that some of their SFAs may have trouble obtaining
a copy of their indirect cost rate agreement, or securing all the information that it needs,
and in that case the State agency should consider contacting the state education agency to help
the LEA obtain the information. Remember, as we've already noted, many costs may be
classified as either direct or indirect. Next we're going to talk about how to figure out
how to categorize a cost as direct or indirect. The School Food Authority state education
agency plays a role in determining if a cost should be categorized as direct or indirect.
For instance, the indirect cost methodology the state education agency prescribes for
a local education agency may call for direct/indirect distinctions. And in determining whether a
cost should be charged as direct or indirect the SFA is required to treat each item of
cost in a consistent manner as a direct or indirect cost in accordance with the federal
cost principles. A cost may be assigned to the non-profit school food service as a direct
cost only if that cost item under the same circumstances has not been charged to the
other programs or cost objective as an indirect cost. Some questions to contemplate in determining
whether a cost is direct or indirect include: does the cost benefit multiple programs or
other cost objectives, or solely the school food service? Does the cost have a direct
relationship to the school food service? What guidance did the federal cost principle provide
for those costs? How are similar costs treated in other cost objectives of the SFA? And also,
how have the costs been treated historically by the SFA? These questions will help SFAs
determine whether a cost is direct or indirect. Now, you'll recall that we provided examples
earlier of allowable and unallowable costs. Now we're going to provide an example of how
to categorize an expense common to all SFAs: custodial expenses. As you're well aware,
custodial expenses generally include the costs associated with cleaning the entire school.
Some SFAs charge custodial expenses directly. This is possible if the SFA documents for
hours that custodians work specifically on cleaning the food service areas. This can
be accomplished by a time reporting system that documents the exact hours that custodian
cleans the food service area versus the rest of the school. The SFA is then able to charge
the custodial expenses associated with cleaning the food service area as a direct expense.
On the other hand, some School Food Authorities charge custodial expenses indirectly when
they do not have a methodology for determining the cost item's direct relationship to the
school food services operation. Custodial expenses may be charged as indirect costs
by including them in the indirect cost pool used to calculate the local education agency's
indirect cost rate. Custodial expenses must be charged either directly or indirectly in
a consistent manner across all activities of the School Food Authority. This means that
an SFA may not charge custodial expenses as a direct cost to the school food service and
as an indirect cost for other programs. Actual indirect costs such as utility bills, janitorial
services, trash service, and others are often paid from the LEA's general fund and then
billed to the non-profit school food service account. For example, unless the school district
has separate meters or utility lines to serve the school food service assigning the charges
through indirect costs may be the only way to identify them as costs allocable to the
non-profit school food service. Please keep in mind that while School Food Authorities
are reimbursed under the meals times rate funding model, direct and indirect costs for
program services are billed or charged to the non-profit school food service account.
Funds are provided for meals and these funds, plus state payments, student charges, and
other funds accrue to the non-profit school food service account to be used for program
expenses. Now, again, no matter how appropriate a cost may seem, costs may only be billed
to the non-profit school food service account with appropriate documentation. Child Nutrition
Program regulations require that these records must be retained for three years except that
if audit findings have not been resolved the record shall be retained beyond the three
year period as long as required for resolution of the issues raised by the audit. Errors
in the way in which indirect costs may be charged can occur for different reasons, including
mathematical errors and when indirect costs for a service are included in the indirect
cost pool for service that is also already charged as a direct cost. For this reason
it's important that the School Food Authority have the tools it needs to prevent incorrect
indirect cost charges. How to avoid indirect and direct cost charges? Well, the SEA, the
state education agency, is the provider, again, of the SFA's indirect cost rate and should
be contacted if the SFA does not have the information. As previously mentioned, the
information may be sent to the SFA via letter, although some state education agencies communicate
the indirect cost rate information through their Web sites. The SFA is responsible for
double checking indirect costs that are billed to the school food service to ensure that
the account is not charged more than it should be charged. This review is a check-and-balance
to protect the non-profit school food service account from overcharges by the local education
agency. Now, that we've covered some background on how allowable costs and direct and indirect
costs are determined, Eric is going to provide you with an overview of how allowable costs
and direct and indirect costs should be reviewed during the course of the Administrative Review.
Eric? Thank you very much, Eleanor. Now, I'll go into the next section and we're going to
look at how allowable costs should be reviewed during the course of an Administrative Review.
If you were able to attend one of our regional administrator review trainings, this chart
will probably look familiar to you. At least four weeks prior to the on-site review State
agencies will conduct a risk assessment to determine whether an SFA will need a Resource
Management and comprehensive review. If insufficient risk for non-compliance exists, no comprehensive
review is needed. But if sufficient risk is found, the reviewer will examine the SFA's
costs during the comprehensive Resource Management review. While other areas of that comprehensive
Resource Management review may be conducted prior to the on-site review, the review of
SFA's costs must occur on-site. So now that we have this general framework, let's look
at how a State agency reviewer will examine allowable costs during a comprehensive Resource
Management review. The focus of the allowable cost monitoring area and the Resource Management
comprehensive review is to do a few things. One is to test actual SFA expenses for compliance
with allowable cost requirements; two, to identify and correct any unallowable costs;
and then finally, to ensure costs are adequately documented and treated consistently. The steps
for monitoring allowable costs are as follows. Step one: Review the most recently completed
fiscal year's operating statement or statement of activities and select a sample cost. Step
two: Determine whether the selected expenses were allowable. And step three: Ensure that
the SFA keeps adequate documentation and allocates expenses consistently among local and federal
programs. So, a little bit more on step one. The State agency should advise the SFA to
be prepared during the on-site review to provide documentation to support and justify any expense
charged to the school through its service account. The SFA's statement of revenues and
expenses, also known as the statement of activities, or operating statement, will reflect funding
sources compared against program expenses, administrative costs, and other operating
commitments. The basic premise on which a statement of revenue and expenses is based
is revenues minus expenses equals net income. Now, the important thing to remember about
a statement of revenues and expenses is that it represents a period of time as compared
to a balance sheet, which represents a specific point in time. The documentation should be
sufficiently detailed to identify all expenses by category and by line item. The costs must
represent charges for actual costs, not budgeted or projected amounts. When reflecting the
test sample of expenses, the State agency should take into consideration the size of
the SFA and the expense amount, but also review a minimum of 10% of total expenditures. Here's
an example of what that means. You see here in this case there's a breakdown of the minimum
values of expenses that would be reviewed here, and on the first line you can see that
since total expenses are $100,000, the State agency here would be reviewing 10%, or $10,000,
in this case. That 10% sample should include costs from food, labor, and other expenses,
and you can see those items in this example here. The state's review should include a
minimum of 10% of salaries and benefits, and it should also ensure that all employees paid
are involved in the school meal programs. The State agency reviewer should also examine
a minimum of 10% of food and food processing supplies. So moving on to step two, the State
agency should interview SFA staff about any questionable items and request invoices to
substantiate the expenditures. Your review could include a few things. Determining whether
large or unusual actual expenses are allowable and properly documented; reviewing the salaries
and benefits for employees who are dually employed by the LEA's Child Nutrition Program
and other departments within the school district to ensure expenses are prorated and fair,
verifying costs that were approved by the State agency, if required, and a case where
it would be required would be capital equipment, for example. Also reviewing transfers out
of the school through a service account by checking whether the transfers ... benefit
of the school food service, ensuring that the LEA did not use Child Nutrition funds
to pay for expenses for other programs operated by the LEA. And finally, identifying bad debts
if they were charged or carried over to the SFA food service account, and also requiring
corrective action to repay the SFA. Now, if necessary when looking at the statement of
activities or operating expenses, the state reviewer should ask the SFA: What was this
expenditure used for? How was money spent, and for what purposes? If those are questions
that the SFA cannot answer, the reviewer should follow up. The SFA should have the ability
in its financial accounting system to track and note how funds travel in and out of the
non-profit school food service account, and sufficient documentation is required for program
expenses and the SFA must be able to provide that documentation to the reviewer upon request.
Moving on to step number three, so federal regulations under 7 CFR 21014 require that
expenditures and non-profit school food service revenues must be made in accordance with the
financial management system established by the State agency. The State agency reviewer
should ensure that the SFA's program expenditures are documented and tracked in accordance with
the state's financial management system. The State agency reviewer should also check whether
the SFA's compliance with any procedures -- I'm sorry -- they should always check the compliance
with any procedures established by the State agency for determining the allowability of
program costs. Again, all expenses charged to the school food service account must be
adequately documented to meet the allowability conditions. If costs are not supported by
proper documentation, such as receipts, invoices, and under certain circumstances documentation
showing prior State agency approval for the expenditure, should be treated as unallowable.
The State agency reviewer should also ensure that the SFA has effective, internal procedures
and practices to ensure that expenditures financed with federal funds are properly chargeable
to the school food service account. If the reviewer does identify problems with the SFA's
activity surrounding allowable costs, the reviewer must require corrective action to
fix those violations and the slide you see here details some of the instances when the
corrective action would be needed. And those corrective actions could include a required
transfer of funds from the SFA's general fund to the non-profit school food service account.
Now, we'll go into our next section, looking at how the State agency should review indirect
costs during the course of that Administrative Review. There's a number of documents that
a State agency will need when it conducts a Resource Management comprehensive review
of SFA's indirect costs. A list of some of the necessary records the reviewer will need
to reference is included on this slide. So you see those include indirect cost rate agreement,
financial statements, a chart of accounts, and accounting records. So again, we'll go
through the different stuff here on how to conduct this portion of the comprehensive
review. Step one: The state reviewer must ensure that this SFA obtained an approved
indirect cost rate from the state education agency which should be included in the SFA's
indirect cost rate agreement. This is required because the U.S. Department of Education requires
that LEAs charging indirect cost of programs obtain a federally approved indirect cost
rate. Step two: The reviewer should ensure that the SFA is applying the correct indirect
cost rate established for the appropriate fiscal year to the correct direct cost base.
Now, both the indirect cost rate and the direct cost base can be found in that indirect cost
rate agreement. Step three: When a cost benefits two or more cost objectives, the costs must
be allocated or distributed among them proportionate to the benefit each receives from that cost.
Allocation is necessary because it identifies the portion of the cost that has benefited,
or will benefit the school food service. An allowable cost can be charged to the non-profit
school food service account as an indirect cost with appropriate documentation, and that
they must conduct transactions using federal program funds in the same way it conducts
transactions with its own non-federal funds. A cost item must be treated consistently as
direct or indirect in all activities of the SFA unless legislation, regulations, or guidance
from an awarding agency dictates otherwise. A cost may not be assigned to a federal award
as a direct cost if that same cost incurred for the same purpose and similar circumstances
has been allocated to other federal awards as an indirect cost. The reviewer must ensure
that the SFA is not charged indirect costs via methods that are inconsistent with the
methodologies approved by the SFAs in direct cost rate agreement. For instance, the LEA
may not calculate indirect cost rates based on a percentage of federal reimbursement,
a percentage of food service revenues, or whatever the LEA needs to make up a general
fund deficit. One example of an inconsistent methodology that is not allowable is an LEA
charging the school food service account for electricity costs based on square footage
when not charging any other federal program for electricity. The reviewer should also
evaluate all other actions taken by the SFA to ensure that indirect costs charged to the
school food service account are reasonable, necessary, and otherwise allowable to ensure
that the proper rate was applied to the correct base. Step number four: It's unallowable for
an SFA to build a non-profit school food service account for indirect costs from prior years
unless an agreement exists to show that the SFA had been loaning the non-profit school
food service account funds to cover the indirect costs in one or more prior years with the
expectation of repayment. In such cases the LEA's accounting records should support implementation
of the ... agreement. For example, a transfer of funds from the general fund to the food
service account might be recorded as a receivable due from the food service account, or as an
official inter-fund transaction posted to the accounting records of the general fund
and the school food service each year, with that indicating that a special loan had been
made. Step number five: The reviewer should determine whether costs are consistently treated
as direct or indirect costs. The reviewer should also confirm that school food service
accounts are not charged directly for expenditures that are already included in the indirect
cost pool, and this is also known as "double dipping." Step six, this is the final step
in this sequence: The State agency reviewer should finally verify that documentation that
supports actual indirect costs charged to a school food service account is accurate
and complete. The State agency should review the SFA's documentation and indirect cost
calculations and compare the indirect cost rate proposal submitted to the state education
agency with the approved indirect cost rate agreement. If the correct indirect cost rate
and direct cost base were used, the State agency should compute the number of the amount
of indirect costs chargeable to the school food service and compare this result with
the amount of indirect costs actually billed to school food service to validate its accuracy.
This is the same principle a reviewer uses when the State agency double checks an SFA's
claim for reimbursement. So basically you're trying to answer the question, overall, did
the SFA's math add up? Now, in terms of corrective action for indirect costs, so here's some
examples of where corrective action might be needed. The State agency would need to
assess corrective action because of non-compliance with indirect cost requirements, and each
of the instances you see on the screen the reviewer must develop a corrective action
plan for the SFA to resolve the issue sufficiently. All right, and that takes us right up to our
last couple of slides. I just wanted to wrap up and let you all know that this Webinar,
again, was designed to really provide you with basic information about cost allowability,
direct and indirect costs, and also the review procedures for these areas as part of the
Administrative Review. But, again, this has been an introduction, so if your state is
just starting out and looking more closely at these costs and in a more comprehensive
way at the SFA level, the slide that you see here will be helpful, because it has a list
of resources that are good places to start if you're looking for more information. And
on the next slide you'll see, again, additional resources. In addition to the OMB guidance
federal regulations, and FNS policy guidance, there's also online courses offered by the
National School Food Service Management Institute and those might be helpful as well. The U.S.
Department of Education has also published its cost allocation guide for state and local
governments, that was from September 2009, and that can be downloaded off the Web. And
then finally, state education agencies may post information about allowable costs and
indirect costs, so it's worth checking out that information as well. And with that, we're
at the conclusion of the presentation. Thanks for listening in and participating. As a reminder,
you can access all the Administrative Review materials on the FNS Web site at the link
shown here on the screen. And we have some time for questions, so I'm going to turn it
back over to Lynn Rodgers-Kuperman, and she'll take us through some of the questions that
have been submitted over the Live Meeting. Hi, folks. Thank you for that. I'm going to
give everybody just a moment. We are taking written questions, so we have one or two that
have been submitted, and in some cases we need to obtain clarification on the questions
that have been asked. So if folks want to take the next couple of minutes if they do
have any questions. As we've said in prior Webinars those that we cannot get to we will
do our best to respond and incorporate them into the next Webinar, which I believe we
have one next week. Okay, here's a question we did get already, and that is basically,
if you go back to slide 39, is there a way that we can get back to 39? We'll see if we
can pull 39 up for you guys. This was the one where, it was one of the examples that
we had provided, and the question said, "Slide 39 said you would charge 30% for two hours
of gym use for utilities, however, the rest of it was being given heat and electricity.
Is this example correct?" What we think, and we've tried to go back a little bit, back
and forth and make sure we understood what they were asking, we think that what they're
basically asking is well, what about the rest of the school, are they responsible for some
of the costs? So the answer to that is -- let us explain. Yes, the rest of the school does
pay their share too. For example, the whole school, think of it in these terms, the whole
school has a bill that represents 100% of the heating and cooling costs, based on the
square footage 25% of those costs are to heat or cool the gym. Of the gym's 25% of the heating
and cooling costs, 30% is allocable to the food service operation. That's what we were
trying to convey in that example. The food service is responsible for 30% of the gym's
25% of the total share because the food service uses the gym for two hours of the six hour
school day. So hopefully that will make a little more sense to folks. Okay, the next
question is: "What happens if a School Food Authority isn't under the jurisdiction of
the SEA and therefore doesn't have an approved indirect cost rate agreement on file with
them?" And we tried to seek a little bit of information to figure out whether it was a
private school, or what the situation was. I want to point out, you know, the indirect
cost guidance that we issued, it was either last year or the year before, makes clear
that in order to be able to charge an indirect cost rate to the program, to the grant essentially,
you have to know what the rate bases are. You just can't charge any percentage. The
reason we required the approved rate is because somebody needs to have gone through the process
of assessing what the cost part in the base and what the rate is. Now, what we are going
to suggest is, it sounds to us, based on the person who submitted the question, that maybe
they don't have this rate. And so our recommendation is that you contact your regional office and
then we can work with them to help you figure out how to obtain a rate through a cognizant
agency and/or how to assess what your situation is and whether perhaps there is a rate that's
available that you're just not aware of. So that would be our recommendation in those
scenarios, to contact your regional office and if they need assistance we can work with
them. But the key thing I want to get across is you can't just charge any percentage. It's
a methodology to assess, you have to know what's in your base before you go applying
just any rate that's pulled out of the air. It has to be based on a calculation that makes
sense and is meaningful to the program. Okay. Oh, we want to point out, somebody noted to
us that the bottom of slide 55 says, "Allowable and Allowable," and that that is incorrect,
and they are right. And that's a typo. We will make sure that we fix this. The slide
should say, "At Allowable and Unallowable Costs." So for the person who sent that in,
thanks for catching that. We try our best to catch everything, but we've been doing
a lot of Webinars and a lot of slides. Okay, give me a moment to see if there are any additional
ones that have come in. I'm sorry, guys. We're just trying to sort through as the questions
come in. One of them says, "Can you please show the slide with the six review steps again?"
We can do that. "Are there often situations when indirect costs are reviewed for a sample
of LEAs even when there's no apparent risk of non-compliance?" I need to see the slide
again, if we're talking about the risk indicator tool. If anybody knows the number of that
slide, maybe just send it in. Can you type it in, if anybody happens to know -- well,
we're sorting through them, but we don't know the specific number. Let me see if I can go
to another one. Okay, here's another one: "If a school is painting the school with general
funds and wants to charge painting of the cafeteria, 100% of the paint plus labor for the cafeteria, is that allowable?" And
I'm going to try to answer this question in the way I think I understand it. I think what
you're saying is, okay, the entire school is being painted, again, remember, think back
to our example, a program can be charged, either directly or indirectly, whether it's
direct cost or indirect cost, for the costs that are attributable and allocable to that
program, so the program should not be bearing 100% of the cost to paint the entire school.
That would not be allocable, nor would it be reasonable for them to pay for all the
paint to paint the entire school. Now, if they wanted to absorb the cost of the paint
to perhaps do something within the school food service operations, which is the cafeteria
space, just like if you added a refrigerator or if you did a built-in refrigerator, those
costs could be attributable, yes, to the non-profit school food service account within that cafeteria
space, or wherever it's housed, because that might be allocable to the program. But it
should not be responsible for 100% of the cost to paint the entire school. Okay, let
me see if I can read anymore. I've got some and there's nothing there when I pull them
up, so just bear with me. Okay, here's another one: "When reviewing 10% of food supplies
and other expenses, what period of time do we look at, the previous school year or the
review month?" It would be the previous school year. Okay, we're still looking for that slide,
I'm sorry, for that one question. The individual that had asked for us to scroll through the
slides with the six steps, we're going to scroll through them now. We did it already,
but we realized we need to make people cognizant of the fact that we just did it. So it's not
on one slide. It is on several slides. So we are doing that right now. And that was
for the question where it said, "Can you please show the slide with the six steps again?"
You know, hopefully folks know that they can download these as handouts. I don't know that
we said that in the beginning of the call, but you can do so. This question says: "I
am surprised you said that an LEA can assess utility charges on school food service accounts
based on square footage and percentage of use of that square footage. Can you confirm
that this would be an example of a direct rate as opposed to needing a separate meter?"
Yes, there are many ways to attribute, or allocate cost to a program. It may be more
common than we think where they can put in a separate meter, but that's not always the
case and there are many ways to assess how to allocate cost. That is often in the past,
they've used things such as time studies, square footage in a building because, remember,
if a school food service operation is limited to an area of a building, you can assess the
total square footage of this space that they occupy and sometimes that square footage is
a reasonable way to allocate the cost. And again, these are, as we said, every situation
is different, so if you have more specifics and there's a reason why you find that that
seems odd to you, feel free to send it in and we will do our best to answer it, at least
by the next Webinar if we can't get to it here. "What impact would an ... contractor
have on this review process?" Now, I'm trying to think about how to answer that. The review
is being conducted by the State agency reviewers, so the impact that they would have on this
process I suppose is it could certainly impact the process if they were unwilling to share,
if they made it difficult to assess things while we were out there on site. I can't imagine
that would happen. But certainly those are ways, I suppose, they could impact the process.
The School Food Authority is always responsible for the operations of their programs, and
so in my mind the only way that I can think that you may be asking that question is whether
or not they throw up road blocks when the programs are being reviewed. Again, as long
as they're forthcoming while they're there and the School Food Authority recognizes that
they are responsible for ensuring that an on-site review, we can get in there and see
the meals and if the records are available, there should be no real impact. Okay, one
question that we got was: "Does the comprehensive review need to be completely done on site?"
And the answer to that is no. There are some large portions of it that are on site, but
please go to your guidance and we are very clear in that area of the Resource Management
as to the aspects of the comprehensive reviews that have to be done on site and those that
can be done off site. One of the questions we got, and we get this at every Webinar is:
"Will these slides be posted on the Web site?" They're available to you now to download.
Everything we are doing here in terms of the new Administrative Review process will ultimately
be posted back up and we will alert you guys to that. As we have mentioned in prior Webinars,
we are in the process of, after taking some of the edits we needed to make after all of
the five national trainings and based on questions we received trying to figure out how to better
clarify information in the guidance and the guidance then has sort of a domino effect
on the tools and everything, so while there's no major changes we do want to be cautious
and make sure that we've captured everything before we put everything back up on the partner
Web, which will be very soon. We are working diligently and very hard to get that material
up while we're trying to conduct these Webinars, because these Webinars, you know, we have
to do the work necessary to get these slides together. So, yes, everything will go up.
And in fact, our advice at that point would be once everything goes up, to take those
documents and work from those, because they will be those final versions, as opposed to
any former documents that you had. Again, I got another question on the paint one. "Regarding
the paint question, would it be allowable if just for the food service area?" Again,
I think that you need to assess whether that's an allowable cost. We have talked in the past
and we've put out guidance on what we call renovations to the school food service area,
and there are renovations and this would certainly fall under that classification, where renovations
can be paid for to the school food service operations. Now, this is where, and I always
hesitate to answer these without knowing all of the information, but there are some expenditures
that should be borne by the county or by the school in terms of these structures, you know,
whether it be a school or things that should be borne by the county. And in terms of grading
or upkeep on those things, you know, I think that I would need to give some consideration
to whether the need to paint that area provides and improvement to the school food service
operations and/or are all other areas of the school being updated and paid for differently.
So if that person wants to reach out to their regional office with that question I'd love
to be able to talk to you about that. So I'll leave it at that. If you could reach out,
if that's not a hypothetical one but it's actually a real question. And even if it's
hypothetical if you want to reach out and get more information on that, certainly talk
with your regional office folks about it. All right, we're at the end of our time. Hopefully
we understood your questions as asked. Sometimes it's very difficult how they're written, they
tend to be a little cryptic in some cases, but we're doing our best. We can certainly
go over them again and if we have ones remaining that we can still ask but we need to ask you
questions, we may reach out to you directly, if we have your name and we're able to do
so. Thank you for joining us, and we hope this was helpful. And again, these will be
posted. Don't forget we do have another Webinar next week, and it's the second in our Resource
Management Webinars. Okay, thank you so much, and have a good afternoon.