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Net Cash Resources and Excess Fund Balances

End of Year Fund Balance (Net Cash Resources)

Any positive balance remaining in the nonprofit food service account at the end of the school year must be carried over to the next school year as the beginning balance in the nonprofit food service account. Any negative balance in the account at the end of the year must be cleared by funds from non-federal sources, such as the general fund. A school food authority cannot carry a negative fund balance (Net cash resources) into the next school year. A negative fund balance exists when all net cash resources have been depleted, and the resulting negative balance constitutes a liability to the organization.

Excessive Fund Balance 

To maintain the nonprofit status required for the food service account, the fund balance (net cash resources) of the account must not exceed three month's average expenditures at any time. The Excessive Balance (Net Cash Resources) Calculation Chart provides an explanation and examples of how to determine if the SFA has an excessive fund balance.

 Determine the SFA’s average monthly operating expenses by dividing the prior year’s expenses by the number of months in operation; Determine if the SFA has an excess fund balance by comparing the total net cash on hand to three month’s average expenses.

Resolving an Excess Fund Balance

If an excess fund balance occurs, the SFA must immediately take steps to reduce its net cash resources or have an ecceptable plan for using surplus net cash resources. Since program funds must be used only for program purposes, excess net cash resources must be reduced by improving the quality of food served or purchasing needed supplies, services, or equipment.

A plan must be submitted to the Child Nutrition Program Administration and provide the following:

  • Explanation of how the SFA will reduce the fund balance (net cash resources) to an acceptable level within one year by improving the quality of food served or by purchasing needed supplies, service, or equipment.
  • Explanation of what the SFA will do to ensure that an excessive fund balance (Net cash resources) will not occur in the future.

Special Guidance - Fund Balance

Allowing net cash resources to build up in the food service account for an extended period to save for a future project is unallowable. If the proposed expenditure project is a construction project, construction projects are typically not allowable.

Helpful Links - Net Cash Resources and Excess Fund Balances

Excess Fund Balance Fillable Form

 

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USDA Nondiscrimination Statement

In accordance with federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, this institution is prohibited from discriminating on the basis of race, color, national origin, sex (including gender identity and sexual orientation), disability, age, or reprisal or retaliation for prior civil rights activity.

Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (e.g., Braille, large print, audiotape, American Sign Language), should contact the responsible state or local agency that administers the program or USDA’s TARGET Center at (202) 720-2600 (voice and TTY) or contact USDA through the Federal Relay Service at (800) 877-8339.

To file a program discrimination complaint, a Complainant should complete a Form AD-3027, USDA Program Discrimination Complaint Form which can be obtained online at: https://www.usda.gov/sites/default/files/documents/USDA-OASCR%20P-Complaint-Form-0508-0002-508-11-28-17Fax2Mail.pdf, from any USDA office, by calling (866) 632-9992, or by writing a letter addressed to USDA. The letter must contain the complainant’s name, address, telephone number, and a written description of the alleged discriminatory action in sufficient detail to inform the Assistant Secretary for Civil Rights (ASCR) about the nature and date of an alleged civil rights violation. The completed AD-3027 form or letter must be submitted to USDA by:

  1. mail:
    U.S. Department of Agriculture
    Office of the Assistant Secretary for Civil Rights
    1400 Independence Avenue, SW
    Washington, D.C. 20250-9410; or
  2. fax:
    (833) 256-1665 or (202) 690-7442; or
  3. email:
    program.intake@usda.gov

 

This institution is an equal opportunity provider.

Click here for Nondiscrimination Statement translations.

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