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Summary of SFA and/or FSMC Ongoing Responsibilities

NYSED’s CN Office welcomes all SFA/FSMC contracts and/or extensions into the program, however it is imperative that SFAs are aware that our agreement is with the SFA and that it is the SFA’s responsibility to provide ongoing requisite administrative oversight of the FSMC’s operation. It is also the responsibility of the SFA to ensure that each school year there is a current approved contract or extension on file in order to claim for reimbursement. All fiscal records pertaining to the Child Nutrition Program must be retained by the SFA.

A.  Preparing Bid Specifications

SFAs may contract with individuals or companies in order to obtain information from as many sources as possible to assist in preparing bid specifications. However, an FSMC or other interested party may not participate in the procurement process by way of drafting the bid specifications, procedures or documents, if they intend to be a potential candidate for providing the service or product. In addition, it is not allowable for a potential bidder and/or an incumbent FSMC who is planning to be a potential bidder to make suggestions to the SFA to meet only their specific needs and/or suggest the use of terminology and/or phrasing that it is only familiar to them as in the SFAs preparation of bid specifications. Doing so prohibits them from participating in the bidding process as a viable candidate. It is important to keep in mind that FSMC does not “dictate” the bid specifications. This provision is intended to ensure that SFAs have sufficient flexibility in contracting matters, while maintaining an open and free competition.

B.  Increasing the Bid Price

The FSMC can ask the SFA for an increase in the bid price based on the CPI-U for the new school year/term. However, if the SFA decided that there was not a significant increase in costs from last year to this year, they do not have to agree to an increase. Careful monitoring of the FSMC’s operating statements, outlining expenses and income, will help make that determination.

The SFA can increase the bid price for breakfast and/or lunch using the Consumer Price Index for Urban Consumers (CPI-U) as a guide and limit. You must use the May CPI-U for contracts ending in June, or the September CPI-U for contracts ending in October, etc. Education Law 305 states the percentage of increase in the bid price for breakfast and/or lunch cannot exceed the CPI-U for the twelve-month period immediately preceding the month in which the contract ends. However, you can negotiate an increase that is less than the CPI-U. Call the U.S. Department of Labor, Bureau of Labor Statistics, for the Consumer Price Index for Urban Consumers in the New York-Northeastern, New Jersey area at (646) 264-3600. You may also obtain that information on the World Wide Web at Click on New York regional economy, scroll down to Consumer Price Index and review New York-Northeastern New Jersey-Long Island All Urban Consumers (U). See the “percentage change from year ago” column for recent CPI-U information. Please check your math when applying the CPI-U to your current bid price. Most delays in processing extensions are the result of mathematical errors.

C.  Returning to a Self-Operated Program

SFAs are required to send or fax a letter to our office on official school letterhead stating that the SFA will no longer be using the services of a FSMC for the 2020-2021 school year. The letter must be signed by the business official or superintendent. The signature of the principal is required for nonpublic schools.

D.  Prohibitions for the FSMC

Federal regulations prohibit an FSMC representative from signing or submitting online program agreements and reimbursement claim forms. However, FSMC personnel may prepare claims for the SFA’s review, approval and submission.

An FSMC representative cannot be the reviewing, verification or hearing official for the free or reduced price applications. SFA personnel must update the master list of eligible students and provide it to FSMC personnel (i.e., cashiers) with the understanding that the master list contains confidential information and should not be shared with anyone. In addition, only SFA personnel may conduct verification.

For SFAs with more than one RA, SFA personnel must conduct an annual self-review in all schools participating in the Child Nutrition Programs before February 1. The SFA must use the appropriate self-review form provided on our web site or they may use one they have developed. FSMC personnel can accompany the SFA on the self-review, but they may not conduct the self-review for the SFA.

E.  USDA Foods

The SFA is held financially responsible for the distribution and use of USDA Foods in accordance with applicable federal and State policies and procedures. The SFA should monitor USDA Food orders, pick up slips and inventory sheets to ensure that USDA Foods are being used solely for your child nutrition programs.

F.  Handling the Program Money and Fiscal Records

SFAs are responsible for maintaining administrative and financial oversight and responsibility for the Child Nutrition Programs in which they participate. The SFA must account for all money received from the sale of lunches and/or breakfasts to students and adults, a la carte sales and reimbursement for meals served. These funds must be kept in an account by the SFA in the name of the SFA only. Funds can be kept in the general fund of the SFA, but they must be accounted for separately. FSMC personnel may deposit monies in the SFA account, however, the FSMC should turn in the deposit slip to the SFA within a reasonable period (i.e., less than one hour).

G.  Administrative Monitoring

The SFA should routinely review the invoices and monthly operating statement at their discretion but must audit the invoices and monthly operating statements no less frequently than annually. Invoices for the Type II contract should report, at a minimum, the number of reimbursable lunch and breakfast meals, plus equivalent meals, multiplied by the bid price or meal cost, whichever is less. These invoices should also report the dollar amount of a la carte sales and the conversion to equivalent meals by the factor listed in the contract by meal type. Payments to the FSMC must also be made on a timely basis, as described in the contract.

The FSMC's monthly operating statements must be received by the SFA no later than 10 days following the calendar month in which services were rendered. All reported expenditures must be legitimate, reasonable and allowable costs that are incurred solely for the SFA's on-site operations, not corporate or administrative costs.

The SFA must conduct a reconciliation at least once per year, of all records, including the monthly invoices and operating statements to ensure that payment to the FSMC is limited to the extent of annual program income which is defined as monies generated by the sale of meals to children, accrued State and federal reimbursement and student and adult a la carte sales, less the annual guaranteed return to district, if applicable. Prior years school lunch fund balances are not considered program income. General fund subsidies are only considered program income if it is stipulated in the contract/ bid specification prior to letting bids.

Contracts that provide for a return to the SFA or a break-even program require the FSMC to operate within annual program income. If the FSMC's expenses exceed the bid price or annual program income, or both, the FSMC must absorb the loss.

The SFA is held responsible for any areas of noncompliance and subsequent fiscal action found during an Administrative Review (AR). However, since our agreement is with the SFA, the SFA may recoup funds from the FSMC for related program violations. The SFA must review the point of service accountability system to determine if complete meals are properly being claimed by category for reimbursement. Menus, which must meet menu planning requirements, must be received by the SFA as indicated in the contract (usually 10 days before service) for review and approval.

H.  Establishing an Advisory Board

7 CFR Part 210.16(a) (8) requires SFAs to “Establish an advisory board composed of parents, teachers, and students to assist in menu planning.” The advisory board should meet with a representative of the FSMC to assist in menu planning. The advisory board is also encouraged to review the menus to confirm that meal standards outlined in the bid specification are being met in the cafeteria. While there is no set number of times that the advisory board should meet, NYSED recommends that the board meet at least three times per year. It is also recommended that the advisory board include children from all grade levels and that the minutes from meetings between the advisory board and the FSMC be retained.

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:, 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:

This institution is an equal opportunity provider.

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