Nonprogram Food - Consolidated Guidance

This Management Bulletin (MB) provides consolidated guidance for school food authorities (SFA) about nonprogram food requirements, revenue requirements, SFA compliance monitoring, unique situations, catering and vending requirements, and state agency monitoring through administrative review. The MB also provides policy for SFAs when using a reference period to comply with nonprogram food requirements.

Nonprogram Food Requirements

Title 7 CFR, Section 210.14(f) defines nonprogram foods as food and beverages that are:

1. Sold at a participating school other than a reimbursable program meal; and
2. Purchased using funds from the SFA’s nonprofit school food service account (otherwise known as the cafeteria fund).

SFAs shall ensure that proportion of total revenue from the sale of nonprogram foods to total revenue of the school food service account shall be equal to or greater than the proportion of total food costs associated with obtaining nonprogram foods to the total costs associated with obtaining program and nonprogram foods from the cafeteria fund. This is known as the nonprogram food revenue requirement and is explained in greater detail in the next section.

Further, 7 CFR, Section 210.14(f) and the National School Lunch Act specify that all revenue from the sale of nonprogram foods accrue to the cafeteria fund; and revenue available to support the production of reimbursable school meals does not subsidize the sale of nonprogram foods.

Revenue is all money provided to the cafeteria fund including, but not limited to: federal reimbursement, state or local funds, payments from children, adult meals, vended meals, catering, fund raisers, and vending machines.

Nonprogram foods are sold at any time or location and include but are not limited to the following: a la carte items, adult meals, catering, vended meals, items purchased for fund raisers, vending machines, and school stores. Some nonprogram foods can be priced below cost as long as the total revenue generated from all nonprogram food sales meets the nonprogram food revenue requirement.

Nonprogram Food Revenue Requirement

SFAs are required to determine if the percent of total revenue that is generated from their nonprogram food is equal to or greater than the percent of total food costs that are attributable to the SFA’s purchase of nonprogram foods. For example, if the cost of nonprogram foods is 20 percent of the SFA’s total food costs, then the amount of revenue generated from the sale of the nonprogram foods must be at least 20 percent of the total revenue generated within the same reference period.

Nonprogram to program revenue requirement calculation:

Revenue from nonprogram food divided by the total SNP and nonprogram food revenue = percent of nonprogram food revenues

Must be equal to or greater than

Food costs for nonprogram foods divided by the total food costs for SNP and nonprogram foods = percent of nonprogram food costs

For the purpose of this calculation, the statutory requirement states that only food costs are to be used to measure compliance (i.e., exclude labor, supplies, etc.). If a nonprogram food is made from scratch, the SFA would determine the price of ingredients to calculate food cost. In addition, the food costs for catering and vending to outside agencies may be removed completely from the nonprogram food revenue requirement calculation if the SFA recovers all costs, including labor.

To assist with the calculation, the USDA created the Nonprogram Food Revenue Calculator Tool. This tool is available in the Child Nutrition Information Payment System (CNIPS) download forms, or on the USDA’s website at https://www.fns.usda.gov/cn/guidance-paid-lunch-equity-and-revenue-nonprogram-foods . The California Department of Education (CDE) has a more detailed SNP Nonprogram Food Tool to assist SFAs further with the nonprogram food revenue requirement, which is also available in CNIPS download forms.

Noncompliance Due to Universal Meals Reimbursement

The California Universal Meals Program was established in school year 2022–23, and provides additional state revenue to support the cost of providing meals for free to students attending public schools. Due to the increased state reimbursement, SFAs may find they are out of compliance with the nonprogram food revenue requirement. Please reach out to the Resource Management Unit (RMU) for assistance if your SFA is out of compliance presumed due to California Universal Meals Program reimbursement. You can reach the RMU at SNPCafeFundQuestions@cde.ca.gov.

SFA Compliance Monitoring

Under the federal nonprogram food revenue requirement, SFAs need to track the cost and sale of nonprogram foods in order to determine compliance. USDA Policy Memo SP 20-2016 states the SFA must collect the following: The total nonprogram food sales (revenue); total revenue of both program and nonprogram foods sold; itemized lists of all nonprogram foods offered and the per item/serving cost; number of items/servings sold; and total food costs for program and nonprogram foods.

SFAs should monitor compliance of nonprogram food sales at least once per year to ensure that revenues from the sales of nonprogram foods generate at least the same proportion of SFA revenues as they contribute to SFA food costs. To implement this requirement, SFAs should compile the total revenue and food costs for the entire school year and use the USDA Nonprogram Foods Calculator Tool to assess if the nonprogram food revenue requirement is met.

USDA Policy Memo SP 20-2016 clarifies that state agencies may establish the reference period for SFAs. Therefore, the CDE allows SFAs to monitor compliance using a reference period that coincides with one menu cycle and be no less than two consecutive operational weeks (i.e., 10 days for a 5-day week or 8 days for a 4-day week). All revenue and cost data used to assess compliance must reflect the same reference period.

A reference period is useful for SFAs to monitor compliance throughout the school year or in cases where the entire year is not reflective of the SFA’s typical school year. For example, this may apply when a school recently began selling nonprogram foods or if the school was closed for a portion of the year due to disaster.

If at the end of the year or reference period, the USDA Nonprogram Foods Revenue Calculator Tool determines additional revenue is needed to comply (i.e., SFA’s percent of revenue is less than their percent of cost), SFA’s may adjust nonprogram foods pricing and/or deposit nonfederal funds into the cafeteria fund to offset the difference. The CDE monitors compliance with the nonprogram revenue requirement through the resource management section of the administrative review (AR) process. Please note, to assess compliance with the revenue requirement during the AR, the CDE allows for SFAs to use a reference period in the current school year only in situations where the SFA does not have complete nonprogram food information from the prior closed school year or the SFAs nonprogram food operations have significantly changed. Please see the section titled Administrative Review for more information.

Unique Situations

Some SFAs may offer a limited number of nonprogram food items with an easy to identify per serving cost (e.g., the SFA only sells milk a la carte) and are not able to accurately perform the assessment. In these instances, SFAs may be charging the full cost for the nonprogram foods they offer, but due to the small number of these items in relation to the total revenue and costs, their assessment may overestimate the required increase in sales price or amount to comply.

During the AR, the CDE may determine that the compliance assessment does not fully represent the SFA’s pricing practice and may instead base compliance on whether or not the SFA is recovering more than the per-serving food cost of these nonprogram items.

Catering and Vending Requirements

An SFA may offer catering or vending to outside agencies (i.e., charter schools) or other departments such as the superintendent’s office, the school board, student clubs, or meetings. However, the SFA may provide goods and services to the outside entity only if all costs, including labor and any other costs incurred, are covered by the entity being served by the school food service operations.

When catering and vending, the USDA encourages SFAs to have a written agreement that identifies costs and other responsibilities. The agreement should include a stipulation that all risk relating to revenue losses must be covered by the outside entity and not the school food service. For example, if a parent group purchases hamburgers from the school food service, but is unable to sell all of the hamburgers, the parent group is still responsible for reimbursing the food service the costs associated with the purchase and any labor that was involved in the SFA’s preparation of the hamburgers.

The CDE reminds SFAs that revenue sharing agreements are not allowed. All revenues from the sale nonprogram foods within the food service must accrue to the cafeteria fund. However, once the nonprogram food is sold to the entity outside of food service, the food may be resold by the outside entity. For more information, please see USDA Policy Memo SP 13-2014 at https://www.fns.usda.gov/resources?f%5B0%5D=program:39&f%5B1%5D=resource_type:160 .

Program regulations do not restrict revenues earned from the sale of competitive foods that are purchased with funds outside of the cafeteria fund, i.e. the general fund. However, state agencies and SFAs are reminded that to the extent such foods are sold on the school campus during the school day, the “Smart Snack” requirements at 7 CFR 210.11 apply. Additionally, California state-specific competitive food rules also apply to public schools. For more information visit https://www.cde.ca.gov/ls/nu/he/compfoodsrefpub.asp for public schools and https://www.cde.ca.gov/ls/nu/he/compfoodsrefcharter.asp for non public charter and private schools.

State Agency Monitoring through AR

Compliance with the nonprogram food revenue requirement is reviewed during the resource management portion of the AR. While noncompliance with the revenue from nonprogram foods requirements is not subject to fiscal action as defined under 7 CFR 210.18(m), the CDE must ensure that SFAs secure nonfederal funds to make up any shortfalls in the cafeteria fund and/or otherwise take steps to ensure that nonprogram foods are priced sufficiently to meet the nonprogram foods requirement. The CDE may request the following documentation from SFAs to determine compliance with the nonprogram food revenue requirement:

• The USDA Nonprogram Revenue Calculator Tool
• Nonprogram food revenue and cost source documentation
• Total School Nutrition Program revenue and cost source documentation
• Comprehensive list of all nonprogram foods offered
• Adult meal cost determination and local policy
• Catering or vending invoices and documentation that support costs were recovered and deposited in the cafeteria fund

Also, as previously stated, the CDE allows for SFAs to use a reference period in the current school year only in situations where the SFA does not have complete nonprogram food information from the prior closed school year or the SFAs nonprogram food operations have significantly changed. Likewise, the CDE may determine during the AR that an SFA has a unique situation, and the revenue requirement does not fully represent the SFA’s pricing practice. SFA are encouraged to reach out to the RMU to determine if a reference period or unique situation applies to their operations.

Other Resources

The CDE has the following resources that can assist SFAs with nonprogram food compliance:

• USDA Nonprogram Food Revenue Calculator Tool is available in CNIPS download forms; form ID USDA Nonprogram Foods Calculator
• Pricing of Adult Meals in the National School Lunch and School Breakfast Program MB at https://www.cde.ca.gov/ls/nu/sn/mbsnp042021.asp
• SNP Adult Meal Pricing Tool is available in CNIPS download forms; form ID SNP Adult Meal Pricing Tool
• SNP Nonprogram Food Tool is available in CNIPS download forms; form ID SNP Nonprogram Food Tool
• Resource Management Quick Reference Guide is available in CNIPS download forms; form ID UM QR-RM
• All USDA policy references can be found at the USDA Food and Nutrition Service web page at https://www.fns.usda.gov/resources?f%5B0%5D=program%3A9069&f%5B1%5D=resource_type%3A160

Contact Information

If you have any questions regarding this subject, please contact the Resource Management Unit by email at snpcafefundquestions@cde.ca.gov.