This announcement provides information to program operators about excess net cash resources, the budget agreement process, and long-term noncompliance.
Excess Net Cash Resources
Federal regulations require program operators to limit their cash reserves, or net cash resources (NCR), to an amount that does not exceed three months of average operating expenditures or other amount established by the state agency. Beginning July 1, 2022, the California Department of Education (CDE) increased the NCR limitation to six months average operating expenditures.
Title 7Code of Federal Regulations (CFR) Section 210.19 (a)(1) requires the CDE to monitor program operator compliance with the NCR limitation for the nonprofit school food service account, known as the cafeteria fund.
Budget Agreement for Excess NCR
Program operators that have cafeteria fund excess NCR of six months or more average operating expenses are required to have a budget agreement with the CDE. A budget agreement is a plan to spend excess cafeteria funds over a specified time period. Therefore, the Nutrition Services Division is requesting that all program operators evaluate their risk for excess NCR at the end of School Year (SY) 2023–24 by completing Form SNP-57, Net Cash Resources Calculator. Form SNP-57 can be found in the Download Forms section of the Child Nutrition Information and Payment System (CNIPS)
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Program operators with six months or more of excess NCR must send a copy of Form SNP-57 and the supporting financial report (i.e., Unaudited Actuals Form 13) to the Resource Management Unit (RMU) by email to SNPBA@cde.ca.gov. The RMU will evaluate whether a budget agreement is necessary and coordinate the budget agreement process if needed. The due date for program operators to respond is October 15, 2024.
No action is required for program operators that do not have excess NCR of six or more months.
Long-Term Noncompliance
The purpose of the excess NCR limitation is to ensure program operators spend program reimbursement on the operation and improvement of school food service. Strategies for spending include improving food quality and making investments in food service supplies and equipment. Program reimbursements are restricted and cannot be redirected for activities outside of school food service. Therefore, it is important that program operators show progress toward spending excess NCR.
Program operators that do not make progress toward compliance of the NCR limitation may be subject to payment hold (2 CFR, 200.339 (a)) and reimbursement rate adjustment (7 CFR 210.19 (a)(1)) until compliance is achieved. The CDE understands that many program operators are prioritizing spending one-time grant funds before the spending of cafeteria funds. Therefore, the CDE will perform targeted outreach and technical assistance for program operators at risk of long-term noncompliance that began prior to SY 2020-21 and continues through SY 2023-24. The CDE may exercise payment hold and rate adjustments only as a last resort for systemic long-term noncompliance.
Resources
Information about budget agreements and excess NCR can be found on the Cafeteria Fund Guidance web page, tab NCR.
Contact Information
For questions regarding NCR and budget agreements, please contact the RMU by email at SNPBA@cde.ca.gov.
For questions about allowable use of cafeteria funds, please reach out to SNPcafefundquestions@cde.ca.gov.