New Administrative Review Process Updates

This Management Bulletin (MB) provides information and guidance on the implementation of the new administrative review (AR) process as authorized by the Healthy, Hunger-Free Kids Act of 2010 (HHFKA). The California Department of Education (CDE) Nutrition Services Division (NSD) conducted 323 reviews during School Year (SY) 2013–14. The NSD has scheduled 347 reviews during SY 2014–15, and the remainder of reviews will be scheduled for the last year in the three-year cycle. It is the CDE’s priority to provide clear and consistent communication, ample technical assistance (TA), and excellent customer service during the transition to the new review process.

Background

Section 207 of the HHFKA amended the Richard B. Russell National School Lunch Act to require the implementation of a more robust and unified accountability system. After a thorough assessment of review requirements in Title 7, Code of Federal Regulations (7 CFR), Section 210.18, the USDA established a new process for reviews, referred to as the AR. This replaces the previous review process conducted by state agencies (SA) titled the Coordinated Review Effort (CRE). The USDA provided SAs with the option to conduct reviews during the first year of the new review cycle using the CRE or to seek a waiver to use the new AR process. The CDE submitted a waiver request and was approved to institute the new AR process in SY 2013–14. USDA Policy Memo SP 42-2013, School Nutrition Programs Updated AR Process, outlines the transition from the CRE to the AR and supplies a list of requirements that are waived until the USDA finalizes the new AR process in regulation. The new AR process implements the following changes:

• New supplemental forms that include the Off-site Assessment and Risk Assessment Tools

• The Risk Assessment Tool to evaluate the depth of financial management portions of the AR needed for the school food authority (SFA)

• A more comprehensive scope of review that still includes the National School Lunch Program (NSLP) and adds the School Breakfast Program (SBP) and other federal School Nutrition Programs (SNP) (i.e., Afterschool Meal Supplements, Seamless Summer Feeding Option [SSFO], Special Milk Program, and Fresh Fruit and Vegetable Program [FFVP])

• An increased focus on the overall financial health of the SFA’s nonprofit school food service account and addition of the Resource Management section of the AR

• Elimination of federally mandated follow-up review thresholds

The SA and SFA collaborate to complete the AR to ensure program integrity and increase overall compliance, with the following objectives:

• Determine if the SFA is meeting all federal and state SNP requirements

• Provide focused TA to assist the SFA with correcting any findings

• Secure necessary corrective action documentation demonstrating the SFA’s permanent corrections

• Assess fiscal action and, when applicable, recover improperly paid funds

Frequency and Schedule of Administrative Reviews

Section 210.18(c)(1) of 7 CFR specifies that the SA must review all SFAs at least once during the three-year review cycle, including any new SFA entering the program during that same three-year review cycle. As authorized by 7 CFR, Section 210.18(d), the SA must determine its own criteria for scheduling reviews within the new three-year cycle. In accordance with guidance provided in USDA Policy Memo SP 26-2014, New Questions and Answers Related to the Certification of Compliance with Meal Requirements for the NSLP, the CDE selected SFAs for review early in the three-year cycle that met the following criteria:

• SA-postponed reviews from the SY 2012–13 SNP CRE review year

• New sponsors that began participating in SY 2011–12

• SFAs with new meal patterns certified by the SA that did not pass their validation review

• SFAs that the SA denied 6-cent certification due to noncompliance with federal funding requirements

• SFAs that did not submit 6-cent certification in time to be included in the validation pool

• SFAs that did not apply for 6-cent certification

The CDE will send an e-mail with the SY 2015–16 list of SFAs selected for review to all SFAs this summer. If any SFA is added to the review schedule, they will receive communication consistent with the notification process outlined below.

Administrative Review Process

The USDA issued the Administrative Review Manual (AR Manual), tools, and forms for SAs to use to implement the new review procedures. The documents, originally released in March 2013 and revised in September 2014, are essential resources referenced throughout this MB. SFAs can access the AR Manual by logging in to the Child Nutrition Information and Payment System (CNIPS) with their User ID and password on the CNIPS Web site at https://www.cnips.ca.gov/ and completing the following steps:

• On the Programs screen—select School Nutrition Programs
• On the Welcome screen—select the Applications tab
• On the Applications screen—select Download Forms
• On the Download Forms screen—select Manual AR

The AR process consists of three phases: prereview, on-site review, and post-review. An AR Process Flowchart that highlights the three phases—which are described in detail in the following sections of this MB—can be downloaded as a Word file from the CDE Web site at http://www.cde.ca.gov/ls/nu/sn/documents/arflowchart.doc.

Prereview (AR Process Flowchart, Section 1)

The NSD reviewer conducts the prereview phase prior to the entrance conference at the SFA office—providing ongoing correspondence and TA as needed. The CDE initiates the prereview phase by e-mailing the AR Notification to the SFA’s Superintendent, Chief Business Official (CBO), and Food Service Director (FSD). SFAs that do not have these positions will be sent an e-mail to the highest ranking officials. Receipt of the AR Notification officially marks the beginning of the AR process.

This correspondence introduces the review, states the name of the NSD lead reviewer, and gives direction to save the date to attend a mandatory prereview workshop (PRW). A follow-up e-mail will be sent to each SFA with the specific PRW they are assigned to attend. It is critically important that the SFA attend the specific workshop identified in the AR notification. The assigned workshop presenter will also be the assigned reviewer who can answer agency-specific questions. In addition, the CDE will send a confirmation notification with the date and time of the on-site review later in the prereview phase.

Space is very limited due to the volume of SFAs being trained. As a result, two attendees from each SFA will be permitted to register for the PRW. The FSD (or equivalent position) is required to attend the mandatory PRW. The CBO or Superintendent is strongly encouraged to be the second attendee. During the workshop, the reviewer outlines the AR process, highlights any policy changes or updates, and provides additional resources to help prepare for a successful AR.

The Off-site Assessment Tool (OAT) will be made available in the CNIPS by the assigned reviewer. The OAT must be completed by the SFA in the CNIPS at least eight weeks prior to the scheduled on-site review, which allows the reviewer sufficient time to analyze the contents and collaborate with the SFA to complete it correctly. The NSD reviewer performs site selection in accordance with requirements outlined in Section I, Previsit Procedures, of the AR Manual.

Note: Failure to complete answers to questions 700–712 in the CNIPS within four weeks before the on-site portion of the AR will automatically result in the SFA receiving a comprehensive Resource Management review.

On-site Review (AR Process Flowchart, Section 2)

During the on-site review the reviewer observes and validates the information submitted in the OAT. The review commences with an entrance conference during which the reviewer summarizes the results of the OAT, explains the on-site review process, and identifies the sites selected for review. The FSD (or equivalent) is required to attend. The CBO and Superintendent are strongly encouraged to attend the entrance conference with the FSD, due to the increased emphasis on the SFA’s overall financial accountability for the program.

There are five key compliance areas of the AR categorized as critical and general areas of review. The USDA requires the CDE to take regulatory fiscal action for noncompliance in the critical areas; however, the USDA grants authority to the CDE to determine any fiscal action in the general areas. The five key compliance areas are as follows:

• Meal Access and Reimbursement, AR Manual, Section II: This component is identified as a Critical Area, Performance Standard 1, and focuses on the certification and benefit issuance process, verification, and accuracy of meal counting and claiming.

• Meal Pattern and Nutritional Quality, AR Manual, Section III: This component is identified as a Critical Area, Performance Standard 2, and focuses on the nutritional quality and meal pattern requirements for meal reimbursement.

• Resource Management, AR Manual, Section IV: This component is identified as a General Area and addresses the maintenance of the nonprofit school food service account, paid lunch equity, revenue from nonprogram foods, and indirect costs. A more in-depth financial evaluation is being conducted by the SA. The Resource Management Risk Indicator Tool assists the CDE to determine if the SFA’s school food service financial health is at risk. If the tool indicates the SFA is at risk, a comprehensive resource management review is required.

• General Program Compliance, AR Manual, Section V: This component is identified as a General Area and includes a review of civil rights compliance, SFA on-site monitoring, local school wellness policy, smart snacks, school meal environment, water, food safety, reporting and recordkeeping, and SBP and Summer Food Service Program outreach.

• Other Federal Program Reviews, AR Manual, Section VI: This component includes General and Critical Areas and focuses on compliance regarding Afterschool Meal Supplements, SSFO, FFVP, Special Milk Program, and contracting with food service management companies.

Transition to Post-review (AR Process Flowchart, Section 3)

The on-site review phase concludes and the post-review phase begins with an exit conference where the reviewer notifies the SFA of any preliminary findings and provides an initial assessment of corrective action with a discussion of appropriate deadlines. The CDE requires the FSD to attend and strongly encourages the Superintendent and CBO to also attend the exit conference to receive TA, especially if a comprehensive resource management review was completed. The reviewer and the SFA collaborate on a Corrective Action Plan (CAP) to correct any findings. The CDE may finalize the CAP with the SFA during the exit conference or later during the post-review phase. If there are findings the reviewer may accept documented corrective action during the on-site review. Strong support and availability from the SFA’s CBO and Superintendent have been shown to expedite completion of the AR process.

The reviewer then completes an electronic AR Report that includes any findings and a summary of corrective actions with associated deadlines, and identifies potential fiscal action if necessary. An exact amount of fiscal action cannot be identified by the reviewer as the review must be fully processed by the CDE to make a final determination. All findings will be documented in the electronic AR Report even if corrective action was immediately implemented during the review process.

Within 30 calendar days of the exit conference, the reviewer will complete the electronic AR Report. The reviewer will save the electronic AR Report in the CNIPS. The SFA will have access to the AR findings by logging in with their User ID and password on the CNIPS Web site at https://www.cnips.ca.gov/ and completing the following steps:

• On the Programs screen—select School Nutrition Programs

• On the Welcome screen—select the Compliance tab

• On the Compliance screen—select Review Tracking

• On the SNP Reviews screen—select Details corresponding to the current AR

• On the Review Dashboard screen—select View corresponding to Corrective Action Documents

If there are no findings, receipt of the closure letter marks the end of the AR. If there are findings, the SFA must provide the corrective action documentation (CAD) to the reviewer no later than 30 calendar days from the date the SFA receives the electronic AR Report containing the CAP in CNIPS. If the CAD is incomplete, incorrect, or submitted after the due date, the CDE may place the SFA’s reimbursements on hold. To request an extension past the due date, the SFA must provide a written request to the reviewer. The reviewer has the authority to extend the CAD due date one time for 15 additional days beyond the original due date. Thereafter, the CDE will only consider written requests for extensions to the CAD due date on a case-by-case basis.

Once the CDE receives and determines the acceptability of the CAD, the CDE processes any fiscal action and sends the SFA a letter with a claim adjustment and notice of appeal, if appropriate. The post-review guidelines are explained in further detail in the AR Manual, Section VII, Post-review Procedures.

Communication—Technical Assistance and Training

The CDE is committed to providing ongoing communication, TA, and training to all SFAs. The CDE is developing an AR Web page to disseminate information and guidance specific to California’s AR process, including a dedicated section for advertising ongoing training such as PRWs and menu planning workshops. The CDE will provide further information about the launch of the CDE AR Web page and the availability of training through the SNP mailing list. To subscribe, please visit the CDE SNP Mailing List Web page at http://www.cde.ca.gov/ls/nu/sn/snpmail.asp.

If you have any questions regarding this subject, please contact Stephen Montano, Southern Field Services Unit Office Technician by phone at 916-322-8314 or by e-mail at smontano@cde.ca.gov.