BUDGET 101: REVIEW, APPROVAL AND MONITORING State of Wisconsin
CACFP NPA CONFERENCE FFY2012 APRIL 10-13, 2012 AUSTIN, TEXAS 1
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AGENDA Background Budget Form Budget Review Budget Approval
Budget Monitoring Box of Tools and Resources Bewildered? 2
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3 BEFORE WE BEGIN Child and Adult Care Food Program (CACFP):
Federally funded program through USDA that provides reimbursement
for eligible meals served to enrolled participants. Sometimes
referred to as the Food Program. WI Department of Public
Instruction (WDPI): State Agency (SA) that administers the CACFP in
the State of Wisconsin. Sponsoring Organization (SO): Business that
contracts with WDPI to administer the CACFP to more than one home
provider or center. Family Day Care Home Sponsor (FDCH): Non-profit
organizations that administer the CACFP to eligible family day care
homes. Also referred to as Home Sponsor or Sponsoring Organization
(SO). Child Care Facilities: Approved family day care homes (Home
Providers) or centers (Sites) under a Sponsorship. Independent
Centers: Single site, child or adult care center, that contracts
directly with the State Agency. Also referred to as Centers.
Agency: Any entity that has a contract with WDPI to participate in
the CACFP. Bubbler: A drinking fountain.
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BACKGROUND State of Wisconsin Annual Contract Period 1 Base, 2
renewals FFY2012: 529 approved agencies 95 Sponsors of Affiliated 6
FDCH Sponsors 1 Sponsor of Unaffiliated 427 Independent Centers
Format Online Program Application only includes budget summary (not
detail) Detailed budgets Excel format 4
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BACKGROUND State of Wisconsin 2 agencies Sponsor homes and
affiliated centers. Considered two separate contracts/budgets.
Sponsor of Unaffiliated does admin. and operational duties Retains
100% CACFP funds Interest in FDCH Sponsors also sponsoring
unaffiliated centers. None approved. All budgets for Sponsors are
reviewed, approved and monitored by CACFP Auditor. 5
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BACKGROUND State of Wisconsin An approved budget is only one
measure of financial viability. Required by Regulations for
application. Stronger emphasis is on the reporting of actual food
program costs and the financial review process. Completing a budget
is easy its showing that the federal funds were actually spent on
the food program which is hard. 6
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budget (buhj-it) n.: an itemized summary of estimated or
intended expenditures for a given period of time along with
proposals for financing them. (American Heritage dictionary) CACFP
translation the actual amounts of money earned and expenditures are
unknown as they are dependent on the level and amount of
participation. So all items are projected and amounts and items can
be amended. 7
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8 All Food Program Costs or Cost Items Paid with CACFP
Reimbursement must have received PRIOR WDPI approval
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BUDGET FORM 9
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Budget Form Set-up like a Profit and Loss Report Budget
Requirements SO Homes = Detailed budget every year SO Unaffiliated
Centers = Detailed budget every year. SO Affiliated Centers = Every
3 years Budget Summary during interim Independent = Budget summary
only All figures are projections Based on upcoming program year.
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Budget Form Administrative (Homes & Centers) vs.
Operational (Centers Only) Admin: Monitoring/Claim/Recordkeeping
Operational: Kitchen/Meals/Food Costs not approved are unallowable
Cannot be funded with CACFP funds Work with agency on unallowable
costs Result: Agency revises budget or costs are disallowed.
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Budget Form Spring = Revisions to Budget Form/Procedures Summer
= E-mailed to all participating Sponsors and available online after
Training. Fall: Due September. Application not approved without
approved budget. 12
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Budget Form Common cost categories Include a Misc. cost section
Specifics spelled out Dont be a mind reader Require support
documentation at the time of budget process. When in doubt leave it
out. Plenty of room to report revenue How is this program going to
be funded? 13 Key Elements on Budget Form
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Budget Form Automatic notification if out of compliance i.e.
Exceed 15% admin. costs (center sponsors); More than 10% carryover
(FDCH); Not enough income reported (ALL). Saves WDPI time on
reviewing a non-compliant budget. Highlight key Regulations on form
i.e. Less than Arms length; Contracted services; out of state
travel; Membership dues 14 Key Elements on Budget Form
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Budget Form Review WDPI CACFP Budget Forms Attachment E: FDCH
Sponsors Attachment G Sponsors of Affiliated Sponsors of
Unaffiliated Independent Centers 15
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BUDGET REVIEW 16
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Budget Review Every agency is different but they all have the
same goal. 17
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Budget Review Who completed the Budget? Expertise level Cook,
Center Director, Accountant Any financial issues? Reports:
Licensing, CACFP, Audits Be sure to address prior to approval.
Review Accounting system first Application question Budget should
match accounting system. Detailed = Detailed; Simple = Simple 18
Factors:
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19 CACFP Costs Allowable FNS 796-2 (rev 3) Approvable Realistic
Reasonable Actual Costs Support documentation Budget Review
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20 Project Food Program Costs & Revenue Costs: Regardless
if paid with CACFP reimbursement How much will it cost your agency
to administer the food program in the upcoming program year
(October 1 September 30) Revenue: List all sources and amounts
available to fund food program expenses. Not covered (unfunded)
Unallowable Pay Overclaims Costs not approved are unallowable
Cannot be funded with CACFP funds Budget Review
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21 Reasonable projections Project # of homes claiming; Number
of meals to be served for upcoming year Comply Achieve goals (ex.
expansion, training) Provide explanations/procedures for
non-routine costs. When in doubt submit attachments Use electronic
technology Dont assume Budget Review Keys for a smooth Budget
Process
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22 Include Additional Income Source AND Amounts available
(projection) CACFP AND Non-CACFP funding The more the better! Total
income SHOULD exceed total projected expenditures. Question if
amount comes out exactly to zero. Consideration taken into internal
approval of budget. Budget Review Keys for a smooth Budget
Process
25 Typical Allowable Costs - Homes Salaries and Benefits CACFP
Staff Accounting Advertising Audit Services Telephone or other
communication costs Conference/Training CACFP Related Indirect
Costs Approved CAP Purchase of Equip. Rent Expense Employee Travel
Printing & Copying Insurance Training of Staff and Providers
Standard Bank Fees Minimal Value Incentive Payments For work
performed Specific Written Approval Budget Review
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26 Frequent Allowable CACFP Costs - Centers (list is not all
inclusive) Allowable Food (consumable) Kitchen Supplies/Nonfood
Contract / Vended Meals Food Program Personnel Admin &
Operational Employee CACFP Travel e.g. Grocery shopping, WDPI
training Equipment Purchase/Rental Audit Services CACFP Portion
Budget Review
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Food Costs Costs in purchasing ingredients for menu items (Food
Supplies) AND/OR the cost of purchasing itemized CACFP meals from
an outside vendor (Contracted Service) that are served to the
participants WI recommends at least 50% of budget Will still
approve if less but agency must explain. 27 Budget Review
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Administrative Costs - Centers Sponsors: No more than 15% of
CACFP meal reimbursement can be spent on administrative costs
without State Agency waiver. Independent Centers: Not an issue
because CACFP meal reimbursement is usually spent on operational
costs, any leftover should be less than 15%. 28 Budget Review
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CACFP (direct) Administrative Costs should never be higher then
CACFP Operational Costs. It should cost an agency more to prepare
and serve the meals then doing the paperwork and monitoring of the
program. 29 Administrative Costs - Centers Budget Review
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Allowable CACFP costs that are not funded directly with earned
CACFP reimbursement. Not enough CACFP reimb. earned to cover costs.
Costs must be reported on budget and financial report. Plan must be
in place prior to approval on how these costs will be funded Funds
must be actual WDPI does not consider these costs when calculating
15% admin. for SO. 30 Unfunded CACFP Costs Budget Review
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CACFP Reimbursement is not designed to cover 100% of the Food
Program expenses. 31 Budget Review
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32 How is the agency going to pay for this program? Budget
Review
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Remember! The CACFP funds are replacing funds the agency is now
spending 33 Budget Review
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Other Source of Income 34 CACFP is part of the overall
organization. Funds received to run organization must also be
available to fund CACFP costs not covered by reimbursement.
Examples: Headstart, Tuition, W-2 (TANF), Fundraising, Private
Donations Projected Source and Amount reported on Budget; Actual
reported on financial reports. Food Stamps is not another source of
income for the center. Budget Review
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Best use of CACFP Reimbursement Plan, budget, and organize the
funds available will help maximize CACFP reimbursement. 35 No
planning, using funds on non-program needs, no accountability of
funds spent will result in loss of funding and/or participation
Budget Review
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Not enough income reported. Budget for costs that are not FP
related Budget for unallowable costs i.e. gas for personal vehicle;
rent for owned building. Do not budget for food costs or for
minimal food costs. (Centers) Budget for costs with no method of
tracking i.e. Travel = no mileage log or travel policy 36 Common
Errors
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Budget Review Over 15% Admin. (Centers) Admin. not funded
directly with CACFP funds is acceptable. Carryover not reported.
(Homes) Indirect costs reported without an approved plan. Not
identifying direct CACFP expenses. Not all Food Program costs will
be funded with CACFP reimbursement earned. 37 Common Errors
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BUDGET APPROVAL 38
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Budget Approval Three levels of approval: Generally Allowable
Prior Approval Specific Prior Written Approval 39
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40 Budget Approval Prior approval or Specific Prior Written
approval Must be detailed/broken out More info the better Requires
addl documentation prior to approval Examples (not all inclusive):
New position Related party transactions Purchasing vehicle, real
estate Purchased/Contracted Services Membership dues Effect
employee policies Out of State travel Conference Attendance
Indirect Cost Plans Must receive WDPI (sometimes USDA) approval
PRIOR to incurring. Generally allowable costs Routine CACFP costs
No specifics required Addl. Doc. Note line item $ amount.
Consistent with tracking Be sure not to duplicate Examples (not all
inclusive): Printing Office Supplies Postage Phone Services Can
incur prior to notifying SA of changes in budget/mgmt. plan but
should keep CACFP budget current.
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41 Amending Budgets Notification: Prior to incurring Prior
Approval items Immediately Change(s) that result in a significant
increase or decrease in original budget amount. Anytime Generally
Allowable Cost items To keep budget accurate. Budget Approval
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42 Amending Budgets Send e-mail or leave voicemail explaining
change. Include specific cost item, dollar amount, and any
additional support documentation. Indicate source of funding for
increases (ex. decreasing a line item amount or increasing
projected reimbursement, or other non- CACFP funding). Budget
Approval
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43 Budget Approval Approved once receive verbal or written
communication from WDPI. WDPI will update original budget/most
current budget and submit to agency which will replace the old
budget. Effective date defaults to date budget request was
received. 15% Admin. Waiver Approval
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BUDGET MONITORING 44
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45 Review of Nonprofit Food Service (NPFS) Financial Reports
On-Site Financial Reviews Budget Monitoring
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46 Nonprofit Food Service Financial Report (NPFS) Required for
all agencies (for-profit, non-profit, public). Report of all ACTUAL
CACFP expenditures during the reporting period. Costs reported
should equal expenditures charged to food service program plus any
additional expenses covered with non-CACFP funds. Amounts must be
supported by actual documentation NO ESTIMATES Submission required
as part of Permanent Agreement. Budget Monitoring
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47 All Food Program Costs: Actual Expenditures Not Estimates
Support Documentation Only report CACFP % Shared costs Amount net
credits Allowable and Approved FNS 796-2 (rev.3) CACFP Budget
Nonprofit Food Service Financial Report (NPFS) Budget
Monitoring
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48 Nonprofit Food Service Financial Report (NPFS) CACFP revenue
should be reported using the accrual method (as earned, not
received). Additional program income must be reported (e.g.
interest income, rebates, CACFP carryover). Additional non-program
income must be reported Total Costs less Program income =
non-program income Must be actual and available. Budget
Monitoring
50 CACFP Financial Reviews WDPI Financial Review Announced or
Unannounced Usually occur during a program review More frequent for
problem agencies (red flag issues). Items must have available:
Support documentation for NPFS for current and last FFY ALL support
documentation for food program costs Invoices, receipts, purchase
orders, etc. Bank statements/cancelled checks for food program
funds General Ledger, allocation plan, P/L reports Budget
Monitoring
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51 WDPI Financial Review (continued) Should be able to describe
accounting system. How do you pay your bills? Where did CACFP funds
go? MUST BE ORGANIZED Be able to show and explain their
organizational system Any non-food program/unallowable cost found
to be paid with CACFP funds will be disallowed. May result in
repayment to WDPI. CACFP funds exceed CACFP costs = repayment to
WDPI Appeal-able Action Budget Monitoring CACFP Financial
Reviews
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Budget Monitoring Low/No food costs reported. Actual figures
reported are all whole numbers (i.e. 100; 1,000; 1,200) Travel
costs are high Rent costs reported on owned property. High admin.
costs (centers) 52 Red Flags:
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Budget Monitoring High contracted services costs No procurement
procedures Related party transactions Large Miscellaneous amount
Could be sign of hidden costs; or no accounting system. 53 Red
Flags:
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Budget Monitoring FDCH Home Sponsors Monitored on quarterly
financial reports 4 th Quarter report exceed 10% = payback WDPI
Carryover balance must be reported on 1 st quarter financial
report. Still considered CACFP Admin. not separate set of funds. 54
Carryover:
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Budget Monitoring Centers & Center Sponsors Monitored on
financial reports (annual/quarterly) WDPI policy = no more than 3
mos. reimbursement carried over to next fiscal year. Excessive (2-3
mos.) must have a plan to spend down. At-Risk Suppers resulted in
large carryovers 55 Carryover:
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TOOLSandRESOURCES 56
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57 FNS Instruction 796-2 (rev. 3) Abbreviated version Created
by WDPI Available on website:
http://dpi.wi.gov/fns/centermemos.html. Under Guidance Memo
#11.http://dpi.wi.gov/fns/centermemos.html General Ledger Template
Created by WDPI Available on website:
http://dpi.wi.gov/fns/centermemos.html. Under Guidance Memo
#11.http://dpi.wi.gov/fns/centermemos.html Budget Form Created by
WDPI Available on website
http://dpi.wi.gov/fns/cacfpapps.html.http://dpi.wi.gov/fns/cacfpapps.html
Updated and posted after July 1. Tools
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58 Federal Regulations 7 CFR 226, 2 CFR 230 (formerly OMB
A-122) Website:
http://www.whitehouse.gov/omb/circularshttp://www.whitehouse.gov/omb/circulars
IRS Website:
http://www.irs.gov/businesses/small/article/0,,id=206004,00.html#foodexpensehttp://www.irs.gov/businesses/small/article/0,,id=206004,00.html#foodexpense
FNS Instruction 796-2 (rev. 3) Federal version - available as pdf
Abbreviated version (Attachment 3) created by WDPI User friendly
search function Available on WDPI website:
http://dpi.wi.gov/fns/centermemos.html (under Guidance memo 11)
http://dpi.wi.gov/fns/centermemos.html State Agency Policy Guidance
Memorandums State agency FM policy Website:
http://dpi.wi.gov/fns/guidememos.htmlhttp://dpi.wi.gov/fns/guidememos.html
Cari Ann Muggenburg
E-mail:[email protected]@dpi.wi.govResources
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QUESTIONS 59
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BUDGET 101: REVIEW, APPROVAL AND MONITORING State of Wisconsin
CACFP NPA CONFERENCE FFY2012 APRIL 10-13, 2012 AUSTIN, TEXAS
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