[Code of Federal Regulations]
[Title 7 Volume 4]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR226.6]

[Page 165-175]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 226--CHILD AND ADULT CARE FOOD PROGRAM--Table of Contents
 
                   Subpart C--State Agency Provisions
 
Sec. 226.6  State agency administrative responsibilities.


    (a) State agency personnel. Each State agency shall provide 
sufficient consultative, technical and managerial personnel to 
administer the Program, provide sufficient training and technical 
assistance to institutions and monitor performance to facilitate 
expansion and effective operation of the Program.
    (b) Application approval. Each State agency shall establish an 
application procedure to determine the eligibility under this part of 
applicant institutions, and facilities for which applications are 
submitted by sponsoring organizations. State agencies, by written 
consent of the State agency and the institutions, shall renew agreements 
with institutions not less frequently than annually. A State agency may 
not execute an agreement to be effective during two fiscal years but may 
nevertheless establish an ongoing renewal process for the purpose of 
reviewing and approving applications from participating institutions 
throughout the fiscal year. As a minimum, such application approval 
process shall include:
    (1) Renewal of the Program agreement;
    (2) For child care centers, adult day care centers and outside-
school-hours care centers, submission of current eligibility information 
on enrolled participants.
    (3) For sponsoring organizations of day care homes, submission of 
the current total number of children enrolled, and an assurance that day 
care home providers' children enrolled in the Program are eligible for 
free or reduced-price meals;
    (4) Issuance of a nondiscrimination policy statement and media 
release;

[[Page 166]]

    (5) For sponsoring organizations, submission of a management plan;
    (6) Submission of an administrative budget;
    (7) Submission of documentation that all child care centers, adult 
day care centers, outside-school-hours care centers, and day care homes 
for which application is made are in compliance with Program licensing/
approval provisions;
    (8) For proprietary title XX child care centers, submission of 
documentation that they are currently providing nonresidential day care 
services for which they receive compensation under title XX of the 
Social Security Act, and certification that not less than 25 percent of 
enrolled children or 25 percent of licensed capacity, whichever number 
is less, in each such center during the most recent calendar month were 
title XX beneficiaries. In the case of title XIX or title XX adult day 
care centers, submission of documentation that they are currently 
providing nonresidential day care services for which they receive 
compensation under title XIX or title XX of the Social Security Act, and 
certification that not less than 25 percent of enrolled adult 
participants in each such center during the most recent calendar month 
were title XIX or title XX beneficiaries;
    (9) Statement of institutional preference to receive commodities or 
cash-in-lieu of commodities;
    (10) Institutional choice to receive all, part, or none of advance 
payment. Any institution applying for participation in the Program shall 
be notified of approval or disapproval by the State agency in writing 
within 30 calendar days of filing a complete and correct application. If 
an institution submits an incomplete application, the State agency shall 
notify the institution within 15 calendar days of receipt of the 
application and shall provide technical assistance, if necessary, to the 
institution for the purpose of completing its application. Any 
disapproved applicant shall be notified of its right to appeal under 
paragraph (j) of this section.
    (c) Denial of applications and termination of institutions. The 
State agency shall not enter into an agreement with any applicant 
institution which the State agency determines to have been seriously 
deficient at any time in its operation of any Federal child nutrition 
program. However, the State agency may enter into an agreement with such 
an institution when with FNS concurrence it determines that the 
deficiencies have been corrected. The State agency shall terminate the 
program agreement with any institution which it determines to be 
seriously deficient. However, the State agency shall afford an 
institution every reasonable opportunity to correct problems before 
terminating the institution for being seriously deficient. The State 
agency shall notify FNS whenever it has denied an application from or 
terminated the participation of a seriously deficient institution. This 
notification shall be made within 15 days of the review official's 
decision upholding the State's action or, if the institution elects not 
to appeal the decision, within 15 days of the expiration of the appeal 
right. FNS will maintain a list of these institutions and will notify 
all other State agencies of these institutions' ineligibility to 
participate in the program. FNS may determine independently that an 
institution has been seriously deficient in its operation of any Federal 
child nutrition program and include such institution on the list of 
ineligible institutions if appropriate corrective action is not taken. 
State agencies shall not enter into an agreement with any institution 
included on this list of ineligible institutions and shall terminate any 
participating institution included on the list within 30 days of the 
receipt of notification by FNS of the institution's ineligible status. 
Once included on this list, an institution shall be ineligible to 
participate in the program until such time as FNS, in consultation with 
the appropriate State agency, determines that the serious deficiency 
which resulted in the ineligible status has been corrected. Any 
institution which is identifiable with a seriously deficient institution 
through its corporate organization, officers, employees, or otherwise 
shall also be considered to be ineligible unless it is demonstrated to 
the satisfaction of the State agency, with FNS concurrence, that good 
cause exists for considering the institution distinct from the seriously 
deficient institution. Denial or

[[Page 167]]

termination actions taken on the basis of FNS notification of ineligible 
status shall not be subject to administrative review as provided in 
Sec. 226.6(k). However, an institution which FNS has determined to be 
seriously deficient and which has not taken acceptable corrective action 
may request an administrative review of this determination by an FNS 
review official in accordance with the appeal procedures set forth in 
Sec. 226.6(k) and will not be included on the list of ineligible 
institutions unless FNS' determination is upheld by the review official. 
Serious deficiencies, which are grounds for disapproval of applications 
and for termination include, but are not limited to, any of the 
following:
    (1) Noncompliance with the applicable bid procedures and contract 
requirements of Federal child nutrition program regulations;
    (2) The submission of false information to the State agency;
    (3) Failure to return to the State agency any advance payments which 
exceeded the amount earned for serving eligible meals, or failure to 
return disallowed start-up or expansion payments;
    (4) Failure to maintain adequate records;
    (5) Failure to adjust meal orders to conform to variations in the 
number of participants;
    (6) The claiming of Program payments for meals not served to 
participants;
    (7) Service of a significant number of meals which did not include 
required quantities of all meal components;
    (8) Continued use of food service management companies that are in 
violation of health codes;
    (9) Failure of a sponsoring organization to disburse payments to its 
facilities in accordance with its management plan;
    (10) A history of administrative or financial mismanagement in any 
Federal child nutrition program;
    (11) The claiming of Program payment for meals served by a 
proprietary title XX child care center during a calendar month in which 
less than 25 percent of enrolled children or 25 percent of licensed 
capacity, whichever number is less, were title XX beneficiaries. In the 
case of an adult day care center, the claiming of Program payment for 
meals served by a proprietary title XIX or title XX center during a 
calendar month in which less than 25 percent of enrolled adult 
participants were title XIX or title XX beneficiaries.
    (d) Licensing/approval for child care centers, outside-school-hours 
care centers and day care homes. This section prescribes State agency 
responsibilities to ensure that child care centers and day care homes 
meet the licensing/approval criteria set forth in this part. Sponsoring 
organizations shall submit to the State agency documentation that 
facilities under their jurisdiction are in compliance with licensing/
approval requirements. Independent centers shall submit such 
documentation to the State agency on their own behalf.
    (1) General. Each State agency shall establish procedures to 
annually review information submitted by institutions to ensure that all 
participating child care centers, day care homes, and outside-school-
hours care centers either:
    (i) Are licensed or approved by Federal, State, or local 
authorities, provided that institutions which are approved for Federal 
programs on the basis of State or local licensing shall not be eligible 
for the Program if their licenses lapse or are terminated; or
    (ii) Are complying with applicable procedures to renew licensing or 
approval in situations where the State agency has no information that 
licensing or approval will be denied; or
    (iii) Receive Title XX funds for providing child care, if licensing 
or approval is not available; or
    (iv) Demonstrate compliance with applicable State or local child 
care standards to the State agency, if licensing is not available and 
title XX funds are not received; or
    (v) Demonstrate compliance with CACFP child care standards to the 
State agency, if licensing or approval is not available and Title XX 
funds are not received.
    (2) CACFP child care standards. (i) When licensing or approval is 
not available, independent child care centers, and sponsoring 
organizations on behalf of their child care centers or day care homes, 
may elect to demonstrate

[[Page 168]]

compliance, annually, with the following CACFP child care standards or 
other standards specified in paragraph (d)(3) of this section:
    (A) Staff/child ratios. (1) Day care homes provide care for no more 
than 12 children at any one time. One home caregiver is responsible for 
no more than 6 children ages 3 and above, or no more than 5 children 
ages 0 and above. No more than 2 children under the age of 3 are in the 
care of 1 caregiver. The home provider's own children who are in care 
and under the age of 14 are counted in the maximum ratios of caregivers 
to children.
    (2) Child care centers and outside-school-hours care centers do not 
fall below the following staff/child ratios:
    (i) For children under 6 weeks of age--1:1
    (ii) For children ages 6 weeks up to 3 years--1:4
    (iii) For children ages 3 years up to 6 years--1:6
    (iv) For children ages 6 years up to 10 years--1:15
    (v) For children ages 10 and above--1:20
    (B) Nondiscrimination. Day care services are available without 
discrimination on the basis of race, color, national origin, sex, age, 
or handicap.
    (C) Safety and sanitation. (1) A current health/sanitation permit or 
satisfactory report of an inspection conducted by local authorities 
within the past 12 months shall be submitted.
    (2) A current fire/building safety permit or satisfactory report of 
an inspection conducted by local authorities within the past 12 months 
shall be submitted.
    (3) Fire drills are held in accordance with local fire/building 
safety requirements.
    (D) Suitability of facilities. (1) Ventilation, temperature, and 
lighting are adequate for children's safety and comfort.
    (2) Floors and walls are cleaned and maintained in a condition safe 
for children.
    (3) Space and equipment, including rest arrangements for preschool 
age children, are adequate for the number of age range of participating 
children.
    (E) Social services. Independent centers, and sponsoring 
organizations in coordination with their facilities, have procedures for 
referring families of children in care to appropriate local health and 
social service agencies.
    (F) Health services. (1) Each child is observed daily for 
indications of difficulties in social adjustment, illness, neglect, and 
abuse, and appropriate action is initiated.
    (2) A procedure is established to ensure prompt notification of the 
parent or guardian in the event of a child's illness or injury, and to 
ensure prompt medical treatment in case of emergency.
    (3) Health records, including records of medical examinations and 
immunizations, are maintained for each enrolled child. (Not applicable 
to day care homes.)
    (4) At least one full-time staff member is currently qualified in 
first aid, including artificial respiration techniques. (Not applicable 
to day care homes.)
    (5) First aid supplies are available.
    (6) Staff members undergo initial and periodic health assessments.
    (G) Staff training. The institution provides for orientation and 
ongoing training in child care for all caregivers.
    (H) Parental involvement. Parents are afforded the opportunity to 
observe their children in day care.
    (I) Self-evaluation. The institution has established a procedure for 
periodic self-evaluation on the basis of CACFP child care standards.
    (ii) When licensing or approval is not available, independent 
outside-school-hours care centers, and sponsoring organizations on 
behalf of their outside-school-hours care centers, may elect to 
demonstrate compliance with child care standards developed by the State 
agency which shall include, as a minimum, information on: (A) Fire/
safety, (B) sanitation, (C) organized activities, (D) kitchen and 
restroom facilities, (E) appropriateness of games and materials, (F) 
availability of emergency medical care, and (G) child-staff ratios as 
indicated in Sec. 226.6(d)(2)(i)(A). For items (A) and (B), of this 
paragraph, appropriate State or local permits are required.
    (3) Alternate approval procedures. Each State agency shall establish 
procedures

[[Page 169]]

to review information submitted by institutions for centers or homes for 
which licensing or approval is not available in order to establish 
eligibility for the Program. Licensing or approval is not available when 
(i) no Federal, State, or local licensing/approval standards have been 
established for child care centers, outside-school-hours care centers, 
or day care homes; or (ii) no mechanism exists to determine compliance 
with licensing/approval standards. In these situations, independent 
centers, and sponsoring organizations on behalf of their facilities, may 
choose to demonstrate compliance with either CACFP child care standards, 
applicable State child care standards, or applicable local child care 
standards. State agencies shall provide information about applicable 
State child care standards and CACFP child care standards to 
institutions, but may require institutions electing to demonstrate 
compliance with applicable local child care standards to identify and 
submit these standards. The State agency may permit independent centers, 
and sponsoring organizations on behalf of their facilities, to submit 
self-certification forms, and may grant approval without first 
conducting a compliance review at the center or facility. But the State 
agency shall require submission of health/sanitation and fire/safety 
permits or certificates for all independent centers and facilities 
seeking alternate child care standards approval. Compliance with 
applicable child care standards are subject to review in accordance with 
Sec. 226.6(n).
    (e) Licensing/approval for adult day care centers. This paragraph 
prescribes State agency responsibilities to ensure that adult day care 
centers meet the licensing/approval criteria set forth in this part. 
Sponsoring organizations shall submit to the State agency documentation 
that facilities under their jurisdiction are in compliance with 
licensing/approval requirements. Independent adult day care centers 
shall submit such documentation to the State agency on their own behalf. 
Each State agency shall establish procedures to annually review 
information submitted by institutions to ensure that all participating 
adult day care centers either:
    (1) Are licensed or approved by Federal, State or local authorities, 
provided that institutions which are approved for Federal programs on 
the basis of State or local licensing shall not be eligible for the 
Program if their licenses lapse or are terminated; or
    (2) Are complying with applicable procedures to renew licensing or 
approval in situations where the State agency has no information that 
licensing or approval will be denied.
    (f) Annual requirements. State agencies shall require institutions 
to comply with applicable provisions of this part. Each State agency 
shall annually:
    (1) Enter into and execute a written Program agreement with each 
institution, or renew such agreement with the written concurrence of the 
institution. The Program agreement shall provide that the institution 
shall accept final financial and administrative responsibility for 
management of an effective food service, comply with all requirements 
under this part, and comply with all requirements of title VI of the 
Civil Rights Act of 1964, title IX of the Education Amendments of 1972, 
Section 504 of the Rehabilitation Act of 1973, the Age Discrimination 
Act of 1975 and the Department's regulations concerning 
nondiscrimination (7 CFR parts 15, 15a and 15b), including requirements 
for racial and ethnic participation data collection, public notification 
of the nondiscrimination policy, and reviews to assure compliance with 
such policy, to the end that no person shall, on the grounds of race, 
color, national origin, sex, age, or handicap be excluded from 
participation in, be denied the benefits of, or be otherwise subjected 
to discrimination under the Program.
    (2) Require each sponsoring organization to submit a management plan 
with its application for review and approval. Such a plan shall include: 
detailed information on the organizational administrative structure; the 
staff assigned to Program management and monitoring; administrative 
budget; procedures which will be used by the sponsoring organization to 
administer the Program in and disburse payments

[[Page 170]]

to the child care facilities under its jurisdiction; and, for sponsoring 
organizations of day care homes, a description of the system for making 
tier I day care home determinations, and a description of the system of 
notifying tier II day care homes of their options for reimbursement. For 
initial implementation of the two-tiered reimbursement structure for day 
care homes, by April 1, 1997, each sponsoring organization of day care 
homes shall submit an amendment to its plan, subject to review and 
approval by the State agency, describing its systems for making tier I 
day care home determinations and for notifying tier II day care homes of 
their options for reimbursement.
    (3) Require each institution to submit an administrative budget. 
Each sponsoring organization shall be required to incorporate this 
budget into its management plan.
    (4) Determine that all meal procurements with food service 
management companies are in conformance with the bid and contractual 
requirements of Sec. 226.22.
    (5) Inquire as to the preference of institutions for commodities or 
cash-in-lieu of commodities.
    (6) Provide institutions with information on foods available in 
plentiful supply, based on information provided by the Department.
    (7) Inform institutions with separate meal charges of their 
responsibility to ensure that free and reduced-price meals are served to 
participants unable to pay the full price and provide to all 
institutions a copy of the income standards to be used by institutions 
for determining the eligibility of participants for free and reduced-
price meals under the Program.
    (8) Perform verification of the eligibility of participants for free 
and reduced-price meals in participating institutions in accordance with 
the procedures outlined in Sec. 226.23(h). State agencies verifying the 
information on free and reduced-price applications shall ensure that 
verification activities are applied without regard to race, color, 
national origin, sex, age, or handicap.
    (9) Coordinate with the State agency which administers the National 
School Lunch Program to ensure the receipt of a list of elementary 
schools in the State in which at least one-half of the children enrolled 
are certified eligible to receive free or reduced price meals. The State 
agency shall provide the list to sponsoring organizations by April 1, 
1997, and by February 15 of each year thereafter, unless the State 
agency that administers the National School Lunch Program has elected to 
base data for the list on a month other than October, in which case the 
State agency shall provide the list to sponsoring organizations within 
15 calendar days of its receipt from the State agency that administers 
the National School Lunch Program. The State agency also shall provide 
each sponsoring organization with census data, as provided to the State 
agency by FNS upon its availability on a decennial basis, showing areas 
in the State in which at least 50 percent of the children are from 
households meeting the income standards for free or reduced price meals. 
In addition, the State agency shall ensure that the most recent 
available data is used if the determination of a day care home's 
eligibility as a tier I day care home is made using school or census 
data. Determinations of a day care home's eligibility as a tier I day 
care home shall be valid for one year if based on a provider's household 
income, three years if based on school data, or until more current data 
are available if based on census data. However, a sponsoring 
organization, the State agency, or FNS may change the determination if 
information becomes available indicating that a home is no longer in a 
qualified area. The State agency shall not routinely require annual 
redeterminations of the tiering status of tier I day care homes based on 
updated elementary school data.
    (10) Provide all sponsoring organizations of day care homes in the 
State with a listing of State-funded programs, participation in which by 
a parent or child will qualify a meal served to a child in a tier II 
home for the tier I rate of reimbursement.
    (11) Require each sponsoring organization of day care homes to 
submit the total number of tier I and tier II day care homes that it 
sponsors; a breakdown showing the total number of children enrolled in 
tier I day care homes;

[[Page 171]]

the total number of children enrolled in tier II day care homes; and the 
number of children in tier II day care homes that have been identified 
as eligible for free or reduced price meals.
    (g) Program expansion. Each State agency shall take action to expand 
the availability of benefits under this Program. At a minimum, the State 
shall annually notify each nonparticipating child care center, outside-
school-hours care center, and day care home within the State that is 
licensed, approved, registered, or receiving funds under title XX and 
each nonparticipating adult day care center that is licensed or 
approved, of the availability of the Program, the requirements for 
Program participation, and the application procedures to be followed in 
the Program. The State agency shall make the list of child care centers, 
adult day care centers, outside-school-hours care centers, and day care 
homes notified each year available to the public upon request.
    (h) Commodity distribution. The State shall annually inquire as to 
the preference of each institution for commodities or cash-in-lieu of 
commodities. Each institution electing cash-in-lieu of commodities shall 
receive such payments. Each institution which elects to receive 
commodities shall have commodities provided to it unless the State 
agency, after consultation with the State commodity distribution agency, 
demonstrates to FNS that distribution of commodities to the number of 
such institutions would be impracticable. The State agency may then, 
with the concurrence of FNS, provide cash-in-lieu of commodities for all 
institutions. A State agency request for cash-in-lieu of all commodities 
shall be submitted to FNS not later than May 1 of the school year 
preceding the school year for which the request is made. The State 
agency shall, by June 1 of each year, submit a list of institutions 
which have elected to receive commodities to the State commodity 
distribution agency, unless FNS has approved a request for cash-in-lieu 
of commodities for all institutions. The list shall be accompanied by 
information on the average daily number of lunches and suppers to be 
served to participants by each such institution.
    (i) Standard contract. Each State agency shall develop a standard 
contract in accordance with Sec. 226.21 and provide for its use between 
institutions and food service management companies. The contract shall 
expressly and without exception stipulate:
    (1) The institution shall provide the food service management 
company with a list of the State agency approved child care centers, day 
care homes, adult day care centers, and outside-school-hours care 
centers to be furnished meals by the food service management company, 
and the number of meals, by type, to be delivered to each location;
    (2) The food service management company shall maintain such records 
(supported by invoices, receipts or other evidence) as the institution 
will need to meet its responsibilities under this part, and shall 
promptly submit invoices and delivery reports to the institution no less 
frequently than monthly;
    (3) The food service management company shall have Federal, State or 
local health certification for the plant in which it proposes to prepare 
meals for use in the Program, and it shall ensure that health and 
sanitation requirements are met at all times. In addition, the State 
agency may require the food service management company to provide for 
meals which it prepares to be periodically inspected by the local health 
department or an independent agency to determine bacteria levels in the 
meals being prepared. These bacteria levels shall conform to the 
standards which are applied by the local health authority with respect 
to the level of bacteria which may be present in meals prepared or 
served by other establishments in the locality. Results of these 
inspections shall be submitted to the institution and to the State 
agency;
    (4) The meals served under the contract shall conform to the cycle 
menus upon which the bid was based, and to menu changes agreed upon by 
the institution and food service management company;

[[Page 172]]

    (5) The books and records of the food service management company 
pertaining to the institution's food service operation shall be 
available for inspection and audit by representatives of the State 
agency, of the Department, and of the U.S. General Accounting Office at 
any reasonable time and place, for a period of 3 years from the date of 
receipt of final payment under the contract, or in cases where an audit 
requested by the State agency or the Department remains unresolved, 
until such time as the audit is resolved;
    (6) The food service management company shall operate in accordance 
with current Program regulations;
    (7) The food service management company shall not be paid for meals 
which are delivered outside of the agreed upon delivery time, are 
spoiled or unwholesome at the time of delivery, or do not otherwise meet 
the meal requirements contained in the contract;
    (8) Meals shall be delivered in accordance with a delivery schedule 
prescribed in the contract;
    (9) Increases and decreases in the number of meal orders may be made 
by the institution, as needed, within a prior notice period mutually 
agreed upon in the contract;
    (10) All meals served under the Program shall meet the requirements 
of Sec. 226.20;
    (11) All breakfasts, lunches, and suppers delivered for service in 
outside-school-hours care centers shall be unitized, with or without 
milk, unless the State agency determines that unitization would impair 
the effectiveness of food service operations. For meals delivered to 
child care centers and day care homes, the State agency may require 
unitization, with or without milk, of all breakfasts, lunches, and 
suppers only if the State agency has evidence which indicates that this 
requirement is necessary to ensure compliance with Sec. 226.20.
    (j) Procurement provisions. State agencies shall require 
institutions to adhere to the procurement provisions set forth in 
Sec. 226.22.
    (k) Institution appeal procedures. Except as provided in 
Sec. 226.8(g), each State agency shall establish an appeal procedure to 
be followed by an institution requesting a review of a denial of an 
institution's application for participation, a denial of an application 
submitted by a sponsoring organization on behalf of a facility, a 
termination of the participation of an institution or facility, a 
suspension of an institution's agreement, a denial of an institution's 
application for start-up or expansion payments, a denial of an advance 
payment, a denial of all or a part of the claim for reimbursement, 
(except for late submission under Sec. 226.10(e)), a denial by the State 
agency to forward to FNS an exception request by the institution or 
sponsoring organization for payment of a late claim or a request for an 
upward adjustment to a claim, demand for the remittance of an 
overpayment, and any other action of the State agency affecting the 
participation of an institution in the Program or the institution's 
claim for reimbursement. State agencies may use their own State appeal 
procedures provided the same procedures are applied to all appellants in 
the State and the procedures meet the following requirements: Appellants 
are assured of a fair and impartial hearing before an independent 
official at which they may be represented by legal counsel; decisions 
are rendered in a timely manner not to exceed 120 days from the date of 
the receipt of the request for review; appellants are afforded the right 
to either a review of the record with the right to file written 
information, or a hearing which they may attend in person; and adequate 
notice is given of the place, date and procedures of the hearing. The 
appeal procedures adopted by the State agency shall be made available in 
writing each year to all institutions at the time of application for 
participation in the Program and upon request. If the State has not 
established its own appeal procedures or the procedures do not meet the 
above listed criteria, the State agency shall observe the following 
procedures at a minimum:
    (1) The institution shall be advised in writing of the grounds on 
which the State agency based its action. The notice of action, which 
shall be sent by certified mail, return receipt requested, shall also 
include a statement indicating that the institution has the right to 
appeal the action;

[[Page 173]]

    (2) The written request for review shall be filed by the appellant 
not later than 15 calendar days from the date the appellant received the 
notice of action, and the State shall acknowledge the receipt of the 
request for appeal within 10 calendar days;
    (3) The appellant may refute the charges contained in the notice of 
action in person and by written documentation to the review official. In 
order to be considered, written documentation must be filed with the 
review official not later than 30 calendar days after the appellant 
received the notice of action. The appellant may retain legal counsel, 
or may be represented by another person. A hearing shall be held by the 
review official in addition to, or in lieu of, a review of written 
information submitted by the appellant only if the appellant so 
specifies in the letter of request for review. Failure of the appellant 
institution's representative to appear at a scheduled hearing shall 
constitute the appellant institution's waiver of the right to a personal 
appearance before the review official, unless the review official agrees 
to reschedule the hearing. A representative of the State agency shall be 
allowed to attend the hearing to respond to the appellant's testimony 
and to answer questions posed by the review official;
    (4) If the appellant has requested a hearing, the appellant and the 
State agency shall be provided with at least 10 calendar days advance 
written notice, sent by certified mail, return receipt requested, of the 
time and place of the hearing;
    (5) Any information on which the State agency's action was based 
shall be available to the appellant for inspection from the date of 
receipt of the request for review;
    (6) The review official shall be an independent and impartial 
official other than, and not accountable to, any person authorized to 
make decisions that are subject to appeal under the provisions of this 
section;
    (7) The review offficial shall make a determination based on 
information provided by the State agency and the appellant, and on 
Program regulations;
    (8) Within 60 calendar days of the State agency's receipt of the 
request for review, the review official shall inform the State agency 
and the appellant of the determination of the review;
    (9) The State agency's action shall remain in effect during the 
appeal process. However, participating institutions and facilities may 
continue to operate under the Program during an appeal of termination, 
unless the action is based on imminent dangers to the health or welfare 
of participants. If the institution or facility has been terminated for 
this reason, the State agency shall so specify in its notice of action. 
Institutions electing to continue operating while appealing terminations 
shall not be reimbursed for any meals served during the period of the 
appeal if the State agency's action is upheld; and
    (10) The determination by the State review official is the final 
administrative determination to be afforded to the appellant.
    (11) Appeals shall not be allowed on decisions made by FNS on 
requests for exceptions to the claims submission deadlines stated in 
Sec. 226.10(e) or requests for upward adjustments to claims.
    (12) In cases where an appeal results in the dismissal of a claim 
against an institution which was asserted by the State agency based upon 
Federal audit findings, FNS may assert a claim against the State agency 
in accordance with the procedures outlined in Sec. 226.14(c).
    (l) Program assistance. Each State agency shall provide technical 
and supervisory assistance to institutions and facilities to facilitate 
effective Program operations, monitor progress toward achieving Program 
goals, and ensure compliance with the Department's nondiscrimination 
regulations (part 15 of this title) issued under title VI of the Civil 
Rights Act of 1964. Documentation of supervisory assistance activities, 
including reviews conducted, corrective actions prescribed, and follow-
up efforts, shall be maintained on file by the State agency. Program 
reviews shall assess institutional compliance with the provisions of 
this

[[Page 174]]

part and with any applicable instructions of FNS and the Department. 
Program reviews shall include State agency evaluation of the 
documentation used by sponsoring organizations to classify their day 
care homes as tier I day care homes. State agencies shall annually 
review 33.3 percent of all institutions. State agencies shall also 
ensure that each institution is reviewed according to the following 
schedule.
    (1) Independent centers, sponsoring organizations of centers, and 
sponsoring organizations of day care homes with 1 to 200 homes shall be 
reviewed at least once every four years. Reviews of sponsoring 
organizations shall include reviews of 15 percent of their child care, 
adult day care and outside-school-hours care centers and 10 percent of 
their day care homes.
    (2) Sponsoring organizations with more than 200 homes shall be 
reviewed at least once every two years. Reviews of such sponsoring 
organizations shall include reviews of 5 percent of the first 1,000 
homes and 2.5 percent of all homes in excess of 1,000.
    (3) Reviews shall be conducted for newly participating sponsoring 
organizations with five or more child care facilities or adult day care 
facilities within the first 90 days of program operations.
    (m) Program irregularities. Each State agency shall promptly 
investigate complaints received or irregularities noted in connection 
with the operation of the Program, and shall take appropriate action to 
correct any irregularities. State agencies shall maintain on file 
evidence of such investigations and actions. FNS and OIG may make 
investigations at the request of the State agency, or whenever FNS or 
OIG determines that investigations are appropriate.
    (n) Child care standards compliance. The State agency shall, when 
conducting administrative reviews of child care centers, outside-school-
hours care centers, and day care homes approved by the State agency 
under paragraph (d)(3) of this section, determine compliance with the 
child care standards used to establish eligibility, and the institution 
shall ensure that all violations are corrected and the State shall 
ensure that the institution has corrected all violations. If violations 
are not corrected within 60 calendar days of written notification to the 
institution, the State agency shall terminate the Program participation 
of the violating institution or facility. However, if the health or 
safety of the children is imminently threatened, the State agency may 
immediately terminate participation of the institution or facility. If, 
during an administrative review of a child care center, outside-school-
hours care center, or day care home not approved by the State agency 
under paragraph (d)(3) of this section, the State agency observes 
violations of applicable health, safety, or staff-child ratio standards, 
or attendance in excess of licensed capacity, the State agency shall 
promptly refer such violations to the appropriate authority. The State 
agency may deny reimbursement for meals served to attending children in 
excess of authorized capacity.
    (o) Sponsoring organization agreement. Each State agency shall 
develop and provide for the use of a standard form of agreement between 
each day care home sponsoring organization and all day care homes 
participating in the Program under such organization. However, the State 
agency may, at the request of the sponsor, approve an agreement 
developed by the sponsor. State agencies may develop a similar form for 
use between sponsoring organizations and other types of facilities.
    (p) Following its reviews of institutions and facilities under 
Secs. 226.6(l) and 226.23(h) conducted prior to July 1, 1988, the State 
agency shall report data on key elements of program operations on a form 
designated by FNS. These key elements include but are not limited to the 
program areas of meal requirements, determination of eligibility for 
free and reduced price meals, and the accuracy of reimbursement claims. 
These forms shall be submitted within 90 days of the completion of the 
data collection for the institutions except that, if the State has 
elected to conduct reviews of verification separate from its 
administrative reviews, the State shall retain data until all key 
elements have been reviewed and shall report all data for each 
institution on one form within 90 days of the completion of the data 
collection for all key

[[Page 175]]

elements for that institution. States shall ensure that all key element 
data for an institution is collected during a 12-month period.

[47 FR 36527, Aug. 20, 1982]

    Editorial Note: For Federal Register citations affecting Sec. 226.6, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.