[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR253.11]

[Page 533-535]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 253--ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR HOUSEHOLDS ON INDIAN RESERVATIONS--Table of Contents
 
Sec. 253.11  Administrative funds for State agencies.

    (a) Payments. Within the limitation of funds available to carry out 
the provisions of this part, FNS shall, beginning with fiscal year 1980, 
make available to each State agency 75 percent of approved 
administrative costs. Any approval for payment of funds in excess of 75 
percent shall be based on compelling justification that such additional 
amounts are necessary for the effective operation of the Food 
Distribution Program on an Indian reservation. Compelling justification 
may include, but not be limited to, such factors as the need for a 
larger Federal contribution during a State agency's first year of 
operation of the program, and the need to assure that no State agency 
currently operating the program receives a level of funding that would 
cause a diminution of program services. Administrative costs must be 
included in annual or revised budget information submitted by the State 
agency to FNS for approval prior to the contribution of Federal funds. 
Administrative costs must be allowable under part 277 of this chapter.
    (b) Use of funds by State agencies. Any funds received under this 
section shall be used for any costs which are allowable under part 277 
of this chapter and which are incurred in operating the Food 
Distribution Program for households on a reservation. The value of 
services rendered by volunteers, part 277 notwithstanding, shall be 
allowable to meet the matching administrative costs requirements for the 
Food Distribution Program. In no event shall such funds be used to pay 
any portion of such expenses if reimbursement or payment therefor is 
claimed or made available from any other Federal source. State agencies 
shall also adhere to the provisions of part 277 of this chapter, as 
apply to the Food Distribution Program, which establish:
    (1) Uniform requirements for the adminstration of funds to State 
agencies; and
    (2) Principles for determining costs applicable to activities 
assisted by the Food Stamp Program funds provided to State agencies. The 
provisions of part 277 are generally adaptable to this section and the 
appropriate provisions shall be used in complying with paragraphs (b) 
and (f) of this section.
    (c) Application for funds. (1) Any State agency administering a Food 
Distribution Program that desires to receive administrative funds under 
this section shall submit form SF-424, ``Application for Federal 
Assistance,'' to the appropriate FNS Regional Office at least three 
months prior to the beginning of a Federal fiscal year. The application 
shall include budget information, reflecting by category of expenditure 
the State agency's best estimate of the total amount to be expended in 
the administration of the program during the fiscal year. FNS may 
require that detailed information be submitted by the State agency to 
support or explain the total estimated amounts shown for each budget 
cost category. As required by 7 CFR part 3015, Subpart V, agencies of 
State government shall submit the

[[Page 534]]

application for Federal assistance to the State clearinghouse before 
submitting it to the FNSRO. ITOs shall not be subject to this 
requirement.
    (2) Approval of the application by FNS shall be a prerequisite to 
the payment of any funds to State agencies.
    (d) Availability of funds. (1) FNS shall review and evaluate the 
budget information submitted by the State agency in relationship to the 
State agency's plan of operation and any other factors which may be 
relevant to FNS' determination as to whether the estimated expenditures 
itemized by budget category are reasonable and justified. FNS shall give 
written notification to the State agency of (i) its approval or 
disapproval of any or all of the itemized expenditures, (ii) the amount 
of funds which will be made available, and (iii) the period for which 
funds are available.
    (2) FNS shall review and evaluate applications submitted by State 
agencies for administrative funds available under this section in the 
following order of priority and shall give preference in making payments 
of funds under this section in the same order of priority:
    (i) Applications from State agencies which desire to continue a Food 
Distribution Program now in operation,
    (ii) Applications from State agencies, in the order received, which 
FNS determines are immediately capable of effectively and efficiently 
administering the Program, and
    (iii) Applications from other States agencies, in the order 
received.
    (e) Method of payment to State agencies. (1) Payments are made to 
State agencies through a Letter of Credit or an advance by Treasury 
check. The Letter of Credit funding method shall be used by FNS except 
when the advances to be made within a 12 month period are estimated to 
be less than $120,000. However, FNS may, at its option, reimburse a 
State agency by Treasury check regardless of the amount in response to a 
valid claim submitted by the State agency.
    (2) The Letter of Credit funding method shall be done in conjunction 
with Treasury Department procedures, Treasury Circular No. 1075 and 
through an appropriate Treasury Regional Disbursing Office (RDO). The 
Standard Form 183, ``Request for Payment on Letter of Credit and Status 
of Funds Report,'' shall be correctly prepared and certified by a duly 
appointed official of the State for requesting payment from an RDO.
    (3) The advance by Treasury check method shall be done by use of the 
Standard Form 270, ``Request for Advance or Reimbursement,'' and 
procedures associated with its use. State agencies receiving payments 
under this method may request payments before cash outlays are made.
    (4) Any State agency receiving payment under the Letter of Credit 
method or the advance by Treasury check method shall have in place and 
in operation, a financial management system which meets the standards 
for fund control and accountability prescribed in part 277 of this 
chapter, as amended. The State agency shall demonstrate on a continuing 
basis its willingness and ability to have and to function within 
procedures that will minimize the time lapse between the transfer of 
funds and its disbursement to meet obligations. For any State agency 
which does not meet the requirement of this paragraph, the reimbursement 
by Treasury check method shall be the preferred method for FNS to make 
payments to that State agency.
    (f) Accounting for funds. Each State agency which receives 
administrative funds under this section shall establish and maintain an 
effective system of fiscal control and accounting procedures. 
Expenditures and accountability of such funds shall be in accordance 
with the appropriate provisions of part 277. The accounting procedures 
maintained by the State agency shall be such as to accurately reflect 
the receipt, expenditure and current balance of funds provided by FNS 
and to facilitate the prompt preparation of reports required by FNS. The 
accounting procedures shall also provide for segregation of costs 
specifically identifiable to the Food Distribution Program from any 
other costs incurred by the State agency. Any budget revisions by a 
State agency which require the transfer of funds from an approved cost 
category to another shall be in accordance with the budget revision 
procedures set

[[Page 535]]

forth in OMB Circular No. A-102, Attachment K, and shall be approved by 
FNS prior to any transfer of funds.
    (g) Return, reduction, and reallocation of funds. (1) FNS may 
require State agencies to return prior to the end of the fiscal year any 
or all unobligated funds received under this section, and may reduce the 
amount it has apportioned or agreed to pay to any State agency if FNS 
determines that:
    (i) The State agency is not administering the Food Distribution 
Program in accordance with its plan of operation approved by FNS and the 
provisions of this part, or
    (ii) The amount of funds which the State agency requested from FNS 
is in excess of actual need, based on reports of expenditures and 
current projections of Program needs.
    (iii) Circumstances or conditions justify the return reallocation or 
transfer of funds to accomplish the purpose of this part.
    (2) The State agency shall return to FNS within 90 days following 
the close of each Federal fiscal year any funds received under this 
section which are unobligated at that time.
    (h) Records, reports, audits. (1) The State agency shall:
    (i) Keep such accounts and records as may be necessary to enable FNS 
to determine whether there has been compliance with this section, and
    (ii) Adhere to the retention and custodial requirements for records 
set forth in Sec. 277.4 of this chapter.
    (2) The State agency receiving funds either through a Treasury RDO 
Letter of Credit system or Treasury check shall submit quarterly reports 
to FNS on Form SF-269, ``Financial Status Report,'' by the 30th day 
after close of the reporting quarter and shall submit such other reports 
as may be required by FNS.
    (3) The appropriate provisions of part 277 are adaptable to this 
section for additional guidance.

(Approved by the Office of Management and Budget under control number 
0584-0071)

(44 U.S.C. 3506)

[44 FR 35928, June 19, 1979, as amended at 47 FR 746, Jan. 7, 1982. 
Redesignated and amended by Amdt. 1, 47 FR 14137, Apr. 2, 1982, as 
amended at 62 FR 53731, Oct. 16, 1997. Redesignated at 64 FR 73385, Dec. 
30, 1999.]