[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR226.15]

[Page 208-211]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 226_CHILD AND ADULT CARE FOOD PROGRAM--Table of Contents
 
                    Subpart E_Operational Provisions
 
Sec.  226.15  Institution provisions.


    (a) Tax exempt status. Except for proprietary title XIX and title XX 
centers, and sponsoring organizations of such centers, institutions must 
be public, or have tax exempt status under the Internal Revenue Code of 
1986.
    (b) New applications and renewals. Each institution must submit to 
the State agency with its application all information required for its 
approval as set forth in Sec. Sec.  226.6(b) and 226.6(f). Such 
information must demonstrate that the institution has the administrative 
and financial capability to operate the Program in accordance with this 
part and with the performance standards set forth at Sec.  226.6 
(b)(18). The State agency must deny the application of any institution 
that does not demonstrate in its application that it is administratively 
and financially capable of operating the Program in accordance with this 
part, and may approve only those applicant institutions that meet the 
performance standards. No institution may submit an application if the 
institution or any of its principals is on the National disqualified 
list, and no sponsoring organization may submit an application on behalf 
of a facility if the facility or any of its principals is on the 
National disqualified list. At a minimum, such information must include:
    (1) Except for proprietary title XIX and title XX centers and 
sponsoring organizations or proprietary title XIX and title XX centers, 
evidence of nonprofit status, in accordance with Sec.  226.15(a).
    (2) An application for participation, or application renewal 
materials, accompanied by all necessary supporting documentation;
    (3) An administrative budget;
    (4) If an independent child care center or independent outside-
school-hours care center, documentation that it meets the licensing/
approval requirements of Sec.  226.6(d)(1); or, if an independent adult 
day care center, the licensing/approval requirements of Sec.  
226.19a(b)(3).
    (5) A nondiscrimination and free and reduced-price policy statement, 
and information regarding a public release, in accordance with Sec.  
226.23;
    (6) For each proprietary title XX child care center, documentation 
that it provides nonresidential day care services for which it receives 
compensation under title XX of the Social Security Act, and 
certification that not less than 25 percent of the enrolled children, or 
25 percent of the licensed capacity, whichever is less, during the most 
recent calendar month were title XX beneficiaries. For each proprietary 
title XIX or title XX adult day care center, documentation that it 
provides nonresidential day care services for which it receives 
compensation under

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title XIX or title XX of the Social Security Act, and certification that 
not less than 25 percent of the adult participants enrolled during the 
most recent calendar month were title XIX or title XX beneficiaries. 
Sponsoring organizations shall provide documentation and certification 
for each proprietary title XIX or title XX center under its 
jurisdiction;
    (7) A list of the publicly funded programs in which the institution 
and its principals have participated in the past seven years and a 
certification that, during the preceding seven years, neither the 
institution nor any of its principals has been declared ineligible to 
participate in any publicly funded program by reason of violating that 
program's requirements. Instead of such a certification, the institution 
may submit documentation that the institution or the principal 
previously declared ineligible was later fully reinstated in, or 
determined eligible for, the program, including the payment of any debts 
owed;
    (8) A statement certifying that neither the institution nor any of 
its principals has been convicted of any activity that occurred during 
the past seven years and that indicated a lack of business integrity. A 
lack of business integrity includes fraud, antitrust violations, 
embezzlement, theft, forgery, bribery, falsification or destruction of 
records, making false statements, receiving stolen property, making 
false claims, obstruction of justice, or any other activity indicating a 
lack of business integrity as defined by the State agency; and
    (9) A statement certifying that all information on the application 
is true and correct, along with the name, mailing address, and date of 
birth of the institution's executive director and chairman of the board 
of directors.
    (c) Responsibility. Each institution shall accept final 
administrative and financial responsibility for Program operations. No 
institution may contract out for management of the Program.
    (d) Staffing. Each institution shall provide adequate supervisory 
and operational personnel for management and monitoring of the Program.
    (e) Recordkeeping. Each institution shall establish procedures to 
collect and maintain all program records required under this part, as 
well as any records required by the State agency. Failure to maintain 
such records shall be grounds for the denial of reimbursement for meals 
served during the period covered by the records in question and for the 
denial of reimbursement for costs associated with such records. At a 
minimum, the following records shall be collected and maintained:
    (1) Copies of all applications and supporting documents submitted to 
the State agency;
    (2) Documentation of the enrollment of each participant at child 
care centers, adult day care centers and outside-school-hours care 
centers including information used to determine eligibility for free or 
reduced price meals in accordance with Sec.  226.23(e)(1).
    (3) Documentation of: The enrollment of each child at day care 
homes; information used to determine the eligibility of enrolled 
providers' children for free or reduced price meals; information used to 
classify day care homes as tier I day care homes, including official 
source documentation obtained from school officials when the 
classification is based on elementary school data; and information used 
to determine the eligibility of enrolled children in tier II day care 
homes that have been identified as eligible for free or reduced price 
meals in accordance with Sec.  226.23(e)(1).
    (4) Daily records indicating the number of participants in 
attendance and the number of meals, by type (breakfast, lunch, supper, 
and supplements), served to participants.
    (5) For child care centers and outside-school-hours care centers 
claiming reimbursement for two meals and two supplements or three meals 
and one supplement per child per day, either:
    (i) Documentation of total time-in-attendance for each child at the 
center for each day for which the fourth meal service was claimed, 
including a time-in/time-out form which records time-in-attendance for 
each child at the center; or, at the discretion of the State agency,
    (ii) Documentation which demonstrates that at least eight hours

[[Page 210]]

elapse between the end of the first meal service and the beginning of 
the fourth meal service on any day in which reimbursement is claimed for 
a fourth meal; service.
    (6) Except at day care homes, daily records indicating the number of 
meals, by type, served to adults performing labor necessary to the food 
service;
    (7) Copies of invoices, receipts, or other records required by the 
State agency financial management instruction to document:
    (i) Administrative costs claimed by the institution;
    (ii) Operating costs claimed by the institution except sponsoring 
organizations of day care homes; and
    (iii) Income to the Program.
    (8) Copies of all claims for reimbursement submitted to the State 
agency;
    (9) Receipts for all Program payments received from the State 
agency;
    (10) If applicable, information concerning the dates and amounts of 
disbursement to each child care facility or adult day care facility 
under its auspices;
    (11) Copies of menus, and any other food service records required by 
the State agency;
    (12) If applicable, information concerning the location and dates of 
each child care or adult day care facility review, any problems noted, 
and the corrective action prescribed and effected;
    (13) Information on training session date(s) and location(s), as 
well as topics presented and names of participants; and
    (14) Documentation of nonprofit food service to ensure that all 
Program reimbursement funds are used: (i) Solely for the conduct of the 
food service operation; or (ii) to improve such food service operations, 
principally for the benefit of the enrolled participants.
    (f) Day care home classifications. Each sponsoring organization of 
day care homes shall determine which of the day care homes under its 
sponsorship are eligible as tier I day care homes. A sponsoring 
organization may use current school or census data provided by the State 
agency or free and reduced price applications collected from day care 
home providers in making a determination for each day care home. When 
using elementary school or census data for making tier I day care home 
determinations, a sponsoring organization shall first consult school 
data, except in cases in which busing or other bases of attendance, such 
as magnet or charter schools, result in school data not being 
representative of an attendance area's household income levels. In these 
cases, census data should generally be consulted instead of school data. 
A sponsoring organization may also use census data if, after reasonable 
efforts are made, as defined by the State agency, the sponsoring 
organization is unable to obtain local elementary school attendance area 
information. A sponsoring organization may also consult census data 
after having consulted school data which fails to support a tier I day 
care home determination for rural areas with geographically large 
elementary school attendance areas, for other areas in which an 
elementary school's free and reduced price enrollment is above 40 
percent, or in other cases with State agency approval. However, if a 
sponsoring organization believes that a segment of an otherwise eligible 
elementary school attendance area is above the criteria for free or 
reduced price meals, then the sponsoring organization shall consult 
census data to determine whether the homes in that area qualify as tier 
I day care homes based on census data. If census data does not support a 
tier I classification, then the sponsoring organization shall reclassify 
homes in segments of such areas as tier II day care homes unless the 
individual providers can document tier I eligibility on the basis of 
their household income. When making tier I day care home determinations 
based on school data, a sponsoring organization shall use attendance 
area information that it has obtained, or verified with appropriate 
school officials to be current, within the last school year. 
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, State agency, or FNS may

[[Page 211]]

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.
    (g) Claims submission. Each institution shall submit claims for 
reimbursement to the State agency in accordance with Sec.  226.10.
    (h) Program agreement. Each institution shall enter into a Program 
agreement with the State agency in accordance with Sec.  226.6(f)(1).
    (i) Commodities. Each institution receiving commodities shall ensure 
proper commodity utilization.
    (j) Special Milk Program. No institution may participate in both the 
Child and Adult Care Food Program and the Special Milk Program at the 
same time.
    (k) Elderly feeding programs. Institutions which are school food 
authorities (as defined in part 210 of this chapter) may use facilities, 
equipment and personnel supported by funds provided under this part to 
support a nonprofit nutrition program for the elderly, including a 
program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 et 
seq.).

[47 FR 36527, Aug. 20, 1982, as amended at 48 FR 21530, May 13, 1983; 50 
FR 8580, Mar. 4, 1985; 52 FR 15298, Apr. 28, 1987; 52 FR 36907, Oct. 2, 
1987; 53 FR 52590, Dec. 28, 1988; 54 FR 26724, June 26, 1989; Amdt. 22, 
55 FR 1378, Jan. 14, 1990; 56 FR 58174, Nov. 16, 1991; 61 FR 25554, May 
22, 1996; 62 FR 903, Jan. 7, 1997; 62 FR 23619, May 1, 1997; 63 FR 9105, 
Feb. 24, 1998; 64 FR 72260, Dec. 27, 1999; 67 FR 43490, June 27, 2002]