[Code of Federal Regulations]

[Title 7, Volume 4]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR235.5]



[Page 270-272]

 

                          TITLE 7--AGRICULTURE

 

    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE

 

PART 235_STATE ADMINISTRATIVE EXPENSE FUNDS--Table of Contents

 

Sec. 235.5  Payments to States.



    (a) Method of payment. FNS will specify the terms and conditions of 

the State agency's annual grant of SAE funds in conjunction with the 

grant award document and will make funds available for payment by means 

of a Letter of Credit issued in favor of the State agency. The total 

amount of a State agency's grant shall be equal to the sum of the 

amounts allocated to such agency under Sec. 235.4 plus or minus any 

adjustments resulting from the reallocation provisions under paragraph 

(d) of this section plus any transfers under Sec. 235.6(a) and/or Sec. 

235.6(c) of this part. The amount of SAE funds made available for 

payment to a State agency in any fiscal year shall be determined by FNS 

upon approval of the State agency's administrative plan under paragraph 

(b) of this section and any amendments to such plan under paragraph (c) 

of this section. Funds shall not be made available before the State 

agency's plan or amendment to such plan, as applicable, has been 

approved by FNS. However, if the plan has not been approved by October 1 

of the base year, FNS may advance SAE funds to the State agency, in 

amounts determined appropriate by FNS, pending approval of the plan.

    (b) Administrative plan. (1) Each State agency shall submit, subject 

to FNS approval, an initial State Administrative Expense plan based upon 

guidance provided by FNS. This base year plan shall include:

    (i) The staffing pattern for State level personnel;

    (ii) A budget for the forthcoming fiscal year showing projected 

amounts (combined SAE and State funds) by cost category;

    (iii) The total amount of budgeted funds to be provided from State 

sources;

    (iv) The total amount of budgeted funds to be provided under this 

part;

    (v) The State agency's estimate of the total amount of budgeted 

funds (combined SAE and State funds) attributable to administration of 

the School Nutrition Programs (National School Lunch, School Breakfast 

and Special Milk Programs), Child and Adult Care Food Program, and/or 

Food Distribution Program in schools and child and adult care 

institutions and to each of the major activity areas of the State 

agency; and

    (vi) The State agency's estimate of the total Child and Adult Care 

Food Program audit funds to be used for the forthcoming fiscal year.

    (2) These activity areas shall be defined and described by the State 

agency in accordance with guidance issued by FNS and may include such 

activities as program monitoring, technical assistance, Federal 

reporting/claims



[[Page 271]]



processing, policy implementation, and allocation of foods to recipient 

agencies.

    (3) Except in specific instances where determined necessary by FNS, 

State agencies shall not be required to maintain expenditure records by 

activity area or program. State agencies shall refer to Office of 

Management and Budget Circular A-87, Attachment B, to establish cost 

categories.

    (4) FNS shall approve a State agency's plan, or any amendment to 

such plan under paragraph (c) of this section, if it determines that the 

plan or amendment is consistent with program administrative needs and 

SAE requirements under this part.

    (5) To the extent practicable, State agencies shall implement their 

approved plans (as amended). FNS shall monitor State agency 

implementation of the plans through management evaluations, State agency 

reports submitted under this part, audits, and through other available 

means.

    (6) FNS may expand plan requirements for individual State agencies 

in order to address specific administrative deficiencies which affect 

compliance with program requirements and which have been identified by 

FNS through its monitoring activities.

    (c) Amendments to the administrative plan. A State agency may amend 

its plan at any time to reflect changes in funding or activities, except 

that, if such changes are substantive as defined in the June 5, 1997 

guidance, and any amendments or updates to this guidance, the State 

agency shall amend its plan in accordance with guidance provided by FNS. 

Plan amendments shall provide information in a format consistent with 

that provided in the State agency's plan, but shall only require FNS 

approval if it results in a substantive change as defined by FNS.

    (d) Reallocation of funds. Annually, between March 1 and May 1 on a 

date specified by FNS, of each year, each State agency shall submit to 

FNS a State Administrative Expense Funds Reallocation Report (FNS-525) 

on the use of SAE funds. At such time, a State agency may release to FNS 

any funds that have been allocated, reallocated or transferred to it 

under this part or may request additional funds in excess of its current 

grant level. Based on this information or on other available 

information, FNS shall reallocate, as it determines appropriate, any 

funds allocated to State agencies in the current fiscal year which will 

not be expended in the following fiscal year and any funds carried over 

from the prior fiscal year which will not be expended in the current 

fiscal year. Reallocated funds shall be made available for payment to a 

State agency upon approval by FNS of the State agency's amendment to the 

base year plan which covers the reallocated funds, if applicable. 

Notwithstanding any other provision of this part, a State agency may, at 

any time, release to FNS for reallocation any funds that have been 

allocated, reallocated or transferred to it under this part and are not 

needed to implement its approved plan under this section.

    (e) Return of funds. (1) In Fiscal Year 1991, up to 25 per cent of 

the SAE funds allocated to each State agency under Sec. 235.4 may 

remain available for obligation and expenditure in the second fiscal 

year of the grant. In subsequent fiscal years, up to 20 percent may 

remain available for obligation and expenditure in the second fiscal 

year. The maximum amount to remain available will be calculated at the 

time of the formula allocation by multiplying the appropriate percentage 

by each State agency's formula allocation as provided under Sec. 

235.4(a) through (c). At the end of the first fiscal year, the amount 

subject to the retention limit is determined by subtracting the amount 

reported by the State agency as Total Federal share of outlays and 

unliquidated obligations on the fourth quarter Standard Form (SF) 269, 

Financial Status Report, from the total amount of SAE funds made 

available for that fiscal year (i.e., the formula allocation adjusted 

for any transfers or reallocations). However, funds provided under Sec. 

235.4(d) are not subject to the retention limit. Any funds in excess of 

the amount that remains available to each State agency shall be returned 

to FNS.

    (2) At the end of the fiscal year following the fiscal year for 

which funds were allocated, each State agency shall return any funds 

made available which are unexpended.



[[Page 272]]



    (3) Return of funds by the State agency shall be made as soon as 

practicable, but in any event, not later than 30 days following demand 

by FNS.



[Amdt. 14, 51 FR 27151, July 30, 1986, as amended by Amdt. 17, 55 FR 

1378, Jan. 16, 1990; 60 FR 15462, Mar. 24, 1995]



[41 FR 32405, Aug. 3, 1976, as amended at 64 FR 50743, Sept. 20, 1999]