President Bush signed the Child Nutrition and WIC Reauthorization Act of 2004 (Act) into law on June 30, 2004. This legislation includes a number of regulatory changes in the administration and operation of the National School Lunch (NSLP) and School Breakfast Program (SBP). Some of these changes are effective as of July 1, 2004, for the 2004-05 school year and some are phased in over several years. The purpose of this policy memorandum is to provide schools with the latest program regulations.
The following regulatory changes were effective immediately (July 1, 2004) for the 2004-05 school year and are being implemented by this policy memorandum.
1. Medicare Prescription Drug Assistance not to be considered income:
Medicare is providing, through drug discount cards, a $600 subsidy (`transitional assistance`) to Medicare beneficiaries whose incomes are not more than 135 percent of the poverty line and who do not have certain other drug coverage from June to December 2004. An additional subsidy of up to $600 will be provided in calendar year 2005.
The Social Security Act, as amended, states that the availability of negotiated prices or transitional assistance received through the prescription drug card `shall not be treated as benefits or otherwise taken into account in determining an individual`s eligibility for, or the amount of benefits under, any other Federal program.` Therefore, in accordance with regulations issued by the Centers for Medicare and Medicaid Services, any subsidy that a household receives through the prescription drug discount card program must NOT be treated as income in determining eligibility for free and reduced-price meals under any of the Child Nutrition Programs.
2. Exclusion of the Housing Allowance for Military Households in Privatized Housing:
In accordance with the Act, the housing allowance for military personnel living in privatized housing will be permanently excluded from income when determining household eligibility for free and reduced-price meals or free milk in all of the child nutrition programs.
Privatized housing refers to the Military Housing Privatization Initiative, a program operating at a number of military installations. This initiative puts the operation of military owned housing under private contractors. Under this privatization initiative, a housing allowance appears on the leave and earnings statement of service members living in privatized housing. It is important to note that this income exclusion is only for service members living in housing covered under the Military Housing Privatization Initiative. It is not an allowable exclusion for households living off-base in the general commercial/private real estate market.
This provision has been in effect for several years as a temporary waiver. The Act makes this permanent. Additional information about DOD`s Military Housing Privatization Initiative, including a list of affected installations, may be accessed at www.acq.osd.mil/housing/projawarded.htm.
3. Duration of Households` Free and Reduced-Price Meal Eligibility Determination:
The Act specifies that, effective July 1, 2004, households` eligibility for free and reduced-price meals shall remain in effect beginning on the date of eligibility for the current school year and ending on a date during the subsequent school year. The essential change is that once a household is approved for free or reduced-price benefits, the household will remain eligible for those benefits for the remainder of the school year plus a maximum of 30 operating days after the first operating day in the following school year. The household is no longer required to report changes in circumstances, such as an increase in income of $50 per month ($600 annually), a decrease in household size, or when the household is no longer certified as eligible for food stamps or Temporary Assistance for Needy Families (TANF).
This provision does not apply when the initial eligibility determination was incorrect or when verification of household eligibility does not support the level of benefits for which the household was approved. In those instances, officials must make appropriate changes in eligibility. Additionally, this provision does not apply when a household is given temporary approval.
The current free and reduced-price application package includes instructions for households to report the changes in household income and household size mentioned above. School districts do not have to make changes in their free and reduced-price application materials for this school year because the enactment of this legislation is so late in the year. Any changes to the application materials now would be very burdensome to most school districts. However, school districts may use other means to notify households that they do not have to report changes. For example, households may be notified via the annual media/public release or notified in their notice of approval for free and reduced-price school meals.
Please note that households may continue to apply for benefits any time during the school year. As noted above, this provision does not apply to households that are provided temporary approvals. We continue to encourage determining officials to approve households on a temporary basis when their need for assistance appears to be short-term, such as when the household reports zero income or a temporary reduction in income. The time frame for a temporary approval may be up to 90 calendar days from the first approval date and every 30 calendar days thereafter. At the end of the temporary approval, school officials must re-evaluate the household`s situation.
4. Categorical Eligibility for Free Lunches and Breakfasts of Runaway, Homeless, and Migrant Youth:
The Act extends categorical eligibility to runaway, homeless and migrant children. This provision makes runaway, homeless and migrant children categorically eligible for free meal benefits under the National School Lunch and School Breakfast Programs and is effective July 1, 2004. In addition to establishing free meal eligibility, the Act also establishes a requirement for documenting a child`s status as runaway, homeless or migratory.
Previously, through guidance, the USDA extended categorical eligibility for free school meals to children considered homeless under the McKinney-Vento Homeless Assistance Act. School officials were allowed to accept statements that children were homeless from the local educational liaison for the homeless or directors of homeless shelters where the children reside. The Act now establishes in law the categorical eligibility of these children for free school meals. There were, however, no similar eligibility and documentation provisions for runaway youth or migrant children. At this time, we are in discussions with the Department of Health and Human Services regarding implementation of that portion of the Act that addresses categorical eligibility for runaway youth served through grant programs established under the Runaway and Homeless Youth Act. We hope to provide guidance in the very near future on how to determine and document if a child is receiving services as a runaway and is therefore categorically eligible for free school meals.
For migrant children, each State Educational Agency`s Migrant Education Program establishes its own process for determining if a child meets the criteria provided under the Elementary and Secondary Education Act of 1965. We have contacted the State Migrant Education Program to develop a plan for sharing and documenting the migratory child`s eligibility for free school meals. To certify the status of migrant children a local migrant program recruiter must complete and sign a Migrant Education Program Certificate of Eligibility (COE) form for each migrant family. To document a child`s migrant status and eligibility for free meal benefits the school must obtain and maintain on file a copy of the COE form for the current school year. Documentation of migrant status to substantiate free meal eligibility is a dated list with each child`s name and the signature of the local migrant coordinator.
5. Severe Need Assistance for the School Breakfast Program - Elimination of Cost Study:
The Act eliminated cost justification as a requirement to receive Severe Need reimbursement in the School Breakfast Program. Effective July 1, 2004, schools are no longer required to document that the normal per meal reimbursement is insufficient to cover the costs of the SBP. Beginning with school year 2004-05, schools no longer have to maintain cost records or submit a Certification of Meal Cost (COMC) report to receive the Severe Need reimbursement rate under the School Breakfast Program. Please note, however, that all districts, which claimed the Severe Need reimbursement during school year 2003-04, must submit a COMC report by October 1, 2004.
Since the cost justification requirement has been eliminated, all schools that served at least 40 percent of their lunches to free and reduced-price students in the second preceding school year (2002-03) are entitled to claim Severe Need Breakfast reimbursement for the current school year (2004-05) and should do so.
The Act retained the provision that requires that schools must have served 40 percent or more of their lunches to free or reduced-price students in the second preceding year to receive Severe Need assistance. In addition, the law now permits USDA to determine how the 40 percent test is met for schools that did not serve lunches in the second preceding year. USDA will be issuing additional guidance on this new provision.
6. Special Assistance Provision 2:
The Act allows district-wide approval and claiming percentages for Special Assistance Provision 2. Therefore, the State Agency may approve schools where the grade level and/or attendance structure has changed without the need to distribute applications and re-establish a new base year, so long as all the schools and their related attendance areas were previously operating under Provision 2. USDA will be issuing additional policy guidance and procedures for Provision 2 to incorporate the changes in the reauthorization legislation.
New school districts approved to adopt Provision 2 district-wide must establish a base year. The sum of the meal counts by category for all schools in the district for the base year will be used to develop the comprehensive claiming percentages. The common base year becomes the base year for the entire district.
School districts that are currently operating under Provision 2 in which all the schools have the same base year would consolidate the base year data to develop district-wide claiming percentages. School districts that are currently operating under Provision 2 and plan to add new schools, plan to consolidate existing schools (grade level/attendance area changes), or have schools on Provision 2 with different base years must contact the Texas Department of Agriculture (TDA) Food and Nutrition Division for guidance and approval. New schools and changes in school structure may require a new base year to be established.
7. Seamless Summer Program:
The Seamless Summer Program option, which has been available in Texas under a USDA waiver for the last three years, has been included permanently as part of the National School Lunch and School Breakfast Programs.
8. Simplified Summer Food Program (Lugar Pilot):
Texas is one of 14 states that have been authorized to operate the Summer Food Service Program (SFSP) under a simplified set of regulatory rules called the Lugar Pilot. The Act makes the Lugar Pilot permanent in these 14 states and adds 6 additional states. The SFSP is administered in Texas by the Texas Health and Human Services Commission (HHSC).
9. Waiver of Requirement for Weighted Averages:
The Act extends the waiver of the requirement for weighted averages for nutrient analysis of school lunches and breakfasts to September 30, 2009. This waiver extends to all schools using nutrient analysis, as well as to State Agencies (SAs) conducting independent analysis as part of their ongoing review of schools` compliance with the nutrition standards. It should be noted that the statute applies only to requirements imposed by USDA. The provision does not prohibit SAs from requiring schools to use weighted averages when doing nutrient analysis, nor does it prohibit SAs from using weighted averages when doing nutrient analyses as a part of nutrition reviews of schools using food-based menu planning systems.
TDA believes weighted analysis is a more accurate and useful method for doing nutrient analysis since it is based on student selection and, therefore, allows schools, states and federal policy makers to assess whether students are actually making more informed, healthier choices. Once a school or state knows what kind of choices students are making, they are in a better position to modify menus and design nutrition education programs to address any issues revealed by the nutrient analysis.
10. Guidance for Verification Reporting and Recordkeeping Requirements:
In 2003, USDA issued a final rule (entitled Determining Eligibility for Free and Reduced-Price Meals in Schools - Verification Reporting and Recordkeeping Requirements.) This rule requires school districts to report their verification activity and results to their respective SAs. Additionally, SAs must report the district level data to USDA. Submission of this data on a district basis will enable SAs and USDA to better understand certification errors and to improve oversight activities. This will help ensure that free and reduced-price subsidized meals are provided only to eligible children. This reporting requirement is effective for the 2004-05 school year and requires school districts to report the results of their verification activities to the SAs by March 1, 2005.
A separate policy memorandum will be issued with reporting procedures, forms, and a MS Access software application to allow the data to be transmitted electronically to TDA as soon as it is received from USDA. For preliminary planning purposes the following is a list of data elements that must be collected and reported by each school district:
The type of free/reduced-price meal benefits application used (individual student, household, or both);
The total number of schools and total enrollment for all NSLP schools;
The number of schools which are operating under Provision 2/3 in a non-base year and the total enrollment in these schools;
The number of children approved for free and reduced-price meal benefits who are not subject to verification, including children approved by direct certification;
The number of children approved for free meal benefits based on a food stamp/TANF/FDPIR case number submitted on an application (categorically eligible), and the number of these applications;
The number of children approved for free meal benefits based on income/household size information submitted on an application (income eligible), and the number of these applications;
The number of children approved for reduced-price meal benefits and the number of reduced-price eligible applications;
The method of verification sample selection (focused, random, all); and
A summary of the results of the verification process for all applications selected for verification, including the number of students whose eligibility for benefits did not change, the number whose eligibility was reduced or terminated based on the household response to verification, the number whose household did not respond to verification, and the number of applications in each of these categories.
A copy of the prototype verification form, including the definition of the required data elements, is available for download from the FNS Web site: www.fns.usda.gov/cnd.
There are a number of changes to the verification process that will be effective on July 1, 2005. These include:
Verification date change: Beginning with the 2005-06 school year verification will be based on the applications on file as of October 1 of each year and the verification process must be completed by November 15.
Verification sample size change: Beginning with the 2005-06 school year, 3 percent of all applications received by October 1 and selected from error-prone applications must be verified.
Implementation of additional regulatory changes effective for the 2005-06 and subsequent school years will be disseminated by policy memorandum when received from USDA.
