Sponsoring Centers: 101

In recent years, as the number of family child care providers participating in the CACFP has steadily declined, Sponsoring organizations have come under intense financial strains.  Caseloads and administrative dollars have dropped while regulatory requirements have increased.  Meanwhile, the number of centers interested in and eligible to participate in the CACFP has steadily increased.  So many Sponsors have begun to look at the possibility of sponsoring unaffiliated centers (that is, centers that are not legally owned by the Sponsor itself) to offer a new funding stream.


In truth, making the jump from sponsoring homes to sponsoring centers is natural.  The move represents the perfect opportunity for Sponsoring organizations to further their missions of helping to improve the quality of child nutrition, because it builds on the expertise family child care Sponsors already have in the CACFP and applies that expertise to child care centers that need the help.  And federal legislation encourages this idea – the Agricultural Risk Protection Act (ARPA) has provisions that specifically address organizations that sponsor unaffiliated centers, which means that any previous state agency prohibitions against sponsoring unaffiliated centers are no longer valid.  Additionally, USDA has recently hosted workshops at conferences specifically encouraging Sponsors of Family Child Care Homes to begin sponsoring centers. 


However, while much of the Food Program expertise Sponsoring organizations already have is very useful, it’s important that agencies making the move from family child care to child care centers understand some of the key differences between sponsoring homes and sponsoring centers.  This article is meant to highlight some of those differences, but the regulations are complex and there are lots of little details, so this is only meant as a generalized introduction.  For more details, don’t hesitate to give us a call at Minute Menu (as we offer solutions for agencies sponsoring centers as well as homes).  But as an introduction, the primary areas of difference include:


  • Free / Reduced / Base determination per Child
  • Administrative Reimbursement
  • Blended Rate Calculations per Center
  • Menu Production Records
  • Receipt / Expense Tracking
  • Non Profit Food Service Tracking
  • Management Issues


Free / Reduced / Base Determination Per Child


Homes are classified as Tier 1, 2, or Mixed.  Centers are effectively all “mixed” – with each child being classified as Free, Reduced, or Base (also referred to as Paid or Denied) based on the child’s income or categorical eligibility.  Every child must have an enrollment and income eligibility application filled out, and then each child is appropriately classified.


Both non- and for-profit centers can participate in the CACFP.  But with for-profit centers, specifically, they can only participate if 25% of their enrollment is Free or Reduced.  So for each of your for-profit centers, you must evaluate the percentage of Free/Reduced children enrolled each month to ensure that it stays above this 25% – and if it doesn’t, that center can’t claim that month.


Administrative Reimbursement


Centers get paid based on the mix of Free / Reduced / Base children they have, so the more Free children being claimed, the higher the reimbursement rate.  Likewise, the more meals claimed (as opposed to snacks), the higher the reimbursement for that center.


As a sponsor of unaffiliated centers, your administrative reimbursement is based solely on the center’s reimbursement.  You are allowed to keep up to 15% of the center’s reimbursement for administrative purposes.


This means that, unlike family child care homes, not all centers are created equal.  A large center with a high percentage of Free (or Reduced) children claiming breakfast and lunch will supply much more administrative funds than a small center with mostly Base rate children serving only snacks.  Obviously, all of these centers, and their children, will benefit from the training and other benefits that you can provide them.  But to maintain appropriate financial viability with your agency, it’s important that you find the right mix of large and small centers.


Blended Rate Calculations Per Center


Each state has its own method of determining how, precisely, an individual center’s reimbursement is calculated.  Many states use “actuals” to determine reimbursement – meaning that each month, if a Free child was claimed for 10 breakfasts, that counts as 10 Free breakfasts for that center’s claim, and the total number of Free, Reduced, and Base breakfasts is maintained separately and those counts are multiplied by the reimbursement rates published for Free, Reduced, and Base breakfasts.  Using actuals tends to be the easiest to describe, but it’s the hardest to track and count accurately – especially without some form of automation.


Other states use a “blended” rate calculation.  In this case, percentages are determined based on the number of Free, Reduced, and Base children that are enrolled, and then those percentages are applied to overall meal counts for each meal/snack.  There are many tricky parts here, though.  Exactly how are those percentages calculated and applied to the claim?  Does a child that isn’t claimed in a given month still count as enrolled?   Do I recalculate the blended rate for each center each month?  Does the state reimburse based on a single blended rate for all centers?


It’s important to get to the bottom of your state’s exact method for calculating reimbursement, and sometimes it’s very difficult to do this.  For Sponsors that work with Minute Menu, we do this research for you.


Menu Production Records


Unlike homes, many states mandate that centers keep full menu production records.  This effectively means that the centers must record quantities of food served.   Exactly what quantities are required varies from state to state.  Some states don’t require any quantities.  Others require only that the center document the per serving requirement.  Others require that the center only make an effort to plan the quantities required ahead of time.  Others want to know exactly how much food overall was served. 


But beyond the record keeping requirements, centers really do benefit from training in this area.  It’s a bit easier for a family child care provider to figure out how much to cook for 6 children than it is for a center to figure out how much is needed for 60.  So you should work with your centers to help them plan better meals, including the quantities that must be prepared.


Receipt / Expense Tracking


Unlike homes, you must keep track of the amount of money centers are spending in the operation of their food program.  In fact, agencies will cross reference certain big ticket food items – like Milk – on receipts to ensure that enough food was ordered to satisfy the amount of food the center said they served.  Most agencies do this during their reviews of those centers, but some will also do it as part of their monthly claim process.


Non-Profit Food Service Tracking


Every center that participates in the CACFP must operate a non-profit food service program (even if the center itself is a for-profit center).  Basically, this means that the expenses that you track for the center, including food, labor, and any pro-ration of utilities or other overhead, must add up to more than the amount the center receives in reimbursement.  This doesn’t have to be the case every month, but it generally has to be the case over a 3 month window.  So you must monitor this, and where you see centers getting in trouble in this area, you must work with the center to resolve the problem (typically by encouraging them to purchase higher quality foods). 


Management Issues


The above areas highlight some of the big picture differences between sponsoring centers and sponsoring homes.  There are many other specific regulatory details that you’ll need to be aware of, as well.  But it’s also important to consider some of the general management issues you may face.  Is your staff completely swamped, or will they be able to handle the transition?  Do you have a monitor that will be able to work closely with the centers?  Are you committed to a very aggressive training program – both of your staff, and when your staff work with centers?  Do you have an information system that can make the management and processing of all this data possible?  (And as a plug for our agency:  Minute Menu does offer a system to sponsor centers, along with a system to sponsor homes, that addresses all of a Sponsor’s key responsibilities). 


Making the plunge into centers is a big step, and a very important decision.  But it can certainly be worthwhile, as it can help improve the quality of child nutrition in your community while help improving your agency’s financial solvency.  I would encourage any Sponsoring agency to consider it seriously, but as always, look before you leap!

2 Responses to Sponsoring Centers: 101

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