Financial Management for School Nutrition Programs

Nonprofit School Foodservice

The school food service program must be nonprofit. Section 7 CFR 210.9 (b)(1) of the NSLP regulations and 7 CFR 220.13(i) of the SBP regulations require SFAs to maintain a nonprofit school food service and observe the requirements for and limitations on the use of nonprofit school food service revenues (7 CFR 210.14) and the limitations on any competitive school food service (7 CFR 210.11).

Nonprofit school food service” means all food service operations conducted by the school food authority (SFA) principally for the benefit of schoolchildren, all the revenue from which is used solely for the operation or improvement of such food services. For detailed guidance and more topics, refer to the CSDE's Guide to Financial Management Requirements for the School Nutrition Programs.


Nonprofit School Food Service Account (NSFSA)

Section 7 CFR 210.14 (a) of the NSLP regulations and section 7 CFR 220.13(i) of the SBP regulations require SFAs to establish a NSFSA. The NSFSA is the restricted account in which all the revenue from all food service operations conducted by the SFA, principally for the benefit of school children, is retained and used only for the operation or improvement of the nonprofit school food service. The USDA's manual, Indirect Costs: Guidance for State Agencies & School Food Authorities, provides assistance to SFA business officials to ensure that NSFSA funds are limited to expenses that are reasonable, necessary, and allocable to provide quality meals for the NSLP and SBP. This guide addresses allowable direct and indirect costs for the NSLP and SBP. 

Net Cash Resources

To maintain the SFA’s nonprofit status, sections 7 CFR 210.14(b) and 7 CFR 210.19(a)(1) of the NSLP regulations require that the fund balance (net cash resources) of the NSFSA cannot exceed three months’ average expenditures at any time. “Net cash resources” means all monies, as determined in accordance with the state agency’s established accounting system, that are available to or have accrued to a SFA’s nonprofit school food service at any given time, less cash payable. Such monies may include, but are not limited to, cash on hand, cash receivable, earnings on investments, cash on deposit and the value of stocks, bonds, or other negotiable securities. Refer to page 8 of the USDA's manual, Indirect Costs: Guidance for State Agencies & School Food Authorities.


Financial Report  |   Plan to Reduce Excess Operating Balance
Expenditures Benefitting Other Programs  |   Items Not on Capital Expenditure Approved List


Financial Report

To document compliance with the NCR requirement, SFAs must submit the annual Financial Report for School Nutrition Programs in the Connecticut Online Application and Claiming System for Child Nutrition Programs (CNP System). The CSDE’s Instructions for Submitting the Financial Report for School Nutrition Programs provides step-by-step guidance on how to complete this report. SFAs that exceed three months’ average expenditures must submit their Plan to Reduce Excess Operating Balance as part of the Financial Report.  

Plan to Reduce Excess Operating Balance

SFAs that exceed three months’ average expenditures must submit a Plan to Reduce Excess Operating Balance for School Nutrition Programs to the CSDE to indicate how the excess balance will be spent to maintain the SFA’s nonprofit status. Expenditures must make improvements to the school nutrition programs such as improving food quality and replacing or purchasing necessary equipment.

Expenditures Benefitting Other Programs

For any expenditures that benefit other programs (such as cafeteria furniture, lunch aides, and utilities), SFAs must submit the Cost Allocation Plan Form for School Nutrition Programs with the Plan to Reduce Excess Operating Balance for School Nutrition Programs.

Items Not on Capital Expenditure Approved List

For any item with a unit cost of $5,000 or greater that is not listed on the Capital Expenditure Approved List for School Food Authority Equipment Purchases, SFAs must submit the Capital Expenditure Request Form in the CNP System (refer to the CSDE's Instructions for Completing the Capital Expenditure Request Form for School Nutrition Programs).