8. How can the Child Nutrition Funds be used?
The USDA School Breakfast and Lunch Programs earn federal revenue based on the number of free, reduced-price, and paid meals served and claimed by the organization that has an approved application and agreement on file with the State Department of Education, Child Nutrition Programs. In addition to the federal reimbursement, other sources of funds are earned through daily cash sales to students, ala carte sales to students and teachers, catering, and other special functions. There is a State of Alabama mandated transfer of funds from the school system’s general fund to the child nutrition fund to cover the state mandated raises and fringe benefits for child nutrition employees. USDA regulations, 7CFR 210.14(a) states “Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, or to construct buildings…” The primary allowable costs include salaries and fringe benefits, food, supplies, purchased services, equipment, and indirect costs. Child Nutrition funds MAY NOT be used to pay for items such as bad debts (bad checks, uncollected charged meals, uncollected catering functions, etc.), fines, and penalties, interest, unapproved capital projects, passenger vehicles, costs associated with providing adult meals, alcoholic beverages, entertainment, and costs of personal memberships. Child Nutrition Funds may also not be used to purchase foods of minimum nutritional value.
Bad debts. Bad debts, including losses (whether actual or estimated) arising from uncollectable accounts and other claims, related collection costs, and related legal costs, are unallowable. See Page 5 of the link below: