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Financial Management


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Managing finances is important for the success of a school food service operation. School Food Authorities (SFAs) must comply with state and federal regulations related to resource management, procurement, and allowable costs. The purpose of the school food service account is to operate and improve a school meals program that serves nutritious and appealing meals that meet meal pattern requirements.

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State Aid Payments Received in May 2024 (Earned in SY 2022-23)

Schools participating in the National School Lunch, School Breakfast, Elderly Nutrition, and/or Wisconsin School Day Milk Programs:

Allowable Costs
When evaluating expenses, SFAs must ensure funds support the operation and improvement of the school meals program(s) and that all expenses are allowable (i.e., necessary, reasonable, and allocable) in accordance with 7 CFR 210.14, 220.13(i) and OMB guidance under 2 CFR Part 200.

Indirect Costs


Annual Financial Report (AFR)
All SFAs participating in USDA School Meals Programs are required to submit a food service Annual Financial Report (AFR) each year. The report categorizes food service revenues and expenditures by program for July 1 through June 30, which is the school fiscal year. The AFR is due annually by August 31, and can be submitted electronically by accessing Online Services or the Reporting webpage. The report may be amended online through December 31 for the prior school year.


Budgeting and Cost Control
Managing school meals program resources can be challenging. There are industry standards and performance indicators to assist food service directors and business managers in improving the quality and efficiency of the operation. The food service budget consists of revenue (sales) and costs (labor, food, equipment, purchased services, and other). Food and labor costs are a large piece of the budget. Tools to aid SFAs in managing a budget can be found below.


Nonprogram Foods
SFAs are required to ensure that all revenue from the sale of non-program foods accrues to the non-profit school food service account (7 CFR 210.14(f)). Non-program foods include any non-reimbursable foods and beverages (adult meals, a la carte, vending, catering, etc.) purchased using funds from the non-profit school food service account. Revenue available to support the production of reimbursable meals cannot subsidize the sale of non-program foods. When the SFA sells more non-program foods than adult meals and a la carte milk, the Non-program Food Revenue Tool (see Tools below) must be completed annually.




Paid Lunch Equity (PLE)

Paid Lunch Equity Guidance for School Year (SY) 2024-25

Under Section 748, of Division B of the Appropriations Act, for SY 2024-2025, only School Food Authorities (SFAs) that had a negative balance in the nonprofit school food service account as of June 30, 2023, shall be required to establish a price for paid lunches according to the PLE provisions in Section 12(p) of the Richard B. Russell National School Lunch Act (NSLA) (42 U.S.C. 1760(p)) and implemented in the National School Lunch Program (NSLP) regulations at 7 CFR 210.14(e). Consistent with the terms of the Appropriations Act, this memorandum provides notice that any SFA with a positive or zero balance in its nonprofit school food service account as of June 30, 2023, is exempt from paid lunch equity pricing requirements found at 7 CFR 210.14(e) for SY 2024-2025.
Any SFA with a positive or zero balance in its nonprofit school food service account as of June 30, 2023, is exempt from PLE pricing requirements found at 7 CFR 210.14(e) for SY 2024-25. The PLE exemption means your SFA does not have to complete the PLE tool, nor increase paid meal prices unless you elect to do so. Please note, paid meal prices cannot be decreased below the current school year prices, even with the exemption.  
SFAs that had a negative balance in the nonprofit school food service account as of June 30, 2023, must follow PLE requirements when establishing their prices for paid lunches in SY 2024-25. These SFAs must use the PLE Tool to establish paid lunch prices and may use the prices last charged to students as the basis for the SY 2024-25 paid lunch price calculation.



These reflect the 17- 18 SY PLE Tool, but can aid in completing subsequent PLE tools. 

Annually, after July 1, the United States Department of Agriculture (USDA) and the School Nutrition Team (SNT) release categorical meal, milk, and snack reimbursement rates. SFAs can use these rates to budget the amount of federal and state revenue earned per meal in addition to any local revenue.



Unpaid Meals
SFAs operating the school meals programs are required to have a written and clearly communicated policy to address unpaid meal charges per USDA memo SP 46-2016. USDA and the SNT have developed resources that SFAs can use in their efforts to manage the challenge of unpaid meal charges. Bad debt is an unallowable cost to the nonprofit food service account per 2 CFR 200.426 of Subpart E. Resources found below cover best practices, questions and answers, and guidance memoranda.



Best Practice Manual from USDA Memo SP 29-2017



Deb Wollin, SNS

Nutrition Program Consultant

Karen Jardaneh, RDN, CD, SNS

Nutrition Program Consultant

Jessica Lessner, RDN

Paid Lunch Equity Specialist
(608) 267-2293