ATTENTION CO-OP DIRECTORS AND CHILD NUTRITION DIRECTORS
The school meal programs aim to provide nutritious
meals to children during the school day. Children may receive breakfast and
lunch at no cost if they are categorically eligible for free meals or if they qualify
for free meals based on Federal poverty guidelines. Children who do not qualify
for free meals may purchase meals at a subsidized cost, at either the reduced
price or paid rate. Sometimes, however, children who do not qualify for free
meals would like a breakfast or lunch, but do not have money in their account
or in hand to cover the cost of the meal at the time of the meal service.
The United States Department of Agriculture’s (USDA)
Food and Nutrition Service (FNS) recognizes that unpaid meal charges represent
a difficult and complex issue directly impacting the schools participating in
the school meal programs and the children they serve. FNS has made a concerted
effort to learn from and build on the success of school nutrition directors,
principals, and food service professionals with direct experience in managing
unpaid meal charges.
and Answer (Q&A) memorandum is designed to provide an overview of policies
related to unpaid meal charges and to address common questions from State
agencies, school food authorities (SFAs), and local Program operators. This
Q&A supplements recently issued policy memoranda related to unpaid meal
charges, which include the following:
SFAs are required to have a local meal charge policy
in place no later than July 1, 2017.
Please see ADE Commissioner’s Memo CNU-17-003, Unpaid Meal Charges:
Local Meal Charge Policy and Clarification on Collection of Delinquent Meal Payments which can be found on the
Child Nutrition website at: http://adecm.arkansas.gov/ViewApprovedMemo.aspx?Id=1980 .
Additional information and best
practices may be found on the USDA Unpaid Meal Charges webpage: http://www.fns.usda.gov/school-meals/unpaid-meal-charges
first edition of Overcoming the Unpaid Meal Challenge: Proven Strategies
from Our Nation’s Schools summarizes the best practices FNS has collected.
The guide shares positive approaches local program operators can use in their
- Reach all eligible children
- Assist families with the school
meal application process
- Get buy-in for a local meal
- Provide alternate meals,
- Find alternative funding sources
The guide is designed to
support State and local stakeholders working every day to address the challenge
of unpaid meal charges. Throughout the guide, readers will hear from school
superintendents, principals, food service professionals, and others who shared
their own challenges and successes addressing unpaid meal charges during the
comment period on unpaid meal charges and during two public webinars FNS hosted
on the topic in February 2016.
The guide will be updated as needed
to reflect changes to policy, additional best practices, and to incorporate
clarifications requested by State agencies and FNS Regional Offices.
The guide can be found by following
the link below:
1. Must the required meal charge policy be developed at the school food
authority (SFA) level?
discretion in developing the specifics of individual meal charge policies. SFAs
must develop and implement an SFA-level policy. This is intended to avoid
inconsistent or varying policies within an SFA that create confusion for
families, especially when children transition to a new school or families have
students attending different schools within the SFA. SFAs do have discretion,
however, to vary the policy based on student grade level. For more information,
please see “Meal Charge Policy Considerations” on page 2 of SP 46-2016: Unpaid Meal Charges: Local Meal Charge Policies, July 8, 2016, http://www.fns.usda.gov/unpaid-meal-charges-local-meal-charge-policies
2. Are SFAs permitted to adopt a standard practice about how to handle
meal charges instead of establishing a formal policy?
requires all SFAs operating the Federal school meal programs to have in place a
written and clearly communicated system to address meal charges. The Food and
Nutrition Service (FNS) will refer to this as a policy, but whether this is
referred to as a “policy” or “standard practice” is at the discretion of the
SFA. Whichever terminology is used, the policy or standard practice must
consist of a written document explaining how the SFA will handle situations
where children eligible to receive reduced price or paid meals do not have
money in their account or in hand to cover the cost of their meal at the time
of service. The policy or standard practice must be implemented throughout the
3. Are SFAs required to obtain
school board approval for their meal charge policy?
Although there is no Federal requirement for school board approval of
the local meal charge policy, SFAs should consult with local administrators
about any additional local requirements for the establishment of an SFA-level
meal charge policy.
4. What are the communication requirements for the meal charge policy?
SFAs must ensure the policy is provided in
writing to all households at the start of each school year and to households
transferring to the school or school district during the school year. Additionally, SFAs are encouraged to include the policy in student handbooks
and/or on online portals that households use to access student accounts. While
not required, SFAs are encouraged to provide the written policy again to the
household the first time the policy is applied to a specific child (e.g., by
mail, email, or a note home).
SFAs also must
provide the written meal charge policy to all school or SFA-level staff
responsible for policy enforcement. This includes school food service
professionals responsible for collecting payment for meals at the point of service,
staff involved in notifying families of low or negative balances, and staff
involved in enforcing any other aspects of the meal charge policy. School
social workers, school nurses, the homeless liaison, and other staff members
assisting children in need (or who may be contacted by families with unpaid
meal charges) also should be informed of the policy. In addition, FNS strongly
encourages SFAs to provide information about the policy to principals and other
school or district administrators to ensure they are familiar with and
supportive of the policy.
5. May an SFA simply post the meal charge policy on its website to meet
the policy communication requirement?
school year (SY) 2017-2018, and each year thereafter, the meal charge policy
must be communicated in writing to all households at the start of each school
year and to households transferring to the school during the school year. While
posting the policy online is helpful, it will not ensure the information
reaches all households, particularly those households without access to a
computer or the internet. Therefore, SFAs must have a method in place to ensure
the policy is provided in writing to all households at the start of each school
year and to households transferring to the school during the school year.
are methods SFAs could use to communicate the policy to families:
Include a letter to households explaining
the meal charge policy when sending “back-to-school” packets with student
- Include the policy in the print versions
of student handbooks, if provided to parents and guardians annually; and/or
- Include the written policy when using
existing notification methods to inform families about applying for free or
reduced price meals, such as distributing household applications at the start
of the school year.
SFAs also are
encouraged to redistribute the policy to the family the first time the policy
is applied to a specific child and mention the charge policy on reminder calls
or in written notices of low or negative account balances.
6. How often should SFAs revise or update their policy?
Although it is not required, SFAs are
encouraged to revise their policy on a regular basis (e.g., annually). Regularly reviewing the policy, assessing its effectiveness, and incorporating
new feedback will allow the policy to evolve to better meet the needs of
schools, families, and children.
7. Are SFAs required to maintain records related to the meal charge
developed at the SFA level must be maintained and provided to the State agency
during the Administrative Review. SFAs also must maintain documentation of the
methods used to communicate the policy to households and school or SFA-level
staff responsible for policy enforcement.
STUDENT ELIGIBILITY FOR FREE OR REDUCED PRICE MEALS
8. How early may schools begin the
school meal application process?
students who are eligible for free or reduced price school meals from accruing
unpaid meal charges, schools should ensure families are aware of the
application and return their application prior to the first day reimbursable
meals are offered. According to 7 CFR 210.2, the official start of the school
year is July 1. As long as an application is submitted on or after this date,
it is considered current for the new school year.
9. May schools accept applications
after the school year begins?
Families may submit, and schools
may accept, applications at any point during the school year. Schools must
inform families of this, and remind families their child may become eligible
for free meals at any time during the school year if the household experiences
a change in financial circumstances. Schools also are encouraged to reach out
to families experiencing an acute financial setback, such as a job loss or
long-term illness, which may result in a change in eligibility status for the
Because of the year-long duration
of eligibility, households certified for free or reduced price school meals are
not required to report changes in their household income or categorical
eligibility status. Once a child is approved for free or reduced price school meals,
their eligibility status remains in effect for the duration of the school year. Additionally, children carry over their eligibility status for 30 operating
days into the following school year, or until a new eligibility determination
is made, whichever comes first.
10. Are schools permitted to
eliminate the reduced price category as a strategy to prevent children eligible
for reduced price meals from accruing unpaid meal charges?
Yes. At the discretion of the SFA,
schools participating in the National School Lunch Program (NSLP) and School
Breakfast Program (SBP) may offer meals at no cost to children who would
otherwise qualify for reduced price benefits. SFAs also could choose to lower
the cost of reduced price meals below the maximum cost permitted. This is an
allowable use of funds in the non-profit school food service account (NSFSA). SFAs electing to take advantage of this flexibility continue to receive reduced
price Federal reimbursement based on meals claimed for children in the reduced
considering this option are advised to conduct a thorough analysis of their
current and projected operating costs to ensure they will be able to maintain
operations and meal quality without children’s payments for reduced price
meals. For more information, please see SP 17-2014: Discretionary Elimination of Reduced Price Charges in the School Meal
Programs, January 22, 2014, available at: http://www.fns.usda.gov/discretionary-elimination-reduced-price-charges-school-meal-programs.
If a child graduates or moves to a
new school district, may the SFA use funds remaining in the child’s account to
cover meal charge debt accrued by other students?
child leaves the district or graduates, SFAs must attempt to contact the
child’s household to return any funds remaining in the student’s account.
However, SFAs may encourage families that are not approved for free or reduced
price meals to donate the funds remaining in their account rather than
receiving a refund when their child leaves the school. These funds then could
be used to cover unpaid meal charges that were uncollectable.
approved for reduced price meal benefits, however, must receive a refund. There
is a Federal requirement that children eligible for reduced price meals pay a
maximum of 40 cents per lunch; retaining the unused funds would result in the
per meal lunch price exceeding this amount.
What alternative counting
and claiming procedures are available to local educational agencies (LEAs) and
schools struggling with unpaid meal charges?
The Community Eligibility Provision (CEP) is a
meal service option for schools and school districts operating the school meal
programs in high-poverty communities. CEP allows these schools to provide
breakfast and lunch at no cost to all enrolled children without the need to
collect applications or establish individual eligibility for a four-year
period, thereby increasing access to school meals and eliminating unpaid meal
charges. To learn more about CEP, please visit the CEP Resource Center: http://www.fns.usda.gov/school-meals/community-eligibility-provision-resource-center.
Provisions 2 and 3 also reduce the application
burden and simplify counting and claiming procedures and eliminate unpaid meal
charges by allowing low-income schools to serve meals to all enrolled children
at no charge for a four-year period. Under Provision 2, reimbursement is
determined by applying the percentages of free, reduced price, and paid meals
served during the first year, or base year, to claims during subsequent years. Provision 3 is similar to Provision 2, except, each year, schools receive the
level of Federal cash and commodity support paid to them during the base year
adjusted to reflect changes in enrollment, inflation, and operating days. To learn more, see: http://www.fns.usda.gov/school-meals/provisions-1-2-and-3.
PAYMENT OPTIONS AND PAYMENT REMINDERS
13. What should schools consider when implementing a pre-payment system for reimbursable meals?
Encouraging families to pre-pay
for meals at the reduced price or paid rate can help to ensure children have
consistent access to healthy, reimbursable meals without accruing unpaid meal
charges. Some SFAs even provide incentives, such as prize drawings, for
families opting to pre-pay for their children’s reimbursable meals. Any
incentives involving offering discounts for families who pre-pay for
reimbursable meals, however, must meet paid lunch equity (PLE) pricing
requirements. For more information, see SP 09-2016: Paid Lunch Equity: School Year 2016-2017 Calculations and Tool,
November 13, 2015, http://www.fns.usda.gov/paid-lunch-equity-school-year-2016-2017-calculations-and-tool.
If a pre-payment system is
established, children and families must continue to have a method to add funds
on the day of service. For example, families could make cash payments to the
school office on the day of service.
SFAs also may wish to allow
parents and guardians to limit the amount of funds that a student could use
daily, particularly for à la carte purchases. The pre-payment system could
include a feature to allow for parental restrictions at the point of service.
Finally, pre-payment systems for
children approved for reduced price meals must ensure that all meals paid for
are actually received or that the funds are carried over or are refunded. Federal regulations are clear that reduced price lunches may not exceed 40
cents and reduced price breakfasts may not exceed 30 cents. Therefore, payment
for any meals not received by a student approved for reduced price meals must
be refunded to the household.
For example, a household pre-pays
$8 for one month of lunches (20 lunches x $0.40). If at the end of the month
the household did not receive all 20 lunches, the remaining funds must be
carried over into the next month or the money must be refunded to ensure that
the student did not pay more than 40 cents per lunch.
14. May SFAs establish long-term
payment plans for households struggling to pay back a negative balance?
may work with families to establish long-term repayment plans. Repayment plans
may be especially helpful for households with income just above the threshold
for free or reduced price meals or where income is sporadic. SFAs also are
reminded that unpaid meal charges may be carried over at the end of the school
year (i.e., beyond June 30) as a delinquent debt and collection efforts may
continue into the new school year. For more information, see SP 47-2016: Unpaid Meal Charges: Clarification on
Collection of Delinquent Meal Payments, July 8, 2016, http://www.fns.usda.gov/unpaid-meal-charges-clarification-collection-delinquent-meal-payments.
15. May schools enlist volunteers to
assist with communicating payment reminders?
LEAs may disclose individual student eligibility information only to
those persons (and organizations) who require the information in order to carry
out an activity specifically authorized by the Richard B. Russell National
School Lunch Act (NSLA, 42 USC 1751). Therefore, LEAs and schools may not
enlist the assistance of unauthorized persons, such as parent volunteers, to
follow up with payment reminder or debt collection efforts related to unpaid
meal charges. For example, if a school calls families with unpaid meal charges
to remind them to replenish their accounts, only authorized persons may make
those phone calls. For more information, please see SP 16-2016: Disclosure Requirements for the Child Nutrition Programs, December
7, 2015, http://www.fns.usda.gov/disclosure-requirements-child-nutrition-programs-0.
16. Are SFAs permitted to move the
point of service (POS) to prevent the identification of children with unpaid meal
is no Federal policy regarding the specific location of the POS as long as
reimbursable meals are identified and claimed appropriately. To prevent the
unfortunate situation of having to take away or replace a child’s reimbursable meal,
SFAs may move the POS to the beginning of the lunch line. This helps the
cashier determine which children, if any, are unable to pay for their meal, and
allows the cashier to address the issue discretely before the child has
selected a meal. Any changes to the
counting and claiming method submitted to as part of the Agreement and Policy
Statement for the current school year (including movement of the POS) must be
submitted as a revision to the State agency.
as part of the State agency agreement outlined in 7 CFR 210.9(b)(9), SFAs must
count the number of free, reduced price, and paid reimbursable meals served to
eligible children at the POS, or through another counting system if approved by
the State agency. SFAs moving the POS to the beginning of the lunch line must
have a monitor or other assurance to verify that students have the required
components for a reimbursable meal after passing through the lunch line. 7 CFR
210.7(c)(2) explains the requirements for use of an alternate POS.
17. Are SFAs required to prevent the
overt identification of children through the method of payment used to purchase
Yes. According to 7 CFR 245.8, meal cards, tickets, tokens, or other methods of
payment cannot be coded or colored in a manner which overtly identifies
children based on free or reduced price eligibility status. Instead, SFAs are
encouraged to use pre-payment systems to limit the exchange of money in the
cafeteria. Publicizing pre-payment systems and encouraging their use by
families can help prevent the charging of meals. For more information, see SP
45-2012: Preventing Overt Identification
of Children Certified for Free or Reduced Price School Meals, August 24,
Allowing families to check their account balance and add money
electronically from a computer or mobile device also limits the exchange of
money in the cafeteria. Often, even families who do not opt to pay using an
online system can use the system to check their children’s balance. However,
SFAs cannot exclusively use an online system. SFAs using an online payment
system must provide an alternative option to meet the needs of families who do
not have access to a computer or who prefer to make their payment in person. For more information, see SP
02-2015: Online Fees in the School Meal
Programs, October 8, 2014, http://www.fns.usda.gov/online-fees-school-meal-programs.
include at least one method of payment that is free of charge. Because it is
allowable to use NSFSA funds to pay usage fees, SFAs may consider covering any
fees associated with using an online system for low-income families. Families
must be notified about all payment systems used at the school, including any
fees associated with specific payment options.
18. Are SFAs that opt to serve an alternate meal to children with unpaid meal charges required to meet FNS’ meal pattern requirements?
seeking reimbursement for an alternate meal must meet the meal pattern
requirements. SFAs not seeking reimbursement for an alternate meal, however,
are not required to ensure those meals meet the meal pattern requirements.
Schools providing a non-reimbursable alternate meal should aim to offer an
economical meal that reflects FNS’ nutritional goals. The costs of non-reimbursable
alternate meals may be absorbed by the NSFSA, the general fund, or other
FNS encourages schools to provide a reimbursable meal to all children who want
one. Providing children with a “regular” reimbursable meal prevents the
singling out of children with unpaid meal charges, provides children with the
nutritional benefits of a reimbursable meal, and ensures the school receives
the applicable Federal reimbursement for the meal.
To claim an alternate meal that
limits choices to lower cost entrées and other components, schools must offer
children at least two different types of fluid milk. In addition, a school
participating in the offer versus service (OVS) provision must allow children
to select up to five food components for the NSLP and four items for the SBP. Alternate meals that allow children to select only three components are not
May SFAs charge students for an
many SFAs providing alternate meals to children with unpaid meal charges choose
to provide those meals for free, SFAs have discretion to charge children for
alternate meals. If the SFA charges for a non-reimbursable alternate meal, then
the meal is subject to the Smart Snacks requirements (7 CFR 210.11) and the
requirements for revenue from non-program foods (7 CFR 210.14(f)), as the
alternate meal is considered an à la carte item for sale in the school.
20. Are SFAs opting to provide
alternate meals expected to accommodate special dietary needs when a child’s
disability restricts their diet?
must make substitutions for children who are considered to have a disability
under 7 CFR 15b.3 and whose disability restricts their diet. SFAs opting to
provide alternate meals to children with unpaid meal charges are still required
to provide reasonable accommodations for such children when the restriction is
supported by a medical statement signed by a State licensed healthcare
professional. This requirement is included in Federal regulation at 7 CFR
21. What should SFAs consider when developing a policy regarding the collection of delinquent debt arising from unpaid meal charges?
In establishing policies regarding collection
of delinquent debt, SFAs should ensure their efforts do not have a negative
impact on the children involved, and instead focus primarily on adults in the
household responsible for providing funds for meal purchases. SFAs also are
encouraged to consider whether the benefits of potential collections outweigh
the costs which would be incurred to achieve those collections. Policies
regarding the collection of unpaid meal charges should be included in the
written meal charge policy, which is required for SFAs no later than July 1,
22. At what point are unpaid
meal charges classified as “delinquent debt”?
Unpaid meal charges are considered “delinquent debt” when payment is
overdue as defined by local policies. The debt is classified as delinquent as
long as it is considered collectable and efforts are being made to collect it.
SFAs must make reasonable efforts to collect unpaid meal charges classified as
delinquent debt; the cost of such collection efforts is an allowable use of
NSFSA funds. A debt owed to the NSFSA remains on the accounting documents until
it is either collected or is determined to be uncollectable and written off. For more information, see SP 47-2016: Unpaid
Meal Charges: Clarification on Collection of Delinquent Meal Payments, July
8, 2016, http://www.fns.usda.gov/unpaid-meal-charges-clarification-collection-delinquent-meal-payments.
23. May unpaid meal charge debt
be carried over into a new school year?
Yes. Unpaid meal charges may be carried over
at the end of the school year (i.e., beyond June 30) meaning collection efforts
may continue into the new school year. This allows SFAs to work with individual
families to establish longer repayment plans and to continue pursuing
collection efforts when children change schools within the district or move to
a new school outside the district.
24. At what point is delinquent
debt considered “bad debt”?
When local officials determine further collection efforts for
delinquent debt are useless or too costly, the debt must be reclassified as
“bad debt.” Once a delinquent debt is reclassified as a bad debt, it must be
written off as an operating loss. NSFSA resources may not be used to cover
costs related to the bad debt, such as continued legal and collection costs. Instead, these losses must be restored using non-Federal funds. These funds may
come from the school district’s general fund, special funding from State or
local governments, or any other non-Federal sources.
25. What non-Federal funding
sources may be used to restore operating losses from bad debts?
Allowable sources of non-Federal revenue
- State revenue matching funds in excess of the State revenue
matching fund requirement,
- State or local funds provided to cover the price of student
- Local contributions provided by community organizations or
- Revenue from adult meals prepared using resources outside the
food service and not funded through the NSFSA,
- À la carte revenue and profit from foods not purchased using
funds from the NSFSA and funded from an account separate from the NSFSA,
- Revenue from catering or contracting services that operate using
an account separate from the NSFSA.
If a revenue source is funded through NSFSA,
then all revenue from the source must return to the NSFSA and may not be used
to cover operating losses resulting from bad debts.
26. What are the requirements
for SFAs using revenue from catering, vending, and other contracting services
to restore operating losses?
In arrangements where school food service
labor is used to prepare goods for an outside entity (e.g., catering and
vending), the school food service must ensure all costs are covered by the
entity served by the school food service operations. For example, an SFA may
use NSFSA funds to purchase and prepare hamburgers for a Parent Teacher
Association (PTA) that runs a high school concession stand during football
games. In this example, if the cost associated with purchasing and preparing
the hamburgers is $2 per hamburger, the SFA must recoup at least $2 per
hamburger from the PTA; the PTA then may sell each hamburger for $3 and keep
the $1 profit per burger.
When entering into arrangements with outside
entities, the school food service is best served having an agreement in place
regarding costs and all other terms and conditions, including a stipulation
that all risk relating to revenue losses must be covered by the outside entity
and not the NSFSA. For more information, see SP 13-2014: School Food Service Account Revenue from the
Sale of Non-Program Foods, December 12, 2013, http://www.fns.usda.gov/school-food-service-account-revenue-sale-nonprogram-foods and SP 20-2016: Nonprofit
School Food Service Account Nonprogram Food Revenue Requirements, December
23, 2015, http://www.fns.usda.gov/nonprofit-school-food-service-account-nonprogram-food-revenue-requirements.
27. Are revenues from the sale
of competitive foods purchased using the general fund also restricted?
Revenue earned from the sale of competitive
foods purchased with funds outside of the NSFSA (i.e., the general fund) may be
used to cover bad debt.
28. If a child has money to
purchase a meal but has outstanding meal charge debt, can the SFA require
repayment and refuse to provide the child a meal?
No. If a child has money to purchase a reduced price or paid meal at the
time of the meal service, the child must be provided a meal. SFAs may not use
the child’s money to repay previously unpaid charges if the child intended to
use the money to purchase that day’s meal.
29. Are SFAs required to
maintain records related to bad debt?
Yes. According to SP 47-2016, once delinquent meal charges are
converted to bad debt, records relating to those charges must be maintained in
accordance with the record retention requirements in 7 CFR 210.9(b)(17) and 7
Types of records that should be maintained to
document establishment and handling of bad debt include:
- Evidence of efforts to collect unpaid meal charges in accordance
with the policy,
- Evidence that collection efforts fell within the timeframe and
methods established by the policy,
- Financial documentation showing when the unpaid meal charge
became an operating loss. and
- Evidence that the funds written off as bad debt were restored to
NSFSA from non-Federal sources.