Child Nutrition and WIC Reauthorization Act of 1989 and Other Amendments

DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Part 226

RIN 0584-AC07

Child Nutrition and WIC Reauthorization Act of 1989 and Other

Amendments

AGENCY: Food and Consumer Service, USDA.

ACTION: Interim rule, with request for comments.

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SUMMARY: This interim rule incorporates changes to the Child and Adult

Care Food Program (CACFP) as required by the Child Nutrition and WIC

Reauthorization Act of 1989, the Child Nutrition Improvement Act of

1992, and the Older Americans Act Amendments of 1992. These changes

consist of making one change and one clarification to the requirements

governing participation of adult day care centers in the CACFP;

changing the basis for making commodities available to State agencies;

clarifying the rules governing the participation of for-profit centers

in the CACFP; and making two specific technical adjustments in the

CACFP regulations. This interim rule also clarifies that households

participating in the Food Distribution Program on Indian Reservations

(FDPIR) are categorically eligible as free meal recipients under the

CACFP. These changes are intended to reduce administrative burdens at

the Federal, State, and local levels.

DATES: This rule is effective June 2, 1997. To be assured of

consideration, comments must be postmarked on or before June 30, 1997.

ADDRESSES: Comments should be addressed to Mr. Robert M. Eadie, Chief,

Policy and Program Development Branch, Child Nutrition Division, Food

and Consumer Service, United States Department of Agriculture, 3101

Park Center Drive, Room 1006, Alexandria, Virginia 22302. All written

submissions will be available for public inspection at this location,

Monday through Friday, 8:30 a.m.-5:00 p.m.

FOR FURTHER INFORMATION CONTACT: Mr. Robert M. Eadie or Mr. Edward

Morawetz at the above address or by telephone at (703) 305-2620.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This interim rule has been determined to be significant and was

reviewed by the Office of Management and Budget under Executive Order

12866.

Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the

Regulatory Flexibility Act (5 U.S.C. 601-612). The Administrator of the

Food and Consumer Service has certified that this rule will not have a

significant economic impact on a substantial number of small entities.

This rule will effect State agencies, certain types of institutions in

the CACFP, and households participating in both the FDPIR and the

CACFP, by simplifying and/or clarifying the rules governing their CACFP

participation. The Administrator has determined that these effects do

not constitute a significant economic impact.

Executive Order 12372

The Child and Adult Care Food Program is listed in the Catalog of

Federal Domestic Assistance under No. 10.558 and is subject to the

provisions of Executive Order 12372, which requires intergovernmental

consultation with State and local officials (7 CFR Part 3015, Subpart V

and final rule-related notice at 48 FR 29114, June 24, 1983).

Executive Order 12988

This interim rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This rule is intended to have preemptive effect

with respect to any State or local laws, regulations or policies that

conflict with its provisions, or which would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

unless so specified in the ``Effective Date'' section of this preamble.

Prior to any judicial challenge to the provisions of this rule or the

application of its provisions, all available administrative procedures

must be exhausted. In the Child and Adult Care Food Program, the

administrative procedures are set forth under the following

regulations: (1) Institution appeal procedures in 7 CFR Sec. 226.6(k);

and (2) Disputes involving procurement by State agencies and

institutions must follow administrative appeal procedures to the extent

required by 7 CFR 226.22 and 7 CFR Part 3015.

Information Collection

In accordance with the Paperwork Reduction Act of 1995, this Notice

announces the Food and Consumer Service's (FCS) intention to request

Office of Management and Budget (OMB) review of the proposed

adjustments to be made to the information collections for the Child and

Adult Care Food Program (CACFP) as a result of the interim rule, Child

Nutrition and WIC Reauthorization Act of 1989 and Other Amendments.

To be assured of consideration, comments must be received by June

30, 1997.

Comments concerning the information collection aspects of this

interim rule should be sent to Mr. Robert Eadie at the address listed

in the ADDRESS section of this preamble. Commenters are asked to

separate their information collection requirements from their comments

on the remainder of the interim rule.

Comments are invited on: (a) whether the proposed collection of

information is necessary for the proper performance of the functions of

the agency, including whether the information will have practical

utility; (b) the accuracy of the agency's estimate of the burden of the

proposed collection of information including the validity of the

methodology and assumptions used; (c) ways to enhance the quality,

utility and clarity of the information to be collected; and (d) ways to

minimize the burden of the collection of information on those who are

to respond, including through the use of appropriate automated,

electronic, mechanical, or other technological collection techniques or

other forms of information technology.

The title, description, and respondent description of the

information collections are shown below with an estimate of the annual

reporting and recordkeeping burdens. Included in the estimate is the

time for reviewing

[[Page 23614]]

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information.

Title: 7 CFR Part 226, Child and Adult Care Food Program.

OMB Number: 0584-0055.

Expiration Date: April 30, 1997.

Type of request: Revision of existing collection.

Abstract: The interim rule, Child Nutrition and WIC Reauthorization

Act of 1989 and Other Amendments, incorporates changes as required by

the Child Nutrition and WIC Reauthorization Act of 1989, the Child

Nutrition Improvement Act of 1992, and the Older Americans Act

Amendments of 1992.

Collection of Information: Commodity Assistance.

Section 226.5 contains an information collection requirement. As

required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507 (d)),

the Department has submitted a copy of this section to OMB for its

review.

Donation of Commodities: (Child Care Program).

The formula for making entitlement commodity determinations is

changing from ``current year'' to ``preceding year'' data. The

Department will, at the end of each school year, compare the number of

lunches and suppers actually served in the State during that school

year to the number served in the preceding year and adjust the State's

commodity entitlement accordingly for the subsequent school year.

The information collected includes the number of institutions

participating in CACFP that request commodities. The Department uses

this information to do advance planning in order to provide for the

timely purchase and distribution of commodities. Preference for

commodities and a list of recipients are each collected once each year

from each State agency. Annual reporting burden for this collection of

information is estimated to average 5 hours for each response for 53

State agencies. Thus, the total annual reporting burden for this

collection is 265 hours, and remains unchanged by this interim

regulation.

Collection of Information: Title XX Reimbursement Claims.

Sections 226.6, 226.10, 226.11, and 226.15 contain information

collection requirements. As required by the Paperwork Reduction Act of

1995 (44 U.S.C. 3507 (d)), the Department has submitted a copy of these

sections to OMB for its review.

State Agency Administrative Responsibilities: (Child Care Program).

The CACFP eligibility criteria for private for-profit child care

centers is being changed to permit such centers to participate if at

least 25 percent of their enrolled children, or 25 percent of their

licensed capacity, whichever is less, are title XX recipients. This

provision would help make centers which serve a large number of part-

time title XX children eligible to participate in CACFP.

The information to be collected includes documentation from title

XX centers that are currently providing services for which they receive

compensation under title XX of the Social Security Act, and

certification that not less than 25 percent of enrolled children or 25

percent of licensed capacity, whichever is less, are title XX

beneficiaries. It also includes the review, and approval or denial, of

applications for participation, the processing of claims for

reimbursement, and the maintenance of documentation to support the

claim. This documentation is submitted by centers once each year and

reviewed by the State agency. Annual recordkeeping burden for this

collection of information is estimated to average 8 hours for each

response for 1,742 institutions. The annual reporting burden is

estimated to average 33 hours for each of the 53 State agencies, and

2.3 hours for each of 1,742 institutions. Thus, the annual

recordkeeping burden for this collection is 13,936 hours for

institutions, and the reporting burden is 1,749 hours for State

agencies and 4,007 for institutions.

Collection of Information: Adult Day Care.

Section 226.19a contains an information collection requirement. As

required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507 (d)),

the Department has submitted a copy of this section to OMB for its

review.

Adult Day Care Center Provisions: (Adult Day Care Program).

This provision extends eligibility to adults attending adult day

care centers, but who reside in group living arrangements. This is

consistent with current program policy.

The collection of information includes documentation to support

that reimbursement is claimed for meals served in centers which serve

individuals that are functionally impaired or 60 years of age or older

in a group, either inside their homes or in a group living arrangement.

Annual recordkeeping burden for this collection of information is

estimated to average 8 hours for each response for 1,025 institutions,

and the annual reporting burden is estimated to average 2.3 hours for

each response for 1,025 institutions. Thus, the total annual

recordkeeping burden for this collection is estimated to be 8,200

hours, and the total annual reporting burden is estimated to be 2,358.

Collection of Information: Technical Clarification Provision.

Sections 226.2 and 226.23 contain information collection

requirements. As required by the Paperwork Reduction Act of 1995 (44

U.S.C. 3507 (d)), the Department has submitted a copy of these sections

to OMB for its review.

Free and Reduced-price meals: (Child Care Program).

This provision provides categorical eligibility to CACFP

participants who also participate in FDPIR. Such households would not

need to submit income information on their application in order to

receive free and reduced price benefits. Indication that they

participate in FDPIR is sufficient.

Implementation of this provision would reduce the reporting burden

for free and reduced-price eligibility determination by 1,200 hours.

Total burden hours in interim rule:

Reporting--8,379

Recordkeeping--22,136

Good Cause

This rule implements substantive and technical changes mandated by

statutory amendments to Section 17 of the National School Lunch Act (42

USC 1766) which do not provide the Secretary with any discretion in

their implementation. Thus, the rule is non-discretionary. For this

reason, the Administrator of the Food and Consumer Service has

determined that, in accordance with 5 USC 553, prior notice and comment

is unnecessary and contrary to public interest. Since the rule merely

implements cited statutory provisions, it constitutes an interpretive

rule for which notice and comment are not required by 5 USC 553. The

rule further implements one technical clarification regarding

categorical eligibility for FDPIR participants. The Administrator of

the Food and Consumer Service has determined that, in accordance with 5

USC 553, prior notice and comment on this technical clarification is

contrary to the public interest and that good cause exists for making

this rule effective thirty days from the date of publication.

Background

On November 10, 1989, the Child Nutrition and WIC Reauthorization

Act of 1989 (Pub. L. 101-147) made several changes to Section 17 of the

National School Lunch Act (NSLA) (42 U.S.C. 1766). In addition to

changing the name of the Program to the Child and Adult Care Food

Program (CACFP) in Section 105(a), Pub. L. 101-147 included

[[Page 23615]]

provisions which: (1) simplified the free and reduced price application

process; (2) established a one-third daily Recommended Dietary

Allowance (RDA) nutritional requirement for lunches served in adult day

care centers; (3) made additional administrative funds available to

family day care home sponsors to reach children located in low-income

or rural areas; (4) permitted State agencies to allow biennial

applications by institutions; (5) allowed governors to designate a

separate State agency to administer only the adult portion of the

CACFP; (6) changed the basis for making commodities available to State

agencies; and (7) made two miscellaneous technical changes.

Congressional explanatory statements on Pub. L. 101-147 (Cong. Rec.

S14021, October 24, 1989) also requested that Program regulations be

amended to reduce to three visits per year the number of facility

visits required of school-sponsored after-school care. This request

will be addressed in a separate rulemaking at a later date.

On August 14, 1992, the Child Nutrition Improvement Act of 1992

(Pub. L. 102-342) amended Section 17(a) of the NSLA (42 U.S.C.

1766(a)). Pursuant to the amendment made in Pub. L. 102-342, any

private for-profit child care center providing nonresidential day care

services may participate in the CACFP if it receives compensation under

title XX of the Social Security Act (42 U.S.C. 1397, et seq.) for at

least 25 percent of its eligible enrolled children or 25 percent of its

licensed capacity, whichever is less.

On September 15, 1992, the Older Americans Act Amendments of 1992

(Pub. L. 102-375) amended Section 17 of the NSLA (42 U.S.C. 1766). This

amendment allows institutions to participate in the CACFP if they

provide adult day care services to functionally impaired adults or to

individuals sixty years of age or older in a group setting outside of

their home or their group living arrangements, on a less than 24-hour

basis.

In response to the above-referenced legislative provisions, the

Department published a final rule on January 16, 1990 (55 FR 1376) that

changed the Program name from the ``Child Care Food Program'' to the

``Child and Adult Care Food Program''. The Department also published a

final rule on July 14, 1993 (58 FR 37847) on a meal pattern to be used

in adult day care centers participating in CACFP. The adult meal

pattern rule contains the requirement found in Section 105(b)(3)(A) of

Pub. L. 101-147 that lunches served in adult day care centers provide

approximately one-third of the Recommended Dietary Allowances to

participating individuals. Finally, the Department has issued a

separate rule, regarding provisions set forth in Pub. L. 101-147

related to the content and processing of free and reduced price

applications in both the CACFP and the Summer Food Service Program for

Children.

This interim rule incorporates in the CACFP regulations other

provisions from Pub. L. 101-147, Pub. L. 102-342, and Pub. L. 102-375

relating to the CACFP. In addition, this interim rule incorporates one

clarifying provision to the CACFP regulations: categorical free meal

eligibility to households participating in the FDPIR.

1. Alternate State Agencies for Adult Day Care

Section 105(b)(3)(B) of Pub. L. 101-147 amended Section 17(o)(6)

(42 U.S.C. 1766(o)(6)) of the NSLA to allow the Governor of a State to

designate a State agency, other than the existing CACFP State agency,

to administer the adult day care component of the CACFP. This change in

the statute recognizes that, in some instances, another State-level

agency may be more cognizant of or capable of meeting the needs of

adults in day care programs due to a long-standing relationship with

the adult day care community and prior administration of other Federal

programs for the elderly.

Accordingly, this interim rule amends Section 226.2 by expanding

the definition of ``State agency'' to include a State agency other than

the existing CACFP State agency, designated by the Governor, to

administer the adult day care component of the CACFP.

2. Commodity Assistance

Section 6(e) of the National School Lunch Act (42 U.S.C. 1755(e))

establishes a per-meal commodity or cash-in-lieu of donated commodity

assistance rate for lunches served under the National School Lunch

Program. Section 17(h)(1) of the Act (42 U.S.C. 1766(h)(1)) authorizes

payment of that rate to States for each lunch and supper served by

institutions participating in the CACFP. Prior to the enactment of Pub.

L. 101-147, the value of commodities donated to each State for any

school year was, by law, calculated by multiplying the number of

lunches and suppers served in CACFP institutions in that State during

the current school year by the rate for commodities established for

that school year. The Department must do considerable advance planning

in order to provide for the timely purchase and distribution of

commodities. Since it cannot know the actual number of lunches and

suppers served until well after the school year is over, it was

difficult under the previous system for the Department to accurately

forecast and purchase commodities for the CACFP.

Congress recognized this problem and in Section 131(b) of Pub. L.

101-147 amended Section 17(h) of the NSLA (42 U.S.C. 1766(h)) to change

the method of calculating commodity assistance. The effect of this

change is that for the CACFP, the value of commodity assistance for

institutions participating in the CACFP will now be calculated by

multiplying the number of lunches and suppers served in participating

institutions during the preceding school year by the current-year rate

for commodities. At the end of each school year, the Department must

determine the actual number of lunches and suppers served during that

year, compare the actual number served in that year with the number

served during the preceding year, and adjust commodity entitlements

upwards or downwards, as necessary. The Department will make such

adjustments in the next school year.

This provision does not affect the payment of cash-in-lieu of

commodities. State agencies electing to receive cash-in-lieu of

commodities for the CACFP will continue to receive payments based upon

the number of meals actually served during the current school year.

Section 17(h) of the NSLA establishes entitlement for cash-in-lieu of

commodities, and payment is made on an ongoing basis as part of the

reimbursement claiming process.

The preamble to the FCS Final Rule ``Cash in Lieu of Donated Foods

and Donation of Foods for Use in the United States, Its Territories and

Possessions and Areas Under Its Jurisdiction'' (published at 58 FR

39113 (July 22, 1993) includes an in-depth discussion of the amendment

made to Section 6(e)(1) of the NSLA by Section 131(a)(1) of Pub. L.

101-147, which changed the base for calculating commodity assistance.

Pub. L. 101-147 has an identical effect on the calculation of commodity

assistance for both the NSLP and the CACFP. As noted in this preamble,

at the Department's discretion, it may make current year adjustments

for significant variations in the number of reimbursable meals served.

Generally, the Department will exercise this discretion only in

exceptional circumstances.

Accordingly, this interim rulemaking amends Section 226.5(b) by

changing the basis for entitlement commodity determinations from

``current year'' to

[[Page 23616]]

``preceding year'' data and by establishing a process under which the

Department will, at the end of each school year, compare the number of

lunches and suppers actually served in the State during that school

year to the number served in the preceding year and adjust the State's

commodity entitlement accordingly for the subsequent school year.

3. Title XX Reimbursement Claims

Section 17(a) of the NSLA (42 U.S.C. 1766(a)) previously allowed

the participation of a proprietary title XX child care center ``if such

organization receive[d] compensation under such title for at least 25

percent of the children for which the organization provides such

nonresidential day care services.'' Section 202 of Pub. L. 102-342

amended this provision to permit a private for-profit center to

participate in CACFP if it receives title XX compensation for at least

25 percent of its enrolled children, or 25 percent of its licensed

capacity, whichever is less.

This provision assists proprietary centers in situations where 25

percent or more of their licensed capacity is used by title XX

recipients, but the actual number of title XX recipients is less than

25 percent of the total number of children enrolled. For example, a

private for-profit day care center has a licensed capacity of 100 and

an enrollment of 125, of which 25 are title XX children. Enrollment

exceeds licensed capacity because a number of children are in part-time

care, and the actual number of children in attendance at any one time

never exceeds licensed capacity. The center is eligible to participate

in the CACFP because 25 percent of the center's licensed capacity (25/

100) consists of title XX children. Similarly, a private for-profit

center has a licensed capacity of 100 and an enrollment of 75, of which

20 are title XX children. The center is eligible to participate in the

CACFP because 27 percent of the center's enrollment (20/75) consists of

title XX children. In both examples, the lesser of the two numbers--

enrollment or licensed capacity--was chosen as a basis for determining

CACFP eligibility.

Pub. L. 102-342 did not amend Section 17(o) of the NSLA, which

permits a private for-profit adult day care center to participate in

the CACFP only if at least 25 percent of its enrolled eligible

participants are title XIX or XX beneficiaries.

Accordingly, this rulemaking amends Sections 226.2, 226.6, 226.10,

226.11, 226.15, 226.17, and 226.19 by changing the CACFP eligibility

criteria for private for-profit child care centers to permit such

centers to participate if at least 25 percent of their enrolled

children, or 25 percent of their licensed capacity, whichever is less,

are title XX recipients.

4. Adult Day Care

Section 811(a) of Pub. L. 102-375 amended Section 17(o)(2)(A)(i) of

the NSLA (42 U.S.C. 1766(o)(2)(A)(i)) to affirm that approved centers

may claim reimbursement for meals served to individuals where the

centers provide day care services to functionally impaired adults or

individuals 60 years of age or older in a group, either outside their

home or outside their group living arrangement. This includes meals

served in a group living arrangement.

The purpose of adult day care, as stated by Congress in the

Conference Report (H. Rept. 100-427) on the Older American Act

Amendments of 1987, is to ``. . . assist its participants to remain in

the community, enabling families and other care givers to continue

caring for an impaired individual at home.'' This report evinces

Congress's intent that CACFP benefits be available to individuals who

attend adult day care while remaining in the community. Accordingly, we

believe it is consistent with Congressional intent to define

individuals remaining in the community as those residing in their own

homes (whether alone or with spouses, children or guardians) or in

group living arrangements. Group living arrangements include

residential communities, which may or may not be subsidized by federal,

State or local funds, but which are private residences housing an

individual or a group of individuals who are primarily responsible for

their own care and who maintain a presence in the community, but who

may receive on-site monitoring. The law's addition of group living

arrangements to this section of the NSLA does not require a change in

previous FCS policy; rather, it confirms that policy.

Under this policy, the Department has interpreted the term ``group

living arrangement'' to exclude residential institutions because the

residents of such institutions no longer remain in the community or

reside with family members or other caregivers who would benefit from

the respite that adult day care services provide. Examples of such

excluded residential institutions would be hospitals, nursing homes,

asylums for the mentally ill or for persons with mental or physical

disabilities, convalescent homes, apartment complexes designed only for

the functionally impaired that provide meals and full-time care,

hospices, and assisted living retirement facilities.

The Department also believes it necessary to emphasize that each

adult day care center must maintain records that document that

qualified adult day care participants reside in their own homes

(whether alone or with spouses, children or guardians) or in group

living arrangements as newly defined in Section 226.2.

Accordingly, this rulemaking amends Sections 226.2 and 226.19a to

make clear that adult day care centers may receive meal reimbursement

under the CACFP if they provide day care services to qualified persons

in a group setting, either outside their homes or their group living

arrangement and must document each participant's living arrangement.

5. Technical Clarification Provision

This provision clarifies that households participating in the FDPIR

are ``categorically eligible'' to receive free meals in the CACFP. In

accordance with Section 9(b)(6) of the NSLA (42 U.S.C. 1758(b)(6)),

households receiving food stamps under the Food Stamp Act of 1977, as

amended (7 U.S.C. 2011, et seq.) (FSA) are ``categorically eligible''

to receive free meals under the Child Nutrition Programs. The FDPIR is

authorized by Section 4(b) of the FSA. Under that section, eligible

households may alternatively elect to participate in the FDPIR. Because

eligible households must meet similar criteria to those required for

food stamp eligibility, and since the FDPIR is authorized under the

FSA, households electing to participate in the FDPIR fall within the

NSLA's classification of people ``categorically eligible'' for free

meals in the CACFP.

Accordingly, this rulemaking amends Sections 226.2 and 226.23 to

make clear FDPIR participants are ``categorically eligible'' to receive

free meals in the CACFP.

6. Miscellaneous Technical Amendments

For purposes of Section 17 of the NSLA, Section 310 of Pub. L. 101-

147 redefined the existing term ``handicapped children'' to now be

defined as ``children with handicaps'' (42 U.S.C. 1766(a)). In

addition, the term ``Internal Revenue Code of 1954'' was redefined to

reflect the latest version of the Code, which was published in 1986.

Accordingly, this rule removes the reference to ``handicapped

children'' in the definition of a ``child care center'' at Section

226.2 and replaces it with ``children with handicaps.'' In addition, it

removes the reference to ``mentally or physically handicapped persons''

in the definition of ``children'' at Section 226.2

[[Page 23617]]

and replaces it with ``persons with mental or physical handicaps.''

Finally, references to the Internal Revenue Code at Sections 226.15(a),

226.17(b)(2), 226.19(b)(2), and 226.19a(b)(4) are updated.

List of Subjects in 7 CFR Part 226

Day care, Food assistance programs, Grant programs--health, infants

and children, Surplus agricultural commodities.

Accordingly, the Department is amending 7 CFR Part 226 as follows:

PART 226--CHILD AND ADULT CARE FOOD PROGRAM

1. The authority citation for Part 226 continues to read as

follows:

Authority: Secs. 9, 11, 14, 16, and 17, National School Lunch

Act, as amended (42 U.S.C. 1758, 1759a, 1762a, 1765 and 1766).

2. In Sec. 226.2:

a. Paragraph (a) of the definition of Adult day care center is

amended by adding the words ``or a group living arrangement'' after

``homes''.

b. The definition of Child care center is amended by removing the

words ``handicapped children'' and adding in their place the words

``children with handicaps''.

c. Paragraph (c) of the definition of Children is amended by

removing the words ``mentally or physically handicapped persons'' and

adding in their place the words ``persons with mental or physical

handicaps''.

d. The definition of Documentation is revised.

e. A new definition of FDPIR household is added in alphabetical

order.

f. The definition of Free meal is revised.

g. A new definition of Group living arrangement is added in

alphabetical order.

h. The definition of Proprietary Title XX center is revised.

i. The definition of State agency is amended by adding a new

sentence to the end of the paragraph.

j. The definition of Verification is amended by revising the fourth

sentence.

The additions and revisions specified above read as follows:

Sec. 226.2 Definitions.

* * * * *

Documentation means:

(a) The completion of the following information on a free and

reduced-price application:

(1) Names of all household members;

(2) Income received by each household member, identified by source

of income (such as earnings, wages, welfare, pensions, support

payments, unemployment compensation, social security and other cash

income);

(3) The signature of an adult household member; and

(4) The social security number of the adult household member who

signs the application, or an indication that he/she does not possess a

social security number; or

(b) For a child who is a member of a food stamp or FDPIR household

or an AFDC assistance unit, ``documentation'' means the completion of

only the following information on a free and reduced-price application:

(1) The name(s) and appropriate food stamp, FDPIR or AFDC case

number(s) for the child(ren); and

(2) The signature of an adult member of the household; or

(c) For a child in a tier II day care home who is a member of a

household participating in a Federally or State supported child care or

other benefit program with an income eligibility limit that does not

exceed the eligibility standard for free and reduced-price meals:

(1) The name(s), appropriate case number(s) and name of qualifying

program(s) for the child(ren); and

(2) The signature of an adult member of the household; or

(d) For an adult participant who is a member of a food stamp or

FDPIR household or is an SSI or Medicaid participant, as defined in

this section, ``documentation'' means the completion of only the

following information on a free and reduced-price application:

(1) The name(s) and appropriate food stamp or FDPIR case number(s)

for the participant(s) or the adult participant's SSI or Medicaid

identification number, as defined in this section; and

(2) The signature of an adult member of the household.

* * * * *

FDPIR household means any individual or group of individuals which

is currently certified to receive assistance as a household under the

Food Distribution Program on Indian Reservations.

* * * * *

Free meal means a meal served under the Program to a participant

from a family that meets the income standards for free school meals; or

to a child who is automatically eligible for free meals by virtue of

food stamp, FDPIR or AFDC recipiency; or to an adult participant who is

automatically eligible for free meals by virtue of food stamp or FDPIR

recipiency or is a SSI or Medicaid participant. Regardless of whether

the participant qualified for free meals by virtue of meeting one of

the criteria of this definition, neither the participant nor any member

of their family shall be required to pay or to work in the food service

program in order to receive a free meal.

* * * * *

Group living arrangement means residential communities which may or

may not be subsidized by federal, State or local funds but which are

private residences housing an individual or a group of individuals who

are primarily responsible for their own care and who maintain a

presence in the community but who may receive on-site monitoring.

* * * * *

Proprietary Title XX center means any private, for profit center:

(a) Providing nonresidential child care services for which it

receives compensation from amounts granted to the States under title XX

of the Social Security Act, and in which title XX child care

beneficiaries constitute no less than 25 percent of enrolled eligible

participants or licensed capacity, whichever is less, during the

calendar month preceding initial application or annual reapplication

for Program participation; or,

(b) Providing nonresidential adult day care services for which it

receives compensation from amounts granted to the States under title XX

of the Social Security Act and in which adult beneficiaries were not

less than 25 percent of enrolled eligible participants during the

calendar month preceding initial application or annual reapplication

for Program participation.

* * * * *

State agency * * * This also may include a State agency other than

the existing CACFP State Agency, when such agency is designated by the

Governor of the State to administer only the adult day care component

of the CACFP.

* * * * *

Verification * * * However, if a food stamp, FDPIR or AFDC case

number is provided for a child, verification for such child shall

include only confirmation that the child is included in a currently

certified food stamp or FDPIR household or AFDC assistance unit; or,

for an adult participant, if a food stamp or FDPIR case number or SSI

or Medicaid assistance identification number is provided, verification

for such participant shall include only confirmation that the

participant is included in a currently certified food stamp or FDPIR

household or is a current SSI or Medicaid participant.

* * * * *

[[Page 23618]]

3. In Sec. 226.5, paragraph (b) is revised to read as follows:

Sec. 226.5 Donation of commodities.

* * * * *

(b) The value of such commodities donated to each State for each

school year shall be, at a minimum, the amount obtained by multiplying

the number of reimbursable lunches and suppers served in participating

institutions in that State during the preceding school year by the rate

for commodities established under section 6(e) of the Act for the

current school year. Adjustments shall be made at the end of each

school year to reflect the difference between the number of

reimbursable lunches and suppers served during the preceding year and

the number served during the current year, and subsequent commodity

entitlement shall be based on the adjusted meal counts. At the

discretion of FCS, current-year adjustments may be made for significant

variations in the number of reimbursable meals served. Such current-

year adjustments will not be routine and will only be made for unusual

problems encountered in a State, such as a disaster that necessitates

institutional closures for a prolonged period of time. CACFP State

agencies electing to receive cash-in-lieu of commodities will receive

payments based on the number of reimbursable meals actually served

during the current school year.

4. In Sec. 226.6:

a. Paragraph (b)(8) is revised.

b. Paragraph (c)(11) is revised.

The revisions specified above read as follows:

Sec. 226.6 State agency administrative responsibilities.

* * * * *

(b) * * *

(8) For proprietary title XX child care centers, submission of

documentation that they are currently providing nonresidential day care

services for which they receive compensation under title XX of the

Social Security Act, and certification that not less than 25 percent of

enrolled children or 25 percent of licensed capacity, whichever number

is less, in each such center during the most recent calendar month were

title XX beneficiaries. In the case of title XIX or title XX adult day

care centers, submission of documentation that they are currently

providing nonresidential day care services for which they receive

compensation under title XIX or title XX of the Social Security Act,

and certification that not less than 25 percent of enrolled adult

participants in each such center during the most recent calendar month

were title XIX or title XX beneficiaries;

* * * * *

(c) * * *

(11) The claiming of Program payment for meals served by a

proprietary title XX child care center during a calendar month in which

less than 25 percent of enrolled children or 25 percent of licensed

capacity, whichever number is less, were title XX beneficiaries. In the

case of an adult day care center, the claiming of Program payment for

meals served by a proprietary title XIX or title XX center during a

calendar month in which less than 25 percent of enrolled adult

participants were title XIX or title XX beneficiaries.

* * * * *

5. In Sec. 226.10, paragraph (c) is revised to read as follows:

Sec. 226.10 Program payment procedures.

* * * * *

(c) Claims for Reimbursement shall report information in accordance

with the financial management system established by the State agency,

and in sufficient detail to justify the reimbursement claimed and to

enable the State agency to provide the final Report of the Child and

Adult Care Food Program (FCS 44) required under Sec. 226.7(d). In

submitting a Claim for Reimbursement, each institution shall certify

that the claim is correct and that records are available to support

that claim. Independent proprietary title XX child care centers shall

submit the number and percentage of the enrolled participants, or the

licensed capacity receiving title XX benefits for the month claimed for

months in which not less than 25 percent of the enrolled children or 25

percent of licensed capacity, whichever is less, were title XX

beneficiaries. Sponsoring organizations of such child care centers

shall submit the number and percentage of the enrolled children or

licensed capacity, whichever is less, receiving title XX benefits for

each center for the claim. Sponsoring organizations of such centers

shall not submit claims for child care centers in which less than 25

percent of the enrolled children and licensed capacity were title XX

beneficiaries for the month claimed. Independent proprietary title XIX

or title XX adult day care centers shall submit the percentages of

enrolled adult participants receiving title XIX or title XX benefits

for the month claimed for months in which not less than 25 percent of

enrolled adult participants were title XIX or title XX beneficiaries.

Sponsoring organizations of such adult day care centers shall submit

the percentage of enrolled adult participants receiving title XIX or

title XX benefits for each center for the claim. Sponsoring

organizations of such centers shall not submit claims for adult day

care centers in which less than 25 percent of enrolled adult

participants were title XIX or title XX beneficiaries for the month

claimed.

* * * * *

6. In Sec. 226.11, paragraph (b) and the introductory text of

paragraph (c) are revised to read as follows:

Sec. 226.11 Program payments for child care centers, adult day care

centers and outside-school-hours care centers.

* * * * *

(b) Each child care institution shall report each month to the

State agency the total number of meals, by type (breakfasts, lunches,

suppers, and supplements), served to children, except that such reports

shall be made for a proprietary title XX center only for calendar

months during which not less than 25 percent of enrolled children, or

25 percent of licensed capacity, whichever is less, were title XX

beneficiaries. Each adult day care institution shall report each month

to the State agency the total number of meals, by type (breakfasts,

lunches, suppers, and supplements), served to adult participants,

except that such reports shall be made for a proprietary title XIX or

title XX center only for calendar months during which no less than 25

percent of enrolled adult participants were title XIX or title XX

beneficiaries.

(c) Each State agency shall base reimbursement to each child care

institution on the number of meals, by type, served to children

multiplied by the assigned rates of reimbursement, except that

reimbursement shall be payable to proprietary title XX child care

centers only for calendar months during which not less than 25 percent

of enrolled children, or 25 percent of licensed capacity, whichever is

less, were title XX beneficiaries. Each State agency shall base

reimbursement to each adult day care institution on the number of

meals, by type, served to adult participants multiplied by the assigned

rates of reimbursement, except that reimbursement shall be payable to

proprietary title XIX and title XX adult day care centers only for

calendar months during which not less than 25 percent of enrolled adult

participants were title XIX or Title XX beneficiaries. In computing

reimbursement, the State agency shall either:

* * * * *

7. In Sec. 226.15:

[[Page 23619]]

a. Paragraph (a) is amended by removing ``1954'' and adding

``1986'' in its place.

b. Paragraph (b)(6) is revised.

The revision specified above reads as follows:

Sec. 226.15 Institution provisions.

* * * * *

(b) * * *

(6) For each proprietary title XX child care center, documentation

that it provides nonresidential day care services for which it receives

compensation under title XX of the Social Security Act, and

certification that not less than 25 percent of the enrolled children,

or 25 percent of the licensed capacity, whichever is less, during the

most recent calendar month were title XX beneficiaries. For each

proprietary title XIX or title XX adult day care center, documentation

that it provides nonresidential day care services for which it receives

compensation under title XIX or title XX of the Social Security Act,

and certification that not less than 25 percent of the adult

participants enrolled during the most recent calendar month were title

XIX or title XX beneficiaries. Sponsoring organizations shall provide

documentation and certification for each proprietary title XIX or title

XX center under its jurisdiction.

* * * * *

Sec. 226.17 Amended

8. In Sec. 226.17:

a. Paragraph (b)(2) is amended by removing ``1954'' and adding

``1986'' in its place.

b. The second sentence of paragraph (b)(4) is amended by adding the

words ``, or 25 percent of licensed capacity, whichever is less,''

after the word ``children'' the third time it appears.

Sec. 226.19 Amended

9. In Sec. 226.19:

a. Paragraph (b)(2) is amended by removing ``1954'' and adding

``1986'' in its place.

b. The third sentence of paragraph (b)(5) is amended by adding the

words ``or 25 percent of licensed capacity, whichever is less,'' after

``children'' the third time it appears.

10. In Sec. 226.19a:

a. The first sentence of paragraph (b)(3) is amended by adding the

words ``or a group living arrangement'' after ``home''.

b. The first sentence of paragraph (b)(4) is amended by removing

``1954'' and adding ``1986'' in its place.

c. Paragraph (b)(10) is amended by adding a new sentence to the end

of the paragraph.

The addition specified above reads as follows:

Sec. 226.19a Adult day care center provisions.

* * * * *

(b) * * *

(10) * * * Finally, each adult day care center shall maintain

records which document that qualified adult day care participants

reside in their own homes (whether alone or with spouses, children or

guardians) or in group living arrangements as defined in Sec. 226.2.

11. In Sec. 226.23:

a. The second sentence of paragraph (c)(2) is amended by adding the

words ``or FDPIR'' after the words ``food stamp'' each time they

appear.

b. The fifth and seventh sentences of paragraph (d) are amended by

adding the words ``or FDPIR'' after the words ``food stamp'' each time

they appear.

c. The sixth sentence of paragraph (e)(1)(i) is amended by adding

the words ``or FDPIR'' after the words ``food stamp'' each time they

appear.

d. Paragraph (e)(1)(ii)(F) is amended by adding to the first

sentence ``, FDPIR'' after the words ``food stamp'' and by revising the

seventh sentence.

e. Paragraph (e)(1)(iii)(E) is amended by adding to the first

sentence the words ``or FDPIR'' after the words ``food stamp'' and by

revising the seventh sentence.

f. Paragraph (e)(1)(iv) is revised.

g. The introductory text of paragraph (e)(1)(v) and paragraph

(e)(1)(v)(A) are amended by adding the words ``or FDPIR'' after the

words ``food stamp'' each time they appear.

h. Paragraph (e)(1)(v)(B) is revised and the undesignated text

following the paragraph is removed.

i. Paragraphs (e)(2)(vii)(A) and (e)(2)(vii)(B) are revised.

j. Paragraph (h)(2)(i) is amended by revising the second sentence.

k. Paragraph (h)(2)(iii)(A) is revised.

l. Paragraph (h)(2)(iii)(D) is amended by adding the words

``FDPIR,'' between the words ``or'' and ``AFDC''.

m. Paragraph (h)(2)(iv) is revised.

n. Paragraph (h)(2)(v)(A) is revised.

o. Paragraph (h)(2)(v)(C) is amended by revising the second

sentence.

p. Paragraph (h)(2)(vi) is amended by adding the word ``FDPIR,''

between the words ``stamps,'' and ``AFDC''.

The revisions specified above read as follows:

Sec. 226.23 Free and reduced-price meals.

* * * * *

(e)(1) * * *

(ii) * * *

(F) * * * These verification efforts may be carried out through

program reviews, audits, and investigations and may include contacting

employers to determine income, contacting a food stamp, Indian tribal

organization or welfare office to determine current certification for

receipt of food stamps, FDPIR or AFDC benefits, contacting the State

employment security office to determine the amount of benefits

received, and checking the documentation produced by household members

to prove the amount of income received. * * *

* * * * *

(iii) * * *

(E) * * * These verification efforts may be carried out through

program reviews, audits and investigations and may include contacting

employers to determine income, contacting a food stamp, Indian tribal

organization or welfare office to determine current certification for

receipt of food stamps or FDPIR benefits, contacting the issuing office

of SSI or Medicaid benefits to determine current certification for

receipt of these benefits, contacting the State employment security

office to determine the amount of benefits received, and checking the

documentation produced by household members to provide the amount of

income received. * * *

* * * * *

(iv) If they so desire, households applying on behalf of children

who are members of food stamp or FDPIR households or AFDC assistance

units may apply for free meal benefits under this paragraph rather than

under the procedures described in paragraph (e)(1)(ii) of this section.

In addition, households of children enrolled in tier II day care homes

who are participating in a Federally or State supported child care or

other benefit program with an income eligibility limit that does not

exceed the eligibility standard for free and reduced price meals may

apply under this paragraph rather than under the procedures described

in paragraph (e)(1)(ii) of this section. Households applying on behalf

of children who are members of food stamp or FDPIR households, AFDC

assistance units, or, for children enrolled in tier II day care homes,

other qualifying Federal or State program, shall be required to

provide:

(A) The names and food stamp, FDPIR, AFDC, or for tier II homes,

other case numbers of the child(ren) for whom automatic free meal

eligibility is claimed; and

(B) The signature of an adult member of the household as provided

for in paragraph (e)(1)(ii)(G) of this section. In accordance with

paragraph (e)(1)(ii)(F) of this section, if a case number is

[[Page 23620]]

provided, it may be used to verify the current certification for the

child(ren) for whom free meal benefits are claimed. Whenever households

apply for benefits for children not receiving food stamp, FDPIR, AFDC,

or for tier II homes, other qualifying Federal or State program

benefits, they must apply in accordance with the requirements set forth

in paragraph (e)(1)(ii) of this section.

(v) * * *

(B) The signature of an adult member of the household as provided

in paragraph (e)(1)(iii)(F) of this section. In accordance with

paragraph (e)(1)(iii)(G) of this section, if a food stamp or FDPIR case

number or SSI or Medicaid assistance identification number is provided,

it may be used to verify the current food stamp, FDPIR, SSI, or

Medicaid certification for the adult(s) for whom free meal benefits are

being claimed. Whenever households apply for benefits for adults not

receiving food stamp, FDPIR, SSI, or Medicaid benefits, they must apply

in accordance with the requirements set forth in paragraph (e)(1)(iii)

of this section.

(2) * * *

(vii) * * *

(A) In the case of households of enrolled children that provide a

food stamp, FDPIR or AFDC case number to establish a child's

eligibility for free meals, any termination in the child's

certification to participate in the Food Stamp, FDPIR or AFDC Programs,

or

(B) In the case of households of adult participants that provide a

food stamp or FDPIR case number or an SSI or Medicaid assistance

identification number to establish an adult's eligibility for free

meals, any termination in the adult's certification to participate in

the Food Stamp, FDPIR, SSI or Medicaid Programs.

* * * * *

(h) * * *

(2) * * *

(i) * * * However,

(A) If a food stamp, FDPIR or AFDC case number is provided for a

child, verification for such child shall include only confirmation that

the child is included in a currently certified food stamp or FDPIR

household or AFDC assistance unit; or

(B) If a food stamp or FDPIR case number or SSI or Medicaid

assistance identification number is provided for an adult, verification

for such adult shall include only confirmation that the adult is

included in a currently certified food stamp or FDPIR household or is

currently certified to receive SSI or Medicaid benefits.

* * * * *

(iii) * * *

(A) Section 9 of the National School Lunch Act requires that,

unless households provide the child's food stamp, FDPIR or AFDC case

number, or the adult participant's food stamp or FDPIR case number or

SSI or Medicaid assistance identification number, those selected for

verification must provide the social security number of each adult

household member;

* * * * *

(iv) Households of enrolled children selected for verification

shall also be informed that if they are currently certified to

participate in the Food Stamp, FDPIR, or AFDC Program they may submit

proof of that certification in lieu of income information. In those

cases, such proof shall consist of a current ``Notice of Eligibility''

for Food Stamp, FDPIR, or AFDC Program benefits or equivalent official

documentation issued by a food stamp, Indian Tribal Organization, or

welfare office which shows that the children are members of households

or assistance units currently certified to participate in the Food

Stamp, FDPIR, or AFDC Programs. An identification card for any of these

programs is not acceptable as verification unless it contains an

expiration date. Households of enrolled adults selected for

verification shall also be informed that if they are currently

certified to participate in the Food Stamp Program or FDPIR or SSI or

Medicaid Programs, they may submit proof of that certification in lieu

of income information. In those cases, such proof shall consist of:

(A) A current ``Notice of Eligibility'' for Food Stamp or FDPIR

benefits or equivalent official documentation issued by a food stamp,

Indian Tribal Organization, or welfare office which shows that the

adult participant is a member of a household currently certified to

participate in the Food Stamp Program or FDPIR. An identification card

is not acceptable as verification unless it contains an expiration

date; or

(B) Official documentation issued by an appropriate SSI or Medicaid

office which shows that the adult participant currently receives SSI or

Medicaid assistance. An identification card is not acceptable as

verification unless it contains an expiration date. All households

selected for verification shall be advised that failure to cooperate

with verification efforts will result in a termination of benefits.

(v) * * *

(A) Written evidence shall be used as the primary source of

information for verification. Written evidence includes written

confirmation of a household's circumstances, such as wage stubs, award

letters, letters from employers, and, for enrolled children, current

certification to participate in the Food Stamp, FDPIR or AFDC Programs,

or, for adult participants, current certification to participate in the

Food Stamp, FDPIR, SSI or Medicaid Programs. Whenever written evidence

is insufficient to confirm eligibility, the State agency may use

collateral contacts.

* * * * *

(C) * * * Information concerning income, family size, or food

stamp/FDPIR/AFDC certification for enrolled children, or food stamp/

FDPIR/SSI/Medicaid certification for enrolled adults, which is

maintained by other government agencies and to which a State agency can

legally gain access may be used to confirm a household's eligibility

for Program meal bene-

fits. * * *

* * * * *

Dated; April 10, 1997.

Mary Ann Keeffe,

Acting Under Secretary for Food, Nutrition, and Consumer Services.

[FR Doc. 97-11350 Filed 4-30-97; 8:45 am]

BILLING CODE 3410-30-U