Appendix A-3 7 CFR Part 235.4

APPENDIX A-3. 7 CFR PART 235.4

§235.4 Allocation of funds to States.
(a) Nondiscretionary SAE Funds. For each fiscal year, FNS shall allocate the following:
(1) To each State which administers the National School Lunch, School Breakfast or Special Milk
Programs an amount equal to one (1) percent of the funds expended by such State during the second
preceding fiscal year under sections 4 and 11 of the National School Lunch Act, as amended, and
sections 3, 4 and 17A of the Child Nutrition Act of 1966, as amended. However, the total amount
allocated to any State under this paragraph shall not be less than $200,000 or the amount allocated to the
State in the fiscal year ending September 30, 1981, whichever is greater. On October 1, 2008 and each
October 1 thereafter, the minimum dollar amount for a fiscal year for administrative costs shall be
adjusted to reflect the percentage change between the value of the index for State and local government
purchases, as published by the Bureau of Economic Analysis of the Department of Commerce, for the 12month period ending June 30 of the second preceding fiscal year, and the value of that index for the 12month period ending June 30 of the preceding fiscal year.
(2) To each State which administers the Child and Adult Care Food Program an amount equal to the
sum of: Twenty percent of the first $50,000; ten percent of the next $100,000; five percent of the next
$250,000; and two and one-half percent of any remaining funds expended within the State under section
17 of the National School Lunch Act, as amended, during the second preceding fiscal year. FNS may
adjust the amount of any such allocation in accordance with changes in the size of the Child and Adult
Care Food Program in a State.
(3) For each of fiscal years 2005 through 2007 no State shall receive less than its fiscal year 2004
allocation for administrative costs for all child nutrition programs.
(b) Discretionary SAE Funds. For each fiscal year, FNS shall provide the following additional
allocations:
(1) Allocate $30,000 to each State which administers the Child and Adult Care Food Program (7
CFR part 226).
(2) $30,000 to each State which administers the Food Distribution Program (part 250 of this chapter)
in schools and/or institutions which participate in programs under parts 210, 220, and 226 of this chapter;
provided that the State meets the training requirements set forth in §235.11(g).
(3) Amounts derived by application of the following four-part formula to each State agency which is
allocated funds under paragraph (a) of this section:
(i) One equal share of forty (40) percent of the funds designated by FNS for the reviews conducted
under §210.18 of this title.
(ii) The ratio of the number of School Food Authorities participating in the National School Lunch or
Commodity School Programs under the jurisdiction of the State agency to such School Food Authorities
in all States times twenty (20) percent of the funds designated by FNS for reviews conducted under
§210.18 or of this title.
(iii) The ratio of the number of free and reduced price meals served in School Food Authorities
under the jurisdiction of the State agency during the second preceding fiscal year to the number of free
and reduced price meals served in all States in the second preceding fiscal year times twenty (20)
percent of the funds designated by FNS for reviews conducted under §210.18 of this title.

(iv) Equal shares of twenty (20) percent of the funds designated by FNS for reviews conducted
under §210.18 of this title for each School Food Authority under the jurisdiction of the State agency
participating in the National School Lunch or Commodity School Programs which has an enrollment of
40,000 or more; Provided, however, That for State agencies with fewer than two School Food Authorities
with enrollments of 40,000 or more, an equal share shall be provided to the State agency, for either, or
both, of the two largest School Food Authorities which have enrollments of more than 2,000; and
Provided, further, That State agencies with only one School Food Authority, regardless of size, shall be
provided with one equal share. For each fiscal year, the amount of State Administrative Expense Funds
designated by FNS for reviews conducted under §210.18 of this title and subject to allocation under this
paragraph shall be equal to or greater than the amount designated by FNS for program management
improvements for the fiscal year ending September 30, 1980.
(4) Funds which remain after the allocations required in paragraphs (a)(1), (a)(2), (b)(1), (b)(2) and
(b)(3) of this section, and after any payments provided for under paragraph (c) of this section, as
determined by the Secretary, to those States which administer the Food Distribution Program (part 250 of
this chapter) in schools and/or institutions which participate in programs under parts 210, 220, or 226 of
this chapter and to those States which administer part 226 of this chapter. The amount of funds to be
allocated to each State for the Food Distribution Program for any fiscal year shall bear the same ratio to
the total amount of funds made available for allocation to the State for the Food Distribution Program
under this paragraph as the value of USDA donated foods delivered to the State for schools and
institutions participating in programs under parts 210, 220 and 226 of this chapter during the second
preceding fiscal year bears to the value of USDA donated foods delivered to all the States for such
schools and institutions during the second preceding fiscal year. The amount of funds to be allocated to
each State which administers the Child and Adult Care Food Program for any fiscal year shall bear the
same ratio to the total amount of funds made available for allocation to all such States under this
paragraph as the amount of funds allocated to each State under paragraph (a)(2) of this section bears to
the amount allocated to all States under that paragraph.
(c) SAE Funds for the Child and Adult Care Food Program. If a State elects to have a separate
State agency administer the adult care component of the Child and Adult Care Food Program, such
separate State agency shall receive a pro rata share of the SAE funds allocated to the State under
paragraphs (a)(2), (b)(1), and (b)(4) of this section which is equal to the ratio of funds expended by the
State for the adult care component of the Child and Adult Care Food Program during the second
preceding fiscal year to the funds expended by the State for the entire Child and Adult Care Food
Program during the second preceding fiscal year. The remaining funds shall be allocated to the State
agency administering the child care component of the Child and Adult Care Food Program.
(d) SAE Start-up Cost Assistance for State Administration of Former ROAPs. For any State agency
which agrees to assume responsibility for the administration of food service programs in nonprofit private
schools or child and adult care institutions that were previously administered by FNS, an appropriate
adjustment in the administrative funds paid under this part to the State shall be made by FNS not later
than the succeeding fiscal year. Such an adjustment shall consist of an amount of start-up cost
assistance, negotiated with the State agency, of no less than $10,000 and not exceeding $100,000, per
State.
(e) SAE Funding Reduction Upon State Agency Termination of a Food Service Program. For any
State agency which terminates its administration of any food service program for which State
administrative expense funds are provided under this part, a reduction in the amount of such funds,
negotiated with the State agency, shall be made by FNS.
(f) SAE Funds for ROAPs. FNS shall have available to it the applicable amounts provided for in
paragraphs (a)(1), (a)(2), and (b)(1) of this section, and part 225 of this title, when it is responsible for the
administration of a program or programs within a State.

(g) Reallocation. Funds allotted to State agencies under this section shall be subject to the
reallocation provisions of §235.5(d).
(h) Withholding SAE funds. The Secretary may withhold some or all of the funds allocated to the
State agency under this section if the Secretary determines that the State agency is seriously deficient in
the administration of any program for which State administrative expense funds are provided under this
part or in the compliance of any regulation issued pursuant to those programs. On a subsequent
determination by the Secretary that State agency administration of the programs or compliance with
regulations is no longer seriously deficient and is operated in an acceptable manner, the Secretary may
allocate some or all of the funds withheld.
(Sec. 14, Pub. L. 95-166, 91 Stat. 1338 (42 U.S.C. 1776); sec. 7, Pub. L. 95-627, 92 Stat. 3621 (42 U.S.C. 1776);
sec. 7(a), Pub. L. 95-627, 92 Stat. 3622 (42 U.S.C. 1751); Pub. L. 96-499, secs. 201 and 204, 94 Stat. 2599; secs.
805, 812, 814 and 819, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1754, 1759a, 1774 and 1776); E.O. 12372 (July
14, 1982, 47 FR 30959); sec. 401(b) Intergovernmental Cooperation Act of 1968 (31 U.S.C. 6506(c))

[44 FR 48957, Aug. 21, 1979]
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