to initiate, maintain, or expand nonprofit breakfast programs in schools, and (b) to supply schools drawing attendance from areas in which poor economic conditions exist with equipment for the storage, preparation, transportation, and serving of food. Section 7 of the Child Nutrition Act of 1966, as amended by Public Law 90-302, authorizes the appropriation of funds for making advances to State educational agencies for use for administrative expense in supervising and giving technical assistance in connection with additional activities undertaken by them under sections 4 and 5 of the Child Nutrition Act of 1966, and section 11 (Special Assistance) and section 13 (Special Food Service Program for Children) of the National School Lunch Act, as amended. This part announces the policies and prescribes the regulations necessary to carry out the provisions of sections 4, 5, and 7 of the Child Nutrition Act of 1966, as amended. [Amdt. 2, 33 F.R. 14513, Sept. 27, 1968]

For the purpose of this part the term: (a) "Act" means the Child Nutrition Act of 1966, as amended.

(b) "Attendance unit" means a building or a complex of buildings and supporting facilities in which instruction is provided for classes of high school grade or under.

(c) "Breakfast" means a meal served to school children at the beginning of a school day which meets the nutritional requirements set out in this part.

(d) "C&MS" means the Consumer and Marketing Service of the U.S. Department of Agriculture.

(e) "CFPDO" means Consumer Food Programs District Office(s), of the Consumer and Marketing Service of the U.S. Department of Agriculture.

(f) "Cost of food used" means the purchase price of agricultural commodities and other foods purchased for and used in the School Breakfast Program, and the cost of processing, distributing, transporting, storing, or handling of food purchased for, and of food donated to, the Program.

(g) "Department" means the U.S. Department of Agriculture.

(g-1) "Distributing agency" means a State, Federal, or private agency which enters into an agreement with the Department for the distribution of commodities pursuant to Part 250 of this chapter.

(h) "Equipment" means articles and facilities, other than land and buildings, for the storage, preparation, transportation, and serving of food.

(i) "Fiscal year" means a period of 12 calendar months beginning with July 1 of any calendar year and ending with June 30 of the following calendar year.

(j) "Milk" means unflavored milk which meets State and local standards for fluid whole milk and flavored milk made from fluid whole milk which meets such standards, and in those areas of Alaska, Guam, and Hawaii where a sufficient supply of fresh fluid whole milk cannot be obtained shall also include recombined or reconstituted fluid whole milk, and in American Samoa, Puerto Rico, and the Virgin Islands shall also include reconstituted nonfat dry milk.

(k) "National School Lunch Program" means the program authorized by the National School Lunch Act.

(1) "Nonfood Assistance Program" means the program authorized by section 5 of the Child Nutrition Act of 1966. (m) "Nonprofit private school" means a nonpublic school that is exempt from income tax under the Internal Revenue Code, as amended.

(n) "OIG" means the Office of the Inspector General of the U.S. Department of Agriculture.

(o) "Participation rate" means a number equal to the number of lunches meeting the minimum requirements prescribed for a Type A lunch in Part 210 of this chapter served in the fiscal year beginning 2 years immediately prior to the fiscal year for which the funds are appropriated, by schools participating in the National School Lunch Program under Part 210 of this chapter as determined by the Secretary.

(p) "School Breakfast Program" means the program authorized by section 4 of the Child Nutrition Act of 1966.

(q) "School" means the governing body responsible for the administration of a public or nonprofit private "school" of high school grade or under, as recognized by the laws of the State, and, in the case of Puerto Rico, also includes nonprofit child-care centers certified as such by the Governor of Puerto Rico. "School of high school grade or under" shall include preschool programs operated as part of the school system. The term "school" also includes a nonprofit agency to which the school has delegated authority for the operation of its nonprofit feeding program.

(r) "Secretary" means the Secretary of Agriculture.

(s) "SLD" means the School Lunch Division, Consumer Food Programs of the Consumer and Marketing Service of the U.S. Department of Agriculture.

(t) "State" means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, or American Samoa. (u) "State Agency" means the State educational agency.

(v) "State educational agency" means, as the State legislature may determine, (1) the chief State school officer (such as the State Superintendent of Public Instruction, Commissioner of Education, or similar officer), or (2) a board of education controlling the State department of education.

[32 F.R. 33, Jan. 5, 1967, as amended by Amdt. 1, 32 F.R. 13215, Sept. 19, 1967; Amdt. 6, 36 F.R. 3043, Feb. 17, 1971]

§ 220.3 Administration of school breakfast and nonfood assistance programs and state administrative expenses. (a) Within the Department, C&MS shall act on behalf of the Department in the administration of the programs covered by this part. Within C&MS, SLD shall be responsible for administration of the programs.

(b) Within the States, responsibility for the administration of the School Breakfast and Nonfood Assistance Programs in schools shall be in the State Agency, except that CFPDO shall administer the programs in nonprofit private schools of any State where the State Agency is not permitted by law to disburse Federal funds paid to it under the Act to nonprofit private schools. References in this part to "CFPDO where applicable" are to CFPDO as the agency administering the programs in nonprofit private schools.

(c) Each State Agency desiring to take part in any of the programs shall enter into a written agreement with the Department for the administration of the program in the State in accordance with the provisions of this part. Any such agreement shall cover the operation of the program during a period which shall not extend beyond the end of the fiscal year in which the agreement became effective unless the agreement is extended for succeeding fiscal years at the option of the Department.

[Amdt. 2, 33 F.R. 14513, Sept. 27, 1968]

(a) Any Federal funds made available for the School Breakfast Program shall be apportioned among the States in accordance with the provisions of section 4 of the Act.

(b) If any State cannot utilize all the funds apportioned to it under section 4 of the Act, or if additional funds are made available for apportionment among the States, further apportionment shall be made among the remaining States in the same manner as the initial apportionment: Provided, however, That the Department may determine the minimum amount of such funds it is practicable to so apportion.

(c) A share of School Breakfast Program funds apportioned to any State shall be withheld by FNS for the nonprofit private schools of that State, if the State Agency does not administer the Program with respect to such schools. The funds so withheld by FNS shall be an amount which bears the same ratio to the School Breakfast Program funds apportioned to that State as the participation rate of all nonprofit private schools of the State bears to the participation rate of all schools in the State. [Amdt. 6, 36 F.R. 3043, Feb. 17, 1971] § 220.5 Payments to States.

Funds apportioned to any State for the School Breakfast Program, except any funds withheld for nonprofit private schools, shall be made available by means of Letters of Credit issued by C&MS to appropriate Federal Reserve Banks in favor of the State Agency. Such Letters of Credit shall be designed to provide funds for the State Agency for the operation of the School Breakfast Program in such amounts and at such times as the funds are needed to reimburse schools. As soon as practicable after funds are made available to C&MS, C&MS shall prepare a Letter of Credit for each State with which it has an agreement. Notwithstanding the foregoing provisions, if funds are made available by Congress for the operation of the program under a continuing resolution, pending an appropriation of funds for a fiscal year, Letters of Credit shall reflect only the amounts available for the effective period of the resolution. The State Agency shall obtain funds needed to reimburse schools through

presentation by designated State officials of a Payment Voucher on Letter of Credit (Treasury Department Form SF-218) to a local commercial bank for transmission to the appropriate Federal Reserve Bank, in accordance with procedures prescribed by C&MS and approved by the U.S. Treasury Department. The State Agency shall draw only such funds as are needed to pay claims certified for payment and shall use such funds without delay to pay the claims. The State Agency shall report information on the use of program funds on a monthly basis to C&MS on a form provided for it. Notwithstanding the foregoing provision for the use of Letters of Credit, program funds shall be made available to the State Agency in the District of Columbia by means of Treasury Department checks.

[32 F.R. 34, Jan. 5, 1967]

§ 220.6 Use of funds.

Federal funds made available under the School Breakfast Program shall be used to reimburse schools in connection with breakfasts served to needy children of high school grade or under in accordance with the provisions of this part: Provided, however, That, with the approval of FNS, any State Agency, or FNSRO where applicable, may reserve for use in carrying out special developmental projects an amount equal to not more than 1 per centum of the sum of the Federal funds initially apportioned to it for any fiscal year, beginning with the fiscal year 1971, for the School Breakfast Program.

[Amdt. 6, 36 F.R. 7593, Apr. 22, 1971]

(a) Any school desiring to participate in the School Breakfast Program shall make written application for participation to the State Agency, or CFPDO where applicable. The school's need to participate in the program shall be reviewed annually by the State Agency or CFPDO, where applicable.

(a-1) Each school participating in the School Breakfast Program shall develop a policy statement covering the criteria used in the attendance units under its jurisdiction in determining the eligibility of children for a free or reduced price breakfast. Such statement shall include a plan for collecting payments from paying children and accounting for free or reduced price breakfasts which will pro

tect the anonymity of the children receiving free or reduced price breakfasts in order that such children shall not be identified as such to their peers. As a minimum, such criteria shall include the level of family income (including welfare grants), the number in the family unit, and the number of children in the family in attendance. Such policy statement shall be written, publicly announced and applied equitably to the children in all such attendance units.

(b) Applications shall include the name and address of the school and the following information: (1) The beginning date of breakfast service under the program; (2) the estimated average daily attendance or membership; (3) the proportion of children enrolled travelling various distance mileages to reach school each day; (4) the price to be charged children for breakfasts; (5) the economic condition of the area from which the school draws attendance; (6) the needs of pupils in the school for free or reduced price breakfasts; and (7) the need of the school for additional assistance as reflected by the financial position of any food service program in the school.

(c) In selecting schools, the State educational agency or CFPDO where applicable, shall, to the extent practicable, give first consideration to those schools drawing attendance from areas in which poor economic conditions exist and to those schools to which substantial proportions of the children enrolled must travel long distances daily. If sufficient funds are available consideration shall be given to other schools.

(d) Any school may employ a food service management company in the conduct of its feeding operations, in one or more attendance units. A school that employs a food service management company shall remain responsible for seeing that the feeding operation is in conformance with its agreement with the State Agency or the FNS Regional Office. The contract between the school and the food service management company shall expressly provide that:

(1) The food service management company shall maintain such records (supported by invoices, receipts, or other evidence) as the school will need to meet its responsibilities under this part, and shall report thereon to the school promptly at the end of each month;

(2) Any federally donated commodities received by the school and made

available to the food service management company shall enure only to the benefit to the school's feeding operation and be utilized therein; and

(3) The books and records of the food service management company pertaining to the school feeding operation shall be available, for a period of 3 years from the close of the Federal fiscal year to which they pertain, for inspection and audit by representatives of the State Agency, of the Department, and of the General Accounting Office at any reasonable time and place.

(e) Schools selected for participation shall enter into a written agreement with the State Agency or, in those States in which CFPDO administers the program in private schools, the private schools selected for participation shall enter into an agreement with the Department. Such agreements shall be on a form approved by SLD and shall provide that the school shall: (1) Operate nonprofit food service programs, using all of the income accruing to the programs solely for the operation or improvement of such service: Provided, however, That such income shall not be used to purchase land, to acquire or construct buildings, or to make alterations of existing buildings; (2) serve breakfasts which meet the minimum requirements prescribed in § 220.8 during a period designated as the breakfast period by the school; (3) price the breakfast as a unit; (4) supply free or reduced price breakfasts only to children who are determined by local school authorities to be unable to pay the full price thereof; and require that those who are able to pay the full price do so; (5) make no discrimination against any child because of his inability to pay the full price of the breakfasts; (6) claim reimbursement for breakfasts served at the assigned rate; (7) submit claims for reimbursement in accordance with procedures established by the State Agency, or CFPDO where applicable; (8) maintain, in the storage, preparation and service of food, proper sanitation and health standards in conformance with all applicable State and local laws and regulations; (9) purchase, in as large quantities as may be efficiently utilized in its breakfast program, foods designated as plentiful by the State Agency, or CFPDO, where applicable; (10) accept and use, in as large quantities as may be efficiently utilized in its breakfast program, such foods as may be offered as a donation by the Department; (11) maintain neces

sary facilities for storing, preparing, and serving food; (12) maintain full and accurate records of its breakfast program, including records with respect to the following:

(i) Breakfast service. (a) Daily number of breakfasts served to children. (b) Daily number of breakfasts served free or at reduced price to children. (ii) Program income (receipts). (a) From children's payments.

(b) From Federal reimbursement.
(c) From all other sources.

(iii) Breakfast Program Cost. The cost of food used during each month (supported by invoices, receipts, or other evidence of expenditure).

Such records shall be retained for a period of 3 years after the end of the fiscal year to which they pertain; (13) upon request, make all accounts and records pertaining to its breakfast program available to the State Agency, to C&MS and to OIG for audit or administrative review at a reasonable time and place.

(f) Any school in which a breakfast program is operated under an agreement as provided in paragraph (e) of this section may serve children from any other school, whether or not a breakfast program is operated in such school. The school in which the breakfast program is operated may request reimbursement in connection with all the breakfasts served, except that, where such school serves children from both public and nonprofit private schools in a State where FNSRO administers the School Breakfast Progam with respect to nonprofit private schools, the public school shall file a separate claim with the State Agency and the private school shall file a separate claim with FNSRO for breakfasts served to their respective participating children.

[32 F.R. 34, Jan. 5, 1967, as amended by Amdt. 1, 32 F.R. 13215, Sept. 19, 1967; Amdt. 3, 33 F.R. 15631, Oct. 23, 1968; Amdt. 5, 35 F.R. 3901, Feb. 28, 1970; Amdt. 6, 36 F.R. 3043, Feb. 17, 1971]

(2) A one-half cup serving of fruit or full-strength fruit or vegetable juice.

(3) One slice of whole-grain or enriched bread; or an equivalent serving of cornbread, biscuits, rolls, muffins, etc., made of whole-grain or enriched meal or flour; or three-fourths cup serving of whole-grain cereal or enriched or fortified cereal; or an equivalent quantity of any combination of any of these foods.

(b) (1) To improve the nutrition of the participating children breakfasts shall also include as often as practicable protein-rich foods such as one egg; a one ounce serving (edible portion as served) of meat, poultry, or fish; or one ounce of cheese; or two tablespoons of peanut butter; or an equivalent quantity of any combination of any of these foods.

(2) Additional foods may be served with breakfasts as desired.

(c) If emergency conditions prevent a school normally having a supply of milk from temporarily obtaining delivery thereof, the State Agency, or CFPDO where applicable, may approve reimbursement for breakfasts served without milk during the emergency period.

(d) The inability of a school to obtain a supply of milk on a continuing basis shall not bar it from participation in the program. In such cases the State Agency, or FNSRO where applicable, may approve the service of breakfasts without milk: Provided, however, That an equivalent amount of canned, whole dry, or nonfat dry milk is used in the preparation of the components of the breakfast.

(e) Substitutions may be made in food listed in paragraph (a) (1) of this section if individual participating children are unable, because of medical or other special dietary needs, to consume such foods. Such substitutions shall be made only when supported by a statement from a recognized medical authority which includes recommended alternate foods.

(f) CND may approve variations in the food components of the breakfast on an experimental or on a continuing basis in any school where there is evidence that such variations are nutritionally sound and are necessary to meet ethnic, religious, economic or physical needs. [32 F.R. 35, Jan. 5, 1967, as amended by Amdt. 6, 36 F.R. 3043, Feb. 17, 1971] § 220.9

Reimbursement payments.

(a) Reimbursement shall be paid only in connection with breakfasts meeting the requirements of § 220.8.

(b) The maximum rate of reimbursement shall be 15 cents per breakfast served: Provided, however, That, where all or nearly all the attending children are in need of free breakfasts and the school is financially unable to meet this need, the State Agency, or CFPDO where applicable, may authorize a higher rate of reimbursement in an amount not to exceed 80 per centum of the operating costs of the breakfast program. Such costs may include, in addition to the cost of food used, the cost of preparing and serving breakfasts. Schools shall justify the need for such higher rate of reimbursement in their applications to the State Agency, or CFPDO where applicable. Initial approval for Federal assistance in an amount not to exceed 80 per centum of operating costs may be given by the State Agency, or CFPDO where applicable, for a period not to exceed 3 full calendar months and only with the concurrence of CFPDO with respect to State Agency administered schools and SLD with respect to CFPDO administered schools. Before the period of initial approval has expired, the State Agency, or CFPDO where applicable, shall visit approved schools to determine whether the need for free and reduced price breakfasts is such as to warrant continued Federal assistance of up to 80 per centum of operating costs.

(c) Schools shall be reimbursed on the basis of the number of breakfasts served to children times the assigned rate, except that schools not approved for a rate higher than 15 cents per breakfast under the proviso in paragraph (b) of this section may not be reimbursed in an amount exceeding the cost of food used during the month.

[32 F.R. 35, Jan. 5, 1967, as amended by Amdt. 1, 32 F.R. 13215, Sept. 19, 1967]

§ 220.10 Effective date for reimburse

ment.

Reimbursement payments under the School Breakfast Program may be made only to schools operating under an agreement with the State Agency or the Department, and may be made only after execution of the agreement. Such payments may include reimbursement in connection with breakfasts served in accordance with provisions of the program in the calendar month preceding the