Food and Nutrition Programs

Charging the Nonprofit School Food Service Account for Maintenance, Repair and Renovation Costs

Introduction

The purpose of this memorandum is to clarify when funds from the nonprofit school food service account can be used to support maintenance, repair or renovation costs that are necessary for the operation or improvement of school food service. For more information on investing in your school nutrition program please refer to the Office for Food and Nutrition Programs (FNP) memorandum titled "Revised: Investing in School Nutrition Programs". For a list of other allowable costs please refer to the memorandum titled "Nonprofit School Food Service Account Allowable and Unallowable Costs".

Maintenance and Repair Costs

Part 2 Code of Federal Regulations CFR 200.452 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards identifies costs of normal repairs and alterations as allowable when they:

• Keep property in an efficient operating condition;
• Do not add to the permanent value of the property or appreciably prolong its intended life;
• Are not included in the rental costs or other charges for the space.

For example, Heating, Ventilation, and Air Conditioning HVAC or plumbing maintenance or repair costs necessary for the operation of kitchen equipment is allowable. However, central Heating, Ventilation, and Air Conditioning HVAC or plumbing repairs serving the whole school is not allowable.

Regular maintenance costs cannot be charged directly to the nonprofit school food service account if such costs are included in the school district's indirect cost pool.

Larger renovation projects within the inside perimeter of the kitchen/cafeteria space and necessary for the operation or improvement of the program is allowed with Food and Nutrition Programs FNP approval.

For example, renovating a kitchen by cutting a portion of the wall to allow room for a walk-in refrigerator and related electrical wiring would be an allowable expense. This renovation would be necessary to accommodate the needs of an increase in participation in the school meals programs. However, it would be unallowable expense if the renovation of the kitchen was purely an aesthetic matter.

Building Construction Costs

Per 7 Code of Federal Regulations CFR 210.14(a) and 220.7(e), revenue from the nonprofit school food service is to be used for the operation or improvement of school food service. Specifically:

• Revenue shall Not be used to purchase land, buildings, or to construct buildings unless otherwise approved by Food and Nutrition Programs FNP or United States Department of Agriculture USDA.
• School kitchen capital infrastructure costs, such as roof replacement or overall building Heating, Ventilation, and Air Conditioning HVAC upgrades should be paid by general or capital school district funds consistent with how projects are paid for outside of the kitchen and cafeteria.

For example, flooring and ceiling tile replacement strictly inside the kitchen or serving area is allowable. However, structural repairs or remediation to the school buildling envelope (roofs, load-bearing walls) is not an allowable cost to the nonprofit school food service account.

Project Considerations

Before considering a project, determine the applicable procurement requirements.

If needed, consult with Food and Nutrition Programs FNP to assist in determining allowability, need for pre-approval and required cost allocation. Before consulting Food and Nutrition Programs FNP for technical assistance, consider the following:

• Is this project necessary for the operation or improvement of school food service?
• Is this project located in the interior perimeter of the school cafeteria/kitchen or the exterior envelope of the school building?
• Do I have documentation to share with Food and Nutrition Programs FNP that will be helpful to determine allowability?
• Were these renovation costs previously paid for by general funds?

Common Equipment, Construction or Renovation Requests

The following list includes examples of allowable and unallowable costs. Note: any shared equipment or space must be cost allocated.

Allowable Cost Examples:

• Internal food service doors
• Elevator specific to food service area
• Painting in kitchen or food service areas, including murals
• Food service delivery truck
• Venting, plumbing, and electrical for food service equipment

  • *Only connection costs to ensure function of food service equipment. Heating, Ventilation, and Air Conditioning HVAC, plumbing, and electrical are general funds costs.

• Food service grease trap
• Food service dock lift gate
• Food service dock forklift or hand truck
• Alternate food service location (e.g., food truck, cafe, etc.)
• Outside freezers and coolers *consult with the Food and Nutrition Programs FNP Financial Management team to discuss allowability of structural additions, like a roof.
• Washing machine and dryer
• Flooring
• Ceiling Tiles
• Portable Air Conditioning AC units (only for food service area)
• Rental of offsite kitchens during a remodel

Unallowable Cost Examples:

• Security Cameras
• Outdoor building for dry storage space
• Outdoor dock space (pavement, resurfacing, dock door)
• Exterior doors.

Equipment Costs

Equipment, as determined by 2 Code of Federal Regulations CFR 200.1, 200.313 and 200.439, includes tangible personal property (including informational technology systems) having a useful life of one year or longer and a per-unit acquisition cost that equals or exceeds the lesser capitalization threshold established for financial statement purposes, $10,000, or a lower threshold set by state or local level regulations.

Purchasing school food equipment with nonprofit school food service account funds is allowable if the item is listed on the Capital Expenditure Approved List or the School Food Authority SFA receives prior approval from the State agency.

Food and Nutrition Programs FNP's Financial Management Team is available to answer your questions and provide technical assistance.

This document was adapted from guidance created by the Wisconsin Department of Public Instruction Bureau of School Nutrition.

This institution is an equal opportunity provider.