Policy Memo 150

DOH-CACFP: Number 150 (01/11), Supersedes Number 147 (09/10)

TO: All CACFP Sponsoring Organizations of Day Care Homes

FROM: Lynne Oudekerk, State Director, Child and Adult Care Food Program

SUBJECT: Updated Procedures for the Participation of the Owner/Operator of Multiple Day Care Homes in CACFP

I. Purpose and Scope

The previously issued Policy Memo DOH-CACFP Number 147 (09/10), New Procedures for the Participation of Owners of Multiple Day Care Homes in CACFP, is immediately rescinded and superseded by this correspondence. This new policy is consistent with the directive from USDA to allow participation of day care homes operated by a business entity, commonly referred to as the Owner/Operator of multiple day care homes. This policy allows homes under a multiple owner to participate only when the agreement is between the Sponsoring Organization and the On-Site Provider and the reimbursement check is issued to the On-Site Provider. The effective date for implementation of this policy is January 31, 2011.

II. Background Information

1. Federal Regulation 7 CFR 226 defines a day care home as "an organized nonresidential child care program for children enrolled in a private home, licensed or approved as a family or group day care home and under the auspices of a Sponsoring Organization." USDA interprets this to mean the following:
   1. Sponsors may enter into an agreement with a Provider as an individual only, not as a corporation or business entity. The intent of the National School Lunch Act (NSLA), which authorizes CACFP, is to provide nutrition support to small groups of children in a residential setting. Although the structure of a day care home is not defined in the NSLA, USDA presumes the operation of a day care home is by an individual, not a corporation or business.
   2. To participate in CACFP as a day care home, the day care must be conducted in the Provider's own private residence, the private residence of another, or a rented or unoccupied private residence. Day care homes in commercial properties (e.g., store fronts), churches and schools are not private residences and therefore, are not eligible to participate in CACFP as a day care home.
   3. Each participating day care home can be licensed by an individual or a business entity, but each home must be run by a different provider. This means an individual or business entity who owns more than one day care home can only participate in CACFP through the On-Site Provider for each of their additional homes.
   4. All of the On-Site Providers of an Owner/Operator must participate in CACFP under a single Sponsoring Organization.
2. CACFP procedures for the Owner/Operator have changed with the rescinding of Policy Memo DOH-CACFP Number 147 (09/10). Please read the following carefully:
   1. New Applicants: Effective immediately, all new applications for CACFP participation must be from the On-Site Provider, when the home is owned and operated by a different individual or business entity.
      • The Continuous Application and Agreement for Day Care Home Participation (DOH-3705), will continue to be signed by the individual who possesses the license or registration, which should be the Owner/Operator.
      • On-Site Providers will sign the DOH-3705 when they are also the Owner/Operator of the site.
      • When the On-Site Provider is not the Owner/Operator, both the Owner/Operator and On-Site Provider must complete and sign the On-Site Provider Addendum (CACFP-160).
      • Sponsors must submit the DOH-3705, CACFP-160 and a valid license or registration to CACFP before approval can be given for the On-Site Provider to participate.
      • CACFP will reject and return any Provider application if either the On-Site Provider or the Owner/Operator has a participating day care home under a different Sponsoring Organization. All On-Site Providers of a single Owner/Operator must participate in CACFP under a single Sponsoring Organization.
      • Sponsors must not sign up any day care home that is not located in a private residential space.
   2. Existing Owner/Operators: Effective January 31, 2011, existing Owner/Operators of multiple day care homes must have their current On-Site Provider designated as the CACFP participant.
      • The existing Owner/Operator of multiple day care homes under a single individual or business entity must notify their Sponsor immediately whenever the On-Site Provider changes by completing an updated CACFP-160 form.
      • Sponsors must submit an updated CACFP-160 form whenever the On-Site Provider changes.
      • The Owner/Operator who refuses to allow their On-Site Providers to sign as the participating Provider will be limited to one home for claiming purposes.
   3. Reimbursement Checks: Monthly reimbursement checks must be issued in the individual On-Site Provider's name only. The business entity name may only be listed on the check in the address block of the check.
      • Monthly reimbursement checks must be issued in the name of the On-Site Provider listed on the most current CACFP-160 form submitted to the Sponsor. If there is a new On-Site Provider and the Owner/Operator fails to submit a new CACFP-160 form, the reimbursement check must be issued in the name of the On-Site Provider on the current form only for the days that they actually cared for a child(ren). Reimbursement will not be paid to an On-Site Provider who does not have a CACFP-160 form on file.
      • For users of the NYS Local Homes System, enter the On-Site Provider's name in the Provider first and last name fields. The Owner/Operator's name and/or business entity should be entered in the "Physical Address" field.
      • If using direct deposit, the monthly reimbursement must be deposited in the On-Site Provider's account and cannot be deposited in the Owner/Operator's account.
   4. Tier Determinations: Tier determinations must be conducted using area eligibility for the location of the day care home (e.g., school or Census data).
      • Verification of the Owner/Operator's household income can also be used when the Owner/Operator is also the On-Site Provider in their own home.
        • The Owner/Operator must report income from the corporation/business and all losses reported on IRS Form 1065 or Schedule C must be added back into the gross income calculation.
        • Sponsors can contact CACFP for further guidance.
      • Tier determinations may not be based on the On-Site Provider's income if the On-Site Provider is not the Owner/Operator.
   5. Resident/Provider's Own Children: Resident child(ren) of the Owner/Operator can be claimed as Provider's own only when the children are cared for in the Provider's own residence. The Owner/Operator's household must be income eligible as determined by the completion of the Letter to Households Family Day Care Home Provider (DOH-4161), and non-resident children must be present for the Owner/Operator to claim them.

III. Summary of Changes

Policy Memo DOH-CACFP Number 147 (09/10), New Procedures for the Participation of Owners of Multiple Day Care Homes in CACFP, is rescinded effective immediately. This memorandum sets out the updated guidance from USDA that allows participation of any day care home as long as the On-Site Provider is designated as the CACFP participant. The Owner/Operator of multiple homes can no longer receive CACFP reimbursement checks in their name or the business name for more than one home. By January 31, 2011, the Owner/Operator will be limited to one home for participation in CACFP unless they allow the On-Site Provider to receive the monthly reimbursement check.

Enclosure:

On-Site Provider Addendum (CACFP-160)