[Federal Register Volume 62, Number 84 (Thursday, May 1, 1997)]
[Rules and Regulations]
[Pages 23613-23620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11350]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 62, No. 84 / Thursday, May 1, 1997 / Rules 
and Regulations  

[[Page 23613]]


=======================================================================
-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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