[Federal Register Volume 71, Number 155 (Friday, August 11, 2006)]
[Rules and Regulations]
[Pages 46074-46076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-13154]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 235

RIN 0584-AD53


State Administrative Expense Funds

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule makes changes to the regulations governing State 
Administrative Expense funds for the Child Nutrition Programs to 
reflect amendments made by the Child Nutrition and WIC Reauthorization 
Act of 2004 to the Child Nutrition Act of 1966. This rule implements a 
provision of the Act that increases the minimum State Administrative 
Expense grant for each State administering the National School Lunch 
Program (NSLP), the School Breakfast Program (SBP) and/or the Special 
Milk Program (SMP) from $100,000 to $200,000 a year, adjusted by an 
index beginning in fiscal year 2009.
    The rule also implements a requirement that for fiscal years 2005 
through 2007 no State shall receive less than its fiscal year 2004 
allocation for administrative costs. This final rule will increase the 
available funds to certain States to expand supervision and technical 
assistance of Child Nutrition Programs.

DATES: This rule is effective September 11, 2006.

FOR FURTHER INFORMATION CONTACT: Melissa Rothstein, Chief, Program 
Analysis and Monitoring Branch, Child Nutrition Division, Food and 
Nutrition Service (FNS) at 703-305-2595.

SUPPLEMENTARY INFORMATION:

Background

    Section 202 of the Child Nutrition and WIC Reauthorization Act of 
2004 (Pub. L. 108-265; June 30, 2004) amended section 7 of the Child 
Nutrition Act of 1966 (42 U.S.C. 1776) regarding State Administrative 
Expense (SAE) funds for administration of the Child Nutrition Programs 
which include the National School Lunch Program (NSLP), the School 
Breakfast Program (SBP) and/or the Special Milk Program (SMP). Section 
202 increased the minimum SAE grant amount to States, from $100,000 to 
$200,000 per year and added an annual adjustment to the minimum grant 
beginning in fiscal year 2009. It also contained a provision that for 
fiscal years 2005 through 2007, no State shall receive less than its 
fiscal year 2004 SAE allocation. Regulations for SAE funds are codified 
at 7 CFR part 235.

Non-Discretionary SAE Funds

    This final rule amends Sec.  235.4 to include the requirement that 
for each of fiscal years 2005 through 2007 no State shall receive less 
than its fiscal year 2004 allocation for administrative expenses.

Minimum State Grant for Administrative Expenses

    This final rule amends Sec.  235.4(a)(1) by increasing the minimum 
SAE grant for each State administering the NSLP, the SBP and/or the SMP 
from $100,000 to $200,000 a year. The minimum SAE grant will be 
adjusted beginning fiscal year 2009 using the Department of Commerce, 
Bureau of Economic Analysis index for State and local government 
purchases. The percentage change between the value of the index for the 
12-month period ending June 30 of the second preceding fiscal year and 
the value of the index for the 12-month period ending June 30 of the 
preceding fiscal year will be the basis for the annual adjustment.
    It should be noted that the annual adjustment prescribed in the law 
is not a cumulative adjustment. Rather, the adjustment will be made 
each year, beginning in fiscal year 2009, to the minimum grant amount 
of $200,000. Depending on the performance of the Department of Commerce 
index, the grant amount levels could increase or decrease from one year 
to the next.
    Pursuant to section 502(b)(2) of Public Law 108-265, these 
requirements were effective October 1, 2004. FNS issued an 
implementation memorandum informing State agencies of these changes on 
July 12, 2004.
    Use of funds--Technology infrastructure improvement requirement 
section 202(b) of Public Law 108-265 also amended section 7 of the 
Child Nutrition Act of 1966 by adding a new subsection (i) which 
included a requirement that each State agency submit an amendment to 
the State agency's plan detailing how SAE funds would be used for 
technology infrastructure improvement. The amendment to the plan was 
required to describe how SAE funds would be used by the State agency in 
part to implement information systems that address potential cost 
savings and improve program integrity by:
     Monitoring the nutrient content of meals served;
     Providing training to local educational agencies, school 
food authorities, and schools on how to use technology and information 
management systems for activities including menu planning, collecting 
point-of-sale data, and the processing of applications for free and 
reduced-price meals; and
     Using electronic data to establish benchmarks to compare 
and monitor program integrity, participation and financial data across 
schools and school food authorities.
    Pursuant to section 502(a) of Public Law 108-265, this requirement 
was effective on June 30, 2004. FNS issued an implementation memorandum 
informing State agencies of this requirement on August 30, 2004. All 
required amendments to SAE plans have been submitted to FNS. No change 
to the existing regulations at 7 CFR part 235 is needed in order to 
implement this statutory requirement.

Executive Order 12866

    This final rule has been determined to be not significant and was 
not reviewed by the Office of Management and Budget under Executive 
Order 12866.

[[Page 46075]]

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act (5 U.S.C. 601-612). Roberto Salazar, 
Administrator, Food and Nutrition Service, has certified that this rule 
will not have a significant economic impact on a substantial number of 
small entities. This rule provides for an increase in the minimum SAE 
grant to States.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, FNS 
must generally prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local or tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. When such a statement is needed for a rule, section 205 of 
the UMRA generally requires FNS to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, more 
cost-effective or least burdensome alternative that achieves the 
objectives of the rule. This rule contains no Federal mandates (under 
the regulatory provisions of Title II of the UMRA) that impose costs on 
State, local, or tribal governments or to the private sector of $100 
million or more in any one year. This final rule is, therefore, not 
subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

    SAE for Child Nutrition is listed in the Catalog of Federal 
Domestic Assistance under No. 10.560. For the reasons set forth in the 
final rule in 7 CFR part 3015, subpart V and related Notice (48 FR 
29115, June 24, 1983), this program is included in the scope of 
Executive Order 12372, which requires intergovernmental consultation 
with State and local officials. FNS provided information to State 
agencies on these non-discretionary requirements by conducting 
informational meetings and training sessions with State officials which 
allowed for clarification and discussion. Additionally, FNS issued 
explanatory memoranda to State agencies on July 12 and August 30, 2004.

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications, agencies are directed 
to provide a statement for inclusion in the preamble to the regulations 
describing the agency's considerations in terms of the three categories 
called for under section (6)(b)(2)(B) of Executive Order 13132. FNS has 
considered the impact of this rule on State and local governments and 
has determined that this rule does not have federalism implications. 
This rule does not impose substantial or direct compliance costs on 
State and local governments. Therefore, under section 6(b) of the 
Executive Order, a federalism summary impact statement is not required.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule has a preemptive effect with respect to any 
State or local laws, regulations or policies which 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 Dates paragraph. Prior to any judicial challenge to 
the provisions of this rule or the application of its provisions, all 
applicable administrative procedures must be exhausted. The 
administrative process can be found in Sec.  235.11 (f).

Civil Rights Impact Analysis

    FNS has reviewed this final rule in accordance with the Department 
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify any 
major civil rights impacts the rule might have on children on the basis 
of race, color, national origin, sex, religion, or disability. After a 
careful review of the rule's intent and provisions, FNS has determined 
that it does not affect the participation of protected individuals in 
the Child Nutrition Programs.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR 
part 1320) requires that the Office of Management and Budget (OMB) 
approve all collections of information by a Federal agency before they 
can be implemented. Respondents are not required to respond to any 
collection of information unless it displays a current valid OMB 
control number. This information contained in 7 CFR 235 is cleared 
under OMB No. 0584-0067. This final rule contains no new paperwork 
burden or information collection requirements that are subject to 
review by the Office of Management and Budget under the Paperwork 
Reduction Act of 1995.

E-Government Act Compliance

    The FNS is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Public Participation

    This action is being finalized without prior notice or public 
comment under authority of 5 U.S.C. 553(b)(3)(A) and (B). This rule 
codifies through amendment to current program regulations the non-
discretionary amendments made by section 202 of the Child Nutrition and 
WIC Reauthorization Act of 2004 (Pub. L. 108-265) to the Child 
Nutrition Act of 1966. Thus, the Department has determined in 
accordance with 5 U.S.C. 553(b) that Notice of Proposed Rulemaking and 
Opportunity for Public Comments is unnecessary and contrary to the 
public interest.

List of Subjects in 7 CFR Part 235

    Administrative practice and procedure, Child and Adult Care Food 
Program, Food assistance programs, Grant administration, 
Intergovernmental relations, National School Lunch Program, Reporting 
and recordkeeping requirements, School Breakfast Program, Special Milk 
Program.


0
Accordingly, 7 CFR part 235 is amended as follows:

PART 235--STATE ADMINISTRATIVE EXPENSE FUNDS

0
1. The authority citation for Part 235 continues to read as follows:

    Authority: Secs. 7 and 10 of the Child Nutrition Act of 1966, 80 
Stat. 888, 889, as amended (42 U.S.C. 1776, 1779).


0
2. In Sec.  235.4:
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a. Amend paragraph (a)(1) by removing ``$100,000'' and adding in its 
place ``$200,000'';
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b. Further amend paragraph (a)(1) by adding a new sentence at the end; 
and
0
c. Add a new paragraph (a)(3).
    The additions read as follows:


Sec.  235.4  Allocation of funds to States.

    (a) * * *
    (1) * * * On October 1, 2008 and each October 1 thereafter, the 
minimum dollar amount for a fiscal year for administrative costs shall 
be adjusted to reflect the percentage change between

[[Page 46076]]

the value of the index for State and local government purchases, as 
published by the Bureau of Economic Analysis of the Department of 
Commerce, for the 12-month period ending June 30 of the second 
preceding fiscal year, and the value of that index for the 12-month 
period ending June 30 of the preceding fiscal year.
    (3) For each of fiscal years 2005 through 2007 no State shall 
receive less than its fiscal year 2004 allocation for administrative 
costs for all child nutrition programs.

    Dated: August 3, 2006.
Roberto Salazar,
Administrator, Food and Nutrition Service.
 [FR Doc. E6-13154 Filed 8-10-06; 8:45 am]
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