[Federal Register Volume 78, Number 36 (Friday, February 22, 2013)]
[Rules and Regulations]
[Pages 12221-12231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04118]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 245 and 272

RIN 0584-AE10


National School Lunch Program: Direct Certification Continuous 
Improvement Plans Required by the Healthy, Hunger-Free Kids Act of 2010

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule amends the National School Lunch Program (NSLP) 
regulations to incorporate provisions of the Healthy, Hunger-Free Kids 
Act of 2010 designed to encourage States to improve direct 
certification efforts with the Supplemental Nutrition Assistance 
Program (SNAP). The provisions require State agencies to meet certain 
direct certification performance benchmarks and to develop and 
implement continuous improvement plans if they fail to do so. This rule 
also amends NSLP and SNAP regulations to provide for the collection of 
data elements needed to compute each State's direct certification 
performance rate to compare with the new benchmarks. Improved direct 
certification efforts would help increase program accuracy, reduce 
paperwork for States and households, and increase eligible children's 
access to school meals.

DATES: This rule is effective March 25, 2013.

FOR FURTHER INFORMATION CONTACT: Vivian Lees or Patricia B. von Reyn, 
State Systems Support Branch, at (703) 305-2590.

SUPPLEMENTARY INFORMATION:

I. Background

A. Legislative History Leading up to This Rulemaking

    Section 104 of the Child Nutrition and WIC Reauthorization Act of 
2004 (Pub. L. 108-265) amended section 9(b) of the Richard B. Russell 
National School Lunch Act (NSLA) (42 U.S.C. 1758(b)) to require all 
local educational agencies (LEAs) that participate in the NSLP and/or 
School Breakfast Program to establish, by school year (SY) 2008-2009, a 
system to directly certify as eligible for free school meals children 
who are members of households receiving benefits under SNAP.
    Section 4301 of the Food, Conservation, and Energy Act of 2008 
(Pub. L. 110-246) (42 U.S.C. 1758a) requires the Secretary of 
Agriculture, beginning in 2008, to assess the effectiveness of State 
and local efforts to directly certify such school-age children for free 
school meals and to provide annual reports to Congress. (See the Direct 
Certification in the National School Lunch Program: State 
Implementation Progress (Report to Congress) for 2008, 2009, 2010, and 
2011 at http://www.fns.usda.gov/ora/menu/Published/CNP/cnp.htm.)
    Section 101(b) of Public Law 111-296, the Healthy, Hunger-Free Kids 
Act of 2010 (HHFKA), amended section 9(b)(4) of the NSLA (42 U.S.C. 
1758(b)(4)) to establish and define required percentage benchmarks for 
directly certifying children who are members of households receiving 
benefits under SNAP. Section 101(b) further amended the NSLA to require 
that, beginning with SY 2011-2012, each State that does not meet the 
benchmark for a particular school year must develop, submit, and 
implement a continuous improvement plan (CIP) aimed at fully meeting 
the benchmarks and improving direct certification for the following 
school year. It also requires that the Secretary provide technical 
assistance to State agencies in developing and implementing CIPs.
    These provisions of section 101(b) of the HHFKA, which were 
effective October 1, 2010, were implemented through USDA Food and 
Nutrition Service (FNS) Memorandum SP 32-2011, Child Nutrition 
Reauthorization 2010: Direct Certification Benchmarks and Continuous 
Improvement Plans, dated April 28, 2011, available at http://www.fns.usda.gov/cnd/governance/Policy-Memos/2011/SP32-2011.pdf.
    On January 31, 2012, FNS published a proposed rule, National School 
Lunch Program: Direct Certification Continuous Improvement Plans 
Required by the Healthy, Hunger-Free Kids Act of 2010, in the Federal 
Register (77 FR 4688) to solicit comments on the incorporation of these 
and other direct certification improvement provisions into regulations 
governing the determination for eligibility for free and reduced price 
meals at 7 CFR part 245. The proposed rule also solicited comments on 
the paperwork burden for the new form FNS-834, State Agency (NSLP/SNAP) 
Direct Certification Rate Data Element Report, which will collect two 
of the data elements for the formula to compute direct certification 
performance rates.

B. Summary of Mandated Provisions in the Proposed Rule

    In summary, the January 2012 proposed rule sought to incorporate 
the

[[Page 12222]]

following mandated provisions from the HHFKA into NSLP regulations:
     Benchmarks. The State performance benchmarks for directly 
certifying for free school meals those children who are members of 
households receiving benefits under SNAP are 80% for SY 2011-2012, 90% 
for SY 2012-2013, and 95% for SY 2013-2014 and for each school year 
thereafter.
     Identify and notify. Each school year, FNS will identify 
and notify State agencies that fail to meet the direct certification 
performance benchmark.
     CIPs required. A State agency that fails to meet the 
benchmark must develop and submit a CIP to FNS for approval.
     CIP components. The CIP must include, at a minimum, 
specific measures the State will use to identify more children who are 
eligible for direct certification with SNAP, a timeline for the State 
to implement these measures, and goals for the State to improve direct 
certification results for the following school year.
     CIP implementation. A State agency that is required to 
develop and submit a CIP must maintain it and implement it according to 
the timeline included in the approved plan.

C. Summary of Additional Provisions in the Proposed Rule

    Additionally, in support of the mandated provisions, the proposed 
rule sought to improve the accuracy of State direct certification rates 
and to strengthen the direct certification process so that States could 
monitor their own performance in a timely manner using the same 
methodology that FNS will use. As such, the January 2012 rule proposed 
to set forth the following improvements and requirements:
     Methodology. A transparent methodology for computing 
direct certification rates by defining the data elements and the 
formula to compute these rates:
[GRAPHIC] [TIFF OMITTED] TR22FE13.004

     Data Element #1. A requirement that Data Element 
1 be the count of the number of children who are members of 
households receiving benefits under SNAP and who were directly 
certified for free school meals as of the last operating day in 
October. Also, certifications via the ``Letter Method'' would not be 
included in the count of SNAP direct certifications as this is no 
longer permitted, pursuant to the statutory changes made by the HHFKA.
     Form FNS-742 timeframes. A change in the date that the 
FNS-742 (currently entitled the Verification Summary Report, but soon 
to be revised and renamed for use in SY 2013-2014 as the School Food 
Authority (SFA) Verification Collection Report)--a form that collects 
verification summary data as well as Data Element 1--is due, 
requiring that it come in one month earlier than currently in order to 
provide Data Element 1 to States and to FNS in a more-timely 
fashion. As such, under the proposed rule, the State agency would 
collect annual verification data from each LEA no later than February 
1st (instead of March 1st) and report this data to FNS no later than 
March 15th (instead of April 15th) each year. To accommodate this 
change in submission timeframes, the proposed rule would also remove 
the requirement for State agencies to report ``the aggregate number of 
students who were terminated as a result of verification but who were 
reinstated for free or reduced price meal benefits as of February 15th 
each year'' (Reapplied and Reinstated).
     Data Element #2. A new way to estimate the universe of 
school-aged children in households that receive benefits under SNAP 
that would require that the SNAP State agency provide FNS and the State 
agency administering the NSLP with the actual count of children ages 5-
17 who at any time during the months of July, August, or September were 
members of such households.
     Data Element #3. A more accurate way to estimate the 
number of children from households receiving SNAP benefits that attend 
schools operating in a non-base year under the special assistance 
provisions of section 11(a)(1) of the NSLA (42 U.S.C. 1759a(a)(1)) and 
7 CFR 245.9. As proposed, Data Element 3 would require that a 
match be run between SNAP records and student enrollment records from 
such schools and would allow the State agency to count all such matches 
in addition to the counts of actual SNAP direct certifications from all 
other schools when determining State direct certification rates.
     Form FNS-834, new interagency form. A mechanism for 
reporting Data Elements 2 and 3 (a new interagency 
form, the FNS-834, State Agency (NSLP/SNAP) Direct Certification Rate 
Data Element Report) to FNS and NSLP State agencies by December 1st 
each year.
     Special Circumstances. An opportunity for States to inform 
us of special circumstances that would affect a State's direct 
certification rate in a quantifiable way not captured by the formula or 
the three data elements.
     CIP additional component. An additional component to the 
CIPs beyond the legislated mandate, which would require State agencies 
to provide information about their progress toward implementing other 
direct certification requirements. Also, the mandated CIP timeline 
would be ``multiyear'' in acknowledgement that by the time a State 
agency's CIP is submitted to FNS and approved, the new school year may 
already be underway.
     CIP timeframe. A requirement that the CIP be submitted to 
FNS within 60 days of a State's having been formally notified that it 
has failed to meet the benchmark.
     Amend SNAP regulations. An amendment to SNAP regulations 
at 7 CFR 272.8 to add the requirement for the SNAP State agency to 
provide Data Element 2 to FNS and to the State agency 
administering the NSLP.
     States affected by this rule. A notification that, at this 
time, the NSLP States affected by this rule are the 50 States, the 
District of Columbia, and Guam.

II. Public Comments and USDA/FNS Response

    FNS received 26 comments on the proposed rule. Of these, 4 were 
from nutrition, health, or child advocacy organizations at the 
national, state, or

[[Page 12223]]

local level; 12 were from individuals representing 8 State agencies 
that administer the school meal programs; 6 were from law students; and 
the remaining 4 were from other interested individuals.
    FNS greatly appreciates these public comments as they have been 
instrumental in developing this final rule. Although FNS considered all 
comments, the description and analysis in this final rule preamble 
focuses on the key issues. To view all public comments on the proposed 
rule, go to www.regulations.gov and search for public submissions under 
docket number FNS-2011-0020.
    Overall, the comments were supportive of the proposed rule in that 
it strengthens the direct certification process so that more eligible 
children will be able to receive free meals at school. Commenters from 
advocacy organizations were in strong support of the proposed rule, 
indicating that the rule does a good job implementing statutory 
requirements and provides a sensible approach to improving the accuracy 
of computing State direct certification performance rates. Of the State 
agency employees that responded, most commented on specific issues that 
could affect their States.
    The following discussion provides information on the comments as 
well as a discussion of the clarifications and changes made to the 
proposal based on the comments received:

Benchmarks

    Proposed Rule on Benchmarks:
    Sets the benchmarks at the mandated 80% for SY 2011-2012; 90% for 
SY 2012-2013; and 95% for SY 2013-2014 and each school year thereafter.
    Comments on Benchmarks:
    Changing the Benchmarks--Several State agencies were concerned that 
they would not be able to meet the direct certification performance 
benchmarks in the given timeframes. Most of those who commented would 
prefer that the benchmark for SY 2013-2014 and beyond be capped at 90% 
and that the benchmarks be phased in more gradually. One commenter felt 
that the 95% target fell short and recommended that the goal be set at 
100%.
    ``Letter Method'' and the Benchmarks--One State agency wanted to be 
able to count ``Letter Method'' certifications as direct certifications 
and felt that they could not reach the benchmark without doing so. 
``Letter Method'' refers to the process where a family member brings to 
the school a letter issued by the SNAP agency confirming that the 
household receives SNAP benefits, and the student is certified for free 
meals through categorical eligibility based on this information.
    Matching Criteria and the Benchmarks--Another State was concerned 
that some States, under pressure to meet the benchmarks, may purposely 
relax their matching criteria in order to increase the number of 
matches they get, thus increasing their direct certification rates even 
though some of the matches might not be valid.
    USDA/FNS Response on Benchmarks:
    On Changing the Benchmarks--The benchmarks and their effective 
dates are statutorily required under section 9(b)(4)(F) of the NSLA (42 
U.S.C. 1758(b)(4)(F)), and may not be altered.
    On ``Letter Method'' and the Benchmarks--Section 9(b)(4)(G) of the 
NSLA (42 U.S.C. 1758(b)(4)(G)) establishes that certifications based on 
the ``Letter Method'' with SNAP, as of SY 2012-2013, can no longer be 
regarded as direct certifications because some action is required by 
the household. Although States can continue to utilize this method as a 
form of certification for free meals, they must not count these 
students as directly certified with SNAP. The intended result is for 
improved State automated direct certification systems that can match 
and certify these students independent of household action.
    On Matching Criteria and the Benchmarks--Regarding the concern 
about some States making their match criteria less stringent in order 
to inflate their numbers, the goal should remain that States set 
criteria to yield high levels of confidence so that eligible children 
are found in the match and ineligible children are not. States have 
different data elements available to them for making a match--what 
works well in one State might not work in another--and as such, this 
final rule does not establish a single national standard for match 
criteria. We will continue to develop and provide guidance to assist 
States in setting reasonable match criteria, including the sharing of 
best practices from other States that may have comparable 
characteristics.
    Disposition on Benchmarks in Final Rule:
    The provisions setting the mandated benchmarks in the new Sec.  
245.12(b) Direct certification performance benchmarks remain unchanged 
from the proposed rule.

Methodology and Data Collection

    Proposed Rule on Methodology and Data Collection:
    Provides for the collection and reporting of single data elements 
to replace, wherever possible, the complex estimates used in the past 
for the component statistics needed to estimate SNAP State direct 
certification performance rates. Provides for a new methodology using 
these new data elements that is straightforward, transparent, timelier, 
and more accurate. Outlines the reporting mechanisms for these new data 
elements--Data Element 1 is to be reported on the form FNS-
742, and Data Elements 2 and 3 are to be reported on 
the new form FNS-834. Provides for an earlier submission of the FNS-742 
and a December 1st deadline for the submission of the new FNS-834. To 
provide for the earlier submission of the FNS-742, the proposed rule 
would remove the requirement for reporting the number of students who 
reapplied and who were reinstated by February 15th.
    Comments on Methodology and Data Collection:
    Most commenters were supportive of the new methodology, lauding our 
proposal to use reported data (rather than generated estimates) and 
appreciative of the reporting mechanisms which would allow State 
agencies to track their own performance in a timely manner. Most also 
did not find the proposed reporting of these data elements to be 
burdensome for States and LEAs.
    The Process as a Whole--One commenter believed the new methodology 
would impose a complex data collection process and assign potentially 
misleading rankings.
    Data Element #1 and the Change in Form FNS-742 Timeframes, 
``Reapplied and Reinstated''--One commenter was concerned that the 
requirement to report the number of students who reapplied and were 
reinstated by February 15th was not actually proposed to be removed.
    Data Element #2, Universe--Several commenters, who otherwise agreed 
with the new approach, pointed out that the new Data Element 
2--requiring SNAP State agencies to provide a count for the 
universe of school-aged children in SNAP households--still includes 
children who may not be students in NSLP schools. Some State agencies 
reported having what they believe to be significant but unquantifiable 
numbers of dropouts, homeschoolers, or children in non-public or 
charter schools which may not participate in the NSLP. These States 
point out that the count against which they would be measured will be 
too high and their direct certification rates would appear to be lower 
because of it.
    Data Element #2, 5-17 Age Range--Three commenters commented on our

[[Page 12224]]

proposal to continue using the 5-17 age range that FNS has used for 
years as ``school-age'' for estimating the number of school-aged 
children living in households receiving SNAP benefits when computing 
direct certification performance rates. Two suggested using an age 
range that is aligned with compulsory school attendance ages, either by 
using a narrower age range or by making the age range State-specific. 
The third commenter was concerned that using the 5-17 age range for 
Data Element 2 meant that the State must run their matches 
only on this same 5-17 age range.
    Data Element #3, State Agency Concerns--Although most commenters 
were supportive of collecting Data Element 3--which requires 
States with special provision schools operating in a non-base year to 
have a match run between SNAP records and student enrollment records 
from these schools--some State agencies expressed special concern with 
this data element. Two of these States foresee problems because 
although some of their provision schools do have their students listed 
in the statewide student enrollment database, a few of their other 
provision schools do not. One State, however, had major concerns with 
this provision, and this State has a significant number of special 
provision schools. This State also pointed out that this issue will 
affect more and more States as they elect the new Community Eligibility 
Option (CEO) when it becomes available to all States in SY 2014-2015. 
Another State pointed out that it does not conduct matches at the State 
level; it uses district-level matching and is under the impression that 
the match for special provision schools must be done at the State 
level.
    Data Element #3, Advocacy Organization Concerns--The advocacy 
organizations were in favor of this provision, commenting that it will 
improve the accuracy of the direct certification performance rate 
calculation and will provide schools with data to make good management 
decisions, especially with regard to continuing in their current 
special provision or switching to CEO or another option. One of these 
advocacy groups went on to urge FNS to allow CEO schools to use the 
results of the CEO match with SNAP (that must be completed by April 1 
if the CEO wants to have their claiming percentages adjusted) in lieu 
of running a match again for this data element requirement in or near 
October.
    USDA/FNS Response to Methodology and Data Collection: 
    On the Process as a Whole--FNS developed the new methodology to 
provide a more simplified and straightforward approach than has been 
used in years past. It has been designed to yield more accurate counts 
with which to measure States against the benchmarks and to give States 
the power to track their own performance. We expect this process to be 
an improvement over generating estimates to assess performance, 
particularly since State performance rates are no longer intended to 
track general trends but rather to compare States against actual 
benchmarks.
    On Data Element #1 and the Change in Form FNS-742 Timeframes, 
``Reapplied and Reinstated''--In actuality, the requirement to report 
on the form FNS-742 the number of students who reapplied and were 
reinstated by February 15th was proposed to be removed and is removed 
by this final rulemaking. Removing this requirement allows the form 
FNS-742 to be submitted a month earlier, which will allow earlier 
computation of direct certification rates.
    On Data Element #2, Universe--We acknowledge that the best scenario 
to determine the universe of those children who could potentially be 
directly certified with SNAP would be to get the count of children who 
not only live in households receiving benefits under SNAP but also are 
actually in attendance at schools that participate in the NSLP. This 
data, however, is not available. This final rule would require the SNAP 
State agency to provide an actual, unduplicated count of school-aged 
children ages 5-17 who are living in households receiving benefits 
under SNAP at any time during the period July 1 through September 30. 
This is a major improvement, but, as stated in the proposed rule, we 
acknowledge that the new methodology still does not account for 
children in this age range who are not attending school or who are 
attending schools not participating in the NSLP. Our commenters noted 
this as well.
    In States with a high incidence of homeschoolers, dropouts, or 
children attending non-NSLP schools, the direct certification rate may 
indeed appear lower than it actually is. To measure the actual impact 
of a large homeschooling population, for instance, FNS would first need 
to determine, by State, the number of homeschooled children in the 
target 5-17 age range. Additionally, FNS would need to determine the 
number of these children who are also members of households receiving 
benefits under SNAP at any time during the July through September 
timeframe. Only then could FNS determine the size of the SNAP-and-
homeschooled population that would need to be removed from the universe 
of children who could potentially be matched. A similar calculation 
would be needed in each State in order to determine the number of 
dropouts and the number of children attending non-NSLP schools. No 
reliable State-specific data is available which would enable FNS to 
determine these numbers.
    In order to address this issue and in recognition of the potential 
for improving data sources, we are adding a check box to the new form 
FNS-834. This check box would provide States a mechanism for indicating 
that they have special circumstances that may affect their direct 
certification rate calculation in a quantifiable way. For FNS to 
consider making an adjustment due to a special circumstance, however, a 
State would need to forward a description of the circumstance, the 
count of the number of children affected by the circumstance, the 
methodology for estimating the count, and the source(s) of published 
State or Federal data used to support that methodology. This ancillary 
system for determining the effect of special circumstances should help 
to keep our own methodology dynamic and better able to adapt to 
improved data sources.
    It is important to point out that there is already some built-in 
variability which could make a State's direct certification rate appear 
to be higher than it actually is. For instance, States that have 
mandatory pre-K programs that serve children younger than age 5, as 
well as States with children in attendance who are older than 17 during 
the target months, are able to count these children if they are 
directly certified, even though they would not be represented in the 
universe of those who could potentially be matched. This variability 
could potentially help offset any negative impact caused by the fact 
that not all children counted in the universe actually attend NSLP 
schools. Also, it is important to remember that the benchmarks are not 
set at 100%; and even for SY 2013-2014 and beyond, where the benchmark 
is at its highest at 95%, there is still a 5% built-in allowance.
    On Data Element #2, 5-17 Age Range--Section 4301 of the Food, 
Conservation, and Energy Act of 2008 requires that when we assess State 
direct certification performance for the Report to Congress we include, 
for the universe of children who could potentially be matched against 
student enrollment records, an estimate of the number of school-aged 
children

[[Page 12225]]

receiving SNAP benefits during the months of July, August, or 
September. We have used the 5-17 age range as a proxy for ``school-
age'' since the first Report to Congress in 2008. Of the two commenters 
who suggested using compulsory education requirements instead, one 
recommended using 6-15 as an age range that would more closely 
represent the average compulsory requirements across States, while the 
other suggested using State-specific compulsory age ranges as defined 
by individual State statute. Compulsory education requirements, 
however, set an age range for when children must be enrolled in and 
attending school; they do not preclude children younger or older from 
attending school, so they would not be good indicators for actual 
school enrollment.
    According to the detailed table, ``Enrollment Status of the 
Population of 3 Years Old and Older, by Sex, Age, Race, Hispanic 
Origin, Foreign Born, and Foreign-Born Parentage: October 2010,'' found 
in the Current Population Survey published by the U.S. Census Bureau 
and the U.S. Bureau of Labor Statistics, 94.5% of 5- and 6-year-olds 
and 96.1% of 16- and 17-year-olds were enrolled in school. School 
enrollment drops significantly on either side of this 5-17 age range. 
The 5-17 age range is therefore an appropriate approximation for the 
``school-age'' snapshot required by Congress, and we intend to continue 
using it in estimating the number of school-aged children who could 
potentially be matched.
    For the commenter who was concerned that the State would need to 
set its match criteria to include only the 5-17 year age range, we wish 
to clarify that States are to count all children directly certified 
with SNAP, not just those in the 5-17 age range. We use the 5-17 age 
range to estimate the universe of potential matches for the Report to 
Congress and to determine State performance, not to dictate the age 
range the State agency is to utilize for the match. States/LEAs are 
therefore responsible for matching SNAP data with their school 
enrollment data over a wider age range than the 5-17 in order to pick 
up all possible matches of children who are in school in the State, 
including those under 5 or over 17 years of age. Using the narrower 
range for the universe actually gives States an advantage for meeting 
the benchmarks if they were to find matches outside of that age range.
    On Data Element #3, State Agency Concerns--States must ensure that 
matches are run between SNAP data and enrollment data of students 
attending special provision schools operating in a non-base year, so 
that the State can get credit for each of the SNAP children in these 
schools. This final rule does not prescribe a particular methodology 
for collecting this data element, enabling each State the flexibility 
to set up its own business practice. For instance, if a State uses 
district- or local-level matching, it might choose to use this same 
method for its non-base year special provision schools, or it may 
choose a different method, perhaps having such schools upload student 
enrollment files to the State, with the State running the match on 
their behalf. If a State uses State-level matching, it may have some 
schools not represented in its statewide student enrollment database, 
and the State may need to come up with a way to upload from such 
schools. For other State-level matching States, it may be that they are 
already running the matches for all the schools in the State, but just 
not sending the matches down to the local level for LEAs to enter into 
their point-of-service systems. In this latter scenario, just counting 
the number of such matches would be very easy for the State. Many 
States have no, or very few, special provision schools, so not all 
States are affected at this time.
    For those States with special provision schools that are not geared 
up to run the match in SY 2012-2013, we are providing an alternative 
phase-in procedure. For SY 2012-2013, the State agency may elect to use 
base-year SNAP direct certification rates for these schools when 
completing the form FNS-834. For SY 2013-2014 and beyond, however, 
States are expected to have a system in place to do this match with 
their special provision schools operating in a non-base year.
    On Data Element #3, Advocacy Organization Concerns--With regard to 
CEO schools--which have the opportunity to run a match by April 1 each 
year to determine if they would be eligible for an increase in claiming 
percentages--we agree that certain accommodations for them can be made. 
Pursuant to this final rule, States that have special provision schools 
exercising the CEO may establish the count for this data element for 
these CEO schools each year through data matching efforts in or near 
October (but not later than the last operating day in October) between 
SNAP data and student enrollment data from these schools--as for the 
other special provision schools--or by opting for one of the following 
two alternatives:
     Using the count of identified students matched with SNAP 
used in determining the CEO claiming percentage for that school year; 
or
     Using the count from the SNAP match conducted by April 1 
of the same calendar year the FNS-834 is due, whether or not it was 
used in the claiming percentages.

In any case, it is important the count used represents students in CEO 
schools matched against SNAP records, without the inclusion of any 
letter method or non-SNAP matches. In other words, the State must 
selectively count the SNAP matches from the matching efforts performed 
for the April CEO opportunity if either of the two alternatives for CEO 
schools is elected. States also must ensure that students are not 
double counted.
    Disposition of Methodology and Data Collection in Final Rule:
    The provisions in the new Sec.  245.12(c)(1) Data Element 
1 remain unchanged from the proposed rule.
    The provisions in the new Sec.  245.12(c)(2) Data Element 
2 remain unchanged from the proposed rule.
    Likewise, the related provisions that amend SNAP regulations in the 
new Sec.  272.8(a)(5)--to point the SNAP State agency to the 
requirements of Sec.  245.12(c)(2) and to require the SNAP State agency 
to execute a data exchange and privacy agreement with the NSLP State 
agency--remain unchanged from the proposed rule.
    Paragraph 245.12(c)(3) Data Element 3 is changed in the 
final rule to allow States annually the option of using specific 
alternatives for the estimation of Data Element 3 for its 
special provision schools that are exercising the CEO.
    The alternative phase-in procedure for SY 2012-2013 for those 
States with special provision schools that cannot properly compute Data 
Element 3 for this first school year will be handled in FNS 
guidance and is not codified in the final rule.
    To keep the methodology for computing Data Element 2 or 
Data Element 3 dynamic as State or Federal data sources 
improve over the years, FNS is adding a check box to the new form FNS-
834 to allow NSLP or SNAP State agencies to indicate they have special 
circumstances to bring to FNS's attention.
    The final rule, as in the proposed rule, would remove the provision 
regarding ``Reapplied and Reinstated,'' and this final rule removes the 
provision by the rewording of Sec.  245.11(i). In addition, the revised 
timeframes for submitting the FNS-742 that are made possible by 
removing this ``Reapplied and Reinstated'' requirement remain unchanged 
from the proposed rule in Sec. Sec.  245.6a and 245.11(i). Note that 
even

[[Page 12226]]

though the revised form FNS-742 will not be implemented for SY 2012-
2013, the provision requiring the earlier submission of the FNS-742 and 
the dropping of the ``Reapplied and Reinstated'' requirement applies as 
well to the current form FNS-742 that will be utilized for SY 2012-
2013.

CIPs

    Proposed Rule on CIPs:
    Sets the requirement that a State that does not meet the direct 
certification performance benchmarks would need to develop a CIP that 
includes, at a minimum, the following components: the specific measures 
the State will use to identify more children who are eligible for 
direct certification with SNAP, a multiyear timeline for the State to 
implement these measures, goals for the State to improve direct 
certification results for the following school year, and a report on 
the State's progress in implementing other direct certification 
requirements. The proposed rule would also require that the State 
agency submit its CIP to FNS for approval within 60 days of formal 
notification.
    Comments on CIPs:
    Commenters were generally supportive of the requirements of the 
CIPs, including making the CIPs ``multiyear'' plans and adding a fourth 
component to track State progress in implementing other direct 
certification requirements.
    What is to be included in the CIP--One commenter was concerned that 
States would spell out for themselves in their CIPs longer timelines 
than necessary for accomplishing tasks because of the ``multiyear'' 
timeline.
    A State agency requested clarification and guidance on the content 
of the CIPs. Additionally, an advocacy organization had very specific 
ideas about what should be included in the CIP and how progress should 
be monitored, such as requiring State agencies to include: goals that 
are quantifiable and objective, the rationale for adopting the measures 
it proposes, and an analysis of why a previous plan may have failed.
    State progress implementing other direct certification requirements 
in the CIP--A few commenters incorrectly believed that the first three 
components of the CIP were already incorporated in regulation and that 
this rulemaking would be adding just the fourth component.
    One State agency was concerned that it would need to report 
progress toward phasing out the ``Letter Method'' even though it finds 
it an effective and successful secondary method of reaching eligible 
families in that State.
    Another commenter wanted the fourth component of the CIP to include 
the tracking of extended eligibility, whereby other children in the 
directly-certified child's household can also be considered directly 
certified, by extension. (See USDA FNS Policy Memorandum SP 38-2009--
Extending Categorical Eligibility to Additional Children in a 
Household, dated August 29, 2009, available at http://www.fns.usda.gov/cnd/governance/Policy-Memos/2009/SP_38-2009_os.pdf, and USDA Policy 
Memorandum SP 25-2010--Questions and Answers on Extending Categorical 
Eligibility to Additional Children in a Household, dated May 3, 2010, 
available at http://www.fns.usda.gov/cnd/governance/Policy-Memos/2010/SP_25_CACFP_11_SFSP_10-2010_os.pdf).
    Other CIP issues--One commenter expressed concern that 60 days may 
not be enough time for a State agency to formulate and submit a CIP.
    Two other commenters were in favor of applying fiscal sanctions or 
other negative incentives for repeated failure to meet the benchmarks 
so that States would not just be submitting CIPs each year with no 
other repercussions.
    Two of the advocacy organizations suggested that States be required 
to post their CIPs for public access.
    USDA/FNS Response to CIPs:
    On what is to be included in the CIP--The proposal that the 
timeline in the CIP be ``multiyear'' was added in the proposed rule so 
that a State agency could define what measures it proposes to implement 
in each of several years. Some goals will take longer than a year to 
implement, some will take less, and others will logically follow after 
some other goal is reached. In addition, some States may take longer 
than others to implement effective changes, due in part to such 
circumstances as the number of LEAs in the State, the population of the 
State, the geographical size of the State, the current data structures 
in the State, the relationship with partner agencies, and the 
restrictions imposed by State law. The intent was to require States to 
accomplish tasks in appropriate timeframes. Regarding the specifics of 
what should go into the plans and how they should be structured, we 
will provide guidance to those State agencies that are required to 
develop CIPs. Each CIP will be reviewed individually and approved based 
on whether the goals and timeframes are reasonable for that particular 
State. Subsequent CIPs can track progress and reflect realigning goals.
    On State progress implementing other direct certification 
requirements in the CIP--This final rulemaking codifies all four 
components of a CIP, not just the fourth.
    For reporting ``Letter Method'' information, there is a phase-out 
plan for the ``Letter Method'' for SNAP as it applies to benchmarks and 
CIPs included in USDA FNS Memorandum SP 32-2011--Child Nutrition 
Reauthorization 2010: Direct Certification Benchmarks and Continuous 
Improvement Plans, dated April 28, 2011, available at http://www.fns.usda.gov/cnd/governance/Policy-Memos/2011/SP32-2011.pdf. By SY 
2012-2013, the ``Letter Method'' must be fully phased-out as a means of 
direct certification of children in households receiving SNAP benefits, 
and the mandatory direct certification with SNAP must be conducted 
using data-matching techniques only. Letters to SNAP households may 
continue to be used as an additional means to notify households of 
children's categorical eligibility based on receipt of SNAP benefits, 
and schools may continue to use the letter to certify children in lieu 
of an application; however, such certifications cannot be counted as 
direct certifications. These certifications based on SNAP letters would 
be exempt from verification but would not be included in data reported 
for direct certifications with SNAP. As time goes on, States must have 
systems that effectively handle more-frequent direct certification with 
SNAP without the use of the ``Letter Method.'' States will need to 
report in each CIP their progress in making this transition.
    As for including in the fourth component of the CIPs information 
about the State's progress toward implementing extended eligibility 
policies, we currently monitor the State's progress during a management 
evaluation and the State monitors the SFA's progress during an 
administrative review. With the advent of the new benchmarks, there is 
additional incentive for States to fully implement the policy on 
extended eligibility since doing so would increase the State's direct 
certification performance rate.
    On other CIP issues--With regard to the proposed 60-day timeframes 
for submitting a CIP, the timed CIP-development period would not start 
until after we formally notify the State that a CIP is needed. The new 
transparent methodology should facilitate a State's ability to 
continually monitor its own performance, analyze its systems, and plan 
for improvement. A State that monitors its own performance will likely 
begin to

[[Page 12227]]

estimate its SNAP direct certification performance rate as early as 
February 1st when the counts are due in from the LEAs, and a State that 
finds itself below a benchmark could begin to formulate and test its 
plans long before the State is even notified of the need to do a CIP. 
To ensure the development of a thoughtful, workable CIP, however, and 
to give the State time to get input from its State agency partners and 
to get the CIP through its own State approval process, this final rule 
sets the due date for submitting the CIP to FNS at 90 days after 
notification, instead of the 60 days that was proposed.
    Regarding the suggestions for applying fiscal sanctions or other 
negative disincentives for repeated failures to meet the benchmarks, we 
want to reiterate that the CIP process is designed for steady progress 
to be made in improving direct certification rates. We anticipate that 
States will continue to make a good faith effort to improve their 
direct certification rates and that the CIPs will be a useful tool in 
guiding their efforts. FNS will address on a case-by-case basis any 
instance of willful noncompliance in implementing the improvements 
required under a CIP. In addition, FNS is in the process of developing 
a proposed rule to implement section 303 of the HHFKA, Fines for 
Violating Program Requirements, which will provide an additional method 
to address any instances of severe mismanagement and willful 
noncompliance with program requirements.
    Finally, with regard to general access to the CIPs, we agree that 
States may wish to share their CIPs with one another to encourage the 
formulation of successful plans, and we will continue to work to 
accommodate the sharing of best practices through channels such as 
PartnerWeb or State-to-State publications. However, mandatory public 
release of CIPs is unnecessary for this type of technical document and 
would be an additional burden on States. As such, USDA intends to leave 
the decision to the individual State as to whether or not it chooses to 
make its plan available to the public at large.
    Disposition of CIPs in Final Rule:
    The provisions regarding CIPs in the new Sec.  245.12, paragraphs 
(a) Direct certification requirements, (d) State notification, (f) 
Continuous improvement plan required components, and (g) Continuous 
improvement plan implementation, remain unchanged from the proposed 
rule. The provision that sets the timeframes for submitting the CIPs is 
changed in the new paragraph Sec.  245.12(e) Continuous improvement 
plan required, from 60 days in the proposed rule to 90 days in this 
final rule.

III. Further Clarification

     Data Element #1--On June 8, 2012, FNS published a notice 
in the Federal Register (77 FR 34005) to solicit comments on the 
proposed changes to the form FNS-742, Verification Summary Report (OMB 
0584-0026), including the name change to School Food Authority 
(SFA) Verification Collection Report. Data Element 1 would be 
collected on line 3-2B of the revised form. This revised form will not 
be required until SY 2013-2014 in order to allow time for changes to be 
made to State automated systems. Since the revised form will not be 
implemented for SY 2012-2013, State agencies will not be required to 
report SNAP-only data for SY 2012-2013. Instead, for SY 2012-2013, the 
SNAP direct certifications will continue to be included as part of line 
4-1A of the current version of the FNS-742. In the interim, States are 
expected to prepare and modify systems to meet the requirement to 
report SNAP-only data on the revised FNS-742 beginning with SY 2013-
2014.
     States Affected by This Rule--To further clarify the 
criteria by which FNS determines whether or not a State is affected by 
this final rule, we offer the following: All NSLP States that also 
operate a food assistance program under SNAP would be affected by this 
final rule. The only exceptions are the Virgin Islands and Puerto Rico, 
each of which provides free meals to all children in those States 
regardless of the economic need of the child's family. Three NSLP 
States--the Commonwealth of the Northern Marianas, American Samoa, and 
the Commonwealth of Puerto Rico--are not affected by this rule because 
they do not operate SNAP, although each does operate a food assistance 
program under a Nutrition Assistance Block Grant. At this time, 
therefore, the NSLP States affected by this rule are the 50 States, the 
District of Columbia, and Guam.

Procedural Matters

Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility.
    This rule has been designated non-significant under section 3(f) of 
Executive Order 12866.

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act of 1980, (5 U.S.C. 601-612). Pursuant to 
that review, it has been certified that this rule would not have a 
significant impact on a substantial number of small entities.

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, the 
Department generally must prepare a written statement, including a cost 
benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures by State, local or tribal 
governments, in the aggregate, or 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 the Department to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the most cost effective or least burdensome alternative that achieves 
the objectives of the rule.
    This final rule does not contain Federal mandates (under the 
regulatory provisions of Title II of the UMRA) for State, local and 
tribal governments or the private sector of $100 million or more in any 
one year. Thus, the rule is not subject to the requirements of sections 
202 and 205 of the UMRA.

Executive Order 12372

    This final rule affects the NSLP and SNAP.
    The NSLP is listed in the Catalog of Federal Domestic Assistance 
Programs under No. 10.555. 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. Since the NSLP is a State-administered, Federally-
funded program, FNS headquarters staff and FNS Regional Office staff 
have formal and informal discussions with State and local officials on 
an ongoing

[[Page 12228]]

basis regarding program requirements and operation. This structure 
allows FNS to receive regular input which contributes to the 
development of meaningful and feasible Program requirements.
    SNAP is listed in the Catalog of Federal Domestic Assistance under 
10.551. For the reasons set forth in the final rule at 7 CFR part 3015, 
subpart V and related Notice (48 FR 29115, June 24, 1983), SNAP is 
excluded from the scope of Executive Order 12372 which requires 
intergovernmental consultation with State and local officials.

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 13121. FNS has 
considered the impact of this rule on State and local governments and 
has determined that this rule does not have federalism implications. 
Therefore, under section 6(b) of the Executive Order, a federalism 
summary is not required.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This final rule is intended to have 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 and timely implementation. This rule is not intended to have 
retroactive effect unless so specified in the Effective Dates section 
of the final rule. Prior to any judicial challenge to the provisions of 
the final rule, all applicable administrative procedures must be 
exhausted.

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, age or disability.
    This rule requires State agencies to develop and implement CIPs if 
they do not meet certain percentage performance benchmarks for directly 
certifying for free school meals children in households receiving SNAP 
benefits. LEAs have for years been required to directly certify for 
free school meals those children in households receiving assistance 
under SNAP, and FNS has been required to assess State and local efforts 
to directly certify these children. This rule codifies the benchmarks 
and CIP requirements set by the HHFKA. After a careful review of the 
rule's intent and provisions, FNS has determined that this rule is 
technical in nature and affects State agencies only. This rule will not 
affect children in the NSLP, except to continue to encourage States to 
increase efforts to have more eligible children directly certified for 
free meals.

Executive Order 13175--Consultation and Coordination With Indian Tribal 
Governments

    Executive Order 13175 requires Federal agencies to consult and 
coordinate with Tribes on a government-to-government basis on policies 
that have Tribal implications, including regulations, legislative 
comments or proposed legislation, and other policy statements or 
actions that have substantial direct effects on one or more Indian 
Tribes, on the relationship between the Federal Government and Indian 
Tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian Tribes. USDA is unaware of any 
current Tribal laws that could be in conflict with the requirements of 
this rule. However, we have made special efforts to reach out to Tribal 
communities. Beginning in the spring of 2011, FNS has offered 
opportunities for consultation with Tribal officials or their designees 
to discuss the impact of the Healthy, Hunger-Free Kids Act of 2010 on 
tribes or Indian Tribal governments. The consultation sessions were 
coordinated by FNS and held on the following dates and locations:
    1. HHFKA Webinar & Conference Call--April 12, 2011
    2. Mountain Plains--HHFKA Consultation, Rapid City, SD--March 23, 
2011
    3. HHFKA Webinar & Conference Call--June, 22, 2011
    4. Tribal Self-Governance Annual Conference in Palm Springs, CA--
May 2, 2011
    5. National Congress of American Indians Mid-Year Conference, 
Milwaukee, WI--June 14, 2011
    6. Quarterly Consultation Meeting Conference Call--May 2, 2012
    There were no comments about this regulation during any of the 
aforementioned Tribal Consultation sessions.
    Reports from these consultations are part of the USDA annual 
reporting on Tribal consultation and collaboration. FNS will respond in 
a timely and meaningful manner to Tribal government requests for 
consultation concerning this rule. Currently, FNS provides regularly 
scheduled quarterly consultation sessions through the end of FY2012 as 
a venue for collaborative conversations with Tribal officials or their 
designees.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR 
1320), requires that the Office of Management and Budget (OMB) approve 
all collections of information by a Federal agency from the public 
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 rule does contain information collection 
requirements subject to approval by OMB under the Paperwork Reduction 
Act of 1995.
    One of the new provisions in this rule--the requirement for the 
development and submission of continuous improvement plans by any State 
that fails to meet certain mandated direct certification performance 
benchmarks--annually increases State agency reporting burden by 54 
hours and the recordkeeping burden by 9 hours, for a total of 63 
additional burden hours. FNS intends to merge these 63 hours into the 
Determining Eligibility for Free and Reduced Price Meals, OMB Control 
0584-0026, expiration date March 31, 2013. The current 
collection burden inventory for the Determining Eligibility for Free 
and Reduced Price Meals (7 CFR part 245) is 1,073,432.
    Another provision, requiring the collection of data elements on a 
new, interagency form (FNS-834, State Agency (NSLP/SNAP) Direct 
Certification Rate Data Element Report), involves changes in both NSLP 
and SNAP regulations and would increase burden hours on State agencies 
by an additional 53 hours annually. These 53 burden hours would remain 
with the newly established OMB Control Number until such time as the 
FNS-834 is incorporated into the Food Programs Reporting System (FPRS) 
and the system is approved by OMB.
    A 60-day notice was imbedded into the proposed rule, National 
School Lunch Program: Direct Certification Continuous Improvement Plans 
Required by the Healthy, Hunger-Free Kids Act of 2010, published in the 
Federal Register at 77 FR 4688 on January 31, 2012, which provided the 
public an opportunity to submit comments on the information collection 
burden resulting from this rule. This

[[Page 12229]]

information collection burden has not yet been approved by OMB. FNS 
will publish a document in the Federal Register once these requirements 
have been approved.
    The average burden per response and the annual burden hours are 
explained below and summarized in the charts which follow.
Estimated Annual Reporting and Recordkeeping Burden for 0584-NEW, 
Direct Certification Requirements, 7 CFR Part 245
    Respondents for This Final Rule: State Agencies.
    Estimated Number of Respondents for This Final Rule: 18.
    Estimated Number of Responses per Respondent for This Final Rule: 
2.
    Estimated Total Annual Responses: 36.
    Average Hours per Response: 1.75.
    Estimated Total Annual Burden on Respondents for This Final Rule: 
63.

                           Estimated Annual Reporting Burden for 0584--New, Direct Certification Requirements, 7 CFR Part 245
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Estimated                        Average
                                                       Section               number of     Frequency of       annual      Average burden  Annual  burden
                                                                            respondents      response        responses     per response        hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Reporting (State Agencies)
--------------------------------------------------------------------------------------------------------------------------------------------------------
State agencies that fail to meet the        7 CFR 245.12 (e) and (g)....              18               1              18               3              54
 direct certification benchmark must
 develop and submit a Continuous
 Improvement Plan within 60 days of
 notification.
                                           -------------------------------------------------------------------------------------------------------------
    Total Reporting for Final Rule........  ............................              18               1              18               3              54
    Total Existing Reporting Burden for     ............................  ..............  ..............  ..............  ..............       1,067,387
     Part 245.
                                           -------------------------------------------------------------------------------------------------------------
      Total Reporting Burden for Part 245   ............................  ..............  ..............  ..............  ..............       1,067,441
       with Final Rule.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                         Estimated Annual Recordkeeping Burden for 0584--New, Direct Certification Requirements, 7 CFR Part 245
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Estimated                        Average
                                                       Section               number of     Frequency of       annual      Average burden  Annual  burden
                                                                            respondents      response        responses     per response        hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Recordkeeping (State Agencies)
--------------------------------------------------------------------------------------------------------------------------------------------------------
State agencies that fail to meet the        7 CFR 245.12 (e) and (g)....              18               1              18             0.5               9
 direct certification benchmark must
 maintain a Continuous Improvement Plan.
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
    Total Recordkeeping for Final Rule....  ............................              18               1              18             0.5               9
    Total Existing Recordkeeping Burden     ............................  ..............  ..............  ..............  ..............           6,045
     for Part 245.
                                           -------------------------------------------------------------------------------------------------------------
    Total Recordkeeping Burden for Part     ............................  ..............  ..............  ..............  ..............           6,054
     245 with Final Rule.
--------------------------------------------------------------------------------------------------------------------------------------------------------


Summary of Reporting and Recordkeeping Burden (OMB 0584--New) 7
                              CFR Part 245
------------------------------------------------------------------------
 
------------------------------------------------------------------------
TOTAL NO. RESPONDENTS...................................              18
AVERAGE NO. RESPONSES PER RESPONDENT....................               2
TOTAL ANNUAL RESPONSES..................................              36
AVERAGE HOURS PER RESPONSE..............................            1.75
TOTAL BURDEN HOURS FOR PART 245 WITH FINAL RULE.........       1,073,495
CURRENT OMB INVENTORY FOR PART 245......................       1,073,432
DIFFERENCE (NEW BURDEN REQUESTED WITH FINAL RULE).......              63
------------------------------------------------------------------------
* These 63 hours will be merged with OMB 0584-0026

Estimated Annual Burden for 0584-NEW, Direct Certification 
Requirements, 7 CFR Parts 245 and 272
    Respondents for This Final Rule: State Agencies.
    Estimated Number of Respondents for This Final Rule: 106.
    Estimated Number of Responses per Respondent for This Final Rule: 
1.
    Estimated Total Annual Responses: 106.
    Average Hours per Response: .5.
    Estimated Total Annual Burden on Respondents for This Final Rule: 
53.

[[Page 12230]]



                            Estimated Annual Burden for 0584--New, Direct Certification Requirements 7 CFR Parts 245 and 272
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Estimated                        Average         Average
                                                       Section               number of     Frequency of       annual        burden per     Annual burden
                                                                            respondents      response        responses       response          hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Reporting (State Agencies)
--------------------------------------------------------------------------------------------------------------------------------------------------------
NSLP State agency must annually report to   7 CFR 245.12(c).............              54               1              54             0.5              27
 FNS data for calculating direct
 certification rates.
SNAP State agency must annually report to   7 CFR 272.8(a)(5)...........              52               1              52             0.5              26
 FNS and to the NSLP State agency data for
 calculating direct certification rates.
                                           -------------------------------------------------------------------------------------------------------------
    Total Reporting for Final Rule........  ............................             106               1             106             0.5              53
    Total Existing Reporting Burden.......  ............................  ..............  ..............  ..............  ..............               0
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
      Total Reporting Burden for Parts 245  ............................  ..............  ..............  ..............  ..............              53
       and 272 with Final Rule.
--------------------------------------------------------------------------------------------------------------------------------------------------------


   Summary of Burden (OMB 0584--NEW) 7 CFR Parts 245 and 272
------------------------------------------------------------------------
 
------------------------------------------------------------------------
TOTAL NO. RESPONDENTS...................................             106
AVERAGE NO. RESPONSES PER RESPONDENT....................               1
TOTAL ANNUAL RESPONSES..................................             106
AVERAGE HOURS PER RESPONSE..............................              .5
TOTAL BURDEN HOURS FOR PARTS 245 and 272 WITH FINAL                   53
 RULE*..................................................
CURRENT OMB INVENTORY FOR PARTS 245 and 272.............               0
DIFFERENCE (NEW BURDEN REQUESTED WITH FINAL RULE).......              53
------------------------------------------------------------------------
* Represents increase of 53 hours from existing reporting burden; no
  additional recordkeeping burden. These 53 hours will remain with the
  newly established OMB Control Number.

E-Government Act Compliance

    The Food and Nutrition Service 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.

List of Subjects

7 CFR Part 245

    Civil rights, Food assistance programs, Grant programs-education, 
Grant programs-health, Infants and children, Milk, Reporting and 
recordkeeping requirements, School breakfast and lunch programs.

7 CFR Part 272

    Alaska, Civil rights, Claims, Food stamps, Grant programs-social 
programs, Reporting and recordkeeping requirements, Unemployment 
compensation, wages.

    Accordingly, 7 CFR Parts 245 and 272 are amended as follows:

PART 245--DETERMIMING ELIGIBILITY FOR FREE AND REDUCED PRICE MEALS 
AND FREE MILK IN SCHOOLS

0
1. The authority citation for 7 CFR Part 245 continues to read as 
follows:

    Authority: 42 U.S.C. 1752, 1758, 1759a, 1772, 1773, and 1779.


Sec.  245.6a  [Amended]

0
2. Section 245.6a is amended in paragraph (h) by removing the word 
``March'' and adding in its place the word ``February''.

0
3. Paragraph 245.11(i) is revised to read as follows:


Sec.  245.11  Action by State agencies and FNSROs.

* * * * *
    (i) No later than February 1, 2013, and by February 1st each year 
thereafter, each State agency must collect annual verification data 
from each local educational agency as described in Sec.  245.6a(h) and 
in accordance with guidelines provided by FNS. Each State agency must 
analyze these data, determine if there are potential problems, and 
formulate corrective actions and technical assistance activities that 
will support the objective of certifying only those children eligible 
for free or reduced price meals. No later than March 15, 2013, and by 
March 15th each year thereafter, each State agency must report to FNS, 
in a consolidated electronic file by local educational agency, the 
verification information that has been reported to it as required under 
Sec.  245.6a(h), as well as any ameliorative actions the State agency 
has taken or intends to take in local educational agencies with high 
levels of applications changed due to verification. State agencies are 
encouraged to collect and report any or all verification data elements 
before the required dates.
* * * * *


Sec. Sec.  245.12 and 245.13  [Redesignated as Sec. Sec.  245.13 and 
245.14]

0
4. Redesignate Sec. Sec.  245.12 and 245.13 as Sec. Sec.  245.13 and 
245.14, respectively.

0
5. New Sec.  245.12 is added to read as follows:


Sec.  245.12  State agencies and direct certification requirements.

    (a) Direct certification requirements. State agencies are required 
to meet the direct certification performance benchmarks set forth in 
paragraph (b) of this section for directly certifying children who are 
members of households receiving assistance under SNAP. A State agency 
that fails to meet the benchmark must develop and submit to FNS a 
continuous

[[Page 12231]]

improvement plan (CIP) to fully meet the requirements of this paragraph 
and to improve direct certification for the following school year in 
accordance with the provisions in paragraphs (e), (f), and (g) of this 
section.
    (b) Direct certification performance benchmarks. State agencies 
must meet performance benchmarks for directly certifying for free 
school meals children who are members of households receiving 
assistance under SNAP. The performance benchmarks are as follows:
    (1) 80% for the school year beginning July 1, 2011;
    (2) 90% for the school year beginning July 1, 2012; and
    (3) 95% for the school year beginning July 1, 2013, and for each 
school year thereafter.
    (c) Data elements required for direct certification rate 
calculation. Each State agency must provide FNS with specific data 
elements each year, as follows:
    (1) Data Element #1--The number of children who are members of 
households receiving assistance under SNAP that are directly certified 
for free school meals as of the last operating day in October, 
collected and reported in the same manner and timeframes as specified 
in Sec.  245.11(i).
    (2) Data Element #2--The unduplicated count of children ages 5 to 
17 years old who are members of households receiving assistance under 
SNAP at any time during the period July 1 through September 30. This 
data element must be provided by the SNAP State agency, as required 
under 7 CFR 272.8(a)(5), and reported to FNS and to the State agency 
administering the NSLP in the State by December 1st each year, in 
accordance with guidelines provided by FNS.
    (3) Data Element #3-- The count of the number of children who are 
members of households receiving assistance under SNAP who attend a 
school operating under the provisions of 7 CFR 245.9 in a year other 
than the base year or that is exercising the community eligibility 
option (CEO). The proxy for this data element must be established each 
school year through the State's data matching efforts between SNAP 
records and student enrollment records for these special provision 
schools that are operating in a non-base year or that are exercising 
the CEO. Such matching efforts must occur in or close to October each 
year, but no later than the last operating day in October. However, 
States that have special provision schools exercising the CEO may 
alternatively choose to include, for these schools, the count of the 
number of identified students directly matched with SNAP used in 
determining the CEO claiming percentage for that school year, or they 
may choose to use the count from the SNAP match conducted by April 1 of 
the same calendar year, whether or not it was used in the CEO claiming 
percentages. State agencies must report this aggregated data element to 
FNS by December 1st each year, in accordance with guidelines provided 
by FNS.
    (d) State notification. For each school year, FNS will notify State 
agencies that fail to meet the direct certification performance 
benchmark.
    (e) Continuous improvement plan required. A State agency having a 
direct certification rate with SNAP that is less than the direct 
certification performance benchmarks set forth in paragraph (b) of this 
section must submit to FNS for approval, within 90 days of 
notification, a CIP in accordance with paragraph (f) of this section.
    (f) Continuous improvement plan required components. CIPs must 
include, at a minimum:
    (1) The specific measures that the State will use to identify more 
children who are eligible for direct certification, including 
improvements or modifications to technology, information systems, or 
databases;
    (2) A multiyear timeline for the State to implement these measures;
    (3) Goals for the State to improve direct certification results for 
the following school year; and
    (4) Information about the State's progress toward implementing 
other direct certification requirements, as provided in FNS guidance.
    (g) Continuous improvement plan implementation. A State must 
maintain its CIP and implement it according to the timeframes in the 
approved plan.

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

0
5. The authority citation for 7 CFR part 272 continues to read as 
follows:

    Authority: 7 U.S.C. 2011-2036.

0
6. Section 272.8 is amended by adding a new paragraph (a)(5) to read as 
follows:


Sec.  272.8  State income and eligibility verification system.

    (a) * * *
    (5) State agencies must provide information to FNS and to the State 
agencies administering the National School Lunch Program for the 
purpose of direct certification of children for school meals as 
described in Sec.  245.12(c)(2) of this chapter. In addition, State 
agencies must execute a data exchange and privacy agreement in 
accordance with paragraph (a)(4) of this section and Sec.  272.1(c).
* * * * *

    Dated: February 4, 2013.
Audrey Rowe,
Administrator, Food and Nutrition Service.
[FR Doc. 2013-04118 Filed 2-21-13; 8:45 am]
BILLING CODE 3410-30-P