Computation of Reimbursement

7 CFR 226.11(c)(5) explains the methods available to a state agency to compute reimbursement. 

1. Actual counts. This one is the most straightforward. The number of meals served to each participant in each income eligibility category is multiplied by the reimbursement rate for that meal or snack. In order to calculate a claim this way, the site needs to be taking meal counts by name (not headcount).
2. Claiming percentages. This method assumes that you do not have meal counts by name. So, instead we divide up the meals into Free, Reduced and Paid in the same proportion as the participants overall and then do the same math as above.  You have the option to either round down or use conventional rounding, which allows the My Food Program claim estimates to match exactly the claim amounts calculated by state agencies with different rounding protocols.
3. Blended rates. This method also assumes that you do not have meal counts by name. Instead of dividing up the meals into Free, Reduced and Paid, we calculate a "weighted average" reimbursement rate for each meal type based on the proportion of participants overall. Then we multiply the weighted average meal rate by the total meals by type.
4. Fixed Rates. This method is used when the state agency has the sponsor compute the Free, Reduced and Paid participant counts for a month and then those counts are used for a period of time, usually a fiscal month.

The number of participants in each income eligibility category is determined by the Participant Claim Roster Method.

This article explains how My Food Program computes the payment amount for a month claim.

For site types other than Family Child Care Homes, we then break that claim down into:

• Operating Funds - which go to the center
• Meal Reimbursement
• Cash in Lieu of Commodities
• Admin Funds - which go to the sponsor

This distribution is included at the bottom of the Claim Summary Report.

Up to 15% of Meal Reimbursement can be used for administrative costs. 

• If you are self-sponsored (i.e. signed up directly with the state agency) then those funds are kept within your organization. 
• If you have a sponsor, then the administrative funds are retained by the sponsor in return for taking on the administrative responsibilities.

To calculate the amount of money in the claim that is set aside for administrative funds, we look at the "Sponsor Percentage" field in Site Details

The Site Percentage is the opposite of the Sponsor Percentage. For example, if the Sponsor Percentage is 15%, then the Site Percentage is 85%.

Cash-in-Lieu of commodities is a separate payment made for lunches and suppers only. Since this is a direct payment for food service, it is not included in the calculations for administrative funds.

At least 85% of the Meal Reimbursement and the full Cash in Lieu of Commodities needs to be spent operating the food service.

Let's take a look at a sample claim calculation.

Let's start with the Admin Funds. How did My Food Program get that answer?

We multiplied the Meal Reimbursement by the Sponsor Percentage, which is this case was 15%

Now let's look at the Operating Funds. We got that answer by multiplying the Meal Reimbursement by the Site Percentage and adding the Cash in Lieu of Commodities.

$2186.54 x 0.85  = $1858.56 = Meal Reimbursement to the Site

$1858.56 + $41.40 = $1899.96 = Operating Funds for the Site