Administrative Costs in the Child and Adult Care Food Program: Results of an Exploratory Study of the Reimbursement System for Sponsors of Family Child Care Homes

Providers of child day care services operating out of their homes may be reimbursed for meals and snacks served to participating children through USDA's Child and Adult Care Food Program (CACFP). To participate, these homes must be sponsored by a public or private organization that recruits the homes, trains them to follow CACFP rules, monitors compliance with the rules, and handles meal reimbursement claims and payments. CACFP reimburses sponsors for the administrative expenses incurred in conducting these activities. In 1996, Congress instituted a meal reimbursement system to better target benefits to low-income providers and children. The system created new administrative tasks for sponsors and a need for more time to be spent on some of the tasks conducted previously. This situation has raised concerns as to the adequacy of reimbursements. The decline in the number of CACFP sponsors-a 6 percent drop between 1995 and 2001-has further added to the concern. To address the issue, this study explores the administrative cost reimbursement system for CACFP sponsors that oversee the family child care homes portion of the CACFP. Costs reported by sponsors on average were about 5 percent higher than allowable reimbursement amounts. The report also presents and discusses alternative administrative reimbursement systems used by other Federal programs.