USDA Urged to Overhaul Management of Child Nutrition Administrative Funds

The U.S. Department of Agriculture (USDA) has been called upon to enhance its management and oversight of federal funds allocated to states for administering child nutrition programs. A recent report highlights how states face persistent challenges in managing these State Administrative Expense (SAE) funds, emphasizing the need for USDA to modernize its allocation formula and guidance practices.

The Government Accountability Office (GAO) found that the SAE funding formula, established by federal law, does not adequately account for unique state circumstances that can increase administrative costs. Rural states, for instance, often incur greater expenses due to travel requirements for necessary oversight activities but do not receive additional funding to address these challenges. Furthermore, uncertainties surrounding annual funding amounts and short timelines for spending supplemental funds compound these difficulties. Although USDA has implemented certain flexibilities, many issues remain unresolved, prompting GAO to recommend a comprehensive review of the allocation process and exploration of regulatory or legislative changes.

SAE funds primarily cover salaries and other administrative costs associated with operating school meal programs and related child nutrition initiatives. Despite generally stable funding levels from fiscal years 2019 through 2023, a notable increase occurred in 2024, linked to higher meal service rates two years prior. Nevertheless, the challenges faced by states in effectively utilizing these funds raise concerns about the efficiency and equity of the current system. States must also contend with outdated USDA guidance, last revised in 1988, that fails to reflect contemporary policies and procedures, leaving state agencies without clear direction.

To address these issues, GAO issued four recommendations urging USDA to not only reassess its SAE funding formula but also to update its compliance manual, improve communication regarding budget submissions, and set specific timelines for corrective actions following compliance reviews. USDA agreed with the recommendations, noting ongoing efforts to align with its principles of integrity and accountability, though concrete actions and timelines are still awaited.

Article by multiple RFHC contributors, based upon information from the U.S. Government Accountability Office (GAO) report GAO-25-106977

---