PROGRAM OPERATING BUDGET AND CASH ADVANCE POLICIES FOR FOOD FOR PROGRESS AND SECTION 416(B) PROGRAMS

DISCLAIMER: The information provided herein highlights information contained in 7 CFR Part 1499. Except where specifically stated herein, in the event of any discrepancy between the information provided herein and 7 CFR Part 1499, the information in 7 CFR Part 1499 shall prevail.

The Cooperating Sponsor may request a program operating budget from the Commodity Credit Corporation (CCC) to pay selected expenses incurred in carrying out Food for Progress and Section 416(b) programs. A Program Operations Budget is required in order for CCC to approve the expenditure of CCC funds, i.e., CCC dollar payments, for two categories of expenditures: 1) administrative and monitoring of program activities including the provision of technical assistance regarding sales of commodities; and 2) internal transportation, storage and handling (ITSH) expenses, which will only be authorized in the case of urgent and extraordinary relief requirements. CCC will consider only funding expenses incurred on or after the date an agreement is signed by USDA.

CCC will review the Program Operation Budgets to determine if any proposed expenditures are unjustified, exceed legislative authority or are unreasonable. Unless specifically approved, the program operating budget will only cover expenses incurred in the country in which the program is implemented. Any expenses which will be covered by monetization proceeds, if authorized, shall be identified separately. The types of expenses which are allowed and the budget policies for each program are summarized below.

Section 416 (b). CCC funds may not be used to pay administrative costs, such as in-country offices or salaries. However, local proceeds generated from the sale of Section 416(b) commodities can be used to fund administrative costs to the extent specifically approved by CCC in the program agreement. CCC may pay ITSH expenses in the case of urgent and extraordinary relief requirements.

Food for Progress. The legislative authority for Food for Progress agreements allow CCC to fund both administrative and ITSH expenses as described above to the extent specified in the agreement. Note, that CCC will only pay ITSH expenses in the case of urgent and extraordinary relief requirements. Because the two categories of expenses are subject to different funding limits, funds cannot be shifted between them.

Cooperating Sponsors that signed Food for Progress or Section 416(b) agreements with USDA during not more that two consecutive fiscal years of the four most recent fiscal years, excluding the current fiscal year, may request an initial cash advance of up to 50 percent of the total approved budget. Such Cooperating Sponsors may request an additional 35 percent of the total approved operating budget not sooner than 60 days after the date of the previous advance made in connection with the same Program Agreement. Cooperating Sponsors that have signed Food for Progress or Section 416(b) agreements with USDA during three or more consecutive fiscal years of the four most recent fiscal years, excluding the current fiscal year, may request an advance of up to 85 percent of the total approved program operating budget. After the 85 percent has been advanced, no more advances will be provided. The final 15 percent of the Program Operating Budget is available on a reimbursable basis only. Any interest earned will be subtracted from the final amount to be re-claimed.

All advances from CCC must be kept in an interest bearing account. All interest earned on unspent funds shall be treated as program income to be used for the purposes of the grant.  The Cooperating Sponsor shall return to CCC any funds not obligated as of the 180th day after being advanced, together with any interest earned on such unexpended funds.  Funds and interest shall be returned within 30 days of such date.  Funds may be returned either by check or, preferably, by wire transfer.  Forms can be found at  food for progress budgets.html under the bullet entitled Return of Unspent Funds.

CCC Funds & Monetization Proceeds

Program funds associated with different agreements cannot be co-mingled. For example, monetization funds or CCC funds provided to a Cooperating Sponsor for a fiscal year 2000 agreement can not be used to pay for costs associated with a fiscal year 2001 agreement. Likewise, monetization funds or funds provided by CCC for a fiscal year 2002 Food for Progress agreement may not be used to pay for costs associated with a fiscal year 2002 Food for Education agreement.  If a Cooperating Sponsor's internal system of accounting controls is not adequate to prevent co-mingling of funds between agreements, separate accounts should be opened for each agreement.

Please refer to your specific agreement language for guidance on allowable adjustments between line items in an approved Program Operation Budget.

The Cooperating Sponsor must submit within 10 days after the end of each calendar quarter a report that reflects all of the following for the most recent calendar quarter for each Program Agreement:

1) cash on hand at the beginning of the quarter,
2) CCC advances received during the quarter;
3) non-CCC funds received during the quarter;
4) expenditures by subcategory of expenses as defined below; and,
5) cash on hand at the end of the quarter.

Within the administrative category, the expense subcategories include salaries, benefits, general expenses for in country office(s), office expense for U.S. headquarters related to monetization programs, travel, equipment maintenance, equipment leases, equipment purchases with supporting information for each equipment purchase, professional services. Within the ITSH category, the subcategories include: handling, warehouse, and internal transportation. The Cooperating Sponsor may use the suggested Lotus 1-2-3 or Excel format available on diskette or from the FAS website ( http://www.fas.usda.gov ). Notwithstanding 7 CFR Section 1499.7(I), the reports should be sent to: Director, Program, Planning, Development and Evaluation Division, USDA/FAS, STOP 1034, 1400 Independence Avenue, SW., Washington, D.C. 20250-1034 or they may be e-mailed to the Cooperating Sponsor's respective FAS program analyst.

Last modified: Monday, April 14, 2008 06:13:23 PM