(1) The written request for a review shall be postmarked within 15 calendar days of the date the appellant received the notice of the denial of all or a part of the Claim for Reimbursement or withholding of payment, and the State agency shall acknowledge the receipt of the request for appeal within 10 calendar days;

(2) The appellant may refute the action specified in the notice in person and by written documentation to the review official. In order to be considered, written documentation must be filed with the review official not later than 30 calendar days after the appellant received the notice. The appellant may retain legal counsel, or may be represented by another person. A hearing shall be held by the review official in addition to, or in lieu of, a review of written information submitted by the appellant only if the appellant so specifies in the letter of request for review. Failure of the appellant school food authority's representative to appear at a scheduled hearing shall constitute the appellant school food authority's waiver of the right to a personal appearance before the review official, unless the review official agrees to reschedule the hearing. A representative of the State agency shall be allowed to attend the hearing to respond to the appellant's testimony and to answer questions posed by the review official;

(3) If the appellant has requested a hearing, the appellant and the State agency shall be provided with at least 10 calendar days advance written notice, sent by certified mail, return receipt requested, of the time, date and place of the hearing;

(4) Any information on which the State agency's action was based shall be available to the appellant for inspection from the date of receipt of the request for review;

(5) The review official shall be an independent and impartial official other than, and not accountable to, any person authorized to make decisions that are subject to appeal under the provisions of this section;

(6) The review official shall make a determination based on information provided by the State agency and the appellant, and on Program regulations;

(7) Within 60 calendar days of the State agency's receipt of the request for review, by written notice, sent by certified mail, return receipt requested, the review official shall inform the State agency and the appellant of the determination of the review official. The final determination shall take effect upon receipt of the written notice of the final decision by the school food authority;

(8) The State agency's action shall remain in effect during the appeal process;

(9) The determination by the State review official is the final administrative determination to be afforded to the appellant.

(r) FCS review activity. The term "State agency" and all the provisions specified in paragraphs (a)-(h) of this section refer to FCS when FCS conducts administrative reviews or followup reviews in accordance with § 210.30(d)(2) of this part. FCS will notify the State agency of the review findings and the need for corrective action and fiscal action. The State agency shall pursue any needed follow-up activity.

[56 FR 32942, July 17, 1991; 56 FR 55527, Oct. 28, 1991, as amended at 57 FR 38584, Aug. 26, 1992; 57 FR 40729, Sept. 4, 1992; 59 FR 1894, Jan. 13, 1994]

§ 210.18a Assessment, improvement and monitoring system.

(a) Effective date. The provisions of this section are effective through June 30, 1992.

(b) Assessment, Improvement and Monitoring System (AIMS). Each State agency shall perform AIMS reviews, audits or a combination thereof of all school food authorities participating in the Program in accordance with the provisions of this section; or a State agency may develop an alternate monitoring system as specified in paragraph (j) of this section.

(c) AIMS definitions. The following definitions are provided in order to clarify AIMS requirements:

(1) AIMS means the Assessment, Improvement and Monitoring System. This is a management improvement system used in the National School Lunch and Commodity School Programs.

(2) AIMS audits means on-site evaluations of school food authorities participating in the Program for compliance with AIMS performance standards, by State auditors or State contracted auditors once every 2 years, in accordance with USDA's audit guide or an audit guide approved by FCS and USDA's OIG.

(3) AIMS performance standards means the following standards which measure compliance with Program regulations:

(i) Performance Standard 1-Certification-Within the school food authority, each child's application for free and reduced price meals is correctly approved or denied in accordance with the applicable provisions of part 245.

(ii) Performance Standard 2Claims The number of free and reduced price meals claimed for reimbursement by each school for any period are, in each case, equal to the number of meals which are served to children who are correctly approved for free and for reduced price meals, respectively, during the period.

(iii) Performance Standard 3-Counting-The system used for counting and recording meal totals, by type, claimed for reimbursement at both the school food authority and school levels yields correct claims.

(iv) Performance Standard 4-Components-Meals claimed for reimbursement within the school food authority contain food items as required by $210.10.

(4) AIMS reviews means on-site evaluation, of all school food authorities participating in the Program during each 4-year AIMS review period, by the State agency or State auditors for compliance with the AIMS performance standards and follow-up reviews, as required.

(5) Corrective action plan means the written description a school food authority submits to the State agency to explain how and when a program deficiency will be corrected.

(6) Large school food authority means, in any State:

(i) All school food authorities that participate in the Program and have enrollments of 40,000 students or more each; and

(ii) The two largest school food authorities that participate in the Pro

gram and have enrollments of 2,000 students or more each.

(7) Second review thresholds means the degree of error of an AIMS performance standard as specified in paragraph (e)(4) of this section which, if exceeded in a reviewed school food authority, triggers a second AIMS review in all large school food authorities and in at least 25 percent of those small school food authorities which exceed second review thresholds on a first review.

(8) Small school food authority means, in any State, a school food authority that participates in the Program and is not a large school food authority.

(d) Number of schools reviewed or audited under AIMS. The number of schools within the school food authority which must be included in a review or audit is dependent upon the total number of schools in the school food authority. The minimum number of schools the State agency shall review or audit is illustrated in Table A:

1 Minimum number of schools to be reviewed or audited. 2 Twelve plus 5 percent of the number of schools over 100. Fractions shall be rounded to the nearest whole number.

(e) AIMS reviews. States performing AIMS reviews shall monitor compliance with the AIMS performance standards described in paragraph (c) of this section. On the first AIMS review, the State agency shall review the school food authority for Performance Standards 1-4. On second AIMS reviews, the State agency shall, at a minimum, review the school food authority for the performance standards which exceeded second review thresholds in the first review.

(1) Scope of AIMS reviews. In reviewing performance standards:

(i) The State agency shall analyze and determine the adequacy of local approval procedures for free and reduced price meals by examining the eligibility determinations made within the school food authority. The State

agency shall review the applications for all children for whom application was made attending the reviewed schools, or a statistically valid sample of the applications for such children. The State agency shall also ensure that the system to update the application file is adequate. If the State agency chooses to review a statistically valid sample of applications, the State agency shall ensure that the sample size is large enough so that there is a 95 percent chance that the actual error rate for all applications is not less than 2 percentage points less than the error rate found in the sample (i.e., the lower bound of the one-sided 95 percent confidence interval is no more than 2 percentage points less than the point estimate). In addition, the State agency shall determine the need for a second review and base fiscal action upon the error rate found in the sample.

(ii) The State agency shall determine that, for each school reviewed, the number of free and reduced price meals claimed for each day of the most recent month for which the school food authority has submitted a claim are equal to the number of meals served to eligible children for that claiming month. In order to make this determination, State agencies shall review the data required to be maintained by the school food authority under § 210.8(a) and observe the meal counting and claiming procedures employed by each school reviewed.

(iii) The State agency shall ensure that each school reviewed has an adequate system for counting and claiming meals served by reimbursement type. An adequate system is one which meets the following objectives:

(A) Provides accurate counts of the number of reimbursable free, reduced price and paid meals served to eligible children on a daily basis;

(B) Accurately records and reports those counts to the school food authority;

(C) Prevents the overt identification of free and reduced price meal recipients in accordance with 7 CFR part 245; and

(D) Is monitored by the school food authority in accordance with §210.8(a) to ensure that internal controls exist.

State agencies shall review each system to determine whether counts are taken at the point of service and whether the counting and claiming system, as implemented, meets these objectives. If an alternative counting system is employed, State agencies shall ensure that it achieves the desired objectives, is correctly implemented and is approved by the State agency. The State agency shall also ensure that the school food authority properly consolidates meal counts from its schools.

(iv) The State agency shall determine by observation of a representative sample of meals that meals contain food items as required in §210.10.

(2) Timing of AIMS reviews. During each 4-year AIMS review period, the first AIMS review of a school food authority shall be completed within the school year in which the review was begun. A second AIMS review, when required, is recommended to be conducted in the same school year as the first review and is required to be conducted no later than December 31 of the school year following the first review.

(3) Method of selecting school food authorities and schools to review.

(i) Each school year, the State agency shall use its own criteria to select school food authorities for AIMS reviews; provided that all participating school food authorities are reviewed at least once every 4 years and that school food authorities found on the first review to exceed second review thresholds are subject to second reviews as specified in paragraph (e)(4) of this section.

(ii) On a first AIMS review of a school food authority, the State agency shall select the required minimum number of schools to review from those which consistently claim that a high proportion of children eligible for free or reduced price meals have been served. However, if the State agency has reason to believe that this criterion will not lead to a review of problem schools, the State agency shall substitute schools with the likelihood of problems. The State's reasons for substitution shall be kept on file at the State agency and will be subject to review by FCSRO.

(4) Second review thresholds. State agencies shall ensure that corrective action plans are completed by all school food authorities which are found on first reviews to exceed the second review thresholds described below. Further, State agencies shall conduct second reviews of: All large school food authorities found to exceed the second review thresholds on first reviews; and at least 25 percent of small school food authorities found to exceed those thresholds on first reviews. In determining which small school food authorities to include in the second review sample, State agencies shall, at a minimum, select those school food authorities which have the most serious problems on the first review. A second review threshold is exceeded when:

(i) For AIMS Performance Standard 1, 10 percent or more (but not less than 10 children) of the children listed on reviewed applications and attending reviewed schools in a school food authority are incorrectly approved or denied for free or reduced price meal benefits; and/or

(ii) For AIMS Performance Standard 2, a number of schools reviewed in a school food authority, as specified in Table B of paragraph (e)(5) of this section, claim reimbursement for more free or more reduced price meals, respectively, than the number of children correctly approved for such meals for the review period times the days of operation times the attendance factor used by the school food authority under §210.8(a); and or

(iii) For AIMS Performance Standard 3, a number of schools reviewed in a school food authority, as specified in Table B of paragraph (e)(5), have an inadequate system for counting and recording meal totals by type claimed for reimbursement, or the school food authority does not use valid procedures for consolidating claims; and/or

(iv) For AIMS Performance Standard 4, 10 percent or more of the total meals observed in a school food authority are missing one or more required food items.

(5) Performance standards 2 and 3 thresholds. Table B indicates the number of schools violating Performance Standards 2 or 3, thus necessitating a corrective action plan in the applicable

1 Number of schools violating Performance Standards 2 or 3 respectively, thus necessitating a second review of the school food authority.

210 plus the number identified above for the appropriate increment.

(6) Corrective action plans for AIMS reviews. Corrective action plans are required to address AIMS performance standard deficiencies exceeding the second review thresholds described in this section. The following procedures shall be followed to develop a corrective action plan:

(i) The State agency shall assist the school food authority in developing a mutually agreed upon corrective action plan.

(ii) The corrective action plan shall identify the corrective actions and timeframes needed to correct the deficiencies found during the review. Corrective action shall include all necessary fiscal actions as described in § 210.19(c), including adjusting data to be used in preparing the Claim for Reimbursement.

(iii) The plan shall be written, signed by the proper official of the school food authority, and submitted to and approved by the State agency within 60 days following the exit conference of a review. State agencies may extend this deadline to 90 days. Extensions beyond 90 days may be made, for cause, with written justification to and approval by FCSRO.

(iv) The State agency shall require the school food authority to implement an amended or extended corrective action plan when second review thresh

olds are exceeded on a second AIMS review.

(7) New violations found on a second AIMS review. If, during the course of a second AIMS review, a performance standard violation is found that has not been noted on a previous AIMS review, the State agency shall institute and document appropriate corrective action. If the violation exceeds the second review threshold, the State agency shall require a corrective action plan and the completion of corrective action. The State agency shall take fiscal action as described in §210.19(c) of this part for any degree of violation of AIMS Performance Standards 2, 3, and 4.

(f) AIMS audits. Audits by State agency, State or State-contracted auditors may be used as an alternative to AIMS reviews. if the State agency chooses this option, the audit must ensure that the four performance standards listed under paragraph (c) of this section are being complied with by the audited school food authority. This includes performing all activities described in paragraph (e)(1) of this section. Additionally, a State using AIMS audits in place of AIMS reviews shall:

(1) Audit school food authorities once every 2 years;

(2) Take fiscal action in accordance with §210.19(c);

(3) Have a documented system for achieving corrective action;

(4) Select schools within a school food authority based upon generally accepted audit principles; and

(5) Use a State audit guide approved by FCS. A State agency shall submit its guide to FCSRO by February 1 of each year; except that portions of the guide which do not change annually need not be resubmitted. State agencies shall provide the title of the sections that remain unchanged, as well as the year of the last guide in which the sections were submitted.

(g) AIMS exit conference, notification and corrective action. The State agency and the school food authority shall hold an exit conference at the close of an AIMS review or audit to discuss the deficiencies observed, the extent of the deficiencies and the corrective action needed to correct the deficiencies. If a corrective action plan is required as

described in paragraph (e)(6) of this seciton, it shall be discussed during the exit conference. After every AIMS review or audit, the State shall provide written notification of the review or audit findings to the school food authority's superintendent or authorized representative who signed the State agency/school food authority agreement or who is otherwise authorized to represent the superintendent. The State shall require that the school food authority take and document corrective action for any program deficiency found on any review or audit. Corrective action may include training, assistance, recalculation of data to ensure the correctness of any claim that the school food authority is preparing at the time of the review, or other actions.

(h) AIMS reporting. Each State agency shall report to FCSRO:

(1) The name of any school food authority which exceeds a second review on a second AIMS review in any review period and the type and extent of the regulatory violations; and

(2) Beginning March 1, 1989, the results of AIMS reviews/audits by March 1 of each school year, on a form designated by FCS. In such annual reports, the State agency shall include the results of all AIMS reviews/audits conducted in the preceding school year and any consequent second AIMS reviews performed in the preceding school year or by December 31 of the current school year.

(i) AIMS recordkeeping. Each State agency shall keep records which document the details of all AIMS reviews or audits and demonstrate the degree of compliance with AIMS performance standards. AIMS records shall be kept on file by the State agency for a minimum of 3 years after the end of the school year in which the review or audit was conducted or after the school year in which problems have been resolved, whichever is later. Such records shall include documentation of AIMS first reviews and any consequent second reviews. When necessary, the records must include a corrective action plan as described in this section. Additionally, the State agency must have on file: