As a center participating in the Child & Adult Care Food Program (CACFP), you might think only sponsors can be declared seriously deficient (SD). The reality is your center can be flagged as seriously deficient and even placed on the National Disqualified List (NDL) if compliance issues aren’t addressed. This is true whether you operate a child care center, adult care center, or At Risk Afterschool Program.

See our earlier blog post here for more details.

The good news? You can avoid this! First, understand what can cause you to be declared seriously deficient. Let’s begin with the most common pitfalls—especially in financial management— and how to avoid them.

🚨 Financial Management Mistakes 

State agencies have increased focus on financial management in CACFP. Using inadequate systems or software to manage funds can result in being seriously deficient.

1️⃣ Mismanaging Your CACFP Budget

Your CACFP budget is a financial roadmap for how funds should be used. Failing to maintain or follow this can lead to non-compliance. Common mistakes include:

• Spending funds on unapproved items.
• Underspending on approved items.
• Failure to keep your budget up-to-date.

💡 PRO TIP: Review your budget monthly to ensure spending stays on track. Get approval if you need to make adjustments.

2️⃣ Not Tracking Reimbursements & Expenses

Every CACFP reimbursement dollar must be accounted for. Keep detailed records of all reimbursements and expenses, including: 

• Receipts and invoices for every CACFP-related expense.
• A separate bank account for CACFP funds.
• Accounting software or professional services to maintain accurate records.

💡 WARNING: If you cannot produce accurate financial records during a CACFP review, you risk being declared seriously deficient.

Need help managing CACFP finances? Click here.

3️⃣ Purchasing Unallowable Items

CACFP reimbursements are not extra income – they must be spent on approved items only. Using them to buy personal items or business items not relevant for the Program could result in paying those funds back to the state agency.

💡 BEST PRACTICE: Unsure if something is allowable? Check with your sponsor or state agency before purchasing.

4️⃣ Not Spending Enough CACFP Funds

Underspending is just as risky as spending on unallowable items! CACFP funds help cover the cost of providing healthy meals – not to generate a profit. Not using funds as intended can trigger closer state agency scrutiny during reviews.

💡 TIP: Ensure every dollar of CACFP reimbursement is spent on approved items.

5️⃣ Failing to Update Financial Management Plans

Your CACFP Management Plan details how you handle finances and operate the Program. If something changes—you must update your management plan. Failing to do this can result in being seriously deficient.

• Regularly review and update your plan – including financial details.
• Keep documentation of approvals.

📂 Poor Record-Keeping 

Accurate records are essential to support reimbursement claims. Missing, incomplete, or falsified records can make you seriously deficient.

• Meal counts – Claim only eligible meals.
• Attendance records – Ensure meal counts match attendance logs.
• Menus & meal records – Verify meals meet CACFP requirements.
• Receipts – Keep documentation for food & supply purchases.
• Staff training records – Keep proof of required CACFP training.

💡 REMINDER: If records don’t back up reimbursement claims, you could be seriously deficient and required to repay funds.

🍽️ Serving Non-Compliant Meals

CACFP meal pattern requirements are designed so children receive healthy, nutritious meals. 

Common violations include:

• Missing required meal components (e.g., milk, grains, fruits, vegetables, or meat).
• Serving unallowable items like grain-based desserts or unapproved milk types.
• Serving insufficient food quantities for each age group.

💡 SOLUTION: Regularly review meal pattern requirements and records to prevent costly errors! Check out meal patterns here.

🚨 Claiming Meals Not Served

Claiming meals that weren’t served is a severe violation in CACFP. In fact, it’s considered fraud.

• Over-Claiming Meals – Reporting more meals than children present.
• Claiming Un-Enrolled Children – Recording meals for children no longer attending the center.

💡 WARNING: Fraudulent claims can lead to termination and placement on the NDL. Always report meal counts accurately and at point-of-service!

👀 Ignoring Sponsor Guidance & Training

Your sponsor and state agency play vital roles in compliance. It’s important to actively participate in training and follow all guidance.

• Don’t skip required training.
• Don’t ignore compliance issues identified during sponsor or state agency visits.

💡 TIP: If your sponsor or state agency identifies an issue, fix it immediately. 

✅ How to Avoid Serious Deficiency

• Keep accurate financial records.
• Spend CACFP funds only on allowable costs.
• Ensure all meals meet CACFP requirements. 
• Be honest in meal counts and recordkeeping.
• Follow sponsor/state agency guidance & complete training.

By staying proactive, you can continue providing healthy, nutritious meals to children.

What happens next?

If your center is declared seriously deficient, what does that look like? 

Don’t miss our next post, “The CACFP Serious Deficiency Process: What to Expect.” Stay tuned! 🚀