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Thursday, A ugust 9, 1956
Dec.
502.205 Agreements between CCC
and State agencies.
502.206 Agreements between State agencies and schools and child-care in
stitutions.
502.207 Agreements between CCC and pri vate schools and child-care in
stitutions.
502.208 Reimbursement.
502.209 Requirements for participation.
502.210 Effective dates for reimbursement.
502.211 Administrative analyses and audits.
502.212 State agency reports and records.
502.213 Investigations.
502.214 Overclaims.
502.215 Definitions.
502.216 Miscellaneous provisions.
502.217 Program information.
Authority : 502.200 to 502.217 issued under sec. 4, 62 Stat. 1070. 15 U. S. C. 714b.
Interpret or apply sec. 201, 63 Stat. 1052, as amended, 70 Stat. 596; 7 . S. C. 1446.

502.200 General Purpose and scope.
This part announces the policies and pre scribes the general regulations with re spect to the operaton of the Special Milk Program under section 201 c of the Agricultural Act of 1949, as amended, and sets forth the general requirements for participation in the program. The pertinent part of 201 c , as amended, reads as follows:
for each of the two fiscal years in the period beginning July 1, 1956, and end ing June 30, 1958, not to exceed $75,000,000, of the funds of the Commodity Credit Cor poration shall be used to increase the con sumption of fluid m ilk by children in 1 nonprofit schools of high-school grade and under; and 2 nonprofit nursery schools, child-care centers, settlement houses, summer camps, and similar nonprofit insti tutions devoted to the care and training of children.

502.201 Administration, a Within the United States Department of Agri culture, theAgricultural Marketing Service hereinafter referred to as A M S
shall act for and on behalf of the Com modity Credit Corporation hereinafter referred to as CC& in connection with the operation of this program. W ithin AMS, and under the general supervision of the Administrator of AMS, the Food Distribution Division hereinafter re ferred to as FD D -A M S shall be respon sible for program administration.
b To the extent practicable and Permissible under State law, responsi bility for the administration of this pro gram in schools and child-care institu tions within the States shall be in the respective educational agency of the State: Provided, however, That another agency of the State upon request by an appropriate State official, may be ap proved by F D D -A M S to administer the Program in child-care institutions.
c FDD-AM S shall administer the Program in any class of schools hereinafter referred to as private schools and child-care institutions in which the Program is not administered by the state.
502.202 Advance of funds to State Wencies. a For each Federal fiscal year FDD-AMS shall initially reserve for Advance to a State educational agency catering into agreement with CCC an amount equal to 115 percent of the ex penditures of that agency under the pro
FEDERAL REGISTER
gram in the Federal fiscal year ending June 30,1956. Expenditures in that year shall be determined by F D D -A M S on the basis of the latest information available to FD D -A M S at the time the initial an
nual reserve for each State is developed.
b This initial reserve shall be ad vanced to the State educational agency on a quarterly basis. F D D -A M S reserves the right to request any State educa tional agency to justify its need for any scheduled quarterly payment prior to its advancement. In the event that a State educational agency does not justify the need for the full amount of any sched uled quarterly payment, F D D -A M S shall withhold from such payment the amount determined to be in excess of program needs.
c In the event that a State educa tional agency justifies the need for funds in excess of the amount of its initial re serve, additional funds shall be made available, at such times as needed, up to an amount that will provide a total pay ment for the year equal to 130 percent of its expenditures in the Federal fiscal year ending June 30, 1956. Any needed funds in excess of 130 percent of its ex penditures in that Federal fiscal year, when justified, will be provided to the extent funds are available for such purpose.
d For each Federal fiscal year F D D AM S shall initially reserve for advance to a. State agency, other than the State educational agency, entering into an agreement with CCC an amount equal to one hundred dollars for each one thousand children between the ages of 5 and 17 years residing in the State.
This initial reserve shall be advanced quarterly to such State agency in an amount estimated to meet anticipated quarterly reimbursement obligations.
In the event that such State agency jus tifies the need for funds in excess of its initial annual reserve, such funds will be provided to the extent funds are avail able for such purpose.
e Following the close of the Federal fiscal year, any funds advanced under this program to an educational or other agency of a State that remain unobli gated under the program shall be re turned to AM S within 30 days after a de mand is made by FD D -A M S. The State shall also pay to AM S any interest paid or credited to it by reason of the deposit of any funds advanced to it under this program.
502.203 Accounting for program funds by State agencies. Each State agency entering into an agreement with CCC shall maintain a separate account of all Federal funds advanced to it under the program and shall maintain a cur rent record of payments made to schools and child-care institutions and of the unexpended balance remaining on hand.
All payments iqade from such funds shall be made only upon properly certified vouchers.
502.204 Use of funds. Funds made available under this program shall be used to encourage the increased con sumption of milk through reimbursement payments to schools and child-care in stitutions in connection with the pur chase of milk for service to children.

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502.205 Agreements between C C C
and State agencies. CCC shall enter into written agreements with State agencies for the administration of the program within the States. The agreement shall show the class or classes of schools and child-care institutions for which the State agency is assuming responsibility.
502.206 Agreements between State agencies and schools and child-care in stitutions. State agencies shall enter into written agreements with schools and child-care institutions setting forth the terms and conditions under which the State agencies will reimburse the schools and child-care institutions in connec tion with the purchase of milk for service to children. Such agreements shall contain, as a minimum, the requirements of 502.209.
502.207 Agreements between CCC
and private schools and child-care in stitutions. In those States in which F D D -A M S will administer the program in private schools and child-care insti tutions, CCC shall enter into written agreements with such private schools and child-care institutions setting forth the terms and conditions under which AM S will reimburse the schools and child-care institutions in connection with the purchase of milk for service to children.
502.208 Reimbursement, a Re imbursement payments shall be made for milk purchased for service to children by participating schools and child-care institutions, except that reimbursement shall not be made for the first half pint of milk served as part of a Type A or Type B lunch by schools participating in the National School Lunch Program.
The maximum rate of reimbursement shall be 4 cents per half pint for schools serving Type A or Type B meals under the National School Lunch Program.
For all other schools and for child-care institutions, the maximum reimburse ment rate shall be 3 cents per half pint.
b Less-than-maximum rates of re imbursement shall be assigned, or as signed rates shall be adjusted, if circum stances indicate such action is advisable.
c In child-care institutions, and in schools operating a food service outside the National School Lunch Program or serving more than one meal a day, a portion of the milk served to children may be excluded from reimbursement if such action is deemed advisable in order to encourage the continued expansion of the service of complete school lunches or to accomplish the objectives of this program.
d Schools operating the program in more than one school attendance unit may be regarded as a single school or as individual schools for reimbursement purposes. I f regarded as a single school, reimbursement shall not be made at a rate in excess of 3 cents per half pint unless all units are serving Type A or Type B meals under the National School Lunch Program.
e Schools and child-care institu tions offering milk as a separately priced item shall make maximum use of the reimbursement payments received under this program to reduce the price of milk