Judy Kennedy runs a child daycare home in Ottumwa. She has participated in the Child and Adult Care Food Program (CACFP), which is administered by the United States Department of Agriculture through the Iowa Department of Education's Bureau of Nutrition Programs, for seven months. The CACFP is a federal program that provides reimbursement for meals and snacks provided to children in daycare homes and centers. Daycare homes such as Kennedy Daycare must be supervised by a sponsoring organization, in this case SIEDA. To participate in CACFP in Iowa, the home provider must be licensed by the Iowa Department of Human Services ["DHS"]. Ms. Kennedy's daycare is licensed as a category C provider. The limit on the number of children who may be in care in a category C home, as imposed by DHS, is discussed under the Conclusions of Law. At issue in this appeal are two Notices of Intent to Terminate that SIEDA sent to Ms. Kennedy on or about January 5, 2006 (Exhibits 27 and 32). The reasons provided in the Notices were being over registration capacity (cited as "other circumstance related to non-performance") and submission of false claims for reimbursement.

Non-compliance with the above limits is not listed in 7 C.F.R. part 226 or the CACFP agreement between sponsor and provider as a serious deficiency. Exercising the authority granted in 281?IAC 6.12(2)"o"(5) , the hearing officer consulted Rod Bakken, Lead Consultant, who helps administer CACFP for the State of Iowa. Mr. Bakken stated that his Bureau has not instructed sponsors to treat capacity issues as serious deficiencies. He believes that the appropriate guidance is that the sponsor shall not reimburse the provider for meals served beyond capacity. But any chronic issues of capacity should be reported by the sponsor to DHS as the licensing authority for appropriate action. A sponsor may caution a provider that capacity issues exist, as SIEDA did with Ms. Kennedy. We applaud the fact that SIEDA asked representatives of the local DHS office to work with them to explain to Ms. Kennedy why category C homes have the capacity limits quoted above and how DHS deals with capacity noncompliance. However, we do not believe that being over capacity is a serious deficiency for purposes of termination from CACFP.

The second deficiency cited by the sponsor is submission of false claims. A false claim allegation does not have to equate to claiming payment for meals not served. It also can be founded in a case of a provider claiming fewer, rather than more, actual meals served (as in the case of Jaden and Leilani). The gist of the allegation is that Ms. Kennedy continued in her failure to keep attendance and meal service records in the manner required by federal law. The Corrective Action Plan offered to Ms. Kennedy, that she mark meals served at the time of service, was appropriate.

The regulations state "[e]ach sponsoring organization shall accept final administration and financial responsibility for food service operations in all child ? day care facilities under its jurisdiction." 7 C.F.R. ? 226.16(c). A home provider is required to be fiscally accountable to the public for the funds she receives through the program. The sponsor is to hold the home provider accountable on behalf of the public. While this result may seem harsh to Ms. Kennedy, the rationale for the strictness of the regulations is simple. CACFP is funded by public monies; that is, by taxpayers. A home provider is required to be fiscally accountable to the public for the funds s/he receives through the program. When such accountability is lacking, the public trust is gone, and the sponsor must act accordingly. Repeating the same lack of care in recordkeeping that she was warned of in November bespeaks gross carelessness on the part of Ms. Kennedy at best and a callous disregard on her part for the public's money at worst.

For the sole reason that Ms. Kennedy failed to fully and permanently correct the serious deficiency of submitting false claims, her proposed termination from the Child and Adult Care Food Program is hereby affirmed.