EU School Scheme. Points for clarification to assist Member States in implementing the school scheme
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1 EU School Scheme Points for clarification to assist Member States in implementing the school scheme EXPERT GROUP FOR AGRICULTURAL MARKETS CONCERNING ASPECTS FALLING UNDER THE CMO REGULATION ANIMAL PRODUCTS 20/04/2017
2 Introduction 23/12/2016 note to delegates with points to be clarified to assist MS in implementing the school scheme 9/3/2017 first discussion : EU financing and level of EU aid; aid for milk component of Annex V products; eligible costs Today 1) complete previous discussion 2) clarify points linked to strategy (notification, amendments; objectives; simplified cost options and reasonable costs) and to products supplied (prioritisation, other agricultural products ) 2
3 Introduction Clarifications, including examples whenever possible. some questions can't be addressed in abstracto as they require a case-by-case assessment Examples and suggestions for consideration are not exhaustive References to Regulations 1308/2013 and 1370/2013 should be read taking into account the most recent amending regulations: 2016/791 and 2016/795. Merged regulation on school scheme available in CIRCABC as documentation tool 3
4 1. Complete March discussion Questions by AT, CY, CZ, DE, EE, FI, FR, LU, LT, NL, PL, RO, SI, SK EU co-financing Transport costs, EU aid for milk component, VAT, costs related to horizontal actions and corresponding budget items, personnel costs, date of eligibility National payments Questions on other items (e.g. accompanying measures) will be addressed in other meetings 4
5 1. EU co-financing Under current school fruit/vegetables scheme national funds cover 10-15% of budget and EU 75-90% Under the new school scheme co-financing is abolished EU aid not dependent on national funds = 100% from the EU budget Article 23a(6) of Regulation (EU) 1308/2013 "Member States may, in addition to EU aid, grant national aid": different issue as they do not have to 5
6 1. Transport costs What is the difference between Article 4(1)(a) and Article 4(1)(f) of Regulation (EU) 2017/40? Article 4(1)(f) provides for eligibility of transport costs that are not already covered by Article 4(1)(a): transport costs invoiced separately If invoice for portion of fruit supplied to schools (or unit cost set for that portion) covers production, preparation, transport, Art. 4(1)(a) no other transport costs eligible Transport costs for Annex V products not eligible EU aid only for milk component (Art. 23(5) of Reg. 1308/2013); transport costs not eligible also where invoiced separately 6
7 1. EU aid for Annex V products Art. 5(3) of Council Regulation 2016/795: Union aid for milk component of Annex V products EUR 27/100 kg Annex V defines 2 categories - Category I: products 90% milk component - Category II: products 75% milk component Calculation of EU aid: Aid rate for each product in the 2 categories based on their milk component (75% 100%). Example: product with 80% of milk 0.8 x 27 /100 kg milk = 21.6 /100 kg of product, or if aid application for 500 kg of product aid only for the milk: 0.8 x 500 kg 400 kg x 27 /100kg = 108 (= 21.6 /100 kg of product) Information required by Art. 2(2)f of Regulation (EU) 2017/39 7
8 1. VAT Art. 4(3) of Regulation (EU) 2017/40 VAT is not eligible for EU aid Member States may reimburse the non-recoverable VAT to non-economic operators (e.g. public educational systems) this is not considered State aid Member States may reimburse the non-recoverable VAT to economic operators within the de minimis State aid rules - Regulation (EU) No 1407/2013 for enterprises, threshold : EUR over 3 years - Regulation (EU) No 1408/2013 for farmers, threshold: EUR over 3 years 8
9 1. Personnel costs Art. 4(4) of Regulation (EU) 2017/40: personnel costs financed by public funds of Member States not eligible Not new for school fruit/vegetables scheme educational measures and monitoring, evaluation, information activities, in addition to supply: - eligible costs in case of outsourced activities (Art. 5 of Regulation (EC) No 288/2009) - not eligible if financed from public funds of Member States (Art. 4(4) of Regulation (EU) 2016/247) 9
10 1. Personnel costs Examples of not eligible costs: - school staff involved in preparation and distribution of fruit/vegetables/milk to schoolchildren - school teachers, or nutritionists in Health Ministry, involved in educational measures for schoolchildren - staff in competent authorities in charge of managing the school scheme (including for control, monitoring, evaluation, information activities) 10
11 Examples of eligible costs: 1. Personnel costs Costs for staff by the supplier (eg. producer group) carrying out activities under the educational measures Costs for outsourced expert advice/qualified personnel to carry out activities under the accompanying educational measures: - contractual arrangement with the body carrying out the activities; - personnel costs, directly linked to the activities to be carried out, form an integral part of the contract, and are clearly specified in the contract 11
12 1. Eligible costs: starting date Can activities for the school scheme be carried out before 1 August 2017? Examples: tenders to select aid applicants; preparation of information/publicity tools Yes if - after entry into force of Regulation (EU) 2017/39 and (EU) 2017/40 and - after notification of strategy to the Commission but payments for those activities (e.g. poster on the new school scheme) after 1 August 2017 (Art. 5(4) of Regulation (EU) 2017/39) 12
13 1. National payments Can one application receive aid from both EU and national funds or is it necessary to fund it entirely from one or the other? Up to Member States' choice 13
14 2. Strategy: notification Strategy for 6 years prior to participation in scheme (Art. 23(8) of Regulation (EU) 1308/2013 as amended) No more yearly strategy/ies School year starts on 1 August for the purpose of the scheme (Art. 1 of Regulation (EU) 2017/39 and 2017/40) Art. 2(3) of Regulation (EU) 2017/40 addresses concerns on timing in 1 st year of implementation - Strategy for school years 2017/2018 to 2022/2023 notified by (at the latest before, if ready, possible via ISAMM form already in place) - Strategy for school years 2023/2024 to 2028/2029 notified by
15 2. Strategy: amendments Art. 2(4) of Regulation (EU) 2017/40: notify within 2 months Keep in mind the aim of the strategy = long-term planning Content of the strategy (Art. 2(1) of Reg. (EU) 2017/39) does not necessarily warrant annual amendments: - Results associated to general and specific objectives for 6 years and not to annually changing outputs (e.g. number of participating children) - Budget for 6 years based on estimated breakdown supply, educational measures, other costs: allocation for a given year may not affect this - Information on criteria, arrangements, procedures expected to remain stable 15
16 2. Strategy: results to be achieved Art. 2(1)c of Regulation (EU) 2017/39: what if they are not achieved? Example: By 2023, increase by 5% of children's appreciation of fruit/vegetables. Mid-term review in 2020 shows no increase No consequences in terms of audit = no financial correction by Commission under clearance of accounts Amendment of the strategy (Art. 23(8) of Regulation (EU) No 1308/2013) change, as relevant, target or indicator or arrangements to implement the scheme in the future Accountability towards citizens on use of public funds: e.g. audit by European Court of Auditors 16
17 2. Strategy: simplified cost options Art. 2(1)(i) of Regulation (EU) 2017/39 Methods to reimburse categories of eligible costs clearly identified in advance Alternative to reimbursement of costs actually incurred If Member States so wish/authorise Not new "alternative proof" of payment under current school fruit/vegetables scheme and school milk scheme Focus on implementation of activity (operational results or performance) rather than actual costs incurred 17
18 2. Strategy: examples of simplified cost options Standard rates unit costs amount per unit EUR 5 per schoolchild under the educational measure farm visit. Amount: if 100 children in the participating school visit the farm 5x100= EUR 500 EUR 40 as hourly cost of external trainer. Amount: If 2-hour training on health pyramid to each of the 5 classes in participating school 40x2x5= EUR 400 EUR 0,10 per portion of drinking milk supplied. Amount: if 100 children in participating school receive drinking milk twice a week for 20 weeks 0,10x100x2x20=EUR
19 2. Strategy: examples of simplified cost options Flat rate amount determined as percentage (rate) of other categories of eligible costs Used in structural funds, generally for administrative costs (% of personnel costs) 19
20 2. Strategy: examples of simplified cost options Lump sum fixed amount upon completion of specific activity or output or result EUR 100 per pedagogical kit for schoolchildren to encourage fruit, vegetables and milk consumption (costs for developing, producing and delivering to participating schools a pedagogical kit with leaflets, games, small gadgets) EUR 1000 per information seminar for school principals in Region XYZ (costs for organising and holding the seminar) 20
21 2. Strategy: how to establish simplified cost options Art 2(1)(i) of Regulation (EU) 2017/39 Fair reasonable not excessive or extreme Example: if over last 5 year of implementation of the accompanying measure farm visit in school fruit scheme the average cost per child was around EUR 5 the Commission would not expect EUR 7 (See also slide No 25 on reasonable costs) Equitable should ensure equal treatment Example: EUR 40 hourly cost of trainer in line with the hourly cost of trainers in the programme supported under the EU structural funds 21
22 2. Strategy: how to establish simplified cost options Art 2(1)(i) of Regulation (EU) 2017/39 Verifiable based on documentary evidence that can be verified Member States should formalise in a document the methodology (how they have established the cost options, the data sources, the calculation itself to determine the cost options) If simplified cost options, the "price" referred to in Art. 4(6) of Regulation (EU) 2017/39 shall be the one set under the cost option in question (e.g. EUR 0,10 per portion of milk supplied) 22
23 2. Strategy: how to establish simplified cost options Article 2(1)(i) of Regulation (EU) 2017/39 In practice: 1. Statistical data (e.g. annual labour costs published by Eurostat or national statistical institute) 2. Beneficiaries' data (historical data of beneficiaries, related to the activities, or based on cost-accounting practice of beneficiaries) Audits by the Commission will verify the system in place (methodology in accordance with Art 2(1)(i) of Regulation 2017/39 has been established and is followed in practice) 23
24 2. Strategy: reasonable costs if cost-based system Article 2(1)(i) of Regulation (EU) 2017/39 Reimbursement to aid applicants based on costs incurred Risk of over-specifications, prices too high Why require reasonable costs? Principle of sound financial management in Financial Regulation applicable to EU budget and in CAP legislation Effectiveness achievement of objectives Efficiency best relationship resources & results Economy resources available in appropriate quantity and quality and at the best price 24
25 2. Strategy: reasonable costs if cost-based system How to assess costs are reasonable? Non-exhaustive list Comparison of different offers Market research Expert advice/evaluation committee Reference or maximum prices Combination of the above European Court of Auditors' guidance in special report 22/2014 (achieving economy) valuable reference In previous discussion, mentioned for milk products refers to all products supplied under the scheme + educational measures + other related costs 25
26 3. Products: priority to fresh fruit/vegetables and milk Article 23(3) of Regulation 1308/2013: taking into account national circumstances, prioritise fruit/vegetables and fresh products of banana sector and/or drinking milk Member States not required to quantify % of fresh fruit/vegetables and drinking milk but this supply prerequisite for supply of other products (e.g. not possible only yoghurt/cheese under the scheme) and strategy to explain clearly how prioritisation will be ensured, as per Art. 23(8) of Regulation 1308/
27 3. Products: distribution in conjunction with regular school meals Special report 10/2011 by European Court of Auditors: are school milk and school fruit scheme effective? es/sfs/documents/cdc_en.pdf Deadweight support beneficiaries who would have made the same choice in the absence of aid milk distributed in canteens a typical meal often includes milk products, which may even be compulsory canteens receive payment for products which they would have served anyway 27
28 3. Products: distribution in conjunction with regular school meals Evaluation of implementation of school fruit and vegetables scheme: where distribution also during school meals, concerns on effectiveness (not all children eat in canteens) Regulation (EU) 2016/791: need to ensure added value and visibility of the school scheme Article 11 of Regulation (EU) 2017/40: 1. Explain in strategy: more effective to provide fruit/vegetables/milk under the school scheme in conjunction with regular school meals? 28
29 3. Products: distribution in conjunction with regular school meals 2. Ensure fruit/vegetables/milk under the school scheme are not used in preparation of regular school meals (no vegetables in a gratin or grated cheese on pasta) 3. Ensure fruit/vegetables/milk under the school scheme are clearly recognisable (information/publicity tool) 4. Ensure fruit/vegetables/milk under the school scheme do not replace products paid by parents or the public under regular school meals (= fruit under meal as EU aid should not replace funding of existing schemes) If free meals: conditions 1, 2 and 3 apply while 4 does not (exception in Art. 23a(5) of Reg. (EU) 1308/2013) 29
30 3. Products : "added" salt/fat/sugar Added = during manufacture or preparation of the products, ingredient added, which does not occur originally in the products Example: Yoghurt: no added sugar but naturally occurring lactose 30
31 3. Products : milk Coefficient for the conversion from litres into kilograms? Only relevant for Annex V products: Member States are encouraged to continue using the coefficient 1,03 set in the current milk scheme (Article 4(3) of Reg. 657/2008) Eligible milk and dairy products: Any kind of milk and milk products intended for human consumption and eligible under the school scheme: Article 23(3)(b), (4)(b) and (5) of Regulation 1308/2013 with certain conditions (e.g. prioritisation, aid limit) The animal species from which the milk originates shall be stated, if it is not bovine 31
32 3. Products : reminder Art. 23(9) of Regulation (EU) 1308/2013 List of products to be supplied involvement of, or autorisation by, national authorities health/nutrition Art. 23(6) of Regulation (EU) 1308/2013 If limited quantities of added sugar/salt/fat previous authorisation by national authorities health/nutrition Art. 2(1)k of Regulation (EU) 2017/39 Strategy indicate procedures to involve relevant authorities and stakeholders 32
33 4. Budget nomenclature The following budget items will be created in AGREX for expenditure declaration of 12 September School fruit and vegetables supply and distribution of products - R.1308/2013, Art.23(1)(a) 2017/2018 for all MS except SE and UK School fruit and vegetables accompanying educational measures - R.1308/2013, Art.23(1)(b) 2017/2018 for all MS except SE and UK School fruit and vegetables other costs - R.1308/2013, Art.23(1)(c) 2017/2018 for all MS except SE and UK School milk - supply and distribution of products - R.1308/2013, Art.23(1)(a) 2017/2018 for all MS School milk accompanying educational measures - R.1308/2013, Art.23(1)(b) 2017/2018 for all MS School milk other costs - R.1308/2013, Art.23(1)(c) 2017/2018 for all MS No budget items for different categories of products (e.g. milk, cheese, Annex V) reporting requirements in annual monitoring reports (Art. 9(3) Reg. 2017/40) 33
34 4. Budget nomenclature If horizontal action for school fruit/vegetables and school milk: Member States may declare expenditure for accompanying educational measure under 1) and (pro rata), or 2) , or 3) Member States may declare expenditure for other related costs may be declared under 1) and (pro rata), or 2) , or 3)
35 Simplified cost options Further information NB: non-legally binding and based on different legal basis EU Structural and Investment Funds /simpl_cost_en.pdf Wine ments/reg _en.pdf Reasonable costs European Court of Auditors, Special Report 22/2014 'Achieving economy: keeping the costs of EU-financed rural development project grants under control" 35
36 Questions? To by 28 April (deadline to review and close discussions on those points in Committee/Expert Group 18 May) Thank you for your attention and feedback! 36
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