Re: Youth Leadership Academy dba Gar Gaar Family Services Appeal of Denial of Application for the Child and Adult Care Food Program (CACFP).

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A22-0378

Re: Youth Leadership Academy dba Gar Gaar Family Services Appeal of Denial of
Application for the Child and Adult Care Food Program (CACFP).

Filed February 13, 2023
Affirmed
Jesson, Judge

Minnesota Department of Education

Barbara Podlucky Berens, Carrie L. Zochert, Berens & Miller, P.A., Minneapolis,
Minnesota (for relator Youth Leadership Academy d/b/a Gar Gaar Family Services)

Keith Ellison, Attorney General, Kristine K. Nogosek, Alec Sloan, Assistant Attorneys
General, St. Paul, Minnesota (for respondent Minnesota Department of Education)

Considered and decided by Jesson, Presiding Judge; Connolly , Judge; and
Johnson, Judge.
NONPRECEDENTIAL OPINION
JESSON, Judge
After relator Youth Leadership Academy d/b/a Gar Gaar Family Services (Gar
Gaar) participated as a sponsor in the Summer Food Service Program (Summer Program),
Gar Gaar applied to be a sponsor of the Child and Adult Care Food Program (Child Care
Program). Respondent Minnesota Department of Education (the Department) denied Gar
Gaar’s application. Gar Gaar appeals the denial of its application because it claims the
Department’s decision was based on erroneous theories of law; arbitrary, capricious, and
unsupported by the record; and violated Gar Gaar’s due process rights. Because the
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Department’s decision applied the correct federal regulations and its findings that Gar Gaar
was neither financially viable nor had proper financial management in place were
supported by substantial evidence, and neither arbitrary nor capricious, we affirm.
FACTS
Gar Gaar is a Minnesota nonprofit organization created in 2020 during the
COVID-19 pandemic with the purpose of providing food to Somali children and adults
who do not have access to regular meals. In order to achieve this mission, Gar Gaar sought
to participate as a sponsor in two federal food-disbursement programs: the Summer
Program and the Child Care Program. 7 C.F.R. §§ 225, 226 (2022).
There are four key components for the effective administration of the Summer
Program and the Child Care Program:
(1) sites—public or non-profit businesses that distribute food
to children and/or adults;

(2) sponsors (Gar Gaar sought this status) —public or
non-profit businesses that regulate sites, provide sites with
training and technical assistance, interact with the state
agency on behalf of the sponsored sites, and reimburse
sites for proper expenses;

(3) state agency (the Department)—regulates sponsors and
sites, provides tec hnical assistance, and distributes
program funds to sponsors; and

(4) United States Department of Agriculture —promulgates
and enforces program regulations, provides administrative
guidance, and reimburses state agencies for funds properly
paid to sponsors.

See 7 C.F.R. §§ 225.2-3, .6(b) (defining and explaining sites, new sponsors, state agency,
and the United States Department of Agriculture’s interplay).
3
Here, our focus is on the role of sponsors, which are subject to detailed regulatory
requirements regarding operations. Sponsors are assessed against three core federal
performance standards: (1) financial viability and financial management, (2) administrative
capability, and (3) program accountability. 7 C.F.R. § 226.6(b)(1)(xviii)(A-C).
In summer 2021, Gar Gaar participated as a sponsor after the Department approved
its application for the Summer Program. See 7 C.F.R. § 225. The Summer Program’s
purpose is to provide food to children from needy areas during periods when schools are
closed for summer vacation. 7 C.F.R. § 225.1. Through the Summer Program, Gar Gaar
sponsored numerous sites and received about $28 million in federal funding across the
approximately three months that it operated in 2021.
In order to continue its work from the Summer Program, Gar Gaar sought to become
a sponsor of the Child Care Program. 1 See C.F.R. § 226. The Child Care Program’s
purpose is similar to the Summer Program’s purpose—to provide nutritional-food aid to
child and adult participants and family or group daycare homes— but the Child Care
Program operates during the school year, not just the summer, and the sponsor applications
for the two programs are reviewed under two separate federal regulations.
7 C.F.R. §§ 225.1, 226.1.

1 The Child Care Program evolved from two previous acts: the 1946 National School Lunch
Act, in which Congress authorized federal subsidies for reduced-price lunches for
low-income school children, and the 1966 Child Nutrition Act, which expanded the
previous act to reach substantially beyond school children during school hours to subsidize
meals for adult-daycare centers, homeless shelters, and after- school care programs.
42 U.S.C. § 1766 (1946); 42 U.S.C. § 1751 (1946); 42 U.S.C. § 1771 (1966).
4
Gar Gaar began its application to become a 2021-22 sponsor for the Child Care
Program in August 2021 with the same mission and goal of operating approximately 52
sites. The Department provided technical assistance and guidance to Gar Gaar on its Child
Care Program application from August 2021 to November 2021. For example, the
Department exchanged emails and conducted telephone conversations with Gar Gaar in
order to address some concerns the Department had with Gar Gaar’s application before it
went under review.
In addition to email and telephone conversations, the Department and Gar Gaar had
approximately five in -person meetings 2 to further discuss those concerns. And the
Department conducted site visits to determine whether Gar Gaar and its chosen sites were
meeting federal regulations. Of the four proposed sites the Department visited, all four
sites were found ineligible. None met program eligibility requirements. See
7 C.F.R. § 226.6(b)(1)(xviii)(A-C).
Some of the Department’s other concerns included:
• Of the over one hundred sites submitted by Gar Gaar,
almost all were either ineligible or sites already assigned to
other Child Care Program sponsors;

• Three county health departments —Hennepin, Anoka, and
Olmstead—refused to grant food and beverage licenses to
Gar Gaar;

• During Gar Gaar’s sponsor participation in the Summer
Program, over $2 million of federal funds were expended
in cashier’s checks and cash, within a short period, without

2 The meetings were held on August 19, 2021, September 16, 2021, September 22, 2021,
October 9, 2021, and October 16, 2021.
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invoices or proper accounting, and were labeled as
“miscellaneous debits” or “payroll”; and

• Gar Gaar lacked internal controls and management
procedures to ensure meals met federal regulations for food
disbursement.

After Gar Gaar attempted to rectify these concerns, Gar Gaar’s application was
considered complete in November 2021, and the Department began its formal review of
Gar Gaar’s application.
In December 2021, the Department denied Gar Gaar’s Child Care Program
application, listing six main reasons for its denial:
(1) failure to demonstrate financial viability and financial
management (federal performance standard 1);

(2) failure to demonstrate administrative capability (federal
performance standard 2);

(3) failure to demonstrate program accountability (federal
performance standard 3);

(4) failure to provide a budget;

(5) failure to document that its sites met eligibility
requirements; and

(6) failure to demonstrate an unmet need in the community.

In addition to denying Gar Gaar’s Child Care Program application, the Department
issued a notice of serious deficiency for Gar Gaar’s participation in the Summer Program
for the submission of false information, which is not appealable according to the
Department’s appeal process.
6
Gar Gaar filed an internal appeal of the denial of its application. In response, the
Department sent Gar Gaar an acknowledgement of its appeal and a link to a site that
contained all the Department’s documentation related to Gar Gaar’s application and appeal.
Gar Gaar sent the Department its written appeal argument with accompanying exhibits,
which included, but was not limited to, its financial documents, management plan,
employee handbook, and corrective-action plan. The Department, through its appeal
panel,3 reviewed Gar Gaar’s materials.
In February 2022, the Department affirmed the denial of Gar Gaar’s sponsor
application for the Child Care Program. In its conclusions of law, the Department denied
Gar Gaar’s application for two main reasons: Gar Gaar failed to demonstrate (1) financial
viability and financial management and (2) program accountability.4
Gar Gaar’s certiorari appeal follows.
DECISION
Gar Gaar contends that the Department’s denial of its application to participate as a
sponsor of the Child Care Program was (1) based on erroneous theories of law when it
referred to Gar Gaar’s Summer Program’s financial history in determining Gar Gaar lacked
financial viability and financial management and (2) unsupported by substantial evidence

3 The Department’s appeal panel includes independent and impartial Department staff
acting as administrative-review officials. 7 C.F.R § 226.6(k)(5)(vii).
4 But the Department concluded that the appeal record was unclear as to whether Gar
Gaar’s management plan and employee handbook were considered by the Department, so
it did not affirm as to the second reason for the Department’s initial denial: failure to
demonstrate administrative capability.
7
in the record, thus making the Department’s determination that Gar Gaar lacked financial
viability and financial management and program accountability arbitrary and capricious. 5
Turning to the standard of review in this certiorari appeal, we examine whether the
administrative agency’s determination “was arbitrary, oppressive, unreasonable,
fraudulent, under an erroneous theory of law, or without any evidence to support it. ”
Anderson v. Comm’r of Health, 811 N.W.2d 162, 165 (Minn. App. 2012)
(quotation omitted), rev. denied (Minn. Apr. 17, 2012); see also
Axelson v. Minneapolis Tchrs.’ Ret. Fund Ass’n, 544 N.W.2d 297, 299 (Minn. 1996)
(explaining that a quasi-judicial decision of an agency that does not have statewide
jurisdiction will be reversed if the decision is fraudulent, arbitrary, unreasonable,
unsupported by substantial evidence, not within its jurisdiction, or based on an error of
law); see also In re Partners in Nutrition’s Appeal of Disapproval of Site Expansion in the
CACFP Program, 904 N.W.2d 223, 228 (Minn. App. 2017) (applying standard of review
for a quasi-judicial agency decision not subject to the Minnesota Administrative Procedure
Act to a Child Care Program application).
It is important to note that an administrative agency’s decision enjoys a presumption
of correctness, and we defer to the relevant agency’s expertise and special knowledge in
its field when conducting our review. In re Cities of Annandale & Maple Lake

5 In addition, Gar Gaar asserts that the Department’s reliance on its finding of serious
deficiency was in violation of its due-process rights because this finding is not appealable
in the Department’s administrative appeal process. Because we do not rely on this finding
of serious deficiency in our decision, we need not reach the merits of this argument on
appeal.
8
NPDES/SDS Permit Issuance for the Discharge of Treated Wastewater,
731 N.W.2d 502, 513 (Minn. 2007). In light of this deferential standard, we do not
substitute our judgment for that of the administrative agency when the admin istrative
agency’s findings are properly supported by the evidence. In re Denial of Eller Media
Co.’s Applications for Outdoor Advert. Device Permits, 664 N.W.2d 1, 7 (Minn. 2003).
But we review a state agency’s interpretation of a federal regulation de novo. In re Cities
of Annandale & Maple Lake, 731 N.W.2d at 516.
I. The Department did not err in relying upon Gar Gaar’s financial history with
the Summer Program when it determined Gar Gaar was neither financially
viable nor had proper financial management to be a sponsor of the Child Care
Program.

Gar Gaar asserts that the Department, in reviewing Gar Gaar’s financial history with
the Summer Program, applied the wrong federal regulation t o its new sponsor application
for the Child Care Program. And as a result, Gar Gaar contends, the Department applied
an erroneous theory of law when it determined Gar Gaar was neither financially viable nor
had proper financial management. We disagree.
We review de novo whether the Department can rely on Gar Gaar’s Summer
Program financial history when evaluating Gar Gaar’s Child Care Program sponsor
application. In re Cities of Annandale & Maple Lake, 731 N.W.2d at 516. To address this
issue, we turn first to the Child Care Program’s federal standard relating to financial
viability and financial management. 7 C.F.R. § 226.6(b)(1)(xviii)(A).
For a new sponsor applicant to meet this federal standard, an applicant must show
all three of the following factors: (1) description of need/recruitment of sites, (2) fiscal
9
resources and financial history, and (3) budgets that are necessary, reasonable, allowable,
and appropriately documented. 7 C.F.R. § 226.6(b)(1)(xviii)(A)(1-3) (emphasis added).
Based on this federal standard, the Department properly relied on Gar Gaar’s
participation in the Summer Program because in order for Gar Gaar’s Child Care Program
application to be approved, it must have sufficiently documented its financial history —
factor two cited above. 7 C.F.R. § 226.6(b)(1)(xviii)(A)(2). Specifically, factor two
explains that:
A new institution must demonstrate that it has adequate
financial resources to operate the [Child Care Program] on a
daily basis, has adequate sources of funds to continue to pay
employees and suppliers, during periods of temporary
interruptions in [Child Care Program] payments and/or to pay
debts when fiscal claims have been assessed against the
institution, and can document financial viability (for example,
through audits, financial statements, etc.).

Id. And a significant part of Gar Gaar’s financial history was its participation in the
Summer Program. As a result, the Department did not apply an erroneous theory of law
when it reviewed the Summer Program’s finances. Factor two explicitly allows this
review. Id.
Gar Gaar’s performance in the Summer Program—when Gar Gaar was tasked with
overseeing numerous sites and approximately $28 million in federal funding—provides
relevant insight into its ability to continue satisfactorily operating a similar program with
approximately 52 proposed sites and about $18 million in requested federal funding. Given
the federal directive to assess a proposed sponsor’s financial history, and Gar Gaar’s recent
experience, the Department did not err in looking into Gar Gaar’s financial management
10
of the Summer Program in making its determination on Gar Gaar’s financial viability and
financial management.
To persuade us otherwise, Gar Gaar argues that the Department “imposed more
restrictive requirements” on Child Care Program applicants, relying on Partners in
Nutrition to support this claim. See 904 N.W.2d at 232-33 (reversing the denial of an
application to expand from a single-site sponsor to a multi-site sponsor for an existing
approved sponsor for the Child Care Program because the Department created “its own
unduly restrictive test” for financial viability). But Partners in Nutrition is distinguishable.
Partners in Nutrition analyzed an already approved sponsor, not a new applicant, and the
Department in that case applied a more stringent ratio for assets and liabilities for financial
viability, which was not done here. Id. at 226, 232.
Further, Gar Gaar asserts that, as in Partners in Nutrition, the Department applied a
“legal standard separate from . . . the applicable federal regulations.” Id. at 232-33. But
the Department did not create its own legal standard when it took into consideration Gar
Gaar’s Summer Program performance. The federal standards allow the Department to do
so by listing financial history in its second factor under financial viability and financial
management.
6 See 7 C.F.R. § 226.6(b)(1)(xviii)(A)(2).
In sum, the Department did not err by reviewing Gar Gaar’s financia l history with
the Summer Program in making its evaluation that Gar Gaar failed to demonstrate adequate

6 Nor did the Department “focus on the incorrect federal food program” in its denial
because it did not apply the federal regulation that governs the Summer Program when it
took into consideration Gar Gaar’s Summer Program finances.
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standards of financial viability and financial management to be a sponsor of the Child Care
Program.
II. The Department’s decision to deny Gar Gaar’s application for failing to
demonstrate financial viability and proper financial management was
supported by substantial evidence in the record.

Next, Gar Gaar asserts that the Department’s denial was unsupported by substantial
evidence in the record because the Department ignored both Gar Gaar’s documentation
relating to its financial viability and financial management and the three factors for
financial viability and financial management in the Child Care Program’s federal
regulation. Because the Department only needs to have substantial evidence that Gar Gaar
did not demonstrate at least one federal performance standard to require its denial of Gar
Gaar’s application, we need not address the Department’s finding that Gar Gaar failed to
demonstrate program accountability.
7 See 7 C.F.R. § 226.6(c)(1)(i) (requiring the
Department to deny a prospective sponsor’s application if it does not meet all three federal
standards). Instead, we continue our review of whether the Department had substantial
evidence in the record to support its finding that Gar Gaar was neither financially viable
nor had effective financial management in place.

7 But even if we did review Gar Gaar’s program accountability, we would have come to
the same conclusions. Given the Department’s undisputed finding that three county health
departments have denied granting food and beverage licenses to Gar Gaar after observing
improper distribution of bulk food to families and a lack of National Sanitation Foundation
equipment at food-service facilities, the Department has sufficient evidence that this
standard has not been met as well. 7 C.F.R. § 226.6(b)(1)(xviii)(A)(3)(5)(ii-iii) (stating
that the applicant must demonstrate that its facilities comply with licensure and have food
service that complies with applicable state and local health sanitation requirements).
12
Whether an administrative body’s decision is supported by the record is a
substantial-evidence analysis. See In re Expulsion of A.D., 883 N.W.2d 251, 259 (Minn.
2016) (stating that the substantial-evidence standard addresses the reasonableness of what
the agency did on the basis of the evidence before it). And substantial evidence is defined
as more than a scintilla of relevant evidence, considered in totality, that could lead a
reasonable person to the factual conclusion at issue. Minn. Ctr. For Env’t. Advoc. v. Minn.
Pollution Control Agency, 644 N.W.2d 457, 464 (Minn. 2002).
As outlined previously, to become a sponsor for the Child Care Program, a new
applicant must demonstrate three factors to satisfy the federal standard for financial
viability and financial management. Recall, these factors include (1) a description of
need/recruitment of sites, (2) fiscal resources and financial history, and (3) budgets
that are necessary, reasonable, allowable, and appropriately documented.
7 C.F.R. § 226.6(b)(1)(xviii)(A)(1-3). If any of these three factors for financial viability
and financial management are not demonstrated, the federal standard has not been met and
the Department must deny the sponsor application. 7 C.F.R. § 226.6(b)(1)(c)(1)(i).
On this record, the Department’s determination that Gar Gaar failed to demonstrate
financial viability and financial management is supported by sufficient evidence. Gar Gaar
failed to demonstrate financial viability and financial management for two main
reasons: (1) deficient transactions from Gar Gaar’s participation in the Summer Program
and (2) numerous sites that failed to meet pro gram-eligibility requirements. We address
each in turn.
13
First, Gar Gaar admits that over $2 million of federal funding was spent in cashier’s
checks and cash transactions within a short period, which violated federal regulations for
financial management because these transactions were not recorded in invoices, receipts,
or in an internal accounting procedure. 7 C.F.R. § 226.6(b)(1)(xviii)(A)(1-3). The
Department flagged these transactions in the initial application process and again in its
internal administrative appeal. Gar Gaar labeled these funds as “miscellaneous debits” and
“payroll” transactions, and Gar Gaar further admits that these transactions occurred in a
“period of disruption caused by Gar Gaar’s prior bank . . . which had been holding funds
deposited by [the Department] for the [Summer Program].” Since Gar Gaar, to be
approved as a sponsor, must demonstrate that its financial-management plan ensures the
delivery of the Child Care Program benefits to its allocated sites and that the program funds
would be accounted for and appropriately e xpended, the uncertainty of the expenses
relating to this $2 million is sufficient to deny Gar Gaar’s application.
7 C.F.R. § 226.6(b)(1)(xviii)(A)(2-3) (stating that an applicant must demonstrate that it can
document financial viability through financial statements and must show that costs in the
applicant’s budget are allowable and appropriately documented).
Yet Gar Gaar maintains that these transactions should not constitute substantial
evidence because it rectified all these transactions as demonstrated through its appeal
documents and exhibits. We disagree. These transactions are still not accounted for nor
are there any invoices or receipts to explain where the federal funds were used, outside of
Gar Gaar’s personal statements. Although Gar Gaar contends that all the cashier’s checks
and cash were recorded in its “financial internal control process,” Gar Gaar failed to explain
14
what this “financial internal control process” entailed in order to be vetted by the
Department for Gar Gaar’s application. More fundamentally, rectification of deficient
transactions does not mean the deficient transactions did not exist. Even assuming Gar
Gaar tightened its financial controls after the Summer Program ended, the misaccounting
of these funds remains as sufficient evidence to deny a sponsor application.
Finally, Gar Gaar argues that this $2 million in miscellaneous costs was an inflated
number and that it explained this all to the Department, citing to emails between itself and
the Department. But these emails are not included in its exhibits. Nor is this an appropriate
rationale to support the transfer of millions of dollars of undocumented federal spending,
all occurring within a short period.
8
In addition to deficient transactions, four sites that Gar Gaar submitted did not meet
the Child Care Program eligibility requirements after a pre-approval visit by the
Department and numerous submitted sites were already operating under other approved
sponsors. Gar Gaar does not deny that these submitted sites were ineligible. Rather, Gar

8 Gar Gaar also contends that the Department misapplied the “rule of reason” when it
reviewed Gar Gaar’s application because the Department did not apply a lower level of
scrutiny. Child and Adult Care Food Program Improving Mgmt. and Program Integrity,
76 Fed. Reg. 34, 546 (June 13, 2011) (to be codified at 7 C.F.R. § 226) (stating that state
agencies should “take into account a [sponsor’s] size and sophistication when examining
different types of organizations’ applications,” and to “apply a ‘rule of reason’ when
reviewing material submitted by different types of institutions, with . . . different levels of
managerial sophistication.”) This argument fails. Gar Gaar is not the type of smaller
organization, such as an independent child-care center, who wou ld have greater difficulty
meeting the federal performance standards that the rule of reason was proposed to protect.
Gar Gaar is a large non-profit that utilized approximately $28 million in federal funds in
three months when it acted as a sponsor for the Summer Program. Accordingly, this lower
level of scrutiny does not apply to Gar Gaar.
15
Gaar contends that this is not a proper basis for a denial of its sponsor application. But
factor one requiring description s of need/recruitment of sites states that “[a] new
sponsoring organization must demonstrate that it will use appropriate practices for
recruiting facilities.” 7 C.F.R. § 226.6(b)(xviii)(A)(1). By failing to demonstrate its ability
to properly recruit sites, Gar Gaar did not satisfy this federal standard. Thus the three
ineligible sites also provide the Department with sufficient evidence for its decision. 9
In sum, because the Department acted properly within federal regulations in relying
on Gar Gaar’s Summer Program financial history and the record provided sufficient
evidence to support its finding that Gar Gaar lacked financial viability and financial
management, the Department did not err in its decision to deny Gar Gaar’s sponsor
application for the Child Care Program.
Affirmed.

9 Nor are we persuaded by Gar Gaar’s assertion that the Department’s decision was
arbitrary and capricious because the Department did not address all three factors for
financial viability and financial management and ignored most of Gar Gaar’s appeal
materials. There is no support for this contention in the record. The Department, in its
findings of fact, address Gar Gaar’s arguments on appeal, referenced the exhibits Gar Gaar
provided, and listed specific relevant documents it reviewed on appeal to support its
decision. And Gar Gaar points to no authority to support its assertion that an administrative
agency must review a sponsor applicant’s appeal argument line by line. Further, an
agency’s conclusions are not arbitrary and capricious as long as a “rational connection
between the facts found and the choice made has been articulated.” In re Excess Surplus
Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d 264, 277 (Minn. 2001) (quotation
omitted).