INDIANA DEPARTMENT OF EDUCATION v. MT ZION LOVING DAY CARE MINISTRY (2026)

Every year, the federal Child and Adult Care Food Program (CACFP) subsidizes nutritious meals and snacks for more than three million children and adults nationwide.¹ After participating in the program for over twenty-five years, Mt. Zion's Loving Day Care Ministry was terminated by the Indiana Department of Education (DOE) due to food-labeling issues by a third-party vendor. Despite Mt. Zion's efforts to comply with program requirements, the DOE would not give Mt. Zion further opportunities to take corrective action after it had already provided one opportunity. We hold that the DOE abused its discretion when it failed to give Mt. Zion another opportunity for corrective action or to provide Mt. Zion with technical assistance to address the issue. The DOE's blanket policy of rejecting correction proposals by CACFP participants once a deficiency recurs, despite its authority to exercise such discretion under federal law, was arbitrary and capricious. Thus, we affirm the trial court's order reinstating Mt. Zion's agreement and eligibility to participate in the CACFP.

Facts and Procedural History

Mt. Zion is a church-based nonprofit day care on the east side of Indianapolis that has participated in the CACFP since 1999. The day care serves four meals a day to more than a hundred infants and children. Ninety-five percent of the children served are African American and living in underserved communities. The children served come from disadvantaged backgrounds and “many of them don't get a good wholesome meal until they come to church or to the day care.” App. Vol. 5, p. 87. Bishop Lambert Gates chairs Kingdom Apostolic Ministries, the church that manages the day care. Patti Jones is responsible for CACFP-related duties like menu planning, ordering food, and completing reports. Sheryl Jennings is responsible for CACFP-related financial management at the day care.

In 2015 and 2018, pursuant to federal regulations, the DOE conducted administrative reviews of Mt. Zion and found that its food menus were noncompliant with meal-pattern requirements (sets of food components and portion sizes for reimbursable meals). Both years, the DOE offered Mt. Zion the opportunity to take corrective action. And both years, Mt. Zion successfully complied. After COVID-related delays, Mt. Zion's next review occurred in 2022. On October 12 of that year, the DOE notified Mt. Zion that it was “seriously deficient” because it didn't have available child-nutrition labels for some commercially prepared foods, didn't serve a whole-grain item every day, didn't have recipes for homemade foods available, served inadequate quantities for some foods, purchased insufficient quantities of milk, and credited a dessert as a grain. App. Vol. 8, p. 167.

Within two weeks of receiving the DOE notice, Mt. Zion submitted a proposed corrective-action plan and explained that, due to COVID-related issues, it was having trouble obtaining child-nutrition labels from its third-party vendor, Sysco, a multinational food distributor and CACFPcertified provider. Three and a half months later, the DOE concluded that this proposed corrective-action plan would “not fully and permanently correct” the serious deficiency. Id. at 110. And for this reason, the DOE notified Mt. Zion that it was proposing termination. The notice informed Mt. Zion that, should it choose to pursue administrative review, it would have one final opportunity for corrective action up until its scheduled termination hearing. Because termination of its CACFP participation would be “devast[at]ing,” Mt. Zion immediately responded by requesting technical assistance to correct their plan. Id. at 119. But the DOE only provided a corrective-action guide and template that Mt. Zion already had. Then, after receiving a revised corrective-action plan, the DOE sent an “official closure letter” confirming Mt. Zion had “fully and permanently corrected the serious deficiencies” and temporarily deferring its serious-deficiency determination. Id. at 153, 161. The DOE also informed Mt. Zion that if any serious deficiencies recurred, it would “immediately propose to terminate” Mt. Zion “without any further opportunity for corrective action.” Id. at 162.

Two months later, in May 2023, the DOE conducted another review. During this review, Jones, the menu planner, coordinated a phone call with DOE representative Tasie Guenthner and Sysco, confirming that the vendor failed to provide child-nutrition labels at no fault of Mt. Zion. Then, on August 9, the DOE, citing evidence of noncompliance extending back to 2015, proposed to terminate Mt. Zion based on recurring deficiencies with child-nutrition labels and meal patterning. The DOE also proposed to disqualify Mt. Zion, Bishop Gates, Jennings, and Jones from the CACFP for seven years. See 7 C.F.R. § 226.6(c)(7)(v).

Mt. Zion initiated an administrative appeal. Leading up to the administrative hearing, Mt. Zion hired a CACFP specialist, purchased recommended software for meal patterning, sought further technical assistance from the DOE, and made written legal demands for Sysco to produce the child-nutrition labels. But the DOE refused to consider these corrective efforts. DOE representative Guenthner explained at the administrative hearing that, “once the propos[al] to terminate was set to begin,” the “corrective action is not accepted.” App. Vol. 5, pp. 189–90. The administrative law judge (or ALJ) affirmed the DOE's decision to terminate Mt. Zion. The ALJ concluded that “[t]he recurrence of the serious deficiency in May 2023, while the serious deficiency finding was deferred, combined with the pattern of repeated noncompliances with meal pattern components dating back to 2015, warrant termination of Mt. Zion's agreement to participate in the CACFP.” App. Vol. 8, p. 244. The ALJ also concluded that the DOE met its requirement to provide training and technical assistance.

Mt. Zion sought judicial review, and the trial court reversed. The trial court concluded that the DOE “secretly imposed an arbitrary unwritten policy banning the federally mandated regulation providing for corrective action opportunities through the conclusion of the administrative hearing.” App. Vol. 9, p. 182. Mt. Zion made multiple inquiries and attempts at corrective action, the trial court found, but the DOE rejected opportunities to fix the remaining issues. As such, the trial court concluded that the DOE's “unwritten policy” was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. Id. at 184. It ordered the DOE to reinstate Mt. Zion's participation agreement and provide Mt. Zion with technical assistance.

The DOE appealed, and the Court of Appeals reversed in a published, unanimous decision. Indiana Dep't of Educ. v. Mt. Zion's Loving Day Care Ministry, 273 N.E.3d 418, 421 (Ind. Ct. App. 2025). The panel concluded that the DOE was not required to give Mt. Zion additional opportunities for corrective action after it deferred termination. Id. at 428. The panel also rejected Mt. Zion's argument that the DOE can only terminate participating institutions unwilling or incapable of correcting a serious problem. Id. at 429–30. Finally, the panel concluded that the DOE was not required to provide further technical assistance to Mt. Zion after no further opportunities for corrective action were allowed. Id. at 430–31. Mt. Zion petitioned for transfer, which we granted, thus vacating the Court of Appeals’ opinion. Ind. Appellate Rule 58(A).²

Standard of Review

We will reverse an agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” or “unsupported by a preponderance of the evidence.” Ind. Code § 4-21.5-5-14(d)(1), (5). A decision is “arbitrary and capricious” if it is “patently unreasonable and made without consideration of the facts and in total disregard of the circumstances and lacks any basis which might lead a reasonable person to the same conclusion.” 255 Morris, LLC v. Ind. Alcohol & Tobacco Comm'n, 93 N.E.3d 1149, 1153 (Ind. Ct. App. 2018) (internal citation and quotation marks omitted). “While reviewing courts must accept the agency's findings of fact if supported by substantial evidence, no such deference need be accorded an agency's conclusions of law, as the law is the province of the judiciary.” Id.

Discussion and Decision

The CACFP is a federal program designed to aid child- and adult-care institutions by providing nutritious foods for children, older adults, and disabled persons. 42 U.S.C. § 1766(a)(1)(A)(ii). The CACFP supports child nutrition because “eating habits and other wellness-related behavior habits are established early in life” and “good nutrition and wellness are important contributors to the overall health of young children and essential to cognitive development.” 42 U.S.C. § 1766(a)(1)(A)(i). To achieve its purpose, the program reimburses participating institutions such as child daycare centers, day-care homes, and adult day-care centers “for their costs in connection with food service operations.” 7 C.F.R. § 226.4(a). The United States Department of Agriculture (USDA) enacts regulations to establish program requirements, but the federal government leaves the administration of the program to each state. 7 C.F.R. § 226.6(a). The DOE is the state agency in Indiana that administers the CACFP.

Under federal regulations governing the CACFP, the DOE must conduct administrative reviews of participating institutions like Mt. Zion at least once every three years. See 7 C.F.R. § 226.6(i)(5); 7 C.F.R. § 226.6(m)(6)(i). This review process includes noting any non-compliance issues with labeling or meal-pattern requirements, among other things. If an institution has been deemed “non-compliant in one or more aspects” of its CACFP operation, it becomes “seriously deficient,” and if the institution has committed certain serious deficiencies, the DOE “must initiate action to terminate the agreement of [the] participating institution.” See 7 C.F.R. § 226.2; 7 C.F.R. § 226.6(c)(3)(i) (emphasis added). The DOE's determination that a participating institution is seriously deficient is not subject to administrative review. See 7 C.F.R. § 226.6(c)(3)(iii)(A)(4).

Because the CACFP's purpose is to keep children fed, federal regulations require the DOE to notify the participating institution of the serious deficiency and to give it “an opportunity to take corrective action” unless the serious deficiency constitutes an “imminent threat to the health or safety of participants.” See 42 U.S.C. § 1766(a)(1)(A)(ii); 7 C.F.R. § 226.6(c)(3)(iii). If the institution fails to “fully and permanently correct” the serious deficiency in a timely manner, then the DOE will take steps toward terminating the institution's agreement and ultimately disqualifying the institution from CACFP participation. See 7 C.F.R. § 226.6(c)(3)(iii)(C). On the other hand, if timely corrective action is taken, the DOE “defer[s]” its serious-deficiency determination and refrains from pursuing termination. See 7 C.F.R. § 226.6(c)(3)(iii)(B)(1)(i). But if the serious deficiency recurs after deferment, the DOE must “immediately” notify the institution of the agency's “intent to terminate and disqualify” it. See 7 C.F.R. § 226.6(c)(3)(iii)(B)(3).

Still, the guidelines in the CACFP Handbook tell participating institutions that intent to terminate “does not mean that the institution should stop working on corrective action.” App. Vol. 7, pp. 194, 199, 239 (quoting CACFP Handbook).³ Participating institutions can undertake “corrective actions” at any point “up until the [administrative hearing] begins” or until “a decision is rendered by the hearing official.” Id. at 194, 199 (quoting same). And the DOE “may (but is not required to) accept the institution's corrective action and defer the proposed termination.” Id. at 199 (quoting same).

Here, the DOE's unwritten policy not to consider a participating institution's efforts after its proposed termination was arbitrary and capricious. When the DOE first determined that Mt. Zion was seriously deficient, it properly gave Mt. Zion “an opportunity to take corrective action.” See 7 C.F.R. § 226.6(c)(3)(iii). Because the regulations only require “an” opportunity for corrective action, the DOE was only required to provide one opportunity. See Niz-Chavez v. Garland, 593 U.S. 155, 141 S.Ct. 1474, 1481, 209 L.Ed.2d 433 (2021) (holding that a federal regulation's reference to “a notice” required only “a single statutorily compliant document”). Having given that opportunity, the DOE deferred Mt. Zion's serious-deficiency determination. But when Mt. Zion's deficiency recurred and the DOE moved to terminate, the DOE still had the discretion to accept corrective action at any point up until the administrative hearing or when the hearing officer renders a decision. The DOE had an arbitrary policy to not consider further efforts for corrective action.

When an agency is afforded discretion, “[f]ailure to exercise discretion is not exercising discretion; it is making a legal mistake.” Munoz-Pacheco v. Holder, 673 F.3d 741, 745 (7th Cir. 2012). For instance, “if you forget an appointment, you don't explain your forgetfulness by saying that you must have been exercising discretion.” Id. “Overlooking relevant evidence is not exercising discretion.” Id. Here, the DOE had discretion to provide additional opportunities for corrective action but didn't use that discretion at all. When the DOE first deferred its serious-deficiency finding, Mt. Zion received a letter saying it would have no further opportunities for corrective action should a deficiency recur. DOE representative Guenthner also testified at the administrative hearing that the DOE's policy was that “once a proposed termination was set to begin” then “no corrective action would be considered or accepted” by the DOE. App. Vol. 9, p. 44. Although the DOE was only required to give Mt. Zion one opportunity to correct (which it did), the Handbook still gives it discretion to consider more opportunities, and it directs participating institutions to continue working on corrective action up until the administrative hearing. The DOE's letter and the testimony from the hearing show that the DOE didn't even consider giving Mt. Zion another opportunity, thus rendering meaningless the Handbook's instruction that participating institutions continue working on corrective action. The DOE should have considered Mt. Zion's significant efforts to attain compliance, like hiring a CACFP expert, purchasing software for meal patterning, and taking legal action to get Sysco to provide child-nutrition labels.

In addition, Mt. Zion's recurring deficiencies were largely attributable to labeling issues outside its control that did not endanger the participating children. Deliberately overlooking this relevant evidence was an abuse of discretion. The serious-deficiency process is designed to keep participating institutions in the program so that children who might otherwise go hungry get fed. It was unreasonable for the DOE not to consider Mt. Zion's efforts or that Mt. Zion was not at fault for the labeling issue. With the severe penalty of a seven-year ban, and meals for hundreds of children at stake, the DOE should have considered giving another opportunity to correct rather than having a policy that doesn't allow more opportunities.

The DOE also abused its discretion by failing to provide Mt. Zion sufficient technical assistance. When enacting the CACFP, Congress declared, “A State participating in the program established under this section shall provide sufficient ․ technical assistance ․ to facilitate effective operation of the program.” 42 U.S.C. § 1766(k) (emphasis added); see also id. § 1766(u)(3)(A) (requiring “technical assistance to institutions participating in the program”). The state agency “shall take appropriate action to correct any irregularities” with an institution's “operation of the Program.” 7 C.F.R. § 226.6(n). Technical assistance includes assistance with menu planning, nutrition labels, purchasing guidance, and more. 42 U.S.C. § 1766(u)(3)(B)–(E). Here, the ALJ made a specific finding that the DOE provided Mt. Zion with “written technical assistance” and trainings. App. Vol. 8, p. 244. But the ALJ did not make any findings as to whether this assistance was sufficient. “Sufficient” means “enough to meet the needs of a situation or a proposed end.” Sufficient, Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/sufficient (last visited Oct. 1, 2026). Mt. Zion repeatedly asked the DOE to provide technical assistance with meal patterning and with obtaining child-nutrition labels from CACFP-certified vendors. The DOE's response was to send Mt. Zion a guide and template that Mt. Zion already had. This assistance did little—if anything—to address the specific issues Mt. Zion raised to the DOE. In fact, when asked at the administrative hearing whether the DOE offered to help Mt. Zion obtain child-nutrition labels from Sysco, Guenthner testified, “No, I would not have given them any guidance on how to work with their vendor.” App. Vol. 5, p. 209. At a minimum, the assistance should have been aimed at addressing the specific issue Mt. Zion had with labeling.

While providing sufficient technical assistance isn't explicitly a prerequisite for the DOE to initiate termination under the CACFP regulations, the technical-assistance requirement would have little value or enforcement incentive if a participating institution couldn't rely on it. The purpose of the requirement is to help institutions stay in the program so that children get fed. If a state agency doesn't meet its obligation to provide an institution with sufficient technical assistance, it shouldn't be able to terminate that institution. See Nardi v. King, 253 N.E.3d 1098, 1104 (Ind. 2025) (“We also read the statutory language logically and consistently with the statute's underlying policy and goals.”) (internal quotation marks and citation omitted). Here, rather than helping Mt. Zion address the labeling issue with Sysco, the DOE terminated Mt. Zion altogether.

Finally, the DOE's decision to terminate Mt. Zion was arbitrary because the DOE was inconsistent and ambiguous about whether Mt. Zion would have another opportunity to correct and whether the serious-deficiency process would restart in subsequent reviews. The 2023 notice said that Mt. Zion had “fully and permanently corrected” the serious deficiencies, but it also said the termination was only “temporarily deferred.” App. Vol. 8, p. 161. While the phrase “temporarily deferred” suggests that the termination process had not yet ended, the phrase “fully and permanently corrected” made it seem like it was over and would restart in subsequent reviews. It was unclear when a recurring deficiency would initiate a new termination process or when it would result in immediate termination. For example, when the 2018 review showed the recurrence of deficiencies from 2015, Mt. Zion still had the chance to cure and did so to the DOE's satisfaction. In the 2023 notice, the DOE notified Mt. Zion that if a deficiency recurred, it would “immediately propose to terminate,” but the ALJ also cited a “pattern of repeated noncompliances with meal pattern components dating back to 2015” as a reason to terminate Mt. Zion's participation agreement. Id. at 162, 244. It was unclear when a deficiency, like the deficiencies from 2015, could be used against them and when they could not. In other words, when would Mt. Zion be off “probation”? Tr. Vol. 2, p. 50.

Recognizing potential notice issues, the Food and Nutrition Service, a USDA agency, proposed a rule in February 2024 that would amend the serious-deficiency process. The proposed rule explains: “The term ‘fully and permanently corrected’ lacks clarity, particularly in cases where the same findings reoccur and the program operator's agreement is proposed to be terminated.” 89 Fed. Reg. 13150, 13153 (Feb. 21, 2024) (to be codified at 7 C.F.R. pts. 210, 215, 220, 225, 226). Further, “[t]he term ‘permanent’ is contradictory as it assumes that the same findings cannot arise again, regardless of the amount of time that has passed since the initial findings.” Id. Rather than “defer” termination, the proposed rule would vacate termination if the participating institution has corrected the serious deficiency. Id. This means that if the deficiency recurs after it's been “fully and permanently corrected,” the state agency must start the serious-deficiency process over and provide another opportunity to correct. Although this proposed rule doesn't apply to the DOE, it supports our reasoning that it was unreasonable and arbitrary not to provide Mt. Zion with another opportunity to correct when it was told its deficiencies were “fully and permanently” corrected, and it previously had opportunities to correct when a deficiency recurred.

Conclusion

For the reasons above, several of which the trial court itself noted in its thorough and thoughtful ruling, we affirm the trial court's order reinstating Mt. Zion to the CACFP.

I would either deny transfer, letting the court of appeals’ thoughtful opinion stand, or summarily affirm its opinion.

A

The Court holds that the Indiana Department of Education, which implements the federal Child and Adult Care Food Program, abused its discretion by terminating Mt. Zion from the program after just one chance to fix its noncompliance with the program's rules. Ante, at ––––. Yet federal law does not require further administrative grace; it merely permits it. Even the Court acknowledges as much, quoting the Program handbook but omitting the key emphasis: The department “may (but is not required to) accept the institution's [Mt. Zion's] corrective action and defer the proposed termination.” Id. at –––– (emphasis in original handbook but omitted from Court's opinion). Though the Court characterizes the department's actions here as a failure to exercise discretion, id. at ––––, the refusal to allow further correction is itself an exercise of discretion. “The denial of a motion is just as much an exercise of discretion as the granting of a motion”. Marshall v. City of Chicago, 762 F.3d 573, 578 (7th Cir. 2014). Today, our Court faults the department for exercising its discretion in precisely the manner federal law permits.

The Court also blames the department for its purported failure to give Mt. Zion sufficient technical assistance. Two problems with the Court's conclusion are, first, that nothing in federal law treats the failure to provide sufficient technical assistance as a defense to noncompliance with program requirements. And the Court cites none. Though the Court relies on the Program's general “purpose”, ante, at ––––, that purpose cannot create an affirmative defense to termination when the statute's text provides none. “We cannot replace the actual text with speculation as to Congress’ intent.” Magwood v. Patterson, 561 U.S. 320, 334, 130 S.Ct. 2788, 177 L.Ed.2d 592 (2010).

The other problem is that the Court supports its conclusion by quoting selectively from the applicable statute about the technical assistance required. Relevant here, the technical-assistance statute is not about obtaining nutrition labels: “The Secretary [of the United States Department of Agriculture] shall provide technical assistance to institutions ․ in complying with the nutritional requirements and wellness recommendations prescribed by the Secretary”. 42 U.S.C. § 1766(u)(3)(A) (emphasis added); see also id. § 1760(d)(7) (defining “Secretary” as secretary of agriculture). This statutory duty is about the “interpretation of nutrition labels” and whether these labels meet federal nutrition requirements, id. § 1766(u)(3)(C)(iii), not about helping a participant like Mt. Zion “obtain” proper labels. Ante, at ––––. Again, the Court holds the department to a legal standard nowhere found in federal law.

Finally, there is no support for the Court's view that Mt. Zion somehow did not understand that further deficiencies would result in its termination. Ibid. After Mt. Zion's first corrective action plan was successful, the department cautioned that any further deficiencies would result in its termination “without any further opportunity for corrective action.” Given this unambiguous forewarning, it was clear to Mt. Zion that “a recurring deficiency would ․ result in immediate termination”, despite the Court's contrary conclusion. Ibid.

The careful reader will note that the Court neither addresses nor refutes any of these points. Its silence speaks volumes.

B

The other reason I would deny transfer here, apart from the correctness of the appellate opinion, is that changes in federal regulations make this case unlikely to recur. As the Court explains, federal regulators overseeing the Program proposed a new rule in February 2024 that would overhaul the current serious-deficiency process. Id. at –––– – ––––. The Court acknowledges the proposed rule does not apply to the department's actions in this case, and I agree. “[J]ust as wishes are not laws, future plans aren't either.” McGirt v. Oklahoma, 591 U.S. 894, 907, 140 S.Ct. 2452, 207 L.Ed.2d 985 (2020), limited on other grounds in Oklahoma v. Castro-Huerta, 597 U.S. 629, 635, 142 S.Ct. 2486, 213 L.Ed.2d 847 (2022). Yet the Court tries to justify today's decision by relying on this unenacted rule, which for now is merely a twinkle in the eye of the USDA's Food and Nutrition Service. The proposed rule underscores that prevailing law entitled the department to do precisely what it did here. It also underscores why, given the proposed rule change, we need not decide an issue of current federal law for which the likely number of relevant Indiana applications is small and dwindling.

I respectfully dissent.

For the reasons Judge Bailey explained in his opinion for the Court of Appeals, I would reverse the trial court's judgment, and I therefore respectfully dissent.

FOOTNOTES

1.   Institute of Medicine, Child and Adult Care Food Program: Aligning Dietary Guidance for All 32 (2011), http://www.nap.edu/catalog/12959.html (Table 2-3 CACFP Program Characteristics and Participation by Provider Type for Fiscal Year 2008, Listed in Descending Order by Average Number of Participants per Month).

2.   We thank amici curiae Pentecostal Churches of the Apostolic Faith International, Inc., Bright Minds Early Learning Center, and Child Advocates, Inc., for their helpful brief.

3.   The CACFP regulations provide that the DOE “must assess each institution's compliance with the requirements” of CACFP law, taking into consideration “[a]ny applicable instructions and handbooks issued by [the Food and Nutrition Service] and the [USDA] to clarify or explain [the CACFP]” and “which are not inconsistent with the provisions of [CACFP].” See 7 C.F.R. § 226.6(m)(3)(iv). The USDA has issued the “Serious Deficiency, Suspension, & Appeals for State Agencies & Sponsoring Organizations, A Child and Adult Care Food Program Handbook” (CACFP Handbook). App. Vol. 7, p. 171. Thus, we look to the federal regulations themselves and the USDA's explanation of the regulations in the CACFP Handbook to determine federal CACFP law.

Goff, Justice.

Massa, J., concurs. Rush, C.J., concurs in the judgment. Slaughter, J., dissents with separate opinion. Molter, J., dissents with separate opinion.