Funding

Both the National School Lunch Program and the School Breakfast Program give cash reimbursements for food served in participating schools. In school year 2012-2013, the NSLP provides the following reimbursements for "non-severe need" schools: $2.86 for free lunches, $2.46 for reduced-price lunches, $0.27 for paid lunches, $0.78 for free snacks, $0.39 for reduced-price snacks, and $0.07 for paid snacks. Additionally, students eligible for reduced-price meals pay no more than 40 cents per meal. In school year 2012-2013, the SBP provides the following cash reimbursements for "non-severe need" schools: $1.55 for free breakfasts, $1.25 for reduced-price breakfasts, and $0.27 for paid breakfasts. Schools may qualify for higher "severe need reimbursements" for breakfasts if 40 percent or more of lunches are served free or at reduced price in the second preceding year. For fiscal year 2011, the cost of the SBP was $3.0 billion, compared to $10.8 million in 1970. In fiscal year 2011, the cost of the NSLP was $11.1 billion, as compared to $70 million in 1947.

Rising costs
Budget trend suggests that meal production costs over the last five years have been increasing faster than revenues are coming in. The Economic Research Report from July 2008 suggests: "Cost pressures may be a barrier to improving school menus in some cases. The nationally representative School Lunch and Breakfast Cost Study II found that while the mean reported cost of producing lunch during 2005-06 was below the reimbursement rate, about one in four school districts reported costs above the reimbursement rate (Bartlett et al., 2008)." It continues to say, "Further, the mean full cost of producing a lunch was higher than the reimbursement rate." The study also found that reported costs increased over 1992-2005 while full costs decreased, reflecting an increase in the number of school food authorities being charged by school districts for indirect costs in response to their own budget pressures (School Nutrition Association, 2006). Other sources of increasing cost pressure include increases in health care costs for employees (GAO, 2003; Woodward-Lopez et al., 2005) and, more recently, rising food costs (FRAC, 2008)."

In 2012, scientists conducted research that compared previous year's data with the limited current year data to see if previously identified problems have persisted or if they have been corrected. They found that in fiscal year 2011 the NSLP served 5.18 billion lunches at a cost of $11.1 billion, representing a 181 percent increase over the same program in fiscal year 2000. Although the problems are not insurmountable, they are significant. However, little research has been completed since the most recent changes to the program in 2012.

In terms of cost efficiency, one can compare NSLP-compliant lunch meal costs with lunches produced in schools that are not participating in the program. Constance Newman's research in "The Food Costs of Healthier School" compared costs during the 2005-2006 school year (2012). Newman found "healthier meals are more costly" than meals that do not meet the new standards. She also found the "mean reported cost for a reimbursement lunch was $2.36 while the reimbursement rate was $2.51," or 106 percent of the total cost. What Newman found is that revenues for non-reimbursable meals (competitive and adult meals) amounted to only 71 percent of the cost of the meal. To address this particular issue, the Healthy, Hunger-Free Kids Act of 2010 requires gradual increases in amounts charged until costs are covered 100 percent.

In addition to the mandated revenue increase, the USDA has also increased School Food Authority (SFA) reimbursement rates by 6 cents per meal served for 2012-2013. Not all of the increases are due to food costs alone. Nearly half of the costs are associated with overhead costs such as equipment, labour, and training. Newman's research identified many of the strengths and weaknesses of the program but she also admits that the majority of her data came from 2005 and is thus outdated. She acknowledges that "another important caveat is that the foods served in schools have changed since 2005" (2012). Newman recognises that proposed standards will lead to higher costs but fail to address how much the overall labor and capital costs will be affected. She does agree that overhead costs would increase as well, at least in the short term.

Recently, there has been a push to privatise the school breakfast and lunch programs because of rising costs. These private food service companies have much greater purchasing power than school districts and are also able to save costs by providing fewer benefits and lower salaries to their employees than those of in-house providers.

Site Map