Extra Lunch Money Hidden in Child Nutrition Bill

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At long last, Congress has passed the child nutrition bill. Among its important achievements, it bans (some) junk food in schools, authorizes new programs to automatically enroll needy kids for free meals, and gives a small, if virtually unprecedented, boost—six cents per lunch—to the federal reimbursement rate that pays for much of what appears on students' trays.

Supporters immediately hailed the bill as historic, in large part because that six cents is the first increase of the reimbursement rate in 30 years. But buried inside this bill, which has been stalled in Congress for two years, is a provision that will, ultimately, nearly double the rate hike that has everyone celebrating. Over the next decade, this provision could raise about $2.6 billion for school lunch, the equivalent of a roughly five-cent additional increase per lunch.

Section 205 requires school districts to ensure that the federal funding for meals for low-income children actually be spent on those children, rather than to subsidize the meals of higher-income children who pay for school lunch. To those uninitiated in the byzantine world of school lunch, it might seem odd—even illegal—that federal money would be used to subsidize school lunch for students who could already afford it.

So here's a quick primer on school lunch. Public schools are allocated a certain amount of money for each lunch they serve that meets federal nutrition standards. Districts receive the highest reimbursement for meals served free or at a reduced price to children whose household income is below 185 percent of the poverty line. They also receive a small amount for students whose household income is above that level and who pay for meals.

A well-run school district, one might imagine, would price the so-called "paid meals" at a level that, when combined with the federal subsidy, covers the cost of producing the meal. But individual school districts set the prices. And local politicians, fearful of upsetting parents/voters, are loathe to raise the price for meals. The result: Students who can afford to pay for school lunch pay less than it costs to produce their meals, and government money allocated for low-income students makes up the difference.

This bit of illogic was documented last January in an analysis (PDF) by the Center for Budget and Policy Priorities. According to the report, schools received an average of $1.81 (including the government subsidy) for a paid meal in 2004-2005. That's 81 percent of what the federal government pays for the same meal for a low-income student. It's 79 percent of the $2.28 that schools say it costs to produce a tray of, say, chicken nuggets, milk, and canned green beans.

"As a result," the authors concluded, "higher reimbursement rates would not necessarily result in school meal programs purchasing healthier foods. Instead, increased reimbursements could be used for any number of purposes, including keeping down the price of meals for better-off students or subsidizing less nutritious foods."

Section 205 eliminates that risk. Over time, it will require some schools to raise the price of meals for higher-income children. The bill also ends another bit of shady accounting in our school-lunch program, by preventing meal reimbursements from subsidizing unhealthy snacks sold outside the lunch line. Taken together, the two new regulations protect the integrity of school lunch. An historic bill, indeed.