Putting the Brakes on Raising Lunch Prices

By Ed Bruske
aka The Slow Cook

Hundreds of school food service directors from around the country will be fanning out on Capitol Hill today to lobby their Congressman. What's at the top of their legislative agenda? Stopping implementation of Section 205 of the recently approved child nutrition re-authorization.

That's the provision that would require most of the country's 100,000 schools to start raising the lunch price they charge children who don't qualify as low-income.

The School Nutrition Association, which represents some 53,000 food service workers, is asking Congress to amend the new law to require pilot testing of the price hike mandate before applying it to all schools.

School officials fear that raising prices is bound to cause many paying students to abandon the program, upsetting the cafeteria business model, perhaps costing kitchen jobs, and turning school lunch into a welfare program that stigmatizes truly needy children who depend on it for food.

Congress billed Section 205 as restoring equity to school lunch pricing. Currently, most schools charge paying students less than what the government deems the full cost of making a lunch, currently $2.72. Here in the District of Columbia, for instance, lunch only costs $1.50, and that's hardly uncommon. The same price holds in New York City as well.

Some advocates see this as unfair, since it means poor children effectively are supporting kids who otherwise are considered financially able to pay full price.

The legislation approved in December would require schools to raise their prices annually by an amount equal to the rate of inflation plus two percent. As I described in a post yesterday, most schools would take more than 10 years to catch up their prices. Nearly half would take more than 20 years.

Not all food service directors favor blocking the price hikes. As I heard yesterday at the SNA's legislative conference, some see Section 205 as a convenient way to work around school boards that are reluctant to raise prices when schools need the extra revenue.

But others fear that targeting middle-class students will cause many of them--especially those on the margins--to abandon the government-sponsored hot lunch, turning it into a welfare program and stigmatizing children who truly need the food.

In fact, federal subsidies for school lunch originally were intended to support all children equally, regardless of income. Those subsidies, known as "Section 4" funds, continue to provide schools with 26 cents from the federal government for every lunch purchased by students who pay full price.

It was only later that Congress agreed to provide extra money so that needy children could eat school lunch for free, or at a reduced price. The SNA argues that federal support should be viewed as benefiting the entire program, and not be parsed to pit one income group against another.

The pricing issue is likely to be a one of the most important challenges school meal programs going forward, one that received very lilttle attention during the legislative process. The SNA believes a simple appropriation amendment could put Section 205 on hold--at least temporarily.

But food service directors also have their eye on new meal standards working their way through the USDA. As they heard from nutrition experts yesterday, nobody yet knows how they will manage to reduce the salt in food by half and still produce meals anyone would actually want to eat.

Decoding Congress' Stealth Formula for Raising the Price of School Lunch

Higher prices mean fewer kids in the lunch line

By Ed Bruske

aka The Slow Cook

A little knowledge can be a dangerous thing—especially when it results in a stealthy government formula for raising lunch prices at the nation’s schools that will cause hundreds of thousands of children—perhaps millions--to abandon the program.

In its recent re-authorization of the school meals program, Congress included a provision that would force schools to raise the price they charge students who don’t qualify as low-income.

Some hailed this little-noted mandate as a way to generate what the USDA estimates could be a $2.6 billion windfall for schools over 10 years. But I wondered, did this estimate include all the kids who will stop buying the much-maligned school lunch if it gets more expensive? And how could the federal government possibly know how many kids would drop out of the lunch line rather than pay the higher tab?

It took some weeks of prodding, but I finally obtained an internal document from the USDA’s Food and Nutrition Services branch revealing how the agency at the Senate's behest formulated the magic number--$2.6 billion—that it then passed on to the committee where the price mandate was hatched.

It also confirms what I originally suspected: The government can’t really know what will happen to participation in the lunch program if schools raise prices. You might expect the federal government to bring every possible resource to bear and weigh ever so carefully a decision that stands to affect some 90,000 public schools. But that is not the case.

“We do not prepare or publish cost estimate memoranda in the way that the Congressional Budget Office sends such materials to members of Congress,” explained a USDA spokesman. “There was no formal document or methodological write-up given to the committee. The agency gave the committee a number in answer to a question.”

So here’s where the number came from:

School food experts for years have known that raising the price of lunch means some students who pay "full price"--about 12 million of the 32 million who participate in the school lunch program on any given day—will stop buying it.

In 2005, Mathematica Policy Research, contracted by the USDA to conduct one of the agency’s periodic reviews [PDF] of the school meals program, created a statistical model that estimated 56 percent of paying students would buy lunch if the price were $1.50, but that fewer—50 percent—would pay if the price were $2.00.

It’s important to note that Mathematica did not conduct a study of children’s actual purchasing behavior at different price levels. What they gave the USDA was a modeled prediction based on all sorts of data the firm collected from 2,314 students at 398 schools that year, including the types of food served, the amount of time kids were given to eat, prices charged, and interviews with children and their parents revealing what the kids typically ate in the course of a day and family income.

Based on Mathematica’s prediction within this narrow price range, Food and Nutrition Services extrapolated its own formula in order to respond to the Senate committee's request for an estimate: For every cent the price of lunch increases, students who pay full price will drop out at a rate of .11 percent. It then calculated that the Senate’s proposed lunch price mandate would generate $2.6 billion more income over 10 years—and cause nearly 500,000 paying students to stop buying lunch.

But that's hardly the end of the story. Under the new mandate, schools will be required to raise prices each year by an amount equal to the rate of inflation plus two percent until they are completely caught up with what the USDA estimates is the actual cost of providing a school lunch, currently $2.72. Many schools now charge as little as $1.50.

As if things couldn’t get any more complicated, the government’s baseline is a moving target. What the USDA calculates as the cost of providing lunch—the amount it gives schools to pay for a fully-reimbursable meal--is adjusted upward annually with the rate of inflation. Thus, the vast majority of schools will take longer than 10 years to reach the government’s baseline. Nearly half will take more than 20 years.

Could the USDA’s formula for calculating drop-outs possibly hold up that long and under all sorts of different economic conditions?

“They [the USDA] asked us that, and we told them we had a problem with it,” said Mathematica senior researcher Anne Gordon, one of the report’s primary authors. “I don’t remember exactly, but I think it was around $3 we couldn’t make a prediction. We can’t know what will happen at that price, because none of the schools we looked at charged that much.”

In other words, accepting the USDA’s predictions years into the future requires a leap of faith. “It’s probably the best they can do,” Gordon said.

The prospect of annual price hikes out to the horizon has caused great alarm among the nation’s lunch ladies. In the current recession, they are grappling with millions of dollars’ worth of meals eaten by children whose families are deemed able to pay, but haven’t.

School food service directors opposed a congressional edict to raise prices, but would have preferred a House version that “sunsetted” the law after 10 years and required the USDA to conduct an impact assessment after four years. But in a last-minute rush to enact the child nutrition legislation, that version never came up for a vote.

When I asked the School Nutrition Association, representing some 53,000 school food workers, to comment on the new law, they reported results from some recent price increases.

When the lunch price rose 15 cents to $1.75 in Munster, Ind., in 2008, for instance, nine percent of the kids dropped out. In Caroline County, Md., the price rose 35 cents to $2 in 2007 and participation plummeted 16 percent. In Franklin Township, Ind., schools hiked the price 15 cents to $2.10 in 2009 and 12 percent of the kids stopped buying. Schools in Willoughby-Eastlake, Ohio, raised the price 10 cents in 2008 to $2.60 and participation fell 10 percent.

SNA spokeswoman Diane Pratt-Heavner said that while food service directors accept Mathematica’s 2005 report as “the most comprehensive data available to FNS, they question it's accuracy in portraying how families will react to current price increases.”

“The economy is worse than in school year 2004-2005, and their own experience tells them that participation drops when you increase prices,” Pratt-Heavner said.

The School Nutrition Association is asking the USDA to test the lunch price increases on a pilot basis before imposing the mandate nationwide.

Besides higher prices, other looming factors will likely suppress school lunch participation and upset the cafeteria business model. Upgraded nutrition standards—including more helpings of vegetables, more whole grains, fewer French fries and other potato products, and much less salt in food—are expected to cause more paying kids to reject the federally-subsidized hot meal.

In a 2010 report to the USDA [PDF], Mathematica predicted that adopting a full range of improvements to make meals “healthier” would result in 5 percent of elementary school children dropping out of the program, and even more—12 percent—at the secondary school level.

Sociologist Janet Poppendieck, whose book on the federally-subsidized meals program, Free for All, has become a widely-cited text, rejects the idea of forcing schools to raise prices across the board.

Undercharging may give an unfair advantage to some families who can afford to pay at the expense of low-income children. But Poppendieck says the USDA is probably underestimating the number of parents who will react angrily to higher prices and pull their children out of the lunch line. And that could hurt the entire program's ability to function.

She fears for millions of children on the margins--those who aren’t exactly affluent, but don’t qualify as “low income” either.

“If we lose them, it’s not just the loss of children, we lose the claim that this is not just a welfare program,” Poppendieck said. “And the more school lunch has the label of being a welfare program, it imposes a kind of a shame tax on kids who do want to participate. I think that’s the wrong direction to go.”

Still Think Raising Lunch Prices is a Good Idea?

By Ed Bruske

aka The Slow Cook

At a time when many families are least able to pay—and are racking up millions in debt at local cafeterias—Congress would profoundly alter the school meal landscape by forcing schools to raise prices.

Schools that now charge only $1.50 for lunch would, over time, have to increase the price to at least match the federal contribution for a fully-subsidized meal--currently $2.72--according to a provision in Congress’ recent re-authorization of the federally-subsidized school meals program.

The mandate for higher prices passed virtually undetected as the public debate over the school food bill focused on the measly six-cent raise Congress gave the program and some $2.2 billion lawmakers borrowed from the food stamp program to pay for it.

The measure is aimed at children who do not qualify as low income and pay “full price” for school lunch. Some have hailed it as a potential boon for school kitchens. The USDA estimates it would, over 10 years, generate some $2.6 billion in additional revenue—assuming millions of kids don’t opt out of the program and start bringing food from home. (Would you pay full price for the food most schools serve?)

The current practice of giving a price break to kids deemed able to pay is seen as unfair because it drains money that should be supporting poor children. One prominent food writer even suggested that bands of rich kids—kids with “parents making hundreds of thousands of dollars a year”—were mooching cheap food in schools here in the nation’s capitol. (D.C. school officials would certainly like to know who those children are, since families making that kind of money typically send their kids to one of the private schools that proliferate here. Participation in the meals program drops sharply with higher income and family education level.)

The cost of complying with new federal meal guidelines that call for more fruits and vegetables, more whole grains, and less salt, may well force cash-strapped schools to raise the price of lunch and breakfast. But what school districts are grappling with at the moment are too many families who should be paying for their meals, but don’t.

In New York City, for instance, schools since 2004 have absorbed at least $42 million in unpaid lunch fees, and now principals are being told they must collect the money or have it docked from their budgets.

Of the city’s 1,600 schools, 1,043 owe a collective $2.5 million to the department for meals served in the first three months of this school year. That puts them on track to be $8 million behind by the end of the school year.

Under city rules, elementary and middle school students who are behind on payments but come to school without their own lunches must be fed the same meal as everyone else. High schools are not required to feed such students.

Similar stories are playing out in school districts across the country, reports the New York Times.

Schools in Albuquerque have started serving cold sandwiches and milk, instead of full hot meals, to students whose parents fall behind on their bill. In Wake County, N.C., those students may eat as many fruits and vegetables as they want, but not the rest of the lunch offerings.

Framingham, Mass., hired a constable to collect money from parents, but the schools are still short $40,000. School officials make repeated phone calls to parents and send letters home, to no avail. “I struggle every day to recoup these funds — every day,’’ said Brendan Ryan, the school system’s food services director.

The School Nutrition Association (SNA), representing some 53,000 cafeteria workers across the country, reports that nearly 40 percent of its members saw an increase in unpaid meals in the last year.

School food advocates look to the federal government to pay for school meals. Instead, Congress, faced with its own budget crisis, is trying to pass the cost onto struggling state and local governments—and now parents unable to make ends meet.

A House version of the bill called for it expire after 10 years and for the USDA to perform and impact assessment after four years. But in a frantic effort to pass the legislation before Congress adjourned last year, the Senate’s version imposing price hikes was adopted unchanged.

The SNA says the feds need to take a second look and test the idea before forcing schools to raise prices nationwide.