Food and Nutrition Programs

Equity in School Lunch Pricing

To:	Superintendents of Public Schools, Administrators of Private Schools, Residential Child Care Institutions and School Nutrition Directors
From:	Kathleen C. Millett Executive Director Office for Nutrition, Health and Safety Programs
Date:	April 11, 2011

This memorandum provides information relating to section 205 of the Healthy, Hunger-Free Kids Act of 2010 (Public Law 111-296). This provision , effective July 1, 2011, requires School Food Authorities (SFAs) participating in the National School Lunch Program to ensure that schools are providing the same level of support for lunches served to students who are not eligible for free or reduced price lunches (i.e., paid lunches) as they are for lunches served to students eligible for free lunches. School Food Authorities must compare the average price charged for lunches served to students not eligible for free or reduced price lunches to the difference between the higher Federal reimbursement provided for free lunches and the lower Federal reimbursement provided for paid lunches.

For Example:

FY 2011 Free Federal Reimbursement:	$2.72
Minus (-) FY 2011 Paid Federal Reimbursement:	- .26
Equals (=):	$2.46

School Food Authorities now charging $2.46 or more for a paid lunch would not be required to adjust prices in the school year 2011-2012. Any SFA charging less than $2.46 for a paid lunch will be required to either gradually increase prices or provide additional non-Federal support for lunches. If the average paid lunch price is less than the difference, an SFA must either gradually adjust the average prices or provide non-Federal funding to cover the difference. In some SFAs the average charge for a paid lunch is less than the cost of producing that lunch. Federal funds intended for free and reduced price lunches are being used to subsidize paid lunches. Based on the legislation for school year 2011-2012, the adjusted average price is the average price charged in school year 2010-2011 increased by a factor equal to two percentage points above the inflation rate and may be rounded down to the nearest 5 cents. For school year 2011-2012, the inflation factor is 1.14 percent. Combined with the required annual 2 percentage point increase, the total adjustment required is 3.14 percent.

For Example:

A School District is charging $ 2.00 for a Lunch:

3.14% of the $ 2.00 charge equals (=) $ .0628
Round down to nearest $.05 (5 cents) equals $.05

FY 2012 minimum charge for Lunch equals (=) $ 2.00 + .05 = $2.05

The law caps the required increase in the average paid lunch price at 10 cents in any year. Therefore, an SFA with a significant gap between its price and the required level will have several years to make adjustments to its prices and/or provide other funding to the SFA account in order to meet this requirement. SFAs may maintain low paid lunch prices if they ensure that sufficient funding from non-Federal sources is added to the school food service account to cover the required revenue. Massachusetts has annually instructed School Food Authorities that student meal charges should not exceed the actual cost of preparing the meals less the federal and state reimbursement rounded off to the next highest multiple of 5 cents. This guidance can be found on the Reimbursement Rate Memorandum under Meal Pricing Guidelines. A Fact Sheet on Equity in School Lunch Pricing can be found in the Document Library on the Department of Elementary and Secondary Education (ESE) Security Portal. Please direct your questions to the Office for Nutrition, Health and Safety Programs at (781) 338-6494.

Last Updated: April 11, 2011