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Published in Print: September 1, 2004, as Students Facing Higher Lunch Prices

Students Facing Higher Lunch Prices

Rising Costs of Food, Oil, and Labor Force Districts to Charge Students More

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For the first time in more than 20 years, the Dallas Independent School District has raised its lunch prices, from $1 to $1.25. In the Galt Joint Union High School District in Galt, Calif., lunch prices have jumped a dollar for this school year to $3—the first price increase in 12 years. And California’s South San Francisco Unified School District raised its lunch prices by 25 cents—to $2.00 in elementary and middle schools and $2.50 in high schools—for the first time in six years.

School districts across the country are increasing lunch prices for this school year in response to the rising prices of oil, food, and labor.

See Also...

View the accompanying table, "Price Hikes."

"I guess it’s just a fact of life," said Karen Johnson, the president of the Alexandria, Va.-based School Nutrition Association, formerly the American School Food Service Association. "Bread’s not a quarter anymore."

She added that most districts’ food-service programs are self-supporting—though districts that participate in the U.S. Department of Agriculture’s National School Lunch Program receive federal subsidies—and must raise prices just to break even. And this year has seen some of the highest consumer price increases in years.

Milk prices alone are higher than they’ve been in decades, according to Ephraim Leibtag, a food-price economist with the economic-research service in the USDA.

"In May, we saw the highest one-month increase in milk prices since World War II," said Mr. Leibtag. That price went from an average of $2.91 per gallon in April, to an average of $3.37 in May, spiking to $3.57 in June, before decreasing less than 10 cents in July.

Mr. Leibtag noted that food-price boosts have not been limited to milk. Dairy and meat prices are up 8 percent to 15 percent from last year’s levels.

Financial Burden

The price jumps are more of a shock to some parents than others because in many instances, school systems wait years, or even decades, to raise prices.

In the Dallas schools, for instance, food-service officials were unable to avoid raising the price of student breakfasts and lunches even though they had held the line for more than two decades.

David P. Brown, the executive director of food and child-nutrition services for the 164,000-student district, cites the rising cost of business as the reason for the increase. Because it receives very little state funding for the lunch program, and no local funds—as is the case with many school lunch programs across the country—the Dallas program has to be, for the most part, self-sufficient.

In addition, a new public school nutrition policy that was issued in March by the Texas Department of Agriculture places stringent rules on districts, such as eliminating deep-fat frying on school grounds and the sale of "competitive foods," such as candy.

Yet, while the state policy may be hurting some already cash-strapped districts that must spend money on new ovens and healthier ingredients, Mr. Brown believes the policy could help his district. By abolishing extra food-related activities at the schools—such as candy sales—Mr. Brown predicts the policy will bring more Dallas students into the cafeteria to eat, and pay for, healthier meals.

Federal Program Unaffected

In California’s Galt Joint Union High School District, officials had planned to bump lunch prices up by 50 cents this year. But facing the high cost of food and labor, they were forced to double the price hike, said Darla VanWarmerdam, the food-service director for the 2,300-student district, located 15 miles south of Sacramento. "[Lunch programs] have always been a drain for the district," Ms. VanWarmerdam said. "For some reason, it’s always been a given that you lose money in the food-service program. But there’s no money to lose anymore."

Such price hikes do not affect families that qualify for the federal free- and reduced-price-lunch program. The cost to the student of a reduced-price lunch is 40 cents, and districts cannot raise it. To qualify for the free-lunch program, a family of four must earn no more than $24,505 a year; similar families that make up to $34,873 a year qualify for the reduced-price program.

For some families, however, even the reduced price is too high, according to Erik Peterson, a spokesman for the School Nutrition Association. Not only are families that qualify for the program having problems paying, he said, but families who fall just outside the qualification limits also are having trouble covering the full price each day for lunches.

The recent reauthorization of the federal law that includes the National School Lunch Program, which President Bush signed into law on June 30, attempts to alleviate that problem. One element of the law is a five-state pilot program that eliminates the reduced-price-lunch program and provides free lunches to students who would have qualified for the lower price.

Ms. Johnson sees the pilot program as important for families and districts. "We need to be looking at eliminating the reduced-price category," she said. The pilot program, she said, is "a big step forward."

For each free lunch a district qualifies for, the USDA gives the school system a maximum of $2.41; for each reduced-price lunch, the district gets reimbursed up to $2.01; and for each fully paid lunch it produces, a school system receives 29 cents from the federal government. (School districts in Alaska and Hawaii receive slightly higher reimbursement rates.)

With the exception of adjustments to the funding for inflation, those rates have stayed about the same for years. As a consequence, they do not accurately reflect the amount that schools are now required to spend on healthier foods and ways of preparation, according to a report released in May 2003 by the congressional agency now known as the U.S. Government Accountability Office. The report noted that in the years studied—1996 to 2001—the percent of districts’ food-service expenses covered by the reimbursed funding dropped from 54 percent to 51 percent.

"Our objective is to feed kids, and somehow we do it, but there is an impact [on the district,]" Ms. Johnson said. "It seems like we’re being asked to do more with less."

Future Prices

As for the future of school lunch prices, experts say this year appears to be a peak. But they also point out that increases may be just around the corner for districts that didn’t raise prices this year.

Still, one thing schools probably won’t have to worry about is the price of food, because it has already started to decline, according to Mr. Leibtag.

"We already hit the peak," the USDA economist said. "And now the question is: It’s going to go back down, but how much lower is it going to go?"

Vol. 24, Issue 1, Page 3

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