December 7, 2016

The National School Lunch Program Is Broken



The Healthy and Hunger Free Kids Act of 2010 (HHFKA) enacted various changes to the National School Lunch Program (NSLP), including significantly stricter regulations on what foods may be served, and increases to the number of eligible children through Community Eligibility Criteria. As Congress gears up to amend and reauthorize child nutrition programs some time early next year, the time is right to evaluate the impact of these changes.

By looking at trends in both administrative and survey data it is clear that the law’s enactment has meant the NSLP serves fewer children with the greatest need, while subsidizing a substantially greater number of middle and upper income students. At the same time, the new nutritional requirements have made school lunches unpalatable to the point where students are increasingly choosing to opt-out of school meals altogether. Due to this and the deterioration in targeting, the program now costs taxpayers more than ever while doing less than ever to meet its goals.

The NSLP is a case study in the inefficiency of in-kind federal programs and the micromanaging bureaucracies that come with them. As we recommend in Toward a Universal Child Benefit, simply giving parents cash is a superior means of promoting child health and well-being, and could be paid for by consolidating less effective programs like the NSLP.

No Such Thing As a Free Lunch

Federal administrative data since the passage of the HHFKA suggests that the law has had a major impact on the dynamics of the NSLP. According to spending and participation figures from the OMB and USDA respectively, federal spending has historically sloped upward with the number of program participants. However, since the law’s passage, costs have continued to rise, despite the fact that the total number of students in the program declined. In fiscal year 2015, the NSLP served 30.5 million participants. That’s 1.3 million fewer participants than the program’s 2010 recession peak, and 100,000 fewer than in 2007, before the recession.

Participation in the Nation School Lunch Program has dropped while costs continue to rise.

Participation in the Nation School Lunch Program has dropped while costs continue to rise.

These declines in participation have been the sharpest among students who pay the full-price for a school lunch. The NSLP employs a three-tiered reimbursement structure whereby students receive meals either for free, at a reduced price, or at full price. How much a child pays depends on its family’s income and participation in other government programs, such as SNAP. Decline in the number of full-paying participants was expected at the outset of the Great Recession, as more children became eligible for federal subsidies. However, the number of students paying for lunches did not rise again as incomes recovered. In fact, the number of paid lunches continued to fall.

Fewer children are paying for meals following the new nutrition guidelines.

Fewer children are paying for meals following the new nutrition guidelines.

Healthy and Hunger Free Kids Act of 2010 appears to be the culprit of this collapse. The legislation significantly altered the NSLP reimbursement structure with the creation of the Community Eligibility Provision. Under this provision, schools may offer free lunch to all students and receive federal reimbursement based on their identified student percentage (ISP). This figure is tabulated via federal statistics such as participation in SNAP or TANF. A school with an ISP of 40% or more may forego the collection of household applications and provide free meals to all students.

The federal government reimburses eligible schools by multiplying their ISP by 1.6 at the “free-lunch” rate. This implies that the federal government subsidizes 100% of meals at schools with an ISP of 62.5%. Schools that do not qualify for 100% reimbursement must make up any cost difference through administrative savings in other areas, such as paperwork reduction. The intent of this provision was to increase participation among low-income students, while reducing the administrative load on both parents and school staff. However, this provision also potentially enables millions of middle and upper income students to receive a taxpayer funded lunch.

Community Eligibility

The Current Population Survey (CPS) provides some indications of the Community Eligibility Provision’s true impact. This survey asks questions regarding family characteristics such as income and  size, as well as whether children are receiving a free or reduced price lunch through the NSLP. During the period in which the Community Eligibility Provision was phased-in, the number of children who receiving a subsidized school lunch who were required to pay full price in prior years skyrocketed. The implication of this finding is that the Community Eligibility Provision gave millions of middle and upper-income students a free school lunch.

It is important to note that the Current Population Survey suffers from a number of notable limitations when it comes to analyzing school lunch participation. The survey asks parents their income annual income, rather than monthly income. This can be problematic as income certifications are often based upon the family’s income in the previous month. The survey also doesn’t identify children that are not attending school as well as leaving out children without families. Finally, estimates from the CPS are weighted on calendar years, as opposed to the federal government’s fiscal year, meaning direct comparisons between the two overlap imperfectly.

While individual figures derived from the CPS may slightly overestimate or underestimate the size of specific populations, the trends identified in this analysis are consistent with those found in government administrative data.

If millions of previously ineligible students began receiving free lunches through Community Eligibility Provision, then what accounts for the overall decline in participation? The other major change to school meal programs as a result of the Healthy and Hunger Free Kids Act of 2010 was the creation of stricter regulations on what foods may be served in schools, including mandated ranges on sodium and calories, as well as restrictions on what grains may be served. These rigid requirements been controversial since their rollout in 2012, with over a million children dropping out of the program entirely and school lunch providers reporting difficulty with compliance.

This conclusion is backed up by a study of the regulation’s impact conducted by the Government Accountability Office as well as the School Nutrition Association, representing school meal providers across the county. If children don’t like the food being served, they won’t eat it. There is strong reason to believe that stricter meal standards have had the unfortunate consequence of prompting children from needy families to opt-out of the program.

non-participants

Despite the Community Eligibility Provision offering free lunch to millions more students, estimates from the Current Population Survey show an increasing number of children opting not to participate in the National School Lunch Program. As of 2015, the total number of children bringing lunch from home reached an all time high.

Conclusion

As a result of the Healthy and Hunger Free Kids Act (HHFKA) of 2010, the National School Lunch Program costs more, is less targeted on the poor, and has reduced student satisfaction to the point where many in need are opting out. The program needlessly subsidizes middle and upper-income children, while forcing schools to produce meals so unpalatable that many children, including those the program has deemed in actual need, have chosen to bring lunch from home instead.

The unintended consequences of centralized school lunch regulation suggest a need to rethink our approach to school meals in favor a more decentralized approach. Weakening the Community Eligibility Provision and returning regulation of school meals to local authorities would be an excellent start.

A more comprehensive approach would be to scrap federal school nutrition programs altogetherof which there are 5, costing in excess of $20 billion per year. As we advocate in our paper, “Toward a Universal Child Benefit,” consolidating these and other federal child programs of dubious effectiveness into a simple cash stipend for parents would save money, enhance parental choice, and do much more for the health and well-being of disadvantaged children than the status quo.