Further Targeting School Meal Programs But Missing the Bull’s Eye

In mid-August the Congressional Budget Office (CBO) released its 2009 Budget Options, a bi-annual publication estimating the cost or savings associated with numerous possible changes to federal programs. Last November Ed Money Watch discussed problems with a proposal to change the Child Nutrition Program (CNP) analyzed in previous Budget Options (2003, 2005, and 2007). While the Child Nutrition Program proposal analyzed in this year’s publication differs significantly from the one included in the past, it still misses out on an important improvement to the program – including Medicaid data as a method of identifying eligible students.

The National Child Nutrition Program provides free and reduced priced meals to low-income children through a per-meal federal subsidy based on family income. Students from families with incomes below 130 percent of the poverty line receive free meals, students from families with incomes below 185 percent of poverty receive reduced-price meals, and all other students receive full-price meals. Student income levels are established either through TANF (the federal welfare program) or food stamp data or paper application.

Schools are reimbursed by the federal government according to a federal formula that updates each year. The rates for lunch are as follows: $2.57 for free lunches, $2.17 for reduced-price lunches, and $0.24 for full-price lunches, which are available to all students regardless of income.

Past CBO Budget Options estimated the cost of eliminating federal reimbursement to school districts for full-price breakfasts and lunches for students whose family incomes are more than 350 percent of poverty. At the same time, they would have increased the reduced-price breakfast and lunch subsidy by $0.20. As the previous analysis described, these changes would present significant administrative and bureaucratic obstacle for schools and districts that would have to identify students above 350 percent of poverty through paper applications. At the same time, the cost of full-price lunches would likely increase, reducing the number of those meals purchased and the revenues brought in as a result.

This year’s Budget Options analyzes a proposal to eliminate the full-priced lunch and breakfast subsidy entirely and expand eligibility for free meals to students between 130 and 185 percent of poverty. While not explicitly stated, we assume that this would eliminate the reduced-price meal category and subsidy because all students previously receiving reduced-price meals would now be eligible for free meals. In other words, the policy change would both expand and simplify the program by creating one category of eligible students. CBO estimates this change would save $1.2 billion between 2010 and 2014 due to the elimination of the full-price meal subsidy.

In addition to abandoning the possibility of requiring school districts to identify students above 350 percent of poverty, these changes would eliminate the administrative burden involved in the CNP in key ways. The eligibility application process would no longer require a distinction between students below 130 percent of poverty for free meals and those below 185 percent of poverty for reduced-price meals, easing paper work for school administrators and parents. Similarly, cafeteria personnel would no longer need to keep records of free, reduced-price, or full-price meals for reimbursement purposes. Instead, all meals would either be free with the full subsidy or paid for entirely by the student. If streamlining the administration of CNP is Congress’ only goal, then this proposal certainly fits the bill.

But if policymakers aim to improve both the efficiency of and access to the school meal program in the upcoming reauthorization, CBO missed an important opportunity to estimate the cost of a more beneficial improvement to the program: using Medicaid data (in addition to TANF and food stamp data) to identify students eligible for school meals. The current paper application process is cumbersome and imperfect, leaving many eligible students without meals and needlessly increasing administrative costs for local schools. This change would increase the number of eligible students automatically identified for meals, lessening the burden of the paper application process on schools and districts, and lowering administrative costs in the long run.