As we have explained, many school districts don’t charge nearly enough to cover the cost of “paid lunches” — those for students whose family incomes are too high to qualify for free or reduced-price lunches. Moreover, contrary to a common misperception, “competitive” foods sold outside the school meals program — such as foods sold in vending machines or à la carte in the lunch line — are revenue losers for schools, on average.
As a result, some school districts divert part of the federal subsidies that are supposed to help pay for meals for low-income children to subsidize meals for better-off children and competitive foods. When Congress renewed the school meals programs last year, it included two provisions to fix that; today’s regulation implements those provisions.
The first provision requires school districts that bring in less revenue for each paid meal than the federal subsidy they receive for each free meal to close the gap between the two, by raising more non-federal revenue from each paid meal. (They could, for example, contribute state or local funds or raise paid lunch prices.). But they can do so gradually — so gradually, in fact, that some districts will take more than 20 years to eliminate the gap. Still, this is an important step in the right direction.
The second provision requires school districts that offer competitive foods to fund them on their own, without diverting any federal subsidies for low-income students. That will take full effect at the start of the next school year on July 1.
Using School Lunch Subsidies for Low-Income Students as Intended: