November 13, 2013

Mandatory SpendingOption 12

Function 600 - Income Security

Eliminate Subsidies for Certain Meals in the National School Lunch and School Breakfast Programs

(Billions of dollars) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014-2018 2014-2023
Change in Outlays -0.1 -0.7 -1.0 -1.0 -1.1 -1.1 -1.2 -1.2 -1.3 -1.3 -3.9 -10.1

Note: This option would take effect in July 2014.

The National School Lunch Program and the School Breakfast Program provide funds that enable public schools, nonprofit private schools, and residential child care institutions to offer subsidized meals and snacks to students. In the 2013–2014 school year, federal subsidies for each lunch are $0.57 and for each breakfast are $0.28 for many students in households with income above 185 percent of the federal poverty guidelines (commonly known as the federal poverty level, or FPL). The programs provide larger subsidies for meals served to students from households with income at or below 185 percent of the FPL and above 130 percent of the FPL, and still larger subsidies to students from households with income at or below 130 percent of the FPL. As a result of the subsidies, students from households with income at or below 130 percent of the FPL pay nothing for their meals.

This option would eliminate the subsidies for meals served to students from households with income greater than 185 percent of the FPL beginning in July 2014. The Congressional Budget Office estimates that the option would reduce federal spending by $10 billion through 2023.

Under current law, federal subsidies for meals served to students from households with income greater than 185 percent of the FPL can include base cash subsidies, certain commodities, and, for those schools in compliance with federal nutrition guidelines, an additional cash subsidy. In the 2013–2014 school year, the base cash subsidies for meals served to students from households with income greater than 185 percent of the FPL are $0.28 per lunch and $0.28 per breakfast; for after-school snacks provided to such students, the amount is $0.07. All participating schools also receive commodities—food from the Department of Agriculture, such as fruit and meat—with a value of $0.23 per lunch. Schools do not receive commodities for breakfasts or snacks. Schools that are in compliance with federal nutrition guidelines receive an additional cash subsidy of $0.06 per lunch. (Schools in Alaska and Hawaii and schools with large numbers of meals served to students from households with income at or below 185 percent of the FPL receive additional subsidies.)

The primary rationale for this option is that it would target federal subsidies to those most in need. No clear justification exists for subsidizing meals for students who are not from low-income households, and because the subsidies for meals served to students from households with income greater than 185 percent of the FPL are small, the effect of the option on those students and the members of their households would probably be minimal.

A rationale against this option is that schools would probably offset part or all of the loss of the subsidies by increasing the prices they charge higher-income students for meals. In addition, schools that incur costs to administer the programs that are greater than the subsidies they receive for meals served to students from households with income at or below 185 percent of the FPL might leave the programs. Eligible students at such schools would no longer receive subsidized meals, and the meals served at those schools would no longer have to meet any of the other requirements of the programs (including the nutrition guidelines).