Eliminate Subsidies for Certain Meals in the National School Lunch, School Breakfast, and Child and Adult Care Food Programs

The National School Lunch Program, the School Breakfast Program, and the Child and Adult Care Food Program provide funds that enable public schools, nonprofit private schools, child and adult care centers, and residential child care institutions to offer subsidized meals and snacks to participants. In the 2016–2017 school year, federal subsidies are generally 59 cents for each lunch, 29 cents for each breakfast, and 7 cents for each snack for participants 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 participants from households with income at or below 185 percent of the FPL and above 130 percent of the FPL, and still larger subsidies to participants from households with income at or below 130 percent of the FPL. As a result of the subsidies, participants from households with income at or below 130 percent of the FPL pay nothing for their meals.

Beginning in July 2017, this option would eliminate the subsidies for meals and snacks served to participants from households with income greater than 185 percent of the FPL. The Congressional Budget Office estimates that the option would reduce federal spending by $10 billion through 2026.

Under current law, federal subsidies for meals served to participants from households with income greater than 185 percent of the FPL can include base cash subsidies; certain commodities; and, for those schools participating in the National School Lunch Program that comply with federal nutrition guidelines, an additional cash subsidy. In the 2016–2017 school year, the base cash subsidies for meals served to participants from households with income greater than 185 percent of the FPL are 30 cents per lunch and 29 cents per breakfast; for after-school snacks provided to such participants, the amount is 7 cents. All participating schools and centers also receive commodities—food from the Department of Agriculture, such as fruit and meat—with a value of 23 cents per lunch. Schools whose meals that state authorities certify as complying with federal nutrition guidelines receive an additional cash subsidy of 6 cents per lunch in the 2016–2017 school year. (Additional subsidies are available for schools and centers in Alaska and Hawaii, schools in Puerto Rico, and participating schools that serve many meals to students from households with income at or below 185 percent of the FPL.)

The primary rationale for this option is that it would target federal subsidies to those most in need. Because the subsidies for meals served to participants from households with income greater than 185 percent of the FPL are small, the effect of the option on those participants and the members of their households would probably be minimal.

A rationale against this option is that schools and centers would probably offset part or all of the loss of the subsidies by charging participants from higher-income households higher prices for meals, and some of those participants might stop buying meals. In addition, schools and centers might leave the programs if they incur meal program costs that exceed the subsidies they receive for meals served to participants from households with income at or below 185 percent of the FPL. Individuals at such institutions who would be eligible for free or reduced-price meals would no longer receive subsidized meals, and the meals served at those institutions would no longer have to meet any other requirements of the programs (including the nutrition guidelines).