Mandatory Spending

Function 600 - Income Security

Eliminate the Reimbursement for Paid Meals in the National School Lunch Program, the School Breakfast Program, and the Child and Adult Care Food Program

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

The federal government reimburses schools and child care centers for meals served to students through the National School Lunch Program, the School Breakfast Program, and the Child and Adult Care Food Program. Reimbursement rates for meals served to children from households with income greater than 185 percent of the federal poverty level (FPL) were up to 57 cents per lunch, 28 cents per breakfast, and 7 cents per snack in the 2014–15 school year. The federal government reimburses schools at a higher rate for meals served to children from lower-income households. Those reimbursements include base cash payments; certain commodities; and, for schools that comply with federal nutrition guidelines, an additional cash payment. This option would, beginning in July 2016, eliminate all reimbursements for meals served to students from households making more than 185 percent of the FPL. In 2017, the first full fiscal year for which the policy will be in effect, such a policy would eliminate the reimbursement for about:

1.4 billion paid lunches and 10 million paid snacks served through the lunch program,
360 million paid breakfasts served through the breakfast program, and
370 million paid meals (including breakfasts, lunches, suppers, and snacks) served through the Child and Adult Care Food Program.

CBO estimates that the option would reduce federal spending by about $11 billion over the 2016–2025 period, about 4 percent of total spending projected for those programs under current law.