Letter to the Honorable Pat Roberts regarding the estimated budgetary effects of the Improving Child Nutrition Integrity and Access Act of 2016, as ordered reported by the Committee on Agriculture, Nutrition, and Forestry on January 20, 2016, and posted on the committee’s website.
The legislation would make changes to child nutrition programs—primarily the National School Lunch Program, the School Breakfast Program, the Summer Food Service Program (SFSP), and the Child and Adult Care Food Program (CACFP). It also would reauthorize through 2020 the SFSP and funding for state administration of child nutrition programs. (Other child nutrition programs are permanently authorized.)
Relative to CBO’s March 2015 baseline (updated to include actual reimbursement rates for the 2015-2016 school year), CBO estimates that enacting this legislation would increase the federal budget deficit by $1.1 billion over the 2016-2025 period. Because enacting the legislation would affect direct spending and revenues, pay-as-you-go procedures apply. Implementing the legislation also would affect spending subject to appropriation, in particular for the Special Supplemental Nutrition Program for Women, Infants and Children. However, CBO has not yet completed an estimate of the discretionary spending effects of the bill.
Most of the provisions in the legislation would increase direct spending for child nutrition programs. A few provisions would either decrease spending on those programs or increase revenues. Specifically, the legislation would:
- Change the process for verifying income on applications for free and reduced-price school meals by using different criteria to target applications for verification and by increasing the percentage of applications that must be examined. CBO projects that the increase in the percentage of applications examined would lead to a reduction in the number of children certified for free and reduced-price meals. CBO estimates that enacting those provisions would reduce direct spending by $294 million over the 2016-2025 period.
- Allow certain sites that provide benefits through SFSP to serve meals on a year-round basis, give states the option to offer a limited number of children during the summer an electronic benefit card to purchase food, and allow sites in rural and high-poverty areas to provide meals for off-site consumption. CBO projects that those provisions would increase participation in child nutrition programs during both the summer and the school year. In total, CBO estimates that enacting those provisions would increase direct spending for SFSP by $568 million over the 2016-2025 period.
- Allow certain residential care centers for children and boarding schools funded by the Bureau of Indian Education to provide meals and snacks to children through CACFP and allow participating day care centers and child care homes to offer an additional snack to children who receive care for nine or more hours a day. CBO projects that those provisions would increase the number of meals and snacks served through CACFP. In total, CBO estimates that enacting those provisions would increase direct spending for CACFP by $445 million over the 2016-2025 period.
- Authorize funding for equipment grants to local educational agencies, school food authorities, and tribal organizations. CBO estimates that the grants would result in increased participation in the child nutrition programs by eligible children and that the greater participation would increase direct spending for those programs by $224 million over the 2016-2025 period. (The funding for the grants is subject to appropriation.)
Other provisions in the legislation would affect direct spending by smaller amounts, including increased spending for the Farm to School Program, a centralized exchange network, and new studies and reviews of various aspects of the child nutrition programs.
Finally, the legislation would reauthorize funding for the SFSP and state administration of the child nutrition programs through 2020. As required by the Balanced Budget and Emergency Deficit Control Act of 1985, the costs of extending the those child nutrition programs are included in CBO’s baseline and are therefore not included in the costs attributable to this bill. CBO estimates that those costs would total about $3 billion over the 2017 2020 period. (The bill also would reauthorize those programs for 2016, but those programs received an appropriation for 2016 and those amounts are also included in CBO’s baseline.)
The legislation includes one provision that would require the Secretary of Agriculture to impose civil penalties on contractors found guilty of certain activities. CBO estimates that enacting that provision would increase revenues by $7 million over the 2016-2025 period.
Long-Term Budgetary Effects
CBO estimates that enacting the legislation would not increase net direct spending or on-budget deficits by more than $5 billion in the first two consecutive 10-year periods beginning in 2026. However, we estimate that enacting the legislation could increase net direct spending and on-budget deficits by more than $5 billion in the third 10-year period and would increase them by more than $5 billion in the fourth 10-year period because inflation and rising program participation would steadily boost the annual cost of the bill’s provisions.
Intergovernmental and Private-Sector Mandates
The bill would impose new mandates as defined in the Unfunded Mandates Reform Act (UMRA) on states and on school districts that implement the child nutrition program. Those mandates would:
- Require the Food and Nutrition Service (FNS) to review the feasibility and evaluate the benefits of using a unique student identifier in the school meals program, which might result in school districts upgrading technology to comply with the new requirements. The costs could vary depending upon how FNS would implement the new requirements, but assuming that the agency would not require major systemic changes, CBO estimates that the costs would be less than $50 million. Most of those costs would be incurred in the first or second year after implementation.
- Impose additional duties on states and local educational agencies (LEAs) when they review applications and verify eligibility in school meal programs. CBO estimates that this provision would cost less than $10 million annually.
- Require school districts to meet new minimum standards for software used to claim reimbursement in the school lunch programs. CBO estimates that this requirement would cost less than $5 million annually.
- Extend a number of other requirements through 2020, including reports about food safety inspections by state agencies, continuation of preferences for domestic products in procurement, and other administrative requirements. CBO estimates that the costs of extending those requirements would be covered by funding authorized in this bill.
In aggregate, CBO estimates that the costs of intergovernmental mandates in the bill would fall below the threshold established in UMRA ($77 million in 2016, adjusted annually for inflation). The bill contains no private-sector mandates.