Presenter: Linda Stull, Consultant Grants Coordination and School Support School Nutrition Programs August 2011

It is important that students are able to prepay for meals in a common location, at designated times during the week so that overt identification is prevented. Prepayment of meals should be advertised. 2 Prepayment of Meals

Meals for eligible students must be served free or at a reduced price. Maximum reduced price for lunch is 40 cents Maximum reduced price for breakfast is 30 cents Neither the United States Department of Agriculture (USDA) nor the Michigan Department of Education (MDE) set specific paid prices for school lunch, breakfast, special milk or a la carte food items. 3 Student Meal Prices

School meals must be priced as a unit (paid or reduced price). Offer versus Serve (OVS) does not affect the unit price of the meal established by the school food authority (SFA). Regardless of the number of items students select, they must pay the established unit price for a reimbursable meal. check your a la carte pricing first 4 Unit Pricing

Adult meals and a la carte: Cannot be subsidized by federal funds Must be priced to cover cost of producing meal Market pricing Purpose is to generate revenue Any income must be used for food service program purposes Non-profit = no more than 3 months operating expenses 5 Establishing Pricing for Adult Meals and A la Carte

$2.50Student Price of Lunch +.26Paid Reimbursement Value of USDA Foods $ Sales Tax $3.1675Final Price ($3.20, $3.25?) Might you have other information that would tell you if you need or don’t need a price increase? 6 Adult Meal Price Calculation

Raw Food Cost $0.48 Desired Food Cost % 38% (.38) = $1.26 (Base Selling Price) Round up to $1.30. Reasonable price? 7 Non-Reimbursable A La Carte Price Calculation

The intent of the law is to ensure that sufficient funds are provided to the food service account for paid lunches. 8 Equity in School Lunch Pricing (Section 205)

SFAs compare the average price for paid lunches at all of their schools to the difference between the per meal federal reimbursement for free and paid lunches. - The current free meal reimbursement rate is $ The current paid meal reimbursement rate is $ $2.72 – $0.26 = $2.46 difference **The difference is the same if you are a “severe need” district 9 Paid Meal Equity Overview

For SY , if an SFA’s average price of paid lunches is $2.46 or more, the SFA is in compliance and no further action is needed. 10 Average Price Calculation

If an SFA’s average paid lunch price is less than the difference between the federal free and federal paid meal reimbursements, it must increase the average paid lunch price by 2% plus inflation by either: Increasing the price charged to children OR Adding non-federal funds to the food service account For , if your average paid price is less than $1.60, you do NOT need to increase prices. 11 Increasing Revenue for Paid Lunches

12 Average Price Calculation

District XYZ average paid lunch price was $1.87 Current inflation factor is 1.14 percent Add 2 percentage points per USDA memo Multiply the average paid lunch price by 3.14 percent $1.87 * = $ cents SFAs can round down to the nearest 5 cent increment 13 Calculating the Paid Meal Price Increase

District XYZ needs to either: 1. Increase the average paid lunch price to $1.90 in School Year (SY) ; or 2. Provide non-federal funds to the non-profit food service account to cover the required revenue Examples of non-federal funds would be money raised by a parent organization for this specific reason, grants from local agencies or community organizations, etc. USDA has said verbally that revenue from a la carte food and beverage sales, of which the foods and beverages were purchased with the non-profit food service account funds, do not count as a source of non-federal funds 14 Next Steps by the School Food Authority

The maximum required annual average paid lunch price increase is capped at 10 cents. SFAs can elect to increase their average paid lunch price by more than the calculation requires Under Section 205, the SFA would never be required to increase its average lunch price by more than 10 cents 15 Next Steps by the School Food Authority

A PLE tool is available on the FNS website. Average price across the SFA New required average price across the SFA Distribution of price increases across SFA Non-federal source contribution amount 16 Paid Lunch Equity Tool

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Pricing Estimation Calculator 18

Non-Federal Source Contribution Calculator 19

Beginning in SY , SFAs must report their paid lunch prices to USDA through the Michigan Department of Education. Data is reported every program year. USDA must publish these prices. 20 Reporting Prices of Paid Lunches

There are two categories of competitive foods: Foods of minimal nutritional value (FMNV) All other foods offered for individual sale 21 Competitive Foods

Schools are prohibited from selling FMNV in serving and eating areas during meal service times. Soda water, water ices, chewing gum, and certain candies such as: Licorice, marshmallow candies, hard candies, fondant (candy corn), jellies and gums (jelly beans), spun candy, and candy coated popcorn USDA has an Exemption List. 22 Foods of Minimal Nutritional Value (FMNV)

Any foods sold in competition with the School Breakfast Program (SBP) or the National School Lunch Program (NSLP) to children in food service areas during the meal period. A la carte items Vending machines Bake sales and other fundraisers 23 Competitive Foods

National School Lunch /School Breakfast Program All buildings at least once each year before February 1 Sample in Manual School employees must conduct reviews 24 On-Site Reviews

After School Snack Program All sites two times per year First review in the first four weeks of operation Second review in the second half of the school year School employees must conduct reviews 25 On-Site Reviews

It is a local decision as to whether or not students are allowed to charge meals. Regulations do prohibit schools from denying meals as a form of disciplinary action against free, reduced, or paid students. 26 School Policy Guidelines for Replacing and Denying Meals

Alternate meals may be reimbursable or non-reimbursable. If a student has a balance due and comes to school with payment for that day’s meal, the student must be provided the meal. 27 School Policy Guidelines for Replacing and Denying Meals

All schools must promote activities to involve students and parents in the program. Menu planning Enhancement to eating environment Program promotion Schools that operate under a Food Service Management Company (FSMC) must establish an advisory board of students, parents, and teachers. 28 Student/Parent/Community Involvement

Local Educational Agencies (LEAs) are selected each year based on risk criteria. 1. Verification data indicating a high-level (e.g. top 25% among SFAs within a State) of non-response or response based terminations; and 2. Consistently claiming over 90% free eligibles or 80% reduced price eligibles AARs focus on Coordinated Review Effort (CRE) Performance Standard 1 (PS1) Critical Areas of Review and the verification component of the General Areas of Review. Application, certification, verification, meal counting, and meal claiming procedures 29 Additional Administrative Reviews (AAR)

A Nutrition Review at all participating SFAs once every five years (7 CFR ). Evaluates compliance, over the school week, with the nutrition standards for lunches and, as applicable, for breakfasts. Proposed rule would discontinue the SMI reviews. Proposed rule: Levels of calories, saturated fat, and sodium to be calculated by SA. 30 School Meals Initiative (SMI)

Proposed Changes – Monitoring Nutrition Standards Three-year review cycle Establish a two-week review period Include breakfast in the CRE review 31

Implementation Plan of the Healthy, Hunger-Free Kids Act of 2010 shows the timeframe for actions and implementation of the law. Plan is in Manual 32 Implementation Plan

Contact MDE School Nutrition Programs at: Phone: or 33 Questions