No Such Thing As A Free Lunch: The impact of food price increases on school food and food inequities

If you are feeling a pinch from increased dairy prices, imagine the impact of a program serving 30 million school meals a day—with each meal including 8 oz of milk on the tray.
— Jennifer Weber, Manager of National Nutrition Policy, Journal of the American Dietetic Association, April 2008

Gas prices are exorbitant and the price of wheat and milk is through the roof. Consumers may make lifestyle adjustments—drive a bit less, opt out of a cappuccino or attend fewer movies, but there are also large institutional changes occurring. And it’s shaping our kids, literally. In the face of rising obesity rates, especially in low-income communities where obesity rates are disproportionately high, schools are having an even tougher time battling the bulge. In the long run, these changes could reduce access to healthy food for children in low-income communities, further exacerbating inequities in health between these and better off children.

Both the National School Lunch Program (NSLP) and competitive foods, those foods sold a la carte outside the NSLP, are affected by rising food and gas prices. As documented by the Economic Research Service, in 2007 milk prices increased by 17%, cheese by 15%, bread by 12% and rice and pasta by 13%.

Kids in poorer communities will suffer most – these already cash-strapped schools are looking for ways to cut costs, undermining many efforts districts have made to implement the mandated, but unfunded, school wellness policies.

School wellness policies, mandated through the Child Nutrition and WIC Reauthorization Act of 2004, required that all school districts participating in the NSLP established wellness policies by July, 2006 and adopted these policies by the start of the 2006 school year. This law requires, among other actions, that schools define their goals for nutrition education, physical activity and nutrition guidelines selected by the local educational agency for all foods available on each school campus.1

But this was more easily said than done and under-resourced school districts are facing major challenges. Schools with good intentions are finding they can’t keep up with the nutritional guidelines set through the program. Many times the healthier items that meet the standards aren’t available, and more recently, to increase revenues , some schools are looking for ways to bring back hot ticket items—highly processed junk sold outside the NSLP by private food and beverage companies.

For the past two decades, school districts have traditionally relied heavily on sales from both vending machine pouring rights contracts and a la carte items to increase school funding. Restricting these foods is clearly beneficial for kids’ health in both the short and long term, and may prove to be financially beneficial in the long run. At least for now, however, schools are feeling the pinch from this lost revenue. And disparities among districts cause certain areas to feel the brunt of this more than others – for example, compared to mostly white school districts, districts with proportionally more Latinos have earned more revenue from pouring rights contracts.2, 3 At the same time, these are frequently the communities in dire need of obesity prevention programs. Low-income, urban, African-American and Latino communities have rates of overweight or obesity that can exceed 40% of elementary school kids.4

But that’s only part one of the double whammy. The NSLP, which serves more than 30 million children, over half of whom receive either free or reduced price lunch, is also suffering from rising food costs. Increasingly expensive meals are causing schools to grapple with how to keep healthier, quality items on the menu. Districts throughout the country are cutting back on fruits and vegetables as costs continue to soar.

Below is a breakdown, as compiled by the School Nutrition Association (SNA), detailing school food prices, reimbursement and total revenue, excluding labor and other costs:

Cost of School Lunch

  Average Meal Prices for Students Reimbursement Rates Total Revenue per Lunch
Full Paid Lunches Elementary: $1.66
Middle School: $1.85
High School: $1.90
$0.23 Elementary: $1.89
Middle School: $2.08
High School: $2.13
Reduced Price Lunch* $0.38-$0.40 $2 $2.38-$2.40
Free Lunch** $0 $2.40 $2.40
*Students with household incomes between 130%-185% of the poverty level receive meals at a reduced price rates
**Students with household incomes below 130% of the poverty level receive meals for free.

Compiled by the School Nutrition Association (SNA)
Sources: School Nutrition Operations Report: The State of School Nutrition 2007 and United States Department of Agriculture (USDA)

SNA researchers found that based on an estimated average cost to prepare a school lunch (including labor, food and other inputs) of about $2.70 to $3.10, and revenue of anywhere from $2.00 to $2.60 to offset that cost (from federal reimbursements, commodity entitlement and the average price paid for a school lunch) school nutrition programs are experiencing a potential loss of $5 to $8 million per school day based on 30 million school lunches provided.5

Their research also indicates that more than 60% of school nutrition directors had meal costs that exceeded the NSLP reimbursement6 and more than 78% of school nutrition programs have increased costs, largely from the cost of healthier items as a result of implementing district’s nutrition standards,7 coupled with rising food costs. At the same time, about half the school nutrition directors ranked both funding and cost of food/food preparation as the biggest obstacle within their programs.8

Some school administrators are lobbying schools to use general funds for school foods – clearly easier in high-resource areas with a larger revenue stream. For many low-income districts, schools either lack these funds altogether or end up cutting other valuable programs instead, risking widening gaps in educational achievement as well as health.

Food prices show no sign of decreasing and with the lack of necessary funding for school food programs, districts are forced to pass along this increased cost to kids’ parents. According to the School Nutrition Association, about one-third of school districts raised the cost of full-price lunch by about 9% during the 2006-2007 school year. Errors in verifying eligibility can magnify the adverse impact of price rises. A 2004 USDA study found that under current verification procedures, children in more than one of every three families selected for verification in metropolitan areas lost their free or reduced-price meal benefits despite being eligible for such meals.9, 10

Recently some food analysts have argued that rapidly rising prices for unhealthy foods (e.g., wheat and corn) will encourage people to eat more fruits and vegetables, whose prices are increasing more slowly. But schools in these resource-poor districts have never been able to afford lots of fruits and vegetables. Now they are merely adding to the growing list of increasingly expensive and out of reach foods.

If there is one glimmer of something positive to come from this, perhaps it’s that schools are learning to conserve, cook from scratch, be creative. A recent article in the Birmingham News said the following about one school district in Alabama:

In Hoover schools, nutrition program personnel are controlling costs by monitoring food purchases and keeping an eye on inventory to prevent waste, Wood [coordinator of the school system’s child nutrition program] said. They’ve also substituted food items as prices fluctuate. They’ve eliminated maraschino cherries as a garnish, for example, and opted for apples and bananas instead of pricier grapes. They are using more mandarin oranges and less fruit cocktail, and they’ve started making their own steak and gravy instead of buying pre-made product.

But these are modest changes and bigger, threats to affordable and healthy school food loom ahead. As food prices increase and federal support remains flat or declines, schools will find it ever more difficult to say no to an easy source of revenue: soda, cookies, and other junk food. Here we go again.

Alexandra Lewin is a staff person at Corporations and Health Watch and is finishing her PhD in nutrition at Cornell University.


References1. School Nutrition Association and School Nutrition Foundation. From Cupcakes to Carrots: Local Wellness Policies One Year Later. September 2007.
2. Johnston LD, Delva J, O’Malley PM. Sports participation and physical education in American secondary schools: current levels and racial/ethnic and socioeconomic disparities. Am J Prev Med 2007;33(4S):S195-S208.
3. Johnston LD, Delva J, O’Malley PM. Soft drink availability, contracts, and revenues in American schools. Am J Prev Med 2007;33(4S):S209-S225.
4. Slusser WM, Neumann CG, Cumberland WG, Browdy BL. Overweight in urban, low-income, African-American and Hispanic children attending Los Angeles elementary schools: research stimulating action. Public Health Nutr 2005;8:141- 8.
5. School Nutrition Association. SNA Statement on USDA Meal Cost Study. 11 April 2008.
6. School Nutrition Association. SNA 2007 Trends Report. Alexandria, VA: School Nutrition Association; 2007.
7. School Nutrition Association. From Cupcakes to Carrots: Local School Wellness Policies One Year Later; September 2007.
8. School Nutrition Association. School Nutrition Operations Report: The State of School Nutrition 2007; August 2007.
9. Neuberger, Z. Reducing Paperwork and Connective with Low-Income Children with School Meals: Opportunities under the New Child Nutrition Reauthorization Law. Center on Budget and Policy Priorities. 22 November 2004.
10. Neuberger article references: Case Study of National School Lunch Program Verification Outcomes in Large Metropolitan School Districts, prepared by Mathematica Policy Research, Inc. under a research contract with the Food and Nutrition Service, USDA, Report CN-04-AV3, April 2004, available at and What Have We Learned from FNS New Research Findings about Overcertification in the School Meals Programs?.
11. Osburn, L. Rising food prices forcing schools to get creative at lunchtime. The Birmingham News. 21 April 2008.


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