Release No. FNS 0002

Contact: Jean Daniel (703) 305-2281

USDA Releases School Meals Cost Study

WASHINGTON, April 11, 2008 – Under Secretary for Food, Nutrition and Consumer Services Nancy Johner today announced the release of the “School Lunch and Breakfast Cost Study-II.” Data from the 2005-2006 school year showed that, on average, Federal reimbursements more than cover the cost for school food service to produce a free lunch.

“USDA is committed to continuing to support schools with guidance, training and technical assistance to ensure their operations are effective and efficient in providing good nutrition to our children,” said Johner.

The study compares the cost of producing school meals in the 2005-2006 school year to the total revenue to schools from Federal reimbursements, state and local contributions, and payments by participating households. That year, the average cost to produce a lunch was $2.28 and the Federal subsidy for a free lunch, including cash and commodity food, was about $2.50. Other key findings include:
 

	On average, revenue generated from reimbursable lunches exceeded the reported cost of production.
	On average, revenue generated from reimbursable breakfasts and a la carte foods did not cover the reported costs for production. As a result, revenue from reimbursable lunches subsidizes a portion of the cost to produce and serve both breakfasts and a la carte foods.
	On average, school food services operated at a break-even level in 2005-06, with revenues equal to costs.
	While most lunches cost less to produce than the USDA subsidy for a free lunch, not all did. For almost four out of five school districts, the average cost of producing a lunch was less than the free subsidy; in the rest, the average cost exceeded the subsidy.

Reported costs reflect all costs that a school food service must cover with the funds they receive. The study also examined the combination of reported costs and other costs, described as “full costs”. School districts do not always charge some expenses – such as time spent by school staff to support the application process and some overhead costs – to this account. There are many factors that may lead districts not to allocate some costs to that account. Since the last study in 1992-93 school districts are charging a higher proportion of these costs to the food service accounts.

By law, payments to school districts automatically adjust each year to reflect changes in food and labor costs. However, short-term cost fluctuations may require some schools to examine production methods and seek ways to economize. USDA will use these findings to continue to help improve school food service operations through the Food and Nutrition Service and the National Food Service Management Institute.

The report can be found online at www.fns.usda.gov/oane/.

Last modified: 12/05/2008