Video: Hidden costs of pricier lunches

By M. Alex Johnson Reporter
msnbc.com
updated 6/9/2008 6:57:51 AM ET 2008-06-09T10:57:51

When America’s schoolchildren return to class in the fall, they will learn a painful lesson in economics: Higher food and fuel prices are forcing up the price of school breakfasts and lunches across the country, by as much as 50 percent in some districts.

The cost of staples that make up the backbone of school meal programs has soared in the past year, far outstripping federal subsidies. While inflation has driven up the price of milk by 12 percent, cheese by 15 percent and bread by 17 percent, the National School Lunch Program has increased what it pays local school districts to feed 30.1 million schoolchildren by only 3 percent.

And pricier ingredients aren’t the only culprit.

Even at $8.2 billion a year, the federal subsidy “hasn’t kept up with rising food costs, with rising labor costs, fuel costs, benefits costs, even,” said Erik Peterson, a spokesman for the School Nutrition Association, a nonprofit foundation representing school food workers nationwide. “All those costs are adding up.”

The math is plain: About half of schoolchildren receive free lunches. On average, the cheapest of those lunches now costs $2.66 to prepare, the School Nutrition Association calculated. But the federal subsidy for a free lunch is only $2.47. That means schools lose at least 19 cents on every one of the 15 million free lunches served every day.

Counterintuitively, schools lose even more money when students pay full price. The average charge for a high school lunch is $1.90, the association found. The federal government kicks in only a 23-cent subsidy for those students, meaning a loss of at least 53 cents on every lunch sold at “full price.”

Under the law, meal programs are supposed to be self-sustaining, meaning those losses have to be made up somehow. So when kids go back to school in Brevard County, Fla., after the summer, their cafeteria breakfasts will cost 50 percent more than in 2007-08, while middle school lunches could cost 35 percent more.

Most increases aren’t that extreme, but school officials from across the country say they will have to charge more:

  • “With the delivery and food prices going up, we’re just at a point where we need to move prices up to stay above the red line,” said Mike Gilbert, superintendent  of the White Oak Independent School District in East Texas, where a half-pint of milk will cost 5 cents more in the fall and breakfast will go up 15 cents to 25 cents depending on the grade level.
  • In the Utica, N.Y., schools, lunch will cost 25 cents extra next term. “We’re going to have an increase of $28,000 for all of our milk products and an $8,000 increase for all of our bread products,” said Karen Pulice, food service supervisor for the Utica School District.
  • Students in Olathe, Kan., will pay 10 percent more for lunch after the Olathe School District’s meal program lost money this year. For Aaron Jack, a student at Frontier Trail Junior High School, that means “I won’t be able to eat as much or eat what I usually eat in a regular day. I’ll have to cut down.”

‘A scary, scary year coming up’
Rapidly rising costs for the basics and for the fuel to get them to the kitchen have thrown a wrench in plans for school meal directors everywhere.

“It’s just part of the job. It’s a challenge,” said Sherry Cliffton, food service director for the Ozark, Mo., School District.

Cliffton orders 2,900 lunches every school day, and lately, she has had to pinch pennies on a budget stretched thin.

“This year, we got hit with a pretty large 7 percent increase” in costs, she said.

In past years, the cost of feeding children rose an average of 3 percent. For 2008-09, Cliffton said, she expects her budget to jump as much as 10 percent.

“It’s not a great surprise but something we need to plan for,” she said.

For Lynda Uden, food service manager for the Doniphan-Trumbull School District in central Nebraska — smack in the middle of the hardest-hit region of the country — the food budget for next term could become a crisis.

“Last year, food cost increased by 15 percent, and so far this year I have exceeded that, so I am thinking that we are going to have to probably look at my food cost escalating at least another 15 to 20 percent, and that is at the very minimum,” Uden said.

“It is a scary, scary year coming up,” she said.

Little room to maneuver for schools
School officials say they are wedged into a difficult position.

Federal law essentially says they must offer hot meals for all students, many of them free or at reduced prices. The average cost of such meals — factoring in all free, reduced-price and full-price breakfasts, lunches and snacks — is between $2.70 and $3.10, according to estimates and surveys by the School Nutrition Association. But school districts generate revenue of only $2 to $2.60 to offset that cost, derived from federal subsidies, commodity entitlement programs and the average price students pay.

As a result, U.S. schools will run a loss of $5 million to $8 million every school day to feed 30 million children, the nutrition association estimates.

Kirk Russell, superintendent of the Doniphan-Trumbull district in Nebraska, said he not only will have to raise the prices kids pay, but that he also will have to consider layoffs to balance the books.

“I have to operate the school and the budget and the personnel we have to make it work.” Russell said. “We just have to make it work.”

Yet another squeeze for families
For parents already paying more for housing, food and gas, the pricier meals are a ticking time bomb that won’t even go off for two to three more months.

“As a parent, it means tightening my budget quite a bit more than what I already am,” said Linda Forshee, the mother of a child in the Shorewood School District in Shorewood, Wis., where meals will rise by 15 cents to 25 cents when classes reconvene. Like many parents, she is considering packing a bag lunch for her child.

“Considering costs, it would be a lot easier to send him with a ham sandwich, peanut butter and jelly, than having to worry about the cost of him eating at school,” she said.

Said Sean Yepez, a social worker with the Belton Independent School District in Belton, Texas: “I think it’s going to hit every family. Whether it’s 5 cents or 10 cents, that definitely affects people’s economic status.”

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