Paid Lunch Equity

1. Paid Lunch Equity CREATED BY: ROSEMARY WILLHITE & DJ SANDHU

2. OverviewPaid Lunch Equity (PLE) Definition/Intent Requirements/Timeline Implementation Options Calculations References

3. Definition & Intent • What is Paid Lunch Equity (PLE)? • Intent: To ensure that revenue from paid lunches is providing sufficient funds to the food service account • This provision applies only to lunches

4. PLE Requirements • USDA mandates that LEAs annually establish and report Weighted Average Price (WAP) • All LEAs must calculate their lunch WAP • In SY 2011-12 if LESS THAN $2.46 – Further Action Required • If MORE THAN or EQUAL TO $2.46 – No Further Action Required

5. Timeline • Effective July 1, 2011 • Interim Rule – Published • USDA accepted public comments until September 15, 2011 • USDA mandates that LEAs annually calculate their lunch WAP

6. Mandatory Annual Calculation

7. Three Step Process • Calculate current lunch WAP • Determine which Option to implement • Adjust current lunch WAP to include inflation rate

8. Step 1:Calculate Current Lunch WAP • Use data from October in the previous SY • Include all sites(elementary, middle, high school, etc.) • List total count of paid lunches at each site • List the paid lunch prices at each site

9. $ 3,000 2,000 Site #1 $ 1.50 Calculation: $9,425 ÷ 5,300 =$1.78 (Total Monthly Revenue) divided by (Total Monthly # of Paid Lunches) $ 3,500 2,000 Site #2 $ 1.75 $ 2.25 1,300 $ 2,925 Site #3 • (Average Paid Lunch Price = $1.83) $1.78 5,300 $9,425 ($1.50 + $1.75 + $2.25) / 3 = $1.83

10. Step 2:Comparison For the example given, the WAP = $1.78 which is less than $2.46 (NSLA Section 11, FREE Federal Reimbursement Rate) FURTHER ACTION REQUIRED

11. Step 3:Include Inflation Increase paid lunch price by inflation rate plus 2 percentage points (current inflation rate 1.14%) 1.14% + 2% = 3.14% Calculation to adjust WAP with Inflation rate: Current WAP x 3.14% = “New WAP” $1.78 x 3.14% = $1.84

12. Implementation Options Option 1 Increase paid lunch prices Option 2 Provide a non-federal funding contribution to cover the difference

13. OPTION 1

14. Option 1Increase Current WAP New WAP Price = $1.84 • Rounded down to the nearest five cents ($0.05) • Limited to a maximum required increase of 10 cents ($0.10) per SY

15. Result: For this example, the LEA must increase the WAP by a minimum of two cents ($0.02) Calculation: New WAP “Rounded-down” minus Current WAP $1.80 - $1.78 = $0.02

16. Option 1Increase average paid lunch prices Flexibility to determine how to distribute the average price increase among their school sites to reach the new average lunch price For this example: Increase WAP to $1.80

18. (Increased) $1.55 MEETS PLE REQUIREMENT $1.80

19. Option 1Increase average paid lunch prices • May increase average paid meal prices more than the required amount • A “credit” for future required increases will be given

20. OPTION 2

21. Option 2Provide Non-Federal Source Contribution • In order to calculate the required “Annual Non-Federal Source Contribution” the following data is required: • Annual Number of paid lunches • Current Weighted Average Price • New Weighted Average Price

22. $1.80 - $1.78 New Weighted Average Price: Current Weighted Average Price: $0.02 50,000 $0.02 $1,000.00 50,000 X $0.02 = $1,000.00

23. AllowableNon-Federal Funding Source • Funds that support paid lunches, including but not limited to: • Per-Lunch reimbursements specifically for paid lunches • Funds provided by organizations for paid lunches (private grants or donations)

24. UnallowableNon-Federal Support • In-kind contributions • A la carte sales • Any payments, including additional per-meal reimbursements, provided for support of any CN Program • Any payments, including additional per-meal reimbursements, provided to support free and reduced price meals; and • Any in-kind contributions converted to direct cash expenditures after July 1, 2011

25. Non-Federal SupportException for SY 2011-12ONLY • Includes any non-federal cash contribution, except for in-kind contributions and revenues from foods and beverages sold in competition with reimbursable meals • The limitations for non-federal contributions do not apply (State meal reimbursement)

26. Reporting Criteria • State agencies must submit data to FNS at the end of November • FNS is required to publish results • Further guidance on reporting is under development • FNS to provide an Excel report to State agencies to collect and directly transmit data

27. FAQ If I have already set my paid lunch price for SY 2011-12, do I still need to determine whether I am in compliance with this new requirement? Yes

28. FAQ What action will be taken against an LEA that does not comply? At this time, we are only looking for a good faith effort

29. FAQ Must an LEA increase meal prices if they currently have a large fund balance or if their current operation is consistently in the black? Yes, all LEAs must calculate their average paid lunch price and determine if any adjustments are required.

30. Provisions If a school district has all their sites participating in Provisions, would they still be required to complete the PLE tool? Yes, all LEAs are required to apply the calculator tool and document the result, even if they are not charging.

31. Provisions If a school district has some of their sites participating in Provisions, would they be requried to list the schools with $0.00 pricing? Yes. In a Provision situation, schools would still be counting the total number of meals for purposes of claiming in non-base years. Hence, they would apply the most frequently charged price of zero and report that as the total number of paid (no charge) meals.

32. References Interim Rule: http://www.fns.usda.gov/cnd/Governance/Legislation/SFArevenue_interimrule.pdf Paid Lunch Equity Q&A: http://www.fns.usda.gov/cnd/Governance/Policy-Memos/2011/SP39-2011_os.pdf Paid Lunch Equity Tool: http://www.fns.usda.gov/cnd/Governance/Legislation/CNR_2010.htm