Other Regulatory and Policy Information

1. Other Regulatory and Policy Information Presenter: Linda Stull, Consultant Grants Coordination and School Support School Nutrition Programs August 2011

2. Prepayment of Meals • 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.

3. Student Meal Prices • 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.

4. Unit Pricing • 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

5. Establishing Pricing for Adult Meals and A la Carte • 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

6. Adult Meal Price Calculation $2.50 Student Price of Lunch + .26 Paid Reimbursement + .2275 Value of USDA Foods $2.9875 .18 Sales Tax $3.1675 Final Price ($3.20, $3.25?) • Might you have other information that would tell you if you need or don’t need a price increase?

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

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

9. Paid Meal Equity Overview • 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 $2.72 • - The current paid meal reimbursement rate is $0.26 • - $2.72 – $0.26 = $2.46 difference • **The difference is the same if you are a “severe need” district

10. Average Price Calculation • For SY 2011-2012, 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.

11. Increasing Revenue for Paid Lunches • 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 2011-2012, if your average paid price is less than $1.60, you do NOT need to increase prices.

12. Average Price Calculation

13. Calculating the Paid Meal Price Increase • 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 * 1.0314 = $1.9287 cents • SFAs can round down to the nearest 5 cent increment

14. Next Steps by the School Food Authority • District XYZ needs to either: • Increase the average paid lunch price to $1.90 in School Year (SY) 2011-2012; or • 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

15. 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

16. Paid Lunch Equity Tool • 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

17. Paid Lunch Equity Tool

18. Pricing Estimation Calculator

19. Non-Federal Source Contribution Calculator

20. Reporting Prices of Paid Lunches • Beginning in SY 2011-2012, 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.

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

22. Foods of Minimal Nutritional Value (FMNV) • 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.

23. Competitive Foods • 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

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

25. 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

26. School Policy Guidelines for Replacing and Denying Meals • 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.

27. 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.

28. Student/Parent/Community Involvement • 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.

29. Additional Administrative Reviews (AAR) • Local Educational Agencies (LEAs) are selected each year based on risk criteria. • Verification data indicating a high-level (e.g. top 25% among SFAs within a State) of non-response or response based terminations; and • 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

30. School Meals Initiative (SMI) • A Nutrition Review at all participating SFAs once every five years (7 CFR 210.19 ). • 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.

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

32. Implementation Plan • 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

33. Questions • Contact MDE School Nutrition Programs at: • Phone: 517-373-3347 or • E-mail: MDE-SchoolNutrition@michigan.gov