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V541 Presentation

A Retrospective Analysis and Recommendations for the Future.
by

Graham McKeen

on 26 April 2010

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Transcript of V541 Presentation

The National School Lunch Program Overview Issue
History of the NSLP
Structure of the NSLP
Cost benefit analysis framework
Recommendations for future policy
Proposed reauthorization legislation
Conclusion The Richard B. Russell National School Lunch Act created the National School Lunch Program
The act was signed by President Truman in 1946 HISTORY Act established to safeguard the health and well being of the nations's children by providing nutritious food at school
Way to manage agricultural surplus and protect 'national security'
Schools use federal reimbursements and food donations to provide free and reduced priced lunches to students from low income families and full price meals to all students
Poorly managed and funded until the 1960s
Child Nutrition Act of 1966 expanded NSLP and other food programs
ISSUE Threat to national security? Originally established to protect national security
Report released April 20, 2010 by group of retired military officers called Mission Readiness cited the NSLP as a threat to national security
Report states that children are so overweight that military recruitment is in danger
27% of Americans 17-24 are too overweight to enlist, #1 reason for recruitment rejection
Ten of millions of dollars spent to train replacements from member discharges due to weight problems
Admiral James Barnett calls national security 'absolutely dependent' on reversing childhood obesity
Report calls to end junk food in school, improve nutritional standards, food quality, and programs that combat obesity Administration The Food and Nutrition Service (FNS) a sub-agency of the United States Department of Agriculture (USDA) administers the program at the federal level
State education agencies, school districts, and schools adminster program at state and local levels
Program is voluntary, school districts apply through the state education department
States enter written agreement to uphold program provisions
USDA provides funding and commodities to states based on participation levels

Participation 7.1 million kids in first school year (1946-47)
30.5 million in 2009-2010, 40% of all school children enrolled
Over 100,000 schools participating (99%)
5.2 billion lunches in 2009
219 billion lunches served since program inception
In 2007 15 million qualified for free lunches, 3 million for reduced, and 12 million paid full price
regulations USDA sets enforceable nutrition guidelines for lunches
Based on USDAs Dietary Guidelines for Americans published every 5 years
Currently using the 1995 guidelines
Must meet minimum nutrient and caloric intake levels
No more than 30% of calories can come from fat, and no more than 10% from saturated fat.
Prohibited foods, menu planning, labeling, food purchasing regluations
Can lose funding if not compliant
Nutrient Guidelines and Calorie Levels
Notice: No calorie maximums established Eligibilty and poverty guidelines Eligibility guidelines updated annually
Children from families at or below 130% of the poverty level qualify for free lunches, 185% for reduced price lunches
Currently 135% is $28,665, 185% is $40,793 based on family of four
Reduced price meals cannot be sold for more than $0.40
Application and verification data used for other programs
Reimbursement Rates Reimbursement rates updated annually
Currently $2.68 for free lunches with 60% or less enrollment, $2.70 for 60% or more.
Reduced $2.28 for 60% or less, $2.30 for 60% or more.
$0.25 and $0.27 for full price lunches
Hawaii and Alaska receive higher rates
Some states provide small reimbursement amounts
The National School Lunch Program is in the middle of the childhood obesity debate:
1 in every 3 American children overweight or obese, tripled over the last 30 years
May have shorter lifespan than their parents
1 in every 3 born in the year 2000 will contract diabetes in their life time
Diabetes rates have tripled in the last 15 years
$25 billion is spent treating diabetes every year in the US
This is about 3 times as much as the annual cost of the NSLP

Costs and Revenues Federal Costs Local Costs Cost Benefit Anaylsis Framework Stakeholders Benefits Transfers Costs Kaldor Hicks Tableau Methodology and analysis FUTURE policy recommendations Proposed LEGISLATION Conclusion USDA has spent $214.8 billion on all school food programs since 1969
In 2009, $8.87 billion for cash reimbursement, $1.12 billion in commodity donations
These costs do not account for administrative costs and uses cash in lieu of commodities
Reported costs are charges to food service account that go towards providing lunches
Full (unreported) costs include supervisor labor, admin labor, equipment and utilities


revenue sources Basic framework established as a tool for proper analysis
Plenty of commentary and discussion on costs/reimbursements and childhood obesity, very little on benefits
No true CBA found, CBO does not account for things such as future health care cost savings
No benefit valuation found or provided, would be difficult to quantify Participants and their families
General Public
School
School District
State Education Agency
State Revenue Department
USDA (FNS)
US Treasury Four identified:
cost savings to low income families, easier to quantify
health care cost savings
nutritional and educational benefits to students
social welfare improvements Health care cost savings could be tremendous if program ran effectively and provided
healthy food
Currently benefits not maximized, assumed that costs outweigh cost saving benefit Cost Savings Education / Nutrition Benefits Nutritional benefits include: reduced fat and calorie intake, decreased stomach aches/headaches, decreases in obesity and bad cholesterol levels, reduced risk of cardiovascular disease
Educational benefits include: increases in cognitive function, school performance, attention span, decreases in disciplinary problems, absenteeism and tardiness

Social Benefits On top of lower health care costs:
Economic and job market stability from healthy, educated citizens
Warm glow associated with assisting low income families 6 types identified:
For Federal, State, District, Schools, and Labor:
Administration
Training and Education
Opportunity Costs - labor
Start Up Costs
Supply (food, etc)
Equipment and Maintenance
Five transfers identified:
taxes - labor
labor wages
cash reimbursements
commodity donations
program funding View provides all stakeholders for national or state accounting domain analysis National accounting domain to capture CBA at the federal level for true NPV
States and schools could establish their own domain, transfers would be skewed, resulting in high net benefits
Benefit period established should be long enough to capture future health care cost savings
Shadow pricing and valuation of social benefits and opportunity costs
Permutations for sensitivity analysis should provide various discount rates, opportunity costs, and a baseline factor
KHT could be set up for NPV per meal or per participant and multiplied by meals served or number of participants Increased funding and reimbursement needed for healthier food, education and training, equipment and maintenance
Many schools only have about $1 per lunch for food after other costs
Increased reimbursement of at least $1 per lunch could provide more nutritious food, would add $5.2 billion to additional annual expenditure (less than the monthly costs of current US military operations)
'04-05 school year study found average full cost per lunch of $2.91, higher than reimbursement rate
Study of 43 large districts, 88% claimed reimbursement did not cover costs and 66% had costs exceed revenues
Reimbursement rates should also be updated every 6 months or be floating to adjust with food and other price changes

Nutrition standards must be updated often, more stringent, and actually enforced
Studies show participants have higher fat and sodium intake, higher probability of obesity than non-participants.
University of Michigan study found only 6% of schools met the current lax nutrition standards
Set calorie maximums, eliminate/reduce soda and vending, lower fat milk
Eliminate loopholes

Must increase nutrition value, quality assurance, safety standards of commodities
20% of food used in NSLP
Majority donated are meats and dairy which are higher in fat content
Of the 44 meats offered, only 6 defined as lean
Only 13% donated last year were fruits and vegetables
Only 11% of fruits offered did not contain added sugar
Only 19% of grains provided were whole grains

Less nutritious, sends a mix message to children
Competitive foods and vending must meet nutrition standards or be eliminated


Fresher, higher nutrient food, boost local economy
Farm to School programs should be expanded

Lack of specific standards for measuring success of the program making it difficult to set or verify goals
Establish standards for children and measure things like: body weight, cholesterol, and blood pressure

Studies suggest that eligibility process is fundamentally broken costing tax payers money, some suggest fraud by schools and families
NSLP eligibility data also used for eligibility, resource allocation, and funding in other various federal and state programs
Provides subsidized lunches to every student regardless of income
Eliminates eligibility issues including enforcement, and some admin costs


Difficult to change opinions and habits through policy but biggest need
Education and awareness should be expanded significantly to make positive impact on children
Currently federal funding for child nutrition education programs is the lowest of all federal food programs Thank You
questions? “I believe it will be held a crime in the twentieth century to lure young bodies and minds to school under the pretense of education, only to poison them slowly with bad food.”
-Ellen H. Richards
Reauthorization legislation currently awaiting Senate approval
Requesting $4.5 billion over the next ten years or an extra $0.06 per lunch
$2.2 billion shifted from the Environmental Quality Incentives Program, a $1 billion reduction in commodity donations, and $1.2 billion cut from the food stamp education program
Reauthorization would implement universal lunches, more Farm to School Programs, and the 2005 nutrition guidelines
Not enough funding to provide healthier meals or meet new nutrition guidelines

The NSLP is fundamentally broken
While cost saving benefits to low income families are being provided, the other goals and benefits of the program are not
Although benefits were unable to be quantified it is assumed that they are not maximized resulting in lower net program benefits
The NSLP should continue if proper reform can be implemented
Millions of Americans depend on the program everyday


Eligibility Performance Evaluation Local Food Universal Lunch Nutrition Standards Commodity Improvements Funding Competitive Foods Education and Awareness Other costs include: supplies, contract services, indirect charges to food service account
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