Healthy meals turn school lunch into a money-loser

Nutritional and financial goals pull cafeterias in opposite directions

Staff WriterMay 2, 2010 

  • President Harry S. Truman signed the National School Lunch Act in 1946 to better nourish students and to build healthier soldiers, said Lynn Harvey, who oversees child nutrition services for the state Department of Public Instruction.

    The program was amended in 1966 when Congress passed the Child Nutrition Act in 1966, which among other provisions created a breakfast program for poor children and allowed some use of federal funds for cafeteria equipment.

    The program suffered its first budget cut during the 1980s. Many schools closed their cafeterias because they couldn't afford to feed students. North Carolina instead started selling individual food items in cafeterias. When federal funds were restored, some states stopped a la carte sales, but North Carolina expanded its program, Harvey said.

    "Over time, what that did was switch the focus to the a la carte program, not the well-rounded square meals lunch," she said.

    Although a la carte sales have been criticized as contributing to poor nutrition and obesity, they proved lucrative.

    A la carte sales made so much money between the 1990s and 2002 that the state cut the $28 million it was giving to food programs, leaving only the match required for federal funding.

    When childhood obesity became a national issue in 2003, schools tried to be a leader in healthy eating, Harvey said. But school officials did not anticipate just how much more expensive it would be to serve healthier food. The higher costs of food higher in nutrient value and personnel costs have combined to put many school food programs in financial jeopardy.

  • The Legislative Task Force on Childhood Obesity's recommendations for improving school food programs:

    Designate all of the $7.2 million going to school food programs from the state for the food, instead of salaries or other expenses.

    Allocate money for the state to pay for meals now served at reduced prices, which would result in a bigger federal subsidy.

    Stop school districts from charging school food programs for indirect costs, such as utilities and janitorial services, unless the programs have enough reserve funds to purchase three months' worth of food.

    Enhance the farm-to-school program, which allows schools to buy fresh fruits and vegetables directly from North Carolina farmers.

  • Stanley B. Chambers Jr. has worked for The N&O since 2005. He covers Durham County's K-12 schools.

The french fries offered separately from the main meal for $1.50 went quickly during a recent lunch period at Wakefield High School's cafeteria. Many students were not enthusiastic about the $2 meal designed to meet certain nutrition standards - a choice of a slice of pizza, a beef and cheese slider or a spicy chicken sandwich with servings of green beans, salad or fruit.

Oyinkan Olusesi, a sophomore at the Raleigh school, didn't eat that day. She said $2 is too much to pay for a school cafeteria meal when more appealing food can be had elsewhere at competitive prices. "A lot of people are going to McDonald's because of their dollar menu," she said.

What Olusesi may not know is that her school cafeteria is losing money on every $2 meal it can entice students to buy. The Wake school board recently raised the price to $2.25, but that still won't cover the food program's cost.

Cafeteria manager Patricia Cuda does not want to sell the large order of fat-laden, salty fries, but she says she has to offer such a la carte items to make her budget.

"I hope it's not totally going to be turned into a McDonald's atmosphere," she said. "We try to give everyone as much healthy food as possible. I would hope that the government can kick in and give everyone free lunch."

More than half of the school food programs in the state are operating in the red, losing a total of $28 million in 2008. Their financial problems are mounting at a time when parents, child health advocates and legislators are looking to school food programs to improve students' nutrition and to help stem the epidemic of childhood obesity.

In 2008, North Carolina ranked 14th in the nation for the percentage of youths aged 11 to 17 who were overweight or obese, according to the Department of Health and Human Services. Nearly 18 percent of North Carolina youths were overweight, and 15.2 percent were obese.

The people who manage school food programs say they can't improve the programs with revenue currently available. The federal government provides a subsidy for meals, but most programs have to cover the cost of food, salaries and other expenses with the federal subsidy and whatever they think they can reasonably charge students. Local school districts absorb losses when the programs can't cover costs.

In 2006, the state legislature required schools to serve more fruits, vegetables and whole-grain food, and fewer dishes with lots of fat and sugar. However, it did not kick in extra money for the higher costs of the more nutritious foods.

School districts implemented the changes, but "at an extreme financial loss," said Marilyn Moody, senior director of child nutrition services for Wake County.

Among the state's 115 school districts, 67 are losing money feeding their kids. About 45 are in such bad financial shape that they would not be able to handle a "catastrophic event" such as having to replace a freezer that costs thousands of dollars, said Lynn Harvey, who oversees child nutrition for the Department of Public Instruction.

The Legislative Task Force on Childhood Obesity, formed to devise strategies to slim down the state's youth, considered the role of school food programs. It recommended that the legislature, which convenes May 12, implement measures that would allow school food programs to get more federal dollars and to devote more of their revenue to quality food.

For now, districts are looking for cheaper ways to get better food on to lunch trays, including grants to pay for fresh fruits and vegetables. Some schools are growing their own gardens.

Most are barely surviving.

"What's happening in school districts across the nation is people are scratching their heads and deciding what the priorities are for their program," Harvey said. "Is the purpose to provide nutritional, affordable meals? Or is the purpose to generate revenue? That's where we find our districts now."

The cost of it all

A lunch meal costs, on average, between $3.05 and $3.20 to make.

Federal subsidies cover as little as 7 percent or as much as 84 percent, based on whether the student eating the meal is paying in full or eating free or at a reduced cost. The amount of the subsidy each month is also tied to the number of meals served. Durham, where about 61 percent of its students qualify for free or reduced lunch, is losing about $6 million a year because the subsidies don't cover the cost of feeding those students, and the food program isn't generating enough other revenue to close the gap, said Heidi Carter, a Durham school board member.

On average, the federal subsidy accounts for 60 percent of a district's food program's budget. About 38 percent comes from sales and the rest from other sources. The state's only contribution is the 5 percent of the federal subsidy for each meal that it is required to give in order to keep the federal dollars flowing. That is currently about $7.2 million.

Collectively, school food programs in North Carolina spent $683 million during the last school year. Almost half, 47 percent, went to salaries and benefits. The rest went to food purchases (44 percent) and other expenses (9 percent).

State school officials estimate it would take an extra $60 million to have a program that truly guaranteed that healthier food would end up on students' lunch trays.

Part of that money would cover indirect costs, a formula that estimates the food program's share for things used across a school district, such as utilities and janitorial services.

It is those costs that "are killing these programs," said Cynthia Sevier, Guilford County's director of child nutrition services.

Her program, which she said is $73,000 in the hole, had to increase sales of less healthy, but popular, foods such as ice cream to make up some of the difference.

"Is it a wise decision when we charge so much indirect costs that we start to compromise the program that we're running?" she said. "We're going backwards instead of forwards. There's nothing more to take."

School districts statewide absorbed more than $58 million in indirect costs between 2007 and 2009, said Phillip Price, chief financial officer for the Department of Public Instruction, during a February meeting of the Legislative Task Force on Childhood Obesity. They can account for as much as 9 percent of a food program's budget.

Struggling to make it

Raleigh's Wakefield High has "smart lunch," in which about 2,500 students on its main campus have the option of eating anywhere on school grounds or receive tutoring from teachers.

About half of the students in the 500-seat cafeteria brought their food from home during a recent lunch period. About 300 left campus for lunch. The rest spread across the school, either bringing their own lunch, grabbing something from a vending machine or eating nothing.

Food program managers worry about making responsible decisions with the money they have. "An apple costs me 22 cents. A serving of canned apple sauce costs 11 cents. When figures are tight, which is Wake County going to do?" said Moody, of Wake schools. "When the legislature says they want to see more fresh fruit but don't provide any funding to do it, it's a value decision that each director has to make."

Parents understand the struggles that school cafeterias face but have deep concerns about the quality of the food.

Jen Niedel, the parent of a kindergartner at Durham's Morehead Montessori Elementary School and chairwoman of the school's PTA Healthy Living Committee, said she understands that it's faster and cheaper for the school cafeteria to heat up chicken nuggets than prepare an oven-roasted chicken.

"As a parent making dinner for my children, I face that choice every day, so I can imagine the burden of serving tens of thousands of students," she said. "Regardless, I don't want my child to have the choice of purchasing a candy bar at school as a supplement to lunch - in the same way that I don't offer that as a snack option at home."

Niedel would like to see solutions focused on healthy food choices, healthy learning and community involvement.

"I'm not sure of the exact amount or resources needed, but I'd like to see us gather data and make those decisions rather than continue to assume that our schools cannot and will not serve healthy food," she said.

Wake PTA President Sarah Martin said her group gets "tons of questions" from parents frustrated about school food. "I think it all comes back to the money end of things, and that's where we keep getting stuck," she said.

Some answers

When the legislature convenes next week, money will be tight, said Rep. Douglas Yongue, a Laurinburg Democrat and co-chairman of the Legislative Task Force on Childhood Obesity. But he hopes the body will act on the task force's recommendations, including those designed to help school food programs.

One recommendation is for the state to pay for the meals that are now served at reduced costs to families. That move would cost the state $5.2 million, but because school cafeterias would be increasing the number of kids eating for free, they would get about $5 million more in federal money, according to the School Nutrition Association of North Carolina.

Another recommendation is to designate all of the $7.2 million the state gives to match the federal subsidy to the costs of food, instead of salaries and other costs.

Parents and children's advocates are happy that school cafeterias are now getting some attention from legislators, but they say more needs to be done.

School food programs are in a "sad state," said Trilby McClammy, Durham PTA president and parent of a Riverside High student.

"It's about budget. It's not about health anymore," she said. "And that's a sad place to put the nutritionists. And that's a community problem."

stan.chambers@newsobserver.com or 919-932-2025

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