New School Year = More Lunch Money

Back-to-school checklists will have children scrambling for a new item this year — more lunch money.

Feeling the pressure of rising food, labor and transportation costs, schools nationwide are hiking the price of breakfast and lunch, in some cases for the first time in more than a decade and by as much as $1.

Duane Ford, business director for Somersworth schools, said this year's 25-cent increase — the first in 10 years — is just the start. Staff cuts, eliminating the breakfast program and another increase next year also are being considered.

"What we did in terms of changing our price isn't enough," he said recently. "You start looking at reports saying, 'Oh my God, what are we going to do? This isn't working."'

The increases don't affect the nearly 17 million children who get free or reduced price lunches and who account for more than half of the 29 million children served by the National School Lunch Program this year.

Forty cents is the limit for a reduced price meal. But prices for kids who don't meet the poverty rules are set by local school districts and have no price cap. It is those prices that some schools are raising — from a few cents to a dollar per meal.

School systems typically get no local money for their lunch programs. They get by on meal sales, vending machine sales and the use of government commodities. But schools complain that the federal system hasn't kept pace with the cost of food. Budgets in the red are routine.

While typical annual food inflation is about 3 percent, dairy prices in June were up 27 percent from a year ago, according to the U.S. Department of Agriculture. Meat and cheese were up 11 percent, and poultry 9 percent.

There also is a catch-up factor at play. Schools generally avoid raising prices for as long as possible. That means many communities are just now covering for years of incremental cost increases in addition to the recent spike.

It all added up to a 17 percent food cost increase at the Galt Joint Union High School District in Galt, Calif., where officials recently relented, raising meal prices to $3 after holding them to $2 for the past 12 years.

The district wanted to hold the increase to 50 cents, but feared having to go back to parents for more money next year.

A reasonable fear, said Barry Sackin, spokesman for the American School Food Service Association. Even tiny price hikes can hurt participation, especially among families that hover above poverty but don't qualify for free or reduced-cost meals.

For Carol Rippa, food service director for 72,000 students at Northside Independent School District in San Antonio, gasoline was a major culprit behind a 25-cent increase.

"We have 350 square miles in our school district," she said. "We're busy taking the food to all 75 schools that are scattered throughout the 350 square miles. The fuel cost makes the food cost more."

At schools in Oshkosh, Wis., where the cost of milk alone is up $100,000 more than the district anticipated, lunch price increases are expected to cost the average child an additional $17.70 a year.

The recent national push to make school food healthier also comes with a price. Eliminating junk food can hurt income.

Texas recently adopted strict new school nutrition standards that include restrictions on fried foods. That's forcing many schools to dump their deep fat fryers and buy pricey new equipment.

In the Hurst-Euless-Bedford Independent School District in Bedford, Texas, school officials increased meal and drink prices to help offset an expected $500,000 needed to equip its 27 schools with new ovens.

Labor prices also have crept up, mostly because of health care costs. Sackin said that while salaries have remained steady, more districts now use health benefits to attract workers.

Schools aren't alone in feeling the pressure. The USDA, which runs the National School Lunch Program, spends about $948 million a year to supply schools with roughly 18 percent of the food they serve.

But this year its buying power is reduced. Like families, the agency is watching prices carefully, hoping to avoid spending more to buy the same amount of food.

The blow is softened somewhat for schools that use outside food service companies, most of which cater for thousands of schools and can leverage that purchasing power for better prices — and creative solutions.

For example, don't be surprised if your child's chicken nuggets are replaced by cheaper chicken-and-soy nuggets this year, said Nancy Quinn of Chartwells School Dining Services, which has contracts with 3,000 schools.

And the outlook isn't all bad. Ephraim Leibtag, a food price economist at the USDA, said the price of milk — the only food federally mandated for every school meal — already shows signs of moderating.

The agency also has increased the credit it gives schools — up 1½ cents to just over 17 cents per meal — for spending on government food commodities in 2005.

Some schools hope the cost hike is temporary and have put off deciding whether to raise prices. At Rio Linda Union School District in Rio Linda, Calif., food service director Susan Stewart is finding ways to save money, instead.

She favors turning off the lights.

"It's been like a contest where every time you leave a room you turn off a light," she said. "It's something that's controllable and it doesn't require a cut in staff or a cut in spending."

By J.M. Hirsch