Increased Free & Reduced Eligibilities a Problem?

Sounds crazy doesn't it?  We have often said that districts with a high free and reduced price eligibility rate do better financially than other districts.  But is that still true?  Consider that in an Obama Presidency if taxes on corporations, businesses, and individuals are increased and checks are sent out to those paying no taxes, and his health plan is enacted, and if, and if, and if. Anyway, what if those who choose not to work, or choose to live off the government;  furthermore, what if those who get laid off from their jobs, or who can't find a job eventually end up on welfare, or at the very least having their children now eligible for a free or reduced price meal at school.  And as a result your free and reduced price eligibility increases by 100 or more can your program afford to serve them that free meal?  I don't know but you really need to know.  Let's assume for the sake of this posting that all the above does occur or occurs to some extent.

Currently the "feds" pay $2.57 for a free lunch and have increased reimbursements by about $.03 or $.04 each year.  Does anyone actually see money in the federal budget to increase that amount significantly higher next year?  I don't.  Anyway, let's assume again that next year's free lunch reimbursement is $2.60 per meal will that be enough to cover all of your costs?   

What is your average per meal cost of preparing and serving a meal (lunch and breakfast) at school?  Most districts that I visit today have that average cost in the $3.00 to $3.25 range.  Let's also assume that due to wellness, your ala carte and snack revenue is down from previous years as has occurred in so many districts, and your food brokers have also increased their costs (which has already happened).   Now what if your staff just negotiated a new 3 year contract providing for 4% per year increase.  How much has the cost of preparing and serving a lunch at your school increased?  How much do you project that it will increase next year.  

Now let's go back to the real possibility that your eligibles will increase due to the poor economic times and the effect of promised tax increases.  Will $2.60 in free lunch reimbursement be enough to cover the added cost of providing a free meal to the new program eligibles?  Let's not forget that as your free and reduced price eligibles increase, your paid population will decrease, so increasing selling prices will not generate enough revenue.

 

I know there are a lot of "ifs" and "assumptions" in this posting but we must be prepared for what may come to pass and I don't see the SNA, or any other group out there pushing for full cost reimbursement for our lunch and breakfast programs.  I also don't see anyone out there, really talking about the financial effect that unfunded "wellness plans" have had on our programs.  Lastly, just think what a local school tax increase to support your cafeteria would do in these economic times.

Who do you think is out there "drooling"?  The Food Service Management Company - the ones who have food costs much lower than your and the ones who will not be subject to those new labor contracts.  I could mount an argument that it is time to return to the sale of "snack foods" just to survive.  But that is the topic of another posting.

Be well

Frank