LEGISLATIVE FISCAL ESTIMATE
ASSEMBLY, No. 2368
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: APRIL 27, 2022
SUMMARY
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Synopsis: |
Requires schools to provide free school breakfasts and lunches to students from working class, middle-income families; designated as "Working Class Families' Anti-Hunger Act." |
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Type of Impact: |
Annual State expenditure increase from the General Fund. Annual local expenditure and revenue increases. Potential State revenue increase. |
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Agencies Affected: |
Department of Agriculture, Department of Education, school districts. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
Year 1 |
Year 2 |
Year 3 |
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State Expenditure Increase |
At least $19.4 million per year |
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Potential State Revenue Increase |
Indeterminate |
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Local Expenditure Increase |
At least $19.4 million per year |
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Local Revenue Increase |
At least $19.4 million per year |
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· The Office of Legislative Services (OLS) estimates that raising the income threshold for free school meals will increase annual school district expenditures for the meals by $19.4 million. Because the State will reimburse school districts for these expenditures, the annual State expenditure increase will be $19.4 million, which will also be an equal revenue increase for school districts.
· In addition, schools that currently do not participate in the National School Lunch Program and the federal School Breakfast Program would be required to participate in these programs by the bill, and this may result in significant one-time capital costs.
· The OLS notes that school districts may incur additional costs from increased administrative duties that will result from the bill, such as publicizing the various ways in which free meals are being made available to students and assisting parents to apply for free meals.
· School districts that already utilize the National School Lunch Program and the federal School Breakfast Program may see increased expenditures and revenues if more students participate as a result of the bill’s provisions. If the bill were to result in a one percent increase in overall participation in the National School Lunch Program and federal School Breakfast Program, schools would see an expenditure and revenue increase of around $9.6 million Statewide.
· Federal funds would pay for the entirety of the participation increase in the free meal component of the two federal programs. The cost of the participation increase in the reduced price component of the programs would be divided between the federal government and the State, with the State paying for the share of the meal for which the student’s family would be responsible. The State will serve as the conduit for any federal funds received under these two programs, meaning that there would be equivalent State expenditure and revenue increases as the money passes through the State.
· The bill would also impose additional administrative duties on the Department of Agriculture and the Department of Education. The most significant such duty may be the requirement to review school breakfast and breakfast-after-the-bell plans from all schools in the State, beginning one year after the date of the bill's enactment. Both departments may also see marginal annual expenditure increases resulting from the State's increased participation in administering school meal programs throughout the State.
BILL DESCRIPTION
This bill would expand the income eligibility for free breakfasts and lunches at all public schools. Currently, only students whose families have an annual household income of up to 185 percent of the federal poverty level qualify for free breakfasts and lunches. The bill would raise the limit to 199 percent of the federal poverty level with the State reimbursing school districts for 100 percent of the costs associated with the eligibility expansion.
This bill would additionally require each public school in the State to offer a school lunch program under the National School Lunch Program and a school breakfast program under the federal School Breakfast Program. Currently, a school lunch program is to be offered only by those public schools where at least five percent of students are federally eligible for free or reduced price meals, while a school breakfast program is to be offered only by public schools where at least 20 percent of students are federally eligible for free or reduced price meals. Currently, a student is “federally eligible” for free or reduced price meals if the student participates in certain federal benefits programs or if the student’s family has an annual household income of up to 185 percent of the federal poverty level.
By way of background, under current federal law, the federal government funds the cost of free meals and the reduced part of the reduced price meals for students who qualify for the services under federal income guidelines. In addition, under current State law, students who are federally eligible for reduced price meals do not have to pay any cost for those meals with the State reimbursing school districts for the discounted costs that the student would have otherwise paid. State law also requires the establishment of breakfast after the bell programs in schools in which at least 70 percent of the students in the prior school year were eligible for free or reduced price meals under the National School Lunch Program or the federal School Breakfast Program.
The bill would also require school districts to maximize the use of federal resources in support of school meals programs. Each school and school district would also have to publicize to parents, guardians, and students the various ways in which a student may qualify for free school meals, and to provide assistance to parents and guardians in completing the application process.
The Department of Agriculture would be additionally required to consult with, and provide assistance to, school districts to help them improve, simplify, and expedite the free and reduced price meal certification process and otherwise reduce their cost of administration.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that raising the income threshold for free school meals will increase annual school district expenditures for the meals by $19.4 million. Because the State will reimburse school districts for these expenditures, the annual State expenditure increase will be $19.4 million, which will also be an equal revenue increase for school districts.
This estimate assumes the following, using data from the United States Department of Agriculture, the United States Census Bureau, and the Annie E. Casey Foundation’s Kids Count Data Center: (1) that there are 36,670 families in the State whose income lies in the bracket between 186 percent and 199 percent of the federal poverty level; (2) that each family includes around 0.68 children who are enrolled in school; (3) that the State would reimburse schools at the federal rate ($3.66 per lunch and $1.97 per breakfast); (4) that 76 percent of eligible students would receive free meals (this is the estimated participation rate in the National School Lunch Program by students certified to be eligible for free or reduced-price lunches during the 2018-2019 school year); and (5) that each participating student would receive 180 lunches and breakfasts per year.
In addition, schools that currently do not participate in the National School Lunch Program and the federal School Breakfast Program would be required to participate in these programs by the bill, and this may result in significant one-time capital costs. For example, the OLS corresponded with two school districts that do not possess cooking facilities at certain schools in their districts. Such schools may need to contract with catering companies, build infrastructure, or hire additional personnel to meet the requirements of the federal meals programs and this bill. None of the schools that the OLS contacted provided a quantifiable estimate of this expenditure increase. However, a school that is required to construct new facilities could expect expenditures of at least hundreds of thousands of dollars. The OLS corresponded with several schools that do not participate in the federal meals programs, but it remains unclear how many schools in the State do not currently participate.
The OLS notes that school districts may incur additional costs from increased administrative duties that will result from the bill, such as publicizing the various ways in which free meals are being made available to students and assisting parents to apply for free meals. The OLS determines that the local expenditure increases would vary widely from school district to school district. For schools that already participate in the National School Lunch Program and the federal School Breakfast Program, there would likely be only marginal expenditure increases, since the costs of providing free meals to a larger number of students would be reimbursed by the State. These marginal costs might include: (1) a differential between the price currently charged to students for meals and the State reimbursement rate; and (2) increased administrative duties that will result from the bill, such as the requirement to publicize the various ways in which free meals are being made available to students and the requirement to assist parents to apply for free meals.
School districts that already utilize the National School Lunch Program and the federal School Breakfast Program may see increased expenditures and revenues if more students participate as a result of the bill’s provisions. The OLS estimates that, for each additional student that participates in the National School Lunch Program, a school would expend around $1,084, and, for each additional student that participates in the federal School Breakfast Program, a school would expend around $754. These estimates use the full cost of meals ($6.02 for lunch and $4.19 for breakfast) from Volume 3 of the "School Nutrition and Meal Cost Study," published in 2019 by the USDA. (The full cost includes the costs of food, labor, equipment, etc. to provide school meals.) The OLS notes that these expenditures would likely be accompanied by nearly equal revenues, since schools usual price their paid meals and a-la-carte items such that the school meal program is revenue neutral or runs a small deficit. If the bill were to result in a one percent increase in overall participation in the National School Lunch Program and federal School Breakfast Program, schools would see an expenditure and revenue increase of around $9.6 million Statewide. This estimate uses the FY 2019 participation numbers for New Jersey, published by the USDA -- 667,127 students for the National School Lunch Program and 318,981 students for the federal School Breakfast Program -- to avoid potential misleading data caused by the COVID-19 pandemic.
Federal funds would pay for the entirety of the participation increase in the free meal component of the two federal programs. The cost of the participation increase in the reduced price component of the programs would be divided between the federal government and the State, with the State paying for the share of the meal for which the student’s family would be responsible. The State will serve as the conduit for any federal funds received under these two programs, meaning that there would be equivalent State expenditure and revenue increases as the money passes through the State.
The bill would also impose additional administrative duties on the Department of Agriculture and the Department of Education. The most significant such duty may be the requirement to review school breakfast and breakfast-after-the-bell plans from all schools in the State, beginning one year after the date of the bill's enactment. Although this represents a one-time, implementation task, it may require hiring additional personnel or the temporary transfer of personnel. Both departments may also see marginal annual expenditure increases resulting from the State's increased participation in administering school meal programs throughout the State.
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Section: |
Environment, Agriculture, Energy, and Natural Resources |
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Analyst: |
Associate Research Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).