Nutrition Standards in the National School Lunch and School Breakfast Programs
Federal Register, Volume 77 Issue 17 (Thursday, January 26, 2012)
Federal Register Volume 77, Number 17 (Thursday, January 26, 2012)
Rules and Regulations
Pages 4088-4167
From the Federal Register Online via the Government Printing Office www.gpo.gov
FR Doc No: 2012-1010
Page 4087
Vol. 77
Thursday,
No. 17
January 26, 2012
Part II
Department of Agriculture
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Food and Nutrition Service
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7 CFR Parts 210 and 220
Nutrition Standards in the National School Lunch and School Breakfast Programs; Final Rule
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DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 210 and 220
FNS-2007-0038
RIN 0584-AD59
Nutrition Standards in the National School Lunch and School Breakfast Programs
AGENCY: Food and Nutrition Service (FNS), USDA.
ACTION: Final rule.
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SUMMARY: This final rule updates the meal patterns and nutrition standards for the National School Lunch and School Breakfast Programs to align them with the Dietary Guidelines for Americans. This rule requires most schools to increase the availability of fruits, vegetables, whole grains, and fat-free and low-fat fluid milk in school meals; reduce the levels of sodium, saturated fat and trans fat in meals; and meet the nutrition needs of school children within their calorie requirements. These improvements to the school meal programs, largely based on recommendations made by the Institute of Medicine of the National Academies, are expected to enhance the diet and health of school children, and help mitigate the childhood obesity trend.
DATES: Effective date: This rule is effective March 26, 2012.
Compliance date: Compliance with the provisions of this rule must begin July 1, 2012, except as otherwise noted on the implementation table provided in the preamble under SUPPLEMENTARY INFORMATION.
FOR FURTHER INFORMATION CONTACT: William Wagoner or Marisol Aldahondo-
Aponte, Policy and Program Development Branch, Child Nutrition Division, Food and Nutrition Service at (703) 305-2590.
SUPPLEMENTARY INFORMATION:
Executive Summary
This final rule modifies several key proposed requirements to respond to commenter concerns and facilitate successful implementation of the requirements at the State and local levels. The rule phases in many of the changes to help ensure that all stakeholders--the children, the schools, and their supply chains--have time to adapt. Most notably, this final rule provides additional time for implementation of the breakfast requirements and modifies those requirements in a manner that reduces the estimated costs of breakfast changes, as compared to the proposed rule. As a result, the final rule is estimated to add $3.2 billion to school meal costs over 5 years, considerably less than the estimated cost of the proposed rule.
When considered in the context of other related provisions of the Healthy Hunger-Free Kids Act (HHFKA) of 2010, sufficient resources are expected to be available to school food authorities to cover the additional costs of updated meal offerings to meet the new standards.
Specifically, in addition to improving nutritional quality, the HHFKA mandated that beginning July 1, 2011, revenue streams for a la carte foods relative to their costs be at least as high as the revenue streams for Program meals compared to their costs. Consequently schools should receive over $1 billion a year in new food revenues beginning in School Year 2011-2012. That will help schools work toward implementing the new standards effective the following year, i.e., July 1, 2012. In addition, USDA estimates that the ``School Food Authorities revenues'' rule will increase participation in school meal programs by 800,000 children.
In addition, the six-cent per lunch performance-based reimbursement increase included in the HHFKA will provide additional revenue beginning October 1, 2012. The Congressional Budget Office estimated about $1.5 billion over 5 years will be provided in performance-based funding.
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Background
The Richard B. Russell National School Lunch Act (NSLA) in Section 9(a)(4), 42 U.S.C. 1758(a)(4), requires that school meals reflect the latest ``Dietary Guidelines for Americans'' (Dietary Guidelines). In addition, section 201 of the Healthy, Hunger-Free Kids Act of 2010 (Pub. L. 111-296, HHFKA) amended Section 4(b) of the NSLA, 42 U.S.C. 1753(b), to require the Department of Agriculture (USDA) to issue regulations to update the meal patterns and nutrition standards for school lunches and breakfasts based on the recommendations issued by the Food and Nutrition Board of the National Research Council of the National Academies of Science, part of the Institute of Medicine (IOM). On January 13, 2011, USDA published a proposed rule in the Federal Register (76 FR 2494) to update the meal patterns and nutrition standards for the National School Lunch Program (NSLP) and the School Breakfast Program (SBP) to align them with the 2005 Dietary Guidelines.
The proposed rule sought to increase the availability of fruits, vegetables, whole grains, and fat-free and low-fat fluid milk in the school menu; reduce the levels of sodium, saturated fat and trans fat in school meals; and meet the nutrition needs of school children within their calorie requirements. The intent of the proposed rule was to provide nutrient-dense meals (high in nutrients and low in calories) that better meet the dietary needs of school children and protect their health. The proposed changes, designed for meals offered to school children in grades Kindergarten (K) to 12, were largely based on the IOM recommendations set forth in the report ``School Meals: Building Blocks for Healthy Children'' (October 2009).
In summary, the January 2011 proposed rule sought to improve lunches and breakfasts by requiring schools to:
Offer fruits and vegetables as two separate meal components;
Offer fruit daily at breakfast and lunch;
Offer vegetables daily at lunch, including specific vegetable subgroups weekly (dark green, orange, legumes, and other as defined in the 2005 Dietary Guidelines) and a limited quantity of starchy vegetables throughout the week;
Offer whole grains: half of the grains would be whole grain-rich upon implementation of the rule and all grains would be whole-grain rich two years post implementation;
Offer a daily meat/meat alternate at breakfast;
Offer fluid milk that is fat-free (unflavored and flavored) and low-fat (unflavored only);
Offer meals that meet specific calorie ranges for each age/grade group;
Reduce the sodium content of meals gradually over a 10-
year period through two intermediate sodium targets at two and four years post implementation;
Prepare meals using food products or ingredients that contain zero grams of trans fat per serving;
Require students to select a fruit or a vegetable as part of the reimbursable meal;
Use a single food-based menu planning approach; and
Use narrower age/grade groups for menu planning.
In addition, the proposed rule sought to improve school meals by requiring State agencies (SAs) to:
Conduct a nutritional review of school lunches and breakfasts as part of the administrative review process;
Determine compliance with the meal patterns and dietary specifications based on a review of menu and
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production records for a two-week period; and
Review school lunches and breakfasts every 3 years, consistent with the HHFKA.
The 2010 Dietary Guidelines were released on January 31, 2011, after USDA published the proposed rule. On March 21, 2011 USDA issued a Notice in the Federal Register (76 FR 15225) seeking public comment on the need to modify the proposed rule to reflect the 2010 Dietary Guidelines recommendations to consume red-orange vegetables and protein subgroups: (1) Seafood; (2) meat, poultry and eggs, and (3) nuts, seeds, and soy products. The public comments to the Notice (76 FR 15225) were added to the proposed rule docket and all comments associated with the proposed rule were considered in preparing this final rule.
USDA received a total of 133,268 public comments during the comment period January 13-April 13, 2011. This total included several single submissions with thousands of comments. The types of comments received included 7,107 unique letters, 122,715 form letters from 159 mass mail campaigns, 3,353 non-germane letters, and 93 duplicates. Comments were analyzed using computer software that facilitated the identification of the key issues addressed by the commenters, as well as by USDA policy officials.
Although USDA considered all comments, the description and analysis in this final rule preamble focuses on the most frequent comments and those that influenced revisions to the proposed rule, and discusses modifications made to the proposed rule in response to public input. USDA greatly appreciates the public comments as they have been essential in developing a final rule that is expected to improve school meals in a sound and practical manner. To view all public comments on the proposed rule go to www.regulations.gov and search for public submissions under docket number FNS-2007-0038. A Summary of Public Comments is available as supporting material under the docket folder summary.
Note: This final rule does not update the Pre-K school meal patterns. These are under review and will be updated in a future rulemaking amending regulations implementing the USDA's Child and Adult Care Food Program. However, two provisions in this final rule, menu planning approach and fluid milk requirements, impact Pre-K meals as discussed later in this preamble.
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Public Comments and USDA Response
USDA received comments from nutrition, health, and child advocates at the national, state and local levels; SAs that administer the school meal programs; school districts/boards; schools; school food service staff; superintendents, principals, and teachers; food manufacturers and distributors; food industry representatives; food service management companies; academia; nutritionists/dietitians; community organizations; parents and students; and many other interested groups and individuals. Overall, the comments provided were generally more supportive of the proposed rule than opposed. Comments from nutrition, health and child advocates; community organizations; academia; and parents favor the proposed rule, citing concern about the national childhood obesity problem and the increased likelihood of preventable diseases such as cardiovascular disease, high blood pressure, high cholesterol, stroke, and type 2 diabetes, all of which increase the cost of healthcare nationally. Many comments enthusiastically supported the increase in fruits, vegetables, whole grains, fat-free milk/low-fat milk in the school menus, and most other proposed changes designed to improve the nutritional quality of school meals.
Comments from SAs and school food authorities (SFAs), food industry, industry representatives, food service management companies, and others in the public and private sectors associated with the operation of the school meals programs also supported improving school meals but voiced strong concerns about some aspects of the proposed rule. The proposed food quantities, meat/meat alternate component at breakfast, weekly vegetable subgroup requirement at lunch, starchy vegetables limit, sodium reductions, whole grains requirement, and frequency of administrative review were the parts of the proposal that prompted most of their concerns. Program operators also raised concerns about the rule cost and implementation timeline, the impact of the proposed changes on student participation in the meal programs, and the potential for increased plate waste if meals are not acceptable to students. A number of commenters suggested that USDA conduct additional research or pilot test the proposed changes before implementation. All of the above concerns are more prevalent in the SBP than the NSLP. Schools that operate the SBP voiced significant concern about the estimated 50 cents increase in food and labor costs for each reimbursable breakfast in FY 2015, when all the requirements will be in place as stated in the proposed rule.
USDA has taken into consideration the different views expressed by commenters and seeks to be responsive to the concerns raised by stakeholders, especially those responsible for the management and day to day operation of the school meal programs. At the same time, we are mindful that the overweight and obesity epidemic affecting many children in America requires that all sectors of our society, including schools, help children make significant changes in their diet to improve their overall health and become productive adults. This final rule makes significant improvements to the NSLP and SBP to facilitate successful implementation of the requirements at the State and local levels. This final rule modifies several key proposed requirements to respond to commenter concerns as well as to address requirements of the Consolidated and Further Continuing Appropriations Act, 2012, Public Law 112-55. Most notably, this final rule provides additional time for implementation of the SBP requirements and modifies those requirements in a manner that reduces the estimated costs of breakfast changes, as compared to the proposed rule.
No changes to the SBP meal pattern take effect immediately upon publication of this final rule, except limiting flavor to fat-free milk, and requiring the service of only fat-free and low-fat milk (the latter is a statutory requirement codified in the NSLA in the HHFKA. See the discussion on ``Milk'' for further details). Furthermore, this rule introduces selected requirements into the SBP beginning SY 2013-
2014 (the second year of implementation) to ease the estimated increase in breakfast costs and minimize impact on SBP operations. This approach is intended to enable program operators to concentrate on improving school lunches first and then focus on the breakfast changes. It also allows USDA to meet the statutory requirement to offer meals that reflect the Dietary Guidelines while being responsive to the concerns raised by program operators and other stakeholders. However, SFAs that are able to implement the new meal requirements concurrently in the SBP and NSLP are encouraged to do so with SA approval.
Section G of the Regulatory Impact Analysis discusses in greater detail the key differences between the proposed and final rules. Most of the estimated reduction in cost is due to the policy changes discussed above, including the
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phased in breakfast meal pattern requirements and the elimination of a separate meat component at breakfast, as well as more modest changes to the lunch meal pattern requirements' grain and vegetable components. In addition to these policy changes, lower food inflation since preparation of the proposed rule cost estimate contributes to the reduction in the cost of the final rule compared to the proposed rule.
The following is a summary of the key public comments on the proposed rule and USDA's response. Public comments unrelated to the specific provisions of the rule (e.g., standards for cholesterol, dietary fiber, artificial sweeteners, caffeine) are not discussed here but are addressed in the Summary of Public Comments. For a more detailed discussion of the public comments see the Summary of Public Comments posted online at www.Regulations.gov.
Menu Planning Approach
Proposed Rule: Follow a single Food-Based Menu Planning (FBMP) approach.
Comments: Nutrition, health and child advocates; community organizations; academia; parents; and SAs support the FBMP approach because it helps children easily identify the key food groups necessary for a well-balanced meal. According to a health advocate, FBMP also minimizes the opportunity to offer unhealthy foods that have been fortified to meet the nutrient requirements. SAs support a single menu planning approach as it supports a more cost effective delivery of training and technical assistance resources.
However, a number of SFAs that currently use the Nutrient Standard Menu Planning (NSMP) and some school advocacy organizations, trade associations, food manufacturers, nutritionists, and other commenters suggested that NSMP be allowed as an option. SFAs that use NSMP claimed that they would still have to conduct a nutrient analysis to assess if they are meeting the new dietary specifications (calories, sodium, and saturated fat levels). Several commenters also claimed that NSMP schools are better able to control costs and that changing to FBMP would result in increased training costs. Some stated that eliminating NSMP decreases menu planning flexibility and menu variety.
USDA Response: To ensure that school meals reflect the key food groups recommended by the Dietary Guidelines, this final rule establishes FBMP as the single menu planning approach for the NSLP (including for Pre-K meals) in SY 2012-2013. A single food-based menu planning approach simplifies menu planning, serves as a teaching tool to help children choose a balanced meal, and assures that students nationwide have access to key food groups recommended by the Dietary Guidelines. It also makes it easier for schools to communicate the meal improvements to parents and the community-at-large. Simplifying program management, training and monitoring is expected to result in program savings. Over 70 percent of the program operators currently use FBMP, and training and technical assistance resources will be available to help all schools successfully transition to the new meal patterns.
In response to commenters' concerns about the estimated cost increase of the breakfast meal, this final rule gives those SBP program operators not currently using FBMP additional time to convert to this planning approach. SBP operators who are not currently using FBMP may continue with their current menu planning approach through SY 2012-
2013. However, all SBP operators must use a single FBMP approach beginning SY 2013-2014 (the second year of implementation).
This final rule sets forth the new food-based meal patterns in 7 CFR 210.10 for lunches and Sec. 220.8 for breakfasts. In order to accommodate the extended implementation for non-FBMP operators, this final rule creates a new Sec. 220.23 that restates the nutrition standards and menu planning approaches that apply to all SBP operators in SY 2012-2013 only. Individual SFAs wishing to adopt the provisions of Sec. 220.8 prior to the required implementation date specified therein may do so with the approval of the SA.
Accordingly, this final rule implements the proposed FBMP approach and codifies the proposal under Sec. 210.10(a)(1)(i) of the regulatory text for the NSLP and Sec. 220.8(a)(1) for the SBP. Menu planning approaches applicable to the SBP in SY 2012-2013 are under Sec. 220.23(a)(5).
Age/Grade Groups
Proposed Rule: Plan lunches and breakfasts using age/grade groups K-5, 6-8, and 9-12.
Comments: A number of nutrition, health and child advocates; and dietitians agreed that the proposed age/grade groups would result in more age-appropriate school meals. They also supported the provision allowing schools to serve the same breakfast and lunch meal patterns for students in grades K through 8, provided that the meals meet the calorie, saturated fat, and sodium standards for each the of the age/
grade groups.
Several commenters argued the proposed meal patterns offer too much food, especially for young children. Some commenters recommended different age/grade groups, and an SA recommended that USDA retain the current age/grade groups. Some SFAs requested flexibility in the use of the age/grade groups (e.g., a one-grade level leeway). A number of commenters expressed concerns regarding use of the age/grade groups in the SBP, as schools generally serve K-12 students in the same line.
USDA Response: This final rule requires schools to use the age/
grade groups K-5, 6-8, and 9-12 to plan menus in the NSLP upon implementation of this rule in SY 2012-2013. These age/grade groups reflect predominant school grade configurations and are consistent with the IOM's Dietary Reference Intake (DRI) groupings. This rule allows reasonable flexibility in the use of the age/grade groups and permits a school to use one meal pattern for students in grades K through 8 as food quantity requirements for groups K-5 and 6-8 overlap. In such a case, the school continues to be responsible for meeting the calorie, saturated fat, and sodium standards for each of the age/grade groups receiving the school meals. The following example illustrates this concept:
Example: A school could offer all students in grade groups K-5 and 6-8 the same lunch choices for the fruit, vegetable, grains, meat/meat alternate, and milk components because the quantity requirements are the same or overlap. Similarly, the calorie requirements for grades K-5 (550-650 average calories per week) and grades 6-8 (600-700 average calories per week) overlap. Therefore, a school could offer both grade groups a range of 600-650 average calories per week to meet the requirement for each grade group. While the saturated fat and trans fat requirement are the same for both grade groups, the school must carefully consider the sodium requirements. The school would have to comply with the lower sodium standard that was developed for age/grades K-5 but would also meet the requirement for students in age/grades 6-8.
In the SBP, the new age/grade groups take effect in SY 2013-2014 (the second year of implementation) to ease the burden on program operators. Until then, schools have the option to continue the age/
grade group K-12 for planning breakfasts. Meals planned for the age/
grade group K-12 must meet the nutrition standards developed for that
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age/grade group, which have been moved from Sec. 220.8 to a new Sec. 220.23 of the regulatory text.
Accordingly, this final rule implements the proposed age/grade groups and codifies the proposal under Sec. 210.10(c)(1) of the regulatory text for the NSLP and Sec. 220.8(c)(1) for the SBP. Age/
grade groups applicable to the SBP in SY 2012-2013 are under Sec. 220.23(b) for nutrient standards menu planning, and under Sec. 220.23(g) for food based menu planning.
Meal Components
Fruits
Proposed Rule: Offer fruit as a separate food component at lunch daily. Increase the fruit and vegetable amounts at lunch and double the minimum required fruit quantity at breakfast. Allow schools to offer a non-starchy vegetable in place of fruit/fruit juice at breakfast. Allow frozen fruit without added sugar only.
Comments: There is general support for the proposal to establish fruit as separate food component. Stakeholders such as nutrition, health and child advocates supported the proposal because they are concerned that children are not consuming the recommended intake of fruits. One major health advocate noted that it is possible to significantly increase the quantity of fruits and vegetables in the school menu in a cost effective way, stating that many schools already exceed the current NSLP meal requirements, and noting that of thousands of schools participating in the Alliance for a Healthier Generation's Healthy School Program, 85 percent provide at least one fruit (fresh, canned, or frozen in fruit juice or light syrup) at breakfast and 72 percent provide at least four non-fried, no-added-sugars fruit or vegetable options daily.
However, many commenters opposed the proposed minimum required fruit quantities, and were particularly concerned about the fruit requirement for breakfast. A number of commenters stated that one cup of fruit at breakfast is too much for young children to consume at one time and will result in significant plate waste. Commenters also emphasized that students usually have very little time to eat breakfast at school and are concerned about the logistics of offering more food through alternative breakfast delivery methods such as Breakfast in the Classroom or on the bus. In general, these commenters argued that the proposal to double the amount of fruit at breakfast would contribute to higher costs for food, labor, equipment, and storage.
Regarding the types of fruit to be offered, several commenters supported the proposed limitation on added sugar in frozen fruit to limit the sources of discretionary calories. Some commenters recommended a prohibition on canned fruit in light syrup. Some program operators asked how to credit whole fresh fruit, and other commenters requested that the quantities in the meal patterns be changed from cups to servings to better account for fresh whole fruit. A few suggested that USDA adopt the HealthierUS School Challenge Gold Level requirement to serve fresh fruit twice per week with school meals.
USDA Response: This final rule establishes fruits and vegetables as separate food components in the NSLP and adds a fruits requirement at lunch beginning SY 2012-2013. The intent of the new requirements is to promote the consumption of these fruits, as recommended by the Dietary Guidelines. Fruits (and vegetables) that are prepared without added solid fats, sugars, refined starches, and sodium are nutrient rich foods and supply important nutrients that are under-consumed by school children in the United States (including potassium and dietary fiber) with relatively little calories.
This rule also gives program operators additional time to meet the required minimum fruit quantity increase in the SBP. Schools are required to offer 1 cup of fruit to all age/grade groups at breakfast beginning in SY 2014-2015 (the third year of implementation). This modification gives program operators more time to prepare for this important change to SBP menus. This rule also gives schools the option to offer vegetables in place of all or part of the required fruit component for menu flexibility and as a potential cost control measure. However, the first two cups per week of any such substitution must be from the dark green, red/orange, beans and peas (legumes) or other vegetable subgroups. These vegetable subgroups have been identified as being under-consumed by school children, according to the IOM report. Starchy vegetables may also be offered in substitution of fruits, once the first two cups offering of non-starchy vegetables have been met. This change to the proposed rule allows schools flexibility and the option to offer vegetables in place of fruit in accordance with the substitution protocol specified here.
Although schools must offer the full amount of the required food component, to minimize the potential for food waste in the NSLP and SBP, all students are allowed to select \1/2\ cup of fruit for a reimbursable meal under Offer versus Serve (OVS), instead of requiring them to take the full fruit component. This change in the application of OVS with regard to the fruits and vegetables components is further discussed in ``Standards for Meals Selected by the Student (Offer versus Serve).''
Schools may meet the fruit component at lunch and breakfast by offering fruit that is fresh; canned in fruit juice, water, or light syrup; frozen without added sugar, or dried. Through its USDA Foods Programs, USDA offers schools a range of fresh, frozen without added sugar, dried and canned fruits. Although 100 percent juice can be offered, no more than half of the per-meal fruit component may be juice because it lacks dietary fiber and when consumed in excess can contribute extra calories. Schools should offer fresh fruit whenever possible.
Although some commenters suggested that the meal patterns set the fruit and other food requirements as servings rather than cups, this final rule does not adopt this suggestion, as a serving can be any amount of food determined by the menu planner and does not ensure uniformity. The 2005 Dietary Guidelines recommended amounts were given in cups and ounce equivalents (oz. eq.), which are standard defined amounts. Menu planners must continue to use the Food Buying Guide for Child Nutrition Programs to determine how to credit whole fruit. USDA will update the Food Buying Guide as soon as possible, and will also develop other technical assistance resources as needed.
Accordingly, this final rule implements the proposed fruit requirements, with modifications, and codifies them under Sec. 210.10(c) for the NSLP and under Sec. 220.8(c) for the SBP. Fruit requirements applicable to the SBP in SY 2012-2013 are under Sec. 220.23(g).
Vegetables
Proposed Rule: Offer vegetables as a separate food component at lunch daily. Increase the variety of vegetables over the week to include the following subgroups: dark green, orange, legumes, and other as defined in the Dietary Guidelines. Limit starchy vegetables at lunch to 1 cup per week for all age/grade groups. Allow non-starchy vegetables in place of fruit at breakfast.
Comments: Nutrition, health and child advocates; community organizations; academia; and parents welcomed the proposal to divide fruits and vegetables into two separate components and expressed support for the proposed weekly vegetable requirements. Some of these
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commenters stated the proposed increase in vegetable variety and quantity should positively impact overall consumption.
State and local program operators, however, suggested that the vegetable subgroups be encouraged, rather than required (similar to the approach in the HealthierUS School Challenge guidelines). Some commenters stated that the vegetable subgroup requirements are too complicated. Others argued that children will not eat vegetables they are not familiar with and, therefore, the vegetable subgroup requirements will result in plate waste. Several commenters expressed concern that procuring some vegetable subgroups will be difficult and costly during specific times of the year in certain parts of the country. Others requested clarification regarding when beans should be considered a legume versus a meat alternate.
Many State and local program operators opposed the starchy vegetable limit. They argued that all vegetables should be encouraged, and that a limit on starchy vegetables will lead to a decrease in vegetable consumption, or a decrease in participation in the NSLP. Some suggested that the weekly limit only apply to potatoes. Several suggested that instead of limiting starchy vegetables, USDA should prohibit French fries or deep-fried preparation methods for all vegetables. Others requested gradual introduction of the weekly limit on starchy vegetables. Many program operators argued that white potatoes are inexpensive and would need to be replaced by more expensive fruits and vegetables, which will be a costly strain on school/state budgets. A few asked that starchy vegetables in mixed dishes, such as soups, not count towards the weekly starchy vegetable limit.
Nutrition and health advocates favored allowing non-starchy vegetables in place of fruit in the SBP. However, numerous commenters opposed disallowing starchy vegetables at breakfast. These commenters, including SFAs, food industry, and some parents, stated that starchy vegetables such as potatoes are affordable and popular, and complement many breakfast dishes. They also noted that potatoes supply potassium and other minerals, vitamins and fiber, and are naturally low in fat and sodium. Many stakeholders suggested that USDA ease the proposed restrictions on starchy vegetables.
Program operators also addressed the use of salad bars to meet the vegetable requirement. They stated that salad bars are good ways to serve a wide variety of fruits and vegetables and are an effective strategy to increase children's consumption of these food groups. However, they expressed concern that the proposed vegetable requirements increase challenges with or could discourage the use of self-serve salad bars. Schools asked how to determine if the required foods/portions are being served.
USDA Response: This final rule establishes vegetables as a separate food component in the NSLP, and requires schools to offer all the vegetable subgroups identified by the 2010 Dietary Guidelines (dark green, red/orange, beans and peas (legumes), starchy, and other) over the course of the week at minimum required quantities as part of the lunch menus in SY 2012-2013. As required by the Consolidated and Further Continuing Appropriations Act, 2012, Public Law 112-55 (FY 2012 Agriculture Appropriations Act), we are removing the proposed rule limit on starchy vegetables, and instead requiring schools to offer at least minimum quantities of all vegetable subgroups in the NSLP over the course of the week. This change encourages consumption from all vegetable subgroups, and is consistent with the Dietary Guidelines' recommendation to increase variety in vegetable consumption. In addition, to be consistent with the 2010 Dietary Guidelines classification of vegetable subgroups, this final rule expands the proposed orange vegetable subgroup to include red/orange vegetables. USDA asked commenters about this change in the vegetable subgroups in the Notice published by USDA in the Federal Register (76 CFR 15225) on March 21, 2011 and there was no public opposition.
This final rule also allows schools the option to offer vegetables in place of all or part of the fruits requirement at breakfast beginning July 1, 2014. This is consistent with the Dietary Guidelines' recommendation to eat a variety of vegetables, especially dark green, red and orange vegetables, and beans and peas (legumes). This recommendation is applicable to the school meals because most vegetables and fruits are major contributors of nutrients that are under-consumed in the United States, including potassium and dietary fiber. Consumption of vegetables and fruits is also associated with reduced risk of many chronic diseases, including obesity, heart attack, stroke, and cancer. By providing more and a variety of vegetables in a nutrient-dense form (without added solid fats, sugars, refined starches, and sodium), schools help students obtain important nutrients and maintain a healthy weight.
This final rule does not implement the proposed rule limitation on servings of starchy vegetables offered as part of the lunch and breakfast reimbursable meals. This change is in response to commenters' concerns and the requirements of the FY 2012 Agriculture Appropriations Act, which specifically prevented USDA from adopting the IOM recommendation for setting maximum limits on starchy vegetables, providing for fiscal year 2012 USDA appropriations. Therefore, schools are allowed to offer any vegetable subgroup identified by the 2010 Dietary Guidelines to meet the vegetables component required for each reimbursable school meal. The vegetable quantities in the lunch meal pattern have been modified to reflect this change to the proposal while remaining consistent with the Dietary Guidelines' focus on increasing the intake of vegetables that are under-consumed.
Commenters asked USDA to clarify when to credit beans and peas (legumes) toward the vegetable component. Local menu planners decide how to incorporate beans and peas (legumes) into the school meal but may not offer one serving of beans and peas (legumes) to meet the requirements for both vegetables and meat/meat alternate components. Beans and peas (legumes) can be credited toward the vegetable component because they are excellent sources of dietary fiber and nutrients such as folate and potassium. These nutrients are often low in the diets of many Americans. Because of their high nutrient content and low cost, USDA encourages menu planners to include beans and peas (legumes) in the school menu regularly, either as a vegetable or as a meat alternate (as discussed later). Some foods commonly referred to as beans and peas (e.g., green peas, green lima beans, and green (string) beans) are not considered part of the beans and peas subgroup because their nutrient profile is dissimilar. More information on the use and categorization of beans and peas (legumes) is available online at http://www.choosemyplate.gov/foodgroups/proteinfoods_beanspeas.html.
In response to commenter questions about how to use salad bars to meet the new meal requirements, the Department would like to emphasize that schools may continue to use salad bars to enhance the variety of vegetables in the school menu. See FNS memorandum SP 02-2010--Revised (January 21, 2011) for more information on how salad bars can be used effectively as part of the reimbursable meals. The memorandum is available online at http://www.fns.usda.gov/cnd/governance/
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Policy-Memos/2011/SP02-2011revised--os.pdf.
As with the proposed rule, this final rule allows schools to use fresh, frozen, and canned products to meet the vegetable requirement. Schools have access to nutritious vegetable choices through USDA Foods. For example, USDA Foods offers only reduced sodium canned vegetables at no more than 140 mg of sodium per half-cup serving, which is in line with the 2010 Dietary Guidelines. Schools also have the option to order frozen vegetables with no added salt, including green beans, carrots, corn, peas, and sweet potatoes.
Accordingly, this final rule implements the proposed vegetables requirements, with modifications, and codifies them under Sec. 210.10(c) for the NSLP and under Sec. 220.8(c) for the SBP. Vegetable requirements applicable to the SBP in SY 2012-2013 are under Sec. 220.23(g).
Grains
Proposed Rule: Offer at least a daily serving of grains at breakfast and lunch. When this rule is initially implemented, at least half of the grains offered during the week must be whole grain-rich. Two years after implementation, all grains offered during the week must be whole grain-rich. In addition, allow schools the option to offer up to one serving of a grain-based dessert daily to meet part of the weekly grains requirement.
Comments: Many commenters, primarily nutrition and health advocates, and parents, favored introducing a whole grains requirement in the NSLP and SBP. A number of program operators, however, objected to the final whole grains requirement (that all grains offered must be whole grain-rich), and stated that the initial requirement (at least half of grains offered must be whole grain-rich) is sufficient. These commenters asserted that prohibiting all refined grains would restrict many grains that children and adolescents enjoy such as white rice and white bread. Other program operators that objected to the final whole grains requirement expressed concern with the timeline and the higher food costs associated with using only whole grain-rich products, which they argued are generally more expensive than refined grain products. Many commenters asked that USDA clarify the criteria schools must use to identify whole grain-rich products.
USDA Response: While children generally eat enough total grains, most of the grains they consume are refined grains rather than whole grains. Whole grains (e.g., whole-wheat flour, oatmeal, whole cornmeal, and brown rice) are a source of nutrients such as iron, magnesium, selenium, B vitamins, and dietary fiber. Evidence suggests that eating whole grains in nutrient dense forms may lower body weight and reduce the risk of cardiovascular disease. Currently, schools may offer enriched or whole grains, and are allowed to offer enriched, refined grains only. Therefore, this final rule establishes a minimum whole grain-rich requirement in the NSLP and SBP to help children increase their intake of whole grains and benefit from the important nutrients they provide.
For the NSLP, the whole grain requirement takes effect upon implementation of the rule. Therefore, in SY 2012-2013 and SY 2013-2014 (the first two years of implementation) whole grain-rich products must make up half of all grain products offered to students. During this time only, refined-grain foods that are enriched may be included in the lunch menu. In SY 2014-2015 (the third year of implementation) and beyond, schools must offer only whole grain-rich products.
In the SBP, this final rule provides that schools must offer the weekly grain ranges and half of the grains as whole grain-rich beginning July 1, 2013 (SY 2013-2014, the second year of implementation). All grains offered in the SBP must be whole grain-rich in SY 2014-2015 (the third year of implementation) and beyond. Once schools meet the daily minimum grain quantity required (1 oz. eq. for all age-grade groups) for breakfast, they are allowed to offer a meat/
meat alternate in place of grains. The meat/meat alternate can count toward the weekly grains requirement (credited as 1 oz. eq. of meat/
meat alternate is equivalent to 1 oz. eq. of grain). This modification is intended to retain the flexibility that menu planners currently have to offer a combination of grains and meats/meat alternates at breakfast. This final rule eliminates the proposed provision to require a meat/meat alternate daily at breakfast due to the cost concerns voiced by program operators. (For more details, please see the discussion on meat/meat alternate.)
In this final rule, to receive credit in the meal programs, a whole grain-rich food must contain at least 51 percent whole grains and the remaining grain content of the product must be enriched. Because current labeling regulations and practices may limit the school's ability to determine the actual whole grain content of many grain products, schools would use both elements of the following criterion to identify whole grain-rich foods. This is consistent with USDA's approach on whole grains in the HealthierUS School Challenge (HealthierUS School Challenge Whole-Grains Resource, http://teamnutrition.usda.gov/healthierUS/NFSMI/lesson2handouts.pdf). Therefore, until the whole grain content of food products is required on a product label by the Food and Drug Administration (FDA), schools must evaluate a grain product according to forthcoming FNS guidance as follows:
Element #1. A serving of the food item must meet portion size requirements for the Grains/Breads component as defined in FNS guidance.
And
Element #2. The food must meet at least one of the following:
-
The whole grains per serving (based on minimum serving sizes specified for grains/breads in FNS guidance) must be >= 8 grams. This may be determined from information provided on the product packaging or by the manufacturer, if available. Also, manufacturers currently may apply for a Child Nutrition Label for qualifying products to indicate the number of grains/breads servings that are whole grain-rich.
-
The product includes the following Food and Drug Administration (FDA)-approved whole grain health claim on its packaging. ``Diets rich in whole grain foods and other plant foods and low in total fat, saturated fat and cholesterol may reduce the risk of heart disease and some cancers.''
-
Product ingredient listing lists whole grain first, specifically:
-
-
Non-mixed dishes (e.g., breads, cereals): Whole grains must be the primary ingredient by weight (a whole grain is the first ingredient in the list).
-
Mixed dishes (e.g., pizza, corn dogs): Whole grains must be the primary grain ingredient by weight (a whole grain is the first grain ingredient in the list).
For foods prepared by the school food service, the recipe is used as the basis for a calculation to determine whether the total weight of whole grain ingredients exceeds the total weight of non-whole grain ingredients.
Several commenters noted that the industry standard of identity for whole grain products is 14.75 grams, while the IOM recommendations for school meals were based on 16 grams per serving. They suggested that schools be permitted to round up to the nearest quarter on gram equivalents in products. USDA will continue to provide SAs and schools guidance on this subject.
Many program operators expressed concern about the increased quantity of
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food offered to children. The weekly grains quantity for the NSLP is reduced to 8-9 oz. eq. for age/grade group K-5, to 8-10 oz. eq. for age/grade group 6-8, and to 10-12 oz. eq. for age/grade group 9-12. This grains requirement still reflects the Dietary Guidelines' recommendation to increase consumption of whole grains as half of all grains offered must be whole grain-rich during the first two years of implementation, and all grains must be whole grain-rich thereafter.
Commenters also expressed concerns regarding the cost and availability of whole grain-rich products. USDA would like to emphasize that such products are now available through USDA Foods, including: brown rice; parboiled brown rice; rolled oats; whole-wheat flour; whole-grain kernel corn; and whole-grain rotini, spaghetti, and macaroni.
This final rule modifies the provision in the proposed rule to allow schools the option to meet part of the weekly grains requirement with grain-based desserts. USDA had proposed to allow up to one serving of grain-based dessert per day to allow additional opportunities to incorporate whole grains in the lunch menu. However, the 2010 Dietary Guidelines cite grain-based desserts as a significant source of solid fats and added sugars in Americans' diets. Therefore, this final rule reduces the number of allowable grain-based desserts from five to two per school week, as recommended by several commenters.
Accordingly, this final rule implements the proposed grains requirements and codifies them under Sec. 210.10(c) for the NSLP and under Sec. 220.8(c) for the SBP. Grains requirements applicable to the SBP in SY 2012-2013 are under Sec. 220.23(g).
Meats/Meat Alternates
Proposed Rule: Offer a meat/meat alternate at lunch and breakfast daily to meet weekly requirements. Solicit comments on whether or not the meat/meat alternate component should include the three protein food subgroups recommended by the 2010 Dietary Guidelines: (1) Seafood; (2) meat, poultry, and eggs; and (3) nuts, seeds, and soy products. Solicit comments on whether or not tofu should be an allowable meat alternate and a methodology for crediting commercially prepared tofu.
Comments: A few commenters, primarily health advocates, expressed support for the overall meat/meat alternate requirement. They supported the proposed rule's emphasis on lean sources of protein and on lower-
sodium meats/meat alternates. Several commenters, however, indicated that applying a weekly meat/meat alternate requirement, rather than a daily source of protein, might decrease the estimated meal cost and increase menu planning flexibility.
Many of the public comments focused on the proposed requirement to offer a meat/meat alternate daily at breakfast. Commenters who favored the proposal stated that a breakfast with a meat/meat alternate would provide greater satiety and help increase the protein intake for children that do not drink milk. They said the protein requirement would result in a more nutritious and balanced breakfast.
However, many school districts expressed concerns about offering a daily meat/meat alternate at breakfast. Several of these commenters argued that there is insufficient scientific support for the proposed meat/meat alternate requirement at breakfast. Others asserted that the daily requirement would be costly, create logistical difficulties and food safety challenges for schools, make it difficult for schools to achieve the new sodium limits, and discourage new breakfast modalities and school participation in the SBP. Some also noted that children in most schools have very limited time to eat breakfast and offering more food would result in increased plate waste.
A few commenters also expressed concerns about the availability of meat/meat alternate products that will enable schools to offer meals that meet the dietary specifications for sodium, saturated fat, and trans fat. A commenter asked whether USDA Foods is able to provide low-
sodium processed meats, cheeses, and other meat/meat alternate products.
Commenters had different opinions on whether or not the meal pattern should require that schools offer the specific protein food subgroups identified in the 2010 Dietary Guidelines. Those in favor stated that it would diversify students' diet and provide health benefits. Those against it said that requiring protein food subgroups would be cost-prohibitive to many schools and that it might not be feasible in certain geographical areas. They also indicated that many parents do not recognize nuts, seeds, and soy products as a substitute for meats.
Many commenters suggested that USDA allow schools to offer tofu as a meat/meat alternate. A range of stakeholders, including SAs, nutrition professionals, advocacy organizations, and individual commenters, expressed support for allowing commercially prepared tofu in the school meal programs. Some commenters suggested a methodology for crediting commercially prepared tofu as a meat alternate. The predominant approach suggested is that USDA credit tofu based on the grams of protein per ounce equivalent.
USDA Response: This final rule implements the meat/meat alternate requirements for the NSLP as proposed. Schools must offer at least a minimum amount of meat/meat alternate daily (2 oz eq. for students in grades 9-12, and 1 oz eq. for younger students), and provide a weekly required amount for each age/grade group. Offering a meat/meat alternate daily as part of the school lunch supplies protein, B vitamins, vitamin E, iron, zinc, and magnesium to the diet of children, and also teaches them to recognize the components of a balanced meal. Menu planners are encouraged to offer a variety of protein foods (e.g., lean or extra lean meats, seafood, and poultry; beans and peas; fat-
free and low-fat milk products; and unsalted nuts and seeds) to meet the meat/meat alternate requirement.
The Department is mindful of the cost and operational concerns expressed by schools and other stakeholders regarding the proposed meat/meat alternate component in the SBP. Previously, schools have had the flexibility to offer one serving each of grains and meat/meat alternate, or two servings of either one at breakfast. We have seen a steady increase in the number of schools participating in the SBP and more schools are offering breakfast in the classroom and other creative delivery options. Therefore, this final rule retains some flexibility offered by the grains and meat/meat alternate combination available in the current SBP meal pattern, and does not require a daily meat/meat alternate in the SBP. Menu planners may offer a meat/meat alternate in place of grains after the minimum daily grains requirement is met. For example, for the K-5 age-grade group, the SBP minimum daily grain requirement is 1 oz. eq. As long as at least 1 oz. eq. of grain is served as part of the breakfast menu, a meat/meat alternate may also be served. The meat/meat alternate may count toward meeting the weekly grains requirement. For crediting, 1 oz. eq. of meat/meat alternate is equivalent to 1 oz. eq. of grains.
As suggested by many stakeholders, this final rule gives schools the option to offer commercially prepared tofu as a meat alternate in the NSLP and SBP. This provision, which is codified under Sec. 210.10(c)(2)(i)(D) of the regulatory text for the NSLP, allows schools to diversify the sources of protein available to students and better meet the dietary
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needs of vegetarians and culturally diverse groups in schools. Although tofu does not have an FDA standard of identity, the Dietary Guidelines recognize plant-based sources of protein such as tofu. USDA will continue to provide SAs and schools guidance on this issue.
USDA wishes to clarify that schools have the option to offer mature beans and dry peas (e.g., kidney beans, pinto beans, black beans, garbanzo beans/chickpeas, black-eyed peas, split peas and lentils) as meat alternates. Mature beans and peas dry longer on the plant, fix more nitrogen, and have a higher protein content, which makes them nutritionally comparable to protein foods. They are also excellent sources of other nutrients such as iron and zinc. Because beans and peas are similar to meats, poultry, and fish in their contribution of these nutrients, they can be credited as a meat alternate.
Note that a serving of beans and peas must not be offered as a meat alternate and as a vegetable in the same meal. Some foods commonly referred to as beans and peas (e.g., green peas, green lima beans, and green (string) beans) are not considered part of the beans and peas subgroup because their nutrient profile is dissimilar. For more information about the use and categorization of beans and peas see http://www.choosemyplate.gov/foodgroups/proteinfoods_beanspeas.html.
Schools also have discretion to offer ready-to-eat foods such as cold cuts, cheese, and yogurt to meet the meat/meat alternate component. Regardless of the protein foods offered, schools must plan all meals with the goal to meet the dietary specifications for sodium, saturated fat, trans fat, and calories. When selecting protein foods that are affordable and easy to prepare, we strongly encourage menu planners to use low-fat and low-sodium products that contribute to improved nutrient intake and health benefits (e.g., fat-free/low-fat yogurt and unsalted nuts and seeds).
To support school meal improvements, USDA Foods has reduced the upper salt limit on mozzarella cheese from 2 percent to 1.6 percent. The current range for mozzarella is 130-175 mg of sodium per 28 g (1 oz.) serving. The sodium in processed and blended cheeses has been reduced from 450 milligrams or more, to between 200 and 300 milligrams per 28 g (1 oz.) serving, which is closer to the sodium levels found in natural cheeses.
USDA had solicited comments on whether schools should be required to offer the protein food subgroups recommended by the 2010 Dietary Guidelines. In response to program operators' concerns, this final rule does not require the three protein food subgroups recommended by the 2010 Dietary Guidelines. However, USDA is developing technical assistance to assist schools in offering students a variety of protein foods consistent with the Dietary Guidelines.
Accordingly, this final rule implements the proposed meat/meat alternate requirements, with modifications, and codifies them under Sec. 210.10(c) for the NSLP and under Sec. 220.8(c) for the SBP. Meat/meat alternate requirements applicable to the SBP in SY 2012-2013 are under Sec. 220.23(g).
Fluid Milk
Proposed Rule: Offer plain or flavored fat-free milk and unflavored low-fat milk (1 percent milk fat or less), and include variety that is consistent with Dietary Guidelines recommendations.
Comments: Many parents and nutrition and health advocates favored the proposed requirement to limit flavor to fat-free milk. They believe that saturated fat and sugar in children's diets can be reduced by restricting milk choices to fat-free and low-fat, and by limiting flavor to fat-free milk. Several commenters stated that schools have already limited flavor to fat-free milk and student acceptability has been good. Some commenters recommended a total ban on flavored milk and argued that several states are in the process of banning flavored milk.
However, more commenters stated that flavored low-fat (1 percent or \1/2\ percent) milk should be allowed. Many of these cited a lack of availability of flavored fat-free milk. Others were concerned that poor student acceptability of flavored fat-free milk could result in lower milk consumption or participation in the school meal programs. Some commenters said that the amount of extra calories and fat in low-fat flavored milk is not significant enough to warrant allowing only flavored fat-free milk. A few asked that USDA phase in the limit on flavored milk, and others suggested that USDA set a maximum level of added sugar in flavored milk instead of allowing flavor only in fat-
free milk.
Several commenters addressed the need to accommodate lactose-
intolerant students and, others requested USDA to clarify milk variety in school meals. Also, although the proposed rule did not address meal variations for special dietary reasons, some commenters discussed the nutrition standards for non-dairy milk substitutes (e.g., soy drinks) and other miscellaneous topics related to the milk component, including OVS.
USDA Response: This final rule allows flavor in fat-free milk only, and fat-free and low-fat choices only (consistent with Dietary Guidelines recommendations and the NSLA as amended by the HHFKA). Flavored low-fat (1 percent or \1/2\ percent) milk is not allowed in the NSLP or the SBP upon implementation of the rule in SY 2012-2013 because it contributes added sugars and fat to the meal and would make it more difficult for schools to offer meals that meet the limits on calories and saturated fat. We anticipate that the new calorie limits will lead menu planners to select milk with the lowest levels of added sugar. Implementing calorie maximums gives menu planners more flexibility than limiting added sugar.
Schools already have the option to offer lactose-free and reduced-
lactose milk (fat-free and/or low-fat) as part of the reimbursable meal. Offering lactose free/reduced milk (fat-free or low-fat) is allowed and counts toward the milk variety requirement established by in the NSLA by the HHFKA. For the NSLP and SBP, variety (at least two choices of milk) can be accomplished by offering different allowable fat levels (fat-free and low-fat) and milk flavor in fat-free milk only. For additional guidance on milk variety, please see the FNS memorandum SP-29-2011, Child Nutrition Reauthorization: Nutrition Requirements for Fluid Milk, dated April 14, 2011.)
The milk fat restriction established by this final rule also applies to the meals for children in the age group 3-4 even though the meal patterns for preschoolers will be updated later through a separate rule. The amendments made to the NSLA by the HHFKA require fat-free and low-fat milk for all school lunches. Although this change was not addressed in the proposed rule due to the timing of publication, USDA notified program operators of this requirement for all school meals through implementation memorandum SP-29-2011. The milk flavor restriction also extends to the milk offered to children in age group 3-4.
As requested by commenters, we wish to clarify that this final rule does not change the nutrition standards for the optional non-dairy drinks offered to students with special dietary needs (not disabilities) in place of milk at the request from parents. Those products (e.g., soy, rice and almond drinks) are offered as meal exceptions on a case by
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case basis and are not intended for general consumption with the school meal. The nutrition standards for non-dairy milk substitutes for children without disabilities were established through a separate final rule ``Fluid Milk Substitutions in the School Nutrition Program,'' which was published in the Federal Register (73 FR 52903) on September 12, 2008. Those standards do not include fat or flavor/sugar restrictions.
We also wish to clarify that although fluid milk must be offered with every school meal, students may decline milk under OVS. In addition, water may not be offered in place of fluid milk as part of the reimbursable meal, but must be available in the food service area for students who wish to drink it in accordance with the NSLA as amended by the HHFKA and as discussed in the memorandum ``SP-28-2011 Revised Child Nutrition Reauthorization 2010: Water Availability During National School Lunch Program Meal Service'' dated July 12, 2011.
Accordingly, this final rule implements the proposed milk requirements and codifies them under Sec. 210.10(d) for the NSLP and under Sec. 220.8(d) for the SBP.
Dietary Specifications
Calories
Proposed Rule: Offer lunches and breakfasts that supply, on average over the school week, a number of calories that is within the established minimum and maximum levels for each age/grade group.
Comments: Many commenters agreed in general with the proposal to establish minimum and maximum calorie levels, and were particularly supportive of the maximum calorie levels. These commenters included advocacy organizations, food banks, a health department, a professional association, and an industry association. Many stated that setting minimum and maximum calorie levels along with providing nutrient dense meals will help address food insecurity and obesity concerns.
A few commenters said many students are not active enough and recommended lower calorie limits. Others, however, indicated that the proposed maximum calorie limits for school lunch might not be adequate to meet the dietary needs of taller and active students. Several commenters asserted that the calorie levels must be adequate enough to support the dietary needs of children who may not have access to sufficient food outside of school. There is also a concern among commenters about the ability of schools to adhere to the minimum and maximum calorie limits in the absence of a nutritional analysis.
In order to control calorie intake, some commenters suggested that USDA establish limits on added sugars for products such as such ready-
to-eat cereal, grain-based desserts, and dairy-based desserts to improve the diet of school children. A few commenters, including an advocacy organization, suggested adopting the World Health Organization's recommendation to limit added sugars to ``no more than 10 percent of a person's daily caloric intake.'' An advocacy organization and a professional association of health nutrition directors suggested adopting the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) breakfast standard, which sets the added sugars limit to no more than 6 grams of sugars per ounce of dry cereal.
USDA Response: This final rule is intended to respond to serious concerns about childhood obesity, and the importance for children to consume nutritious school meals within their calorie needs. Therefore, this rule implements the proposed minimum and maximum calorie levels for each grade group. In the NSLP, the calorie limits for each age/
grade group take effect upon implementation of this final rule. In the SBP, however, calorie limits are not implemented until the SY 2013-2014 (the second year of implementation). This modification from the proposed rule is intended to give program operators additional time to implement the new meal requirements in the SBP.
USDA acknowledges the school meal programs provide a nutrition safety net for food-insecure children and agrees with commenters that meals must supply adequate calories for growth and development. IOM considered this aspect of the Child Nutrition Program missions when developing the minimum and maximum calorie levels for various age/grade groups in the NSLP and SBP. They also took into consideration other opportunities for food intake available to most children outside of school, and the role of community organizations and other groups in supporting the nutritional needs of low-income children.
Although some commenters suggested setting a limit on added sugars for products such as flavored milk, USDA, consistent with the Institute of Medicine recommendations, does not believe a standard is necessary and would unnecessarily restrict menu planning flexibility. The required maximum calorie levels are expected to drive menu planners to select nutrient dense foods and ingredients to prepare meals, and avoid products that are high in fats and added sugars. In addition, this final rule includes other provisions that limit the sources of discretionary calories.
We also wish to clarify that the calorie standards established for each age/grade group are to be met on average over the course of the week. On any given school day, the calorie level for the meal may fall outside of the minimum and maximum levels as long as the average number of calories for the week is within the required range. This provides some flexibility to menu planners, but careful procurement, planning and preparation are important to stay within the calorie ranges.
Accordingly, this final rule implements the proposed calorie requirements and codifies them under Sec. 210.10(f) for the NSLP and under Sec. 220.8(f) for the SBP. Calorie requirements applicable to the SBP in SY 2012-2013 are under Sec. 220.23(b) and Sec. 220.23(c).
Saturated Fat
Proposed Rule: Offer lunches and breakfasts that supply, on average over the school week, less than 10 percent of total calories from saturated fat.
Comments: Most commenters concerned about childhood obesity also expressed general support for limiting saturated fat in school meals at less than 10 percent of total calories. This is the same as the current saturated fat restriction and the 2010 Dietary Guidelines did not change this recommendation. A small number of commenters (a health care professional, a member of academia, and an advocacy organization) suggested a more restrictive standard, recommending that USDA require less than 7 percent of total calories from saturated fat. This limit is listed in the Dietary Guidelines Advisory Committee report but was not adopted as a recommendation in the 2010 Dietary Guidelines.
USDA Response: This final rule implements the proposed saturated fat standard, which is the same as the restriction currently in place in the NSLP and SBP. Schools must continue to limit saturated fat in the school meals to help reduce childhood obesity and children's risk of cardiovascular disease later in life. Many schools are still having difficulty meeting this requirement in the NSLP. Several major sources of saturated fat in the American diet are popular items in the lunch menu.
This final rule implements two new requirements set forth in the proposed rule and are anticipated to encourage
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schools to reduce the saturated fat in meals: allowing only fat-free and low-fat milk, and establishing maximum calorie limits. USDA's technical assistance will continue to emphasize the need to purchase and prepare foods in ways that help reduce the saturated fat level in school meals (e.g., procuring skinless chicken or using meat from which fat has been trimmed, and using vegetable oils that are rich in monounsaturated and polyunsaturated fatty acids such as canola and corn oils).
This rule does not require schools to meet a total fat standard under current regulations. The IOM report did not recommend that USDA require a total fat standard for school meals. The expectation is that the new meal requirements, including the dietary specifications for calories, saturated fat and trans fat, will enable schools to offer meals that are low in total fat.
Accordingly, this final rule implements the proposed saturated requirement and codifies it under Sec. 210.10(f) for the NSLP and under Sec. 220.8(f) for the SBP.
Sodium
Proposed Rule: Offer lunches and breakfasts that supply, on average over the school week, no more than the maximum sodium levels set for each age/grade group. Meet the intermediate sodium targets (two and four years post implementation of the rule), and the final sodium targets (ten years post implementation of the rule; changes represent a sodium reduction of approximately 25-50 percent in breakfasts and lunches). The proposed targets aimed to help reduce students' sodium intakes to less than the Tolerable Upper Intake Levels established in the Dietary Reference Intakes, which range from 1,900-2,300 milligrams per day for children ages 4-18.
Comments: Nutrition and health advocates, community-action groups, individuals, and some school districts expressed support for the proposed sodium restrictions and timeline. A medical association and an advocacy organization supported the proposed sodium restriction to help address the health risks associated with high sodium intake. A professional association recommended that USDA consider further reductions in sodium limits after progress has been assessed. An advocacy organization suggested that USDA base the proposed restrictions on the Dietary Guidelines recommendation of 1,500 mg of sodium per day for special population groups. The 2010 Dietary Guidelines recommend that persons who are 51 years and older, African American children and adults, and persons of any age that have hypertension, diabetes, or chronic kidney disease limit sodium intake to 1,500 mg per day (compared to the 2,300 mg per day recommended for the general population).
However, many commenters were concerned that schools will likely struggle to meet the proposed intermediate sodium limits and fail to achieve the final target within 10 years. Some commenters asserted that the final targets for each age/grade group are lower than the therapeutic levels set for certain high-risk populations and should be increased. A school advocacy organization and school districts argued that it would be difficult for schools to prepare palatable foods at the proposed final sodium targets and, therefore, students would be motivated to drop from the meal program and pack lunches that contain high levels of sodium.
Some commenters expressed concerns about the potential use of sodium substitutes in schools. Commenters also indicated that industry needs time for product development and testing, and schools need time for procurement changes, menu development, sampling, and to foster student acceptance. Two food manufacturers commented that pizza manufacturers would need to complete research in order to secure low sodium cheeses that adhere to the proposed final target and that children like. Some argued that many schools rely on canned and processed food items and have limited access to reduced-sodium products.
School food service staff, a food manufacturer, a nutrition professional and individual commenters suggested that USDA lengthen the time to reach the intermediate sodium targets, and eliminate or reevaluate the final target. Commenters also encouraged USDA to monitor the progress of sodium reductions toward targets before moving forward. Some offered various alternatives to the proposed sodium limits and timeline (e.g., a food manufacturer suggested 33 percent reduction over ten years and a school food service staff member suggested 30 percent over ten years). Several commenters suggested a 10-20 percent reduction over ten years to allow schools to continue purchasing affordable processed foods while working on recipe modification, in order to reduce food costs and potential loss of student participation. Others recommended establishing daily limits for each school meal (e.g., 1,000-1,200 mg/day for lunch and 1,000 mg/day for breakfast).
Some school districts and a child nutrition consultant stated that there is not enough scientific data linking sodium consumption with health issues in children, and did not agree with claims that children's early exposure to sodium leads them to develop a preference for salty foods. A child nutrition consultant, a school nutrition directors' association, a professional association, and a school district argued that further studies should be conducted so that the final target levels are science-based.
USDA Response: Reducing the sodium content of school meals is a key objective of this final rule reflecting the Dietary Guidelines recommendation for children and adults to limit sodium intake to lower the risk of chronic diseases. USDA has encouraged schools to reduce sodium since the implementation of the School Meals Initiative in 1995. According to the SNDA-III study, the average sodium content of school lunches (for all schools) remains high: More than 1400 mg. Therefore, this final rule requires schools to make a gradual reduction in the sodium content of the meals, as recommended by IOM and consistent with the requirements of the FY 2012 Agriculture Appropriations Act.
Schools will be required to meet the first intermediate sodium target for each age/grade group (target 1 in the chart) in the NSLP and SBP no later than July 1, 2014 (SY 2014-2015), two years post implementation of this final rule. To meet target 1, schools are expected to modify menus and recipes promptly to reduce the sodium content of school lunches by approximately 5-10 percent from their baseline.
Prior to the implementation of the second (target 2) and final sodium targets contained in this rule, USDA will evaluate relevant studies on sodium intake and human health, as required by Section 743 of the FY 2012 Agriculture Appropriations Act. The scheduled compliance date for target 2 is no later than July 1, 2017 (SY 2017-2018), five years post implementation of the final rule for both meal programs. In response to stakeholders' concerns, and the provisions of Section 743 of the FY 2012 Agriculture Appropriations Act, this final rule lengthens the time to reach the second intermediate targets from 4 to 5 years. This modification to the sodium proposal is intended to allow food manufacturers additional time to reformulate products and schools more time to build student acceptance of lower sodium meals. To meet target 2, schools have to reduce sodium in school lunches by approximately 15-30 percent from their baseline. We
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anticipate schools will have to incorporate new low-sodium products and ingredients in meals offered in order to meet this target.
The scheduled compliance date for the final sodium targets is no later than July 1, 2022 (SY 2022-2023), ten years post implementation of the final rule. To meet the final sodium target, schools will have to reduce the sodium content of the meals by approximately 25-50 percent from the school baseline. This will require innovation on the part of product manufacturers in the form of new technology and/or food products. As required by Section 743 of the FY 2012 Agriculture Appropriations Act, USDA will certify that it has evaluated relevant data on sodium intake and human health prior to requiring compliance with the second and final sodium targets.
Meeting the final sodium targets will enable schools to offer meals that reflect the 2010 Dietary Guidelines' recommendation to limit sodium intake to less than 2,300 mg per day. Nearly all schools have to reduce the sodium content of school meals to meet final sodium targets, but the extent of the needed reduction varies by school/district as sodium limits for school meals do not currently exist. The following chart illustrates the sodium reduction in school meals:
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Sodium reduction: Timeline and amount
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Baseline: Current Percent change
Age/grade group average sodium levels Target 1: meet by July Target 2: meet by July Final target: \2\ Meet (current levels
as offered \1\ (mg) 1, 2014 (SY 2014-2015) 1, 2017 (SY 2017-2018) by July 1, 2022 (SY vs. final
(mg) (mg) 2022-2023) (mg) targets)
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School Breakfast Program
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K-5................................. 573 (elementary)....... State agencies must review school lunches and breakfasts every three years during scheduled administrative reviews to monitor compliance with the meal requirements (meal patterns and dietary specifications for calories, saturated fat, sodium and trans fats).
State agencies must conduct a weighted nutrient analysis for the schools selected for an administrative review to monitor compliance with the specifications for calories, saturated fat, and sodium. The analysis must cover menu and production records for a two-
week meal period.
State agencies must take immediate fiscal action if a required food component is not offered.
For repeat violations of the vegetable subgroup and milk requirements, State agencies must take fiscal action if technical assistance and corrective action have not resolved these violations.
For repeat violations of the food quantity and whole grain requirements, and the dietary specifications (calorie, sodium, saturated fat and trans fat), State agencies have discretion to take fiscal action if technical assistance and corrective action have not resolved these violations.
Comments: Various commenters, including a health care association, State department of education, trade association, nutrition professional, food service staff, and advocacy organizations supported the proposal to eliminate the School Meals Initiative (SMI) review and monitor the nutritional quality of school meals through the scheduled administrative review. Although a few commenters expressed concern with eliminating the SMI review, several commenters voiced support for a single monitoring system.
However, numerous commenters said that this proposal would not simplify monitoring because it increases the frequency of the review cycle and the meal review period, and requires SAs to conduct a nutrient analysis for the SFAs to determine compliance with the dietary specifications. Some commenters argued that SFAs would still have to conduct their own nutrient analysis to plan meals that meet the calorie, saturated fat, and sodium restrictions. They expressed concern that many food-based SFAs do not have the specialized tools to ensure compliance with the dietary specifications, and that SAs do not have enough time or resources to provide technical assistance to all SFAs.
Although some commenters supported establishing a 3-year review cycle, most commenters opposed increasing the frequency of the administrative reviews. Those in favor of the proposal (health and nutrition advocates and providers) stated that it would increase opportunities to provide technical assistance to the SFAs and result in improved meals. Those opposed included school districts, food service management companies, school food service staff, a school advocacy organization, State departments of education, and nutrition professionals. These commenters argued that retaining the 5-year review cycle would give SAs more time to provide training and technical assistance to the SFAs. They indicated that SAs would not have the staff to handle the increased workload of a 3-year review cycle and, therefore, the quality of the reviews could suffer.
Regarding the proposal to review menu and production records for a two-week meal period, most commenters expressed opposition. These commenters, including State and local operators, school food service staff, school advocacy organizations, professional associations, trade associations, and other groups argued that reviewing menus for one week is a reasonable amount of time to determine if an SFA is meeting the meal requirements. Some commenters estimated that the increased paperwork of a 3-year review cycle and a 2-week review of menus would triple the cost of completing the administrative review.
There was a mixed response to the proposal to include breakfast in the administrative reviews. Commenters that agreed school breakfasts should be included argued that these meals often contain less nutrient-
dense foods than lunch. A similar number of commenters opposed the proposal because of cost concerns. The latter group stated that the reviews should only include lunch to offset the increased time and effort involved in conducting reviews every 3 years rather than every 5 years.
There were few and mixed opinions about the use of fiscal action. School food service staff argued that fiscal penalties are counterproductive and create an adversarial relationship between the SA and the SFA. They recommended that more emphasis be placed on providing technical assistance, not fiscal action. Other commenters favored increasing accountability to improve meal quality.
Commenters offered some suggestions regarding monitoring procedures, including that SAs monitoring report be made available on-
line to the public. Another suggested that SAs target schools with prior non-compliance rather that assess a broad sample of schools.
USDA Response: Section 207 of the HHFKA amended the NSLA to require USDA to establish a unified monitoring system. Accordingly, this final rule eliminates the SMI review and strengthens the administrative review to assess compliance with the new meal requirements. As required by this rule, SAs must monitor compliance with the meal patterns and the dietary specifications (calories, saturated fat, sodium and trans fat) under the administrative review responsibilities established in 7 CFR 210.18. This
Page 4101
change is intended to focus more attention on the importance of providing lunches and breakfasts that reflect the science-based meal requirements, in accordance with Sec. 9 of the NSLA and Sec. 201 of the HHFKA.
In addition to observing the serving line and the meals counted at point of service during the administrative review, the SAs must conduct a nutrient analysis to ensure that the average levels of calories, saturated fat, and sodium in the meals offered over the school week are within the values specified in this final rule. However, in response to commenters' concerns, this final rule requires SAs to review menu and production records for one week only within the review period, instead of the two weeks stated in the proposed rule. This modification reduces the information collection burden for SAs. USDA is reviewing potential alternative approaches to nutrient analysis and will provide further guidance to SAs.
This final rule changes the administrative review cycle from 5 to 3 years in accordance with the NSLA, as amended by Sec. 207 of the HHFKA. This change takes effect in SY 2013-2014, after the current 5-
year review cycle ends. More frequent monitoring is intended to increase opportunities for the SAs to provide guidance and technical assistance to the SFAs during implementation of the new meal requirements. USDA is aware of program operators' concerns regarding increased monitoring and will provide technical assistance resources and guidance to SAs to facilitate transition to the 3-year review cycle.
This final rule also makes several improvements to the SBP to bring those meals closer to the recommendations of the Dietary Guidelines. Therefore, and in accordance with the NSLA as amended by the HHFKA, beginning SY 2013-2014, SAs must monitor breakfasts under the administrative review. However, because the new meal requirements (other than limiting types of milk) are being implemented gradually in the SBP, part of the compliance assessment must be based on prior nutrition standards (which are now in Sec. 220.23) until new requirements in the SBP regulations at Sec. 220.8 take effect. The requirement to conduct a nutrient analysis of breakfast menu records for one-week period begins July 1, 2013 (SY 2013-2014).
SAs must continue to use technical assistance and corrective action as the primary strategies to help schools comply with the meal requirements. However, this final rule gives SAs the ability to use fiscal action to enforce compliance with specific meal requirements. As currently done, SAs must apply immediate fiscal action if the meals offered are completely missing one of the required food components. SAs must also take fiscal action for repeated violations of the vegetable subgroup and milk type requirements when technical assistance efforts and required corrective action have not resolved these violations. However, SAs have discretion to take fiscal action for repeated violations of the food quantity and whole grain requirements, and for repeated violations of the dietary specifications (calories, saturated fat, sodium and trans fats).
A commenter suggested public disclosure of the administrative review findings. The NSLA, as amended by the HHFKA, requires schools to post review final findings and make findings available to the public. Also, the NSLA requires local education agencies to report on the school nutrition environment to USDA and to the public, including information on food safety inspections, local wellness policies, school meal program participation, and nutritional quality of program meals. These statutory requirements will be implemented through a separate rule.
Accordingly, this final rule implements the proposed monitoring requirements, with the modification discussed above, and codifies them under Sec. 210.18(a), Sec. 210.18(c), Sec. 210.18(g) and Sec. 210.18(m) for the NSLP and under Sec. 220.8(h) and Sec. 220.8(j) for the SBP.
Identification of Reimbursable Meal
Proposed Rule: Identify the foods that are part of the reimbursable meal(s) for the day at or near the beginning of the serving line(s).
Comments: Most of the commenters that addressed this proposal supported it because they believe it helps students avoid unintentional purchase of food items not included in the reimbursable meal. A few commenters opposed the proposed requirement and argued that it will overtly identify students that receive free and reduced price meals.
USDA Response: Beginning July 1, 2012 (SY 2012-2013), this final rule requires schools to identify the components of the reimbursable meal at or near the beginning of the serving line(s) as students and parents often are not aware of what is included in the school meal. Identifying the components of the reimbursable meal also reinforces nutrition education messages that emphasize selecting healthy choices for a balanced meal. Schools have discretion to determine the best way to present this information on the serving line. Implementing this requirement must not result in overt identification of any student participating in the NSLP or SBP through use of a separate serving line for the reimbursable meal or other segregation of certified students.
Accordingly, this final rule implements the proposed requirement and codifies it under Sec. 210.10(a)(2) for the NSLP, and under Sec. 220.8(h) and Sec. 220.8(j) for the SBP.
Crediting
Proposed Rule:
Disallow the crediting of any snack-type fruit or vegetable products (such as fruit strips and fruit drops), regardless of their nutrient content, toward the fruits component or the vegetables component.
Require that all fruits and vegetables (and their concentrates, purees, and pastes) be credited based on volume as served with two exceptions: (1) Dried whole fruit and dried whole fruit pieces would be credited for twice the volume served; and (2) leafy salad greens would be credited for half the volume served.
Comments: Comments in favor of disallowing snack-type fruit or vegetable products exceeded the comments opposed. Those in favor stated that permitting such products sends the wrong nutrition message to children. Others said that children should be offered a variety of whole fruits and vegetables. However, some commenters opposed the requirement due to concerns over the cost of providing whole fruit. They suggested that USDA allow products made with 100 percent fruit.
Many commenters opposed the proposal that all fruits and vegetables (and their concentrates, purees, and pastes) be credited based on volume as served. These commenters included school districts, school advocacy organizations, trade associations, food manufacturers, a food service management company, a State department of education and others. They expressed concern over the potential cost increase due to product reformulation and reduced product acceptability. Many commenters recommended that USDA keep the current practice to credit tomato paste and puree based on their whole-food equivalency using the percent natural tomato soluble solids in paste and puree.
USDA Response: One of the goals of the School Meal Programs is to help children easily recognize the key food groups that contribute to a balanced meal, including fruits and vegetables.
Page 4102
Effective July 1, 2012 (SY 2012-2013), reimbursable meals must not include snack-type fruit products that have been previously credited by calculating the whole-fruit equivalency of the processed fruit in the product using the FDA's standards of identity for canned fruit nectars (21 CFR 146.113). FDA revoked the standard of identity for canned fruit nectars through a final rule published in the Federal Register (60 FR 56513) on November 9, 1995; therefore, there is no regulatory basis for allowing the crediting of these snack-type fruit products.
As a result of Section 743 of the FY 2012 Agriculture Appropriations Act, this final rule does not adopt the proposed crediting change for tomato paste and puree. USDA will credit tomato paste and puree as a calculated volume based on the whole food equivalency. Although this specific proposal was intended to promote consistency and improved nutrition by crediting all fruits and vegetables (and their concentrates, purees, and pastes) based on volume as served, this final rule must comply with the statutory provision.
Accordingly, this final rule disallows the crediting of any snack-
type fruit or vegetable products, and continues the crediting of tomato paste and puree as a calculated volume under Sec. 210.10(c)(2)(iii) of the regulatory text.
Fortification
Proposed Rule: Disallow the use of formulated grain-fruit products as defined in Appendix A to 7 CFR part 220.
Comments: Most commenters were in favor of removing formulated grain-fruit products from the School Meal Programs. They indicated that such products do not support the Dietary Guidelines' recommendation to consume fruits as a separate food group. However, some commenters opposed the removal of formulated grain-fruit products, and claimed that these products are cost-effective and convenient in new breakfast delivery systems such as Grab and Go and Breakfast in the Classroom.
USDA Response: This final rule disallows the use of formulated grain-fruit products to meet the grain and fruit components in the SBP beginning July 1, 2012 (SY 2012-2013). Formulated grain-fruit products, as defined in Appendix A to 7 CFR part 220, are (1) grain-type products that have grain as the primary ingredient, and (2) grain-fruit type products that have fruit as the primary ingredient. Both types of products must have at least 25 percent of their weight derived from grain. These products typically contain high levels of fortification, rather than naturally occurring nutrients, and are high in sugar and fat. Furthermore, they no longer meet a need in the school meal programs because schools can procure more nutrient-dense breakfast options with a similar shelf-life. This rule does not prohibit the use of fortified cereals or cereals with fruit (e.g., ready-to-eat cereals) which may provide good sources of whole grains, fiber, and other important nutrients. In most instances, however, the use of highly-
fortified food products is inconsistent with the Dietary Guidelines.
Accordingly, this final rule amends Appendix A to 7 CFR part 220 by removing Formulated Grain-Fruit Products in its entirety. It also makes a technical change to Appendix B to 7 CFR part 210 by removing the statement that affirms that Appendix B will be updated to exclude individual foods that have been determined to be exempted from the categories of Foods of Minimal Nutritional Value. Although USDA has published Federal Register Notices in the past to inform the public of exempted foods, Appendix B has not been amended subsequently to reflect these exemptions. A list of these exempted foods is maintained and available to all State agencies participating in the Programs. There have been no changes to the categories of exempted foods and USDA is maintaining the requirement to publish a Federal Register Notice and update the regulations to reflect any changes to the categories.
Accordingly, this final rule implements the proposed change by removing the Formulated Grain-Fruit Products from Appendix A to 7 CFR part 220.
III New Meal Patterns and Dietary Specifications
The following meal patterns must be implemented in SY 2012-2013 for the NSLP, and phased-in the SBP as specified in the footnotes and regulatory text.
----------------------------------------------------------------------------------------------------------------
Breakfast meal pattern Lunch meal pattern
---------------------------------------------------------------------------------
Meal pattern Grades K-5 Grades 6-8 Grades 9-12
\a\ \a\ \a\ Grades K-5 Grades 6-8 Grades 9-12
----------------------------------------------------------------------------------------------------------------
Amount of food \b\ per week (minimum per day)
----------------------------------------------------------------------------------------------------------------
Fruits (cups) \c\ \d\......... 5 (1) \e\ 5 (1) \e\ 5 (1) \e\ 2\1/2\ (\1/ 2\1/2\ (\1/ 5 (1)
2\) 2\)
Vegetables (cups) \c\ \d\..... 0 0 0 3\3/4\ (\3/ 3\3/4\ (\3/ 5 (1)
4\) 4\)
Dark green \ f\........... 0 0 0 \1/2\ \1/2\ \1/2\
Red/Orange \ f\........... 0 0 0 \3/4\ \3/4\ 1\1/4\
Beans/Peas (Legumes) \ f\. 0 0 0 \1/2\ \1/2\ \1/2\
Starchy \f\............... 0 0 0 \1/2\ \1/2\ \1/2\
Other \f\ \g\............. 0 0 0 \1/2\ \1/2\ \3/4\
Additional Veg to Reach Total 0 0 0 1 1 1\1/2\
\h\.
Grains (oz eq) \i\............ 7-10 (1) \j\ 8-10 (1) \j\ 9-10 (1) \j\ 8-9 (1) 8-10 (1) 10-12 (2)
Meats/Meat Alternates (oz eq). 0 k 0 k 0 k 8-10 (1) 9-10 (1) 10-12 (2)
Fluid milk (cups) \l\......... 5 (1) 5 (1) 5 (1) 5 (1) 5 (1) 5 (1)
----------------------------------------------------------------------------------------------------------------
Other Specifications: Daily Amount Based on the Average for a 5-Day Week
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) \m\ 350-500 400-550 450-600 550-650 600-700 750-850
\n\ \o\.
Saturated fat % of total Offer fruit L......... .......... .......... .......... .......... .......... ..........
daily.
Fruit quantity .......... .......... B......... .......... .......... .......... ..........
increase to 5 cups/week
(minimum 1 cup/day).
Vegetables Component:
Offer L......... .......... .......... .......... .......... .......... ..........
vegetables subgroups
weekly.
Grains Component:
Half of grains L......... B......... .......... .......... .......... .......... ..........
must be whole grain-
rich.
All grains must L, B...... .......... .......... .......... ..........
be whole-grain rich.
Offer weekly L......... B......... .......... .......... .......... .......... ..........
grains ranges.
Meats/Meat Alternates
Component:
Offer weekly L......... .......... .......... .......... .......... .......... ..........
meats/meat alternates
ranges (daily min.).
Milk Component:
Offer only fat- L, B...... .......... .......... .......... .......... .......... ..........
free (unflavored or
flavored) and low-fat
(unflavored) milk.
Dietary Specifications (to
be met on average over a
week):
Calorie ranges. L......... B......... .......... .......... .......... .......... ..........
Saturated fat L, B...... .......... .......... .......... .......... .......... ..........
limit (no change).
Sodium Targets .......... .......... L, B...... .......... .......... .......... L, B
\1\.
cir Target 1......
cir Target 2......
cir Final target..
Zero grams of L......... B......... .......... .......... .......... .......... ..........
trans fat per portion.
Menu Planning:
A single FBMP L......... B......... .......... .......... .......... .......... ..........
approach.
Age-Grade Groups:
Establish age/ L......... B......... .......... .......... .......... .......... ..........
grade groups: K-5, 6-8,
and 9-12.
Offer vs. Serve:
Reimbursable L......... B......... .......... .......... .......... ..........
meals must contain a
fruit or vegetable (\1/
2\ cup minimum).
Monitoring:
3-year adm. .......... L, B...... .......... .......... .......... .......... ..........
review cycle.
Conduct L......... B......... .......... .......... .......... .......... ..........
weighted nutrient
analysis on 1 week of
menus.
----------------------------------------------------------------------------------------------------------------
\1\ Target 2 and the final target will only be required after USDA evaluates relevant data on sodium intake and
human health, as required by Section 743 of the FY 2012 Agriculture Appropriations Act.
Implementation Resources
With respect to resources for the changes, USDA estimates suggest that the common-sense revenue reforms for school food businesses included in the HHFKA will provide an additional $7.5 billion in non-
Federal revenues over 5 years to the food service accounts of local school districts. This includes over $5.3 billion in additional revenue from a la carte foods, over $300 million in additional payments from paid lunches, and over $1.9 billion in additional revenue schools resulting from making school meals more competitive with a la carte foods.
Since the statute mandated that revenue streams from non-Program
Page 4104
foods relative to the costs of those foods, should be at least as high as the revenue stream for Program meals bears to costs beginning July 1, 2011, schools should receive over $1 billion in new revenues in School Year 2011-2012. That will help schools work toward implementing the new standards effective the following year, i.e., July 1, 2012. In addition, USDA estimates that the interim rule ``National School Lunch Program: School Food Service Account Revenue Amendments Related to the Healthy, Hunger-Free Kids Act of 2010'' will increase participation in school meals programs by 800,000 children.
The six-cent performance-based reimbursement increase included in the HHFKA will provide additional revenue beyond this amount. The Congressional Budget Office estimated about $1.5 billion over the same period in performance-based funding.
USDA will work with the SAs to facilitate transition to the new meal requirements. USDA and the National Food Service Management Institute are developing technical assistance resources and training to help school foodservice staff improve menus, order appropriate foods to meet the new meal requirements, and control costs while maintaining quality. Resources and training materials being developed include identifying and purchasing whole grain-rich foods, lowering the sodium on menus, and meeting the new meal pattern requirements. Training will be available through a variety of methods including webinars and online learning modules.
We are updating the Child Nutrition Database and will reevaluate nutrient analysis software systems available from industry to assist SAs with monitoring calories, saturated fat, and sodium in the meals offered to students in grades K through 12 during the administrative review. The Child Nutrition Labeling Program is being updated to report whole grain-rich contributions to the grains component and to provide standardized claims for the vegetable subgroups consistent with the 2010 Dietary Guidelines.
In addition, the HHFKA provides USDA $50 million for each of the first two years of the new meal requirements for use in assisting SAs implement the new requirements. These funds, combined with increases in State Administrative Expense funding, should assist States and local operators in improving the quality of school meals provided to children.
-
Procedural Matters
Executive Order 12866 and Executive Order 13563
Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated an ``economically significant regulatory action'' under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget.
Regulatory Flexibility Act
This final rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Pursuant to that review, it has been determined that this rule will have a significant impact on a substantial number of small entities.
The requirements established by this final rule will apply to school districts, which meet the definitions of ``small governmental jurisdiction'' and ``small entity'' in the Regulatory Flexibility Act. A Regulatory Flexibility Act analysis is included in the preamble.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, USDA generally must prepare a written statement, including a cost/benefit analysis, for proposed and final rules with ``Federal mandates'' that may result in expenditures by State, local, or tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of the UMRA generally requires USDA to identify and consider a reasonable number of regulatory alternatives and adopt the most cost-effective or least burdensome alternative that achieves the objectives of the rule. The Regulatory Impact Analysis conducted by FNS in connection with this final rule includes a cost/benefit analysis and explains the options considered to implement the Dietary Guidelines in the school meal programs.
USDA sought the assistance of the Institute of Medicine of the National Academies to recommend changes to school meal standards in the least burdensome and costly manner consistent with the Dietary Guidelines. However, this final rule contains Federal mandates (under the regulatory provisions of Title II of the UMRA) that could result in costs to State, local, or tribal governments or to the private sector of $100 million or more in any one year. The HHFKA authorizes $50 million over two years to help State agencies implement the new meal pattern requirements. These funds, combined with increases in State Administrative Expense funding, should assist States and local operators in implementing the requirements established by this final rule. Local program operators need to optimize the use of USDA Foods and adopt other cost-savings strategies in various areas of the food service operation, including procurement, menu planning, and meal production to meet the rule requirements in a cost-effective manner.
Executive Order 12372
The NSLP is listed in the Catalog of Federal Domestic Assistance under No. 10.555 and the SBP is listed under No. 10.553. For the reasons set forth in the final rule in 7 CFR part 3015, Subpart V and related Notice published at 48 FR 29114, June 24, 1983, these Programs are included in the scope of Executive Order 12372, which requires intergovernmental consultation with State and local officials.
Since the NSLP and SBP are State-administered, federally funded programs, FNS headquarters staff and regional offices have formal and informal discussions with State and local officials, including ITO representatives, on an ongoing basis regarding program requirements and operation. This structure allows FNS to receive regular input which contributes to the development of meaningful and feasible Program requirements.
Federalism Summary Impact Statement
Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. Where such actions have federalism implications, agencies are directed to provide a statement for inclusion in the preamble to the regulations describing the agency's considerations in terms of the three categories called for under section (6)(b)(2)(B) of Executive Order 13132.
Page 4105
Prior Consultation With State Officials
FNS staff received informal input from various stakeholders while participating in various State, regional, national, and professional conferences. Various departments of education, boards of education, departments of health, and other state and local organizations provided input during the public comment period. The School Nutrition Association, School Food Industry Roundtable, National Alliance for Nutrition and Activity, Association of State and Territorial Public Health Nutrition Directors, and the Center for Science in the Public Interest shared their views about changes to the school meals. Numerous stakeholders also provided input at the public meetings held by the Institute of Medicine in connection with its school meals study.
Nature of Concerns and the Need to Issue This Rule
State Agencies and school food authorities want to provide the best possible school meals through the NSLP and SBP but are concerned about program costs, food waste, and increasing administrative burden. While FNS is aware of these concerns, section 9(a)(4) and section 9(f)(1) of the National School Lunch Act, 42 U.S.C. 1758(a)(4) and (f)(1), require that school meals reflect the most recent ``Dietary Guidelines for Americans'' and promote the intake of the food groups recommended by the Dietary Guidelines.
Extent To Which We Meet Those Concerns
Although there is general support for the meal requirements established by this final rule, State and local program operators, food industry, and others associated with the operation of the school meals programs expressed concern about the proposed increase in food quantities, limit on starchy vegetables, sodium reductions, and implementation timeline, as well as the estimated meal costs. USDA has taken into consideration these concerns, and the requirements of the FY 2012 Agriculture Appropriations Act, and has modified several of the key meal requirements to be responsive to the concerns of State and local program operators. This final rule makes significant improvements to the school meals, while modifying the following provisions to facilitate successful implementation of the final rule at the State and local levels:
Reduce the proposed grains quantities at lunch to reduce food cost,
Remove the proposed starchy vegetable restrictions at lunch and breakfast as required by the FY 2012 Agriculture Appropriations Act,
Allow students to select \1/2\ cup of a fruit or a vegetable to reduce food waste,
Allow more time to comply with the second intermediate sodium targets,
Remove the daily meat/meat alternate requirement at breakfast to reduce food cost,
Provide additional time for implementation of the breakfast requirements, and
Reduce the administrative burden by requiring State agencies to conduct a nutrient analysis of school meals using one week of menus, rather than two weeks as proposed.
Executive Order 12988
This final rule has been reviewed under Executive Order 12988, ``Civil Justice Reform.'' This final rule is intended to have preemptive effect with respect to any State or local laws, regulations or policies which conflict with its provisions or which would otherwise impede its full and timely implementation. This rule would permit State or local agencies operating the National School Lunch and School Breakfast Programs to establish more rigorous nutrition requirements or additional requirements for school meals that are not inconsistent with the nutritional provisions of the rule. Such additional requirements would be permissible as part of an effort by a State or local agency to enhance the school meals and/or the school nutrition environment. To illustrate, State or local agencies would be permitted to establish more restrictive saturated fat and sodium limits. For these components, quantities are stated as maximums (e.g., 0584-0006 which is currently under review. A 60-day notice was published in the Federal Register at 76 FR 2509 on January 13, 2011 which provided the public an opportunity to submit comments on the information collection burden resulting from this rule. This information collection burden has not yet been approved by OMB. FNS will publish a document in the Federal Register once these requirements have been approved. The current total estimated annual burden for OMB No. 0584-0006 is now 11,880,415 hours, rather than the 11,882,408 indicated in the proposed rule.
The average burden per response and the annual burden hours are explained below and summarized in the chart which follows:
Respondents for this rule: State Education Agencies (57) and School Food Authorities (6,983).
Estimated Number of Respondents for this rule: 7040.
Estimated Number of Responses per Respondent for this rule: 3.87217.
Estimated Total Annual Responses: 27,260.
Estimated Total Annual Burden on Respondents for this rule: 73,849 hours.
Estimated Annual Burden For 0584-New, National School Lunch Program, 7 CFR 210
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Average Average
Section number of Frequency of annual burden per Annual
respondents response responses response burden hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reporting:
SA shall verify compliance with critical 7 CFR 210.18(g) & 210.18(h)...... 57 1 57 33 1,881
and general areas of review.
SFA shall submit to SA documented 7 CFR 210.18(k)(2)............... 6,983 1 6,983 6 41,898
corrective action, no later than 30 days
from the deadline for completion, for
violations of critical or general area
identified on administrative follow-up
review.
--------------------------------------------------------------------------------------------------------
Total Reporting for DGA rule........... ................................. 7,040 ............ 7,040 6.2186 43,779
--------------------------------------------------------------------------------------------------------
Total Existing Reporting Burden for ................................. ............ ............ ............ ............ 2,912,745
Part 210.
--------------------------------------------------------------------------------------------------------
Total Reporting Burden for Part 210 ................................. ............ ............ ............ ............ 2,956,524
with DGA rule.
--------------------------------------------------------------------------------------------------------
Recordkeeping:
SA establishes guidelines and approves 7 CFR 210.10 (1)................. 0 0 0 0 * (57)
School Food Authorities menu planning
alternatives. (Burden removed by proposed
rule).
SA modifies menu planning alternatives or 7 CFR 210.10 (1)................. 0 0 0 0 * (100)
develops menu planning alternatives.
(Burden removed by proposed rule).
SA records document the details of all 7 CFR 210.18 (k), 210.18 (p), & 57 93.23 5,314 2.0 10,628
reviews and the degree of compliance with 210.20 (b)(6).
the critical and general areas of review.
To include documented action on file for
review by FNS.
SA documentation of fiscal action taken to 7 CFR 210.19 (c ) & 210.18 (p)... 57 139 7,923 0.50 3,962
disallow improper claims submitted by
SFAs, as determined through claims
processing, CRE reviews, and USDA audits.
Contracts awarded by SFAs to FSMCs.
SFAs adopt menu planning alternatives, 7 CFR 210.10(1).................. 0 0 0 0 * (26,261)
modify menu planning alternatives or
develop menu planning alternatives and
submit them to the State agency for
approval at SFA level. (Burden removed by
proposed rule.).
SFA documentation of corrective action 7 CFR 210.18 (k)(2).............. 6,983 1 6,983 6 41,898
taken on program disclosed by review or
audit.
--------------------------------------------------------------------------------------------------------
Total Recordkeeping for New burden..... ................................. 7,040 ............ 20,220 1.4871 30,070
--------------------------------------------------------------------------------------------------------
Total Existing Recordkeeping Burden for ................................. ............ ............ ............ ............ 8,893,821
0584-0006, Part 210.
--------------------------------------------------------------------------------------------------------
Total Recordkeeping Burden for 0584- ................................. ............ ............ ............ ............ 8,923,891
0006, Part 210 with proposed rule.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Indicates reduced burden hours due to changes in proposed DGA rule.
Page 4107
Summary of Burden (OMB 0584-New)
------------------------------------------------------------------------
------------------------------------------------------------------------
Total No. Respondents................................... 7,040
Average No. Responses Per Respondent.................... 3.87217
Total Annual Responses.................................. 27,260
Average Hours Per Response.............................. 2.70
Total Annual Burden Hours Requested..................... 11,880,415
Current OMB Inventory................................... 11,806,566
Difference.............................................. 73,849
------------------------------------------------------------------------
Reporting: Affected citation is 7 CFR 210.18(g) and 7 CFR 210.18(h)--Based on the comments received, this final rule changed the requirement to analyze two weeks' worth of menus to one week. Hence, average burden time per response is reduced from 40 hours to 33 hours for this citation.
Recordkeeping: 7 CFR 210.18 (k) and (p) and 210.20 (b)(6). As the record keeping time related to administrative review documents is reduced, average burden time per response is reduced from 2.3 hours to 2 hours. The current total estimated annual burden for OMB No. 0584-
0006 is now 11,880,415 hours, rather than the 11,882,408 indicated in the proposed rule.
E-Government Act Compliance
The Food and Nutrition Service is committed to complying with the E-Government Act, 2002 to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.
Regulatory Impact Analysis Summary
As required for all rules that have been designated significant by the Office of Management and Budget, a Regulatory Impact Analysis (RIA) was developed for this final rule. The following is a summary of the RIA. The complete RIA appears later in this document.
Need for Action
Under Section 9(a)(4) and Section 9(f)(1) of the NSLA, schools that participate in the NSLP or SBP must offer lunches and breakfasts that are consistent with the goals of the most recent Dietary Guidelines for Americans. School lunches must provide one-third of the Recommended Dietary Allowances (RDA) for protein, calcium, iron, and vitamins A and C, on average over the course of a week; school breakfasts must satisfy one-fourth of the RDAs for the same nutrients. Current nutrition requirements for school lunches and breakfasts are based on the 1995 Dietary Guidelines and the 1989 RDAs. School lunches and breakfasts were not updated when the 2000 Dietary Guidelines were issued because those recommendations did not require significant changes to the school meal patterns. The 2005 and 2010 Dietary Guidelines, provide more prescriptive and specific nutrition guidance than earlier releases, and require significant changes to school meal requirements.
Benefits
The United States Department of Agriculture's Food and Nutrition Service (FNS) contracted with the National Academies' Institute of Medicine (IOM) in 2008 to examine current NSLP and SBP nutrition requirements. IOM formed an expert committee tasked with comparing current school meal requirements to the 2005 Dietary Guidelines and to current Dietary Reference Intakes. The committee released its recommendations in late 2009 (IOM 2009).
In developing its recommendations, the IOM sought to address low intakes of fruits, vegetables, and whole grains among school-age children, and excessive intakes of sodium and discretionary calories from solid fats and added sugar. The final rule addresses these concerns by increasing the amount of fruit, the amount and the variety of vegetables, and the amount of whole grains offered each week to students who participate in the school meals programs. The rule also replaces higher fat fluid milk with low-fat and skim fluid milk in school meals. And it limits the levels of calories, sodium, and saturated fat in those meals.
A proposed rule, published by USDA in January 2011, made only small changes to the IOM recommendations. The final rule makes additional changes. These changes respond primarily to comments received from school and State officials, nutrition and child advocates, industry groups, parents of schoolchildren, and the general public. The most significant of these changes reduce the immediate and long-term costs of implementing the rule. Additional changes respond to recommendations contained in the 2010 Dietary Guidelines which were released after development of the proposed rule.
The linkage between poor diets and health problems such as childhood obesity are a matter of particular policy concern, given their significant social costs. One in every three children (31.7 percent) ages 2-19 is overweight or obese. Along with the effects on our children's health, childhood overweight and obesity imposes substantial economic costs, and the epidemic is associated with an estimated $3 billion in direct medical costs. Perhaps more significantly, obese children and adolescents are more likely to become obese as adults. In 2008, medical spending on adults that was attributed to obesity increased to an estimated $147 billion.
Because of the complexity of factors that contribute both to overall food consumption and to obesity, we are not able to define a level of disease or cost reduction that is attributable to the changes in meals expected to result from implementation of the rule. As the rule is projected to make substantial improvements in meals served to more than half of all school-aged children on an average school day, we judge that the likelihood is reasonable that the benefits of the rule exceed the costs, and that the final rule thus represents a cost-
effective means of conforming NSLP and SBP regulations to the statutory requirements for school meals. Beyond these changes a number of qualitative benefits--including alignment between Federal program benefits and national nutrition policy, improved confidence of parents and families in the nutritional quality of school meals, and the contribution that improved school meals can make to the overall school nutrition environment, are expected from the rule.
Costs
This final rule will increase the amount of fruits, vegetables, and whole grains offered to participants in the NSLP and SBP. The final rule will also limit certain fats and reduce calories and sodium in school meals. Because some foods that meet these requirements are more expensive than foods served in the school meal programs today, the food cost component of preparing and serving school meals will increase.
The biggest contributors to this increase are the costs of serving more vegetables and more fruit, and replacing refined grains with whole grains. We estimate that food costs will increase by 2.5 cents per lunch served, as compared with prior requirements, on initial implementation of the final rule requirements. There is no immediate increase in breakfast food costs. Two years after implementation, when the fruit requirement is phased in for breakfast, and when all grains served at breakfast and lunch must be whole grain rich, we estimate that food costs will increase by 5 cents per lunch served and 14 cents per breakfast, as compared with prior requirements.
Compliance with this rule is also likely to increase labor costs. Serving
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healthier school meals that are acceptable to students may require more on-site preparation, and less reliance on prepared foods. For purposes of this impact analysis, labor costs are assumed to grow so that they maintain a constant ratio with food costs, consistent with findings from a national study of school lunch and breakfast meal costs (USDA 2008). In practice, this suggests that food and labor costs may increase by nearly equal amounts relative to current costs.
The estimated overall costs of compliance are summarized below. Increased food and labor costs will be incurred by the local and State agencies that control school food service accounts. The rule will also increase the administrative costs incurred by the State agencies responsible for reviewing school district compliance with the new meal patterns. The analysis estimates that total costs may increase by $3.2 billion from fiscal year (FY) 2012 through fiscal year (FY) 2016, or roughly 8 percent when the rule's food group requirements are fully implemented in FY 2015. The estimated increases in food and labor costs are equivalent to about 10 cents for each reimbursable school lunch and about 27 cents for each reimbursable breakfast in FY 2015.
GRAPHIC TIFF OMITTED TR26JA12.000
Alternatives
One alternative to the final rule is to retain the proposed rule without change. The proposed rule closely followed IOM's recommendations. IOM developed its recommendations to encourage student consumption of foods recommended by the Dietary Guidelines in quantities designed to provide necessary nutrients without excess calories. The final rule still achieves that goal. Students will still be presented with choices from the food groups and vegetable subgroups recommended by the Dietary Guidelines. In that way, the final rule, like the proposed rule, will help children recognize and choose foods consistent with a healthy diet.
The most significant differences between the proposed and final rules are in the breakfast meal patterns, and those differences are largely a matter of timing. The final rule allows schools more time to phase-in key IOM recommendations on fruit and grains at breakfast. Once fully implemented, the most important difference between the final and proposed rule breakfast meal patterns is the elimination of a separate meat/meat alternate requirement. That change preserves current rules that allow the substitution of meat for grains at breakfast. It also responds to general public comments on cost, and on the need to preserve schools' flexibility to serve breakfast outside of a traditional cafeteria setting.
Even with these changes, and with the less significant changes to the proposed lunch standards, the final rule remains consistent with Dietary Guidelines recommendations. The added flexibility and reduced cost of the final rule relative to the proposed rule should increase schools' ability to comply with the new meal patterns. The final rule's less costly breakfast patterns will make it easier for schools to maintain or expand current breakfast programs, and may encourage other schools to adopt a breakfast program. These changes reduce the estimated 5-year cost of the final rule, relative to the proposed rule, by $2.9 billion.
A second alternative would implement the final rule's lunch meal pattern changes, but retain the proposed rule's breakfast meal pattern recommendations. Adopting all of the lunch provisions contained in the final rule, but retaining the proposed rule's breakfast provisions, would cost an estimated $5.9 billion over 5 years, or $2.7 billion more than the final rule. This alternative responds less effectively than the final rule to comments received by USDA from SFA and school administrators who expressed concerns about the cost of the proposed rule.
An alternative that implements the final rule's breakfast meal pattern changes, but retains the proposed rule's lunch meal pattern recommendations, would cost $3.4 billion over 5 years, about $180 million more than the final rule.
Regulatory Impact Analysis
Title: Nutrition Standards in the National School Lunch and School Breakfast Programs
Action
-
Nature: Final Rule.
-
Need: Section 103 of the Child Nutrition and WIC Reauthorization Act of 2004 inserted Section 9(a)(4) into the National School Lunch Act requiring the Secretary to promulgate rules revising nutrition requirements, based on the most recent Dietary Guidelines for Americans, that reflect specific recommendations, expressed in serving recommendations, for increased consumption of foods and food ingredients offered in school nutrition. This final rule amends Sections 210 and 220 of the regulations that govern the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). The rule implements many of the recommendations of the National Academies' Institute of Medicine (IOM). Under contract to the United States Department of Agriculture (USDA), IOM proposed changes to NSLP and SBP meal pattern requirements consistent with the 2005 Dietary Guidelines and IOM's Dietary Reference Intakes. The final rule advances the mission of the Food and Nutrition Service (FNS) to provide children access to food, a healthful diet, and nutrition education in a manner that promotes American agriculture and inspires public confidence.
-
Affected Parties: The programs affected by this rule are the NSLP and the SBP. The parties affected by this regulation are USDA's Food and Nutrition Service, State education agencies, local school food authorities, schools, students, and the food
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production, distribution and service industry.
Contents
Abbreviations
-
-
Background
-
Summary of Final Rule Meal Requirements
-
Cost/Benefit Assessment
-
Summary
1. Costs
2. Benefits
-
Food and Labor Costs
1. Baseline Cost Estimate
2. Final Rule Cost Estimate
3. Food Cost Drivers
4. Comparison of FNS and IOM Cost Estimates
-
Administrative Impact
-
Food Service Equipment
-
Comments on Proposed Rule
-
Uncertainties
-
Comparison of Proposed Rule and Final Rule Costs
-
Implementation of Final Rule--SFA Resources
-
-
Impact on Participation
-
Benefits
-
-
Alternatives
-
Accounting Statement
-
References
-
Appendix A
Abbreviations
The following abbreviations are used throughout this document:
CN Child Nutrition Programs
CPI Consumer Price Index
CRE Coordinated Review Effort
DRI Dietary Reference Intake
FNS Food and Nutrition Service
FY Fiscal Year
IOM Institute of Medicine
NSLA National School Lunch Act
NSLP National School Lunch Program
RDA Recommended Dietary Allowance
SA State Agency
SBP School Breakfast Program
SY School Year
SFA School Food Authority
SLBCS-II School Lunch and Breakfast Cost Study II
SMI USDA School Meals Initiative for Healthy Children
SNDA-III School Nutrition Dietary Assessment III
USDA United States Department of Agriculture
-
Background
The National School Lunch Program (NSLP) is available to over 50 million children each school day; an average of 31.7 million children per day ate a reimbursable lunch in fiscal year (FY) 2010. The School Breakfast Program (SBP) served an average of 11.7 million children daily. Schools that participate in the NSLP and SBP receive Federal reimbursement and USDA Foods (donated commodities) for lunches and breakfasts that meet program requirements. In exchange for this assistance schools serve meals at no cost or at reduced price to income-eligible children. Federal meal reimbursements and USDA Foods totaled $13.7 billion in FY 2010. FNS projections of the number of meals served and Federal program costs are summarized in Table 1.\1\
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\1\ The figures in Table 1 are USDA projections of the number of program meals served and the value of USDA reimbursements for those meals. These figures are baseline Federal government costs of the NSLP and the SBP estimated for the President's budget proposal for FY 2012. Elsewhere in this document, baseline costs refer to the cost to schools of serving meals that satisfy current program requirements.
Table 1--Projected Number of Meals Served and Total Federal Program Costs
In millions
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
NSLP:
--Lunches Served.............. 5,386.7 5,465.3 5,530.9 5,586.2 5,630.9 5,675.9
--Program Cost................ $11,822.8 $12,373.0 $12,499.8 $12,584.9 $12,679.3 $12,782.4
SBP:
--Breakfasts Served........... 2,090.9 2,187.0 2,252.7 2,297.7 2,332.2 2,367.2
--Program Cost................ $3,115.3 $3,337.7 $3,469.8 $3,556.7 $3,628.6 $3,721.0
----------------------------------------------------------------------------------------------------------------
In FY 2010, schools served 2.9 billion free NSLP lunches, 0.5 billion reduced price lunches, and 1.8 billion full price or ``paid'' lunches. Schools served 1.5 billion free breakfasts, 0.2 billion reduced price breakfasts, and 0.3 billion paid breakfasts. These figures do not include non-Federally reimbursable agrave la carte meals or other non-program foods.\2\
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\2\ USDA program data.
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Reimbursement rates for meals served under the current meal patterns are established by law and are adjusted annually for inflation.\3\ For school year (SY) 2011-2012, the Federal reimbursement for a free breakfast for schools in the contiguous United States and ``not in severe need'' is $1.51; the Federal reimbursement for a free lunch to schools in SFAs in the contiguous United States that served fewer than 60 percent free and reduced price lunches was $2.77. Schools that participate in the NSLP also receive USDA Foods for each free, reduced price, and paid lunch served, as provided by Section 6 of the Richard B. Russell National School Lunch Act (NSLA). Table 2 provides a breakdown of breakfast and lunch reimbursements in SY 2011-2012, including USDA Foods.
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\3\ Reimbursement rates and annual inflation adjustments are set by statute, not regulation. The final rule does not alter current reimbursement rates. Reimbursement rates for school lunch under current nutrition standards are specified in Sections 4(b)(2) and 11(a)(2) of the NSLA (42 U.S.C. 1753(b)(2) and 42 U.S.C. 1759a(a)(2)). Breakfast reimbursement rates are specified in Section 4(b)(1)(B) of the Child Nutrition Act (42 U.S.C. 1773(b)(1)(B)). Both lunch and breakfast reimbursement rates are subject to the annual inflation adjustment prescribed by Section 11(a)(3) of the NSLA (42 U.S.C. 1759a(a)(3)).
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Table 2--Federal Per-Meal Reimbursement and Minimum Value of USDA Foods, SY 2011-2012 \4\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Breakfast reimbursement Lunch reimbursement Minimum value of
------------------------------------------------------------------------ donated foods
-----------------
SFAs that serve SFAs that serve Additional
Schools in Schools not in at least 60% of fewer than 60% Federal
``severe need'' ``severe need'' lunches free or of lunches free assistance for
at reduced price or at reduced each NSLP lunch
price served
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contiguous States:
--Free.................................................... $1.80 $1.51 $2.79 $2.77 $0.2225
--Reduced Price........................................... 1.50 1.21 2.39 2.37 0.2225
--Paid................................................... 0.27 0.27 0.28 0.26 0.2225
Alaska:
--Free.................................................... 2.88 2.41 4.52 4.50 0.2225
--Reduced Price........................................... 2.58 2.11 4.12 4.10 0.2225
--Paid.................................................... 0.40 0.40 0.45 0.43 0.2225
Hawaii:
--Free.................................................... 2.10 1.76 3.27 3.25 0.2225
--Reduced Price........................................... 1.80 1.46 2.87 2.85 0.2225
--Paid.................................................... 0.30 0.30 0.33 0.31 0.2225
--------------------------------------------------------------------------------------------------------------------------------------------------------
Under Section 9(a)(4) and Section 9(f)(1) of the NSLA, schools that participate in the NSLP or SBP must offer lunches and breakfasts that are consistent with the goals of the most recent Dietary Guidelines for Americans. School lunches must provide one-third of the Recommended Dietary Allowances (RDA) for protein, calcium, iron, and vitamins A and C, on average over the course of a week; school breakfasts must satisfy one-fourth of the RDAs for the same nutrients. Current nutrition requirements for school lunches and breakfasts are based on the 1995 Dietary Guidelines and the 1989 RDAs. (School lunches and breakfasts were not updated when the 2000 Dietary Guidelines were issued because those recommendations did not require significant changes to the school meal patterns.) The 2005 and 2010 Dietary Guidelines, provide more prescriptive and specific nutrition guidance than earlier releases, and require significant changes to school meal requirements.
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\4\ School year 2011-2012 NSLP and SBP reimbursement rates, and the minimum value of donated foods, can be found in the July 20, 2011 Federal Register, Vol. 76, No. 139, pp. 43256 and 43258.
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The United States Department of Agriculture's Food and Nutrition Service (FNS) contracted with the National Academies' Institute of Medicine (IOM) in 2008 to examine current NSLP and SBP nutrition requirements. IOM formed an expert committee tasked with comparing current school meal requirements to the 2005 Dietary Guidelines and to current Dietary Reference Intakes. The committee released its recommendations in late 2009 (IOM 2009). For a summary discussion of the scientific standards that guided the committee, and the development of recommended targets for micro- and macronutrients, see the preamble to the proposed rule.\5\
---------------------------------------------------------------------------
\5\ Federal Register, Vol. 76, No. 9, pp. 2494-2570.
---------------------------------------------------------------------------
-
Summary of Final Rule Meal Requirements
The proposed rule, published in January 2011, made only minor changes to the IOM recommendations. This final rule makes more significant changes. These changes respond primarily to comments received from school and State officials, nutrition and child advocates, industry groups, parents of schoolchildren, and the general public. Additional changes respond to recommendations contained in the 2010 Dietary Guidelines which were released after development of the proposed rule. As a group, these changes reduce program costs relative to the proposed rule. The final rule is effective at the start of SY 2012-2013.
The final rule, like the proposed rule, makes the following changes to current NSLP and SBP meal standards:
Increases the amount and variety of fruits, vegetables, and whole grains;
Sets minimum and maximum levels of calories; and
Increases the focus on reducing the amounts of saturated fat and sodium provided in school meals.
Table 3 summarizes the breakfast and lunch meal standards with all provisions fully phased in. The following provisions are subject to a phased implementation; all other provisions are effective July 1, 2012:
Minimum breakfast fruit requirement is effective July 1, 2014,
Minimum breakfast grain requirement is effective July 1, 2013,
Intermediate sodium targets take effect on July 1, 2014 and July 1, 2017; the final sodium target (in Table 3) takes effect on July 1, 2022. (See Table 3a.)
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\6\ Table taken from preamble to the final rule.
Table 3--Summary of Final Rule Meal Requirements \6\
----------------------------------------------------------------------------------------------------------------
Breakfast meal pattern Lunch meal pattern
-----------------------------------------------------------------------------
Meal pattern Grades K-5 Grades 6-8 Grades 9-12
\a\ \a\ \a\ Grades K-5 Grades 6-8 Grades 9-12
----------------------------------------------------------------------------------------------------------------
Amount of food \b\ per week (minimum per day)
----------------------------------------------------------------------------------------------------------------
Fruits (cups) c d................. 5 (1) \e\ 5 (1) \e\ 5 (1) \e\ 2\1/2\ (\1/ 2\1/2\ (\1/ 5 (1)
2\) 2\)
Vegetables (cups) c d............. 0 0 0 3\3/4\ (\3/ 3\3/4\ (\3/ 5 (1)
4\) 4\)
Dark green \f\................ 0 0 0 \1/2\ \1/2\ \1/2\
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Red/Orange \f\................ 0 0 0 \3/4\ \3/4\ 1\1/4\
Beans/Peas (Legumes) \f\...... 0 0 0 \1/2\ \1/2\ \1/2\
Starchy \f\................... 0 0 0 \1/2\ \1/2\ \1/2\
Other f g..................... 0 0 0 \1/2\ \1/2\ \3/4\
Additional Veg to Reach Total \h\. 0 0 0 1 1 1\1/2\
Grains (oz eq) \i\................ 7-10 (1) 8-10 (1) 9-10 (1) 8-9 (1) 8-10 (1) 10-12 (2)
\j\ \j\ \j\
Means/Meat Alternates (oz eq)..... 0 k 0 k 0 k 8-10 (1) 9-10 (1) 10-12 (2)
Fluid milk (cups) \l\............. 5 (1) 5 (1) 5 (1) 5 (1) 5 (1) 5 (1)
----------------------------------------------------------------------------------------------------------------
Other Specifications: Daily Amount Based on the Average for a 5-Day Week
----------------------------------------------------------------------------------------------------------------
Min-max calories (kcal) m n o..... 350-500 400-500 450-600 550-650 600-700 750-850
Saturated fat (% of total The number of fruit and vegetable servings offered to students over the course of a week would double at breakfast and would rise substantially at lunch.
Schools would no longer be permitted to substitute between fruits and vegetables; each has its own requirement, ensuring that students are offered both fruits and vegetables every day.
A minimum number of vegetable servings would be required from each of 5 vegetable subgroups. The proposed rule included tomatoes in the ``other'' vegetable category, consistent with the 2005 Dietary Guidelines. The 2010 Dietary Guidelines and this final rule create a new ``red/orange'' group that combines tomatoes with all of the vegetables in the previous ``orange'' category.
Initially, half of grains offered to students would have to be whole grain rich. Two years after implementation, all grain products offered would have to be whole grain rich.
Schools would be required to substitute low fat and fat free milk for higher fat content milk. This is a separate requirement of the Healthy Hunger-Free Kids Act of 2010 (HHFKA).
Page 4112
Section 202 of HHFKA requires schools to offer a variety of fluid milk consistent with the recommendations of the most recent Dietary Guidelines for Americans. The 2010 Dietary Guidelines recommends fat free or low fat milk (1 percent milkfat) for children ages 2 and older.
Page 4113
GRAPHIC TIFF OMITTED TR26JA12.001
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-
Cost/Benefit Assessment
-
Summary
1. Costs
The final rule will more closely align school meal pattern requirements with the science-based recommendations of the 2005 and 2010 Dietary Guidelines. These changes will increase the amount of fruits, vegetables, and whole grains offered to participants in the NSLP and SBP.\7\ The final rule meal patterns will also limit certain fats and reduce calories and sodium in school meals. Because some foods that meet these requirements are more expensive than foods served in the school meal programs today, the food cost component of preparing and serving school meals will increase.
---------------------------------------------------------------------------
\7\ Although a separate rulemaking will propose changes to the meal patterns for preschoolers, this rule makes one significant change for that age/grade group. Section 202 of the Healthy Hunger-
Free Kids Act (Pub. L. 11-296) requires that schools offer a variety of milk, and that the milk offered comply with the recommendations of the most recent Dietary Guidelines. Consistent with that statutory requirement, this rule requires that schools serve only fat-free and low-fat milk in school lunches and breakfasts. That requirement applies to meals served by schools to children ages 3-4 as well as to older children in grades K-12. Because low-fat and fat-free milk tend to cost less than milk with higher fat content, that change will have a small negative effect on the cost of meals served to pre-K children. In addition to that change, the rule requires that schools serving meals to pre-K children adopt food-
based menu planning (FBMP) for consistency with the rule's FBMP requirement for meals served to older children. Because the switch to FBMP, where necessary, makes no substantive change to the pre-K meal requirements, our analysis assumes that this provision of the rule has no impact on the cost of serving meals to these children. More than \2/3\ of elementary schools used traditional or enhanced FBMP in SY 2004-2005 (USDA 2008, vol. 1, p. 36) and would need to make no changes at all to comply with the rule's pre-K menu planning requirement. For elementary schools that serve meals to pre-K children using a nutrient based menu planning system, the rule would require a change to FBMP. But that change is required for meals served to older children as well, and the administrative cost of that change is incorporated into the labor cost estimate of this analysis.
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The biggest contributors to this increase are the costs of serving more vegetables and more fruit, and replacing refined grains with whole grains. We estimate that food costs will increase by 2.5 cents per lunch served, as compared with prior requirements, on initial implementation of the final rule requirements. There is no immediate increase in breakfast food costs. Two years after implementation, when the fruit requirement is phased in for breakfast, and when all grains served at breakfast and lunch must be whole grain rich, we estimate that food costs will increase by 5 cents per lunch served and 14 cents per breakfast, as compared with prior requirements.\8\ In aggregate, we estimate that the rule may increase SFA food costs by $1.6 billion from FY 2012 through FY 2016. The annual increase in food costs relative to current standards is estimated to be about $0.6 billion by FY 2015.
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\8\ The 2.5 cent per lunch figure is an estimate for the end of FY 2012 (the start of SY 2012-2013). The higher numbers are for FY 2015.
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The rule sets sodium targets that will not be fully implemented in the five year period covered by this analysis. The rule's initial sodium targets take effect in SY 2014-2015. Our cost estimate does not include an explicit adjustment to meet those targets. The rule's initial sodium targets impose relatively modest reductions from levels observed in SY 2004-2005.\9\ Our estimate assumes that schools will meet the rule's initial targets as they reformulate recipes to meet the rule's food group requirements; that cost is contained in our estimate's food group and labor components.
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\9\ USDA 2008, volume 1, pp. 162 and 196.
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Compliance with this rule is likely to increase labor costs. Serving healthier school meals that are acceptable to students may require more on-site preparation, and less reliance on prepared foods. IOM did not estimate the overall required increase in labor costs to implement its recommended changes in meal requirements, but noted an analysis of data from some Minnesota school districts that showed that ``healthier'' meals had higher labor costs--principally because of increased use of on-site preparation.\10\.
---------------------------------------------------------------------------
\10\ IOM 2009, p. 148.
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For purposes of this impact analysis, labor costs are assumed to grow so that they maintain a constant ratio with food costs, consistent with findings from a national study of school lunch and breakfast meal costs (USDA 2008). In practice, this suggests that food and labor costs may increase by nearly equal amounts relative to current costs. Additional costs of compliance with the rule are discussed in subsections III C and III D of this analysis.\11\
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\11\ The SLBCS-II found that costs other than food and labor accounted for 9.9 percent of reported SFA costs. These costs include ``supplies, contract services, capital expenditures, indirect charges by the school district, etc.'' (USDA 2008, pp. 3-5).
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The estimated overall costs of compliance are summarized in Table 6. For purposes of this analysis, the rule is assumed to take effect on July 1, 2012, the start of school year (SY) 2012-2013. The additional requirement to offer only whole grain rich grain products is assumed to begin in SY 2014-2015.
The analysis estimates that total costs may increase by $3.2 billion through fiscal year (FY) 2016, or roughly 8 percent when the rule's food group requirements are fully implemented in FY 2015. The estimated increases in food and labor costs are equivalent to about 10 cents for each reimbursable school lunch and about 27 cents for each reimbursable breakfast in FY 2015. These costs would be incurred by the local and State agencies that control school food service accounts.
Table 6--Projected Cost of Final Rule
Dollars in Millions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year
----------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Food Costs....................... $20.8 $135.4 $178.7 $612.8 $642.8 $1,590.5
Labor Costs...................... 20.7 141.9 174.4 598.0 627.2 1,562.3
State Agency Administrative Costs 0.1 8.9 9.1 9.4 9.7 37.1
----------------------------------------------------------------------------------------------------------------------
Total........................ $41.6 $286.2 $362.1 $1,220.2 $1,279.7 $3,189.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent Change Over Baseline..... 2.0% 2.0% 2.5% 8.0% 8.1% 5.2%
--------------------------------------------------------------------------------------------------------------------------------------------------------
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2. Benefits
The primary benefit of this rule is to align the regulations with the requirements placed on schools under NSLA to ensure that meals are consistent with the goals of the most recent Dietary Guidelines and the Dietary Reference Intakes. In increasing access to children for such meals it will address key inconsistencies between the diets of school children and Dietary Guidelines by (1) Increasing servings of fruits and vegetables, (2) replacing refined-grain foods with whole-grain rich foods, and (3) replacing higher-fat dairy products with low-fat varieties. It also results in a number of additional benefits, including alignment between Federal program benefits and national nutrition policy, improved confidence by parents and families in the nutritional quality of school meals, and the contribution that improved school meals can make to the overall school nutrition environment.
-
Food and Labor Costs
1. Baseline Cost Estimate
Food Costs: The analysis begins with an assessment of the cost of purchasing food to meet the rule's food-based meal requirements. The estimated increase in food cost is the difference between the cost of serving the quantities and types of foods used to meet current requirements and the cost of serving the quantities and types of foods outlined in the rule.
Figure 1: Baseline Food Cost Estimate Under Current Requirements and Practices
Objective: Use price and quantity data collected from schools to compute the total cost of NSLP and SBP meals served under current program rules.
GRAPHIC TIFF OMITTED TR26JA12.003
The data sources that we use in this analysis, and their contribution to our food cost estimate, are summarized in Table 7.
Table 7--Summary of Food Cost Estimate Data Sources
----------------------------------------------------------------------------------------------------------------
Data source Contribution to food cost estimate
----------------------------------------------------------------------------------------------------------------
School Nutrition Dietary Assessment Study Food codes and descriptions and food quantities served to
III (USDA 2007). students in SY 2004-05. Prices are applied to these food
quantities to determine baseline food costs.
Meals served, quantities served, and quantities offered
(``offer weights'') by food type, by school type (elementary,
middle, and high). Used to determine students' inclinations to
take an offered menu item (``take rates''). Take rates are
applied to the types and quantities of food that must be offered
to students under the rule to estimate quantities served.
School Lunch and Breakfast Cost Study II Food codes and descriptions, number of servings, average
(USDA 2008). gram weight per serving, total grams served, cost per serving.
These are used, along with other data sources, to estimate the
cost per cup or ounce equivalent of each of the rule's required
food types and combination entreacutees.
Also used to estimate the relative cost of food group
subtypes: whole versus refined grain products, and the various
vegetable varieties with separate serving requirements under the
rule.
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USDA Child Nutrition Food Labels............ USDA food labels contain information on food group
crediting for child nutrition program administrators. USDA
maintains a collection of food labels for thousands of
commercially-prepared entrees. Food group crediting information
is used to determine the cup or ounce equivalents of meat, meat
alternate, grain, vegetable, and fruit that may be credited by
schools for a particular entreacutee.
Food group crediting is used to determine how much of the
rule's food group requirements are satisfied by prepared foods
offered by schools, and how much remains to be met with single
food or non-entreacutee items.
USDA, National Food Service Management The recipe database is used to supplement the information
Institute, Recipe Database. from USDA food labels. The recipe records, like the food labels,
contain food group crediting information used to determine how
much of the rule's food group requirements are satisfied by
particular food items.
USDA Food Buying Guide...................... The Food Buying Guide also contains information on food
group crediting. The crediting information for various grain
products is used in this estimate.
USDA, Agricultural Research Service, The SR22 is used to supplement the other food group
National Nutrient Database for Standard crediting resources listed above. SR22 information was used to
Reference, SR22. estimate food credits for food items without a CN food label, or
a USDA recipe. SR22 provides protein and fiber content per given
volume of a particular food. That information is used to estimate
the food group credits for foods that are similar, but not
identical, to foods with CN labels or USDA recipe records.
SR22 data is also used to compute the proper conversion
factor from grams to cups for various school foods.
USDA, Agricultural Research Service, Used to determine the relative share of vegetables in
MyPyramid Equivalents Database for USDA combination foods and entreacutees by each of the varieties
Food Codes, Version 1.0. with separate serving requirements under the rule.
School Nutrition Dietary Assessment Study II Average food group crediting information for school salad
(USDA 2001). bars is taken from SNDA-II.
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We first totaled the value of food served by food group, as reported by schools in a national school nutrition assessment (SNDA-
III), separately for lunch and breakfast. SNDA-III provides an estimate of the amount or quantity (in grams) of foods offered and served in the school lunch and breakfast programs for SY 2004-2005, based on a nationally representative sample of all participating public schools.\12\ SNDA-III provides quantities of both minimally processed single foods (such as whole fruit, fruit juice, milk, and vegetables) and combination foods or entrees (such as beef stew, macaroni and cheese, and breakfast burritos). We summed the quantities of foods served to generate total gram weights for each single food and combination food category. We then divided these sums by SNDA-III's count of total meals served to generate average per-meal gram amounts for the same broad food categories.
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\12\ If patterns of student selection of foods are different in private schools than they are in public schools, then the reliance on public school data alone may bias our results. However, enrollment in public schools accounts for 97 percent of total enrollment in NSLP participating schools. Public schools account for more than 98 percent of total enrollment in SBP participating schools (USDA program data). Because public schools account for such a large share of total enrollment by participating schools, we expect that any differences in selection patterns between public and private schools would have little impact on our analysis.
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We estimated the cost per gram within each food category using detailed price and quantity information collected as part of another nationally representative sample of public schools in SY 2005-2006 (SLBCS-II). SLBCS-II provides information on the number of servings, the average gram weight per serving, total grams served, and the cost per serving for a comprehensive list of single foods and combination entrees. The SLBCS-II dataset provides sufficient information to estimate weighted average prices for the same broad food categories identified in SNDA-III.
We computed preliminary per-meal baseline costs for breakfast and lunch as the product of the food quantities reported in SNDA-III and the unit prices computed from the SLBCS-II. Because the food prices available for this analysis are from SY 2005-2006, we inflated our estimates by the actual and projected increase in prices since that time. We computed a set of food group inflators weighted by SNDA-III's relative mix of foods served by schools in SY 2004-2005. We used the Consumer Price Index (CPI-U) for the specific food items in our weighted group averages. Because the mix of foods served in school breakfasts differs from the mix served at lunch (the grain group, for example, is weighted more heavily with bread at lunch, and more heavily with cereal at breakfast) we computed two sets of food group inflators. Through August 2011, these inflators are constructed with actual CPI values.\13\ For years after 2011, the food group inflators rely on historic 7-year averages.
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\13\ We used index values for the 11 months ending in August 2011 to estimate average index values for all of FY 2011.
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Our proposed rule analysis computed 5-year historic averages through FY 2009. Price inflation for most major food groups in the two years since FY 2009 was lower than inflation in the 5 years ending in September 2009. For our final rule cost analysis we use a 7-year average to project future prices. This 7-year average adds the most recent 2 years of price data to the 5 years used in the proposed rule methodology. We use a 7-year average, retaining all of the 5 years used in the proposed rule methodology, to avoid giving too much weight to the reduction in price inflation observed during the most recent two years, a period of weak economic growth and consumer demand. Use of a 5-year average ending in FY 2011 would produce a lower cost estimate than the one presented here.\14\
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\14\ If, instead, we entirely discount the most recent two years of inflation, and instead used a 5-year average ending in FY 2009 to project future food prices, then our cost estimate would be higher. That scenario is discussed in Section F.
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Food group inflation factors are summarized in Table 8.
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Table 8--Food Group Price Inflators \15\
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7-year
Cumulative Historic
increase 2006 average (for
to 2011 years after
(percent) 2011)
(percent)
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Lunch inflators:
--Milk.............................. 12.33 2.03
--Meat or Meat Alternate............ 17.54 2.75
--Fruit Juice....................... 19.18 2.82
--Fruit (non-juice)................. 12.39 2.82
--Vegetables........................ 18.52 3.97
--Refined and Whole Grains.......... 25.16 3.85
--Combination Foods/Entrees......... 15.62 2.67
Breakfast inflators:
--Milk.............................. 12.33 2.03
--Meat or Meat Alternate............ 16.52 2.63
--Fruit Juice....................... 19.18 2.82
--Fruit (non-juice)................. 10.38 2.66
--Vegetables........................ 19.81 4.83
--Refined and Whole Grains.......... 17.39 2.50
--Combination Foods/Entrees......... 15.62 2.67
------------------------------------------------------------------------
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\15\ Computed by USDA from CPI figures from the Bureau of Labor Statistics. The figures for combination foods are based on the CPI values for the Food at Home series.
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The value of USDA Foods and the value of cash in lieu of such food donations enters into both our baseline and final rule cost estimates; we treat them as food ``costs'' in both estimates. This is the same approach used in the SLBCS-II to estimate the cost of preparing and serving school meals.
We assume in the analysis that the types of commodities offered to schools in future years may satisfy the food group requirements of the final rule as effectively as they do now. USDA's annual commodity purchase plan, developed by FNS in consultation with the Agricultural Marketing Service and the Farm Service Agency, is driven by school demand for particular products as well as by current prices, available funds, and the variable nature of agricultural surpluses.\16\
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\16\ For more information see http://www.commodityfoods.usda.gov/fd_purchasing.htm.
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In large measure, USDA Foods offered to schools are already well positioned to support the final rule's requirements. In recent years USDA has purchased relatively more canned foods and meats with reduced levels of fat, sodium, and sugar for school distribution. As products such as butter and shortening have been removed from the USDA Foods available to schools, new products such as whole grain pasta have been added. The rule is likely to move school demand towards a greater emphasis on these new offerings as schools introduce new menus. We assume that the contribution of USDA Foods to the cost of preparing school meals will not change after implementation of the rule.
The final step in constructing the baseline cost estimate was to multiply the per-meal cost estimates by the projected number of breakfasts and lunches served through our 5-year forecast period. Projected growth in the number of NSLP and SBP meals served in the absence of the rule is shown in Table 9.
Table 9--Projected Baseline Growth in Reimbursable Meals Served \17\
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Fiscal year
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2011 2012 2013 2014 2015 2016
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Lunches:
Meals (billions).......................... 5.4 5.5 5.5 5.6 5.6 5.7
Percent change............................ 2.4% 1.5% 1.2% 1.0% 0.8% 0.8%
Breakfasts:
Meals (billions).......................... 2.1 2.2 2.3 2.3 2.3 2.4
Percent change............................ 6.8% 4.6% 3.0% 2.0% 1.5% 1.5%
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\17\ The projected growth above in meals served through FY 2011 reflects the difference between FNS estimates for FY 2011 prepared for the 2012 President's Budget and actual meals served in FY 2010. The remaining percentages are FNS projections prepared for the FY 2012 President's Budget.
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Appendix A contains a set of tables that detail the calculations described above. The appendix tables present baseline and final rule food prices, food quantities, and meals served for each year from FY 2012 through FY 2016.
Note that our baseline per-meal cost estimates are averages. They reflect the variety of meals served across all NSLP and SBP participating schools. Some schools may be much closer than others to serving meals that meet the requirements of the rule, and the costs of compliance with the rule may therefore vary at the school level. The use of an average baseline cost estimate is appropriate, however, for estimating the aggregate cost of compliance across all schools.
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2. Final Rule Cost Estimate
Food Costs: Both our baseline and final rule food cost estimates rely on quantity and price information reported by schools in SNDA-III and SLBCS-II. These datasets contain detailed information on the quantity, variety, and unit prices of foods offered and served to students. Many of the records on these datasets describe single item foods that are served alone or are used in school recipes. But other records describe prepared or heat-and-serve entrees and other ``combination foods.'' As described above, we developed our baseline cost estimate by multiplying the gram weight of food items served by their cost per gram. For both single item foods and combination foods, prices and quantities are given in SLBCS-II and SNDA-III; our baseline cost estimate required limited processing of these datasets.
For the final rule cost estimate we continue to rely on prices per gram from SLBCS-II. But for quantities served we need to look to the requirements of the rule rather than to SNDA-III. We use the midpoints of the rule's food group requirements, expressed in servings rather than grams, to estimate the quantities of food that schools must purchase.\18\ For single foods, the number of program-creditable food group servings per gram is a function of the foods themselves (density and fat content, for example) and whether the foods (primarily vegetables) are served raw or cooked. We relied on several sources for this information, including the USDA Food Buying Guide and the National Nutrient Database for Standard Reference. For combination foods we relied on the USDA's child nutrition food labels and the USDA's recipe database; these sources contain the result of analyses performed by food manufacturers and USDA. Because the sources for program-creditable servings per gram are different for single foods and combination foods, we need to separate single foods from combination foods and estimate their costs separately.
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\18\ The rule's food group requirements are expressed in servings per week. Because we are developing an average cost per meal we divide these weekly figures by 5. Some of the rule's requirements are given in ranges of servings, such as 10-12 meat or meat alternate servings (for lunches) per high school child per week (see Table 3). FNS's primary cost estimate targets the midpoints of the rule's food group requirements where requirements are expressed as ranges.
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A basic assumption underlying the estimated cost of reimbursable meals under the final rule is that schools will continue to serve entrees that have proven popular with students on current school menus. Some of these entrees may be modified to replace a portion of their refined grains with whole grains, or starchy vegetables with other vegetable varieties. But, because pizza, burritos, and salad bars are successful items today, this impact analysis assumes that they will remain on school menus after implementation of the rule.
Figure 2: Food Costs Under Final Rule
Objective: Use price data collected from schools and new meal pattern requirements to estimate the cost of serving meals under the final rule.
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We separated combination foods from single food items in the SNDA-
III and SLBCS-II datasets.\19\ Using USDA food codes and the descriptive food labels found on the records of both datasets, we divided the combination foods into sub-categories such as chili, beef dishes, lasagna, chicken sandwiches, macaroni and cheese, and peanut butter and jelly. Recognizing that there is variation within these groups, we selected a sample of the most commonly served varieties, and retrieved paper food labels with matching USDA food codes from USDA's Child Nutrition food label collection (CN labels).
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\19\ As with the baseline estimate, we prepared separate estimates of meals served under the final rule for breakfast and lunch.
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CN labels are affixed to many of the commercially prepared and processed foods purchased by school food authorities. The labels provide information on serving size and the number of cup and ounce equivalents of meat, meat alternate (such as cheese, eggs, legumes, or soy protein), grains, or vegetables that schools may credit toward current reimbursable meal pattern requirements.\20\ We averaged the crediting information for several varieties within each combination food category to generate representative food credits for the category.
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\20\ Many large commercial food vendors prepare their own CN labels to help market their foods to SFAs. Other labels are developed by USDA.
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CN labels are not available for some combination foods. However, foods with similar descriptions are often found in USDA's recipe database. The USDA recipe database provides the same type of food crediting information found on CN labels. We used the crediting information from the recipe database when CN labels were unavailable for sampled combination foods. FNS averaged the crediting information from labels and recipes when both sources returned data for particular combination foods.
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CN labels and USDA recipes do not indicate whether creditable grain servings are refined or whole grains, nor do they specify what fraction of creditable vegetable servings are satisfied by dark green, deep yellow, starchy, or other varieties. But, USDA's MyPyramid database breaks down total grain and vegetable content for given foods into those subcategories or varieties. We matched USDA food codes for the sample of combination foods against the MyPyramid database in order to estimate relative shares of whole and refined grains, and vegetable varieties for the combination foods served.\21\
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\21\ Because CN crediting values and MyPyramid equivalents are not the same, information from the MyPyramid database was used only to determine relative shares of vegetable or grain subtypes. FNS also used the MyPyramid database to determine if particular combination foods contained any dark green vegetables, orange vegetables, etc.
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With these average food credits, and with unit prices from the SLBCS-II, we estimated a price per creditable ounce or cup equivalent of meat, grain, vegetable, and fruit for each combination food served. We then computed a weighted average price per food credit for combination foods as a whole, using the SLBCS-II's relative gram weight of each item. Finally, we multiplied the average price and food credit per gram by SNDA-III's total gram weight of combination foods served per reimbursable meal at the elementary, middle, and high school levels.
These steps generate a price, and a set of food group credits, contributed by combination foods to the average elementary, middle, and high school lunch and breakfast.
We subtracted the food credits accrued by combination foods from a set of school-level food group targets that represent the requirements of the rule after adjustment for student selection. Under the final rule, as under current program rules, students need not take all of the food items offered to them in order for their lunch or breakfast to qualify for Federal reimbursement. The difference between what is offered to students and what they select is the ``take rate.'' We computed average take rates by school level for milk, meat/meat alternate, fruit, vegetables, and grains from SNDA-III and applied those rates, unchanged, to the final rule's food group requirements from Tables 4 and 5.\22\
These adjusted requirements are estimates of what elementary, middle, and high schools are likely to serve to students after implementation of the rule. The unadjusted requirements are what schools must offer to their students to be in compliance.
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\22\ Our take rates are weighted averages computed from all school level records on SNDA-III. SNDA data allows the computation of take rates for single food items and combination entrees. We use estimates of the component foods contained in combination entrees to estimate overall take rates for each of the final rule's food groups, whether those foods are served separately or as part of a combination entreacutee. We cap individual school take rates for any food group at 100%. We assume that these take rates remain unchanged after implementation of the rule for two primary reasons: lack of an evidence-based alternative, and to avoid understating the costs of the rule.
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The take-rate adjusted requirements not satisfied by combination foods must be met with single offerings of meat or meat alternates, grains, fruit, vegetables, and milk. We computed weighted average prices for these broad food groups, and for dark green, deep yellow and other vegetable varieties, from the SLBCS-II dataset. We estimated the cost of whole grains relative to all grain and bread products with information contained in a food price database developed by USDA's Center for Nutrition Policy and Promotion. The prices per unit of these foods, multiplied by the balance of the rule's requirements that are not met by combination foods, give a total cost per meal for single item foods.
Note that this analytic framework uses an identical set of combination foods in the baseline and final rule cost estimates; we do not attempt to construct a reformulated set of combination foods to satisfy the rule's requirements for whole grains or dark green, yellow, and other vegetable varieties. The deficits in whole grains and in dark green and other vegetable varieties are satisfied entirely through increased offerings of single foods.\23\ As a result, the cost per unit of combination foods served is unchanged in the baseline and under the final rule, and the entire cost of meeting the new rule's requirements is reflected in the cost of single foods.
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\23\ The amount of refined grains in combination foods in excess of final rule requirements are offset by subtracting the value of an equivalent amount of single food refined grain products from the rule's per-meal cost.
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In practice, we expect manufacturers will offer reformulated versions of popular combination foods, and that schools will incorporate more whole grains and vegetable varieties in their entree recipes, so that students will not be expected to consume all of their whole grains and healthier vegetables as single foods. Implicit in this modeling approach is the assumption that the cost of serving more whole grains and vegetable varieties is similar, whether those foods are part of combination recipes or single items. The reasoning behind this assumption is that the likely effect of these reformulations on the cost of combination foods is uncertain. While some varieties of combination foods may help schools meet the new requirements at lower cost than single foods, others may be developed to provide greater student acceptance or ease of preparation than single items. These products could command higher prices. We thus assume that, on average, these two propensities combine to result in no net difference in the cost of whole grains and vegetable varieties as combination foods or as single items.\24\
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\24\ Note that we are only referring to the incremental cost of foods above the quantities already purchased by schools (singly or in combination items), not the overall cost of all foods in the final rule's meal patterns.
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The final rule requires that no more than half of the fruit requirement be met with fruit juice because juice lacks fiber and may contribute to excessive calorie consumption. Schools may therefore find it necessary to offer more whole or cut-up fruit relative to fruit juice than they offer today. For this reason, this cost estimate assumes that the rule's entire increase in the fruit group requirement will be satisfied with additional servings of whole or cut-up fruit; the estimate assumes that schools will serve no more fruit juice to students under the final rule than they serve today. As a result, there is no added cost for fruit juice in Table 11.
The methodology outlined above generates a set of per-meal cost estimates for breakfast and lunch under the requirements of the final rule. Like our baseline estimates, these are multiplied by weighted food group inflation factors, then multiplied by the projected number of meals served to generate projected aggregate costs through FY 2016.
Labor costs: Compliance with this rule is also likely to increase labor costs because of the need for more on-site preparation, and less reliance on prepared foods, than current requirements. The challenge faced by schools in reducing the sodium content of school meals, one element of both the IOM recommendations and this rule, illustrates the need for additional labor hours by school kitchen staff.
More local food preparation and the use of a greater proportion of fresh foods and frozen vegetables could result in acceptable school meals with a lower sodium content. However, many food production kitchens are designed to heat and hold food items rather than to prepare them.\25\
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\25\ IOM 2009, p. 110.
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In addition to the implied need for new kitchen equipment, IOM notes that
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``switching from heat and hold to food production requires the addition of staff. Those districts that estimate meals per labor hour (MPLH) to monitor productivity may see an unfavorable decrease in their numbers.'' \26\
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\26\ Ibid.
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If schools choose to prepare more meals on-site to meet new requirements, IOM sees the need for ``greater managerial skill,'' and ``more skilled labor and/or training.'' \27\ At the same time, lesser reliance on prepared foods offers some opportunity for offsetting savings.
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\27\ IOM 2009, p. 148.
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An empirical analysis of data from 330 Minnesota school districts found that ``healthier'' meals had higher labor costs (for on-site preparation) but lower costs for processed foods (Wagner, et al., 2007). The authors call for funds to be made available for labor training and kitchen upgrades. They suggest that higher federal meal reimbursement rates may be unnecessary (under the assumption that the meals do not cost more to produce because lower food costs offset higher labor costs).\28\
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\28\ Ibid.
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The effect of the final rule's meal requirements on the mix of food and labor costs is unclear. The rule requires schools to offer relatively more foods with higher unit costs than schools now offer to their students. The rule requires, for example, that schools replace many of their refined grain foods with whole grain substitutes. Because prices for whole grain products tend to exceed the prices of similar products made with refined grains, savings from eliminating a particular refined grain product is more than offset by the cost of its whole grain counterpart. Where pre-baked whole grain foods are simply substituted for pre-baked refined grain products, or whole grain flour is substituted for refined flour in existing recipes, the added cost of serving these new foods is strictly a food cost; labor costs may not increase at all.
But the rule includes other provisions that are likely to increase both food and labor costs. One is the requirement that schools offer more vegetables, from a variety of vegetable subgroups, than schools tend to offer today. Some schools may choose to meet those targets by offering vegetables in school salad bars. It is possible that the cost of installing and maintaining a salad bar could increase the overall cost of school meal production. Similarly, to meet the rule's calorie and fat requirements, schools may find it necessary to rely less on pre-purchased entrees, and hire more central kitchen or cafeteria workers to prepare healthier meals from scratch.
SLBCS-II data show that the cost of purchasing food accounted for 45.6 percent of SFA reported costs, on average. Labor accounted for an additional 44.5 percent of reported SFA costs. The remaining 9.9 percent of reported costs are attributable to ``supplies, contract services, capital expenditures, indirect charges by the school district, etc.'' \29\ Labor costs are broadly defined in the SLBCS-II to include the costs of foodservice administrative tasks such as planning, budgeting, and management, and foodservice equipment maintenance.\30\ Some of these tasks are detailed in section III.C.1. These tasks include training food preparation staff, servers, and cashiers. They also include the work of individuals who plan menus and prepare recipes.
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\29\ USDA 2008, p. 3-5
\30\ USDA 2008, p. 3-9
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For purposes of this analysis, we assume that the relative contributions of food and labor to the total cost of preparing reimbursable school meals will remain fixed at the levels observed in the SLBCS-II. As a result, we estimate that labor costs increase on a nearly dollar for dollar basis with estimated food costs.\31\ We estimate that the rule may increase schools' food costs by about 8 percent by FY 2015. Although labor costs relative to food costs have held steady over many years,\32\ this approach may overstate labor costs. We explore the potential effect of labor costs growing at a somewhat lower rate in section F.
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\31\ The estimates contained in this analysis assume labor costs equal to food costs multiplied by (44.5/45.6), the ratio of reported labor to food costs in the SLBCS-II.
\32\ Labor costs as a share of the total costs of preparing school meals were found to be 43.8 percent in FNS's SY 1992-1993 School Lunch and Breakfast Cost Study I, and 44.5 percent in the SY 2005-2006 School Lunch and Breakfast Cost Study II (a statistically insignificant difference). Food costs as a percent of total costs grew slightly from 45.6 percent in SY 1992-1993 to 48.3 percent in SY 2005-2006. But this change, too, is statistically insignificant. USDA 2008, p. 9-2.
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Food and Labor Cost Summary: Table 10 summarizes the estimated increase in food and labor costs associated with the final rule through FY 2016.\33\ (The final two rows of Table 10 also include the estimated administrative costs to State agencies.) Overall, we estimate that the rule may increase the total cost of reimbursable school meals by $3.2 billion over five years; the cost of food would increase by $1.6 billion, and the cost of labor would increase by $1.6 billion. In the first year of full implementation (FY 2015),\34\ the combined cost of food and labor is expected to be about 8 percent higher under the final rule than under existing requirements. The estimated additional cost of food for a reimbursable lunch increases from about 2.5 cents in FY 2012 to 5.4 cents in FY 2016; food costs for a reimbursable breakfast grow to 14.1 cents in FY 2016. These per meal increases roughly double--to 11 cents and 28 cents by FY 2016--when the estimated cost of labor is included.
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\33\ The new standards will take effect at the start of SY 2012-
2013. Because the 2012-2013 school year begins in July 2012, there is just a small cost in Federal FY 2012. Note that these figures assume no effect on student participation. We discuss the possible effects of the rule on student participation in section III.F. We examine the effect of alternate participation assumptions in section F.
\34\ Two years after implementation of the rule, in SY 2014-
2015, all grains servings offered to meet meal pattern requirements must be whole grain rich. The new minimum fruit requirement at breakfast also takes effect in SY 2014-2015; this is the last of the rule's major changes to the breakfast meal patterns.
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3. Food Cost Drivers
Table 11 provides a breakdown in the estimated food costs of the final rule by seven broad food categories. Consistent with the Dietary Guidelines, the rule will require schools to offer more fruits, vegetables, and whole grains than they currently offer today.
Changes in school demand also impact food producers. The figures in Table 11 indicate that the economic costs and benefits of the rule may not be shared equally by producer groups.
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Milk: This impact analysis estimates that the amount of milk served to students will not change after implementation of the rule.\35\ However, the rule does require schools to serve only low-fat or fat-
free milk in the school meals programs.\36\ Because the per-unit cost of low-fat and fat-free milk is less than the average per-unit cost of the mix of milk products now served in schools, the estimated cost of serving milk under the rule is reduced. Some comments on the proposed rule noted that schools had already made the transition to fat-free and low-fat milk, and that there would be no savings as a result of this provision. We discuss this and other comments in Section E.
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\35\ See section F. for an examination of the cost implications of altering this assumption.
\36\ This provision is required by Section 202 of the HHFKA and has already taken effect. Through implementation memo SP-29--2011, dated April 14, 2011, schools were required to offer a variety of milk that meets Dietary Guidelines recommendations. The USDA implementation memo clarifies that schools must offer at least two fat-free or low-fat (1 percent milkfat) varieties effective with the start of SY 2011-2012. This final rule includes the additional requirement that flavored milk be offered in fat-free form only.
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Fruit Juice: The estimate assumes that schools will satisfy the rule's increased fruit requirement entirely through additional servings of whole or cut-up fruit, not fruit juice. We expect that schools will have to encourage consumption of additional whole or cut-up fruit in order to satisfy this requirement. The cost estimate assumes that the amount of fruit juice served to students will not increase above the levels assumed in the baseline estimate. As a result, the relative share of whole or cut-up fruit to fruit juice servings offered to (and taken by) students will increase after implementation of the rule.
Grains: The rule initially requires that half of grains offered to students be whole grain rich. Beginning in SY 2014-2015, the rule requires that all grains served be whole grain rich. This transition is reflected in the large changes in both the whole grain and refined grain figures between FY 2014 and FY 2016.
This analysis estimates that the total amount of grain products served will be less after implementation of the final rule than the amount served in our baseline (the per-meal amount taken by students according to SNDA-III). The effect of this net reduction in total grains served is reflected in figures for fiscal years 2012 to 2014, where the cost decrease for refined grains is substantially greater than the cost increase for whole grains. Throughout the estimation period, we assume that the unit cost of whole grains exceeds the unit cost of comparable refined grain products. Despite this, the net reduction in total grain products served through FY 2014 more than offsets the increased unit cost of whole grains. After FY 2014, when the rule's 100 percent whole grain rich requirement takes effect, the added cost of serving higher priced whole grain products about equals the savings from a reduction in grains products served.
4. Comparison of FNS and IOM Cost Estimates
IOM prepared its own food cost estimate for its recommended meal pattern changes. The methodology behind that estimate is discussed in School Meals: Building Blocks for Healthy Children (IOM 2009). While IOM relies on SLBCS-II and SNDA-III, the same primary sources used by FNS, to estimate unit costs and baseline quantities served, its methodology differs from ours in several ways.
Perhaps the most significant difference is in the establishment of baselines. We used all records on the SNDA-III dataset to estimate baseline quantities of food served and student take rates. IOM limited its analysis to a set of six representative baseline menus selected from the SNDA-III dataset. IOM selected one 5-day lunch menu and one 5-
day breakfast menu for each of three age-grade groups (elementary, middle, and high school) at random from a subset that excluded practices identified as uncommon.\37\ The goal of both methodologies is to estimate a baseline food cost representative of all schools that participate in the Federal school meals programs. We have not attempted to isolate and quantify the effect of this methodological difference on our cost estimates. Another important difference between the IOM and FNS estimates is our use of different student take rates in preparing food cost estimates for the recommended meal patterns. We computed take rates from SNDA-III and applied them, largely unchanged, to the food group serving requirements of the final rule.\38\ We do not increase take rates in anticipation of greater demand for better meals, nor reduce take rates in anticipation of a decline in student acceptance of new vegetable varieties, whole grains, or low fat milk relative to the starchy
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vegetables, refined grains, and higher fat milk on current school menus.\39\ IOM modified observed take rates from SNDA-III where the expert judgment of committee members and school meal practitioners deemed it appropriate.\40\ Additional differences in FNS and IOM take rates can be attributed to IOM's use of six representative school menus in its analysis; IOM computed its take rates from those schools alone. FNS take rates are computed from all schools on the SNDA-III dataset.
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\37\ IOM excluded menus that did not offer a reduced fat or fat free unflavored milk, offered only one entree, offered 15 or more entree options, offered juice drinks rather than 100% fruit juice, or offered dessert every day. IOM 2009, p. 307
\38\ FNS caps individual school take rates at the food group category to 100 percent. We also attempt to include the contribution of component foods in combination entrees in our estimates of take rates for the major food groups (fruit, milk, vegetables, grains, and meat/meat alternates).
\39\ As discussed elsewhere in this impact analysis, our take rate assumptions are intended to avoid understating the cost of the rule given the uncertain response of both students and school foodservice workers to the new meal pattern requirements. We test the cost implications of adopting different take rates in section F.
\40\ IOM 2009, p. 136.
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-
Administrative Impact
1. School Food Authorities (SFA)
An initial increase in administrative staff time for training and implementation is anticipated at the SFA level. Most of these impacts will be limited to the transition to the rule's new requirements as a result of:
Training staff on the required components of reimbursable lunches and breakfasts;
Changes to menus and portion size may necessitate revisions to menus and recipes currently used by SFAs;
Changes to food purchasing and commodity food use (for example, increasing purchases for fresh fruit and vegetables, whole grain products, and lower sodium products), as well as changes in the methods of preparation of food, may be necessary for many schools;
Changes in SFA financial structure, as SFAs may need to review finances in order to determine how to deal with any cost changes associated with the rule's requirements;
Forging new relationships with local farmers to supply fresh produce appealing to the tastes of school children; and
Modifying a la carte foods and other foods at school to maintain NSLP and SBP participation rates.
The rule also increases the scope of State Agency administrative reviews of SFAs by combining the current Coordinated Review Effort (CRE) with the requirements of School Meals Initiative (SMI) reviews, and increases their frequency to once every three years. SFAs that previously held separate CREs and SMIs may experience a decrease in burden, because they will undergo just one State Agency administrative review every three years, rather than two reviews (one CRE and one SMI) every five years.
FNS expects these additional burdens on SFA staff time and budgets may be offset by other benefits. For instance, new age/grade groupings would require school districts to offer different portion sizes instead of the same portions to all ages/grades. While this could be an additional burden to some SFAs, it could also reduce plate waste with use of more appropriate age/grade groupings. Moreover, it is expected that, as food service workers gain experience and become comfortable with the new requirements, administrative efforts associated with implementation may decline. Therefore, although an initial administrative impact is anticipated, FNS does not expect any significant long-term increase in administrative burden.
2. State Agencies
State Child Nutrition Agencies (SAs) play a key role in the implementation of school meal programs through their agreements and partnership with local SFAs. FNS anticipates that SAs that administer the school meals programs will work closely with SFAs to meet the requirements of the rule, and to remove barriers that may hinder compliance.
Many changes associated with implementation of the rule may result in an increased burden and additional required level of effort from States, such as:
Training and technical assistance: SAs will provide training and technical assistance to SFAs on new calorie and meal pattern requirements, age/grade groupings, and revised nutrient requirements. Moving to a single, food-based menu planning system may simplify the meal service for some schools and will likely streamline the meal planning process, but may require initial training to accomplish.
Although SAs may meet most of this demand by modifying current training and technical assistance efforts, we recognize that SAs may incur additional costs assisting SFAs with the transition to the final rule requirements. Our cost estimate provides for an additional 80 hours per SA in each of fiscal years 2012 and 2013, for a total of $0.2 million.
Systems assistance: SAs may assist SFAs with any changes in the meal planning process occurring as a result of this rule. This is included in our $0.2 million estimate for training and technical assistance.
Food procurement and preparation: More fruits, vegetables, whole grains, and foods that are lower in sodium may be necessary to align meals with the new meal patterns. SAs may also review SFA contracts with food service management companies (FSMCs). We have not estimated this cost, but expect that it will be small.
Monitoring and compliance: SAs will be required to conduct administrative reviews (formerly CREs and SMIs) more frequently, once every 3 years for each SFA beginning in SY 2013-2014. Nutrient analysis will be required for all SFAs and will become an additional component of each review (separate SMIs will be eliminated). Nutrient-based menus will be eliminated and only food-based menu planning will be permitted. The final rule drops the proposed rule requirement to require administrative reviews to cover two weeks of menus and production records; instead, the final rule keeps the current one week review requirement. The final rule, like the proposed rule, would include breakfast in SA administrative reviews.\41\
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\41\ FNS estimated in 1994 that extending the SFA review cycle from four to five years would decrease costs associated with this effort by 20 percent. (June 10, 1994, Federal Register Vol. 59, No. 111, p. 30234) A similar, but opposite, effect might be expected from shortening the cycle from five to three years.
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SAs are currently required to conduct a CRE for each SFA once every 5 years; to conduct a nutrient analysis via SMI review for only those SFAs with food-based menu planning systems (although approximately 30 percent of these SFAs elect to conduct the nutrient analysis themselves); to review menus from a one-week period preceding the review date; and to review a breakfast meal only in the case of a follow-up CRE (which is only conducted in those cases in which problems are noted in the initial CRE). Total costs for each SA to complete a CRE include costs for staff labor, travel (including transportation, accommodations, and meals/incidental expenses), and possible printing costs for those SAs that provide CRE results to SFAs and FNS in hard copy rather than electronically.
Limited discussion with a small number of SA and FNS Regional Office officials suggest that a typical CRE or SMI review costs about $2,000 in 2010, with about half of that cost used for staff travel. Because travel is a largely fixed cost, SAs that previously conducted separate CRE and SMI reviews should realize some savings once SMIs are ended and the nutrient analysis is made part of the consolidated administrative review. That may help offset some of the cost of increased review frequency. A mid-sized State that now conducts 100 CRE reviews might incur annual
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expenses of $200,000. Under the final rule, that SA could expect to conduct \2/3\ more administrative reviews, or roughly 167 per year. If we assume conservatively that the SA realizes no savings from elimination of SMI reviews, its review costs would increase by $134,000 per year--an upper-bound estimate. If all SAs incurred this same expense, the total cost would be roughly $8 million per year by FY 2013.
3. USDA/FNS
FNS will assist State Agencies by providing nutrition education, training, guidance, and technical assistance to facilitate their work with local school food professionals. This may include developing training standards, materials, updated measures for nutrition analysis, and revisions to the food buying guide.
While we expect a small increase in administrative burden for FNS under the rule because of the need to provide additional training and technical assistance to SAs, and to support their role in the administrative review process, this may largely be met by adapting existing efforts to the new requirements.
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Food Service Equipment
Changes in meal pattern requirements may require some SFAs to replace or purchase additional foodservice equipment. For example, some SFAs may need to replace fryers with ovens or steamers. In FY 2009, FNS solicited requests from SFAs for food service equipment grants. In response to its solicitation, FNS received a total of approximately $600 million in grant requests from SFAs. FNS awarded grants for such purposes totaling $125 million, using $100 million from funds provided by the 2009 American Recovery and Reinvestment Act (ARRA) and $25 million provided by the FY 2010 Agriculture Appropriations Act. The strong response to these grant programs indicates that schools could make productive use of an even greater investment in kitchen equipment. FNS awarded grants for such purposes totaling $125 million, using $100 million from funds provided by the 2009 American Recovery and Reinvestment Act (ARRA) and $25 million provided by the FY 2010 Agriculture Appropriations Act. However, much of that demand is associated with the routine need to replace equipment that is nearing the end of its useful life--a cost that is appropriately covered by USDA meal reimbursements and other sources of food service revenue. Although some schools may need additional upgrades to prepare meals that meet the new standards, we do not have the data necessary to assess that need or to estimate the associated cost. The $125 million in kitchen equipment grants distributed to schools through ARRA funds and the FY 2010 appropriation should have addressed much of the most pressing need. For these reasons, we do not include additional incremental equipment costs in our final rule estimate.
Our decision not to include an additional equipment cost in our proposed rule estimate generated comments from school officials and foodservice industry representatives. Those comments do not provide enough information on which to base a reliable estimate of the need for additional kitchen equipment as a result of the rule. The comments confirm that the need, where it exists, will vary significantly. Although we cannot reliably estimate the aggregate cost of meeting the need for additional equipment, we provide one estimate in the Section F below. Additional detail on the comments received from schools and the foodservice industry on this point is discussed in Section E.
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Comments on Proposed Rule
As noted in the preamble to the final rule, USDA received more than 130,000 comments on the proposed rule. Comments on the content of the rule itself are discussed in the preamble. Other comments, addressed specifically to the proposed rule's impact analysis, are discussed here.
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Proposed Rule is Too Costly
Many commenters expressed concern that the proposed rule was too costly. Schools and school districts would not be able to meet the proposed rule's meal standards without additional resources from Federal, State, or local governments. Some of these commenters noted that the cost of the proposed rule exceeded the 6 cents per lunch that would follow adoption of the new meal requirements. Many also noted that State and local governments were not in a position to provide school districts with additional funding. The result, some commenters warned, was that schools might stop serving reimbursable breakfasts under the SBP. Other commenters suggested that schools might even stop serving reimbursable NSLP lunches.
In response to these comments, the final rule modifies the proposed rule's meal pattern requirements. The effect of those modifications is to reduce the cost to schools and SFAs of implementing the rule. The modifications are discussed in detail in the rule, and summarized in Section II of this impact analysis. The modifications offer schools short term savings, relative to the proposed rule, by phasing in the rule's breakfast fruit and grain requirements. As a result of elimination of the proposed rule's breakfast meat requirement, the ongoing cost of the final rule after full implementation is also reduced.
Eliminating the proposed limit on the amount of starchy vegetables that schools may offer at lunch has little effect on the cost of the final rule relative to the proposed rule. Significant savings are realized through a reduction in the lunch pattern's grain requirement.
Part of the difference in the estimated 5-year costs of the proposed and final rules is due to lower projected food cost inflation and increased student participation since preparation of the proposed rule estimate. To facilitate comparison of the estimated costs of the proposed and final rules, we prepared two estimates of the final rule's provisions. The first uses the most current food inflation and student participation figures; this is our primary estimate summarized in Table 6. The second applies the same food inflation and student participation estimates that we used in our proposed rule cost estimate. That is, we use the projections of food inflation for years after FY 2009 that we developed for the proposed rule. (Our primary estimate for the final rule uses actual inflation through August 2011, and an updated projection for years after FY 2011.) The difference between this second estimate and the estimated cost of the proposed rule provides a more direct measure of the reduction in cost due to changes in the content of the proposed and final rules. Using that difference as our basis of comparison, the final rule reduces costs over the first 5 years by almost $3 billion, or 44 percent, as compared to the proposed rule.
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Table 12--Reduction in Estimated Cost of Final Rule Relative to Proposed Rule
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Fiscal year
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2012 2013 2014 2015 2016 Total
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Proposed rule..................... $181.5 $1,246.8 $1,401.9 $1,923.8 $2,041.3 $6,795.2
Final rule--primary estimate...... 41.6 286.2 362.1 1,220.2 1,279.7 3,189.9
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Difference.................... -139.8 -960.6 -1,039.7 -703.6 -761.6 -3,605.3
Proposed rule..................... $181.5 $1,246.8 $1,401.9 $1,923.8 $2,041.3 $6,795.2
Final rule--with proposed rule 53.5 376.0 474.8 1,419.0 1,511.1 3,834.5
inflation and participation
estimates........................
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Difference.................... -127.9 -870.6 - 927.0 -504.8 -530.2 -2,960.7
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In response to comments that an additional 6 cents per reimbursable lunch \42\ falls short of our estimated per meal cost of the proposed rule, we point out that the HHFKA contains a comprehensive package of school lunch and breakfast reforms. These reforms are intended to both increase the quality of school meals and competitive school foods offered to students, and to address financial and funding issues. These latter provisions are expected to increase the amount of revenue generated by SFAs while eliminating the subsidization of paid lunches and non-program foods with Federal funds meant to support reimbursable meals generally, and meals served to free and reduced-price eligible children in particular. The impact analysis contained in the interim final rule prepared for Sections 205 and 206 of HHFKA estimates that those provisions will increase SFA revenues by $7.5 billion through FY 2015.\43\ HHFKA section 205 is designed to gradually reduce the disparity in per-meal school revenue from reimbursable paid lunches relative to the per-meal Federal reimbursement for free lunches. Section 206 requires schools to increase the share of SFA revenue generated by nonprogram foods to a level at least as great as nonprogram food's contribution to total SFA food costs.
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\42\ Section 201 of HHFKA provides an additional 6 cents to schools for each NSLP lunch that meets this rule's meal pattern requirements.
\43\ Federal Register, Vol. 76, No. 117, pp. 35301-35318.
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Costs Are Understated
Some commenters felt that the cost estimate presented in the proposed rule is understated. As we describe in Section III.B.2., our methodology relies primarily on data collected by USDA in SNDA-III to estimate the types and quantities of food offered by schools to program participants. SNDA-III collected information from schools in SY 2004-
2005. We believe that our use of the data from that study, which is several years old, presents a greater risk of overstatement than understatement of the cost of the rule, holding other factors constant. The Dietary Guidelines Advisory Committee completed its 2005 report in August 2004, just as SY 2004-2005 began. The 2005 Dietary Guidelines policy document was released by the U.S. Department of Health and Human Services and USDA in January 2005. These documents were released as SNDA-III data was being collected--too soon for substantial changes prompted by the Dietary Guidelines to be reflected in meals offered to students.
In the years since data was collected for SNDA-III, schools and USDA have taken steps to bring school meals into closer compliance with the 2005 Dietary Guidelines. One example, cited by IOM, is the recent improvement in USDA Foods offered to schools through the USDA's commodity programs.\44\ These changes provide schools with an increased variety of whole grain, low fat, and low sodium products for use in healthier school meals. Other changes have been initiated by schools. The School Nutrition Association's 2010 ``Back to School Trends Report'' highlights some of the most recent changes that schools are making in anticipation of new Federal standards: \45\
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\44\ ``The USDA Commodity Program has made substantial improvements in its offerings in recent years to become better aligned with Dietary Guidelines for Americans and to be more responsive to its `customers.' '' (IOM 2009, p. 188)
\45\ This is just a summary of recent changes adopted by schools. Schools have been moving toward 2005 Dietary Guidelines standards over several years.
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95% of schools districts are increasing offerings of whole grain products.
90.5% are increasing availability of fresh fruits/vegetables.
69% of districts are reducing or eliminating sodium in foods.
66% of districts are reducing or limiting added sugar.
51% of districts are increasing vegetarian options.\46\
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\46\ Figures taken from the SNA's Web site (http://www.schoolnutrition.org/Content.aspx?id=6926, accessed 10/10/11).
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Our use of SNDA-III data means that our cost estimate does not reflect the most recent progress that schools have made toward adoption of Dietary Guidelines recommendations. At least one non-profit organization offered a comment on the proposed rule that concurs with that assessment. The commenter's primary point was that we overstate the savings from replacing more expensive high fat milk with less expensive low fat and fat free varieties; the commenter notes that many schools have already made that transition. We acknowledge that the potential savings of the final rule's milk provision may be overstated in our cost estimate. But that savings is potentially overstated for the same reason that the costs of meeting the rule's other food group requirements may be overstated. Schools have taken recent steps to adopt Dietary Guidelines recommendations on vegetables, fruit, whole grains, and sodium; schools' gradual adoption of Dietary Guidelines recommendations has not been limited to milk. Because our projected savings from the rule's milk provision is much lower than our projected cost of the rule's vegetable, fruit, and whole grains provisions, we believe that the risk that we overstate the cost of the rule exceeds the risk that we understate its cost.
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Analysis Does Not Capture Full Effect of Recent Food Inflation
Some commenters argued that we understated or did not adequately account for food inflation in our proposed rule cost estimate. Both our proposed and final rule cost estimates use food group specific inflation figures from the BLS to estimate current year prices (FY 2011 prices for the final rule analysis) from a set of baseline prices paid by schools in SY 2005-2006 (taken from the SLBCS-II). Both analyses use
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those current year estimates to project prices through FY 2016.
In our final rule estimate we use a 7-year historic average of food inflation, by food group, to project prices. Our proposed rule estimate used a 5-year historic average to inflate food costs. In developing our final rule estimate we recognized that actual food price inflation since we prepared our proposed rule estimate was substantially lower than inflation over the previous 5 years. We adopted a 7-year historic average in our final rule cost projections in order to temper the effects of relatively low recent food price inflation. This yields a slightly higher estimate for our final rule than we would have gotten had we used an updated 5-year average projection factor. We do this to avoid the risk of understating the cost of the final rule.
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Analysis Does Not Account for Higher Costs of Healthier Foods
Some commenters referred specifically to the higher costs of whole grains and vegetables emphasized by the rule. Others referred to the additional costs necessary to produce low-sodium school meals. We address these separately.
Higher Prices for Food Groups Emphasized by the Rule
Our proposed rule and final rule cost estimates develop separate prices for each of the food subgroups with specific standards in the rule. For example, we estimate separate prices for whole grains and refined grains, for whole fruit and fruit juice, and for the dark green, red-orange, starchy, and ``other'' vegetable subgroups. In each of these cases, we estimate higher unit prices for the food subgroups emphasized by the rule. In some cases the price premium for these food subgroups may reflect lower supply in the school food marketplace. As industry increases the supply of these products in response to higher school demand, economies of scale may reduce their cost. Our cost estimates for both the proposed and final rules discount the possibility that prices for these foods may moderate over time. Again, we do this to avoid understating the cost of the rule.
Added Cost of Producing Meals With Less Sodium
The proposed rule's first intermediate sodium targets were designed to be met by schools through menu and recipe changes using currently available foods. The proposed rule's second intermediate target was designed to be met with the help of the food industry through changes that can be met with current food processing technology. The proposed rule analysis stated that ``a reduction in sodium can be achieved at minimal cost, at least over the short term, when sodium requirements are only partially phased-in.'' But the analysis also noted that meeting the rule's sodium targets would likely require replacing some packaged foods with foods prepared from scratch. To clarify, we recognize that meeting even the first sodium target has some cost; however, we do not estimate that as a separate component cost in either the proposed or final rule analyses. Much of the cost of meeting the proposed and final rules' short term sodium targets is contained in the cost of substituting prepared foods for foods cooked from scratch in schools or central kitchens. We account for this in our labor cost estimate. Our proposed and final rule analyses estimate that labor costs will rise nearly dollar for dollar with food costs. Over 5 years, the final rule estimates that labor costs will increase by $1.6 billion.
Our cost estimate extends only through FY 2016, two years before the final rule's second sodium target takes effect. As a result, we do not estimate the cost of meeting that target in SY 2017-2018, or the rule's final sodium target in SY 2022-2023. However, two provisions in the final rule respond to the challenge of meeting those targets. The first is a delay in the second intermediate target from 4 years post-
implementation in the proposed rule to 5 years in the final rule. Lengthening the transition to lower sodium foods is intended, in part, to facilitate student acceptance. But it also gives industry more time to develop products that meet the rule's standards. To the extent that limited supply is a school cost issue, delaying the second intermediate target to 5 years should help reduce costs. The final rule also promises USDA review of schools' progress toward the rule's final sodium target, and allows for modifications to the sodium targets if necessary.
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Analysis Understates Need for Additional Equipment and Infrastructure
School officials and others commented that our proposed rule analysis understated the need for additional investment in food preparation and storage equipment as schools move away from a ``heat and hold'' foodservice model, to a model that relies more on on-site preparation. Our proposed rule analysis discussed the $125 million for school foodservice equipment provided to schools through the 2009 American Recovery and Reinvestment Act (ARRA) and the FY 2010 Agriculture Appropriations Act. Although the proposed rule analysis recognized that the demand for ARRA grants greatly exceeded the amount available, the analysis noted that much of that demand was driven by the routine need to replace aging equipment, costs that are appropriately covered by USDA meal reimbursements and other sources of food service revenue. The proposed rule analysis did not include an additional cost tied specifically to meeting the proposed rule meal patterns.
Some commenters offered estimates of the cost required to equip schools to produce more foods on site. These costs ranged from $4,000 per school for new equipment, to $500,000 or more for a full kitchen and serving site renovation (an estimate given by a foodservice industry representative). Commenters indicated that preparing more meals on-site would require investment in additional refrigeration equipment, microwaves and combination ovens, storage space, sinks, cutting boards and knives. What these comments cannot tell us is the percent of schools in need of new equipment, or the average per-school cost to meet that need. If fully half of all schools require investments averaging $5,000, then the total cost of new equipment necessary to prepare meals that meet the final rule standards would be $250 million. In the end, we do not have the data necessary to develop a reliable estimate of need in excess of the routine costs of replacing outdated equipment. In Section F we present an alternate cost estimate of the final rule under a different assumption about the need for additional investment in school kitchen equipment.
-
-
Uncertainties
We made several simplifying assumptions in developing this cost estimate, reflecting gaps in available data and evidence. The most significant simplifications are discussed in Table 13. In most cases, our primary estimate reflects conservative assumptions, to avoid understating the costs of the rule. In this section, we describe the impact of several alternative assumptions on the estimate. The cost impacts of these alternatives are presented in Table 14.
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Table 13--Simplifying Assumptions
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Explanation and Implications
Item of Simplifying Assumptions
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Take Rates................................ For each of several food
groups, we used SNDA-III
data to compute average
``take rates'' equal to the
percentage of food servings
taken by students for each
serving offered to them.
Take rates under current
program rules vary by
school, grade level, and
menu planning system. They
are, at best, a rough
predictor of student
behavior under the new
rule, which imposes a
single food-based meal
planning system across all
schools, and requires
schools to offer a mix of
foods somewhat different
than many students are
accustomed to. We apply
these take rates to
generate our final rule
cost estimate. Different
take rate assumptions could
produce higher or lower
cost estimates. Take rates
higher than the ones used
in our estimate imply that
students will select more
foods from menus that meet
final rule standards than
they now select from more
familiar current school
menus; we believe that risk
is reasonably low, at least
in the short term. It may
be more likely that actual
take rates will fall below
our estimates. However, the
possibility of lower take
rates is constrained by the
requirement that students
select enough components to
constitute a reimbursable
meal.
Student Participation..................... The cost estimate assumes no
change in student
participation following
introduction of the rule's
new meal pattern
requirements. However, we
recognize that
participation may increase
due to better meals or
decrease when favorite
school foods are replaced
with unfamiliar or less
appealing options. We chose
not to estimate a
participation effect given
the uncertainty about how
schools will incorporate
new foods into their menus,
and what changes schools
will make to a la carte and
other non-NSLP/SBP
``competitive'' foods,
factors known to affect
NSLP/SBP participation.
Schools have a financial
interest in preserving the
revenue stream that comes
with serving Federally-
reimbursable school meals.
It is also unclear whether
participation effects, if
any, may prove temporary or
permanent. We estimate the
cost of the rule under an
assumption of increased and
reduced student
participation in the
uncertainties section.
USDA Foods................................ We include USDA Foods
(formerly USDA commodities)
in both the quantity and
value of food served in its
baseline and final rule
cost estimates. This
treatment of USDA Foods is
consistent with the SLBCS-
II which includes the value
of USDA Foods in its
computation of the cost of
producing a school meal. We
assume that USDA Foods will
contribute comparably to
the overall cost of
preparing school meals
under current rules and
under the new rule. We
believe it is reasonable to
ignore the value of USDA
Foods in computing the
estimated cost increase of
the rule.
Whole Grains.............................. We apply a single take rate
to both whole grain rich
and refined grain products.
A less conservative
approach would have applied
a lower take rate to whole
grain foods, at least when
offered singly, rather than
as part of a combination
entree. Further, this take
rate is the same take rate
observed in SNDA-III where
the relative share of whole
grain rich products is
lower than the 50 percent
share that schools must
offer in the first two
years of implementation,
and much lower than the 100
percent share that must be
offered thereafter.
Testimony before the IOM
expert committee by
University of Minnesota
Professor Leonard Marquart
documented steps SFAs can
take to phase in whole
grains in a manner that
promotes high take rates.
Labor Rates............................... We assume that the relative
contributions of food and
labor to the total cost of
preparing reimbursable
school meals will remain
fixed at the levels
observed in the SLBCS-II
study. The study found that
the cost of purchasing food
accounted for 45.6 percent
of SFA reported costs on
average, while labor
accounted for 44.5 percent
of reported costs. We
therefore estimate that
labor costs will increase
on a nearly dollar for
dollar basis with estimated
food costs. Our assumption
leads to a substantial
increase in estimated labor
costs, one that assumes
schools may rely less on
prepared foods and more on
on-site preparation.
Nevertheless, USDA received
comments from some
individuals and
organizations indicating
that our proposed rule
understates the likely
increase in labor costs. To
respond to these comments,
we re-estimate the cost of
the proposed rule assuming
a bigger increase in labor
costs in Section F. The
cost estimate developed in
this impact analysis is
based entirely on the cost
of adding or deleting foods
from particular food
groups.
The cost estimate accounts
for current price
differences in whole grains
compared to refined grain
products, fat free and low
fat milk compared to 2
percent or whole milk,
whole fruit compared to
fruit juice, and vegetables
by subgroup. But it does
not account directly for
differences in the costs of
comparable combination
entrees with different
levels of sodium, fat, or
calories. SNDA-III found
that school lunches offered
to students in SY 2004-2005
provided, on average, about
11 percent of calories from
saturated fat. The final
rule would limit this to 10
percent--a relatively
modest reduction.
Macronutrient Requirements and Calories... Our cost estimate does take
into account the added cost
of more fruits and
vegetables. It also takes
into account the cost of
shifting to a wider variety
of vegetables.
Finally, the estimate
accounts for the
replacement of higher fat
content milk with low fat
and skim milk. All of these
steps implicitly
incorporate the cost of
offering lower calorie and
lower fat content meals
into our estimate. We
mention above that that the
first intermediate sodium
target can be achieved with
changes to school menus and
preparation methods using
foods already available in
the marketplace. To the
extent that the rule's
first sodium target
requires more on-site
preparation of meals, we
account for that in our
labor cost estimate. We
estimate that the
additional cost of
acquiring lower sodium
versions of processed foods
to meet the rule's initial
sodium target will be
minimal. This is one of the
very few assumptions that,
if wrong, tends to
understate the cost of the
rule. But, given the
decision to err on the side
of overstating costs when
making most other
assumptions, we believe
that the upside risk to an
error on this assumption is
small.
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Change in Participation--2 Percent Increase
As discussed in Table 13 above, we assumed that student participation would not change following the introduction of new meal requirements. Table 14 Sections A and B model the effects of altering that assumption.
Section A estimates the effect of a two percent increase in student participation on the cost of the rule relative to our primary cost estimate in Table 6. The dollar figures in Section A are the estimated cost to schools of preparing all meals served under our baseline assumption plus an additional 2 percent; the costs are not just limited to the incremental per-meal costs of the final rule. The additional meals are eligible for USDA reimbursement at the appropriate free, reduced price, or paid rates. However, the figures shown in
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Section A are not offset by these increased Federal reimbursements. The net cost to schools, after accounting for Federal reimbursements, would be lower. Because these costs reflect the provision of improved meals to additional children, we would expect a commensurate increase in the benefits resulting from addition of more fruits, vegetables, and whole grains to the diets of participating children. This participation assumption would result in a $1.3 billion increase over the cost of our primary estimate.
-
Change in Participation--2 Percent Decrease
Table 14, Section B models the effect of a two percent decrease in participation upon implementation of the new rule. A reduction in participation reduces the cost of compliance with the rule, relative to the primary cost estimate in Table 6.\47\ Again, because the cost reduction reflects the provision of improved meals to fewer children, we would expect a proportionate decrease in the rule's benefits for participating children. This reduction in cost is a reduction in the entire cost of serving 2 percent fewer meals, not just the incremental per-meal cost of complying with the final rule. Schools would realize a partially offsetting decrease in Federal meal reimbursements; that offset is not shown in Table 14. The effect of a 2 percent decrease in student participation would be to decrease the cost of implementing the final rule by $1.3 billion.
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\47\ This reduction in cost comes at the expense of reduced federal meal reimbursements.
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Higher Rate of Increase in Labor Costs than Food Costs
Our primary cost estimate assumes that the ratio of labor to food costs will remain fixed at the ratio observed in the SLBCS-II. Because we estimate a substantial increase in school food costs, our fixed labor to food cost assumption leads to a substantial increase in labor costs.
Some increase in labor costs is likely. Schools may find it necessary to prepare more meals on site to incorporate added vegetables and whole grains, and to reduce levels of sodium and fat. In addition, schools are likely to incur additional expense to train foodservice workers on the new meal requirements. However, commercial suppliers can be expected to develop and introduce healthier products for the school market ahead of implementation of a final rule; other products may be introduced after implementation. Schools may find that new training replaces some training planned in existing budgets.
At least one change reflected in the final rule is intended, in part, to help reduce labor costs relative to the proposed rule. The proposed rule included a separate meat standard for breakfast. The final rule drops that requirement, preserving schools' ability to serve meat as a substitute for grains at breakfast, but not requiring schools to offer meat. USDA expects that this change will support schools that serve breakfast in the classroom, a model that may require less labor cost than breakfast served in the school cafeteria.
Although we believe that the risk that we overstate the labor costs necessary to implement the rule is as likely as the risk that we understate labor costs, comments received from school officials and foodservice and nutrition professionals argue that our labor cost estimate may be too low. Commenters cited the need to hire new kitchen staff to prepare more meals from scratch as a factor that might change the current ratio of labor to food costs.
Our primary labor cost estimate relies on the observation that the ratio of labor to food costs was about the same at two points measured 13 years apart. We acknowledge the uncertainty inherent in the assumption that this ratio will remain unchanged even as substantial changes to the meal patterns are implemented by schools. And we therefore recognize the risk that the absolute dollar cost for labor in our final rule estimate is too low. If the cost of labor needed to implement the final rule exceeds the amount in our primary estimate by 10 percent, then the cost of the final rule would rise by $160 million.
-
Higher Food Inflation
The final rule estimate's food inflation methodology in described section III.B.1. That discussion notes that inflation over the most recent 2 years was lower for most food subgroups than inflation over the five years prior to those two. Our proposed rule estimate used a 5-
year historic average to project food costs through FY 2016. In an effort to limit the effects of low recent inflation on our cost estimate, our final rule methodology uses a 7-year average to project food costs, rather than a revised 5-year estimate using only the most recent food inflation figures. This methodology retains all of the 5 years of relatively high food inflation that we used in our proposed rule methodology. We took this step to minimize the risk of understating the cost of the final rule. It is possible, nevertheless, that food inflation will accelerate in the short term. If food prices from fiscal years 2012 through 2016 match the rate of inflation over the five years that ended in FY 2009, then the cost of the final rule would increase by $240 million.\48\
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\48\ This estimate includes a proportionate increase in labor costs to remain consistent with our labor cost methodology.
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Additional Need for Foodservice Equipment
The cost estimate in our proposed rule (and the primary estimate in this final rule analysis) does not include an additional cost for new foodservice equipment. As we discuss in section E above, commenters offer much different estimates of the need for new kitchen equipment to prepare more foods on site as a means of complying with the rule. These figures do not allow us to estimate the dollar value of that need with any certainty. Table 14 includes a revised final rule estimate that assumes half of all schools will need to invest $5,000 in new kitchen equipment soon after implementation of the rule. We show half of this $250 million cost as an upfront expense, and the other half as an expense incurred in the first full year of implementation of the rule.
Table 14 below assumes that State administrative costs are not impacted by any of the alternate assumptions (a-e) listed above.
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GRAPHIC TIFF OMITTED TR26JA12.007
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Comparison of Proposed Rule and Final Rule Costs
The key differences between our proposed rule and final rule cost estimates are discussed in previous sections of this RIA. Most of the estimated reduction in cost is due to policy changes, but a significant reduction is also realized by lower food inflation since preparation of the proposed rule cost estimate.
Inflation and Other Economic Assumptions
The proposed rule used actual food price inflation through the end of FY 2009. The final rule incorporates nearly two additional years of actual food price inflation. Inflation over the two years ending in August 2011 was lower for most of the food groups affected by the rule than it was in the five previous years. This reduces our baseline cost of food as well as our projection of food prices through the RIA's forecast period. The final rule also uses USDA projections of school meal participation contained in the 2012 President's budget. The proposed rule relied on data in the 2011 President's budget. The more recent participation projections slightly increase the cost of the breakfast meal patterns and reduce the cost of the lunch meal patterns relative to the proposed rule. The net effect of changes to our food inflation and student participation projections is a 5-year $730 million reduction in the cost of the final rule relative to the proposal.
Breakfast Meal Patterns
The most significant reduction in the estimated cost of the final rule relative to the proposed rule is due to changes in the final rule's breakfast provisions. The final rule's phased implementation of the meal pattern's fruit and grain requirements, and elimination of the proposed rule's separate meat and meat alternate requirement reduce the cost of the rule by $2.7 billion over 5 years.
Lunch Meal Patterns
Additional savings are realized through a reduction in the final rule's lunch meal pattern grain requirement relative to the proposed rule. The final
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rule also includes changes to the vegetable component of the proposed rule's lunch meal pattern. The final rule eliminates the proposed rule's 1 cup per week limit on starchy vegetables, and it replaces the proposed rule's orange vegetable subgroup with a red/orange group that now includes tomatoes. Replacement of the orange vegetable subgroup with a red/orange subgroup was prompted by the 2010 Dietary Guidelines. The final rule reduces the weekly requirement for ``other'' vegetables, which previously included tomatoes, and increases the requirement for red/orange vegetables relative to the proposed rule requirement for orange vegetables. The net effect of changes to the vegetable and grain requirements at lunch is a relatively modest $150 million reduction in cost over 5 years.
Table 15--Changes in Cost of the Final Rule Relative to the Proposed Rule
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Fiscal year
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2012 2013 2014 2015 2016 Total
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Proposed rule..................... $181.5 $1,246.8 $1,401.9 $1,923.8 $2,041.3 $6,795.2
Updated economic and -15.9 -114.8 -141.1 -211.3 -248.2 -731.2
participation projections....
Changes to breakfast meal -120.5 -822.7 -871.4 -446.4 -465.6 -2,726.7
pattern requirements.........
Changes to lunch meal pattern -3.4 -23.0 -27.1 -45.8 -47.8 -147.3
requirements.................
Final rule........................ 41.6 286.2 362.1 1,220.2 1,279.7 3,189.9
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Implementation of Final Rule--SFA Resources
We estimate that the new meal patterns may raise the average cost of producing and serving school lunches by about 5 cents on initial implementation of the rule. By FY 2015, when the food group components are fully phased in, the cost per lunch may be 10 cents higher than our baseline estimate; the cost per breakfast may be 27 cents higher than our baseline.
As we discuss in Section E, the Healthy, Hunger-Free Kids Act contains a comprehensive package of school meal reforms that call for an update to the meal patterns and provide for increased SFA revenue. USDA estimates that the $3.2 billion 5-year cost of this rule is more than offset by the impact of other HHFKA provisions on SFA revenues.
HHFKA's meal pattern and revenue raising provisions are linked directly in the performance-based increase in Federal financing for school lunches. Schools that successfully implement the final rule standards will receive an additional 6 cent reimbursement for each lunch served. The Congressional Budget Office estimates that an additional 6 cents per lunch would raise $1.5 billion for SFAs in the first 5 years after implementation of the rule.\49\
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\49\ $1.5 billion is CBO's estimate of additional budget authority for HHFKA's ``Performance-Based Rate Increase'' through FY 2016, less $100 million ($50 million for administrative expenses in fiscal years 2012 and 2013) . See Table 2 in CBO's April 20, 2010 cost estimate for HHFKA. http://www.cbo.gov/ftpdocs/114xx/doc11451/HealthyHungerFreeKidsAct.pdf (accessed 11/06/11).
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HHFKA contains two additional provisions to ensure that Federal reimbursements are used as intended to provide quality meals to program participants. The first requires schools to gradually raise the per-
meal revenue generated from paid lunches to an amount equal to the Federal reimbursement for free lunches. That revenue could come from student payments or State or local sources. The second requires that the revenue generated from non-program foods as a percent of food costs match the revenue to food cost ratio of program meals. USDA estimates that these two provisions will raise a combined $7.5 billion in the 5 years following their July 1, 2011 effective date.\50\
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\50\ See the interim final rule and regulatory impact analysis for ``School Food Service Account Revenue Amendments Related to the Healthy, Hunger-Free Kids Act of 2010'', Federal Register, Vol. 76, No. 117, pp. 35301-35318.
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Schools will face different costs to implement this final rule. Schools with menus that already emphasize fruits, a variety of vegetables, and whole grains may need to make fewer changes, and the costs of implementation in those schools may be lower than average. Because the per-meal costs of complying with the new requirements are much higher for breakfast than for lunch, the overall costs of implementation in schools that serve more school breakfasts relative to lunches may be higher than the costs faced by schools that do not serve breakfast.
Schools will also benefit differently from HHFKA's revenue provisions. Schools with relatively few students who pay full price for program meals stand to gain little from HHFKA's paid lunch provision. Similarly, schools that sell few agrave la carte items will realize little revenue from an increase in agrave la carte prices. At the same time, schools that serve mostly free and reduced-price students and sell little agrave la carte can rely on significant Federal funding for each SFA dollar spent to purchase and prepare school foods.
The experience of some schools suggests that substantial progress toward implementation of the rule can even be achieved with existing resources. USDA's HealthierUS Schools Challenge (HUSSC) recognizes elementary schools that meet voluntary school meal and physical activity standards. HUSSC school meal standards exceed NSLP requirements on several levels, including requirements for a variety of vegetables each week, including dark green and orange vegetables and legumes; a variety of whole fruits, and limits on fruit juice; and whole grain and low fat milk requirements. USDA has certified more than 2,161 HUSSC schools since 2004. HUSSC schools have demonstrated an ability to operate cost-effective school meals programs that emphasize many of the same foods required by the final rule. These schools receive no financial assistance from USDA beyond the meal reimbursements and USDA Foods available to other schools that participate in the Federal school lunch and breakfast programs. Like other service businesses, schools may need to consider changes to their operations to increase efficiency and meet the requirements of the rule. HUSSC schools have demonstrated an ability to operate cost-
effective school meals programs that meet many of the final rule's requirements. These schools may offer models for others as implementation moves forward.
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Impact on Participation
As noted in Table 13, the cost estimate in this analysis assumes no net change in student participation following introduction of the rule's new meal pattern requirements. This assumption reflects uncertainties in a number of areas, including how schools will reflect the new requirements in menus, the acceptance of those changes by students, and potential changes in
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prices for reimbursable paid meals to provide additional revenue. These factors are discussed below.
1. Acceptance of Meals
Any revision to the content of school meals or the method of preparation may have an effect on the acceptance of school meals. Concerns are often raised that students may react negatively to changes designed to improve nutrition. USDA launched the School Meals Initiative for Healthy Children (SMI) in 1995 to help schools improve the nutritional quality of NSLP and SBP meals. The SMI offers an opportunity to examine how students react to substantial changes in school meal patterns.
As a result of the SMI many school food service directors reported making changes in procurement and preparation practices (Abraham, 2002). For example, they reported increased purchases of low-fat/
reduced-fat foods (81 percent) and fresh fruits and vegetables (75 percent). The majority reported no change in food waste. However, to the extent that there was change in the amount of food wasted, more respondents reported a reduction rather than an increase in food waste (with the exception of cooked vegetables). School food service directors report that the SMI has generally had a neutral-to-positive impact on program performance.
SNDA-III found that ``characteristics of NSLP lunches offered, including percent of calories from fat, whether dessert or French fries were frequently offered, and average number of fresh fruits and vegetables offered per day, were generally not significantly associated with NSLP participation.'' \51\ This suggests that changes in meal patterns that enhance nutrition can be well received by students. Furthermore, the increased emphasis on a healthy school nutrition environment in recent years, and greater awareness of the importance of healthy eating habits in schools, may help to support student acceptance of changes in program meals.
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\51\ For breakfast, the study estimated that projected participation rates ``were higher in schools that offered a greater percentage of calories from fat in the SBP breakfast; however, these differences were not statistically significant at conventional levels.'' USDA 2007, vol. II, pp. 113 and 127.
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There is also a strong and growing school nutrition effort and infrastructure already in place.
For example, Team Nutrition is an FNS initiative to support healthier meals through training and technical assistance for food service, nutrition education for children and their caregivers, and school and community support for healthy eating and physical activity. Similarly, in 2004 Congress required all school districts to establish local wellness policies. Through these policies schools have made changes to their school nutrition environments and improved the quality of foods offered to students. In the context of these initiatives, implementation of the final rule is only the next step in a process of ongoing local, State, and Federal efforts to promote children's nutrition and health.
2. Impact of Price on Participation
FNS estimates that the average cost of preparing and serving school meals may increase by 8 percent by FY 2015. Some SFAs may raise student prices for paid meals (above the paid lunch revenue target required by HHFKA) to compensate for some of this increase in cost. We recognize that increased paid meal prices may reduce NSLP paid meal participation. Mathematicasupreg, Inc. modeled the effect of paid meal prices on student participation as part of the SNDA-III study.\52\ All else equal, students who were not income-eligible for free or reduced-price meals were less likely to participate in the program when the full price of the meals was higher. For lunch, the model estimates a 0.11 percent decrease in participation for each 1 cent increase in paid lunch prices.\53\ For breakfast, the model estimates a 0.12 percent decrease in participation per 1 cent increase in price.
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\52\ USDA 2007, vol. II, pp. 116-117, 123-124.
\53\ This relationship between price and participation applies to prices in the range of $1.50 to $2.00 in SY 2004-2005 dollars. A much bigger price increase might trigger a bigger reduction in participation.
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The model's predicted student participation rate was 54 percent in schools that charged $2.00 for an NSLP lunch, compared to 59 percent in schools that charged $1.50. The study also predicts lower breakfast participation in schools that charged higher prices. Predicted participation was 10.3 percent in schools that charged $0.70 for an SBP breakfast versus 7.2 percent in schools that charged $1.00. Since meals meeting the new requirements will be improved in nutritional content it is not clear how this factor would balance against the effects of higher meal prices. Although price changes may be a necessary option for some SFAs, FNS expects that efforts designed to maintain participation would be concurrently implemented.
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Benefits
As noted in the preamble to this final rule, NSLA requires that schools serving lunches and breakfasts under its program authority ensure that those meals are consistent with the goals of the most recent Dietary Guidelines for Americans and the Dietary Reference Intakes. The final rule, by updating program regulations consistent with Dietary Guidelines goals and aligning the regulations with the requirements placed on schools under the statute, will ensure that school meal nutrition requirements reflect current nutrition science, increase the availability of key food groups, better meet the nutritional needs of children, and foster healthy eating habits.
In so doing, it also provides a clear means of meeting the statutory requirements through a food-based meal pattern designed with the particular circumstances and challenges of school food service in mind, to ensure that it is feasible for school foodservice operators and does not jeopardize student and school participation in the meal programs. A related benefit of the rule is that it simplifies meal requirements to create a single, food-based approach to meal planning. This approach helps to simplify menu planning and monitoring, and streamline training and technical assistance needs.
Once implemented by schools, USDA projects that this rule will change the types and quantities of foods prepared, offered and served through the school meals programs (the sources of the costs described in this analysis). The rule is expected to result in (1) increased servings of fruits and vegetables, (2) replacement of refined-grain foods with whole-grain rich foods, and (3) replacement of higher-fat dairy products with low-fat varieties. As documented in the IOM recommendations, each of these changes corresponds to an inconsistency between the typical diets of school-aged children in the United States and the Dietary Guidelines/MyPyramid recommendations. In particular, the report cited an analysis of NHANES 1999-2002 data that showed that:
Total vegetable intake was only about 40 percent of the MyPyramid levels, with intake of dark green and orange vegetables less than 20 percent of MyPyramid levels.
Total fruit intake was about 80 percent of the MyPyramid levels for children ages 5-8, with far lower levels for older children.
Intake of whole grains was less than one-quarter of MyPyramid levels,
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although total grain intake was at or above MyPyramid levels.
Intake of dairy products varied by age, with the intakes of the youngest children exceeding MyPyramid levels, while those of older children were below those levels. However, most dairy consumed contained 2 percent or more milk fat, while the Dietary Guidelines recommend fat-free or low-fat dairy products.\54\
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\54\ IOM 2009, pp. 49-53.
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In addition, the rule would make significant changes to the level of sodium in school meals over time. Research suggests that modest population-wide reductions in dietary salt could substantially reduce cardiovascular events and medical costs.\55\ More specifically, a forthcoming study suggests that reducing dietary salt in adolescents could yield substantial health benefits by decreasing the number of teenagers with hypertension and the rates of cardiovascular disease and death as these teenagers reach young and middle age adulthood.\56\
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\55\ See, for example, Smith-Spangler, 2010; Bibbins-Domingo, 2010.
\56\ Bibbins-Domingo, 2010b.
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The rule also makes substantial changes in the calorie targets for meals that are designed to promote healthful energy balance for the children served by these programs. For the first time, the rule sets maximum as well as minimum calorie targets, and creates a finer gradation of calorie levels by age. As a result, minimum calorie requirements for some groups are reduced by as much as 225 calories per lunch.\57\ Implemented consistent with other requirements that ensure that lunches provide appropriate nutrient content, these changes in calorie levels can help to reduce the energy imbalance that contributes to obesity among the Nation's children, without compromising nutrition to support healthy growth and development.
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\57\ The minimum calorie level for a lunch served to Grade 7 students is 825 calories under current standards (Grades 7-12); this would change to a range of 600 calories minimum, 700 calories maximum under the new standards (Grades 6-8).
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This approach is fully consistent with the recommendations of the Dietary Guidelines for Americans. Recognizing that the Dietary Guidelines apply to a total diet, rather than a specific meal or portion of an individual's consumption, the intention of the rule is to make changes to school meals nutrition requirements to promote diets more consistent with the Guidelines among program participants. Such diets, in turn, are useful behavioral contributors to health and well-
being. As the report of the 2010 Dietary Guidelines Advisory Committee notes, ``evidence is accumulating that selecting diets that comply with the Guidelines reduces the risk of chronic disease and promotes health.'' \58\ The report describes and synthesizes the evidence linking diet and different chronic disease risks, including cardiovascular disease and blood pressure, as well as the effects of dietary patterns on total mortality. Children are a subpopulation of particular focus for the Committee; the report emphasizes the increasing common evidence of chronic disease risk factors, such as glucose intolerance and hypertension, among children, and explains that ``evidence documents the importance of optimal nutrition starting during the fetal period through childhood and adolescence because this has a substantial influence on the risk of chronic disease with age.'' \59\
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\58\ Dietary Guidelines Advisory Committee, p. B1-2.
\59\ Dietary Guidelines Advisory Committee, pp. B1-2, B1-3.
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In response, the report notes improvements in food at schools as a critical strategy to prevent obesity, and related health risks, among children. Indeed, the Committee recommends ``improving foods sold and served in schools, including school breakfast, lunch, and after-
school meals and competitive foods so that they meet the recommendations of the IOM report on school meals (IOM, 2009) and the key findings of the 2010 DGAC. This includes all age groups of children, from preschool through high school.'' \60\
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\60\ Dietary Guidelines Advisory Committee, p. B3-6.
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The linkage between poor diets and health problems such as childhood obesity are also a matter of particular policy concern, given their significant social costs. One in every three children (31.7 percent) ages 2-19 is overweight or obese.\61\ Along with the effects on our children's health, childhood overweight and obesity imposes substantial economic costs, and the epidemic is associated with an estimated $3 billion in direct medical costs.\62\ Perhaps more significantly, obese children and adolescents are more likely to become obese as adults.\63\ In 2008, medical spending on adults that was attributed to obesity increased to an estimated $147 billion.\64\
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\61\ Ogden et al., 2010.
\62\ Trasande et al., 2009.
\63\ Whitaker et al., 1997; Serdula et al., May 1993.
\64\ Finkelstein et al., 2009
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Because of the complexity of factors that contribute both to overall food consumption and to obesity, we are not able to define a level of disease or cost reduction that is attributable to the changes in meals expected to result from implementation of the rule. As the rule is projected to make substantial improvements in meals served to more than half of all school-aged children on an average school day, we judge that the likelihood is reasonable that the benefits of the rule exceed the costs, and that the final rule thus represents a cost-
effective means of conforming NSLP and SBP regulations to the statutory requirements for school meals.
There are other, corollary benefits to improvement in school meals that are worthy of note. The changes could increase confidence by parents and families in the nutritional quality of school meals, which may encourage more families to opt for them as a reliable source of nutritious food for their children. Improved school meals can reinforce school-based nutrition education and promotion efforts and contribute significantly to the overall effectiveness of the school nutrition environment in promoting healthful food and physical activity choices. Finally, the new requirements provide a clearer alignment between Federal program benefits and national nutrition policy, which can help to reinforce overall understanding of the linkages between diet and health.
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Alternatives
1. Make No Changes to Proposed Rule
The proposed rule closely followed the recommendations contained in the 2010 report of the IOM committee commissioned by USDA to propose changes to the NSLP and SBP meal patterns. Those recommendations were designed to reflect current nutrition science, the Dietary Guidelines, and IOM's Dietary Reference Intakes. The reforms contained in the proposed rule were well received by health and nutrition professionals, child advocates, academics, and parents. But, as summarized in the preamble to the final rule and in this analysis, school and SFA officials, other public sector officials, and the food industry expressed concern about the cost and feasibility of the proposed rule. The final rule reflects those concerns by scaling back the quantity of food contained in the proposal, especially at breakfast, eliminating the proposed rule's limitations on starchy vegetables, phasing in some provisions, and extending target dates for meeting the proposed rule's sodium standards. Those changes result in a significantly less costly final rule.
One alternative to the final rule is to retain the proposed rule without change. The proposed rule closely
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followed IOM's recommendations. IOM developed its recommendations to encourage student consumption of foods recommended by the Dietary Guidelines in quantities designed to provide necessary nutrients without excess calories. The final rule still achieves that goal. Students will still be presented with choices from the food groups and vegetable subgroups recommended by the Dietary Guidelines. In that way, the final rule, like the proposed rule, will help children recognize and choose foods consistent with a healthy diet.
The most significant differences between the proposed and final rules are in the breakfast meal patterns, and those differences are largely a matter of timing. The final rule allows schools more time to phase-in key IOM recommendations on fruit and grains at breakfast. Once fully implemented, the most important difference between the final and proposed rule breakfast meal patterns is the elimination of a separate meat/meat alternate requirement. That change preserves current rules that allow the substitution of meat for grains at breakfast. It also responds to general public comments on cost, and on the need to preserve schools' flexibility to serve breakfast outside of a traditional cafeteria setting.
Even with these changes, and with the less significant changes to the proposed lunch standards, the final rule remains consistent with Dietary Guidelines recommendations. The added flexibility and reduced cost of the final rule relative to the proposed rule should increase schools' ability to comply with the new meal patterns. The final rule's less costly breakfast patterns will make it easier for schools to maintain or expand current breakfast programs, and may encourage other schools to adopt a breakfast program.
Table 16 estimates the cost of the proposed rule using updated projections of student participation and food inflation. The estimated 5-year cost of the final rule, from Table 6, is $2.9 billion lower than this updated cost estimate of the proposed rule.
Note that the estimate in Table 16 is about 10 percent lower than our cost estimate for the same set of provisions in the proposed rule Regulatory Impact Analysis. The difference between the two estimates reflects lower food inflation for most food groups since preparation of the proposed rule estimate.\65\ As we discuss in Section III.B.1., lower recent inflation also reduces our projection of future price increases.
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\65\ Table 16 also includes the effect of reclassifying tomatoes as a ``red/orange'' vegetable. Tomatoes were included in the ``other'' vegetable subgroup in our proposed rule cost estimate. Moving tomatoes from the ``other'' vegetable subgroup to the new ``red/orange'' subgroup is one of the changes contained in the 2010 Dietary Guidelines. Moving tomatoes back to the ``other'' vegetable subgroup for school meals was not considered by USDA and is therefore not reflected in this alternative to the final rule.
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2. Adopt Final Rule Lunch Meal Pattern Changes; Retain Proposed Rule Breakfast Patterns
From Alternative 1, above, we estimate that cost of the final rule is $2.9 billion lower than the cost of the proposed rule. Table 17 makes clear that most of this reduction is due to the final rule's breakfast meal pattern changes. Adopting all of the lunch provisions contained in the final rule,\66\ but retaining the proposed rule's breakfast provisions, would cost an estimated $5.9 billion over 5 years, or $2.7 billion more than final rule. This alternative responds less effectively than the final rule to comments received by USDA from SFA and school administrators who expressed concerns about the cost of the proposed rule.
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\66\ For purposes of this estimate, reclassifying tomatoes as a ``red/orange'' vegetable is considered to be one of the final rule's lunch meal pattern changes.
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3. Adopt Final Rule Breakfast Meal Pattern Changes; Retain Proposed Rule Lunch Patterns
This alternative highlights the relatively small difference in the cost of the proposed and final rule lunch provisions. The two key differences in the proposed and final rule lunch provisions have largely offsetting costs. The combined effect of moving tomatoes to the new red/orange vegetable subgroup, and the associated changes in the minimum cup requirements of the red/orange, starchy, and ``other'' vegetable subgroups have the effect of increasing the cost of the final rule relative to the proposed rule. The final rule's reduction in the lunch meal pattern's grain ounce equivalent requirement reduces the cost of the final rule relative to the proposed rule.
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Accounting Statement
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), we have prepared an accounting statement showing the annualized estimates of benefits, costs and transfers associated with the provisions of this final rule.
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References
Abraham, S., M. Chattopadhyay, M. Montgomery, D. M. Steiger, L. Daft, B. Wilbraham. (Abraham, 2002) The School Meals Initiative Implementation Study-Third Year Report. U.S. Department of Agriculture, Food and Nutrition Service.
Bibbins-Domingo K et al. (Bibbins-Domingo, 2010) Projected effect of dietary salt reductions on future cardiovascular disease. New England Journal of Medicine, 2010 Feb 18;362(7):590-9. Epub 2010 Jan 20.
Bibbins-Domingo K. (Bibbins-Domingo, 2010b) Abstract 18899: Cardiovascular Benefits of Dietary Salt Reduction for US Adolescents. Presented at: American Heart Association Scientific Sessions 2010; Nov. 13-17; Chicago.
Dietary Guidelines Advisory Committee. Report of the Dietary Guidelines Advisory Committee on the Dietary Guidelines for Americans, 2010 (http://www.cnpp.usda.gov/DGAs2010-DGACReport.htm).
Finkelstein, E., Trogdon, J., Cohen J., Dietz, W. (2009). Annual Medical Spending Attributable to Obesity: Payer-And Service-Specific Estimates. Health Affairs, 28(5).
Institute of Medicine (IOM 2009). School Meals: Building Blocks for Healthy Children. Washington, D.C: The National Academies Press. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SchoolMealsIOM.pdf.
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Institute of Medicine (IOM 2009). Nutrition Standards for Foods in Schools: Leading the Way toward Healthier Youth. Washington, D.C: The National Academies Press. http://books.nap.edu/openbook.php?record_id=11899.
Maurer, K. The National Evaluation of School Nutrition Programs: Program Impact on Family Food Expenditures. The American Journal of Clinical Nutrition 40: August 1984, pp 448-453.
Ogden, C.L., Carroll, M., Curtin, L., Lamb, M., Flegal, K. (2010). Prevalence of High Body Mass Index in US Children and Adolescents 2007-2008. Journal of American Medical Association, 303(3), 242-249.
Smith-Spangler CM et al. (2010) Population strategies to decrease sodium intake and the burden of cardiovascular disease: a cost-
effectiveness analysis. Annals of Internal Medicine, 2010 Apr 20;152(8):481-7, W170-3. Epub 2010 Mar 1.
Serdula MK, Ivery D, Coates RJ, Freedman DS. Mayiamson DF. Byers T. Do obese children become obese adults? A review of the literature. Prev Med 1993;22:167-177.
Trasande, L., Chatterjee, S. (2009). Corrigendum: The Impact of Obesity on Health Service Utilization and Costs in Childhood. Obesity, 17(9).
Whitaker RC, Wright JA, Pepe MS, Seidel KD, Dietz WH. Predicting obesity in young adulthood from childhood and parental obesity. N Engl J Med 1997; 37(13):869-873;
U.S. Department of Agriculture, Food and Nutrition Service (USDA 2008). School Lunch and Breakfast Cost Study-II, Final Report, by Susan Bartlett, et al.http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/MealCostStudy.pdf.
U.S. Department of Agriculture, Food and Nutrition Service (USDA 2007). School Nutrition Dietary Assessment Study-III by Anne Gordon, et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SNDAIII-SummaryofFindings.pdf.
U.S. Department of Agriculture, Food and Nutrition Service (USDA 2007a). White Paper: USDA Commodities in the National School Lunch Program.
U.S. Department of Agriculture, Food and Nutrition Service (USDA 2007b). NSLP/SBP Access, Participation, Eligibility, and Certification Study--Erroneous Payments in the NSLP and SBP, by Michael Ponza, et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/apecvol1.pdf.
U.S. Department of Agriculture, Dietary Guidelines Advisory Committee (USDA 2004). Report of the Dietary Guidelines Advisory Committee on the Dietary Guidelines for Americans, 2005 http://www.health.gov/dietaryguidelines/dga2005/report/.
U.S. Department of Agriculture, Food and Nutrition Service (USDA 2001). School Nutrition Dietary Assessment Study-II by Mary Kay Fox, et al. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SNDAIIfind.pdf.
U.S. Department of Agriculture, Food and Nutrition Service. The Impact of the School Nutrition Programs on Household Food Expenditures. Prepared by Mathematica Policy Research, Inc., October 30, 1987.
U.S. Department of Health and Human Services (HHS 2010). The Surgeon General's Vision for a Healthy and Fit Nation. http://www.surgeongeneral.gov/library/obesityvision/obesityvision2010.pdf
U.S. Department of Health and Human Services and U.S. Department of Agriculture (HHS/USDA 2005). Dietary Guidelines for Americans, 6th Edition. http://www.cnpp.usda.gov/Publications/DietaryGuidelines/2005/2005DGPolicyDocument.pdf.
U.S. Department of Agriculture and U.S. Department of Health and Human Services. (USDA/HHS 2010) Dietary Guidelines for Americans, 2010. 7th Edition. http://www.cnpp.usda.gov/Publications/DietaryGuidelines/2010/PolicyDoc/PolicyDoc.pdf.
Wagner, B., B. Senauer, and F. C. Runge. (Wagner, 2007). An Empirical Analysis of and Policy Recommendations to Improve the Nutritional Quality of School Meals. Review of Agricultural Economics 29(4):672-688.
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Appendix A
The following tables detail the major steps in the computation of food cost estimates described in the main body of the impact analysis. The tables develop both a baseline food cost estimate and an estimate under the proposed rule.
Table A-1 contains total food and labor cost estimates for the baseline and under the proposed rule. The difference is summarized in the shaded panel at the bottom of the table. That difference is the estimated cost of the rule, as presented in Table 6 in section III.A.1.
Table A-2 shows each of the major inputs into our baseline cost estimate. The first 5 columns give the estimated food cost per school meal served. We inflate each of the meal components by historic and projected changes in food group specific prices to estimate per meal costs through FY 2016. Inflation factors, not shown in Table A-2, are weighted averages, computed from CPI-U data from the Bureau of Labor Statistics. The next set of columns contains projections of meals served through FY 2016. Total baseline costs, in the five rightmost columns of Table A-2, are the product of the estimated costs per meal and FNS projections of the number of meals served.
Our estimate of total cost under the proposed rule is developed in Table A-3. Table A-3 summarizes the steps that we took to estimate a per-meal food cost in FY 2012, the year in which the rule is expected to take effect, and shows our projection of total costs through FY 2016.
Table A-3 resembles Table A-2. It takes the weighted average prices per meal by meal component for FY 2012, projects them through FY 2016 using food group specific inflation factors, then multiplies those inflated per meal figures by FNS projections of meals served. The final estimated cost of meals served under the proposed rule is displayed in the last five columns of the table.
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Final Regulatory Flexibility Analysis
Final rule: Nutrition Standards in the National School Lunch and School Breakfast Programs
RIN 0584-AD59
AGENCY: Food and Nutrition Service, USDA.
Background: The Regulatory Flexibility Act (RFA) requires agencies to consider the impact of their rules on small entities and to evaluate alternatives that would accomplish the objectives of the rules without unduly burdening small entities when the rules impose a significant economic impact on a substantial number of small entities. Inherent in the RFA is Congress' desire to remove barriers to competition and encourage agencies to consider ways of tailoring regulations to the size of the regulated entities.
The RFA does not require that agencies necessarily minimize a rule's impact on small entities if there are significant legal, policy, factual, or other reasons for the rule's having such an impact. The RFA requires only that agencies determine, to the extent feasible, the rule's economic impact on small entities, explore regulatory alternatives for reducing any significant economic impact on a substantial number of such entities, and explain the reasons for their regulatory choices.
Reasons That Action Is Being Considered
Section 103 of the Child Nutrition and WIC Reauthorization Act of 2004 inserted Section 9(a)(4) into the National School Lunch Act requiring the Secretary to promulgate rules revising nutrition requirements, based on the most recent Dietary Guidelines for Americans, that reflect specific recommendations for increased consumption of foods and food ingredients offered in school meal programs. In addition, Section 201 of the Healthy, Hunger-Free Kids Act of 2010 (HHFKA) requires the Secretary to issue regulations to update the school meal patterns based on recommendations of the Institute of Medicine. This final rule amends Sections 210 and 220 of the regulations that govern the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). USDA published a proposed rule in the Federal Register on January 13, 2011 (76 FR 2494) that closely followed IOM's recommendations. USDA received and processed more than 130,000 comments on the proposed rule. USDA considered those comments in developing a final rule that continues to advance the goals of the IOM while responding to concerns about the cost of implementation, and the need for flexibility in administration at the school district level.
Objectives of, and Legal Basis for, the Final Rule
Under Section 9(a)(4) and Section 9(f)(1) of the NSLA, schools that participate in the NSLP or SBP must offer lunches and breakfasts that are consistent with the goals of the most recent Dietary Guidelines for Americans. Current nutrition requirements for school lunches and breakfasts are based on the 1995 Dietary Guidelines and the 1989 RDAs. (School lunches and breakfasts were not updated when the 2000 Dietary Guidelines were issued because those recommendations did not require significant changes to the school meal patterns.) The 2005 and 2010 Dietary Guidelines provide more prescriptive and specific nutrition guidance than earlier releases and require significant changes to school meal requirements.
Number of Small Entities To Which the Final Rule Will Apply
This rule directly regulates the 55 State education agencies and 2 State Departments of Agriculture (SAs) that operate the NSLP and SBP pursuant to agreements with USDA's Food and Nutrition Service (FNS); in turn, its provisions apply to entities that prepare and provide NSLP and SBP meals to students. While SAs are not small entities under the RFA as State populations exceed the 50,000 threshold for a small government jurisdiction, many of the service-providing institutions that work with them to implement the program do meet definitions of small entities:
There are currently about 19,000 School Food Authorities (SFAs) participating in NSLP and SBP. More than 99 percent of these have fewer than 50,000 students.\67\ About 26 percent of SFAs with fewer than 50,000 students are private. However, private school SFAs account for only 3 percent of all students in SFAs with enrollments under 50,000.\68\
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\67\ FNS 742 School Food Verification Survey, School Year 2009-
2010. This number is approximate, not all SFAs are required to submit the 742 form.
\68\ Ibid. RCCIs include but are not limited to juvenile detention centers, orphanages, and medical institutions. We do not have information on the number of children enrolled in these institutions.
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Nearly 102,000 schools and residential child care institutions participate in the NSLP. These include more than 90,000 public schools, 6,000 private schools, and about 5,000 residential child care institutions (RCCIs).\69\ We focus on the impact at the SFA level in this document, rather than the school level, because SFAs are responsible for the administration of the NSLP and the SBP.
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\69\ FNS program data for FY 2010.
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Food service management companies (FSMCs) that prepare school meals or menus under contract to SFAs are affected indirectly by the proposed rule. Thirteen percent of public school SFAs contracted with FSMCs in school year (SY) 2004-2005.\70\ Of the 2,460 firms categorized as ``food service contractors'' under NAICS code 72231, 96 percent employ fewer than 500 workers.\71\
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\70\ U.S. Department of Agriculture, Food and Nutrition Service, Office of Research, Nutrition and Analysis, School Nutrition Dietary Assessment Study-III, Vol. I, 2007, p. 34 http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SNDAIII-Vol1.pdf.
\71\ Ibid.
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Response to Public Comments on Initial Regulatory Flexibility Analysis
USDA received comments on the Initial Regulatory Flexibility Analysis from school, SFA, and State education officials, advocacy organizations, and foodservice industry representatives. Most of those individuals were concerned with the cost of complying with the rule. Commenters pointed to the particular cost challenges faced by small schools with few foodservice employees, limited space for storage and on-site meal preparation, and the inability to purchase food in quantities necessary to get the lowest prices. These comments are discussed in the relevant sections below.
Projected Reporting, Recordkeeping and Other Compliance Requirements
The analysis below covers only those organizations impacted by the final rule that were determined to be small entities.
School Food Authorities (SFA)/Schools
Increased Cost To Produce School Meals
USDA estimates that the proposed rule will raise the average cost of producing and serving school lunches by 5 cents on initial implementation. Phased implementation of the rule's breakfast meal patterns results in no first year costs. By FY 2015, when all of the lunch and breakfast food group requirements are in place, the cost per lunch will be about 10 cents higher than our baseline estimate; the cost per breakfast will be about 27 cents higher. Across all SFAs we estimate that the total cost of compliance will be $3.2 billion over five years. Although about 99 percent of SFAs enroll fewer than
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50,000 students, they enroll only about 80 percent of all students. If they serve about 80 percent of all meals (we do not have data on meals served by SFA size) then these small entities would incur roughly 80 percent of estimated costs.
With exceptions for individual schools, USDA expects that the cost of the rule will increase with meals served and will not be proportionately higher for small schools. Small schools that face average labor and food costs, and have menus typical of the average school are expected to incur per-meal costs comparable to larger schools. We expect that those costs will equal our estimated cost per meal multiplied by the number of meals served.
The most important factors that separate schools with higher than average per-meal costs from those with lower than average costs are not necessarily associated with the size of the SFA. For instance, schools with menus that already emphasize fruits, non-starchy vegetables, and whole grains will need to make fewer changes, and the costs of implementation in those schools should be lower than average. Also, because the per-meal cost of complying with the proposed requirements is much higher for breakfast than for lunch, the overall costs of implementation in schools that serve the most school breakfasts relative to lunches will be higher than the costs faced by schools that do not serve breakfast.
Some commenters note that small districts pay more for food than larger districts that benefit from volume discounts. Others suggest that prices for whole grain and reduced fat products are higher in small, rural communities. USDA's School Lunch and Breakfast Cost Study II (SLBCS) finds that the per-meal costs of producing school breakfasts are higher in small districts than in large districts.\72\ But the study finds no statistically significant difference by SFA size in the cost of producing a school lunch.
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\72\ U.S. Department of Agriculture, Food and Nutrition Service, Office of Research, Nutrition and Analysis, School Lunch and Breakfast Cost Study-II, Final Report, by Susan Bartlett, et al., 2008, pp. 3-2--3-5. http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/MealCostStudy.pdf.
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SLBCS finds that at least some of the higher cost incurred by small districts to produce a school breakfast is due to the fixed costs of operating a small program. The study does not, however, address how much might be due to higher food prices. USDA's School Food Purchase Study (SFPS) found that large districts do tend to pay less than small districts for food on a per-unit basis.\73\ But the study also found that ``the relationship between small SFA size and higher food costs is weak for districts of less than 5,000 enrollment.'' Although SFPS found that small districts tend to pay more for food, it also found that small districts charge students the least for full-price school meals.\74\
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\73\ The study could not conclude whether the price advantage of large districts was a result of ``an economy of scale based on the volume of food they are purchasing, the use of highly centralized procurement systems or formal procurement and pricing methods typically found in large school districts, the accessibility to more vendors leading to a more competitive marketplace, or a combination of factors.'' U.S. Department of Agriculture, Food and Nutrition Service, Office of Analysis and Evaluation, School Food Purchase Study Final Report (Executive Summary), by Lynn Daft, et al., 1998 http://www.fns.usda.gov/ora/MENU/Published/CNP/FILES/SFPS-Execsum.pdf.
\74\ School Food Purchase Study Final Report, pp. III-14--III-
15.
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Increased Cost of Administering School Meals Programs
USDA expects that SFAs will incur additional administrative costs for staff training during implementation of the new standards. The final rule replaces the Coordinated Review Effort (CRE) and School Meals Initiative (SMI) with a combined State Agency administrative review. The new review will be held once every 3 years, instead of once every 5 years. The increased frequency of the combined review will increase administrative costs for many SFAs. However, SFAs that previously had separate CREs and SMIs may experience a decrease in burden, because they will undergo just one CRE every three years, rather than two reviews (one CRE and one SMI) every five years.
USDA estimates that the proposed rule will result in an average 8.2 hour net increase in the annual reporting and recordkeeping burden for each of 7,000 SFAs. That increase appears to fall below the threshold for recognition as a significant impact for RFA purposes.\75\
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\75\ SBA's ``A Guide for Government Agencies'' identifies several examples of significant impact: A rule that provides a strong disincentive to seek capital; 175 staff hours per year for recordkeeping; impacts greater than the $500 fine (in 1980 dollars) imposed for noncompliance; new capital requirements beyond the reach of the entity; and any impact less cost-efficient than another reasonable regulatory alternative.
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Increased Equipment Costs
SFAs may need to purchase new equipment to prepare and serve meals that comply with the proposed standards. For example, some SFAs may need to replace fryers with ovens or steamers. In FY 2009, FNS solicited requests from SFAs for food service equipment grants, awarding $100 million in 2009 American Recovery and Reinvestment Act (ARRA) Equipment Grants and an additional $25 million in one-time funds included in the FY 2010 Appropriations Act. In response to their solicitations for these funds, State agencies received a total of approximately $600 million in grant requests from SFAs. The strong response to these grant programs indicates a substantial demand for investment in kitchen equipment.
We do not have the data necessary to measure the remaining unmet demand in smaller SFAs or in SFAs that did not receive grants. However, much of that demand is driven by the routine need to replace equipment that is nearing the end of its useful life--a cost that is appropriately covered by USDA meal reimbursements and other sources of food service revenue. For recipient SFAs, the grants temporarily freed some of those revenue sources for other priorities. In the absence of additional Congressional action, SFAs must again turn to those sources to meet their ongoing equipment needs.
Data from the SLBCS confirm that small SFAs spend more, on average, to produce a school breakfast than do large SFAs.\76\ SLBCS found that higher per-meal breakfast costs in small SFAs are due, in part, to the fixed costs of operating a breakfast program. For example, schools that choose to offer breakfast must pay staff to serve meals, no matter how few students participate. As schools serve more breakfasts, SLBCS data show that the cost per unit decreases; this is the case for both small and large SFAs.\77\
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\76\ School Food Purchase Study Final Report, p. VII-1.
\77\ Ibid.
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If the fixed costs of starting up a breakfast program were the only factors responsible for higher average breakfast costs in small school districts, then we would not expect the final rule to have a disproportionate effect on those districts. The main costs of the rule are variable rather than fixed: Schools must offer a greater variety and additional quantities of certain foods to each student. Some commenters point out, though, that the rule might require additional investment in food preparation and storage equipment, and that this imposes a special burden on smaller districts. But these costs are variable too; larger districts will spend more than smaller districts on similar types of equipment to handle a greater volume of food. Of course, kitchen equipment is not variable in the same sense as food. Small districts may have to purchase new equipment as a result of the final rule that they may not use
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as intensively as districts that prepare more meals. In that way, expenditures on kitchen equipment may add more to per-meal costs in small districts than in bigger districts.
USDA Response to Public Comments on the Cost of the Proposed Rule
USDA considered all comments submitted by the public on the proposed rule. Comments from school district and school officials, foodservice industry professionals, and others concerned with the cost of the proposed rule were instrumental in guiding USDA's development of a less costly final rule. The modifications offer schools short term savings, relative to the proposed rule, by phasing in the rule's breakfast fruit and grain requirements. As a result of elimination of the proposed rule's breakfast meat requirement, the ongoing cost of the final rule after full implementation is also reduced. Eliminating the proposed limit on the amount of starchy vegetables that schools may offer at lunch has little effect on the cost of the final rule relative to the proposed rule. Significant savings are realized through a reduction in the lunch pattern's grain requirement.
USDA estimated that the proposed rule would increase the costs of preparing and serving school meals by $6.8 billion over 5 years. With the changes discussed above, the 5-year cost of the rule is reduced to $3.2 billion.\78\ The reduction in cost will benefit SFAs of any size that might have had difficulty implementing the proposed rule standards.
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\78\ Part of the reduction in cost is due to a recent reduction in food inflation. See the Regulatory Impact Analysis for additional detail.
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Options for Addressing Increased Costs
Although changes to the final rule significantly reduce the implementation costs faced by SFAs, the rule still requires a substantial investment by schools and school districts to improve the nutritional quality of school meals.
The Healthy, Hunger-Free Kids Act of 2010 (HHFKA), which is one of the 2 statutory directives behind this rulemaking, also contains provisions intended to reform school meal financing. USDA estimates that those provisions will increase SFA revenues enough to fully offset the cost of this rule.
HHFKA's meal pattern and revenue raising provisions are linked directly in the performance-based increase in Federal financing for school lunches. Schools and SFAs that successfully implement the final rule standards will receive an additional 6 cent reimbursement for each lunch served. The Congressional Budget Office estimates that an additional 6 cents per lunch would raise $1.5 billion for SFAs in the first 5 years after implementation of the rule.\79\
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\79\ See Table 2 in CBO's April 20, 2010 cost estimate for HHFKA. http://www.cbo.gov/ftpdocs/114xx/doc11451/HealthyHungerFreeKidsAct.pdf. The total increase in budget authority through FY 2016 includes $100 million for administrative expenses ($50 million in each of the first 2 years).
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HHFKA contains two additional provisions to ensure that Federal reimbursements are used as intended to provide quality meals to program participants. The first requires SFAs to gradually raise the per-meal revenue generated from paid lunches to an amount equal to the Federal reimbursement for free lunches. That revenue could come from student payments or State or local sources. The second requires that the revenue generated from non-program foods as a percent of food costs match the revenue to food cost ratio of program meals. USDA estimates that these two provisions will raise a combined $7.5 billion in the 5 years following their July 1, 2011 effective date.\80\
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\80\ See the interim final rule and regulatory impact analysis for ``School Food Service Account Revenue Amendments Related to the Healthy, Hunger-Free Kids Act of 2010'', Federal Register, Vol. 76, No. 117, pp. 35301-35318.
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SFAs will benefit differently from HHFKA's revenue provisions. SFAs with relatively few students who pay full price for program meals stand to gain little from HHFKA's paid lunch provision. Similarly, schools that sell few agrave la carte items will realize little revenue from an increase in agrave la carte prices. At the same time, schools that serve mostly free and reduced-price students and sell little agrave la carte can rely on significant Federal funding for each SFA dollar spent to purchase and prepare school foods.
The experience of some schools suggests that substantial progress toward implementation of the rule can even be achieved with existing resources. USDA's HealthierUS Schools Challenge (HUSSC) recognizes elementary schools that meet voluntary school meal and physical activity standards. HUSSC school meal standards exceed NSLP requirements on several levels, including requirements for a variety of vegetables each week, including dark green and orange vegetables and legumes; a variety of whole fruits, and limits on fruit juice; and whole grain and low fat milk requirements. USDA has certified more than 1,600 HUSSC schools since 2004. HUSSC schools have demonstrated an ability to operate cost-effective school meals programs that emphasize many of the same foods required by the final rule. These schools receive no financial assistance from USDA beyond the meal reimbursements and USDA Foods available to other schools that participate in the Federal school lunch and breakfast programs. Like other service businesses, schools may need to consider changes to their operations to increase efficiency and meet the requirements of the rule. HUSSC schools have demonstrated an ability to operate cost-
effective school meals programs that meet many of the final rule's requirements. These schools may offer models for others as implementation moves forward.
We recognize that small SFAs, like others, will face substantial costs and potential challenges in implementing the proposed rule. These costs should not be significantly greater for small SFAs than for larger ones, as implementation costs are driven primarily by factors other than SFA size. Nevertheless, we do not discount the special challenges that may face some smaller SFAs. As a group, small SFAs may have less flexibility to adjust resources in response to immediate budgetary needs. Phased implementation of the final rule's breakfast provisions, which will reduce up-front costs of implementation, may be particularly valuable to small SFAs.
Food Service Management Companies
FSMCs are potentially indirectly affected by the proposed rule. FSMCs that provide school meals under contract to SFAs will need to alter those products to conform to the proposed changes in meal requirements. In addition, FSMCs may find new opportunities to work with SFAs that currently do not contract for food service assistance. Consistent with SBA guidance, which notes that ``the courts have held that the RFA requires an agency to perform a regulatory flexibility analysis of small entity impacts only when a rule directly regulates them'',\81\ we do not attempt to quantify the economic effect of the proposed rule on FSMCs.
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\81\ SBA, ``A Guide for Government Agencies'', p. 20.
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Federal Rules That May Duplicate, Overlap or Conflict With the Final Rule
FNS is unaware of any such Federal rules or laws.
Significant Alternatives
One alternative to the final rule is to retain the proposed rule without change. The proposed rule closely
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followed IOM's recommendations. IOM developed its recommendations to encourage student consumption of foods recommended by the Dietary Guidelines in quantities designed to provide necessary nutrients without excess calories. The final rule still achieves that goal. Students will still be presented with choices from the food groups and vegetable subgroups recommended by the Dietary Guidelines. In that way, the final rule, like the proposed rule, will help children recognize and choose foods consistent with a healthy diet.
The most significant differences between the proposed and final rules are in the breakfast meal patterns, and those differences are largely a matter of timing. The final rule allows schools more time to phase-in key IOM recommendations on fruit and grains at breakfast. Once fully implemented, the most important difference between the final and proposed rule breakfast meal patterns is the elimination of a separate meat/meat alternate requirement. That change preserves current rules that allow the substitution of meat for grains at breakfast. It also responds to general public comments on cost, and on the need to preserve schools' flexibility to serve breakfast outside of a traditional cafeteria setting.
Even with these changes, and with the less significant changes to the proposed lunch standards, the final rule remains consistent with Dietary Guidelines recommendations. The added flexibility and reduced cost of the final rule relative to the proposed rule should increase schools' ability to comply with the new meal patterns. The final rule's less costly breakfast patterns will make it easier for schools to maintain or expand current breakfast programs, and may encourage other schools to adopt a breakfast program.
Implementing the proposed rule, without changes, would increase the cost to SFAs of implementing the new meal patterns, relative to the final rule, by an estimated $2.9 billion over 5 years.
List of Subjects
7 CFR Part 210
Grant programs--education, Grant programs--health, Infants and children, Nutrition, Penalties, Reporting and recordkeeping requirements, School breakfast and lunch programs, Surplus agricultural commodities.
7 CFR Part 220
Grant programs--education, Grant programs--health, Infants and children, Nutrition, Reporting and recordkeeping requirements, School breakfast and lunch programs.
Accordingly, 7 CFR parts 210 and 220 are amended as follows:
PART 210--NATIONAL SCHOOL LUNCH PROGRAM
0
1. The authority citation for 7 CFR part 210 continues to read as follows:
Authority: 42 U.S.C. 1751-1760, 1779.
0
2. In Sec. 210.2:
0
-
Revise the definition of Food component;
0
-
Revise the definition of Food item;
0
-
Amend the definition of Lunch by removing the words ``applicable nutrition standards and portion sizes'' and adding in their place the words ``meal requirements'';
0
-
Remove the definition of Menu item;
0
-
Remove the definition of Nutrient Standard Menu Planning/Assisted Nutrient Standard Menu Planning;
0
-
Revise the definition of School week; and
0
-
Add definitions of Tofu and Whole grains.
The revisions and additions read as follows:
Sec. 210.2 Definitions.
* * * * *
Food component means one of the five food groups which comprise reimbursable meals. The five food components to be offered to students in grades K-5 are: Meats/meat alternates, grains, vegetables, fruits, and fluid milk. Meals offered to preschoolers must consist of four food components: Meats/meat alternates, grains, vegetables/fruits, and fluid milk.
Food item means a specific food offered within the five food components: Meats/meat alternates, grains, vegetables, fruits, and fluid milk.
* * * * *
School week means the period of time used to determine compliance with the meal requirements in Sec. 210.10. The period shall be a normal school week of five consecutive days; however, to accommodate shortened weeks resulting from holidays and other scheduling needs, the period shall be a minimum of three consecutive days and a maximum of seven consecutive days. Weeks in which school lunches are offered less than three times shall be combined with either the previous or the coming week.
* * * * *
Tofu means a soybean-derived food, made by a process in which soybeans are soaked, ground, mixed with water, heated, filtered, coagulated, and formed into cakes. Basic ingredients are whole soybeans, one or more food-grade coagulants (typically a salt or an acid), and water. Tofu products must conform to FNS guidance to count toward the meats/meat alternates component.
Whole grains means grains that consist of the intact, ground, cracked, or flaked grain seed whose principal anatomical components--
the starchy endosperm, germ and bran--are present in the same relative proportions as they exist in the intact grain seed. Whole grain-rich products must conform to FNS guidance to count toward the grains component.
* * * * *
0
3. Revise Sec. 210.10 to read as follows:
Sec. 210.10 Meal requirements for lunches and requirements for afterschool snacks.
(a) General requirements. (1) General nutrition requirements. Schools must offer nutritious, well-balanced, and age-appropriate meals to all the children they serve to improve their diets and safeguard their health.
(i) Requirements for lunch. School lunches offered to children age 5 or older must meet, at a minimum, the meal requirements in paragraph (b) of this section. Schools must follow a food-based menu planning approach and produce enough food to offer each child the quantities specified in the meal pattern established in paragraph (c) of this section for each age/grade group served in the school. In addition, school lunches must meet the dietary specifications in paragraph (f) of this section. Schools offering lunches to children ages 1 to 4 and infants must meet the meal pattern requirements in paragraph (p) of this section.
(ii) Requirements for afterschool snacks. Schools offering afterschool snacks in afterschool care programs must meet the meal pattern requirements in paragraph (o) of this section. Schools must plan and produce enough food to offer each child the minimum quantities under the meal pattern in paragraph (o) of this section. The component requirements for meal supplements served under the Child and Adult Care Food Program authorized under part 226 of this chapter also apply to afterschool snacks served in accordance with paragraph (o) of this section.
(2) Unit pricing. Schools must price each meal as a unit. Schools need to consider participation trends in an effort to provide one reimbursable lunch and, if applicable, one reimbursable afterschool snack for each child every school day. If there are leftover meals, schools may offer them to the students but cannot get Federal reimbursement
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for them. Schools must identify, near or at the beginning of the serving line(s), the food items that constitute the unit-priced reimbursable school meal(s). The price of a reimbursable lunch does not change if the student does not take a food item or requests smaller portions.
(3) Production and menu records. Schools or school food authorities, as applicable, must keep production and menu records for the meals they produce. These records must show how the meals offered contribute to the required food components and food quantities for each age/grade group every day. Labels or manufacturer specifications for food products and ingredients used to prepare school meals must indicate zero grams of trans fat per serving (less than 0.5 grams). Schools or school food authorities must maintain records of the latest nutritional analysis of the school menus conducted by the State agency. Production and menu records must be maintained in accordance with FNS guidance.
(b) Meal requirements for school lunches. School lunches for children ages 5 and older must reflect food and nutrition requirements specified by the Secretary. Compliance with these requirements is measured as follows:
(1) On a daily basis: (i) Meals offered to each age/grade group must include the food components and food quantities specified in the meal pattern in paragraph (c) of this section;
(ii) Food products or ingredients used to prepare meals must contain zero grams of trans fat per serving or a minimal amount of naturally occurring trans fat; and
(iii) The meal selected by each student must have the number of food components required for a reimbursable meal and include at least one fruit or vegetable.
(2) Over a 5-day school week: (i) Average calorie content of meals offered to each age/grade group must be within the minimum and maximum calorie levels specified in paragraph (f) of this section;
(ii) Average saturated fat content of the meals offered to each age/grade group must be less than 10 percent of total calories; and
(iii) Average sodium content of the meals offered to each age/grade group must not exceed the maximum level specified in paragraph (f) of this section.
(c) Meal pattern for school lunches. Schools must offer the food components and quantities required in the lunch meal pattern established in the following table:
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Lunch meal pattern
Meal pattern -----------------------------------------------------
Grades K-5 Grades 6-8 Grades 9-12
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Amount of food \a\ per week
(minimum per day)
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Fruits (cups) \b\......................................... 2\1/2\ (\1/2\) 2\1/2\ (\1/2\) 5 (1)
Vegetables (cups) \b\..................................... 3\3/4\ (\3/4\) 3\3/4\ (\3/4\) 5 (1)
Dark green \c\........................................ \1/2\ \1/2\ \1/2\
Red/Orange \c\........................................ \3/4\ \3/4\ 1\1/4\
Beans and peas (legumes) \c\.......................... \1/2\ \1/2\ \1/2\
Starchy \c\........................................... \1/2\ \1/2\ \1/2\
Other c d................................................. \1/2\ \1/2\ \3/4\
Additional Veg to Reach Total \e\......................... 1 \e\ 1 \e\ 1\1/2\ \e\
Grains (oz eq) \f\........................................ 8-9 (1) 8-10 (1) 10-12 (2)
Meats/Meat Alternates (oz eq)............................. 8-10 (1) 9-10 (1) 10-12 (2)
Fluid milk (cups) \g\..................................... 5 (1) 5 (1) 5 (1)
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Other Specifications: Daily Amount Based on the Average for a 5-Day Week
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Min-max calories (kcal) \h\............................... 550-650 600-700 750-850
Saturated fat (% of total calories) \h\...................
-
