Don't Call Healthy School Lunch an "Encroachment"

by Dana Woldow, 2013-02-11

As school budget season gets underway, it's time to say goodbye to "encroachments." San Francisco Unified School District's Student Nutrition Services (SNS) spends more money running school meal programs than it collects in meal payments from families and the government, necessitating an infusion of cash from the district's general fund. In Budgetspeak, this is called an "encroachment", which means the cost of providing a required service is more than the funds provided to pay for it, so other funds must be used to cover the cost.

However, "encroachment", derived from a medieval French word meaning literally "to catch with a hook", carries a negative connotation, implying the "encroaching" program is seizing money to which it is not entitled, thereby shortchanging other programs or services (or, in the worst case, other students.) As parent of a special education student, SF school board member Rachel Norton wrote passionately in 2009 about her distaste for the term "encroachment" as it referred to the special ed budget, even comparing that program's funding shortfall to that of student nutrition.


"School districts are being expected to provide services way beyond the limits of the funding provided by the state and federal governments for special education; similarly, the cost of providing a nutritious and reasonably appetizing lunch prepared and served by trained employees is almost impossible with the amount of funding schools get for this purpose," Norton wrote.

The comparison is apt, and as the budget season begins in SFUSD, with the Budget and Business Services Committee meeting on February 6th the first in a series to determine spending for 2013-14, it's time to stop calling the amount of money required to serve SF schools' new healthier, tastier, and more popular meals from Revolution Foods an "encroachment."

The cost of living in SF is among the highest in the nation; a 2012 report from the National Low Income Housing Coalition ranked SF as the most expensive metropolitan area in which to rent a 2 bedroom apartment. SF also ranks 4th out of 300 US cities on the Council for Community and Economic Research's 2012 list of most expensive places to live, exceeded only by Manhattan, Brooklyn, and Honolulu.

As a result, SFUSD's cafeteria worker salaries are higher than most other school districts, some of which pay around $8.60/hour; the lowest entry level SNS jobs start at about $14/hour. No SF resident could afford to work the almost entirely part-time SNS jobs for $8.60/hour, or even for SF's higher-than-average minimum wage of $10.55/hour, and it is unreasonable to expect workers to commute in from a cheaper outlying area to work 3.5 hours a day.

SF's Board of Education supports paying workers a living wage. However, a paradigm in which scarce resources are allocated first to labor, followed by overhead, with food budgeted at whatever remains, leaves the food budget most vulnerable to cuts when student nutrition expenses exceed revenues.

Given that some of SFUSD's own policies and procedures exacerbate the shortfall, it would be more appropriate to call the $2 million in general fund money which SNS needed last year, and which may be higher this year, a "contribution" or "support" from the school district, not an "encroachment".

While $2 million dollars may sound high for a department with a budget of about $18 million, it's a case of the pie being too small to yield all the required slices. The per-meal federal funding rate is set by Congress and is the same for all 48 contiguous states (Alaska and Hawaii get more.) States may also contribute; California adds about 22 cents to the $2.94 SFUSD gets from the feds for free lunch served, for a grand total of $3.16 per free lunch.

How does that $3.16 get spent? The meals from Revolution Foods cost SFUSD $1.95 at elementary, $2.07 at middle school and $2.15 at high school; the milk which regulations require be offered adds about another 25 cents. Thus, the cost of the food alone ranges from $2.20-$2.40.

Subtracting that from the $3.16 which SFUSD receives for a free school lunch, leaves between 76-96 cents to pay for all of the other costs to run the meal program, including labor and benefits, and overhead costs including utilities, pest control, delivery charges, office expenses like software licenses, etc.

The typical US school meal program spends about 45% of its budget on labor and benefits, according to the USDA. Assuming the government believes that $3.16 is a sufficient budget for a free lunch, then about $1.42 of the $3.16 (45%) should cover labor. But here in SF, less than $1 is left of the $3.16 after subtracting the cost of a healthy meal that students are happy to eat; already the budget is in the red, and that is before even a penny is allocated for overhead costs.

And that is just for those students qualified for free lunch. Families with slightly higher incomes qualify for reduced price lunch; the federal payment is $2.54, and students are supposed to pay the .40 difference, although SFUSD waives this. Adding in the .22 from the state, the total SFUSD receives for a reduced price lunch is just $2.76, but the food cost stays the same, at $2.20-2.40, leaving even less for labor and overhead.

Students whose families don't qualify for government-paid school meal assistance at all eat what are called "paid" meals. SNS charges $3 per paid lunch; the federal government adds .35, but the state does not contribute at all; total revenue per paid meal in SF is $3.35.

Clearly, the way the program is funded by the government ensures there will be cost overruns in high cost of living areas like SF, but there are policies and procedures within SFUSD that exacerbate the situation. The Board of Education's 2009 Feeding Every Hungry Child policy guarantees that when students show up in the lunch line not qualified for free or reduced price meals, but with no money in their online account to pay for their meal, they are given a meal anyway; a charge is applied to the student's account, and the district tries to collect payment later from the family.

This progressive policy reflects SFUSD's commitment to social justice, and stands in stark contrast to districts that instead give such students a "meal of shame" like a cheese sandwich. Still, it is also an unfunded mandate, requiring a meal for which SFUSD paid between $2.20-2.40 to be provided, with only the .35 federal payment guaranteed to be paid for it.

If SNS is eventually able to recoup the $3 price of this "paid" meal from the family, then there is no problem, but when the family is not able to pay, the unpaid balance becomes part of the SNS shortfall. In 2010-11, these unpaid charged meals exceeded half a million dollars, and while better collection recently has greatly reduced that amount, as many as 30% of the meals which fall into the "paid" category still end up being paid for by SNS.

Before anyone suggests that these families are good-for-nothing freeloaders who should be forced to pay up, remember that SFUSD pays even its entry level cafeteria workers about twice the federal minimum wage because of SF's higher cost of living. That high cost of living affects not just SFUSD workers, but also SFUSD families.

The amount of income a family can earn and still receive government subsidized school meals is capped uniformly across the country; for a family of 4, the cutoff this year is $42,643. This means that in SF, a family with two children in school and two adults both working a 40 hour week, 52 weeks a year at SF's minimum wage of $10.55/hour, earns $43,888 - too high to receive even reduced price school meals.

Yet with average rent for a 2 bedroom apartment in SF requiring hourly income of $36.63, according to the National Low Income Housing Coalition study, that family with combined income of just $21.10/hr from two minimum wage jobs must spend far more than the recommended 30% of income on housing. Such families may not be able to afford $3 cafeteria lunches, or even a .40 co-pay, but with so much of the family income going towards housing, the household food budget may not cover the cost of brown bag lunches either.

That's why the Board of Education passed the Feeding Every Hungry Child resolution; with hunger linked to poor academic performance, it benefits no one to have children sitting in class unable to learn because their stomachs are rumbling from lack of food. It's also why SFUSD decided many years ago to forego collecting the .40 co-pay for reduced price lunches.

But that's another unfunded mandate. A bill now moving through the state legislature in Minnesota, designed to have the state cover the .40 reduced price co-pay, is estimated to cost that state $4 million annually if enacted. A similar proposal in Vermont carries an estimated price tag of $396,000 for the approximately 5700 students qualified for reduced price lunch. In 2011-12, about 5750 SFUSD students qualified for reduced price lunch.

Additional district practices, like allowing classes to go on field trips without giving the cafeteria sufficient notice to cut back on the number of lunches to order for that day, result in tens of thousands of dollars in wasted meals, which by law must be discarded at the end of the meal period if students aren't there to eat them. With Revolution Foods lunches costing much more than the previous frozen meals, this number (called "unclaimed meals", meaning meals ordered and paid for, but for which no government payment can be claimed) will likely go higher this year, unless district brass make cafeteria notification of field trips a mandatory part of any field trip permission process.

Another money-losing practice at some schools is failing to collect a free meal application from all students. A new online meal application allows families to complete the form quickly and confidentially, and many schools, especially elementary schools, have a near 100% completion rate. Yet at some schools, especially high schools with significant numbers of students who may be undocumented immigrants, far fewer meal applications get returned. Some Principals offer the rationale that they don't want to badger undocumented families who fear that filling out any government form will result in problems, even possible deportation (this is just a myth, but the fear is very real.) Again, this is a progressive and compassionate approach, but it carries a cost - when students with no meal application eat in the cafeteria, the only government payment available is the .35 for a "paid" meal.

Despite the fact that progressive policies like Feeding Every Hungry Child, and the elimination of the .40 reduced co-pay, make for a kinder, gentler school meal program, they also help drive the department shortfall. Both the higher than average salaries which the SF Board of Education wants for their cafeteria workers, and the higher cost of the fresh healthy meals they want for their students, may be viewed as unfunded mandates as well.

Policies and practices intended to better nourish students, and support families and staff, are admirable, and should not be abandoned. However, it must be acknowledged that each one comes at a cost, borne by SNS, and that these costs exacerbate the underfunding of school nutrition programs by Congress. To call the resulting deficit an "encroachment" only add insult to injury, as if the deficit were due to mismanagement instead of underfunding.

I asked SF school board member and special ed parent Rachel Norton, now President of the Board of Education, whether she might, as leader of the BOE, frame the conversation around the nutrition and special ed budget shortfalls as district "contributions" or "support", rather than encroachments. She said, "Absolutely. In the end it's all about priorities. If you have three priorities you have to balance, you don't say one "encroaches" on the other."

Dana Woldow has been a school food advocate since 2002 and shares what she has learned at PEACHSF.org. Follow her on Twitter @nestwife.