Wake votes to raise school meal prices, as free meals will end

Wake County schools meals will be $0.25 per meal more expensive next year, following a vote Tuesday by the county Board of Education.

The cost increase will coincide with the expiration of a temporary measure that allowed meals to be free during the COVID-19 pandemic.

That means families may end up paying more than $500, per child, for school meals next year that they weren’t paying this year.

The board voted 6-2 to raise the prices, with Monika Johnson-Hostler and Tara Waters voting against it. Heather Scott was absent.

The district is only the latest to plan higher meal prices next year. The Johnston County Board of Education approved an increase last week, and the Durham County Board of Education will vote on one Thursday night. Other districts are holding prices steady and many have yet to propose meal prices.

Wake County Public School System officials cited rising costs of food, contracts and a planned pay raise for child nutrition service workers as the need for the price increase. The child nutrition services department is largely self-sustaining, funded by its sales, as opposed to other school system departments that are funded from various pots of tax dollars.

Andrew Harrell with No Kid Hungry North Carolina and the Carolina Hunger Initiative says the hike was expected with the waiver going away.

"The loss of these waivers will really be harmful to school nutrition programs so I understand why school systems like Wake will have to raise costs to sustain operations," said Harrell.

Harrell would like to see that districts can find a better solution in the future.

“I hope longer term we find a way to return to no-cost meals for everyone instead of charging families,” said Harrell.

The school system painted a complicated financial picture for the department, however, in which its shortfalls would have a broader impact on the public school system itself.

School board members said Tuesday they were concerned about increasing prices on families already contending with inflation and the fact that they will once again be asked to pay for meals as temporary federal funding expires.

Board Member Jim Martin said he didn’t think the district should raise prices if families already face the “sticker shock” of paying for school meals again.

“And so I’m struggling a little bit,” Martin said.

A shortfall of $500,000 is a “drop in the bucket” in terms of district and county spending, Martin said. The district should be able to find that money or ask the county for it, while finding a longer-term solution to rising costs, he said.

“It feels like we ought to be able to ask for that as a holdover while we come up with a plan,” Martin said.

Still, Martin voted in favor of the change “reluctantly.”

For Wake County families, the meal price increase will look like this:

• Lunch would increase at elementary schools, from $2.75 to $3
• Lunch would increase at middle and high schools, from $3 to $3.25
• Breakfast would increase at elementary schools, from $1.25 to $1.50
• Breakfast would increase at middle and high schools, from $1.50 to $1.75

The $0.25 per meal increase would generate $1 million in revenue, based on the number of meals sold each year to families who pay for them. That factors in an expected drop in school meal participation that would come with a price increase.

It would cover just a portion of the millions of dollars in increased costs the district’s child nutrition services department expects to incur next year.

Not raising prices would likely not directly affect school meal operations, but a small shortfall could trigger bigger shortfalls across the school system.

The district is expecting a $500,000 shortfall in the child nutrition services department, without raising prices, next year. That’s down from projections delivered in a presentation Friday to school board members, thanks to a one-year federal grant that will help cover the higher operating costs.

But that small shortfall could push the fund balance of the department below two months’ operating costs. That means the school system, which pays for indirect costs to support the department, would not be able to bill the department for indirect costs, under state law. The district could lost $3 million to $4 million by the end of the next school year in that scenario, district chief financial officer David Neter told the school board.

Even if the school board found a way to adjust its budget for the loss in revenue, Neter said, that doesn’t solve the problem in the long run for the child nutrition services department, if it’s dipping into its fund balance.

“At some point that fund balance will be used up,” Neter said. “And it’s not a recurring revenue source.”

Paula De Lucca, district senior director over child nutrition services, told the school board the district will have to contend with another possible shortfall in two years, once the one-time federal dollars for next year run out. That would necessitate another price increase, De Lucca said. If the school board approved a price increase this year, it could be a smaller increase next year. District estimates show meal prices may need to eventually rise by $1, De Lucca said.

A wave of events is about to hit school meals programs in Wake County and nationwide.

Congress’ approval of universally free school meals will expire June 30. Food costs are rising. The supply chain is wrought with shortages. Employee vacancy rates remain high and are expected to worsen, so the school system wants to pay them more.

Paying the school system’s more than 700 child nutrition workers a minimum of $16 per hour, with a gradual increase at each year of experience, will cost about $1 million next year — about the expected revenue from the $0.25 meal price increase.

On top of that, the school system has already learned it will lose several contracts next year as vendors’ capacity to provide meals is challenged. Other contracts will see higher prices. Delivery of food will cost 40% more, about $200,000 more. Wholesale chicken nuggets will cost 20% more, about $100,000 more. Compostable meal trays will be $200,000 more.

Those are just a few of the price increases, De Lucca told the school board Tuesday.

The district’s shortfall is projected to be $3.5 million, a figure corrected Tuesday from the $3 million figure the district shared earlier.

De Lucca said the district is thankfully receiving a $3 million, one-year federal grant next year that will cover all but $500,000 of the shortfall.

That shortfall is what’s expected without raising meal prices and after families begin to pay for meals once again.

Expanding free meals

Martin said he wanted to explore a way to provide universally free meals to all students. He noted a third of the district’s students qualify for free and reduced-price lunches already.

That would require a local funding source, Superintendent Cathy Moore said.

“I do truly believe.. that the answer here is for the federal government to extend these benefits permanently,” Moore said.

Universal free meals would still require the nutrition services department to operate within its means, Moore said, but it would protect school systems from facing deficits amid changing costs.

Still, under existing circumstances, Moore said the school system could look at cutting some of its plans or existing services to make up for deficits. That’s not something the district has done before to handle rising operating costs.

The school system also needs to plan to help families apply for free or reduced-price lunch, board members said.

Superintendent Cathy Moore said it could take years for the district to get those eligible for free or reduced-price lunch to apply, as school meals have now been free for two years and many families haven’t been filing out the paperwork during that time.

“I think this is one of those where we need to help people figure out how to do their paperwork,” Board Member Roxie Cash said. “This is going to be for a long period of time.”

The school system can work with county services to make sure students and families who are eligible for services, such as free lunch or transitional housing, know they can apply and how to do so, Cash said.

Communication is key for school employees, too, Board Member Monika Johnson-Hostler said. Johnson-Hostler said she spoke with a child nutrition worker recently who didn’t know her school had a community-funded “angel fund” that paid for meals when students couldn’t afford them. The worker was still giving those students modified meals meant for students who can’t pay.

Families can keep their free or reduced-price lunch status for only the first 30 days of the next school year. They must reapply every year to receive the benefit.

Meals will remain free at likely seven schools next year, under the federal community eligibility provision, which allows higher-poverty schools to have universal free meals.

But only seven of the district’s 196 schools will likely be eligible next year, as the district has spent decades trying to ensure it has few higher-poverty schools and has more even distributions of students across demographics at each school. The district has lessened its focus on that since pushback in 2009 on student reassignments, and data tracked by WRAL News show school demographics are somewhat less evened out since then.

EARLIER:

The Wake County Board of Education will consider raising school meal prices next fall by a quarter at the same time families are expected to have to start paying for meals again.

Under the proposal being presented for the first time Tuesday — and expected for a vote later that night — the price of both breakfast and lunch would raise $0.25 per meal. It’s part of the district’s “multi-year” plan to adjust meal prices to manage cost increases in a department that’s uniquely funded based on its prices.

The expense is intended to cover an expected shortfall in the Wake County Public School System’s child nutrition services division.

School system officials are planning to raise staff wages, expecting the cost of supplies to rise and anticipating federal reimbursements per meal to drop. That would result in a $3 million revenue shortfall, according to a presentation compiled by the school system for Tuesday’s meeting.

At the same time, families must already brace for paying for school meals again. Congress has not renewed a COVID-19 rule that allowed schools to provide all meals to students 18 years old or younger for free, regardless of students’ family income levels. States, including North Carolina, and child welfare groups have urged Congress to continue funding free meals into next school year. Without action, students once again pay beginning July 1.

A handful of federal initiatives are expiring that impact school meal programs:

• Free meals for all students, regardless of income
• Higher per-meal reimbursement rates to school districts
• Operational flexibility, such serving to-go school meals for children required to quarantine
• Substituting for foods schools can’t find because of a supply-chain shortage. Substitutions that result in meals that don’t meet nutritional requirements can lead to financial penalties for a school.

Free meals and flexibility to serve them were provided under an emergency, temporary expansion of the “Seamless Summer Option” of the National School Lunch Program into the regular school year. That option waives schools’ need to collect information on whether students are eligible for free or reduced price lunch, allowing the meals to be free. The federal government reimburses schools for those meals provided.

A federal report from March found that 90% of the nation’s schools were using the expanded summer initiative.

For Wake County families, the meal price increase up for a vote Tuesday would look like this:

• Lunch would increase at elementary schools, from $2.75 to $3
• Lunch would increase at middle and high schools, from $3 to $3.25
• Breakfast would increase at elementary schools, from $1.25 to $1.50
• Breakfast would increase at middle and high schools, from $1.50 to $1.75

So a $0.25 increase for the 177-day traditional calendar would cost a family $44.25 more per child next school year, if the student eats one lunch per day. A family would pay $531 or $575.25 more per child next year, compared to the $0 they’ve been paying this year, depending on the child’s grade level.

Families that have not had to worry about applying for free or reduced-price lunch eligibility will need to apply for eligibility next year to receive the benefit.

Thousands of families may be eligible but not enrolled. Before the pandemic meal changes, about a third of Wake County school system students — 50,843 — were eligible for free or reduced-price lunch, according to district data. This year, only about a quarter — 39,208 — are. While schools have pushed parents to continue to compete the paperwork, district officials consider the current data an undercount of who is really eligible because families haven’t needed to apply for the meal benefit.

The district enrolls just under 160,000 students, eating millions of meals at school each year,

Stressed operations

In response to the proposed meal price changes, WRAL News asked the district how much revenue the increase would raise and how it would be used. WRAL had not received a breakdown by the end of the workday Monday, but a district presentation on the increase and budget proposal documents published earlier this year provide some clues on the school system’s financial realities.

In its budget proposal for next year, the Wake County Public School System outlined about $15 million in new funding it needs locally for its child nutrition services department, along with another half a million dollars for new employees needed for the four new schools opening next year.

The district expects to lose $11.4 million in federal funding for supplies and another $341,082 from the federal government for services.

The district anticipates needing $10.1 million to replace the services cost, $2 million more toward salaries, $1.4 million more toward benefits, nearly a million dollars for indirect costs associated with the school meals program. Another more than $600,000 would cover capital and transportation cost increases.

That would cover a 3% increase in food costs, filling only 78% of jobs and turning three-quarter of temporary contracts into salaried positions.

Supply chain shortages — caused by pandemic-related supply chain disruptions and staffing shortages across industries — have prompted higher prices for goods.

The school system intends to raise employee wages from $15 per hour this year to $16 per hour next year, with some adjustments at each experience level to ensure employees will earn higher wages with each year of experience.

While the district receives funding from the state for most employees’ base pay, child nutrition staff are paid through “earned revenues,” or sales and government per-meal reimbursements.

The school system wants to raise wages for child nutrition staff to match other wage workers the state funds.

The Wake County Public School System has raised wages and offered bonuses for nearly all employees since last fall. Child nutrition workers will get up to three more $450 bonuses through next fall under federal COVID-19 stimulus funds approved earlier this spring.

While those funds’ impact on recruitment and retention remains to be seen, the school system has some small improvements to vacancy rates for certain jobs.

Child nutrition staff vacancies dropped from 172 on Nov. 1, before the school board approved the extra pay, to 120 April 1, according to data tracked by WRAL News. With 837 total positions, that means just 85.5% of positions are filled.

But the school district isn’t planning for that to continue. In its presentation to the school board, the district is planning for a 78% fill rate.

The federal report from March found nutrition services in the largest school districts — defined as having at least 25,000 students — were among the hardest hit financially and personnel-wise during the previous school year.

Nearly half reported operating deficits. Only about a quarter reported an operating deficit in October of 2021, but still far more than usual, around 10% of them prior to the pandemic.

In terms of personnel, 99% of those districts said they had “staffing challenges.”

The outlook

The federal report found schools struggling with supply chain and staffing issues that leaders expect will persist into the fall:

• 92% of school food authorities reported substituting foods related to supply chain challenges. Meats and grains were the most troublesome foods, while the actual supplies for producing and serving foods were the most difficult to procure.
• North Carolina schools overwhelmingly struggled with the supply chain. The Tar Heel State was in the top tier among states, with 96% to 100% of school food authorities reporting supply chain issues
• 73% of school food authorities reported staffing shortages
• Most schools expect higher costs for food and supplies next year
• Most schools said the supply chain disruptions caused increased staff stress and workloads, increased programs costs and made complying with meal plans more challenging
• Most schools said continued waivers on compliance would help them operate
• Most school nutrition departments are able to at least break even under the current rules, but 26% are operating at a deficit

CORRECTION: Andrew Harrell is communications and program manager for No Kid Hungry North Carolina and the Carolina Hunger Initiative. An earlier version of this article misidentified his employer.