LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

ASSEMBLY, No. 5855

STATE OF NEW JERSEY

218th LEGISLATURE

 

DATED: JANUARY 14, 2020

 

 

SUMMARY

 

Synopsis:

Requires State to pay difference between federal allocation and total cost of reduced price breakfast or lunch; appropriates $4.5 million.

Type of Impact:

Annual State Expenditure Increase from the General Fund.

Agencies Affected:

Department of Agriculture.

 

 

Office of Legislative Services Estimate

Fiscal Impact

Year 1 

Year 2 

Year 3 

State Cost Increase

$0

          $4.5 million                 Indeterminate

 

 

·         The Office of Legislative Services (OLS) determines that the bill would result in an annual State expenditure increase starting in FY 2021.

 

·         In FY 2019, the bill would have cost an estimated $4.3 million based on United States Department of Agriculture (USDA) information on national participation rates in the National School Lunch Program and New Jersey program statistics.

 

·         The legislation appropriates $4.5 million in FY 2021 to cover the required payments under the bill.

 

·         The New Jersey Department of Agriculture (NJDOA) estimates that it will need $4.5 million, but the OLS notes the State cost to pay the difference between the federal allocation and the total cost of the reduced price breakfast or reduced price lunch served to eligible public school students could be slightly more or less than $4.5 million, depending on the actual numbers of reduced price breakfasts and lunches served.

 

BILL DESCRIPTION

 

      This bill requires the State to pay for reduced price breakfasts and lunches, so that there is no cost to eligible public school students.  The bill would require the State to pay to school districts the difference between the federal allocation and the total cost of the reduced price breakfasts or reduced price lunches served to eligible public school students.  This legislation also directs the NJDOA to adopt regulations establishing the schedule for, and the manner in which, reimbursements would be made to districts, and any other provisions necessary to implement the bill.  Finally, the legislation appropriates $4.5 million to cover the required payments under the bill.  This bill will take effect 180 days following enactment, except the NJDOA and the Department of Education may take any advance administrative action necessary to implement the legislation.

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      According to informal information provided by the DOA, and based upon Fiscal Year 2019 federal reimbursement rates, the State would have to pay $0.30 per reduced price breakfast and $0.40 per reduced price lunch in order to provide reduced price breakfasts and reduced price lunches at no cost to eligible students.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS determines that the bill would result in an annual State expenditure increase starting in FY 2021.  The legislation appropriates $4.5 million in FY 2021 to cover the required payments under the bill. 

      Each fiscal year the USDA provides updated reimbursement rates for the National School Lunch Program and the School Breakfast Program.  Further, the USDA reimbursement guidelines provide reimbursement for the number of meals served as opposed to a lump sum.  Under the School Breakfast Program and the National School Lunch Program, for fiscal year 2019, the federal program paid $1.49 per reduced price breakfast and $2.91 per reduced price lunch provided to an eligible student in a public school.  In order to receive federal funding, the State is required to provide matching funds of a minimum of $5.6 million for the National School Lunch program.  The State is not required to provide, and currently does not pay, any matching funds for school breakfast.  For the National School Lunch Program, New Jersey provides $5.6 million as reimbursement to public schools at $0.055 per reduced price meal served. 

      This bill would appropriate $4.5 million to schools to pay the difference between the federal allocation and the total cost of reduced price breakfast or lunch.  According to informal information provided by the NJDOA, the $4.5 million allocation would eliminate for one fiscal year the cost of reduced price breakfast and lunch to an eligible student in public school by providing $0.30 per reduced price breakfast and $0.40 per reduced price lunch.  Table A below shows the current total federal and State reimbursement rates for a free and a reduced price breakfast for a student in a public school under the “current total” column.  Under this bill, the new total reimbursement for reduced price breakfast would be equal the cost of a free breakfast, which is $1.79.  Table B below shows the current total federal and State reimbursement rates for a free and a reduced price lunch for a student in a public school under the “current total” column.  Under this bill, the new total reimbursement for reduced price lunch would be equal the cost of a free lunch, which is $3.365.

Table A

Reimbursement Rate Breakdown– School Breakfast Program (July 1, 2018 – June 30, 2019)

 

Federal

State

Current Total

Additional 4.5 million

New Total

Free

1.79

0

1.79

 

 

Reduced

1.49

0

1.49

0.3

1.79

 

Table B

Reimbursement Rate Breakdown– National School Lunch Program (July 1, 2018 – June 30, 2019)

 

Federal

State

Current Total

Additional 4.5 million

New Total

Free

3.31

0.055

3.365

 

 

Reduced

2.91

0.055

2.965

0.4

3.365

 

      The OLS estimates that in FY 2019 the bill would have cost an estimated $4.3 million based on USDA information on national participation rates in the National School Lunch Program and New Jersey program statistics.

      The USDA’s Program Data site includes an Annual Summary of Food and Nutrition Service Programs, which shows national participation rates for the National School Lunch Program and the School Breakfast Program for federal fiscal years 2014 through 2018.  For the School Breakfast Program, it includes free and reduced-price breakfast participation rates overall, with no breakdown of free and reduced, but for the National School Lunch Program there is a breakdown of the free and reduced-price lunch participation rates.  The five-year national average for reduced-price lunch participation is 6.86 percent.

      According to the key performance indicators for FY 2019 found in the Fiscal Year 2020 budget, the State served 116 million lunches to students.  Applying the five-year national average and assuming that 6.86 percent of those lunches were at the reduced price rate, and that the State pays $0.40 per reduced price lunch, the total annual cost would be $3.2 million.  Further, according to the key performance indicators in the Fiscal Year 2020 budget, the State served 55 million breakfasts to students.  Assuming that 6.86 percent of those breakfasts were at the reduced price rate, and that the State pays $0.30 per reduced price breakfast, the total annual cost would be $1.1 million.  Under these assumptions, the total annual cost to pay the difference between the federal allocation and the total cost of a reduced price breakfast or lunch to an eligible student would have cost $4.3 million in FY 2019.  Thus, the OLS notes the State cost to pay the difference between the federal allocation and the total cost of the reduced price breakfast or reduced price lunch served to public school students could be slightly more or less than $4.5 million, depending on the actual numbers of reduced price breakfasts and lunches served.

 

 

Section:

Environment, Agriculture, Energy and Natural Resources

Analyst:

Neha Mehta Patel

Associate Fiscal Analyst

Approved:

Frank W. Haines III

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).