Payments

(a)

Operating Expenses

Section 13(b)(1) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1761(b)(1)) is amended by striking subparagraph (A) and inserting the following:

(A)

In general

A payment to a service institution shall be equal to the maximum amount for food service under subparagraphs (B) and (C).

(b)

Administrative Costs

Section 13(b) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1761(b)) is amended by striking paragraph (3) and inserting the following:

(3)

Administrative costs

Payment to a service institution for administrative costs shall be equal to the maximum allowable levels determined by the Secretary under the study required under paragraph (4).

(c)

Conforming Amendment

Section 18 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1769) is amended by striking subsection (f).

Startup grants for summer food service programs

Section 13 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1761) is amended by inserting after subsection (h) the following:

(i)

Startup Grants for Summer Food Service Programs

(1)

Grants

The Secretary shall make grants, on a competitive basis, to 10 States, in a total amount of not more than $5,000,000 for each fiscal year from funds made available to the Secretary, to assist eligible service institutions in initiating summer food service program sites. (2)

Uses

A State shall use a grant made available under this subsection to assist eligible service institutions with expenses incurred in initiating summer food service programs during the first year of the sites. (3)

Supplementary funds

A grant under this subsection shall supplement any payment to which a State is entitled under this section. (4)

Plan

To be eligible to receive a grant under this subsection, a State shall submit to the Secretary a plan to initiate summer food service program sites conducted in the State, including a description of the manner in which the State shall provide technical assistance and funding to eligible service institutions in the State to initiate the sites. (5)

State preferences

In making a grant under this subsection for a fiscal year to initiate summer food service programs sites, the Secretary shall give preference to a State in which not more than 10 lunches under summer food service programs are served on an average day in June and July for each 100 free and reduced price lunches served on an average day from September through May of the previous school year, as determined by the Secretary. (6)

Reallocation

The Secretary shall act in a timely manner to recover and reallocate to other States any amount made available to a State under this subsection that is not used by the agency or State within a reasonable period (as determined by the Secretary). (7)

Application

The Secretary shall allow application by States on an annual basis for grants under this subsection. (8)

Preferences by states

In allocating funds within the State, each State shall give preference for assistance under this subsection to an eligible service institution that demonstrates the greatest need for assistance for a summer food service program, as determined by the State. (9)

Maintenance of effort

The expenditure of funds from State and local sources for the maintenance of the summer food service program shall not be diminished as a result of grants made available under this subsection. (10)

Definition of eligible service institution

In this subsection, the term eligible service institution means a service institution that agrees to operate the summer food service program established with the assistance provided under this subsection.