I 111th CONGRESS 2d Session H. R. 5202 IN THE HOUSE OF REPRESENTATIVES May 4, 2010 Ms. Chu (for herself, Mr. Tonko, and Mr. Polis of Colorado) introduced the following bill; which was referred to the Committee on Education and Labor, and in addition to the Committee on the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To direct the Secretary of Agriculture to issue guidance to school food authorities on indirect costs, and for other purposes.

1.

Short title

This Act may be cited as the National School Lunch Protection Act of 2010.

2.

Findings and purpose

(a)

Findings

Congress finds the following: (1)Through the National School Lunch Program (NSLP) and the School Breakfast Program (SBP), school food service has played an integral role in the health and nutrition of American children, and remains one of the key safety-nets in place to alleviate childhood hunger and malnutrition domestically. In 2009, the NSLP served more than 31,000,000 students every day, while the SBP fed over 11,000,000 students. (2)The NSLP and SBP are shared responsibilities between the Federal, State, and local governments. (3)In 2009 the Federal Government spent more than $12,000,000,000 to support the NSLP and the SBP, to ensure students across the country received at least one healthy meal every school day. (4)Faced with growing student participation and increased costs, school food service programs across the country are facing unprecedented budget crises. (5)According to a recent study by the School Nutrition Association, 52 percent of school food service programs are charged indirect costs by local educational agencies. Indirect costs are costs incurred for a common purpose that benefit more than one programmatic objective. (6)According to the study, there is an overall lack of consistency amongst local educational agencies nationwide about what method should be used to identify and calculate indirect costs, and what constitute appropriate direct cost charges to school food authorities. (7)School food service must operate on a nonprofit basis, balance cost with revenue, and ensure all revenue generated is used to support or improve the food service. (b)

Purposes

The purposes of this Act are to— (1)ensure Federal funds are being appropriately spent to benefit the health and nutrition of American children; (2)study the impact of indirect and direct costs charged to the NSLP and SBP programs; (3)study the types and amounts of indirect and direct costs charged and recovered by local educational agencies; and (4)encourage the Secretary to issue regulations to ensure the effectiveness of Federal support for the NSLP and SBP.

3.

Cost study and funding

(a)

Guidance on allowable costs to school food authorities

Not later than 180 days after the date of enactment of this Act, the Secretary of Agriculture shall issue guidance to school food authorities participating in the school lunch program established under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.) and the school breakfast program established under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) covering program rules pertaining to allowable costs that may be charged to the nonprofit school food service accounts of such authorities including, indirect and direct costs. (b)

Indirect and direct costs study

The Secretary of Agriculture shall— (1)conduct a study to assess the extent to which school food authorities participating in the school lunch program established under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.) and the school breakfast program established by section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) pay indirect and direct costs, including assessments of— (A)the allocation of indirect and direct costs to such school food authorities; (B)the methodologies used to establish indirect cost rates for such school food authorities; (C)the types and amounts of indirect and direct costs charged and recovered by local educational agencies; (D)the impact of indirect and direct costs charged to the nonprofit school food service accounts of such school food authorities; (E)whether the indirect and direct costs charged or recovered are consistent with requirements for the allocation of costs and school food service operations; and (F)the types and amounts of indirect and direct costs that could be charged or recovered under requirements for the allocation of costs and school food service operations but are not charged or recovered; and (2)after completing the study required under paragraph (1), issue additional guidance relating to the types of costs that are reasonable and necessary to provide meals under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.) and section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773). (c)

Regulations

After conducting the study under subsection (b)(1) and identifying costs under subsection (b)(2), the Secretary of Agriculture may promulgate regulations to address— (1)any identified deficiencies in the allocation of indirect and direct costs charged to school food authorities participating in the lunch program under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.) and the breakfast program under the Child Nutrition Act of 1966 (42 U.S.C. 1773); and (2)the authority of school food authorities to reimburse only those costs identified by the Secretary as reasonable and necessary under subsection (b)(2). (d)

Report

Not later than October 1, 2013, the Secretary of Agriculture shall submit to the Committee on Education and Labor of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report that describes the results of the study conducted under subsection (b)(2). (e)

Funding

(1)

In general

On October 1, 2010, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall transfer to the Secretary to carry out this section $2,000,000, to remain available until expended. (2)

Receipt and acceptance

The Secretary shall be entitled to receive, shall accept, and shall use to carry out this section the funds transferred under paragraph (1), without further appropriation. (f)

Budgetary effects

The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go-Act of 2010, shall be determined by reference to the latest statement titled Budgetary Effects of PAYGO Legislation for this Act, submitted for printing in the Congressional Record by the Chairman of the House Budget Committee, provided that such statement has been submitted prior to the vote on passage.