BILL ANALYSIS Ó AB 626 Page 1 Date of Hearing: May 24, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 626 (Skinner) - As Amended: May 15, 2013 Policy Committee: Education Vote:6-0 Health 18-1 Urgency: No State Mandated Local Program: No Reimbursable: No SUMMARY This bill makes the following changes to school nutrition requirements, primarily for the purpose of conforming to the federal Healthy Hunger-Free Kids Act of 2010 (HHFK Act): 1)Requires meals made available under the After School Education and Safety (ASES) program to conform to the United States Department of Agriculture's (USDA) nutrition standards for at-risk afterschool meal component or the National School Lunch (NSL) program. 2)Repeals a school district's authority to do the following related to its cafeteria fund (CF): a) Establish one or more accounts within its CF. b) Make expenditures from the CF for the construction, alteration, or improvement of a central food processing plan, and for the lease or purchase of vehicles used primarily in connection with the plant. 3)Authorizes a school district or two or more school districts governed by boards of identical personnel to make expenditures from the CF for the purchase and installation of additional preparation, cooking, or service equipment for a kitchen, including the lease or purchase of vehicles solely used in connection with a kitchen or central food processing plant, as specified. 4)Repeals statute authorizing a school district with an average daily attendance of over 100,000 to expend money from its CF AB 626 Page 2 generated from the joint sale of items between the cafeteria and an associated student body store, as specified. FISCAL EFFECT GF/98 cost pressure, likely in the hundreds of thousands to low millions, to backfill school districts for costs associated with the lease, purchase, or maintenance of cafeteria equipment. To the extent districts were using CF reserves for this purpose and this bill now prohibits this use, district may seek additional funds from the state. SUMMARY CONTINUED 5)Requires the cost of the lease or purchase of cafeteria equipment and of vending machines (installation and housing of them) to be a charge against the CF. Further requires the school district to only approve reimbursement for vending machines if one, or both, of the following apply: a) The vending machines are owned and operated by the school food services department, sell meals that qualify for federal meal program reimbursement, and are equipped with appropriate point of service meal counting software. b) The vending machines sell only food, or only beverages, or both that comply with state and federal competitive food laws and regulations. 6)Authorizes a school district to apply the costs of telephone charges against the CF provided the district complies with federal and state law. 7)Repeals statute authorizing school districts to maintain a CF reserve for purchase, lease, maintenance, or replacement of cafeteria equipment, which enables these funds to be accumulated from year to year until expended for these purposes. 8)Clarifies the sale of food and beverages that comply with state and federal nutrition standards are to be sold at elementary, middle and, high schools from one-half hour before the start of the schoolday to one-half hour after the schoolday. Conversely, this bill requires all non-compliant food and beverages sold at these schools to be sold beginning at least one-half hour after the end of the schoolday and off AB 626 Page 3 premises. 9)Repeals nutrition standards compliance requirements related to monitoring and reporting conducted by the Superintendent of Public Instruction (SPI) and instead, requires the State Department of Education (SDE) to conduct compliance monitoring in conformity with USDA's administrative review process as defined in January 2012. 10)Repeals the Linking Education, Activity, and Food Pilot grant program. COMMENTS 1)Background . Existing law requires each school district or county office of education maintaining any of grades K-12 to provide one nutritionally adequate free or reduced-price meal to a needy pupil during each schoolday. Statute further defines nutritionally adequate meal as a breakfast or lunch that qualifies for reimbursement under the federal child nutrition program. In December 2010, the federal government enacted the HHFK Act, which establishes new nutritional requirements for the school breakfast program (beginning July 1, 2013) and the national school lunch program (beginning July 1, 2012). The new requirements include more of an emphasis on whole grain, fruits and vegetable offerings and narrow caloric count requirements determined for age groups. For example, local education agencies (LEAs) must meet a weekly requirement of vegetable subgroup offerings (i.e., dark green, orange, legumes) for these meal programs. Also, students are required to select a fruit or vegetable to receive reimbursement for a breakfast or lunch meal. This bill updates state statute to reflect the vegetable subgroup offerings. Under the existing federal Child and Adult Care Food Program, after school programs have been able to be reimbursed for serving healthy snacks. The HHFK Act expanded federal reimbursement through this program to also include meals. Under current state law, ASES Programs must agree to provide snacks that conform to the state's current nutrition standards for competitive foods. However, the law is silent on meals provided through these programs. This bill requires meals served through the ASES program to conform to the nutrition AB 626 Page 4 standards of the at-risk afterschool component or the National School Lunch program. 2)Purpose . The author argues this bill, sponsored by the Superintendent of Public Instruction, is necessary to conform to the federal HHFK Act. Specifically, the author states: "Improving child nutrition is one of the focal points of the HHFK Act. Across the country, schools serve meals on a daily basis to more than 31 million children. Unfortunately, one out of every three children is now considered overweight or obese. The HHFK Act represents the nation's continued commitment to provide all children with nutritious food in schools, with an emphasis on foods that are healthy. "In addition to setting nutritional standards, the HHFK Act also regulates how nutritional programs operate. For example, [it] sets policies on what expenses are allowable using cafeteria funds and limits the amount of reserves in cafeteria funds. The HHFK Act also sets improved oversight policies that will ensure that students are being provided with nutritious meals." 3)Senate Office of Oversight and Outcomes (SOOO) report on Cafeteria Funds (CFs) . In February 2013, SOOO released a report entitled: Food Fight: Small Team of State Examiners No Match for Schools that Divert School Meal Funds. The report charges school districts are "illegally dipping into student meal funds, misappropriating millions of dollars intended to feed California's poorest children." Specifically, the report states: SDE "has ordered eight districts to repay nearly $170 million to student meal programs. Perhaps more troubling, department officials candidly acknowledge they have no idea how big the problem may be and fear they may have uncovered only a hint of the ongoing abuse?" Furthermore, SOOO states California must pay the federal government if funding cannot be recouped. As highlighted by the report, "if the state fails to force repayment of misappropriations or refunds due from food service accounts, the federal government collects the unpaid amount from SDE. Over the past two decades, the department has had to pay the USDA more than $3 million that it could not recoup from food service accounts. Those bad debts often involved agencies, such as child or adult care centers, which had gone out of business." Likewise, SOOO identified the following state statutes that AB 626 Page 5 were in conflict with federal law but have remained on the books. Existing law permits CF revenue sharing with associated student bodies. Federal regulations no longer permit such revenue sharing with student groups. This bill repeals this statute in accordance with the HHFK Act. Current law authorizes districts to establish CF for equipment with reserves from their meal programs. The USDA does not recognize such accounts and strictly limits cafeteria fund surpluses to three months average expenditures of the program. This bill repeals this state law. Analysis Prepared by : Kimberly Rodriguez / APPR. / (916) 319-2081