BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 626 (Skinner) - School Nutrition Amended: July 10, 2013 Policy Vote: Education 9-0 Urgency: No Mandate: No Hearing Date: August 30, 2013 Consultant: Jacqueline Wong-Hernandez SUSPENSE FILE. Bill Summary: AB 626 makes numerous changes to school nutrition standards, primarily to conform to the federal Healthy, Hunger-Free Kids Act. This bill also makes changes to local authority and allowable uses of cafeteria funds, as specified. Fiscal Impact: The majority of the provisions of this bill make changes to local authority and program requirements implemented at the local level, for participating schools and school districts. These changes are unlikely to drive any significant new cost to the state. Those being changed to comply with federal law could result in additional costs to school districts, but are conditions of their participation in a program for which they receive federal funding. Compliance monitoring: Potentially significant increased staffing costs (Federal Funds) for the California Department of Education (CDE) to provide program compliance monitoring. See staff comments. Background: Existing law establishes the After School Education and Safety (ASES) program, consisting of before and after school academic enrichment for pupils in kindergarten through grade 9. ASES programs must agree that snacks made available through the program conform to the nutrition standards for K-12 schools. Before school programs are required to offer a breakfast meal that meets federal child nutrition program regulations. (Education Code § 8482.3 and § 49531) The federal Healthy, Hunger-Free Kids Act and related regulations established new nutritional requirements for the school breakfast program and the national school lunch program. The new requirements include a greater emphasis on whole grain, fruits and vegetable offerings and limits on caloric intake for AB 626 (Skinner) Page 1 specific age groups. Schools are also required to provide a serving of fruit or vegetable daily for the breakfast or lunch meal to count as a reimbursable meal. Existing law requires each school district to provide each needy pupil one nutritionally adequate, free or reduced-price meal during each schoolday, and defines a "nutritionally adequate meal" as one that qualifies for reimbursement under the federal child nutrition program regulations. (EC § 49550 and § 49553) Existing law provides that cafeteria funds are to be used only for expenditures authorized by the school district governing board as necessary for the operation of school cafeterias, including for the lease or purchase of additional cafeteria equipment for the central food processing plant, vending machines and their installation and housing, and computer equipment and related software. A school district's governing board may authorize the establishment of one or more cafeteria revolving accounts. Transfers, replenishments, and deposits between the cafeteria fund and a cafeteria revolving account are allowed. A cafeteria revolving account may receive and spend funds in the same manner and for the same purposes as authorized for a cafeteria account. The governing board of any school district, or of two or more districts governed by the boards of identical personnel, may make expenditures from the cafeteria fund for the construction, alteration, or improvement of a central food processing plant, for the installation of additional cafeteria equipment for the central food processing plant, and for the lease or purchase of vehicles used primarily in connection with the central food processing plant. (EC § 38091 and § 38092) With regard to charges against district funds versus charge against cafeteria funds, existing law provides that: 1) The cost of housing and equipping cafeterias is a charge against the funds of the school district. However, when the governing board of a school district deems it necessary, the board may make the cost of the lease or purchase of additional cafeteria equipment for a central food processing plant, and of vending machines and their installation and housing, a charge against cafeteria funds. AB 626 (Skinner) Page 2 Governing boards may at any time within five years after the expenditure reimburse school district funds from cafeteria funds. 2) A school district governing board may, by resolution, make the cost of maintenance of the physical plant used in connection with cafeterias, the cost of replacement of equipment and the cost of specified utilities a charge against the funds of the school district. 3) The school district governing board, or of two or more districts governed by boards of identical personnel, may also make the cost of the construction, alteration, or improvement of a central food processing plant and the installation of additional cafeteria equipment a charge against cafeteria funds. Governing boards may at any time within five years after the expenditure reimburse district funds from cafeteria funds. (EC § 38100) Existing law authorizes a school district governing board to establish and maintain a cafeteria funds reserve for the purchase, lease, maintenance or replacement of cafeteria equipment, to be known as the cafeteria equipment reserve. These funds are to be derived from the sales of food in the school cafeterias in an amount to be determined by the governing board and may be accumulated from year to year until expended for this purpose. These funds may only be used for the purchase, lease, maintenance, or replacement of cafeteria equipment. (EC § 38102) Proposed Law: AB 626 makes numerous changes to school nutrition standards and sales restrictions primarily to conform with the federal Healthy, Hunger Free Kids Act. Additionally, this bill establishes new requirements relative to use of cafeteria funds, and deletes obsolete provisions. With regard to cafeteria funds, this bill: 1) Repeals a school district's authority to: (a) establish one or more revolving accounts within its cafeteria fund; (b) transfer, replenish and deposit funds between the cafeteria fund and a cafeteria revolving account; and, (c) make expenditures from the cafeteria fund for the construction, alteration, or improvement of a central food processing plant. AB 626 (Skinner) Page 3 2) Modifies authority for a school district or two or more school districts governed by boards of identical personnel to make expenditures from the cafeteria fund to allow for the purchase and installation of additional preparation, cooking, or service equipment for a kitchen or central food processing plant. 3) Removes the cost of cafeteria equipment from a charge against district funds and, instead, requires the cost of the lease or purchase of cafeteria equipment and of vending machines and their installation and housing to be charged against cafeteria funds. 4) Changes from cafeteria funds to district funds, the source that may be used for the lease or purchase of cafeteria equipment for a kitchen or central food processing plant, and vending machines and their installation and housing. 5) Reduces from within five years, to the same fiscal year, the amount of time in which a school district governing board may reimburse school district funds from cafeteria funds. 6) Limits the authority of school districts to approve reimbursement for vending machines, as specified. 7) Makes various changes to requirements for the sale of food and beverages in elementary, middle, and high school both during and outside of the school day. 8) Requires the CDE to monitor school district compliance, in conformity with the United States Department of Agriculture (USDA)'s administrative review process. 9) Changes from district funds to cafeteria funds, the source that may be used for maintenance of the kitchen facilities, equipment, telephone charges, water, drinking water, electricity, gas, coal, wood, fuel, oil, and garbage disposal related to food service and delivery. Adds the condition that the school district complies with all applicable state and federal laws and regulations. Related Legislation: SB 302 (Cannella) implements various AB 626 (Skinner) Page 4 recommendations contained in a recent report by the Senate Office of Oversight and Outcomes regarding school cafeteria funds, including the requirements that cafeteria funds be audited. That bill is pending in the Assembly Appropriations Committee. Staff Comments: This bill makes changes to, among other things, competitive food and beverage requirements for schools, and specifically requires the CDE to be responsible for compliance monitoring; whereas, existing law permits the department to monitor. Those changes are consistent with new federal USDA requirements which will take effect on July 1, 2015; the CDE will be responsible for that workload, but this bill begins the workload on January 1, 2014. The CDE has indicated that it will likely require additional staff for the expanded compliance monitoring, and that those positions will likely be federally-funded.