I’ve heard that EASD could participate in a federal program that would allow every student to receive lunch for free. If that program is available, why doesn’t the District participate?
The Elizabethtown Area School District is eligible to participate in the federal Community Eligibility Provision (CEP), which would allow the District to provide lunch to all students at no charge. However, while lunch would be free to students, participation in CEP would not be free to the District.
The District provided a brief overview of CEP and its projected financial impact during the September 8 School Board meeting. The information below provides additional context regarding how that financial impact is calculated and what participation would mean for EASD.
It is important to note that breakfast is already available at no charge to all EASD students through a separate Pennsylvania program. The question surrounding CEP for EASD is therefore primarily about providing universal free lunch.
Under CEP, all students would be able to receive lunch at no charge regardless of individual household eligibility. The federal government reimburses participating districts for meals served; however, the level of reimbursement varies based on student eligibility data. For EASD, the current direct certification percentage used in the District’s CEP analysis is 32.5%. Based on EASD’s current eligibility data and financial projections, CEP reimbursement is not projected to cover the full financial impact of providing lunch at no charge to all students.
What Does EASD’s 32.5% Direct Certification Percentage Mean?
EASD’s 32.5% direct certification percentage is not the percentage of students who currently qualify for free or reduced-price meals, nor is it a percentage selected by the District. Each year, EASD receives its updated eligibility information through a state-provided spreadsheet on April 1, which provides the District with the data needed to evaluate CEP participation.
Direct certification identifies students who qualify for free meals without completing a traditional household meal application. This includes students identified through qualifying government assistance programs such as SNAP, TANF and Medical Assistance with qualifying income. Certain other categorically eligible students are also included when determining a district’s Identified Student Percentage for CEP.
This is different from the traditional free and reduced-price meal program, under which additional families may qualify based on household income by completing a meal application. Students who qualify through an income-based meal application are not included in the CEP identified-student calculation simply because they qualify for free or reduced-price meals.
As a result, EASD’s 32.5% direct certification percentage should not be interpreted to mean that only 32.5% of District students experience financial need or qualify for meal assistance. Rather, it reflects the percentage identified through the specific eligibility methods used for direct certification.
Timing is also an important consideration. Because EASD receives this updated eligibility information on April 1, the District’s budget-development process is already well underway when it learns whether changes in its student population may make CEP more financially viable. Although EASD has until June 30 to elect to participate for the following school year, the District adopts its proposed budget in May and final budget in June. Because participation could require General Fund support, its projected financial impact must be evaluated and incorporated into the District’s budget before a decision to participate can responsibly be made.
How Does CEP Reimbursement Affect EASD Financially?
Under CEP, a district's Identified Student Percentage is multiplied by a federally established factor of 1.6 to determine the percentage of meals reimbursed at the higher federal free-meal rate. EASD's financial analysis incorporates this 1.6 multiplier. Based on the District's current eligibility data, approximately 52.05% of meals would qualify for reimbursement at the higher federal free-meal rate.
Because EASD would provide lunch at no charge to every student under CEP, families would no longer pay for those meals. The remaining meals would receive the applicable federal reimbursement, but EASD would be responsible for costs not covered by that reimbursement. At EASD's current reimbursement level, the total federal reimbursement is not projected to cover the full cost of providing universal free lunch.
That reimbursement gap has a significant effect on the financial position of the School Nutrition Program and, because of the projected operating deficit it creates, on the District's General Fund.
What Would CEP Cost EASD?
Under EASD's current food service contract, the School Nutrition Program is projected to generate approximately $261,142 in positive annual revenue. Those funds remain within the School Nutrition Program and can be used only for allowable food service expenses, including future equipment and capital needs within the program.
If EASD were to participate in CEP, the School Nutrition Program is projected instead to operate at an approximately $108,305 annual loss. Because School Nutrition Program resources cannot be used to cover that projected deficit, the $108,305 loss would require support from the District's General Fund. This would create an additional General Fund obligation that must ultimately be funded through District revenues, including local tax dollars, or offset through reductions or adjustments elsewhere in the budget. In other words, while lunch would be provided at no charge to students, the cost not covered by CEP reimbursement would still need to be paid by the District.
At the same time, foregoing the projected $261,142 in positive annual revenue would reduce the School Nutrition Program's ability to fund future allowable expenses, including equipment and capital needs. Those needs would still exist and, without sufficient food service resources, could ultimately require support from the General Fund or other District capital resources.
Taken together, the District's financial analysis projects a change from a $261,142 positive annual food service position to a $108,305 operating loss – a $369,447 annual change in the financial position of the School Nutrition Program.
Are There Other Financial Considerations?
Yes. CEP also changes how certain student economic data are collected and reported.
As explained above, traditional free and reduced-price meal applications are not used to determine EASD's direct certification percentage for CEP. However, under the District's current meal program, those applications serve another important purpose: they provide information about students who qualify based on household income and can contribute to measures of economic disadvantage used for purposes beyond school meals.
If lunch is provided at no charge to every student through CEP, families no longer need to complete a traditional meal application to receive that benefit. As a result, the District must consider how it will continue to collect and report economic-disadvantage information used in connection with certain state and federal programs and funding calculations.
Pennsylvania provides alternative methods for CEP schools to report economically disadvantaged students, so participation in CEP does not automatically result in a loss of other state or federal funding. However, because CEP changes the way some of this information is collected and reported, the District must consider any potential effects on other programs and funding as part of its overall evaluation of CEP.
Why Do Some Other School Districts Participate in CEP?
CEP can be a financially viable option for some school districts because the federal reimbursement a district receives is tied to its percentage of identified students. Districts with higher percentages of identified students receive a greater proportion of their meals at the higher federal reimbursement rate.
As a result, the financial impact of CEP can vary significantly from one school district to another. A district with a higher percentage of identified students may receive enough federal reimbursement to make CEP financially viable, while a district with a lower percentage may need to use additional non-federal resources to cover the difference.
EASD's current direct certification percentage is 32.5%. Based on the District's current financial analysis, participating in CEP is projected to move the School Nutrition Program from a $261,142 positive annual financial position to a $108,305 operating loss – a $369,447 annual change in the program's financial position.
Therefore, the fact that another school district participates in CEP does not necessarily mean EASD could participate under the same financial circumstances. Each district must evaluate CEP based on its own student demographics, reimbursement levels, meal participation, food service operations and overall financial position.
Does CEP Have Benefits?
Yes. CEP can provide meaningful benefits. Ensuring students have access to nutritious meals can support their health, well-being and readiness to learn. Universal free lunch could also help families who experience financial challenges but do not otherwise qualify for free meals, reduce administrative requirements associated with meal applications and eliminate distinctions at the point of service based on meal eligibility.
The District recognizes these benefits. However, like other budget decisions, EASD must weigh those benefits against the financial impact and competing demands for finite District resources. Based on current projections, CEP would result in a $369,447 annual change in the financial position of the School Nutrition Program, including a projected $108,305 operating loss that would require General Fund support. The question is therefore not whether CEP has benefits, but whether participation makes financial and operational sense for EASD given its current circumstances.
The Bottom Line
EASD is eligible to participate in CEP, but eligibility does not mean participation comes at no cost to the District.
Based on EASD’s current student eligibility data, food service contract and financial projections, moving to CEP is projected to change the School Nutrition Program from a $261,142 positive annual financial position to a $108,305 operating loss – a $369,447 annual change in the program’s financial position.
The projected $108,305 operating loss would require General Fund support. In addition, foregoing the projected positive annual food service revenue would reduce the School Nutrition Program’s ability to fund future allowable expenses, including equipment and capital needs, potentially creating additional demands on other District resources over time.
For these reasons, EASD has not elected to participate in CEP at this time. The District will continue to evaluate the program as direct certification levels, reimbursement rates, food service finances and other relevant factors change.