Nearly 70% of U.S. public schools report that reimbursement rates from the federal government do not cover the actual cost of serving lunches, and administrators warn that new dietary guidelines from the Trump administration may deepen the financial strain.
For the 2023-2024 school year, the National School Lunch Program provided 4.8 billion meals to approximately 29.4 million students at a cost of $17.7 billion. The government reimburses schools roughly $4.70 per free meal, but many districts say that figure falls short of actual food, labor, equipment, and utility costs.
A survey of more than 1,170 school nutrition directors conducted by the School Nutrition Association found that 69.6% reported insufficient reimbursement rates this year, up from 67.4% the prior year. More than half expressed serious concern about the financial sustainability of their meal programs over the next three years, a figure that rose from 46% in the 2024-2025 school year.
How Federal Policy Changes Factor In
The One Big Beautiful Bill Act cut Supplemental Nutrition Assistance Program funding, ending automatic free meal eligibility for children. With fewer students qualifying for SNAP, a school’s identified student percentage drops, reducing the reimbursements available for free and reduced-cost meals.
Separately, the Department of Health and Human Services under Secretary Robert F. Kennedy Jr. has pushed schools to eliminate ultra-processed foods in favor of whole foods, fruits, vegetables, and protein as part of the Make America Healthy Again movement. Schools must comply with these updated dietary guidelines to maintain federal funding.
While nutrition experts have praised the shift toward scratch-made meals and whole food options, food economists argue the guidelines add operational pressure that underfunded lunch programs cannot currently absorb.
“The issue here is the operational reality of getting there with the current level of funding,” said David Ortega, professor of food economics and policy at Michigan State University. “Not having enough staff, culinary training that comes with trying to do a lot of that more whole-food scratch cooking, the need for equipment and infrastructure—these are really operational issues that have to be addressed from a funding perspective.”
At a Congressional briefing, SNA President Stephanie Dillard said the $4.70 per meal must cover food, supplies, labor, equipment, deliveries, and utilities. “Our St. Patrick’s Day menu featured a scratch-prepared Shepherd’s Pie using fresh, locally sourced beef. I wish we could offer this option regularly, but local beef is priced about $3 more per pound.”
Without increased resources, Ortega said schools will face difficult choices. “You may have loss of coverage for some children and schools, and schools may be taking on more debt for some of the unpaid meals.”
Rising Costs Already Straining Programs
The cost of feeding schoolchildren has climbed steadily alongside food prices and labor costs. Grocery prices have risen nearly 30% since early 2020, outpacing broader inflation—a result of pandemic-era supply chain disruptions, geopolitical conflicts affecting commodity markets, and a tightening labor market in agriculture and food production.
The updated standards advocate for more red meat and whole-fat dairy, but beef prices have climbed amid shrinking cattle herds. More than half of schools report food service staffing shortages, potentially requiring investment in kitchen equipment to maintain meal quality and timing.
“Healthy eating is not just a choice. There are real constraints,” Ortega said. “If nutritional guidance is going to translate into real-world behavior, we have to account for these things: price levels, inflation dynamics, access constraints, and time costs.”