Continued: Schools wondering where their lunch money went

In a typical week in the Lakeville school district, the lunch menu can offer students beefy nachos, crispy chicken, broccoli, tossed salads, and peanut butter and jelly sandwiches. For just $2 a day last year, high school students could eat a lunch and even get extras like a s'mores bar.

But this fall, lunch prices in Lakeville and other south-metro districts from Belle Plaine to Burnsville-Eagan-Savage are rising quickly as districts scramble to make up for both rising food costs and an increase in more-expensive healthy food offerings.

"We went for about five years without increasing prices," said Gayle Smalley-Rader, student nutrition supervisor in Lakeville. "Then we had to raise prices 10 cents last year and 15 cents this year. We're not even sure if that will cover our expenses."

Tom Pellegrino, president of the Minnesota School Nutrition Association and the Osseo district's director of food and nutrition services, called the rise in food prices a "phenomenon," based on price increases in food, petroleum-based paper products and transportation.

"This year is a lot worse," he said.

According to Minnesota law, school districts need to keep their food service funds separate from the rest of the general fund budget.

If the fund runs a deficit and doesn't have enough reserves to cover it, the general fund budget -- which pays teacher salaries, among other things -- has to subsidize it.

"Fortunately, we've got a large enough [reserve] that we're going to be able to weather this storm," said Mark Stotts, business manager for the Burnsville-Eagan-Savage district, which is projecting a $25,000 deficit in its food services budget next year. "But it sounds like a lot of districts are going to be running a deficit."

Stotts attributed some of the increased expense to new school district "wellness" policies that ban treats such as sodas with sugar from district vending machines. That's a double whammy, because those treats often brought in money to school food programs, and now schools need to provide fresher, more expensive alternatives.

At Burnsville High School alone, the district has lost $400 a week in soda sales over the past year, he said.

Many districts, including Burnsville-Eagan-Savage, Rosemount-Apple Valley-Eagan and Lakeville, have started to participate in a school district cooperative that buys its foods together to keep down prices. The Minnesota School Food Buying Group has grown to include more than 60 districts that go directly to food producers to consolidate their buying power.

Even with those savings, Smalley-Rader said, "It gets to the point where you can't really support some of the expenses."

Families cutting back

The federal government reimburses school districts for providing lunch for low-income students through the National School Lunch Program, for free or at a reduced price. But districts are worried that the federal subsidies won't keep up with the rising food prices and they'll have to shoulder more of the cost during tough economic times.

Students whose families live at or below 130 percent of the poverty level -- $26,845 for a family of four during the 2007-08 school year -- get free lunches from school districts. Students whose families earn between 130 and 180 percent of the poverty level -- $38,203 for a family of four during the 2007-08 year -- can be charged no more than 40 cents for a lunch.

Smalley-Rader worries that there's a gap between families who qualify for the program and those that can easily handle the higher prices, leaving a group in the middle who will be affected greatly.

School food service providers still believe their lunch is the best deal in town for families, Pellegrino said, "but people will tend to cut back when they see that their dollar is just not going as far."

"It's been a really tough time," he said. "You don't know when it's going to stop."

Staff writer Norman Draper contributed to this report

Emily Johns • 952-882-9056