Child Nutrition and WIC Legislation in the 106th and 107th Congresses

Report for Congress
Child Nutrition and WIC Legislation
thth
in the 106 and 107 Congresses
Updated December 2, 2002
Joe Richardson
Domestic Social Policy Division

Congressional Research Service ˜ The Library of Congress

Child Nutrition and WIC Legislation
in the 106^th and 107^th Congresses
Summary
Child nutrition programs and the Special Supplemental Nutrition Program for
Women, Infants, and Children (the WIC program) are governed by: the Richard B.
Russell National School Lunch Act, the Child Nutrition Act, and Section 32 of the
Act of August 24, 1935. Reauthorization of appropriations and comprehensive
review of the these programs was last done in the 1998 William F. Goodling Child
Nutrition Reauthorization Act (P.L. 105-336), and the next reauthorization and major
review is scheduled for 2003. However, a number of significant changes to child
nutrition and WIC law have been enacted since 1998.
In the 106^th Congress, seven laws included provisions affecting child nutrition
and WIC programs: P.L. 106-65, P.L. 106-170, P.L. 106-224, P.L. 106-398, P.L.

106-472, and P.L. 106-554. The most important of these – P.L. 106-224 and P.L.

106-554 – increased commodity support for school lunch programs, incorporated
amendments aimed at improving the integrity and management of the Child and
Adult Care Food Program (CACFP), expanded/established demonstrations affecting
for-profit child care centers in the CACFP and outside-of-school programs, and
created a pilot to increase participation in the Summer Food Service program.
In the 107^th Congress, a number of legislative issues arose: CACFP eligibility
of for-profit child care centers, rules for day care homes in the CACFP, CACFP after-
school initiatives, commodity support for schools (the level of support and expansion
of the presence of fruits and vegetables in school nutrition programs), the purchase
of locally produced foods for school meal programs, rules governing the offering of
foods in competition with school meals (“competitive foods”), a paperwork reduction
initiative for school meal programs, military families’ eligibility for free/reduced-
price school meals and WIC assistance, expansion of the Summer Food Service
program, School Breakfast program expansion and a “before-school” proposal, and
a nutrition and physical activity initiative. A number of these areas were addressed
in enacted legislation: P.L. 107-76 (the FY2002 Agriculture Department
appropriations measure) and P.L. 107-171 (the 2002 “farm bill;” the Farm Security
and Rural Investment Act).
In addition: S. 2801 (the Senate Appropriations Committee version of the
FY2003 Agriculture Department appropriations measure) touched on several
legislative issues, as did S. 940/H.R. 1990; S. 1179 and S. 1246 dealt with
commodity support, although the provisions of S. 1246 were overtaken by P.L. 107-
171; H.R. 3997 affected rules for locally produced foods (in Puerto Rico) and was
incorporated in P.L. 107-171; S. 745 and H.R. 2129 proposed changes in
“competitive food” rules; S. 1246 dealt with a paperwork reduction issue, which was
separately resolved in P.L. 107-76; H.R. 3082, H.R. 3216, and S. 1973 all dealt with
the eligibility of military families, which was separately resolved in P.L. 107-171; S.
2660 included provisions to expand summer programs (also in S. 2801); H.R. 4192
proposed a new “before-school” initiative affecting the School Breakfast program;
and S. 2821 incorporated nutrition and physical activity initiatives relating to school
nutrition programs.

Contents
Background ......................................................1
Legislation in the 106^th Congress......................................3
P.L. 106-65...................................................3
P.L. 106-78...................................................3
P.L. 106-170..................................................3
P.L. 106-224..................................................3
P.L. 106-398..................................................6
P.L. 106-472..................................................6
P.L. 106-554..................................................6
Legislative Issues and Legislation in the 107^th Congress....................7
Child and Adult Care Food Program (CACFP): For-profit Child
Care Centers..............................................7
Child and Adult Care Food Program (CACFP): Family Day
Care Homes..............................................8
Child and Adult Care Food Program (CACFP): After-School Initiatives..9
Commodity Support for Schools: The 12% Rule.....................9
Commodity Support for Schools: Fruits and Vegetables..............10
Locally Produced Foods........................................10
Competitive Foods............................................11
Paperwork Reduction in School Meal Programs.....................12
Eligibility for Military Families..................................12
Expansion of the Summer Food Service Program....................14
School Breakfast Program and Before-School Initiatives..............14
Nutrition and Physical Activity Initiative..........................15

Child Nutrition and WIC Legislation
thth
in the 106 and 107 Congresses
Background
Child nutrition programs and the Special Supplemental Nutrition Program for
Women, Infants, and Children (the WIC program) are governed by three major¹
federal laws –
^!The Richard B. Russell National School Lunch Act. This law was
originally enacted as the National School Lunch Act of 1946 (it was
renamed in 1999). It provides authority for the School Lunch
program, the Child and Adult Care Food program, the Summer Food
Service program, after-school programs (those run under both the
aegis of the School Lunch program and the Child and Adult Care
Food program), commodity support for child nutrition programs,
training and technical assistance (including the Food Service
Management Institute), compliance and accountability activities (i.e.,
the coordinated review effort), and an information clearinghouse. It
also includes a number of general-purpose provisions governing the
operation of multiple child nutrition programs (e.g., income
eligibility and inflation indexing rules, nutrition requirements).
^!The Child Nutrition Act. This law was originally enacted in 1966.
It provides authority for the School Breakfast program, the WIC
program, the Special Milk program, assistance for state
administrative expenses, and the (unfunded) Nutrition Education and
Training program.
^!Section 32 of the Act of August 24, 1935 (7 U.S.C. 612c). Section
32 authority provides funding for cash child nutrition subsidies
(permanent appropriations under Section 32 are transferred to the
child nutrition appropriations account annually). It also includes
additional (to that in the Richard B. Russell National School Lunch
Act) authority and funding for the acquisition and distribution of

¹ In addition to these laws, Congress has used annual appropriations measures and omnibus
agriculture legislation to direct the Agriculture Department to take actions affecting child
nutrition and WIC programs. These directives typically take the form of requirements to
purchase and distribute food commodities or provide Section 32 funds (noted here) or
funding from the Department’s Commodity Credit Corporation (CCC).

food commodities for distribution to child nutrition programs
(Section 32 money is used to by surplus commodities).²
For information about the programs and activities covered by these laws, see CRS Report
RL31577, Child Nutrition and WIC Programs: Background and Funding. For^th^th
information about child nutrition and WIC legislation in the 104 and 105 Congresses^th
(1995 through 1998), see CRS Report 96-987, Child Nutrition Legislation in the 104^th
Congress, and CRS Report 97-108, Child Nutrition Issues in the 105 Congress.
The most recent comprehensive amendments to child nutrition law were made
in the 1998 William F. Goodling Child Nutrition Reauthorization Act (P.L. 105-336),
which extended the appropriation authorizations for all child nutrition programs not
permanently authorized through FY2003. This law’s major initiative expanded the
availability of federal subsidies for snacks served outside of regular school schedules
(typically after-school programs). Additional amendments authorized demonstration
projects providing free breakfasts for elementary schoolchildren without regard to
family income, increased administrative flexibility for schools, states, and WIC
agencies, made it easier for private nonprofit sponsors to operate summer nutrition
programs, changed licensing and health/safety requirements for child nutrition
providers, added a number of provisions to protect the integrity of the WIC and Child
and Adult Care Food programs, and limited the degree to which WIC agencies can
keep unused money and spend it in the following year.
Reauthorization of appropriations for child nutrition and WIC programs (and,
with it, a major comprehensive review of all the programs) is not scheduled until
2003. However, a number of significant changes to child nutrition and WIC law
have been enacted since the 1998 reauthorization law. They and legislative issues
raised (but still pending) are covered in this report. Issues that have not become the
subject of legislative interest (e.g., concerns over updating the federal rules governing
the content of WIC food packages) and appropriations issues are not.³

² For more information, see CRS Report RS20235, Farm and Food Support under USDA’s
Section 32 Program, by Geoffrey Becker.
³ For coverage of funding for child nutrition and WIC programs, see CRS Report RL31577,
Child Nutrition and WIC Programs: Background and Funding, by Joe Richardson.

Legislation in the 106^th Congress
Seven laws affecting child nutrition and WIC programs were enacted in the^th
106 Congress. The enacted provisions were, in many cases, derived from bills
introduced during the 106^th Congress, but not, themselves, acted on; these are noted
where appropriate.
P.L. 106-65
The FY2000 Defense Authorization law (P.L. 106-65; Section 674; enacted
October 5, 1999) required the Secretary of Defense to implement a WIC program for
overseas military personnel (earlier law had permitted this).
P.L. 106-78
In addition to making FY2000 appropriations for child nutrition and other
Agriculture Department programs, P.L. 106-78 (Section 752; enacted October 22,
1999) changed the name of the National School Lunch Act to the Richard B. Russell
National School Lunch Act in honor of former Senator Russell of Georgia.⁴
P.L. 106-170
A law making changes affecting social security disability programs, P.L. 106-
170 (Section 411; enacted December 17, 1999) included a provision revising child
nutrition law (Section 6(e) of the Richard B. Russell National School Lunch Act) so⁵
as to reduce the value of commodities provided for child nutrition programs. This
change was supported by the Administration in its FY2000 child nutrition budget and
included in the FY1999 and FY2000 Agriculture Department appropriations
measures. It required that the value of “bonus” food commodities (already in
Department stocks and distributed to schools) count toward meeting a mandate that
12% of all School Lunch program assistance be provided in the form of commodities
– thereby reducing the need to purchase additional so-called “entitlement”
commodities to meet the minimum 12% threshold. It was to be effective for FY2001
through FY2009. However, Section 241 of P.L. 106-224 (discussed below) overrode
it for FY2001, and Section 4301 of P.L. 107-171 (discussed in the next section of this
report) continued the override through FY2003.
P.L. 106-224
On June 20, 2000, the President signed P.L. 106-224, the Agriculture Risk
Protection Act (H.R. 2559). A number of provisions of this new law – in Subtitle E,
Sections 241-244 – made significant revisions to the laws governing child nutrition
and WIC programs. The child nutrition and WIC amendments were not part of either
the House or Senate versions of H.R. 2559. They were added in the House-Senate

⁴ This name change was proposed in S. 575 of the 106^th Congress.
⁵ Savings from this change in child nutrition law were used to pay for some of the added
costs expected to be incurred from the disability program provisions of P.L. 106-170.

conference on the measure and included in the conference agreement (H.Rept. 106-
639) approved by the House and Senate on May 25, 2000. Virtually all were derived
from recommendations put forward in various child nutrition bills introduced in the
106^th Congress (see footnotes below). Overall, they were estimated to have a net cost
of about $80 million (in budget authority) or $100 million (in outlays) for FY2000-
FY2005. The majority of costs were associated with the commodity purchase
provisions of Section 241, and partially offsetting savings were derived from the
provisions of Child and Adult Care Food program amendments of Section 243.
Section 241 required the Agriculture Department to increase the purchase of
food commodities for distribution through the School Lunch program in FY2000 and
FY2001.⁶ For FY2000, it directed the Department to buy $34 million worth of
commodities over and above the amount already scheduled to be provided. For
FY2001, it (1) temporarily changed the law (as revised by P.L. 106-170, noted above)
to remove a mandate that any “bonus” commodities acquired for agricultural support
purposes and donated to schools be counted toward a minimum requirement that
12% of all school lunch assistance be in the form of commodities (thereby forcing
the purchase of more “entitlement” commodities to meet the 12% requirement) and
(2) mandated that the Department buy an additional $21 million worth of
commodities for schools. As a result, it was estimated that mandatory commodity
purchases for the School Lunch program in FY2001 would be some $76 million
more than previously scheduled.
Section 242 made changes to child nutrition law to allow schools and WIC
agencies to take a more active role in helping to identify and enroll eligible children
for Medicaid or assistance under the State Child Health Insurance Program (SCHIP).⁷
It allowed schools to share income and other relevant information they collect when
determining eligibility for free or reduced-price meals in the School Lunch program
with state Medicaid and SCHIP agencies – as long as there is a written agreement
that limits use of the information to identifying and enrolling children in Medicaid
or SCHIP and parents are notified and given a chance to “opt out.” Section 242 also
established a one-state pilot project under which WIC administrative funds could be
used to help identify and enroll eligible children in Medicaid and SCHIP (and
provided a small grant to defray some of the added costs to local WIC agencies).
Section 243 incorporated a number of amendments aimed at improving the
integrity and management of the Child and Adult Care Food Program (CACFP) –
primarily in response to 1999 reports by Agriculture Department’s Office of
Inspector General and the General Accounting Office criticizing program operations
(particularly with respect to family day care home providers and their sponsors).⁸

⁶ The directive to increase commodity purchases for school lunch programs derived from
a proposal advanced in the Emergency Commodity Distribution Act (H.R. 3614/ S. 2056 of^th
the 106 Congress).
⁷ The provisions to increase the role of schools and WIC agencies in identifying and
enrolling children for Medicaid and SCHIP derived from proposals included in the SCHIP^th
Improvement Act (S. 1570/H.R. 2807 of the 106 Congress).
⁸ The CACFP integrity provisions were largely derived from proposals in the Child and
(continued...)

The major program integrity provisions of the law: (1) disqualified institutions that
have been determined ineligible to participate in any other publicly funded program
because they violated requirements of that program, (2) added requirements that
sponsoring organizations employ sufficient monitoring staff to ensure effective
oversight of local providers and have in place a policy that restricts other work by
employees that would interfere with their oversight responsibilities, (3) established
specific eligibility criteria for applicant institutions (particularly with regard to their
administrative and financial management capabilities), (4) tightened tax-exemption
requirements for private nonprofit institutions, (5) gave state agencies greater control
over the approval process for institutions (e.g., in some instances, limits can be
placed on the number of approved institutions in a given area), (6) strengthened
requirements for site visits to participating institutions, (7) required parental
notification of an institution’s participation in the CACFP, (8) mandated the
establishment of procedures for terminating or suspending institutions failing to
fulfill their responsibilities or engaging in unlawful practices, (9) restricted
administrative cost payments to sponsors of day care centers in the program, (10)
limited the ability of day care homes to change sponsors without good cause, and
(11) allowed withholding of administrative funds from states failing to provide
sufficient training, technical assistance, and monitoring in the CACFP.
Section 243 also expanded an existing pilot project and established a new pilot.
A pre-existing pilot operating in Iowa and Kentucky permitted for-profit child care
centers to participate in the CACFP under more liberal rules than were normally
applied (i.e., in Iowa and Kentucky, they could participate if more than one-quarter
of their children are from families with income below 185% of the federal poverty
guidelines).⁹ The new law allowed this pilot to expand to one more state (Delaware).
Taking this a step further, P.L. 106-554 (discussed below) made the
Iowa/Kentucky/Delaware pilot rule a nationwide rule (through FY2001), and P.L.
107-76 (discussed in the next section of this report) extended nationwide application
of the rule through FY2002. Outside-of-school programs for “at-risk” schoolchildren
can receive federal subsidies for free snacks they serve in poor areas. The new law
authorized a pilot project – to operate in six states (expanded to include Illinois by
P.L. 107-76, discussed in the next section of this report) – under which these
programs can receive federal payments for free meals (typically suppers) as well as
snacks.

⁸ (...continued)
Adult Care Food Program Management Improvement Act (an Administration bill; S. 2356^th
of the 106 Congress) and the bipartisan Child and Adult Care Program Integrity Act (H.R.^th

4520 of the 106 Congress). The 1999 reports that influenced these changes were – (1)

Presidential Initiative: Operation Kiddie Care. Food and Nutrition Service, Child and
Adult Care Food Program, National Report on Program Abuses. U.S. Department of
Agriculture, Office of Inspector General Audit Report No. 27601-7-SF (August 1999); and
(2) Efforts to Control Fraud and Abuse in the Child and Adult Care Food Program Should
be Strengthened. U.S. General Accounting Office. RCED-00-12 (November 1999).
⁹ For more information, see the description of the CACFP in CRS Report RL31577, Child
Nutrition and WIC Programs: Background and Funding, by Joe Richardson.

Section 244 made several small adjustments to the WIC program primarily
aimed at giving WIC agencies in Alaska, Hawaii, and outlying areas more flexibility
(e.g., allowing Alaska to use funding provided for food to pay for necessary services
to remote Indian or Native villages, permitting these agencies to disregard military
cost-of-living allowances in determining income eligibility for WIC benefits).
P.L. 106-398
Section 662 of the Defense Authorization measure for FY2001 (P.L. 106-398;
H.R. 4205/H.R. 4508; H.Rept. 106-945; enacted October 30, 2000) changed the law
requiring a WIC program for overseas military personnel to make clear that military
housing assistance (including the basic allowance for housing) will not be taken into
account in judging eligibility for WIC benefits.
P.L. 106-472
The Grain Standards and Warehouse Improvement Act of 2000 (P.L. 106-472;
enacted November 9, 2000) contained technical and clarifying amendments to the
provisions of the Agriculture Risk Protection Act (P.L. 106-224, discussed above)
and an extension of funding authority for removal/destruction of federally provided
food commodities (e.g., those provided through school meal programs) when they
pose a health or safety risk.
P.L. 106-554
The omnibus FY2001 Consolidated Appropriations Act (P.L. 106-554; H.R.
4577; H.Rept. 106-1033; enacted December 21, 2000) incorporated amendments to
the Richard B. Russell National School Lunch Act derived from: (1) H.R. 2907/ S.^th¹⁰

1995 and (2) S. 3054 of the 106 Congress. The provisions taken from H.R.

2907/S. 1995 loosened rules governing participation of for-profit child care centers
in the CACFP by making the rule applying to Iowa, Kentucky, and Delaware a
national eligibility standard for for-profit centers (see the discussion of Section 243¹¹
of P.L. 106-224 above) – but only through the end of FY2001. The provisions
taken from S. 3054 established a pilot program to increase participation in the
Summer Food Service program in states with very low participation rates – by
eliminating certain administrative/paperwork requirements for public sponsors of
summer programs. Both the child care center and summer program pilot
amendments were added by House-Senate conferees on the consolidated
appropriations measure, without separate action by either the House or the Senate.

¹⁰ These amendments were contained in Sections 101 and 102 of Title I of Division B
(Section (1)(a)(4)) of the Miscellaneous Appropriations portion of the Consolidated
Appropriations Act for FY2001.
¹¹ As noted earlier, making the Iowa/Kentucky/Delaware rule a national standard was
extended through FY2002 by P.L. 107-76 (see the next section of this report).

Legislative Issues and Legislation
in the 107^th Congress
The size of the appropriation for the WIC program was the major child-
nutrition-issue in the 107^th Congress – with two supplemental appropriations
approved to meet rising participation pressures and special action taken to ensure
FY2002 funding for the WIC farmers’ market nutrition program (see CRS Report
RL31577, Child Nutrition and WIC Programs: Background and Funding).
However, a number of child nutrition and WIC legislative issues (which can also
affect costs) were addressed in the 107^th Congress, or are likely to return in the 108^th
Congress.
Child and Adult Care Food Program (CACFP): For-profit
Child Care Centers¹²
As noted above in the discussion of legislation enacted in the 106^th Congress,
provisions of P.L. 106-554 (an appropriations measure) loosened rules governing
participation of for-profit child care centers in the CACFP by making an eligibility
rule used in Iowa, Kentucky, and Delaware nationally applicable. This rule allows
private for-profit centers to get subsidies under the CACFP if at least 25% of their
enrolled children meet the income requirements for free or reduced-price meals. The
alternate standard for the rest of the country tied the eligibility of for-profit centers
to their receipt of at least some funding under Title XX of the Social Security Act
(Social Services Block Grants). This “rest-of-the-country” standard greatly limits
participation by for-profit centers because the major funding sources for child care
have shifted since its adoption – to Child Care and Development Block Grants and
Temporary Assistance for Needy Families block grants. There has been relatively
little controversy over revising the eligibility rules for for-profit child care centers in
the CACFP – recognizing that tying their eligibility to receipt of Title XX money is
out of date and that a requirement that they serve a significant proportion of lower-
income children is more targeted. But the cost of doing so has stalled attempts to
change them over the last several years, and a policy allowing “pooling” of Title XX
money has mitigated the restrictive effect of the “rest-of-country” rule (for
information on the “pooling” policy, see the description of the CACFP in CRS
Report RL31577, Child Nutrition and WIC Programs: Background and Funding).
The liberalization of the rules for for-profit child care centers enacted in P.L.
106-554 was to have expired September 30, 2001. However, Section 743 of the
FY2002 Agriculture Department appropriations law (P.L. 107-76; H.Rept. 107-275)
made the more liberal Iowa/Kentucky/Delaware rule effective nationwide through
the end of FY2002. This action meant that Congress was again faced with deciding
on the eligibility policy to be applied to for-profit providers.¹³ And, in response,
Section 731 of the Senate Appropriations Committee version of the FY2003

¹² Also see the description of the CACFP in CRS Report RL31577, Child Nutrition and WIC
Programs: Background and Funding, by Joe Richardson.
¹³ Note: Title VI (Section 6001) of S. 940/H.R. 1990 proposed to make the current
temporary policy for for-profit centers permanent.

Agriculture Department appropriations measure (S. 2801) proposed to further extend
the national applicability of the Iowa/Kentucky/Delaware rule through FY2003, with
the expectation that the issue would be addressed in the 2003 child nutrition
reauthorization debate.¹⁴ However, the 107^th Congress did not act on the FY2003
appropriations measure, and authority for national application of the
Iowa/Kentucky/Delaware rule lapsed when Congress instead chose to approve a
“continuing resolution” (P.L. 107-294) to fund most federal activities through
January 11, 2003. Reinstatement of this authority will depend on action in the 108^th
Congress related to the FY2003 Agriculture Department appropriations bill and
reauthorization/review of child nutrition programs.
Child and Adult Care Food Program (CACFP): Family Day
Care Homes
In 1996, the law governing the CACFP was changed to establish a “2-tier”¹⁵
system of subsidies for family day care homes. Under this system, the federal
subsidy rates for meals/snacks are higher for homes located in lower-income areas
(or operated by a lower-income provider). As this change has been implemented,
two issues have been raised by organizations sponsoring family day care homes;
these sponsoring organizations perform administrative and technical assistance tasks
for the individual homes they sponsor and receive federal payments for doing so
(based on the number of homes sponsored). Sponsors contend that, with the change
in subsidy rules for day care homes (the old law had a single subsidy rate for all
homes and fewer administrative tasks for sponsors), they should receive a larger
administrative subsidy. They also maintain that day care home operators should be
eligible for the higher subsidies paid in the case of lower-income operators without
having to go through a special income test – if they already participate in a federal
or state income-tested program with an income eligibility limit no higher than the
CACFP standard. This, they argue, would ease administrative burdens and may have¹⁶
been an oversight in the 1996 change in law.
Title VI (Section 6003) of S. 940/H.R. 1990 would have significantly increased
CACFP payments made to day care home sponsors who handle individual homes’
administrative tasks. And Section 6002 of the bill would have allowed day care
homes operated by providers participating in an income-tested benefit program for
lower-income persons that has an income eligibility limit no higher than the CACFP
limit to qualify for higher subsidies without going through a separate income test.

¹⁴ Moreover, accompanying committee report language encourages states to conduct
outreach to recruit new for-profit providers using the less restrictive
Iowa/Kentucky/Delaware eligibility rule and the “pooling” authority noted in the CACFP
description in CRS Report RL31577, Child Nutrition and WIC Programs: Background and
Funding, by Joe Richardson.
¹⁵ For information on the “2-tier” system, see the description of the CACFP in CRS Report
RL31577, Child Nutrition and WIC Programs: Background and Funding, by Joe Richardson.
¹⁶ For example, where higher subsidies are claimed for meals/snack served to individual
lower-income children, participation in another means-tested program is sufficient.

Child and Adult Care Food Program (CACFP): After-School
Initiatives
In addition to the question of changing rules for private for-profit child care
centers and day care homes in the CACFP (see discussions above), revisions
affecting the CACFP’s outside-of-school and day-care home components received
some attention. Title VI (Section 6004) of S. 940/H.R. 1990 included significant
changes to the CACFP that have been pressed by program advocates for several
years. And a change in law incorporated in the FY2002 Agriculture Appropriations
measure added one state to the six states that may offer free meals (typically suppers)
– in addition to free snacks – in their CACFP outside-of-school programs for at-risk
schoolchildren in poor areas.
Outside-of-school (typically after-school) programs serving free snacks are now
supported under the CACFP in areas where at least half the children are eligible for
free or reduced-price school meals. Title VI proposed to significantly expand the
number of areas in which CACFP subsidies could go to after-school programs by
allowing areas in which “poor economic conditions” are determined to exist to
qualify.
P.L. 107-76 (the FY2002 Agriculture Department appropriations law) added one
state (Illinois) to the six states previously permitted to allow their CACFP operators
to offer (and receive federal subsidies for) free suppers in outside-of-school programs
for at-risk children in poor areas. The six states already included were: Delaware,
Michigan, Missouri, New York, Oregon, and Pennsylvania. Going a step further,
Title VI (Section 6004) of S. 940/H.R. 1990 would have provided CACFP subsidies
for suppers nationwide, instead of the limited number of states now covered.
Commodity Support for Schools: The 12% Rule¹⁷
As noted earlier in the discussion of legislation enacted in the 106^th Congress,
Section 241 of P.L. 106-224 temporarily removed a mandate that any “bonus”
commodities acquired for agricultural support purposes and donated to schools be
counted toward a minimum requirement that 12% of all school lunch assistance be
in the form of commodities. This ensured that the Agriculture Department would
have to continue to purchase more “entitlement” commodities to meet the 12%
requirement, and thus increased the total amount of commodity support provided to
schools. This change was to have expired September 30, 2001.
In response, Section 4301 of the 2002 “farm bill” (P.L. 107-171; the Farm
Security and Rural Investment Act of 2002) continued the bonus commodity
provisions of P.L. 106-224 through FY2003.¹⁸ This effectively increased

¹⁷ See the description of commodity distribution in CRS Report RL31577, Child Nutrition
and WIC Programs: Background and Funding, by Joe Richardson.
¹⁸ In addition – (1) S. 1179 (the Emergency Commodity Distribution Act of 2001) proposed
to make permanent the change enacted in P.L. 106-224; and (2) S. 1246 (reported by the
(continued...)

Agriculture Department commodity purchases for schools by at least an estimated
$50+ million a year for FY2002 and FY2003. However, whether to count “bonus”
commodities for purposes of the 12% rule is likely to recur as an issue in the 2003
child nutrition reauthorization debate.
Commodity Support for Schools: Fruits and Vegetables
In addition to increasing the overall volume of commodities provided to schools
(see the discussion of the 12% rule above), the 107^th Congress acted to expand the
presence of fresh fruits and vegetables in schools, responding to concerns over the
quality of food served in school nutrition programs. The 2002 “farm bill” (P.L. 107-

171; the Farm Security and Rural Investment Act) included two provisions –

^!Section 10603 requires at least $50 million a year in fresh fruit and
vegetable purchases for schools. This is to be provided through the
pre-existing “Department of Defense Fresh Program” in order to
utilize the Department’s extensive acquisition/distribution network.
^!Section 4305 provides $6 million for a 1-year pilot program to make
free fruits and vegetables (including dried fruits) available to
students in a limited number of elementary and secondary schools.
Both of these actions coincided with and reinforced statements in
Appropriations Committee reports accompanying the FY2002 and FY2003
Agriculture Department appropriations measures backing expansion of support for
fresh fruits and vegetables in schools.
Locally Produced Foods
As a component of federal agricultural support policies, the 2002 “farm bill”
(P.L. 107-171; the Farm Security and Rural Investment Act) included two provisions
relating to the purchase of locally produced foods for school meal programs –
^!Section 4303 requires the Agriculture Department to encourage the
purchase of locally produced foods in school meal programs and
authorizes $400,000 a year to be appropriated for start-up grants to
defray costs incurred in carrying out this policy.
^!Section 4304 adopts an amendment to the Richard B. Russell
National School Lunch Act that – to the maximum extent practicable
– requires school food authorities in Puerto Rico to purchase
commodities or food products that are produced in Puerto Rico in
sufficient quantities to meet their needs.¹⁹ This supplements a
general “Buy American” rule for child nutrition programs and copies

¹⁸ (...continued)
Senate Agriculture, Nutrition, and Forestry Committee on July 25, 2001) would have
extended the FY2001 expiration date through FY2002.
¹⁹ This provision was derived from H.R. 3997 of the 107^th Congress.

a special variation of that rule that previously applied only in
Hawaii.
Competitive Foods
Current School Lunch and School Breakfast program rules prohibit the sale of
foods of minimal nutritional value (primarily, sodas and candies) in competition with
school meals in school food service areas during meal periods. Other competitive
foods may be sold in food service areas during mealtimes only if all the income
accrues to the benefit of the school or student organizations. States and schools can
impose additional restrictions on the sale of competitive foods. But there are no
federal standards governing the offering of competitive foods outside of food service
areas during mealtimes or relating to competitive foods that are offered for free.
A significant number of schools have chosen to enter into contracts with, and
be paid by, companies that offer competitive foods (often through vending machines,
or sometimes for free). The agreements can be structured so that only one company’s
products are allowed on school grounds (sometimes called “pouring rights”
agreements when they involve sodas). These foods are generally offered outside
school food service areas and can be of various types – ranging from sodas to juices,
candies to vitamin-enriched grain products.
Opposition (including among school food service operators) has developed to
allowing schools to enter into these types of agreements and thereby sanction the
offering of potentially non-nutritious foods in competition with school meal
programs. Schools are seen as making money from the sale of food items that may
run counter to the focus on improving children’s eating habits and nutrition status.
Opponents ask for some type of federal rule barring schools in the school meal
programs from allowing the service of non-nutritious foods or those of minimal
nutritional value. However, school administrators and food companies with these
agreements argue that: (1) tight local school budgets need the extra money raised by
these agreements, (2) not all competitive foods are lacking in nutritional value, and
(3) the decision should be a local one, not dictated by federal rules.
S. 745 (the Better Nutrition for School Children Act of 2001) would have
expanded the current rule against the sale of competitive foods by barring the sale,
donation, or service without charge of foods of minimal nutritional value on school
grounds during mealtimes. With regard to the school day between breakfast and
lunch, it would have required the Agriculture Department to (1) review federal, state,
and local laws, policies, and practices covering the sale, donation, or service without
charge of foods of minimal nutritional value, and (2) issue regulations relating to the
sale, donation, or service without charge of foods of minimal nutritional value. The
regulations could prohibit foods of minimal nutritional value between breakfast and
lunch on all or part of the school grounds, or permit states and local school
authorities to decide.
H.R. 2129 (also entitled the Better Nutrition for School Children Act of 2001)
would have required the Agriculture Department to prescribe regulations relating to
the service of foods in competition with school meal programs covering the entire
school day and all school grounds. It would also have eliminated the current

provision of law permitting the sale of competitive foods in food service areas during
mealtimes if the proceeds go to the school or student organizations.
In related activity, Appropriations Committee report language accompanying the
FY2002 and FY2003 Agriculture Department appropriations measures supported
expansion of pilot initiatives (underway in Iowa and Wisconsin) offering milk
through school vending machines.
Paperwork Reduction in School Meal Programs
For a number of years, child nutrition law has included two rules – called
“provision 2" and “provision 3" – that allow schools with high proportions of needy
students to avoid the paperwork and administrative burdens associated with
certifying children eligible for free and reduced-price school meals, at little or no net
cost (see footnotes 3 and 5 earlier in this report). In 1998, a grant program was
established to encourage schools to make greater use of these rules. Under this
initiative (originally scheduled to expire September 30, 2001), 12 states received
grants under which they provide technical and other assistance to schools that enable
them to determine whether they should take advantage of these rules and how to do
it.
On July 25, 2001, the Senate Committee on Agriculture, Nutrition, and Forestry
reported S. 1246 (the Emergency Agricultural Assistance Act of 2001). This version
of the House-approved H.R. 2213 would have extended the time that the 12 grantee
states could provide assistance to September 30, 2003. However, the Senate did not
pass the Senate Committee’s version of the 2001 emergency agricultural assistance
legislation. Instead, it approved the House version, which has been enacted as P.L.
107-25. The House version did not include provisions to extend the paperwork
reduction initiative.
The issue was resolved in the FY2002 Agriculture Department appropriations
law (P.L. 107-76). Section 766 of this law adopted a proposal in the Senate’s version
to extend the time the grantee states can provide assistance to September 30,2003,
and required a report on the activities of state agencies receiving the grants.
Eligibility for Military Families
All housing allowances granted to military personnel and reported on their leave
and earnings statements are counted as income in determining eligibility for free and
reduced-price school meals. On-base housing provided free (in-kind income) is not
counted. The Department of Defense is implementing a “privatized” military
housing policy under which formerly free housing operated by military authorities
is converted to privately operated housing, or military personnel are moved from free
to privately operated housing. In these “privatization” scenarios, military personnel
are given a housing allowance that they pass on to the private operator, the housing
allowance is counted (it is included on leave and earnings statements), and military
families formerly eligible for free or reduced-price school meals can lose eligibility.

Advocates for military families and schools with large populations of children
from military families argued that families in privatized military housing were being
unfairly penalized – losing eligibility for free or reduced-price school meals when
their circumstances have not substantively changed. Schools also argued that they
were penalized because they lose out on funding allocated according to how large a
population of children receiving free/reduced-price meals they have (a widely used
proxy for how poor the school’s student population is).
H.R. 3082, H.R. 3216, and S. 1973 all responded to these arguments and
proposed to require that, in cases where military personnel live in privatized housing,
their housing allowance not be counted as income in determining eligibility for free
or reduced-price school meals. On December 11, 2001, H.R. 3216 was approved by
the House. However, this action was overtaken with the enactment of the 2002 “farm
bill” (P.L. 107-171; the Farm Security and Rural Investment Act of 2002). Section

4302 of this law enacted the provisions of H.R. 3216 – effective through FY2003.

It is expected that the issue will reappear for a final resolution in the 2003 child
nutrition reauthorization debate.
Privatization of military housing presents a slightly different problem for the
WIC program. In determining income eligibility for WIC benefits, states may choose
to exclude any housing allowance received by military personnel residing off-base
– regardless of whether they live in “privatized” housing. All states have taken this
option. On-base housing provided free (in-kind income) is not counted. However,
housing allowances provided for on-base privatized housing must be counted.
Miliary family advocates make the case that the current WIC rule was predicated on
an understanding that all on-base housing is provided free (and would not be counted
when judging eligibility). They argue that conversion of on-base housing to privately
operated housing units (using housing allowances) should not deny WIC eligibility
since the families’ circumstances have not materially changed.
In response, Section 4306 of the 2002 “farm bill” (P.L. 107-171) amended WIC
law by adding an option for states to exclude any housing allowance in cases where
military personnel live in privatized on-base housing.
The above noted immediate concerns over the treatment of military families’
housing assistance highlight a larger underlying issue for school meal programs that
may be addressed when child nutrition laws come up for review in 2003. Should the
value of housing provided free be treated differently than cash housing allowances
included in military paychecks? Under current law, the value of housing provided
free (most on-base housing) is not considered in judging eligibility for free/reduced-
price school meals, but housing allowances are counted. Thus, two otherwise
identical military families can be treated differently depending on the type of military
housing support they receive. Under the legislation noted above, free housing will
continue to be disregarded. But housing allowances will be treated differently.
Allowances provided for privatized housing will be disregarded, but counted in other
cases.²⁰ Finally, the legislation will continue the practice of following different

²⁰ It should be noted that implementing a policy disregarding some housing allowances, but
(continued...)

policies for school meal programs and the WIC program (e.g., housing allowances
for off-base, non-privatized housing will be counted in school meal programs, but not
in the WIC program).
Expansion of the Summer Food Service Program
Participation in the Summer Food Service program has not significantly
increased in recent years and is still a fraction of participation of lower-income
children in school meal programs.²¹ This has prompted calls for measures to
encourage local sponsors to join the program. One such initiative – eliminating
certain paperwork requirements for public agency sponsors (documentation of all
costs) – was enacted as a pilot project in P.L. 106-554 (discussed earlier). The
documentation eliminated is not required of public sponsors (schools) in the school
meal programs. Preliminary results of this project (operating in some 13 states)
indicate that it is bringing about significant increases (almost 10%) in participation.
S. 2660 would have made the pilot project rule part of permanent law, as would
Section 747 of the Senate Appropriations Committee version of the FY2003
Agriculture Department appropriations measure (S. 2801). However, the 107^th
Congress did not act on the FY2003 appropriations bill, and expansion of the pilot
project rule was not approved. Nationwide application of this rule will likely be an
issue in the 2003 child nutrition child nutrition reauthorization debate.
School Breakfast Program and Before-School Initiatives
As with the Summer Food Service program, advocates of the School Breakfast
program have called for measures to encourage its expansion. At present, 74% of
schools participating in the School Lunch program also operate breakfast programs.
But the proportion of schools participating has grown only slightly in the last 6²²
years.
One approach has been supported in recent Agriculture Department
appropriations laws. The FY2001 and FY2002 measures provided $500,000 to
support a school breakfast start-up grant program in Wisconsin, and the Senate
Appropriations Committee version of the FY2003 appropriations bill (S. 2801)
would have increased that to $3.3 million and called for expansion to an additional
five or more states (with at least $1 million reserved for Wisconsin). Start-up (and

²⁰ (...continued)
not others, may prove to be administratively difficult for schools and hard to understand for
parents.
²¹ Refer to a recent report by the Food Research and Action Center (FRAC): Hunger Doesn’t
Take a Vacation: A Status Report on the Summer Food Service Program for Children (2002,
Tenth Edition). It is available through FRAC’s website – [http://www.frac.org].
²² Refer to a recent report by the Food Research and Action Center (FRAC): School
Breakfast Score Card (2001, Eleventh Edition). It is available through FRAC’s website –
[ h t t p : / / www.f r a c .or g] .

expansion) grant funding for school breakfast programs was eliminated by the 1996
welfare reform law (P.L. 104-193).
Another approach is represented by H.R. 4192 (the Education Grants for Great
Starts Act). This proposal would have established a limited number of
demonstrations to support and evaluate the provision of before-school activities that
(1) advance student academic achievement and (2) encourage the establishment of
(and increase participation in) school breakfast programs.
Finally, it should be noted that another avenue for expanding the reach of the
School Breakfast program is represented by an ongoing pilot project testing the
results of offering free breakfasts to all students in participating schools. This pilot
was authorized in the 1998 child nutrition reauthorization law and later funded at $13
million (about half for evaluation costs).²³ Whether to take this approach may be an
issue in the 2003 child nutrition reauthorization debate.
Nutrition and Physical Activity Initiative
Responding to concerns about overweight and obesity among children (and
adults), a bill aimed at improving nutrition and increasing physical activity – the
Improved Nutrition and Physical Activity Act (S. 2821) – proposed grants, studies,
and a new National Nutrition Foundation. Because child nutrition and WIC
programs play a significant role in participating children’s health status, they likely
would be an important component in all three initiatives. The bill would have
authorized grants to state and local entities for school health initiatives related to
prevention of overweight and obesity, including education and training for school
food service professionals and activities to improve the nutritional status of
schoolchildren. The Agriculture Department would have been directed to contract
for a study of its food and nutrition assistance programs to investigate whether they
are based on the latest scientific evidence, whether they contribute to either
preventing or enhancing overweight and obesity among children (and adults), and
whether they can be changed to contribute to the prevention of overweight and
obesity. And a new National Nutrition Foundation would have been established in
the Department of Agriculture. The foundation was to be charged with supporting
and carrying out research on (and disseminating information about) nutrition and
food assistance programs – including the nutritional effects of readily available,
competing foods at schools with school meal programs.

²³ Preliminary results of this pilot are described in a report from the Office of Analysis,
Nutrition, and Evaluation (OANE) of the Agriculture Department’s Food and Nutrition
Service – Evaluation of the School Breakfast Pilot Project: Findings from the First Year of
Implementation, October 2002. It is accessible at the Food and Nutrition Service website:
[ h t t p : / / www.f n s .us da .gov/ o a n e ] .