USDA pumps $750 million into school meals to counter inflation, supply chain woes

A child puts her mask back on after finishing lunch at a socially distanced table in the cafeteria of Medora Elementary School on March 17, 2021, in Louisville, Kentucky.

By Tami Luhby, CNN

(CNN) -- Schools are not only wrestling with how to educate children amid the surge in coronavirus cases. They are also contending with feeding kids as inflation and supply chain problems disrupt their ability to serve meals.

That's why the US Department of Agriculture is pumping an estimated $750 million more into school meals programs nationwide as part of a midyear adjustment to the reimbursement rate.

Schools will receive an additional 25 cents per lunch to counter higher food costs and other issues, the agency said Friday.

"This adjustment is well-timed to ensure the purchasing power of schools keeps pace with the cost of living," the USDA said in a statement.

Reimbursement rates typically don't increase during the school year. But because of the pandemic, the agency is providing schools with funding based on rates for the summer food services program. That translated into a 15% bump in the rate for lunch for the current school year.

The summer rates adjust annually for inflation each January. That means schools now will receive 22% more for school lunches than they typically would.

The move will help alleviate some of the pressure schools are facing, Lisa Davis, senior vice president of Share Our Strength, which is focused on ending hunger and poverty, said in a statement.

"First, it will help bolster the purchasing power of our nation's schools, allowing them to stretch their budgets during these uncertain times," she said. "Second, at a time when families continue to face financial strain and hardship, this will give them fewer meal expenses to worry about each day."

Schools have been struggling to serve students meals amid the spike in food prices and supply chain disruptions.

Only about half of school meals programs indicated the higher reimbursement rates for breakfast and lunch were sufficient to cover the costs of producing a meal, according to a study released last month by the School Nutrition Association.

Some 97% of respondents said they are challenged by higher costs, compared with contracted bids, with nearly three-quarters citing it as a "significant challenge," according to the association's survey.

In recent months, the USDA provided $1 billion to schools to purchase food, as well as $300 million to states to buy food to be distributed to schools. An additional $200 million was allocated for a new program to support farmers supplying food for schools.

Also, the agency is ensuring schools will not be penalized if they cannot meet meal standards due to supply chain issues.

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