Senate Standing Committee on Education

Thank you for joining us. On our Committee on Education. We have one resolution to hear today. This is Senate Concurrent Resolution 134 Senate Resolution 113, which urges the Department of Education to provide a detailed report to the legislature of on the true cost of producing school meals to ensure transparency and avoid unnecessary price increases.

To testify, DOE please.

Good afternoon, Chair Kidani, Vice Chair Kim, members of the committee, you know Dean Uchida, Deputy Superintendent with the Department of Education. The department stands on its written testimony which provides comments on this measure.

The school food service branch currently has a system in place to identify the cost of current school meals and releases both quarterly and annual fiscal reports that are available to the public. Thank you for the opportunity to testify.

Thank you. And can I get a copy of your testimony, please? Anyone else here wishing to testify in this measure.

Aloha Chair, Vice Chair, Senator Kanuha. Nate Hix, Hawaii Public Health Institute, in support. As you've heard us testify before, we're advocating for free school meals for all of our students and we recognize that increasing costs in the production of meals might get passed on to families, further hindering their ability to eat during the school day.

And so, making sure costs are kept low can help make sure our students are fed since food insecurity is such a issue within our state. So, mahalo for considering this. Thank you.

Thank you, Nate. Anyone else here wishing to testify? Angela.

Angela Melody Young, CARES, providing comments. So, while I can't deny that transparency in the school system relating to school meals is a very necessary goal and yet I think the logistical concerns of this resolution is that, for example, could it be an administrative burden because you would have to employ teams to get this done and instead.

Yet I think what would be a more feasible strategy to approach this by is to do training at schools where if you have passionate teams that can learn to teach Excel spreadsheets and, so each school in the complex can then do Excel spreadsheets, and then calculate the operational costs and then, you know, learn about how to gather information and receipts and accounting processes for materials and supplies.

I think it would be much more achievable with this plan at the school systems and very, you know, nontraditional, unconventional way, but I think in this generation it works. Yeah. And of course, the overall goal of health and nutrition is very important in the schools. Thank you.

Anyone else here wishing to testify on this measure? Recess. Members, questions? Question?

So, if I heard your testimony correct, it sounded as though we don't need this resolution, you're saying?

Yeah, we have the information available to the public right now.

So, but does it break down the cost?

I believe so.

Can you give us an example? What cost is, how it's working now?

I think we have it, like was it comes up to like 1466 for breakfast and lunch, total costs.

No, but is it broken down like how much for labor, how much for food, for preparation? How much for, do you ever book it down? Because that's what this reso is asking for, right? Ingredients, cost of ingredients, operational cost, beverage cost, material and supply cost, logistical and distribution cost: is that already -

I don't think it's a detail because we have the labor cost all in one and then the food cost is all in one.

But that's what this reso is saying. So, if you don't have that then? So that's not provided?

I don't think so, no.

But you can provide that?

I would have to go back and see if we can break it down that far.

Thank you.

Members, further questions?

So, I guess for DOE; when you saw that you're over budget in school, you know, meals, what did you - did someone go in and really understand what is the cost driver? Is it a material thing? Is it labor costs? Do we know right now what, why the cost driver is so high?

I think it was the cost of food, and our budget was flat. So, I think we started off without sufficient funds to cover the cost of the food.

But so, nobody was projecting though on what the costs were going to be or was that a surprise or was that anticipated, and we just didn't give you extra money? What was the case?

I think we knew the cost was going to go up because of inflation, everything. But I wasn't, I'm not sure if we could project that, that deficit. I think we figured it out after, probably in the last few months that we were going to be in a hole.

So, has anyone gone in though to do a full accounting of where the cost drivers are though? Like, you know, they have one of your staffers just like to kind to look at all the expenses and see where, where things are at the moment.

Or is it just you're just looking at high level numbers of what they're reporting?

Yeah, we're looking at high - the only cost, we're really focusing on the cost of the food because the operational costs. I don't think we have it broken down the way the reso wants it broken down.

Because I would, I would imagine if you know what the cost drivers are, then you can start figuring out, okay, is this, can we get a better deal or can we cut or we move around stuff because. So, has there been strategic, a strategic look at food service and where we're spending the dollars?

I don't understand. Do you want to, you want us to reduce the cost of the purchase?

I'm just saying that you should be looking at it and maybe there's a different way that you can do things, but you don't won't know that unless you do the analysis. So, I'm assuming there is no analysis of how the money is spent at this point. You are just saying, "Okay, the money spent; it is what it is.

We're not going to change the way we do business." Is that, is that my assessment of how things are at the moment?

I don't think we're seeing that. I think we, we recognize that the food cost is going to go up.

The question is, is, did you do the analysis though?

Did you start digging down and getting, you know, looking at line by line where, where things are going to, to see if there are patterns of, okay, this is, this is going up higher than we projected or quicker than we projected, and maybe that's, that's something that then you can make operational decisions based on that, or are you just assuming, okay, this is the full number, which it sounds like.

Right? So, you haven't done that analysis then?

Not to my knowledge.

Okay, thank you, Chair.

Any questions?

Yeah, I'm going to just follow up. I know the whole intent at some point as it was brought up in testimony, about doing full free school lunch across the board. And it, this apparently will help us to see what the cost is.

But have you folks estimated as to, if the federal government does not continue to supplement school lunches; what the entire cost would be to the state or across the board? School lunches, free school lunches?

We're looking at it right now. I think we're focusing on making the reduced lunches free and then probably next fiscal year making the ALICE families free. And that's been the focus right now during the session. But I think what else happening in Washington, I think we're beginning to look at what that number might be.

I don't think we have it right now.

And if you add in the ALICE families and you add in the reduced lunches, what's left? What portion of the student body that is actually paying for the school lunch and the percentage?

Dallas people are currently paying, whatever the food, we're trying to figure out if it's 250% or 300% of the poverty level, that's ALICE cut off. And so, everybody above that would be paying.

Yeah, but what that - what percentage of students would be paying?

We don't have that number right now because we don't have the data that we can sort the families by their poverty level.

So are you working on getting us those numbers at some point?

Yeah, we're trying to work with the system that we use to sort the free and reduce applications to see if we can call those numbers out from the application forms that people are filing.

And at some point, if we do that, the funding has to come from somewhere. And where are we anticipating that money comes from?

We probably have to come back in next session once we do the analysis to tell you what that number might be.

So general fund monies would have to go; that has to get cut from someplace.

Yeah. And then if the, if you like, you're saying if the federal government reduces the reimbursement or eliminates, it's going to put us in a whole different problem. Right. So, we're looking at all the numbers right now, in fact.

Because I know, you know, they talk about universal free school lunches, but the cost, I mean, if we don't print money like the federal government, so somebody's program going to get caught.

I agree. Right.

Okay. Thank you.

So, Dean, when was the last time that the cost of lunches was raised: breakfast or lunches?

Was increased? We tried to go to the board earlier this year with a staggered increase because I think the statute says they have to pay a minimum of 50% of the cost of the meal. So, we staggered it over a five-year period to get us to that 50% number.

But the Governor's office intervened and said that they didn't want to do the increase in the food meals, and he was going to send a governor's message down to cover the cost, at least for this year. So, we never increased the price of the school meals. The board never approved it.

Is he sending it down this year?

I believe so.

Well, my understanding was that at the Board of Ed meeting that the DOE asked for an increase up to $454.50. Is that correct?

Yeah, we did it over, like I said, a five-year period. It was staggered over five years to get to that 50% number.

And what was the response from the Board of Education?

I think we had. I don't think they took action because I think the Governor's office had intervened at that point.

Lunch is at 250, right?

The - yeah, 250 or 275.

250.

Yeah.

For up to grade eight and 275?

So, is the intention of the board not to take any action? Because I would assume that at some point you got to raise it something. You can't just keep it the same forever.

Well, I think this year is taking care from the Governer's message. If, if the law stays the same, then the board will have to take action again.

But if you don't start now, like, even if it's a quarter increase, you got to start something. Right. So, but the board thinks they can just kick the can down the road and not, not good. Because over time you want it to be, you know, you want it to be very incremental over time. Correct.

So, if you take no action now, you're just kind of saying -

I think there's legislation to try and reduce that 50% down to something. Another percentage like 25% or something. So that's the bill that I think was moving this session.

No, we passed that bill. But, but still, I would think the board should be a little bit more proactive of. Or at least are you guys proposing something?

Well, if the bill takes effect and you know there's no chance of getting a Governer's message next year, we're going to have to go back to the board, make sure we're hitting that, whatever that percentage.

Because maybe over five years, instead of five years, it's over 10 years. And you just, you know, quarter every year or something.

Well, I think if it goes down to 25%; I think that's kind of where we are right now, what we're charging right now. Not.

Okay, then you're just going to depend on coming back then and increasing your -

Well, if the percentage gets reduced from 50 to 25, we're charging the 25% right now. In fact, we might be above it a little bit.

But it's not going to probably stay that for long. I would assume costs are going to increase, so shouldn't be. I would hope that you're going to be more proactive than reactive.

When was the last time the school lunches were increased?

I think, this was like before the pandemic. I think it's the exact year. I don't recall offhand.

And do you know the percent of students receiving free or reducement?

The problem with getting the numbers is we have different numbers for breakfast. There's two different breakfasts and then the free. So, we don't know the number. But I can view the percentage of 104...104,000 meals we serve a day. About 45% is free and about 8% is reduced.

104,000 meals per day.

Right.

How many students in our schools?

About 155,000.

And currently does a federal reimbursement cover all of the free and reduced meals?

They cover the majority of it. It's not 100% that they cover.

You don't know the percentage?

Not offhand, but I can get that.

Yes, please.

And what assurances do you have, or do you have any assurance that this reimbursement from the feds will continue?

Okay.

I don't want to speculate, but we're hoping that it stays in place. So far, they haven't done anything to USDA, except some of the grants. But the new reimbursement hasn't been brought up for any changes, as far as we know.

But is it addressed every year at the federal level or, you know, do you have to go back every so many years to request the reimbursement or it's automatically given?

It's usually automatic. Right now, USDA is looking, and they send a team down to analyze our cost and our process to see if we can increase the reimbursement amount from the federal government.

And when will that?

It's ongoing. Right now. I'm not sure when their final report is going to come up because I think Alaska has a higher reimbursement than we do, and we're trying to get up close to what Alaska gets.

Thank you. Members, further questions? There's no further questions. Members, let's call for the vote. Recommendation would be to pass as is.

Okay. Recommendation to pass SCR 134 and SR 113 unamended to Chair. [Roll Call]. Five ayes; recommendations to adopt.

Thank you. Hearings adjourned.