Back to School: Maximizing Financing Options for School Meals

1 in 5 children are food insecure in Tennessee, meaning there are hungry children in every county. School meals are an important line of defense for addressing child hunger and some days, may be the only food a child eats. Research links participation in school meals to positive educational and health outcomes such as improving academic achievement, attendance, nutrition, and student behavior (FRAC). Ensuring students have a nutritious breakfast and lunch allows students to stay focused and engaged in the classroom.

The National School Lunch Program (NSLP) and School Breakfast Program (SBP) are federally assisted meal programs operating in public and nonprofit private schools as well as residential childcare institutions. These federal programs provide nutritionally balanced, low-cost or free meals for children each school day. 

While many students qualify for free school meals, there are still families who do not qualify and fall into the benefit cliff. This can leave families with an unpaid dividend that impacts school nutrition programs’ ability to operate efficiently or worse, leaves children hungry.  We know food is the most important school supply, which is why it is vital to break down the barriers for students and school nutrition staff to provide the maximum number of no-cost meals. 

States have a variety of ways to tap into federal dollars and make no-cost school meals a reality for more students while being financially feasible for schools. This includes the Community Eligibility Provision (CEP), Provision 2, and Provision 3. School nutrition is Tennessee’s largest source of federal funding for K-12 at 36% for FY 2025 (Sycamore Institute). Tennessee has continued to show commitment to ensuring better access to school meals through direct certification and Broad-Based Categorical Eligibility, but there are even more options for schools to increase student access. 

Community Eligibility Provision (CEP):

The Community Eligibility Provision (CEP), authorized under the Healthy, Hunger-Free Kids Act, allows eligible high-poverty schools and school districts to provide free breakfast and lunch to all students. Unlike NSLP, schools do not need to collect, process, or verify school meal applications for each student every year when participating in CEP. Instead, schools are eligible to participate in CEP if they participate in National School Lunch Program (NSLP) and School Breakfast Program (SBP) and have at least 25% of its students who are considered “identified students.” The percentage of identified students is known as the Identified Student Percentage (ISP).  

 “Identified students” are categorically eligible for free meals. This includes but is not limited to children who are enrolled in programs like the Supplemental Nutrition Assistance Program (SNAP), are in foster care, or are experiencing homelessness. Local Education Agencies (LEAs) are required to submit documentation to the Tennessee Department of Education listing the schools or districts seeking to participate in CEP as of April 1st and then demonstrate the eligibility criteria by June 30th. 

The more "identified students" or those who are automatically eligible for free school meals, the more federal reimbursement CEP schools receive.

Once a school is authorized, all children must be offered free breakfast and lunch during a four-year cycle. The number of reimbursable meals must be counted daily and are then reimbursed based on the ISP. The ISP is multiplied by 1.6 to determine the percent of meals served for the month reimbursed at the federal free rate which is $3.05 for breakfast and $5.02 for lunch for SY 2026-27 at the maximum rate (USDA). If the ISP is less than 62.5%, then all meals are reimbursed at the free rate. The remaining percent of meals served are reimbursed at the Federal Paid Rate, which is $0.42 for breakfast and $0.62 for lunch for SY 2026-27 at maximum rate (USDA). No meals are reimbursed at the reduced rate. 

Tennessee has historically been a leader in adopting CEP, which can provide schools with significant administrative savings by eliminating the need to track meal eligibility and payment categories. For the 2024-25 school year, the percentage of eligible or near eligible schools adopting CEP was 89% (FRAC). As a CEP school, the administrators do not need to monitor meals by fee category, which provides additional administrative savings. In contrast, under NSLP, schools must keep track of each meal distributed as free, reduced-price, and paid. Based on this information, the school will get certain reimbursement rates for the meals distributed. Eliminating the need to keep track of each meal fee category reduces administrative costs.

Provision 2: 

Provision 2 is an option for schools participating in NSLP to reduce paperwork, simplify the logistics of operating school meals programs, and offer meals at no charge to all students. Any school that participates in either or both school meal programs may opt for Provision 2. Schools using Provision 2 do not have to collect, process, or verify school meal applications or keep track of meals served by fee category (free, reduced-price, and paid) for at least three out of every four years. Schools collect school meal applications and count and claim meals by fee category during year one of the multiyear cycle, called the “base year.” That data will then determine the federal reimbursement and are used for future years in the cycle.

Provision 2 schools have the option to serve only breakfast or lunch, or both breakfast and lunch, to all students at no charge — and use economies of scale from increased participation and significant administrative savings to offset the cost of offering free meals to all students (FRAC). Provision 2 helps students and schools alike by increasing school meal participation, streamlining meal service, and decreasing administrative work.

Provision 3:

Schools using Provision 3 are required to serve meals to participating students at no charge and have a reduced application burden, meal counting process, and claiming procedure. Similar to Provision 2, the reimbursement rate for Provision 3 schools is determined on a base year, and this rate can apply to a four-year cycle. The rate can be adjusted if there are changes in enrollment, inflation, or operating days. These schools can offer free meals to all students for a four-year cycle, but the base year is not part of this cycle, and schools can charge meals to students who are not eligible for free school meals in the base year. Again, like Provision 2, federal funds cannot be used to cover the costs of providing free meals that are not reimbursed through the federal school meal program. Any remaining costs must be covered by the school. 

**Provision 2 uses daily meal counts multiplied by baseline percentage factors, while Provision 3 adjusts the total base-year funding amount for inflation, enrollment changes, and operating days. Both allow schools to serve free meals to all students and reduce application paperwork.

CEP, Provision 1, and Provision 2 provide schools and districts with a great opportunity to expand the number of children able to receive no-cost school meals while maintaining a balanced budget. While some students may still fall outside the eligibility requirements for reduced-cost or no-cost meals, these programs significantly reduce the number of students who face barriers to accessing them. School meals are just as important to students’ academic success as textbooks and buses and, therefore, should be offered at no cost to all students.

Join TJC’s Child Nutrition Partner Group to stay up to date on relevant information regarding school meals and other child nutrition programs.