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Child
Nutrition Meal Cost Methodology Study:
Final Report
EXECUTIVE
SUMMARY
Background
and Need for the Study
There have been
several studies and attempts to measure
the cost of producing reimbursable meals
in the National School Lunch Program
(NSLP) and the School Breakfast Program
(SBP). However, past efforts were
limited for several reasons, namely:
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The
inability to directly measure and
allocate meal production costs to
School Food Authority (SFA)
activities. Existing meal cost
measurement approaches heavily rely
on indirect, econometric techniques
to allocate costs to various food
service functions, e.g., breakfast
production and lunch production and
reimbursable and non-reimbursable
meals. Direct measurement is
infeasible due to join production:
there is no separate accounting of
food, labor and other costs used to
produce different meals (e.g.,
reimbursable versus a la carte
meals). A widely used approach to
allocate meal production costs to
different activities is to convert
breakfasts, adult meals, and a la
carte sales into NSLP-lunch
equivalents (LEQ). A variety of
techniques have been used by SFAs
and researchers to construct a LEQ
measure. However, while feasible,
this methodology does not provide a
true measure of the costs directly
attributed to each SFA activity.
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Not
considering the full cost of meal
production when calculating per-meal
costs. Previous studies have almost
always relied on costs as reported
by SFAs when measuring meal
production costs. However, reported
costs do not include all resources
used by the SFA to produce school
meals. These may include costs that
are either not charged to, or paid
by the SFA. Often space, utility and
some labor costs may be subsidized
by the school district. Omitting
these costs reduces the total cost
attributable to meal production.
The Food and
Nutrition Service (FNS) is in need of
accurate, comprehensive meal production
cost estimates to inform policy and to
facilitate program decision-making. The
purpose of this study was to develop a
methodology to provide the Agency with a
feasible tool to collect reliable meal
cost data on a national level.
Study
Objectives and Design
The major goal
of the Child Nutrition Cost Methodology
Study is to identify the best practical
approach for measuring meal production
costs for reimbursable meals in the NSLP
and SBP. Primary study objectives
include:
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To
determine the full costs of
producing reimbursable meals in the
NSLP and SBP;
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To
assess the reliability and validity
of meal production costs reported by
SFAs
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To
develop technical assistance
materials for use by SFAs that will
enable them to calculate meal
production costs for their own
school districts.
The study was
conducted by Abt Associates Inc. (AAI)
of Cambridge, Massachusetts under
contract to the Food and Nutrition
Service. After designing the
methodology, AAI pilot tested the
methodology in 18 SFAs nested in four
States: New Jersey, Maryland, Arizona,
and Florida. Overall, 91 schools
participated in the study. The study
collected data on-site on food, labor,
and other meal production costs for a
five day period. A major goal was to
test the feasibility of identifying meal
production costs that were not charged
to the SFA account (to obtain full
costs) and directly allocating costs to
different SFA activities. Data
collection occurred in 1990; the data
reflect meal production costs for the
1989-1990 school year.
Summary
of Findings
The methodology
developed and tested in this study
builds on previous work to measure meal
production costs. Major advancements
were made in the are of identifying the
full cost of meal production. The pilot
also indicates that it is possible to
allocate major meal production costs
(food and labor) to the various SFA
activities in a more direct fashion that
algorithms currently used. The
methodology was adaptable to the
different types of meal production
systems included in the study; on-site
and satellite kitchens, and in districts
receiving vended meals and using food
service management companies.
The results of
the pilot study indicate that the
approach developed by this study is a
feasible mechanism for measuring
per-meal costs for reimbursable school
meals. The methodology can be used in
future studies to obtain reliable
estimates of the full cost of meal
production.
Measuring the
Full Cost of Meal Production
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Efforts
to identify the full cost of meal
production were successful; in most
instances, respondents (SFA
Directors and other school district
personnel) were able to identify
uncharged costs and provide
information needed to estimate their
value.
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Uncharged
costs were primarily made up of
space, labor (usually at the school
district level), and indirect costs
that were not charged to the SFA.
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Imputing
space costs used in support of meal
production, but not charged to the
SFAs was problematic. While the
participating SFAs were able to
provide information necessary to
impute space costs (square footage);
the study team was unable to obtain
rental values for comparable space
in order to assign space costs. In
these instances, construction costs
were used to impute space costs. Due
to the difficulty in obtaining
rental values, construction costs
are a viable alternative for
imputing space costs.
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Efforts
to estimate the utility costs
associated with meal production were
also problematic. While there are a
number of way to identify SFA
utility costs, they represent a
small proportion of operational
costs (about 2%) and efforts to
obtain these costs may not be worth
the cost.
Allocating
the Full Cost of Meal Production to
Breakfast, Lunch and Other Meal
Production Activities
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The
allocation of total annual food
costs between breakfast, lunch, and
other meals was conducted by
extracting data from menus,
production, and recipe records
during a sample week. While data
collectors were able to capture all
food items served, some of the
schools failed to correctly identify
some (or all) of the costs of
non-reimbursable lunch food items.
Future uses of this methodology
should highlight the importance of
capturing the cost of a la carte
food items when measuring total
lunch food costs. This may be done
by extensive training in this area.
To correct this problem, the study
team used an alternative approach to
estimate meal costs based on food
costs for all other meals; data
which were measured reliably. No
other problems occurred when
allocating food costs to lunch,
breakfast, and other meals.
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The
allocation of food costs between
reimbursable and non-reimbursable
meals is based on estimates of the
costs of food that students actually
take as part of reimbursable meals.
Meal observers were able to
accurately record the food items
taken on reimbursable breakfasts and
lunches at a sample of schools
during the 5-day observation period.
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A
time study was used to allocate the
majority of labor costs between SFA
activities. Professional estimates
made by school district staff were
used to obtain estimates of labor
for staff that only worked on one or
two readily identifiable SFA
activities (e.g., principals
reviewing meal applications). These
allocation methods proved feasible;
however there was some confusion
regarding the definition of one time
category in the time study.
Additional examples and/or training
should eliminate this problem in
future applications of the
methodology.
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There
is substantial difference between
the reported cost and full cost of
meal production. On average, 19% of
the full cost of meal production was
not charged to the SFA. Among the
pilot sites, the range of full costs
per reimbursable lunch was $1.235 to
$2.236 with a median cost of $1.698.
The range of full costs per
reimbursable breakfast was $0.991 to
$1.792 with a median cost of $1.443.
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The
range of reported (charged to SFA)
costs per reimbursable lunch was
$1.034 to $1.704 with a median cost
of $1.353. The range of reported
costs per reimbursable breakfast was
$0.68 to $1.492 with a median cost
of $1.207.
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The
major elements of uncharged costs
are space (32%), off-budget labor
(27%), indirect costs that are not
charged to the SFA budget (21%),
utilities (12%), and equipment
depreciation (7%). None of the 18
SFAs in the study were charged space
costs for the use of school district
facilities (e.g., kitchens,
warehouses).
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While
all food costs, and the majority of
labor costs are included in the
reported cost of meal production,
61% of "other" costs
(space, utilities) were not charged
to the SFA budget.
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There
is no apparent relationship between
the type of production system and
the elements of uncharged costs.
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The
study team suggested that a
comparison of meal cost estimates
obtained from the direct measurement
approach used in this study yield
similar estimated meal costs. The
study team suggests further that the
LEQ approach may be viewed as a
cost-effective alternative to the
more expensive, yet precise direct
measurement approach. In conclusion,
the study team recommends that a
two-phase approach, combining the
direct and indirect approaches, may
be the best methodology to use in a
national study of meal costs.
Last modified:
05/22/2009
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