To direct the Secretary of Agriculture to issue guidance to school food authorities on indirect costs, and for other purposes.

Summary: National School Lunch Protection Act of 2010 - Directs the Secretary of Agriculture to issue guidance to school food authorities participating in the school lunch and breakfast programs covering program rules pertaining to the costs that may be charged to the nonprofit school food service accounts of such authorities, including indirect and direct costs.

Requires the Secretary to assess the extent to which school food authorities pay such indirect and direct costs, and then issue additional guidance relating to the types of costs that are reasonable and necessary.

Authorizes the Secretary, after the completion of such assessment, to promulgate regulations addressing: (1) any identified deficiencies in the allocation of such indirect and direct costs to school food authorities; and (2) the authority of school food authorities to reimburse only those costs identified by the Secretary as reasonable and necessary.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National School Lunch Protection Act 
of 2010''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds the following:
            (1) Through the National School Lunch Program (NSLP) and 
        the School Breakfast Program (SBP), school food service has 
        played an integral role in the health and nutrition of American 
        children, and remains one of the key safety-nets in place to 
        alleviate childhood hunger and malnutrition domestically. In 
        2009, the NSLP served more than 31,000,000 students every day, 
        while the SBP fed over 11,000,000 students.
            (2) The NSLP and SBP are shared responsibilities between 
        the Federal, State, and local governments.
            (3) In 2009 the Federal Government spent more than 
        $12,000,000,000 to support the NSLP and the SBP, to ensure 
        students across the country received at least one healthy meal 
        every school day.
            (4) Faced with growing student participation and increased 
        costs, school food service programs across the country are 
        facing unprecedented budget crises.
            (5) According to a recent study by the School Nutrition 
        Association, 52 percent of school food service programs are 
        charged indirect costs by local educational agencies. Indirect 
        costs are costs incurred for a common purpose that benefit more 
        than one programmatic objective.
            (6) According to the study, there is an overall lack of 
        consistency amongst local educational agencies nationwide about 
        what method should be used to identify and calculate indirect 
        costs, and what constitute appropriate direct cost charges to 
        school food authorities.
            (7) School food service must operate on a nonprofit basis, 
        balance cost with revenue, and ensure all revenue generated is 
        used to support or improve the food service.
    (b) Purposes.--The purposes of this Act are to--
            (1) ensure Federal funds are being appropriately spent to 
        benefit the health and nutrition of American children;
            (2) study the impact of indirect and direct costs charged 
        to the NSLP and SBP programs;
            (3) study the types and amounts of indirect and direct 
        costs charged and recovered by local educational agencies; and
            (4) encourage the Secretary to issue regulations to ensure 
        the effectiveness of Federal support for the NSLP and SBP.

SEC. 3. COST STUDY AND FUNDING.

    (a) Guidance on Allowable Costs to School Food Authorities.--Not 
later than 180 days after the date of enactment of this Act, the 
Secretary of Agriculture shall issue guidance to school food 
authorities participating in the school lunch program established under 
the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et 
seq.) and the school breakfast program established under section 4 of 
the Child Nutrition Act of 1966 (42 U.S.C. 1773) covering program rules 
pertaining to allowable costs that may be charged to the nonprofit 
school food service accounts of such authorities including, indirect 
and direct costs.
    (b) Indirect and Direct Costs Study.--The Secretary of Agriculture 
shall--
            (1) conduct a study to assess the extent to which school 
        food authorities participating in the school lunch program 
        established under the Richard B. Russell National School Lunch 
        Act (42 U.S.C. 1751 et seq.) and the school breakfast program 
        established by section 4 of the Child Nutrition Act of 1966 (42 
        U.S.C. 1773) pay indirect and direct costs, including 
        assessments of--
                    (A) the allocation of indirect and direct costs to 
                such school food authorities;
                    (B) the methodologies used to establish indirect 
                cost rates for such school food authorities;
                    (C) the types and amounts of indirect and direct 
                costs charged and recovered by local educational 
                agencies;
                    (D) the impact of indirect and direct costs charged 
                to the nonprofit school food service accounts of such 
                school food authorities;
                    (E) whether the indirect and direct costs charged 
                or recovered are consistent with requirements for the 
                allocation of costs and school food service operations; 
                and
                    (F) the types and amounts of indirect and direct 
                costs that could be charged or recovered under 
                requirements for the allocation of costs and school 
                food service operations but are not charged or 
                recovered; and
            (2) after completing the study required under paragraph 
        (1), issue additional guidance relating to the types of costs 
        that are reasonable and necessary to provide meals under the 
        Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et 
        seq.) and section 4 of the Child Nutrition Act of 1966 (42 
        U.S.C. 1773).
    (c) Regulations.--After conducting the study under subsection 
(b)(1) and identifying costs under subsection (b)(2), the Secretary of 
Agriculture may promulgate regulations to address--
            (1) any identified deficiencies in the allocation of 
        indirect and direct costs charged to school food authorities 
        participating in the lunch program under the Richard B. Russell 
        National School Lunch Act (42 U.S.C. 1751 et seq.) and the 
        breakfast program under the Child Nutrition Act of 1966 (42 
        U.S.C. 1773); and
            (2) the authority of school food authorities to reimburse 
        only those costs identified by the Secretary as reasonable and 
        necessary under subsection (b)(2).
    (d) Report.--Not later than October 1, 2013, the Secretary of 
Agriculture shall submit to the Committee on Education and Labor of the 
House of Representatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate a report that describes the results of the 
study conducted under subsection (b)(2).
    (e) Funding.--
            (1) In general.--On October 1, 2010, out of any funds in 
        the Treasury not otherwise appropriated, the Secretary of the 
        Treasury shall transfer to the Secretary to carry out this 
        section $2,000,000, to remain available until expended.
            (2) Receipt and acceptance.--The Secretary shall be 
        entitled to receive, shall accept, and shall use to carry out 
        this section the funds transferred under paragraph (1), without 
        further appropriation.
    (f) Budgetary Effects.--The budgetary effects of this Act, for the 
purpose of complying with the Statutory Pay-As-You-Go-Act of 2010, 
shall be determined by reference to the latest statement titled 
``Budgetary Effects of PAYGO Legislation'' for this Act, submitted for 
printing in the Congressional Record by the Chairman of the House 
Budget Committee, provided that such statement has been submitted prior 
to the vote on passage.