I 
111TH CONGRESS 
2D SESSION 
H. R. 5202 
To direct the Secretary of Agriculture to issue guidance to school food 
authorities on indirect costs, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 4, 2010 
Ms. CHU (for herself, Mr. TONKO, and Mr. POLIS of Colorado) introduced the 
following bill; which was referred to the Committee on Education and 
Labor, and in addition to the Committee on the Budget, for a period to 
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To direct the Secretary of Agriculture to issue guidance 
to school food authorities on indirect costs, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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: 
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(1) Through the National School Lunch Pro-
gram (NSLP) and the School Breakfast Program 
(SBP), school food service has played an integral 
role in the health and nutrition of American chil-
dren, and remains one of the key safety-nets in place 
to alleviate childhood hunger and malnutrition do-
mestically. 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 responsibil-
ities between the Federal, State, and local govern-
ments. 
(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 in-
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curred 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 agen-
cies 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 non-
profit 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 appro-
priately 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 edu-
cational agencies; and 
(4) encourage the Secretary to issue regulations 
to ensure the effectiveness of Federal support for 
the NSLP and SBP. 
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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 partici-
pating 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 estab-
lished under section 4 of the Child Nutrition Act of 1966 
(42 U.S.C. 1773) covering program rules pertaining to al-
lowable costs that may be charged to the nonprofit school 
food service accounts of such authorities including, indi-
rect and direct costs. 
(b) INDIRECT AND DIRECT COSTS STUDY.—The Sec-
retary 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 es-
tablished 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; 
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(B) the methodologies used to establish in-
direct cost rates for such school food authori-
ties; 
(C) the types and amounts of indirect and 
direct costs charged and recovered by local edu-
cational agencies; 
(D) the impact of indirect and direct costs 
charged to the nonprofit school food service ac-
counts of such school food authorities; 
(E) whether the indirect and direct costs 
charged or recovered are consistent with re-
quirements 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 Na-
tional 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). 
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(c) REGULATIONS.—After conducting the study 
under subsection (b)(1) and identifying costs under sub-
section (b)(2), the Secretary of Agriculture may promul-
gate 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 Sec-
retary 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 appro-
priated, the Secretary of the Treasury shall transfer 
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