Child Nutrition and WIC Programs: Background and Recent Funding
Released: 2006-07-12T00:00:00

General Background

Child nutrition programs and the Special Supplemental Nutrition Program forWomen, Infants, and Children (the WIC program) provide cash, commodity, and otherassistance (including nutrition services and food packages in the WIC program) under threemajor federal laws: the National School Lunch Act (originally enacted in 1946 and renamedthe Richard B. Russell National School Lunch in 1999), the Child Nutrition Act (originallyenacted in 1966), and Section 32 of the act of August 24, 1935 (7 U.S.C. 612c). (1) The AgricultureDepartment's Food and Nutrition Service (FNS) administers the programs at the federal level;most funding is included in the annual Agriculture Department appropriations laws; andcongressional jurisdiction is exercised by the Senate Agriculture, Nutrition, and ForestryCommittee, the House Education and the Workforce Committee, and, to a limited extent(relating to commodity assistance and Section 32), the House Agriculture Committee.

The most recent major amendments to the laws affecting child nutrition and WICprograms were made in the 2004 Child Nutrition and WIC Reauthorization Act ( P.L.108-265 ; enacted June 30, 2004) and a number of laws enacted in the 106th and 107thCongresses -- most notably as part of larger measures not specifically targeted at childnutrition or WIC programs (e.g., P.L. 106-224 and P.L. 107-171 ). The next generalreauthorization of child nutrition and WIC authorities is scheduled for 2009.

Child nutrition and WIC programs are operated by a variety of local public andprivate nonprofit providers, and the degree of direct state involvement varies by program andstate -- e.g., in the WIC program, state health agencies exercise substantial control; in theschool meal programs, local educational agencies (LEAs), and local "school food authorities"most often have the major role; in a very few instances, the federal government (FNS) takesthe place of state agencies (for example, where a state has chosen not to operate a specificprogram or where there is a state prohibition on aiding private schools). At the state level,education, health, social services, and agriculture departments all have roles; at a minimum,they are responsible for approving and overseeing local providers such as schools, summerprogram sponsors, and child care centers, as well as making sure they receive the federalsupport they are due. At the local level, program benefits are provided to more than 39million children and infants, and some 2 million lower-income pregnant and postpartumwomen, through just over 100,000 public and private schools and residential child careinstitutions, about 200,000 child care centers and family day care homes, approximately30,000 summer program sites, and, in the case of the WIC program, some 10,000 local healthcare clinics/sites operated by nearly 2,000 health agencies.

All programs are available in the 50 states and the District of Columbia. Virtually alloperate in Puerto Rico, Guam, and the Virgin Islands, and there are no restrictions oneligibility related to citizenship or legal residence status. American Samoa gets assistancefor school lunch and WIC operations, and the Northern Marianas receive school lunchsupport. In addition, WIC-like benefits are available for overseas military personnel, andDefense Department overseas dependents' schools participate in the School Lunch andBreakfast programs.

In the meal service programs like the School Lunch and School Breakfast programs,summer programs, and assistance for child care centers and day care homes, federal aid is inthe form of legislatively set subsidies paid for each meal/snack served that meets federalnutrition guidelines. Most subsidies are cash payments to schools and other providers, butabout 10% of the total value of assistance is in the form of federally donated foodcommodities. While all meals/snacks served are subsidized, those served free or at a reducedprice to lower-income children are supported at higher rates. All federal meal/snack subsidyrates are indexed annually for inflation, (2) as are the income standards of eligibility for free andreduced-price meals/snacks. (3) However, federal subsidies do not necessarily cover the fullcost of the meals and snacks offered by participating providers, and states and localitiescontribute significantly to cover program costs -- as do children's families (by paying chargesfor nonfree or reduced-price meals and snacks). Required nonfederal cost-sharing (matching)is relatively minimal -- states must expend at least an amount totaling just over $200 milliona year nationally in order to receive federal school lunch funds. Federal per-meal/snack childnutrition subsidies may cover local providers' administrative costs, but separate federalpayments for administrative expenses are limited to administrative expense grants to stateoversight agencies, a small set-aside of funds for state audits of child care sponsors, andspecial administrative payments to sponsors of summer programs and family day care homes. Under the WIC program, federal appropriations pay the cost of specifically tailored foodpackages and include specific amounts for related nutrition services and administration.

The basic goals of the federal child nutrition programs are to improve children'snutrition, increase lower-income children's access to nutritious meals and snacks, and helpsupport the agricultural economy. Child nutrition programs are treated as entitlements: federal funding and commodity support is "guaranteed" to schools and other providers basedon the number of meals/snacks/half-pints of milk served, who is served (e.g., freemeals/snacks to poor children get higher subsidies), and legislatively set andinflation-indexed per-meal/snack subsidy rates. On the other hand, the WIC program is a discretionary grant program. WIC agencies serve as many applicants as possible with themoney available from federal grants (and, in some cases, voluntary state subsidies), but notnecessarily all eligible applicants.

Extensive information about child nutrition programs and the WIC program may befound at the Agriculture Department's Food and Nutrition Service website: http://www.fns.usda.gov . This website provides information on all of the followingprograms -- for applicants/recipients, governments, researchers, program operators, and thoseinterested in child nutrition legislation, regulations, and guidelines -- as well as recent newsreleases, announcements, and regulatory action.

Programs and Participation

School Lunch Program

Public and private nonprofit schools and residential child care institutions(RCCIs) -- including Defense Department overseas dependents' schools -- choosingto participate in the School Lunch program receive per-meal federal cash subsidiesand federally donated commodities for all lunches they serve to schoolchildren. While similar aid (primarily, federally donated commodities) for school meals wasprovided as early as the mid-1930s, the basic School Lunch program as it operatestoday dates to the enactment of the 1946 National School Lunch Act and majorchanges to the law in the early 1960s and early 1970s.

Subsidized meals must meet federal nutrition standards based onRecommended Dietary Allowances (RDAs) and the Dietary Guidelines forAmericans and certain food safety requirements. Participating schools/RCCIs alsomust guarantee to offer free/reduced-price meals to lower-income children, adhere tofederally set administrative standards (under state oversight), and follow "BuyAmerican" rules. (4) However, there is only minimal federal regulationof foods offered separately from subsidized school meals -- "competitive foods" suchas a la carte items and food sold from vending machines.

Cash subsidies are set by federal school lunch law (and indexed annually,each July, for inflation), and the amount of federal aid is not dependent on providers'costs. These cash subsidies (also called "reimbursement rates") differ depending onwhether the lunch is served free, at a reduced price (no more than 40 cents), or at"full price" ("paid" meals for which a participating school or RCCI may charge as itsees fit).

Free lunch cash subsidies are paid for meals served to those who apply, andare judged eligible claiming annual family cash income below 130% of theinflation-indexed federal poverty guidelines -- e.g., $21,580 for a family of three or$26,000 for a four-person family in the 2006-2007 school year. Free lunch eligibilityalso is extended automatically to children who are "directly certified" eligible aspublic assistance (e.g., food stamp) recipients, migrant and homeless children, andthose served under federal runaway and homeless youth grant programs. For the2006-2007 school year, these basic free-lunch subsidies are $2.40 a lunch.

Reduced-price lunch subsidies are paid for meals served to those who applywith family income between 130% and 185% of the inflation-indexed povertyguidelines -- e.g., between $21,580 and $30,710 for a family of three or between$26,000 and $37,000 for a four-person family in the 2006-2007 school year. For the2006-2007 school year, these basic reduced-price subsidies are $2.00 a lunch.

Subsidies for full-price ("paid") lunches are paid for meals served to childrenwith family income above 185% of the poverty guidelines -- e.g., above $30,710 fora family of three or $37,000 for a four-person family in the 2006-2007 school year -- or whose families do not apply for free or reduced-price lunches. For the2006-2007 school year, these subsidies are 23 cents a lunch.

All of the above rates are increased by a flat 2 cents a lunch for schools/RCCIswith very high (60%+) free and reduced-price participation (about half of all lunchesare subsidized with this added 2 cents). (5)

On top of cash subsidies, schools/RCCIs are entitled to federal commodityassistance (also discussed later in this report) for any lunch served. Under this rule,schools/RCCIs are entitled to receive "entitlement" commodities (valued at aminimum of 16.75 cents a lunch in the 2006-2007 school year); this amount isinflation indexed annually (each July). Two special provisions are made with regardto fresh fruit and vegetables : (1) $50 million taken from the amount schools areentitled to in commodities is set aside and used to make available fresh fruit andvegetables through Department of Defense distribution systems (the "DOD Fresh"program), and (2) about 400 schools in 14 states and 3 Indian reservations receiveassistance to operate a program under which all students are offered free fresh fruitand vegetables. (6)

In addition to the regular School Lunch program, schools/RCCIs may expandtheir program to cover snacks served to children through age 18 in after-schoolprograms (or other programs operating outside regular school schedules during theschool year) serving an "educational enrichment purpose." (7) Federalsubsidies are paid to schools operating these programs at the free snack rate offeredto child care centers, if the snacks are served free to children in lower-income areas. In other cases, subsidies vary by the child's family income. (See the later discussionof the Child and Adult Care Food program for the various federal subsidy rates forsnacks, as well as separate authority for child care organizations, including schools,to get subsidies for snacks and, in some cases, meals served free in after-schoolprograms.)

Finally, the 2004 child nutrition reauthorization law ( P.L. 108-265 ) requireslocal educational agencies participating in school meal programs to establish local "school wellness" policies , as they determine appropriate. These policies are toinclude goals/policies for nutrition education, physical activity, nutrition guidelinesfor all foods available on campus during the school day, and a plan for measuringimplementation of the policy.

In FY2005, well more than 90% of schools and RCCIs got School Lunchprogram subsidies -- some 95,000 schools enrolling 49.3 million children and 6,000RCCIs with almost 300,000 children. Average daily participation in the regular lunchprogram during the school year was about 29.6 million children (60% of enrollmentin participating schools/RCCIs). Children receiving free lunches averaged 14.5million a day (49% of participants, or 29% of enrollment); those paying forreduced-price lunches averaged 2.9 million a day (10% of participants, or 6% ofenrollment); and those buying full-price lunches averaged 12.2 million a day (41%of participants, or 25% of enrollment). (8) Average daily participation in the after-school snackcomponent of the School Lunch program reached some 1 million children in FY2005.

School Breakfast Program(9)

As with the School Lunch program, all breakfasts meeting federal nutritionstandards (and other rules applicable to the School Lunch program) are subsidized inparticipating public and private nonprofit schools and RCCIs, including DefenseDepartment overseas dependents' schools. Inflation-indexed subsidy rates set byfederal law vary depending on whether the breakfast is served free, at a reduced price(no more than 30 cents), or at full price. The School Breakfast program dates backto a two-year pilot project first established by the 1966 Child Nutrition Act and madepermanent in 1975.

Income eligibility standards for free and reduced-price breakfasts are the sameas in the School Lunch program (see the earlier discussion), and, for the 2006-2007school year, basic cash subsidies are $1.31 per free breakfast , $1.01 per reduced-pricebreakfast , and 24 cents per full-price breakfast . (10) Special"severe need" rates (an extra 25 cents for each free or reduced-price breakfast,indexed annually) are paid to schools and RCCIs with relatively high (40%+) free andreduced-price participation, and the majority of breakfasts are subsidized at thishigher rate. With the exception of different subsidy rates and the lack of a specificentitlement to commodity support, the School Breakfast program operates very muchlike the School Lunch program, although in fewer schools and with a lower rate ofparticipation among enrolled children. As with the School Lunch program,participation in the School Breakfast program by schools and RCCIs is voluntary --although a number of states have enacted laws requiring some schools with lunchprograms to join the breakfast program.

In FY2005, 80% of School Lunch program schools and virtually all RCCIs inthe lunch program also operated a breakfast program -- i.e., some 76,000 schoolsenrolling 40.8 million children and about 6,000 RCCIs enrolling almost 300,000children. Average daily participation in the breakfast program during the school yearwas 9.4 million schoolchildren (about 23% of enrollment). Children receiving freebreakfasts formed the bulk of participants, averaging 6.8 million a day (72% ofparticipants, or 17% of enrollment); those getting reduced-price breakfasts averaged900,000 a day (10% of participants, or 2% of enrollment); and those buying full-pricebreakfasts averaged 1.7 million a day (18% of participants, or 4% of enrollment).

Child and Adult Care Food Program (CACFP)(11)

The CACFP dates to 1968, when federal assistance for programs servingchildren outside of school ("special food service" programs) was first authorized. In1975, the summer food service and child care components were first formallyseparated as individual programs.

Public, private nonprofit, and (under certain conditions) for-profit nonresidential child care centers -- typically serving 30-50 children or more --choosing to participate in the CACFP receive cash subsidies for each meal or snackthey serve (up to two meals and one snack, or two snacks and one meal per child aday, or three meals a day in emergency homeless shelters). Eligible centers alsoinclude after-school projects and Head Start centers, as well as recreational centers,centers caring for children with disabilities, and residential emergency homelessshelters. In order to qualify for subsidies, meals/snacks must meet federal nutritionstandards and be served to children age 12 or under (or migrant children age 15 orunder, or children with disabilities); in the case of emergency/homeless shelters, theage limit is 18. In addition, participating centers receive commodity assistance (seethe later discussion of commodity distribution) or cash-in-lieu of commodities; thisrepresents about 4% of the value of aid they get.

Inflation-indexed federal cash subsidies to centers vary by the type of mealserved (breakfast, lunch/supper, snack). Similar to the school meal programs, thesesubsidies vary by whether they are served to (1) children with family income below130% of the federal poverty income guidelines (for those who would be eligible fora free school meal, see the School Lunch program discussion), (2) children withfamily income between 130% and 185% of the poverty guidelines (those who wouldbe eligible for a reduced-price school meal, see the School Lunch programdiscussion), or (3) children with family income above 185% of the poverty guidelines(those who would not be eligible for either a free or reduced-price school meal). (12) Subsidiesfor lunches (or suppers) and breakfasts are the same as those noted above for theSchool Lunch and Breakfast programs. For July 2006-June 2007, the subsidies forsnacks are 65 cents for "free" snacks, 32 cents for "reduced-price" snacks, and 6 centsfor all other snacks. However, unlike the school meal programs, while federal cashsubsidies differ according to the family income of individual children in a center,there is no requirement that free or reduced-price meals be served. Centers mayadjust their fees to account for the federal subsidies or charge (or not charge)separately for meals to account for the subsidies; but the CACFP itself does notregulate the fees they charge.

The CACFP generally operates through child care centers that are public orprivate nonprofit entities. However, for-profit child care centers can participate in theCACFP if they meet certain conditions. They are qualified if they receive at leastsome payments derived from Title XX of the Social Security Act (the federal SocialServices Block Grant) for at least 25% of enrolled children. (13) In addition,under a pilot project that began operating in Iowa and Kentucky, a more liberal testcan be applied to for-profit centers: they may participate if at least 25% of enrolledchildren meet the family income requirements for free/reduced-price school meals;this pilot was expanded to Delaware in FY2002. Finally, under provisions of lawenacted in December 2000 ( P.L. 106-554 ), the more liberal Iowa/Kentucky/Delawarerule was made applicable nationwide . The nationwide authority granted in theDecember 2000 law originally covered FY2001 only. But a series of laws -- P.L.107-76 , P.L. 108-134 , and P.L. 108-211 -- extended it through June 30, 2004, and P.L. 108-265 made it permanent and nationally applicable . (14) As a result,there now are three potential methods by which for-profit centers can qualify: theoriginal Title XX rule, the "pooling" variation of that rule (see footnote 13), and, mostimportant, the (now permanent and nationwide) Iowa/Kentucky/Delaware rule.

In addition to the regular CACFP, the law allows organizations that wouldnormally be eligible to participate in the regular CACFP as child care centers(including schools), and running after-school programs (or other similar programsoperated outside regular school schedules) serving an "educational enrichmentpurpose," to get federal CACFP subsidies for snacks served free in their programs tochildren ( through age 18 ) in lower-income areas -- at the free snack rate notedabove. (15) Moreover, in seven states -- Delaware, Illinois, Michigan, Missouri, Pennsylvania,New York, and Oregon -- the law allows federal subsidies to be offered for free meals, typically suppers, served in after-school programs (at the free lunch rate, $2.40a supper).

Separately, the CACFP provides cash subsidies to family and group day carehomes , typically serving four to six children. This component operates verydifferently than the component for centers, although, like centers, subsidies for daycare homes are limited to two meals and one snack (or one meal and two snacks) perday per child.

Day care homes receive cash subsidies that generally do not differ byindividual children's family income -- unlike the subsidy structure in programs forschools and child care centers, which differs according to the family income of thechild to whom the meal/snack is served. (16) Instead, there are two distinct sets of subsidy ratesthat generally depend on the location of the home or the provider's income. "Tier I"homes -- those located in lower-income areas or operated by lower-income providers -- receive higher cash subsidies; for July 2006-June 2007, all lunches/suppers aresubsidized at $1.97 each, all breakfasts are subsidized at $1.06, and all snacks aresubsidized at 58 cents. The majority of participating homes are in Tier I. On theother hand, "Tier II" homes -- those not located in lower-income areas or without alower-income provider -- receive much lower subsidies; for July 2006-June 2007, alllunches/suppers are subsidized at $1.19 each, all breakfasts at 39 cents, and all snacksat 16 cents. Tier II homes may seek the higher Tier I rates for individuallower-income children, and, similar to the program in centers, day care homesponsors may opt to have subsidies calculated according to the family incomedemographics of the children in the homes they sponsor -- if family incomedocumentation is obtained. (17)

Day care homes participate under the aegis of public or private nonprofit"sponsoring organizations" that handle administrative tasks (e.g., overseeingcompliance with program requirements, making federal subsidy claims). Thesesponsors receive separate inflation-indexed monthly payments for theiradministrative/oversight costs, varying according to the number of homes the sponsoroversees; for July 2006-June 2007, these per-home payments ranged from $50 to $95a month. Centers may participate either directly as independent centers or through asponsoring organization; but center sponsors do not receive additional federaladministrative funds (although sponsors can assess centers for administration to alimited degree). Participating day care homes and centers generally must meet stateor local licensing or other state-set approval requirements (or certain alternate federalstandards if there are no state or local rules applying to them).

Finally, the CACFP funds state costs connected with auditing sponsors andproviders. States are provided an annual amount equal to 1% of their CACFPsubsidies, and unused money can be reallocated among states that need it.

In FY2005, some 47,000 centers/sites (with some 19,000 sponsors) with anaverage daily attendance of 2.1 million children participated -- 31% (660,000) of thechildren were in for-profit centers/sites; 5% (115,000) participated inoutside-of-school-hour centers/sites; and 26% (540,000) were served in Head Startcenters/sites. In addition, 153,000 day care home sites (with about 1,000 sponsors)received subsidies for an average daily attendance of 900,000 children.

Summer Food Service Program(18)

Local public and private nonprofit "service institutions" runningyouth/recreation programs, summer feeding projects, or camps can receive cashsubsidies and some federally donated food commodities for free food service tochildren aged 18 and younger (and older disabled children) during the summer. Participating service institutions (also called sponsors) often, but not of necessity, areentities that provide ongoing year-round service to the community, and includeschools, local government agencies, camps, colleges and universities in the NationalYouth Sports program, and (with some restrictions governing the number of sites andchildren served) private nonprofit organizations (e.g., churches).

Summer programs date to 1968, when federal assistance for "special foodservice" programs serving children outside of school was first authorized. In 1975,the summer and child care food service components of the old special food serviceprogram were first formally separated as individual programs.

Sponsors of three types of summer program sites can be approved: (1) "open"sites operating in lower-income areas where 50% or more of the children have familyincome below 185% of the federal poverty guidelines (i.e., more than half of thechildren are eligible for free or reduced-price school meals), (2) "enrolled" sites whereat least half of the children enrolled in a sponsor's program (e.g., a summer educationor recreation activity) are eligible for free or reduced-price school meals, and (3)summer camps. Summer meals/snacks are provided free to all children at open orenrolled sites and to lower-income children in camps.

Summer sponsors get operating cost subsidies for all meals/snacks served free -- one meal and one snack, or two meals (three meals for children in programs formigrant children) per child per day. These subsidies cover documented food andfood service costs up to annually indexed (each January) per-meal/snackmaximums. (19) For the summer of 2006, the maximum operatingcost subsidy rates are $2.56 for each lunch/supper, $1.47 for breakfasts, and 59 centsfor snacks. Subsidies do not vary by individual children's family income, and mostsponsors receive the maximum allowable rates. Summer program sponsors alsoreceive significant payments for administrative costs (up to about 27 cents a meal)according to the number and type of meals/snacks served and the type of program(e.g., urban vs. rural sites, self-preparation vs. contracted vendor preparation), andstate agencies receive special administrative cost payments for oversight (see laterdiscussion of state administrative expenses) and health inspections (see below). Schools wishing to sponsor summer programs may effectively bypass most separateSummer Food Service program rules and, under a "seamless summer option," operatea summer program using School Lunch and School Breakfast program rules andsubsidy rates.

In addition to subsidies to sponsors, states receive direct subsidies for healthand meal quality inspection costs related to summer programs -- an amount equal to1% of a state's summer program subsidies.

In July 2005, nearly 3,800 sponsors operating some 30,000 sites providedsubsidized meals and snacks to an average daily attendance of just under 2 millionchildren. In addition, at least 1.6 million children received summer meals subsidizedthrough the School Lunch program (1.4 million of these children received free orreduced-price meals).

Special Milk Program

Under this program, schools and institutions like summer camps andresidential and non-residential child care facilities not otherwise participating in afederally subsidized meal service program, along with schools with split (part-day)sessions for kindergartners or pre-kindergartners where the children do not haveaccess to regular school meal programs, provide milk to all children at a reduced priceor free. Each half-pint served is federally subsidized at a different rate, depending onwhether it is served free (to those meeting criteria for free school lunches) or not --but the provision of free milk to needy children is up to the participating school andis not required. Half-pints are subsidized at 14.5 cents a half-pint for the 2006-2007school year, or at their net cost (typically 1-2 cents higher) if served free. Participating schools and other outlets must have a policy of lowering any pricescharged for milk they serve to the maximum extent possible, and of using their federalpayments to reduce the price of milk to children. Although similar assistance existedin prior years, this program dates to 1954-1955.

In FY2005, almost 7,000 schools and other outlets served about 100 millionsubsidized half-pints (7% free) to roughly 500,000 children.

Commodity Assistance(20)

The Agriculture Department provides commodity support for School Lunchprogram schools, the CACFP, and the Summer Food Service program. Federaldonations of food commodities for child nutrition operations began in the mid-1930sto support the agricultural economy (most prominently, following the enactment ofSection 32 of the Agricultural Act of August 24, 1935). In 1974, a basic "entitlement"to commodity assistance was placed in child nutrition law.

In addition to cash subsidies, schools (which receive the bulk of federallydonated commodities) and other providers are "entitled" to a specific dollar value ofcommodities based on the number of meals they serve. (21) Theinflation-indexed (each July) commodity entitlement is set at 16.75 cents a meal forthe 2006-2007 school year. The Department purchases these commodities and paysfor most processing costs to fulfill this guarantee, with the goals of meeting thepreferences of recipient agencies, supporting agricultural prices, and removingagricultural surpluses.

Schools and other providers also receive "bonus" commodities donated fromfederal stocks acquired, at the Department's discretion, for agricultural supportreasons (e.g., surplus commodities and excess Commodity Credit Corporationholdings). These bonus commodities were valued at $120 million in FY2005.

Finally, the value of commodity donations (both "entitlement" and "bonus")must equal at least 12% of the total cash and commodity assistance provided underthe School Lunch program. If this 12% requirement is not met, the AgricultureDepartment is required to purchase and distribute additional commodities to schools;because of the value of bonus commodity donations, this 12% requirement has nottriggered added commodity purchases/distributions in recent years.

State Administrative Expenses

Under authority in the Child Nutrition Act tracing back to 1966, states receivegrants to help cover general administrative and oversight/monitoring costs associatedwith child nutrition programs (including commodity distribution costs, but notincluding WIC program costs). The national amount each year is equal to 1.5% offederal cash payments for the School Lunch, School Breakfast, Special Milk, andChild and Adult Care Food programs. The majority of this money is allocated tostates based on their share of spending on the programs covered above; about 15% isallocated under a "discretionary" formula granting each state additional amounts forthe Child and Adult Care Food program, commodity distribution, and "coordinatedreview efforts" (see the later discussion of other child nutrition special projects andactivities for a description of coordinated review efforts). In addition, states receiveadministrative payments for their role in overseeing summer programs -- equal toapproximately 2.5% of their summer program aid. States are free to apportion theirvarious federal administrative expense payments among child nutrition initiatives(including the summer program) as they see fit.

The WIC and WIC Farmers' Market Programs(22)

The Special Supplemental Nutrition Program for Women, Infants, andChildren (the WIC program) provides nutritious foods and other support tolower-income pregnant, postpartum, and breastfeeding women, and to infants andchildren (up to age 5). (23) The program is operated through some 10,000local health care clinics/sites run by 2,000 local agencies and state health agencies(and more than 30 Indian tribal organizations participating as separate grantees treatedlike states). In addition, a special WIC-like extension run through the DefenseDepartment serves overseas military personnel. (24) The WICprogram originated as a two-year pilot project in 1972, and was established in law asa national program in 1975.

Although the administering state and tribal WIC agencies have somediscretion in judging eligibility, recipients' household income generally can be nohigher than 185% of the federal poverty guidelines (the same standard used fordetermining eligibility for reduced-price school meals) -- e.g., $24,440 for a familyof two or $30,710 for a three-person family, until the next annual inflation adjustmentin July 2007 -- and all state agencies now use the 185% income test. In thealternative, applicants who are recipients of Medicaid, food stamp, or TemporaryAssistance for Needy Families (TANF) benefits may be judged automaticallyincome-eligible. However, just as important as meeting the income test, enrolleesalso must be judged at "nutritional risk" by health professionals in the health agenciesand clinics that administer the program -- e.g., based on clinical measurements,documented nutritionally related medical conditions, dietary deficiencies.

Foods are provided ("prescribed") through vouchers/checks, listing thespecific foods and amounts appropriate to the recipient's status, that are redeemed atapproved retail outlets (or, much less commonly, supplied directly by theadministering agency itself). (25) The specific foods prescribed (e.g., juice, infantformula, cereal, eggs) are based on a set of federally established food packages thatdiffer by recipient type (e.g., infant, pregnant mother). However, WIC agencies haveconsiderable leeway in implementing the federally defined food packages. Theychoose which infant formulas (or other items like juices or cereals) are offered to meetthe federal food package requirements and how to respond to recipients' special needs.

Participating retailers (more than 45,000 are approved) then redeem thevouchers/checks for cash through arrangements with their state WIC agency. Theprogram also provides financial support for state and local clinic Nutrition Servicesand Administrative (NSA) costs -- about 27% of total federal aid provided to statesand tribal organizations. These include costs associated with nutritional risk, health,and immunization assessments, nutrition and substance abuse education andcounseling, health care and immunization referrals, certain breastfeeding promotionand support costs, determining eligibility, and issuing and redeeming vouchers (ordirectly delivering food items or operating an EBT system). (26) In addition,about 1% of WIC spending goes for grants to improve infrastructure (e.g., computersystems), technical assistance, and special projects like breastfeeding peer counselorsand help with state management information systems.

Annual federal appropriations are granted to state and Indian tribal WICagencies under a formula that reflects food and NSA caseload costs, inflation, and"need" (as evidenced by poverty indices) -- although small amounts are set aside anddistributed at the Agriculture Department's discretion for infrastructure development(like building and upgrading EBT and management information systems) and other(e.g., breastfeeding counselor) projects, and other funds have been used for smallspecial initiatives (e.g., immunization and health care outreach efforts). These annualnew appropriations are supplemented by unused money carried over from year to yearand reallocated among state and tribal grantees or retained by state WIC agencies foruse in the next year. Moreover, recent appropriations also have included a small ($125million) contingency fund.

The direct support supplied by appropriations and funding carryovers is addedto by the effect (holding down food costs) of substantial rebates (discounts) frommanufacturers with which state agencies contract (through competitive bidding) to bethe sole source for a particular food item. This cost control strategy is used by allstate agencies for infant formula, and, in FY2005, the majority of them received 90%-97% discounts on the wholesale cost of infant formula. (27) Moreover,11 state agencies also have rebate contracts for juice and cereal. In FY2005, theestimated rebate savings was worth $1.6 billion. (28) As part ofthis cost containment effort, special limits are in place for approving retailers whoderive the majority of their revenue from WIC vouchers (so-called "WIC-only"stores); at present, no new WIC-only stores may be certified for participation, and theprices they may charge the WIC program are significantly constricted.

Finally, a relatively small (in dollar terms) WIC farmers' market nutritionprogram operates, with significant non-federal matching funding (30% ofadministrative costs), in 38 states, the District of Columbia, Puerto Rico, Guam, andfour Indian tribal organizations. It is run by a variety of state agencies (typically, stateagriculture offices) coordinating with the regular WIC program and offers some 2.5million WIC participants special vouchers that are used to buy fresh produce throughabout 4,700 participating farmers' markets, roadside stands, and community supportedagriculture projects. The federal government pays the cost of the first $30 (perparticipant per year) of each farmers' market voucher, and shares administrative costswith the states and other political jurisdictions sponsoring the program.

In FY2005, average monthly WIC participation was 8.0 million persons --1.97 million women, 2.05 million infants, and 4.0 million children. Averageper-person federal costs were $37.50 a month for food and $14.40 a month for NSAexpenses.

Special Projects and Other Support Activities(29)

Under the coordinated review effort (CRE) , the FNS, in cooperation withstate agencies, conducts periodic school compliance and accountability evaluationsto improve management and identify administrative, subsidy claim, and meal qualityproblems. This $5 million-a-year effort is the major ongoing initiative related tomaintaining the integrity of child nutrition programs (although, under the terms of themost recent child nutrition reauthorization law, P.L. 108-265 , new funding isavailable for additional administrative reviews of schools needing special oversight). The Agriculture Department's Economic Research Service (ERS) and the FNSconduct nutrition research, studies, surveys, and evaluations (typically totaling$6-$8 million a year for child nutrition and WIC activities); this work was formerlydone exclusively by the FNS. (30) A national Food Service Management Institute(FSMI) provides technical assistance, instruction, materials in nutrition and foodservice management (it is funded at $4 million a year). And an informationclearinghouse provides information to support community-sponsored food assistanceinitiatives (funding of about $250,000 a year). Special FNS projects -- "TeamNutrition" nutrition education projects, a food safety project, technical assistance toprogram operators, food service training grants, aid with electronic food serviceresource systems, "program integrity" initiatives -- are aimed at helping schools andother providers with nutrition education materials, assisting them to improve theirmeal service operations and the quality of meals, and ensuring federal support is spentcorrectly; they are typically funded at about $10-$20 million a year.

In addition to the above-noted ongoing projects and activities, the 2004 ChildNutrition and WIC Reauthorization Act ( P.L. 108-265 ) added new, mostly one-time,"mandatory" spending to assist states and schools in improving administration oftheir school meal programs (especially determination of eligibility for free andreduced-price meals), gave money to the FNS to help local schools develop "wellnesspolicies " (outlined in the school lunch section of this report), and provided one-timefunding for specific pilot projects (related to expanding summer food service). It alsoextended, expanded, and provided new money (later increased) for a free fresh fruitand vegetable program in selected schools (discussed under the description of theSchool Lunch program). (31)

Funding for Child Nutrition and WIC Programs

Federal support for child nutrition and WIC programs is derived from fundingprovided out of (1) annual Agriculture Department appropriations, (2) permanentappropriations not included in the annual appropriations laws (e.g., money directlyappropriated for the Food Service Management Institute under its authorizing law andother spending mandated by law), (3) unused money available (carried over) fromprior years' appropriations, transferred from other Agriculture Departmentappropriations accounts, or recovered from states and operators, and (4) funds paidfor child nutrition initiatives from budget accounts separate from appropriations to thechild nutrition and WIC accounts (e.g., a large share of commodity assistance).

Actual spending for most child nutrition programs -- but not WIC programs-- normally is dictated by the demand for federal dollars called for by the number and type of subsidized meals, snacks, or half-pints of milk served, not the fundingmade available (annually appropriated or otherwise); these programs are mandatory"entitlements." WIC (and WIC farmers' market) spending, on the other hand, is"discretionary" and dictated by the dollar amounts available from current andprior-year (carried-over or recovered unused) appropriations. State WIC agenciesserve as many persons as they can within their respective allocations of appropriatedfunds (supplemented by carryovers and recoveries), and not all eligibles may beserved if funds run short. Individual programs within the child nutrition budgetaccount (e.g., the School Lunch and Breakfast programs) do not receive specific("line-item") appropriations, and thus funding may be shifted among the various childnutrition programs as needed -- so long as total spending stays within the overallamount available from new appropriations and other sources.

As a result, readily identifiable annual congressional appropriations --typically divided into two major accounts, a child nutrition account and a WICprogram account -- do not provide a clear or complete picture of total federal supportfor child nutrition and WIC programs in a given year. (32) Rather, spending figures -- normally higher than appropriations, shown in this report's secondtable (typically, obligations), give a much better overview than appropriationsamounts.

Table 1 presents recent appropriations for the child nutrition and WICprogram accounts (FY2004-FY2006), the appropriations request for FY2007, theHouse-approved FY2007 appropriations bill ( H.R. 5384 ; H.Rept.109-463 ), and the Senate-reported FY2007 appropriations measure (H.R.5384; S.Rept. 109-266 ). Table 2 , on the other hand, shows, for the sameyears, spending figures (estimates for FY2006 and FY2007) for the various childnutrition programs and activities, the WIC program, and the WIC Farmers' Marketprogram.

For additional detailed information about the FY2007 budget andappropriations, see CRS Report RL33412 , Agriculture and Related Agencies: FY2007Appropriations , coordinated by [author name scrubbed].

Table 1. Child Nutrition & WIC Appropriations: FY2004-FY2007

(in millions)

Sources: Agriculture Department appropriations laws for FY2004-FY2006, annual Agriculture Department budgetdocuments, H.Rept. 109-463 , and S.Rept. 106-266 .

Notes: WIC appropriations have been reduced to reflect directed rescissions in discretionary programs -- $27.3 million(FY2004), $42.2 million (FY2005), and $52.3 million (FY2006) -- and a $100 million transfer in FY2004. Not includedare mandatory appropriations made by laws outside the appropriations acts, funding available from other AgricultureDepartment accounts (e.g., some commodity support, a $120 million transfer from the Food Stamp budget account inFY2005), unused carryover or recovered funding from previous years, and money for the WIC farmers' market program inFY2005 and later years (about $20 million a year appropriated through another budget account). The House bill's childnutrition appropriation does not include a $300 million contingency fund proposed by the Administration and included inthe Senate bill; however, it (like the Senate bill and the Administration's request) does allow for $125 million in contingencyfunds for the WIC program. Added funds for a free fresh fruit and vegetable program in selected schools are not includedin the House bill amounts shown here (they are appropriated separately), but are included in the Senate child nutritionappropriation.

Table 2. Child Nutrition & WIC Spending: FY2004-FY2007

(in millions)

Sources: Agriculture Department budget documents, H.Rept. 109-463 , S.Rept.109-266 , and estimates from the Agriculture Department's Food and Nutrition Servicefor WIC spending under the House bill.

Notes: Includes spending from all funding sources: regular appropriations, moneyfrom other budget accounts (e.g., Section 32 commodity support, a $120 millionFY2005 transfer from the Food Stamp account), permanent appropriations, andcarryovers of unused funding from previous fiscal years. Does not include spendingon child nutrition- and WIC-related research.

a. Figures include cash assistance only, not the value of commodities or cash-in-lieuof commodities.

b. Figures include (1) some $400 million in commodities purchased for and donatedto child nutrition programs (at no charge to the child nutrition account) tomeet commodity entitlements, (2) cash subsidies and commodity letters ofcredit provided in lieu of commodity entitlements (e.g., $94 million inFY2005), and (3) certain federal commodity donationadministrative/distribution/computer support spending (e.g., $9 million inFY2005). Not shown is the value of "bonus" commodities donated by theDepartment from excess federal commodity holdings (e.g., $120 million inFY2005).

c. Unlike other numbers in this table, figures for the free fresh fruit and vegetableprogram in schools represent funding made available for each year, not actualspending, because of uncertainty about spending amounts. Actual spendingfigures are likely to be substantially lower than the amounts shown. The tableallocates to FY2004 $3 million of the $6 million provided by the 2002 farmbill ( P.L. 107-171 ) for FY2003 and FY2004. The $9 million shown forFY2005 is the amount mandated by the 2004 child nutrition reauthorizationlaw ( P.L. 108-265 ) for each year beginning with FY2005. The $15 millionshown for FY2006 includes the $9 million mandate from the child nutritionreauthorization law, plus $6 million appropriated by the FY2006appropriations measure. The Administration's request for FY2007 includesonly the $9 million mandated amount. The House $25 million figure is adiscretionary appropriation that assumes suspension of the $9-million-a-yearmandate. The Senate figure includes the $9 million mandatory fundingamount, plus a $9 million discretionary appropriation.

d. Special projects and other activities include nutrition education efforts through"Team Nutrition," food safety education, several program integrity/technicalassistance initiatives undertaken by the Administration or directed by the 2004child nutrition reauthorization law, an information clearinghouse, programevaluations, a summer program pilot project, and funding for the FNS to helpschools establish "wellness policies." A large portion of the FY2006 amountreflects one-time spending directives in the 2004 child nutritionreauthorization law ( P.L. 108-265 ).

e. The FY2007 Administration request for the WIC program is predicated onenactment of a recommendation to limit WIC Nutrition Services andAdministration (NSA) support to 25% of state grants (an estimated savingsof $152 million in FY2007). The House and Senate figures reject theproposed NSA limits. They also reflect major changes in assumptions as tofood costs, participation, and the availability of prior-year funds (as estimatedby the Food and Nutrition Service after passage of the House bill and beforereporting of the Senate bill).

e. WIC farmers' market figures represent spending from amounts available from newannual appropriations, plus money recovered or carried over from prior years. They reflect a substantial amount of unused funding in FY2004 (later madeavailable and obligated in FY2005), and they assume significant, althoughshrinking, recoveries/carryovers (a decrease in unused money) in FY2005,FY2006, and FY2007. Annual appropriations were $22.9 million in FY2004,$19.8 million in FY2005, and $19.8 million in FY2006. A $19.8 millionappropriation is requested for FY2007. In effect, the drop in appropriationsbeginning with FY2005 does not show in spending totals until FY2006because unspent funds from earlier years were available. However, theFY2005 spending figure may be revised downward by as much as $2 millionwhen all unused money is recovered, and the FY2006 and FY2007 amountsmay be revised upward to the extent recoveries from FY2005 are madeavailable as grants. The FY2007 figure for the House and Senate bills reflects$200,000 added by these bills.