In fiscal year 1995, the U.S. Department of Agriculture (USDA) spent about $5.2 billion to provide the nation’s school-age children with nutritious foods and promote healthy eating choices through its National School Lunch Program. State agencies, usually departments of education, are responsible for the statewide administration of the lunch program through the disbursing of federal funds, monitoring of the program, and record keeping. Many of these responsibilities are carried out in cooperation with local school food authorities. Food authorities are responsible for managing school food services for one or more schools or for a school district. Schools have traditionally operated their own food services. However, some important changes in the way they provide meals have taken place since the 1980s. Some food authorities have contracted with private food service management companies (FSMC) to operate their school food services. In addition, some schools are offering brand-name fast foods as a part of the lunch program meal or as separate (a la carte) items. According to USDA, on a typical school day in fiscal year 1996, the lunch program provided about 26 million students with balanced and low-cost or free lunches nationwide. Of these students, about 25 million, or about 96 percent, attended public schools, and about 967,000, or about 4 percent, attended private schools. Within a school district, schools can choose to participate or not participate in the program. During fiscal year 1995, about 94,000 institutions, including about 89,000 schools and about 5,000 residential child care institutions participated in the lunch program, according to USDA. State education agencies usually administer the program through agreements with food authorities. The federal cost to support school lunches in fiscal year 1995 was about $5.2 billion, including about $613 million in federal commodity donations, such as beef patties, flour, and canned vegetables. The lunch program operates in all 50 states, the District of Columbia, and U.S. territories and possessions. Schools participating in the lunch program receive cash reimbursements and commodities from the federal government for each meal served. In turn, they must serve lunches that meet federal nutritional requirements and offer these lunches free or at a reduced price to children from families whose income falls below certain levels. For school year 1995-96, schools were reimbursed $1.795 for each free lunch, $1.395 for each reduced-price lunch, and 17.25 cents for each full-pay lunch. In addition, schools received 14.25 cents worth of commodity foods for each lunch served. These lunch program meal reimbursements and donated commodities help to sustain the food services provided by food authorities. However, in some areas, food authorities may incur meal costs that are below or above the lunch program’s reimbursements because of food, labor, and other food service-related cost variations, thus creating surpluses or deficits in some food service budgets. USDA has developed a “lunch pattern” for five different age and grade categories. (See app. II.) This pattern requires that a school lunch contain five food items chosen from the four basic food groups. The size of the portions varies by these categories; nevertheless each lunch, at a minimum, must contain (1) one serving of a meat or a meat alternate, (2) one serving of a bread or bread alternate, (3) one serving of milk, and (4) two servings of vegetables or fruits. Schools must offer all five food items unless, as provided by the lunch program’s regulations, they use the “offer versus serve” option. Under this option, a school must offer all five food items, but a student may decline one or two of them. All high schools must use the “offer versus serve” option, and middle and elementary schools may use it at the discretion of local officials. According to a 1993 report prepared for USDA, 71 percent of elementary schools and 90 percent of middle schools used this option. Participating schools also agree to collect data on the number of meals served and are responsible for other tasks, such as verifying the income of families with students to determine whether the students are eligible for free or reduced-price lunches. According to the American School Food Service Association, school lunch preparation usually occurs at individual or centrally located school kitchens. These facilities are operated by the food authorities or, with their approval, by others, such as FSMCs. In 1970, USDA issued regulations permitting food authorities to contract with FSMCs to operate their school food services. Food authorities may contract with FSMCs for many aspects of their school food service. The commercial organizations that typically contract with food authorities to operate food services include large national companies, such as Marriott, Canteen, and ARAMARK; companies operating regionally or at multiple sites in a state; and companies servicing a single school district. The services provided by FSMCs are likely to include some combination of the following management and operational service: Food services, including meal planning, food purchasing, storage, preparation, and packaging and serving the food to students. Accounting services and the design of financial controls, budgets, and reporting systems, including those required for state and federal reports. The design of facilities, maintenance and replacement of equipment, and cleaning services. Staffing and personnel management. Support activities, such as marketing and promotion of school meals, and nutrition information and education programs. USDA’s regulations stipulate that if a food authority contracts with an FSMC, the food authority must remain responsible for the overall operation of its food service to ensure that the program is administered in an accountable manner and that all of the program’s regulations are met. This responsibility requires the food authority to maintain direct involvement in the food service operation, such as monitoring the food service operation through periodic on-site visits. While food authorities have traditionally prepared their own foods for school lunches, many have begun to serve brand-name fast foods in recent years. These foods are ready-to-serve—for example, pizzas, burritos, subs, and sandwiches—and are generally prepared and delivered to schools by fast-food vendors such as Pizza Hut, Domino’s Pizza, Taco Bell, and Subway as well as by local vendors. Unlike FSMCs, these vendors usually do not manage schools’ food service operations. Instead, they provide schools with a food product at a specified time. For example, a pizza vendor may agree to provide a school with fresh, hot pizza for lunch on every other Wednesday. Unless a fast-food vendor operates as an FSMC, USDA does not allow these vendors to sell directly to students at school. Instead, these vendors typically sell their food products to a school or its FSMC, which, in turn, sells the products to the students. Schools can offer brand-name fast foods as part of a reimbursable lunch, as an a la carte item, or both. In the Healthy Meals for Healthy Americans Act of 1994 (P.L. 103-448), the Congress directed us to study the use of private food establishments and caterers by schools participating in the National School Lunch or School Breakfast Programs. In response to this mandate, and as agreed with the offices of the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committees on Agriculture and on Economic and Educational Opportunities, we (1) determined the extent to which food authorities use FSMCs to operate their food services and the impacts that their use has had on various aspects of the lunch program, such as student participation, school food service employment, the generation of revenues through school meal sales, and a la carte sales of food in schools; (2) described the terms and conditions under which schools that participate in the lunch program use FSMCs; and (3) determined the extent to which schools that participate in the lunch program are provided with fast foods and snack foods in vending machines, described the most frequently used types and brands of fast foods commonly offered, and described their nutritional content. Because our preliminary work demonstrated that developing a nutritional profile of the hundreds of different food products available nationwide to students during school hours would be excessively costly, we discussed this issue with the offices of the cognizant committees. Given the technical complexities of the requirement and the limits on our resources and reporting time frame—our mandate required us to complete our work by September 1, 1996—we agreed with the cognizant committees to limit our work on the third objective to (1) presenting nutritional information for a sample of popular brand-name fast food products and (2) describing the types of vending machine foods commonly available in schools participating in the lunch program. As further agreed, we limited our review to the lunch program—the largest of USDA’s school meals programs. To address the first objective, we contacted each of the 50 states and the District of Columbia to obtain their school year 1994-95 lists of all food authorities, both public and private, and all food authorities using an FSMC. We then mailed questionnaires to 1,462 food authorities that states had identified as having contracts with FSMCs during the 1994-95 school year. In the course of our review, we identified 75 food authorities that were residential child care institutions, did not participate in the lunch program, or did not have contracts with FSMCs. We excluded these food authorities from the universe of 1,462 food authorities, thereby developing a universe of 1,387 food authorities. Eighty-five percent (1,175) of the remaining 1,387 food authorities returned a completed questionnaire. Hence, our survey results for this group represent only the 1,175 survey respondents that participated in the lunch program and had FSMC contracts during school year 1994-95. In addition, we mailed questionnaires to a national random sample of 934 of the food authorities that did not have contracts with FSMCs.