As Biden Signs Waiver Extension, Study Shows School Meals Lower Grocery Costs

Updated June 27

On June 25, President Biden signed the Keep Kids Fed Act of 2022. The law will extend some school meal waivers through the end of the 2022-23 school year.

With a massive, pandemic-era expansion of free school meals scheduled to expire on June 30, Democrats and Republicans coalesced this week around a possible compromise that would extend the federal program through the summer. Passed by a 376-42 margin in the House of Representatives Thursday, the deal is expected to move through the Senate and be signed by President Biden in the next few days.

Authorized by Congress and the Department of Agriculture over the last two years, the waivers widened the category of students eligible to receive breakfast and lunch. Schools providing meals were also offered higher reimbursement rates for the costs of running their programs, as well as the flexibility to serve food off-site and substitute for items lost to supply-chain snags.Those benefits are often cited by proponents of renewing the waivers, or even making them permanent following the pandemic’s end. But language to continue the program into next year was left out of the FY2023 budget signed by the president in March.

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In the near term, the proposed $3 billion Keep Kids Fed Act could ease classroom hunger and simplify the work of schools in the months to come. But research suggests that greater availability of free meals in public schools actually lowers grocery spending even for those without school-aged children. And at a time of sharply rising food prices, it’s conceivable that the end of the waivers would contribute to further inflation.

In a working paper circulated last fall by the National Bureau of Economic Research, academics from the University of Chicago and the Wharton School of the University of Pennsylvania found that an earlier boost to free meals — through the Obama-era Community Eligibility Provision, which allowed certain schools to offer breakfast and lunch to all students without having to process individual applications — caused a significant decline in grocery sales at local retailers. Those chains responded by lowering prices across all their stores, leading nearby households to spend approximately 4.5 percent less in grocery bills in areas where the policy was adopted.

Jessie Handbury, a Wharton economist and one of the paper’s co-authors, called the effects “fairly sizable.”

“Because they’re responding across all their retail locations, the…drop in prices is going to affect all the households in the vicinity of that chain’s stores,” she said. “So you’ll have households that aren’t directly impacted by the demand shock, or that live nowhere near the communities that are taking up universal free lunch, but are still benefiting from it.”

Related: From D.C. to the Cafeteria: A School Meals Primer

The Community Eligibility Provision was introduced in select states through the Healthy, Hunger-Free Kids Act of 2010, before becoming nationally available in the 2014-15 school year. Participating schools (identified as those where over 40 percent of students qualified for free or reduced-price lunch) could choose to provide such meals to all of their enrolled students, whether they were eligible or not.