College of Natural Resources, UC Berkeley

Schools can Improve Nutritional Value of Food While Increasing Revenue

April 22, 2005

by Sarah Yang

BERKELEY – When schools kick high-sugar sodas and high-fat chips off their campuses, food service department revenues tend to increase, according to a new report by researchers at CNR's Center for Weight and Health.

The findings provide encouraging news to school officials concerned about the budgetary hit they might take if they eliminate junk food from school grounds.

"Our results show that when kids have less access to high fat, high sugar snack foods and beverages, they will switch to healthier meals," said Patricia Crawford, co-director of the Center for Weight and Health and co-author of the report. "This trend can benefit the students' health as well as the school food service department's bottom line."

The conclusion comes from a fiscal analysis of 16 middle and high schools in nine school districts in California that participated in a pilot program called Linking Education, Activity and Food (LEAF). The Nutrition Services Division of the California Department of Education established the LEAF program with funding from the California Department of Food and Agriculture to pilot test the implementation of Senate bills 19 and 56 (SB 19/56).

The state education department contracted with UC Berkeley's Center for Weight and Health to evaluate the impact on schools that implemented SB 19/56. The fiscal analysis is the first in a series of evaluation reports on the LEAF program to be produced by the center, which is based at UC Berkeley's College of Natural Resources.

The state bills, together called the Pupil Nutrition, Health and Achievement Act of 2001, set nutrition standards for food and drinks sold outside the federally regulated school meal programs, such as items in vending machines, snack bars, student stores or on a la carte menus. Such offerings - classified as "competitive" foods by school nutrition experts - are typically high in sugar and/or fat, and low in nutritional value.

Under the bill's guidelines, the percentage of total calories from fat in such foods would be capped at 35 percent, and the total weight from sugar limited to 35 percent or less. Sodas would be replaced with water, milk and fruit drinks that have at least 50 percent fruit juice and no added sweeteners. Certain sports drinks would be allowed only if they contained, at most, 42 grams of added sweeteners per 20-ounce serving.

"I am glad to see evidence that schools do not have to forfeit revenue as a tradeoff to offering healthy options to students," said State Superintendent of Public Instruction Jack O'Connell. "We know from prior studies that students with healthy eating habits perform better in class. I hope this study will encourage more schools to increase the availability of nutritious food and drink options and eliminate unhealthy snacks."

Schools that participated in the pilot program were each given $200,000-250,000 to implement SB 19/56 regulations as well as policies promoting consumption of fresh produce grown in California. These funds were particularly critical for upgrading kitchen facilities and improving the appeal of the meals and serving areas in order to encourage students to participate in the school meal program. Some ongoing funding for coordination and evaluation, as well as to support nutrition education and promotion, would probably also be beneficial to ensure fiscally sustainable institutionalization of the nutrition standards.

The report analyzed two academic years' worth of data - from September 2002 through June 2004, excluding summer months. The researchers focused on sustainable daily revenues and expenses, so they did not include grant funds in revenue figures, nor did they include one-time capital expenditures in their calculation of expenses.

The report's authors found that 13 out of the 16 participating sites saw increases in food service per capita gross revenues ranging from 1 to 38 percent during the study period.

Of the other three sites, one school saw no change in gross revenues, while two experienced losses of 8 to15 percent. Notably, one of the two schools reporting a loss also lost an entire grade level, or one-third of its student population, due to restructuring.

Many of the schools reported an increase in food service revenues despite the decline in sales of a la carte foods. The authors explained that most of the increased revenue came in the form of state and federal reimbursements for children enrolled in free or reduced-price school meal programs. The greatest reimbursable meal sales came from schools that completely eliminated a la carte foods.

"By switching students to government-subsidized meal programs, schools are able to offset the losses from declines in competitive food sales," said Gail Woodward-Lopez, associate director of UC Berkeley's Center for Weight and Health and report co-author. "Some schools were also able to increase net income from the sale of healthy SB 19/56-compliant snack foods and beverages, suggesting that students will buy healthy options especially when they are involved in selecting and promoting these options."

Site-specific expenditure data were not available at 11 schools because they were in regions where such figures are tracked on a district-wide basis.

Among the five sites that did have quantitative expenditure data, the researchers found that only two reported changes greater than 6 percent. One school saw costs go up 34 percent due to increases in food costs and employee wages and benefits. A second school experienced a 23 percent increase in expenditures primarily associated with the higher cost of handling fresh versus processed fruits and vegetables.

Of the five schools reporting quantitative data, three reported net income increases of $19,000-$133,000. The authors credit the increases partly to improvements in the variety and appeal of the school meals along with the reduced appeal of and access to other competitive foods and beverages.

Two of the five schools reported decreases in food service net income ranging from $6,000 to $17,000, attributed primarily to handling fresh produce and increased employee wages and benefits.

"Storage and handling of fresh fruit and vegetables and other freshly prepared foods are more costly than for prepackaged options, so some schools may need extra funding to help cover expenses for upgrading kitchen facilities and increasing staff to accommodate the preparation of these healthier and more appealing options," said Woodward-Lopez.

However, the authors found that the food service directors were hopeful that such expenses could be controlled or offset in the future by increased meal participation rates. They note that qualitative data suggests that the other 11 schools did not experience substantial declines in food service net income.

The authors acknowledge that schools with relatively low rates of student enrollment in subsidized meal programs may have more difficulty increasing overall food service revenues after implementing SB 19/56. Schools in this study that were able to offset losses from competitive food sales had enrollment rates in the free and reduced meal programs as low as 20 percent.

"These are case studies, but the trends that emerged in the LEAF project are being seen in other similar projects around the state," said Annie Vargas, public health nutritionist at the Center for Weight and Health and co-author of the report. "It's encouraging that, for most schools, we did not see a fiscally negative impact associated with implementing the nutrition guidelines set forth in SB 19/56, and in most cases, it actually benefited the school food service department.

"There is still a lot to learn about helping schools make the switch, but we believe the rewards related to better nutrition for students are worth the effort."

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