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May 21, 2001

Report Says Free Food
Costing Schools Too Much

Getting USDA surplus food to schoolchildren could be cheaper - $1.3 million a year cheaper in fact, according to a new report from the Institute for Social Research at California State University, Sacramento.

The eight-month, $100,000 study, which was completed on behalf of the California Department of Education, recommends privatizing the 40 percent of surplus food delivery now carried out by the department. The food is given to school districts to be used in school lunch programs.

The report estimates the private sector can deliver the food for $2.40 weighted average cost per case, compared to the $3.44 plus headquarters charges that it costs the state to deliver each case.

Nationwide, 39 states have fully privatized their systems for delivering surplus food to school districts, the report says. Just one, Montana, has returned to a partially state-run system.

"The state could feasibly privatize this operation, no question," says one of the report's authors, CSUS economics professor George Jouganatos. "Of course they have to be careful and reduce any risks from privatization by effective planning. Regardless of the location of the school district, each student has equal rights to this food."

Jouganatos and his co-authors caution that converting to a privatized system would have initial costs ranging from $165,500 to as high as $5.7 million if the state does not plan adequately for the conversion.

More information and copies of the study's executive summary are available by contacting Jouganatos at (916) 739-1132 or the CSUS public affairs office at (916) 278-6156.


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