SB 740 - HB 1153
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 15, 2025
Fiscal Analyst: Alan Hampton | Email: alan.hampton@capitol.tn.gov | Phone: 615-741-2564
SB 740 - HB 1153
SUMMARY OF BILL: Expands the requirement to provide a school breakfast program
from schools that meet certain criteria to all schools. Requires the state to reimburse each local
education agency (LEA) the cost of providing a free breakfast and lunch served to each student
enrolled in the LEA who is eligible for reduced-price meals after all federal funds available pursuant
to the national school lunch program is applied. Expands the waiver of school fees from applying to
students that receive free or reduced-price lunch to students who are members of households with
an income that meets the eligibility requirements for free or reduced-price school lunch.
FISCAL IMPACT:
STATE GOVERNMENT
EXPENDITURES General Fund
FY25-26 $2,217,100
FY26-27 & Subsequent Years >$2,217,100
LOCAL GOVERNMENT
REVENUE Mandatory
FY25-26 $2,217,100
FY26-27 & Subsequent Years >$2,217,100
OTHER FISCAL IMPACT
In the event that expanding the waiver for school fees increases the number of students who do
not have to pay school fees, a decrease in local revenue will occur. However, due to multiple
unknown factors, the extent and timing of any such decrease cannot be reasonably determined
For schools required to begin providing a school breakfast program, a mandatory increase in
expenditures will occur. However, due to multiple variables, a precise local fiscal impact cannot be
reasonably determined.
Article II, Section 24 of the Tennessee Constitution provides that: no law of general application shall impose increased expenditure
requirements on cities or counties unless the General Assembly shall provide that the state share in the cost.
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Assumptions:
• Pursuant to the Tennessee School Nutrition Standards Act, schools must establish a breakfast and
lunch program for free or reduced-price meals to the extent that federal funds are available.
• The National School Lunch Program and the School Breakfast Program are federally assisted
meal programs administered by the Department of Education at the state level and operated
in schools by local school food authorities.
• The United States Department of Agriculture (USDA) reimburses LEAs for the cost of free
or reduced-price meals for students who qualify.
• For the 2024-25 school year, the USDA reimbursement rates are as follows:
o Breakfast is set for $2.54 at the reduced-price rate; and
o Lunch is set for $3.61 at the reduced-price rate.
• Based on data from the 2023-24 school year, the cost for reimbursing each LEA for providing
a free breakfast and lunch served to each student enrolled in an LEA who is eligible for
reduced-price meals after all federal funds available have been applied is $1,999,498.
• Based on USDA reimbursement rates from FY19-20 through FY23-24, the average annual
increase is 5.3 percent.
• It is estimated that the USDA reimbursement amount in FY23-24 will increase by 5.3 percent
in each FY24-25 and FY25-26 such that the total increase in state expenditures and equal
corresponding increase in local revenue is estimated to be:
o $2,217,061 [($1,999,498 x 1.053) x 1.053] in FY25-26; and
o Exceeding $2,217,061 in FY26-27 and subsequent years.
• Pursuant to Tenn. Code Ann. § 49-6-2302(a)(2), each school board is required to establish a
school breakfast program in the following schools based on the cumulative analysis of school
lunch participation for the month of April of the preceding school year:
o Every school that contains kindergarten through grade eight (K-8) in which 25
percent or more of the students participated in the school lunch program at a free or
reduced price; and
o In every school that does not contain K-8 in which 40 percent or more of the students
participated in the school lunch program at a free or reduced price.
• The proposed legislation expands the requirement to provide a school breakfast program to
apply to all schools.
• It is unknown how many schools do not provide a school breakfast program. For schools
that have to start providing a school breakfast program as a result of the proposed legislation,
a mandatory increase in expenditures will occur. However, due to multiple unknown factors,
including the cost of hiring additional staff and providing additional meals to students and
the extent to which revenue from paid meals offsets costs to operate a school breakfast
program, a precise local fiscal impact cannot be reasonably determined.
• The proposed legislation expands the waiver of school fees from applying to students that
receive free or reduced-price lunch to students who are members of households with an
income that meet the eligibility requirements for free or reduced-price school lunch.
• Pursuant to Tenn. Code Ann. § 49-2-114(b), “school fees” means:
o Fees for activities that occur during regular school hours;
o Fees for activities and supplies required to participate in all courses offered for credit
or grade;
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o Fees or tuition applicable to courses taken during the summer by a student, except
that nonresident students regularly enrolled in another school system may be required
to pay fees or tuition for such summer courses; and
o Fees required for graduation ceremonies.
• In the event that the proposed legislation increases the number of students who do not have
to pay school fees, a decrease in local revenue will occur. However, due to multiple unknown
factors, the extent and timing of any such decrease cannot be reasonably determined.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director