The Agriculture Secretary announced that starting in 2027-2028, students eligible for free and reduced-priced school meals cannot be charged junk fees. The USDA Food and Nutrition Service issued a memo as part of this announcement. For this fee policy, school meal programs encompass a School Breakfast Program, Special Milk Program, and National School Lunch Program (including after-school snacks). Additionally, the fees at issue are those associated with electronic payments (AKA credit card payments).
Students who qualify for reduced-price school meals can be charged up to $0.40 per lunch or $0.30 per breakfast. Beginning with the 2027-2028 school year, students who qualify cannot be charged fees when they use electronic payment. This applies to transaction fees associated with credit/debit card payments, bank account/ACH transfers, one-time program fees, annual fees, and convenience fees. For schools that choose to provide electronic payment services, the following must occur: (1) provide a free and accessible method of making deposits, (2) provide a method of deposit that does not require computer access, (3) notify families of available payment options, and (4) ensure that all families have access to every payment method made available for adding money to meal accounts.
The 2027-2028 school year start date is designed to allow school districts to begin making arrangements to comply with their vendors and contracts. Schools “are encouraged to implement this requirement as soon as they are able and may use funds in the nonprofit school food service account to cover the fees under their current contract.” One requirement to comply with this policy is to ensure that negotiating contracts with payment processing companies does not lead to fee shifts or fee increases for those students paying full price.
Even though 2027 seems like a million years away, now is the time to review your school's practices and determine what needs to be done to comply. Please call us at (402) 804-8000 or email ksb@ksbschoollaw.com if you have any questions.
P.S. The IRS released guidance related to the recent federal legislation that changed PPACA requirements, allowing for notice as a method of furnishing 1095 forms. As predicted, the notice requirements are in line with past IRS practices. Review our previous blog post for a full review of those notice rules. By the end of today, make sure you have either posted notice of the availability to request or provided copies.