To amend the Child Nutrition Act of 1966 and the Richard B. Russell National School Lunch Act to improve the school breakfast program.

To amend the Child Nutrition Act of 1966 and the Richard B. Russell National School Lunch Act to improve the school breakfast program.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `School Breakfast Improvement Act of 2003'.

SEC. 2. SEVERE NEED ASSISTANCE.

Section 4(d)(2) of the Child Nutrition Act of 1966 (42 U.S.C. 1773(d)(2)) is amended--

(1) by striking `100 percent' and all that follows through `food, or'; and

(2) by striking `, whichever is less'.

SEC. 3. STARTUP AND EXPANSION GRANTS FOR SCHOOL BREAKFAST PROGRAMS.

Section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) is amended by adding at the end the following:

`(f) STARTUP AND EXPANSION GRANTS FOR SCHOOL BREAKFAST PROGRAMS-

`(1) DEFINITION OF ELIGIBLE SCHOOL- In this subsection, the term `eligible school' means--

`(A) in the case of a startup grant, a school that agrees to operate the school breakfast program established with the assistance provided under this subsection for a period of not less than 3 years; and

`(B) in the case of an expansion grant, a school that has operated a school breakfast program established for a period of not less than 3 consecutive years.

`(2) GRANTS- The Secretary shall make grants, on a competitive basis, to State educational agencies, in a total amount of not more than $10,000,000 for each fiscal year from funds made available to the Secretary, to assist eligible schools in initiating and expanding school breakfast programs, of which not less than $7,000,000 for each fiscal year shall be used for expansion grants.

`(3) USES- A State educational agency shall use grants made available under this subsection to assist eligible schools, during the first school year eligible schools initiate or expand school breakfast programs, with expenses incurred in initiating or expanding school breakfast programs.

`(4) SUPPLEMENTARY FUNDS- A grant under this subsection shall supplement any payment to which a State educational agency is entitled under subsection (b).

`(5) PLAN- To be eligible to receive a grant under this subsection, a State educational agency shall submit to the Secretary a plan to initiate or expand school breakfast programs conducted in the State, including a description of the manner in which the State educational agency shall provide technical assistance and funding to eligible schools in the State to initiate or expand the programs.

`(6) STATE EDUCATIONAL AGENCY PREFERENCES FOR STARTUP GRANTS- In making a grant under this subsection for a fiscal year to initiate a school breakfast program, the Secretary shall give preference to a State educational agency that--

`(A) has not more than 60 percent of schools in the State that are participating in the school lunch program also participating in the school breakfast program; or

`(B) has not more than 35 percent of the students in the State receiving free or reduced price lunch also receiving free or reduced price breakfasts.

`(7) REALLOCATION- The Secretary shall act in a timely manner to recover and reallocate to other State educational agencies or States any amount made available to a State educational agency or State under this subsection that is not used by the agency or State within a reasonable period (as determined by the Secretary).

`(8) APPLICATION- The Secretary shall allow application by State educational agencies on an annual basis for grants under this subsection.

`(9) PREFERENCES BY STATE EDUCATIONAL AGENCIES AND STATES- In allocating funds within the State, each State educational agency shall give preference for assistance under this subsection to an eligible school that demonstrates the greatest need for assistance to initiate or expand a school breakfast program, as determined by the State educational agency.

`(10) MAINTENANCE OF EFFORT- The expenditure of funds from State and local sources for the maintenance of the school breakfast program shall not be diminished as a result of grants made available under this subsection.'.

SEC. 4. COMMODITY ASSISTANCE FOR SCHOOL BREAKFAST PROGRAM.

Section 6 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1755) is amended--

(1) by striking subsection (b) and inserting the following:

`(b) COMMODITY ASSISTANCE FOR SCHOOL LUNCH AND BREAKFAST PROGRAMS- Not later than September 30 of the following school year, the Secretary shall deliver to each State participating in--

`(1) the school lunch program established under this Act, commodities valued at the total level of assistance authorized under subsection (c) for each school year for the school lunch program in the State; and

`(2) the school breakfast program established under the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.), commodities valued at the total level of assistance authorized under subsection (d) for each school year for the school breakfast program in the State.'; and

(2) by striking subsection (d) and inserting the following:

`(d) VALUE OF DONATED FOODS FOR SCHOOL BREAKFAST PROGRAM-

`(1) IN GENERAL- Subject to paragraph (2), in the case of the school breakfast program established under the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.), the value of donated foods shall be 5 cents.

`(2) ADJUSTMENT-

`(A) IN GENERAL- The value of donated foods under paragraph (1) shall be adjusted on July 1, 2004, and each July 1 thereafter, to reflect changes in the Price Index for Food Used in Schools and Institutions.

`(B) FOOD COMPONENTS-

`(i) IN GENERAL- The Index shall be computed using 5 major food components of the Producer Price Index of the Bureau of Labor Statistics (cereal and bakery products, meats, poultry and fish, dairy products, processed fruits and vegetables, and fats and oils).

`(ii) WEIGHTING- Each component shall be weighed using the same relative weight as determined by the Bureau of Labor Statistics.

`(C) TIME PERIOD- The value of food assistance for each meal shall be adjusted each July 1 by the annual percentage change in a 3-month average value of the Price Index for Foods Used in Schools and Institutions for March, April, and May each year.

`(D) ROUNDING- The adjustment shall be computed to the nearest 1/4 cent.

`(3) CALCULATION-

`(A) IN GENERAL- Subject to subparagraph (B), for each school year, the total amount of commodity assistance, or cash in lieu of commodity assistance, available to a State for the school breakfast program shall be the product obtained by multiplying--

`(i) the number of breakfasts served in the preceding school year; by

`(ii) the rate established under paragraphs (1) and (2).

`(B) RECONCILIATION- After the end of each school year, the Secretary shall--

`(i) reconcile the number of breakfasts served by schools in each State with the number of breakfasts served by schools in each State during the preceding school year; and

`(ii) increase or reduce subsequent commodity assistance, or cash in lieu of commodity assistance, provided to each State based on the reconciliation.'.

SEC. 5. UNIVERSAL SCHOOL BREAKFAST PILOT PROJECTS.

Section 18 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1769) is amended by added at the end the following:

`(h) UNIVERSAL SCHOOL BREAKFAST PILOT PROJECTS-

`(1) IN GENERAL- The Secretary shall make grants to State agencies to conduct pilot projects in high schools under the jurisdiction of not more than 6 school food authorities approved by the Secretary to provide free breakfasts to high school students, without regard to family income.

`(2) NOMINATIONS- A State agency that seeks a grant under this subsection shall submit to the Secretary nominations of school food authorities to participate in a pilot project under this subsection.

`(3) APPROVAL- The Secretary shall approve for participation in pilot projects under this subsection high schools under the jurisdiction of not more than 6 nominated school food authorities selected so as to--

`(A) target the pilot projects toward school food authorities that have--

`(i) the highest percentage of students eligible for free or reduced price meals under the school lunch or breakfast program; and

`(ii) the lowest percentage of students that receive free or reduced price meals under the school lunch or breakfast program; and

`(B) provide for an equitable distribution of pilot projects among urban and rural high schools.

`(4) GRANTS TO SCHOOL FOOD AUTHORITIES- A State agency receiving a grant under paragraph (1) shall make grants to school food authorities to conduct the pilot projects described in paragraph (1).

`(5) DURATION OF PILOT PROJECTS- Subject to the availability of funds made available to carry out this subsection, a school food authority receiving amounts under a grant to conduct a pilot project described in paragraph (1) shall conduct the project during a period of 3 successive school years.

`(6) WAIVER AUTHORITY-

`(A) IN GENERAL- Except as provided in subparagraph (B), the Secretary may waive the requirements of this Act and the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) relating to counting of meals, applications for eligibility, and related requirements that would preclude the Secretary from making a grant to conduct a pilot project under paragraph (1).

`(B) NONWAIVABLE REQUIREMENTS- The Secretary may not waive a requirement under subparagraph (A) if the waiver would prevent a program participant, a potential program participant, or a school from receiving all of the benefits and protections of this Act, the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.), or a Federal law (including a regulation)

`(7) REQUIREMENTS FOR PARTICIPATION IN PILOT PROJECT- To be eligible to participate in a pilot project under this subsection--

`(A) a State agency--

`(i) shall submit an application to the Secretary at such time and in such manner as the Secretary shall establish to meet criteria the Secretary has established to enable a valid evaluation to be conducted; and

`(ii) shall provide such information relating to the operation and results of the pilot project as the Secretary may reasonably require; and

`(B) a school food authority--

`(i) shall agree to serve all breakfasts at no charge to all high school students enrolled in participating high schools;

`(ii) shall not have a history of violations of this Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.);

`(iii) shall agree to use innovative methods for making breakfasts available to eligible students, such as making breakfasts available to students after the beginning of the academic day or using alternative breakfast delivery and marketing methods; and

`(iv) shall meet all other requirements that the Secretary may reasonably require.

`(8) REPORTS- The Secretary, acting through the Administrator of the Food and Nutrition Service, shall submit to Congress an interim and final report on the status of the pilot projects.

`(9) REIMBURSEMENT-

`(A) IN GENERAL- Except as provided in subparagraph (B), a school conducting a pilot project under this subsection shall receive a total Federal reimbursement under the school breakfast program in an amount that is equal to the total Federal reimbursement for the school for the prior year under the program (adjusted to reflect changes in the series for food away from home of the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor and adjusted for fluctuations in enrollment).

`(B) EXCESS NEEDS- Funds required for the pilot project in excess of the level of reimbursement received by the school for the prior year (adjusted to reflect changes described in subparagraph (A) and adjusted for fluctuations in enrollment) may be taken from any non-Federal source or from amounts provided under this subsection.

`(10) FUNDING-

`(A) IN GENERAL- On October 1, 2003, and on each October 1 thereafter through October 1, 2005, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall transfer to the Secretary of Agriculture funds to carry out this subsection.

`(B) RECEIPT AND ACCEPTANCE- The Secretary shall be entitled to receive, shall accept, and shall use to carry out this subsection the funds transferred under subparagraph (A), without further appropriation.'.

SEC. 6. EFFECTIVE DATE.

This Act and the amendments made by this Act take effect on October 1, 2003.