It did not reduce subsidies for administrative costs. Reduced Rates Had Little Effect Nationwide in 1997, but Some Future Effects Are Expected

The reduced reimbursement rates had little effect on the number of sponsors or children participating in 1997. Both USDA and many state officials expect the lowered reimbursement rates to somewhat reduce the number of sponsors and children participating in the program over the next 3 years. Few Sponsors Left the Program Because of the Reduced Rates

According to our analysis of data from the 50 states and the District of Columbia, 346 of the 3,387 sponsors that participated in the program in 1996 did not do so in 1997. In addition, some state officials said that sponsors that stayed in the program reduced the number of locations where they served meals. Many States Expect Some Future Decreases in the Number of Sponsors and Children

According to USDA officials, the full effect of the reduced subsidies was not experienced in the summer of 1997. The officials said that they believed some sponsors chose to continue participating in the program in 1997 to test their ability to manage the program financially with the reduced rates. In responding to our question of whether they would see additional changes in the number of sponsors over the next 3 years because of the rate decrease, the states reported the following:
24 states and the District of Columbia said that the number of sponsors
16 states reported that the lower meal rates would not affect the number
10 states reported that they were uncertain of the effect. State officials explained that a number of factors may mitigate the effects of the rate decrease on the number of sponsors and children over the next 3 years. Some state officials also said that the number of children seeking participation in the program may increase as a result of (1) welfare-to-work initiatives that could cause parents to rely more on the care provided through the sponsors and (2) a reduction in benefits such as food stamps that would make the summer food program more important.
Why GAO Did This Study

Pursuant to a congressional request, GAO reported on the changes made to the Department of Agriculture's (USDA) Summer Food Service Program, focusing on the: (1) effects these changes had on the number of sponsors and children participating in the program in 1997; and (2) potential effect of the reduced subsidies for the future.

What GAO Found

GAO noted that: (1) the reduction in federal subsidies for sponsors did not have a significant effect on the number of program sponsors or children participating in 1997; (2) state officials specifically identified only a handful of 1996 sponsors that stopped participating in the program in 1997 because of the reduced subsidies, and the number of children participating in the program was generally not affected; (3) however, almost half of the states reported that the program was affected in other ways, such as sponsors' reducing the number of food items in the meals provided or reducing the number of locations where meals were served; (4) while the number of sponsors and children participating changed only minimally in 1997, both the USDA and the majority of the states expect to see a decrease in the number of sponsors and in the number of children participating over the future because of the reduced subsidies; (5) USDA and several state officials said that some sponsors continued their participation in 1997 to test whether they could finally manage the program with the reduced rate; (6) USDA officials expect that sponsors that could not manage the program with the reduced rates will leave it in future years; and (7) on the other hand, USDA and some state officials said that other factors such as increased outreach efforts and state funding could mitigate the effects of the rate decrease on the number of sponsors and children participating in the future.