A BILL TO BE ENTITLED
AN ACT TO APPROPRIATE FUNDS TO PROVIDE FREE BREAKFAST AND LUNCH TO STUDENTS attending k‑12 public schools.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 115C‑263 reads as rewritten:
"§ 115C‑263.  Required provision of services.
As a part of the function of the public school system, local boards of education shall provide school nutrition services in the schools under their jurisdiction. Meals shall include breakfast and lunch at no cost to students. All school nutrition services made available under this authority shall be provided in accordance with standards and regulations established by the Food and Nutrition Service of the United States Department of Agriculture."
SECTION 2.  G.S. 115C‑264 reads as rewritten:
"§ 115C‑264.  Operation.
(a)	In the operation of their public school nutrition programs, the public schools shall participate in the School Breakfast Program and the National School Lunch Program established by the federal government and administered by the Department of Public Instruction. The program shall be under the jurisdiction of the Division of Safe and Healthy Schools Support, School Nutrition Services, of the Department of Public Instruction. The Department of Public Instruction shall allocate sufficient supplementary funds to the local school administrative units to provide free breakfast for every student who elects to receive free breakfast and free lunch for every student who elects to receive free lunch. Taking into account funds provided toward the cost of breakfast and lunch for students under the National School Lunch Program, the School Breakfast Program, any other federally assisted school nutrition program, or any program operated by a local school administrative unit, the supplementary funds provided by the Department shall be sufficient to ensure that each local school administrative unit is compensated for each participating student up to the federal free meal reimbursement rate.
(b)	For nutritional purposes, the public schools shall not (i) use cooking oils in their school nutrition programs that contain trans‑fatty acids or (ii) sell processed foods containing trans‑fatty acids that were formed during the commercial processing of the foods.
(c)	All school nutrition services shall be operated on a nonprofit basis, and any earnings therefrom over and above the cost of operation as defined herein shall be used to reduce the cost of food, to serve healthier food, or to provide free breakfast and lunch to students and for no other purpose. The term "cost of operation" means the actual cost incurred in the purchase and preparation of food, the salaries of all personnel directly employed in providing school nutrition services, and the cost of nonfood supplies as outlined under standards adopted by the State Board of Education. "Personnel" means persons directly employed in the operation of the school nutrition program in the local school administrative unit. School nutrition personnel shall be paid from the funds of school nutrition services only for services rendered in behalf of the school nutrition program. Public schools are not required to comply with G.S. 115C‑522(a) in the purchase of supplies and food for such school nutrition services."
SECTION 3.(a)  Article 14A of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑218.4.  Charter school nutrition.
(a)	The charter school may provide school nutrition services for enrolled students by participating in federally assisted school nutrition programs. All school nutrition services provided at the school shall meet the same standards and regulations described in G.S. 115C‑263. The Department of Public Instruction shall allocate sufficient supplementary funds to the charter school to provide free breakfast for every student who elects to receive free breakfast and free lunch for every student who elects to receive free lunch. Taking into account funds provided toward the cost of breakfast and lunch for students under the National School Lunch Program, the School Breakfast Program, any other federally assisted school nutrition program, or any program operated by a local school administrative unit, the supplementary funds provided by the Department shall be sufficient to ensure that the charter school is compensated for each participating student up to the federal free meal reimbursement rate."
SECTION 3.(b)  G.S. 115C‑75.9(l) reads as rewritten:
"(l)	School Nutrition Program. – The innovative school shall provide school nutrition services for enrolled students by participating in federally assisted school nutrition programs. All school nutrition services provided at the school shall meet the same standards and regulations described in G.S. 115C‑263. The Department of Public Instruction shall allocate sufficient supplementary funds to the innovative school to provide free breakfast for every student who elects to receive free breakfast and free lunch for every student who elects to receive free lunch. Taking into account funds provided toward the cost of breakfast and lunch for students under the National School Lunch Program, the School Breakfast Program, any other federally assisted school nutrition program, or any program operated by a local school administrative unit, the supplementary funds provided by the Department shall be sufficient to ensure that the innovative school is compensated for each participating student up to the federal free meal reimbursement rate."
SECTION 3.(c)  G.S. 115C‑238.72(b) reads as rewritten:
"(b)	Food Service. – The local school administrative unit identified by resolution shall provide school food services to the regional school in accordance with G.S. 115C‑263. For purposes of federal funding through the National School Lunch Program or other federally supported food service programs, the local school administrative unit identified by resolution shall include eligible students enrolled in the regional school. The Department of Public Instruction shall allocate sufficient supplementary funds to the local school administrative unit to include eligible students enrolled in the regional school pursuant to G.S. 115C‑264. Other participating units shall not include students enrolled in the regional school for purposes of federally supported food service programs."
SECTION 3.(d)  G.S. 116‑239.8(b)(4) reads as rewritten:
"(4)	Food and transportation services. – The local school administrative unit in which the laboratory school is located shall provide food services and transportation to students attending the laboratory school pursuant to G.S. 115C‑263. The local school administrative unit in which the laboratory school is located shall administer the School Breakfast Program and the National School Lunch Program for the laboratory school in accordance with G.S. 115C‑264. The Department of Public Instruction shall allocate sufficient supplementary funds to the local school administrative unit to include eligible students enrolled in the laboratory school pursuant to G.S. 115C‑264. The chancellor shall arrange for the provision of these services from the local school administrative unit."
SECTION 4.  Article 17 of Chapter 115C of the General Statutes is amended by adding a new Part to read:
"Part 4. The North Carolina School Breakfast and Lunch Fund.
"§ 115C‑266.  North Carolina School Breakfast and Lunch Fund established; source of funding.
(a)	Establishment of the Fund. – The North Carolina School Breakfast and Lunch Fund is established as a special revenue fund to provide financing for breakfast and lunch for students in public school units. For purposes of this Part, the term "public school unit" refers to local school administrative units, regional schools, charter schools, innovative schools, and UNC laboratory schools. All expenses of administering the Fund shall be paid from the Fund and not from the General Fund. Any interest generated by the Fund is credited to the Fund. The State Board of Education shall administer the Fund through the Department of Public Instruction.
(b)	Source of Funding. – Money received from all of the following sources shall be deposited in the North Carolina School Breakfast and Lunch Fund:
(1)	Designations made to the Fund by individual taxpayers pursuant to G.S. 105‑159.3.
(2)	Voluntary donations made directly to the Fund.
(c)	Determinations of Fund Amount. – By December 15, 2020, and every year thereafter, the State Board of Education shall prepare and provide to the Joint Legislative Education Oversight Committee of the General Assembly a report documenting, evaluating, and making recommendations relating to the administration, implementation, and enforcement of this Part. In its report, the State Board shall set out the funds received to date and the expected needs of the Fund in the next school year.
"§ 115C‑267.  Administration of the Fund.
(a)	Estimated Number of Participants; Reporting. – Prior to the beginning of the school year, each participating public school unit shall survey its students to determine how many students elect to receive free breakfast or lunch. Within 30 days of the beginning of the school year, the public school unit shall report this information to the Department of Public Instruction.
(b)	Timing of Fund Distribution. – The Department of Public Instruction shall reimburse a public school unit from the Fund within 30 business days of receipt of a request from the public school unit for reimbursement for breakfast or lunch.
(c)	Use of Funds. – Monies in the fund shall be used to fund breakfasts and lunches for students electing to receive those meals. If the money in the fund is insufficient to fully fund all breakfasts and lunches for all students electing to receive those meals over the course of the year, the State Board of Education shall use additional State funds provided for this purpose. It is the intent of the General Assembly to fund any shortfall.
(d)	Reimbursement of Funds. – The Department of Public Instruction shall reimburse public school units each month pursuant to G.S. 115C‑264(a) for all breakfasts and lunches served in each respective public school unit. The State Board shall use a rapid, reliable method of reimbursing public school units for these amounts. In all cases, the State Board shall distribute funds to public school units in a manner that is expeditious, ensures accountability, and safeguards the integrity of the Fund."
SECTION 5.(a)  Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑159.3.  Designation of tax to North Carolina School Breakfast and Lunch Fund.
(a)	Allocation to the North Carolina School Breakfast and Lunch Fund. – To ensure the financial viability of the North Carolina School Breakfast and Lunch Fund established in Part 4 of Article 17 of Chapter 115C of the General Statutes, the Department must allocate to that Fund three dollars ($3.00) from the income taxes paid each year by each individual with an income tax liability of at least that amount, if the individual agrees. A taxpayer must be given the opportunity to indicate an agreement or objection to that allocation in the manner described in subsection (b) of this section. In the case of a married couple filing a joint return, each individual must have the option of agreeing or objecting to the allocation. The amounts allocated under this subsection to the Fund must be credited to it on a monthly basis.
(b)	Returns. – Individual income tax returns must give an individual an opportunity to agree to the allocation of three dollars ($3.00) of the individual's tax liability to the North Carolina School Breakfast and Lunch Fund. The Department must make it clear to the taxpayer that the dollars will support financing for breakfast and lunch for students in public school units, as defined in G.S. 115C‑266(a), and that allocation of the dollars neither increases nor decreases the individual's tax liability. The following statement must be used to meet this requirement: "Mark "Yes" if you want to designate $3.00 of taxes to this special Fund for providing financing, including administrative costs, for free breakfast and lunch meals to students in public schools. Marking "Yes" does not change your tax or refund." The Department must consult with the State Board of Education to ensure that the information given to taxpayers complies with the intent of this section.
The Department must inform the entities it approves to reproduce the return that they must comply with the requirements of this section and that a return may not reflect an agreement or objection unless the individual completing the return decided to agree or object after being presented with the statement required by subsection (b) of this section and, as available background information or instructions, the information required by subsection (c) of this section. No software package used in preparing North Carolina income tax returns may default to an agreement or objection. A paid preparer of tax returns may not mark an agreement or objection for a taxpayer without the taxpayer's consent.
(c)	Instructions. – The instruction for individual income tax returns must include the following explanatory statement: "The North Carolina School Breakfast and Lunch Fund provides an alternative source of funding to offset the costs of breakfast and lunch meals for students attending public school. Three dollars from the taxes you pay will go to the Fund if you mark an agreement. Regardless of what choice you make, your tax will not increase, nor will any refund be reduced.""
SECTION 5.(b)  This section is effective for taxes imposed for taxable years beginning on or after January 1, 2019.
SECTION 6.  There is appropriated from the General Fund to the Department of Public Instruction the sum of two hundred million dollars ($200,000,000) in nonrecurring funds for the 2019‑2020 fiscal year to provide free breakfast and lunch for students in the 2019‑2020 school year in accordance with this act and the sum of two hundred million dollars ($200,000,000) in recurring funds for the 2020‑2021 school year to supplement the Fund established pursuant to Section 4 of this act.
SECTION 7.  Except as otherwise provided, this act becomes effective July 1, 2019, and applies beginning with the 2019‑2020 school year.