Agency of Education says Local Foods Incentive is growing; grant requests exceed $500,000 appropriation, prompting proration and audits

The Agency of Education told the House Agriculture, Food Resiliency, & Forestry committee that Vermont’s Local Foods Incentive (LFI) is producing measurable increases in school-local purchasing but that this year’s grant requests exceeded the $500,000 annual appropriation, triggering proration and a sample audit of applicants.

Rosie Krueger, state director of Child Nutrition Programs, introduced Connor Floyd, the agency’s grant programs manager, who walked the committee through the report. Floyd described two grant tracks: a baseline-year grant for first-time school food authorities (SFAs) and subsequent-year grants available to SFAs that meet local-purchasing thresholds. Subsequent-year tiers pay 15¢ per lunch at 15% local purchasing, 20¢ at 20% and 25¢ at 25%; awards are scaled by prior-year meal counts and typically fall in a $15,000–$40,000 range.

"We had 14 school food authorities hit 15% this year," Floyd said. "Six of those hit at least 20%." He added that Wyndham Northeast Supervisory Union reached 31% local purchasing — the second time it has reached that level. Floyd said grant award requests exceeded the $500,000 appropriation for the first time, so awards will be prorated; the report’s table estimates SFAs will receive roughly 90% of full funding if all awards had been funded.

The agency is conducting in-house audits on a sample of applicants to verify reported local purchasing; Floyd told the committee audit results could reduce grant requests if reporting errors or disqualifying issues are found.

Floyd highlighted a roughly 1:3 ratio of state grant dollars to local purchasing ("about $1 of grant funding represents $3 in local purchasing"), and the report shows local purchasing has roughly doubled over the past three years. He credited recent changes in contract language by food-service management companies — which previously limited local purchases — for part of the increase and said about three-quarters of eligible SFAs have engaged with the program. The agency estimates 60 SFAs are eligible and 12 have not applied at all; many of those 12 contract with food-service management companies or are wary of future commitments.

Committee members pressed agency staff on several practical points. On funding and operations, Krueger said the state previously excluded fluid milk from both the local and total-dollar calculations because there were limited Vermont suppliers meeting earlier program standards, though she named Miller Farm (a Southern Vermont dairy) as an option that could qualify. Krueger also summarized federal developments: the new "Whole Milk for Healthy Kids" federal change applies to lunch only and federal meal-pattern rules constrain state flexibility on milk offerings. Krueger gave per-meal funding figures to illustrate tight budgets: about $2.46 to produce a breakfast and about $4.69 (plus about $0.45 of USDA foods) to produce a lunch.

On policy to limit so-called ultra-processed foods, Krueger told members there is no single accepted definition and recommended the committee model statutory language that other states have used — a specific list of additives or ingredients to prohibit — and leverage the existing federal administrative-review process for compliance rather than creating a separate compliance regime. She warned that strict definitions could reduce portable, low-labor products schools use for grab-and-go breakfasts, and that any restriction should be balanced against funding and staffing realities.

The committee paused the hearing with plans to return later and to consider the LFI in the budget letter; agency staff said they would continue to provide data and technical assistance as members craft bill text and budget recommendations.