Recent increases in the cost of food and labor, while affecting individual families across the Nation, are also affecting food programs supported by the Federal Government. In response to concerns regarding the impact of these increases on the School Lunch Programs, particularly, the Chairman and Ranking Minority Member of this Select Committee instructed the staff to survey the situation. The committee staff sent a questionnaire to State Food Service Directors requesting current information on this year's school food costs, as compared with previous costs, and the effect of these increases on the quality of and participation in the program. There are indications that more recent cost increases will result in somewhat higher estimates than those contained in the responses received by the committee. This working paper contains the individual responses by the State directors; a summary of them; letters from concerned citizens; as well as sample newspaper articles on this problem. Also there is a brief projection, based on studies collected by the Department of Agriculture, of the possible impact with increased lunch prices on student participation. Forty States reported. Findings include the following: the average cost of producing a lunch (in 37 States) was 61.7 cents, with a range of 50 to 85 cents. The cost of producing a breakfast (in 33 States) averaged 30.6 cents, with a range from 10 to 45 cents. (Author/JM)