Summarizing the first year report of a multi-year study of the Food and Nutrition Service's (Department of Agriculture) Child Nutrition Programs, this report describes the programs and methods of the study. Data were collected through telephone interviews with states and School Food Authorities (SFAs) between 1987 and 1992. Findings from 1987-1988 data include the following: (1) approximately 39.7 percent of all school lunches were served free to low income children; (2) 6.6 percent were served at a reduced rate; (3) 53.7 percent were served at full price; (4) National School Lunch Program participation was higher in SFAs offering the School Breakfast Program, in smaller SFAs, and in high-poverty areas; (5) average SFA cost of producing a lunch was $1.43; (6) Food and labor costs accounted for most of production costs; (7) 90 percent of SFAs received donated commodities such as cheese, flour, oil, chicken, and turkey from the federal Food Donation Program; (8) 43 percent of the SFAs that participated in the School Breakfast program cited student nutritional needs as a major concern; and (9) 28 percent of the SFAs felt breakfast was important to children's intellectual functioning. (Includes eight charts.) (JW)