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--- version:First - Community Eligibility Provision Expansion Program - Establishment
+++ version:(document, no version)
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-EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
-        [Brackets] indicate matter deleted from existing law.
-           *sb0586*
+  SB 586
+Department of Legislative Services
+Maryland General Assembly
+2026 Session
 
-SENATE BILL 586
-F1   6lr1403
-SB 769/25 – B&T & EEE   CF HB 704
-By: Senator Guzzone
-Introduced and read first time: February 5, 2026
-Assigned to: Budget and Taxation and Education, Energy, and the Environment
+FISCAL AND POLICY NOTE
+First Reader
+Senate Bill 586 (Senator Guzzone)
+Budget and Taxation and Education, Energy,
+and the Environment
 
-A BILL ENTITLED
+Community Eligibility Provision Expansion Program - Establishment
 
-AN ACT concerning 1
+This bill establishes a Community Eligibility Provision (CEP) Expansion Program
+administered by the Maryland State Department of Education (MSDE). The program
+provides funding to eligible schools that participate in the federal CEP. The State must pay
+the difference between the applicable federal paid reimbursement rate and the federal free
+reimbursement rate for school meal programs. Funding complements, but does not replace,
+federal CEP funding. Beginning with fiscal 2028, the Governor must include $10.0 million
+in the annual budget bill for the program. MSDE must develop a process for local boards
+of education to participate in the program based on funding availability. The bill takes
+effect July 1, 2026.
 
-Community Eligibility Provision Expansion Program – Establishment 2
+Fiscal Summary
 
-FOR the purpose of establishing the Community Eligibility Provision Expansion Program 3
-in the State Department of Education to provide funding to eligible schools that 4
-participate in the federal community eligibility provision of the child nutrition 5
-programs; and generally relating to the Community Eligibility Provision Expansion 6
-Program. 7
+State Effect:  General fund expenditures increase by $10.0  million annually beginning in
+FY 2028. Revenues are not affected. This bill establishes a mandated appropriation
+beginning in FY 2028.
 
-BY adding to 8
- Article – Education 9
-Section 7–606 10
- Annotated Code of Maryland 11
- (2025 Replacement Volume and 2025 Supplement) 12
+($ in millions) FY 2027 FY 2028 FY 2029 FY 2030 FY 2031
+Revenues $0 $0 $0 $0 $0
+GF Expenditure 0 10.0 10.0 10.0 10.0
+Net Effect $0.0 ($10.0) ($10.0) ($10.0) ($10.0)
+Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
 
- SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 13
-That the Laws of Maryland read as follows: 14
+Local Effect:  Local school systems receive the majority of $10.0 million annually,
+beginning in FY 2028, after accounting for MSDE administrative costs under the program.
+To the extent CEP participation increases, federal funding for school meals may increase
+substantially. Local school system expenditures increase correspondingly to any revenues.
 
-Article – Education 15
+Small Business Effect:  None.
 
-7–606. 16
+SB 586/ Page 2
+Analysis
 
- (A) IN THIS SECTION , “PROGRAM” MEANS THE COMMUNITY ELIGIBILITY 17
-PROVISION EXPANSION PROGRAM. 18
+Bill Summary:  MSDE must (1) ensure that program funding is distributed based on the
+concentration of poverty in public schools within a local school board jurisdiction;
+(2) consider geographic diversity in prioritizing funding; and (3) distribute funds to eligible
+local boards. It is the intent of the General Assembly that the State, each local board of
+education, and participating nonpublic schools maximize the use of all available federal
+and State funds in carrying out requirements of the program. Beginning July 1, 2027,
+MSDE must annually report to the General Assembly on the status and outcomes of the
+program and the amount of school meal debt incurred by students, disaggregated by the
+individual school, and how the local school system resolved the debt. However, t he bill
+does not specify intended program outcomes.
 
- (B) THERE IS A COMMUNITY ELIGIBILITY PROVISION EXPANSION 19
-PROGRAM IN THE DEPARTMENT. 20
+If any schools within a local school system are eligible to participate in the federal CEP
+due to an identified student percentage (ISP) of 25% or greater, but elect not to participate,
+the local school  system must include specified information in the annual report. The
+annual report must be published to MSDE’s website in a specified searchable and
+downloadable format.
 
- (C) THE DEPARTMENT SHALL ADMINISTER THE PROGRAM. 21
+Current Law:
 
- (D) (1) THE PURPOSE OF THE PROGRAM IS TO PROVIDE  FUNDING IN 22
-2 SENATE BILL 586
+Federal School Nutrition Programs and Reimbursement Rates
 
-ACCORDANCE WITH PARA GRAPH (2) OF THIS SUBSECTION T O ELIGIBLE SCHOOLS 1
-THAT PARTICIPATE IN THE FEDERAL COMMUNITY ELIGIBILITY PROVISION OF THE 2
-CHILD NUTRITION PROGRAMS. 3
+The School Breakfast Program and the National School Lunch Program are federally
+assisted meal programs for schools. The School Breakfast Program subsidizes public and
+participating nonprofit private schools of high school grade or lower and participating
+residential child care institutions for breakfast meals served to children. Similarly, the
+National School Lunch Program subsidizes public and participating nonprofit private
+schools of high school grade or lower and participating residential child care instit utions
+for lunches served to children. In both programs, federal funds pass through MSDE to
+participating schools and institutions.  Information on federal reimbursement rates can be
+found here.
 
-  (2) THE STATE SHALL PAY THE D IFFERENCE BETWEEN TH E 4
-APPLICABLE FEDERAL P AID REIMBURSEMENT RA TE AND THE FEDERAL F REE 5
-REIMBURSEMENT RATE , AS SET ANNUALLY BY T HE U.S. SECRETARY OF 6
-AGRICULTURE UNDER 42 U.S.C. § 1759A. 7
+Community Eligibility Program
 
-  (3) THE FUNDING PROVIDED UNDER THE PROGRAM IS INTENDED TO 8
-COMPLEMENT AND NOT R EPLACE FEDERAL FUNDS  RECEIVED UNDER THE 9
-COMMUNITY ELIGIBILITY PROVISION OF THE CHILD NUTRITION PROGRAMS. 10
+The Healthy, Hunger-Free Kids Act of 2010, in part, amended the federal National School
+Lunch Act to provide an alternative to household applications for free or reduced priced
+meals (FRPM) in h igh-poverty local school system  and schools. This alternative is CEP.
+To be eligible, local school systems and schools must meet a minimum level of students
+directly certified for free meals – the ISP – which must be at least 25% of enrollment in the
+year prior to implementing the option, agree to serve free lunches and breakfasts to all
+students, and agree to cover with nonfederal funds any costs of providing free meals to all
 
- (E) THE DEPARTMENT SHALL: 11
+SB 586/ Page 3
+students above amounts provided in federal assistance. Identified students inclu de those
+who qualify for free meals without an application, such as children from households
+receiving Supplemental Nutrition Assistance Program or Temporary Assistance for Needy
+Families benefits, foster children, homeless students, migrant students, and others
+categorically eligible.
 
-  (1) DEVELOP A PROCESS FOR  COUNTY BOARDS TO PARTICIPAT E IN 12
-THE PROGRAM BASED ON FUNDING AVAILABILITY; 13
+Reimbursement is based on claiming percentages derived from the percentage of students
+directly certified as increased by use of a multiplier determined by the U.S. Department of
+Agriculture (USDA), which has been set at 1.6 since the inception of CEP. A local school
+system may choose to participate in CEP for all schools in a local school system or only
+some schools, depending on the eligibility districtwide and of the individual schools and
+financial considerations based on the anticipated level of federal reimbursement and other
+nonfederal support that may be available.  For example, a school with a 25% student
+eligibility ISP, yields federal support for the equivalent of 40% (25% multiplied by 1.6),
+leaving an additional 60 % to be covered outside of the federal CEP program. More
+information on CEP can be found on the USDA website.
 
-  (2) ENSURE THAT PROGRAM FUNDING IS DI STRIBUTED BASED ON 14
-THE CONCENTRATION OF POVERTY IN PUBLIC SCHOOLS WITHIN THE JURISDICTION 15
-OF EACH COUNTY BOARD; 16
+Maryland Meals for Achievement
 
-  (3) CONSIDER GEOGRAPHIC D IVERSITY IN DETERMINING FUNDI NG 17
-PRIORITIZATION; AND 18
+Maryland Meals for Achievement (MMFA) is a joint effort of MSDE and local boards of
+education or sponsoring agencies for eligible nonpublic schools. MMFA provides funding
+for schools that make an in -class (with exceptions for “Grab and Go” meals) breakfast
+available to all students enrolled in schools in which 40% or m ore of the students qualify
+for FRPMs. A school that , for one year , falls below the 40% FRPM student population
+eligibility threshold is eligible for MMFA funding in that year. However, the school is no
+longer eligible for MMFA funding if its percentage of  students falls below 40% in a
+second consecutive year.  Under Chapter 628 of 2023, the Governor must include in the
+annual budget bill $12.05 million  for MMFA. Accordingly, the fiscal 2027 budget as
+introduced includes $12.05 million in general funds for MMFA.
 
-  (4) DISTRIBUTE FUNDS TO ELIGIBLE COUNTY BOARDS. 19
+Maryland Cares for Kids Act
 
- (F) FOR FISCAL YEAR 2028 AND EACH FISCAL YEAR  THEREAFTER, THE 20
-GOVERNOR SHALL INCLUD E AN APPROPRIATION O F $10,000,000 IN THE ANNUAL 21
-BUDGET BILL FOR THE PROGRAM. 22
+Under the Maryland Cares for Kids Act (Chapter 560 of 2018), the State is responsible for
+the student share of the costs of (1) reduced -price breakfasts provided under the federal
+School Breakfast Program by fiscal 2022 and (2) reduced-price lunches provided under the
+National School Lunch Program by fiscal 2023. A local board of education or participating
+nonpublic school is prohibited from charging a student who is eligible for a reduced ‑price
+breakfast or a reduced -price lunch, for any portion of the cost of a meal. The
+fiscal 2027 budget as introduced includes $1.9 million in general funds  for this
+reduced‑price meals program.
 
- (G) IT IS THE INTENT OF THE GENERAL ASSEMBLY THAT THE STATE, EACH 23
-COUNTY BOARD, AND PARTICIPATING NONPUBLIC SCHOOLS MAXIMIZE THE USE OF 24
-ALL AVAILABLE FEDERAL AND STATE FUNDS IN CARRYING OUT THE REQUIREMENTS 25
-OF THE PROGRAM. 26
+SB 586/ Page 4
+State Expenditures:  Despite the bill’s effective date, this analysis assumes that
+expenditures commence in fiscal 2028 (July 1, 2027). General fund expenditures increase
+by $10.0 million annually beginning in fiscal 2028, given the $10.0 million annual funding
+mandate under the bill and assuming MSDE administrative costs, as described below.
 
- (H) (1) ON OR BEFORE JULY 1, 2027, AND EACH JULY 1 THEREAFTER, 27
-THE DEPARTMENT SHALL REPORT TO THE GENERAL ASSEMBLY, IN ACCORDANCE 28
-WITH § 2–1257 OF THE STATE GOVERNMENT ARTICLE, ON THE PROGRAM. 29
+This estimate reflects the cost of hiring a  half‑time (50%) staff specialist within MSDE’s
+Office of School and Community Nutrition Programs to administer the reporting
+requirement and coordination activities resulting from the appropriation, as well as $10,000
+in annual contractual costs to cover claiming and reporting system enhancements. It
+includes a half-time salary, fringe benefits, one-time start-up costs, and ongoing operating
+expenses.
 
-  (2) THE REPORT REQUIRED U NDER THIS SUBSECTION  SHALL 30
-INCLUDE THE FOLLOWING INFORMATION FROM EACH LOCAL SCHOOL SYSTEM: 31
+Position 0.5
+Grants to Public Schools $9,924,690
+Salary (50%) and Fringe Benefits 56,849
+Contractual Expenses 10,000
+Other Expenses            8,461
+Total FY 2028 State Expenditures $10,000,000
 
- SENATE BILL 586 3
+Future year expenditures reflect annual increases and employee turnover as well as
+annual increases in ongoing operating expenses.
 
-   (I) THE STATUS AND OUTCOMES OF THE PROGRAM; AND 1
+Local Fiscal Effect:  Beginning in fiscal 2028, local school systems receive the majority
+of $10.0 million annually provided for the program, after accounting for MSDE costs
+described above. Local school system expenditures increase accordingly.
 
-   (II) THE AMOUNT OF SCHOOL MEAL DEBT INCURRED B Y 2
-STUDENTS, DISAGGREGATED BY THE  INDIVIDUAL SCHOOL, AND HOW THE LOCAL 3
-SCHOOL SYSTEM RESOLVED THE DEBT.   4
+The bill appears to establish a funding formula mandate with respect to federal government
+reimbursement rates, yet also provides MSDE with considerable discretion as to ho w
+funding is prioritized and distributed. The bill also requires MSDE to develop a process for
+local boards to participate in the program, based on funding availability. Because it is not
+certain what specifically this process will entail, an estimate of p rogram funding by local
+school system cannot be determined at this time. However, it is assumed that schools and
+school systems that participate in CEP, with a CEP claiming percentage below 100%, will
+benefit under the bill because federal funding does not  cover the entire federal free meal
+reimbursement for these schools and school systems.
 
-  (3) IF ANY SCHOOLS WITHIN A LOCAL SCHOOL SYSTEM ARE ELIGIBLE 5
-TO PARTICIPATE IN THE PROGRAM DUE TO AN IDENTIFIED STUDENT PERCENTAGE 6
-OF 25% OR GREATER, BUT ELECT NOT TO PARTICIPATE, THE LOCAL SCHOOL SYSTEM 7
-SHALL INCLUDE THE FOLLOWING INFORMATION IN THE REPORT REQUIRED UNDER 8
-THIS SUBSECTION:   9
+Information on the number of CEP schools by county can be found on the MSDE website.
+Eight local school systems in Maryland participate in federal CEP systemwide, including
+Baltimore City, and Allegany, Baltimore, Caroline, Dorchester, Kent, Somerset, and
+Wicomico counties. School year 2025-2026 data indicates that 709 schools (about 50% of
+all public schools), including the SEED school, are CEP sites.
 
-   (I) THE REASONS THE SCHOOL ELECTED NOT TO PARTICIPATE 10
-IN THE PROGRAM; 11
+SB 586/ Page 5
+Maximizing the use of all available federal funds likely results in increased CEP
+participation for school systems that do not already participate districtwide, and t hus
+substantially increased federal funds.
 
-   (II) AN ESTIMATE OF THE NE T COST OR SAVINGS TO  THE 12
-SCHOOL IF THE SCHOOL HAD ELECTED TO PARTICIPATE IN THE PROGRAM;  13
+Additional Comments:  This analysis assumes that required reporting  by local school
+systems regarding decisions not to participate in the program relates to federal CEP
+participation, and not to the CEP Expansion Program established by the bill.
 
-   (III) THE PROJECTED COST OF  OPERATING THE PROGRAM IN 14
-THE SCHOOL; AND 15
+Additional Information
 
-   (IV) THE ANTICIPATED AMOUN T OF FEDERAL 16
-REIMBURSEMENTS ASSOCIATED WITH PARTICIPATION IN THE PROGRAM. 17
+Recent Prior Introductions:  Similar legislation has been introduced within the last
+three years. See HB 1254 and SB 769 of 2025.
 
-  (4) THE DEPARTMENT SHALL PUBL ISH THE REPORT REQUI RED 18
-UNDER THIS SUBSECTION ON ITS WEBSITE IN A SEARCHABLE AND DOWNLOADABLE 19
-FORMAT, DISAGGREGATED BY LOCAL SCHOOL SYSTEM AND INDIVIDUAL SCHOOL. 20
+Designated Cross File:  HB 704 (Delegate Palakovich Car r, et al.) - Appropriations and
+Ways and Means.
 
- SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 21
-1, 2026. 22
+Information Source(s):  Anne Arundel County Public Schools; Frederick County
+Public Schools; Prince George’s County Public Schools; Wicomico County
+Public Schools; Department of Budget and Management; Maryland State Department of
+Education; Department of Legislative Services
+
+Fiscal Note History:  First Reader - February 18, 2026
+ jg/clb
+
+Analysis by:   Scott P. Gates  Direct Inquiries to:
+(410) 946-5510
+(301) 970-5510