The state Department of Education is raising school lunch prices by 25 cents and also wants to boost bus fares for students living outside Honolulu and on the Neighbor Islands.

School meals and bus service are heavily subsidized by taxpayers, and the price increases are required by escalating costs, said Randolph Moore, acting assistant superintendent for business services.

State administrative rules allow for periodic increases in school lunch prices as costs rise, and effective July 1, students will pay $1.25.

But bus fare increases require a formal amendment to administrative rules and must be approved by the Board of Education after public hearings.

Now students in Honolulu, from Red Hill to Hawai'i Kai, pay $1 for a one-way ride on city buses or $20 for a monthly pass. Elsewhere, the DOE provides bus service to about 40,000 students who pay a 35-cent one-way fare, except on Maui, where the fare is 25 cents, thanks to a 10-cent county subsidy.

The DOE wants to increase those fares to match city bus prices in Honolulu, in order to reduce reliance on a "huge subsidy" and to make the system more equitable, so that everyone is paying the same prices, Moore said.

"It has been kept at the 35-cent level for a number of years," he said. "One dollar is still substantially below our costs, and students in Honolulu have been paying a dollar for years."

At first glance, the proposed fare increases seem substantial, but "almost nobody" pays for single one-way rides, Moore said. Most students buy passes with discounted fares. The fare proposal would increase the cost of a quarterly DOE bus pass from $31.50 to $40, and an annual pass from $119.70 to $150.

The DOE also wants to eliminate a policy that allows large families to get free bus fares after a third paying child. Moore said children in such families usually are enrolled in different schools, depending on their ages, and keeping track of them to see who qualifies for free fares is an administrative headache. He said no other DOE programs offer similar fee waivers.

Children from qualified low-income families who ride the bus for free will continue to receive those benefits, he said.

Board of Education member Lei Ahu Isa, who chairs the Support Services Committee, said there are concerns that dropping the "fourth and more child" free-fare policy would burden some families. The committee asked for more information, and Moore said public hearings on the fare proposals have not been scheduled.

The DOE spends $37 million annually on bus services, while fare revenues add up to only $1 million, according to the department. The proposed fare increases would generate an extra $425,000 in revenue.

Eliminating the "fourth and more child" policy is expected to generate an extra $15,000.

The last increase in school lunch prices was in 2001. Although no approval is necessary for the hike in lunch prices, the DOE must get board permission to raise the price of breakfast and reduced-price meals for students from low-income families.

The agency is proposing to increase the regular-priced breakfast from 35 cents to 50 cents and the reduced-price breakfast from 20 cents to 25 cents, and to double the reduced-price lunch from 20 cents to 40 cents, the maximum price allowed by the U.S. Department of Agriculture.

Hawai'i public schools serve an average of 107,000 lunches and 34,000 breakfasts daily. Roughly 20,500 students qualify for reduced-priced meals, and 51,500 qualify for free meals. Total DOE enrollment is about 173,000, not including charter schools.

DOE school food services director Glenna Owens said the actual cost of a producing a school lunch is $3.70.

The program's direct expenses total $78.6 million, but only $19.1 million is collected from meal sales, according to DOE figures. The USDA provides $32.5 million in reimbursements, and the state kicks in $16.1 million. An additional $10.9 million comes from payments related to federal and military dependents.

The DOE estimates higher meal prices would increase revenue by $2.8 million.

A survey of school districts in Western states showed that most charge the actual price of a lunch without any subsidies, Owens said. Those prices range from $1.40 to $3.75.

As a separate option, the School Food Services Branch is recommending that the BOE approve a rule change to implement two-tiered pricing that would charge middle and high school students 25 cents more than elementary pupils for their larger portions — or $1.50. Owens said Hawai'i is one of the few school systems surveyed that does not have tiered pricing.

"It makes sense. I'm a parent of a high-schooler, and I know how much he eats," she said.

Another proposal would see students pay the full adult price for a second meal. Teachers and other school staff now pay $3 for lunch, but that is increasing to $4.

Students have been paying $1 per lunch regardless of how many meals they buy, but Owens said the DOE receives a federal reimbursement only for the first meal. In some cases, students are buying four or five meals for friends who don't have money or forgot their lunch payment cards.

Ahu Isa said some BOE members balked at a higher price for additional meals for hungry students and athletes with large appetites.

There was no opposition to the meal price increases, but Ahu Isa said there was a lot of discussion about improving school lunches and providing more nutritious foods.

"We think it's about time they raised the quality of lunches. We want healthier stuff, not so much carbs and gravy," she said. "We also want them to look at the garbage can. What they are serving is not being eaten.

Reach Christie Wilson at cwilson@honoluluadvertiser.com.