Funds paid to any State during any fiscal year pursuant to section 1753 of this title shall be disbursed by the State educational agency, in accordance with such agreements approved by the Secretary, as may be entered into by such State agency and the schools in the State, to those schools in the State which the State educational agency, taking into account need and attendance, determines are eligible to participate in the school lunch program.

The agreements described in subsection (a) shall be permanent agreements that may be amended as necessary.

The State educational agency may suspend or terminate any such agreement in accordance with regulations prescribed by the Secretary.

Use of funds paid to States may include, in addition to the purchase price of agricultural commodities and other foods, the cost of processing, distributing, transporting, storing or handling thereof.

In no event shall such disbursement for food to any school for any fiscal year exceed an amount determined by multiplying the number of lunches served in the school in the school lunch program under this chapter during such year by the maximum per meal reimbursement rate for the State, for the type of lunch served, as prescribed by the Secretary.

In any fiscal year in which the national average payment per lunch determined under section 1753 of this title is increased above the amount prescribed in the previous fiscal year, the maximum per meal reimbursement rate, for the type of lunch served, shall be increased by a like amount.

Lunch assistance disbursements to schools under this section and under section 1759a of this title may be made in advance or by way of reimbursement in accordance with procedures prescribed by the Secretary.

(June 4, 1946, ch. 281, § 8, 60 Stat. 232; Pub. L. 92–433, § 8, Sept. 26, 1972, 86 Stat. 729; Pub. L. 93–150, § 2(b), Nov. 7, 1973, 87 Stat. 560; Pub. L. 95–166, § 3, Nov. 10, 1977, 91 Stat. 1332; Pub. L. 95–627, § 10(d)(1), Nov. 10, 1978, 92 Stat. 3624; Pub. L. 97–35, title VIII, § 819(d), Aug. 13, 1981, 95 Stat. 533; Pub. L. 101–147, title II, § 201, title III, §§ 304, 312(1), Nov. 10, 1989, 103 Stat. 908, 914, 916; Pub. L. 104–193, title VII, § 701(a), Aug. 22, 1996, 110 Stat. 2287.)