The only thing the school did wrong was not informing parents well in advance (apparently) and setting such a low limit. Our school district in CA does the same thing, except I believe the balances are looked at BEFORE food is dished out. If a child's account has too high of a negative balance, that child is given milk and fruit.
Yes, it sounds harsh, but schools are operating on shoe-string budgets. Some parents would run their negative balances into hundreds of dollars if allowed. In fact, thisd isn't the first time this type of report has surfaced. Several months ago I read a report of a school being out $60K the previous year due to unpaid lunch accounts.
The only adjustment the school needs to make is to set a limit on the negative account balances. For example, -$5 means the child has been given a couple of free meals. At that point the parent has likely been notified 2x and had a chance to replenish the account. Although my child rarely purchases school lunches nowadays, we were notified EVERY time we had a negative balance (happens to even the best of us when we forget or a child purchases a lunch without our knowledge). Then it's a simple matter of going on-line and putting more $ in the account. But the school certainly shouldn't throw away a meal if the child's account is under by less than a dollar.
Seriously, though, when I went to school I either took a lunch or carried lunch $. If I forgot, or my parents forgot, I went hungry or borrowed from friends. What happened to parents/children taking responsibility?