So containing a vegetable product makes something a vegetable?
It counts as a serving of vegetables (previously the quantity of tomato sauce was considered insufficient to qualify). Kinda hearkens back to the Reagan administration's attempt to get ketchup reclassified as a vegetable, for pretty much the same reasons -- so schools can be cheapo on the food. (And as a kickback to the various food lobbies, like the potato lobby demanding that french fries be a staple, and the tomato lobby w/ the pizza thing).
It's really sad, because I remember my lunches in elementary school were pretty awesome. They actually cooked everything there, and there was a lot of local potatos, green beans, corn, etc. on the menu. Not a whole lot of processed stuff.
When I got to middle school, it was like "what the hell is this crap?" The only way you could eat a slice of the pizza was to grab a handful of napkins, lay them on the slice and try to squeeze as much of the oil out of it as you could first. Which would then leave you with a slab of dried out translucent material that vaguely resembled cheese. But at least it didn't give you the runs.
What really pisses me off is the political bullshittery that gets used to pass garbage like this. The Republicans railed about "nanny state liberals telling YOUR child what to eat, and taking away American staples like pizza and French fries". Yes, and they're also trying to cut down on the new American staple of children that look like Weeble Wobbles.