Not so much free lunch: USDA revises guidelines

Nation's Restaurant News, August 26, 2002 by Paul King

WASHINGTON -- Responding to an internal study last year that suggested that tens of thousands of ineligible schoolchildren are receiving free or reduced-price meals in school, the U.S. Department of Agriculture this month proposed stricter controls on the income-verification process.

The USDA published the proposed rules in the Federal Register Aug. 9, and comments on the proposal should be received by the USDA's Food and Nutrition Services division by Oct. 7.

The new rules would require school foodservice directors to file annually with their state's education department reports showing how they documented the eligibility of students. The state agencies then would have to compile all of the reports and file a report with the USDA.

A spokesman for the American School Food Service Association declined to comment on the proposal, explaining that the association's executive board was in the process of deciding what its stance would be.

But for a long time school officials have objected to the amount of paperwork already required to verify income eligibility in order to receive reimbursement from the USDA for the free and reduced-price meals they serve.

At present school foodservice officials are required to take a randomly selected sample of applications and verify the eligibility of the students on those applications. The USDA requires the sample to be at least 3 percent of the total number of applications, but school officials may choose to verify all of the applications.

The foodservice directors also must keep on file a description of the verification process they used. Under the proposed rule the USDA would require the school districts to compile those data into a report for the state education department.

However, the USDA believes that the extra step is necessary to save the government millions of dollars in overpayments to the National School Lunch Program and School Breakfast Program.

"School food authorities generally have been determining free and reduced-price eligibility in accordance with the regulatory requirements and completing verification," the Food and Nutrition Services division stated in its explanation of the proposal. "However, in spite of their efforts, data indicate that the number of children certified as eligible to receive free meals exceeds the number of children who should be eligible to receive those meals, given other poverty indicators."

The USDA based that conclusion on comparisons of NSLP data with statistics from the U.S. Census Bureau. The study showed that in 1999 "the percentage of children determined eligible for free school eals was estimated to be 127 percent of the [Census Bureau] estimate of school-aged children at or below ... the income level required for free participation."

Following up on the comparison, the USDA's Office of Inspector General conducted its own audit of school districts in Illinois. The OIG stated that nearly 20 percent of the applications examined failed a verification test.

Earlier this year the Louisville Courier-Journal conducted its own study and discovered that as many as one in four of Kentucky's 312,000 public-school students who receive free meals is not legally eligible. The newspaper's findings were reported in a two-part series entitled "School lunches: Who is being served?"

USDA officials have argued that a better means of income verification is essential to make sure that federal money is being spent appropriately. Certification is not used solely to determine school lunch reimbursements. The amount of federal and state education funds allocated to schools is tied to income guidelines.

According to the USDA, school lunch reimbursements totaled about $5 billion during the most recent school year. However, more than $15 billion in education-related benefits was allocated based on the income verification data.

The USDA also is trying to find better ways of gathering the information needed to determine who is eligible for free meals. In 2000 the OIG selected 21 school districts and one entire state to participate in a test of alternate application, approval and verification procedures to determine student eligibility. The test began with the 2000-2001 school year and will run through the 2003-2004 year.

"Preliminary data have shown the alternative methods have, to varying degrees, deterred and detected misreporting of eligibility information," the USDA report stated.