The economic downturn has encouraged more families to seek free or reduced-price lunch benefits for their school-aged children. But national and state data show a surprising number of enrollees in public school lunch programs don’t really meet the income guidelines. David Bass, associate editor of Carolina Journal, discussed the issue with Donna Martinez for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)
Martinez: Let’s talk first about North Carolina. You looked at a whole lot of data from across the state. Tell us what you found.
Bass: Well, the interesting thing is that the free and reduced lunch program is meant for families that are at a certain percentage of the federal poverty limit. So it’s meant for low-income families. And last summer, when I went back and pulled these verification summaries, it turned out that it looks like there are some families in there – in fact maybe quite a few families – that are not eligible for the benefit, that are nevertheless in there. For North Carolina, I went back and pulled the 115 verifications for all the school districts in the state, and the average of all of those was a reduced benefits rate, or a revoked benefits rate, of 54 percent.
Martinez: So more than half of folks, once people looked at their income forms, more than half had those benefits revoked?
Bass: Correct. And that was for a 3 percent verification pool. It’s important to point out that that 3 percent is not exactly indicative of the entire pool of applicants. It was taken from applicants who are pretty close to the income threshold, so they’re considered error-prone applicants. But the percentage was so high in that 3 percent, I think it’s caused some people to say, well, what does the entire pool of applicants look like?
Martinez: How is this possible, David? I think when folks think of a program like this they would say, okay, this [program] is understandable, it’s part of the social safety net. But there are specific guidelines. So how is it, then, that people who actually aren’t eligible are allowed to be in the program?
Bass: Well, because the application process is pretty wide open to abuse. Compared with an entitlement that’s put forward by the federal government, like the food stamp program, which requires income proof in order to sign up, the free and reduced lunch program does not require that. All parents have to do is fill out the form and self-report their income on the form. So you don’t have to show a pay stub or a W-2 form, like you would have to for food stamps. So, since it’s basically just people saying this is what my income is, without having to really back that up, it opens up the door for some cheating.
Martinez: It’s the honor system.
Bass: Exactly. Yes. And really, the only mechanism that’s in place for verifying it is this 3 percent window that’s mandated by law.
Martinez: That’s very curious. Explain the 3 percent – because it sounds like a very small portion is actually being audited.
Bass: It is a very, very, very, very small portion. And in fact, last year, Charlotte-Mecklenburg – after some of the reports came out about the high number of potential fraud rate and that 3 percent – Charlotte-Mecklenburg wanted to go in and do a complete audit of the system. The USDA came in and said, if you do that, we’re going to pull your funding because it’s illegal.
Martinez: Illegal?
Bass: Illegal. So there you had a case where some school board members were saying, hey, it looks like there are some people who are cheating the system here. We want to go in and find out whether that’s really the case. But the USDA said no, you can’t do that.
Martinez: Now that’s another interesting point. The federal government is actually telling them no – you cannot look further for potential abuse of the program?
Bass: Well, I guess they could look further. The question is, they would forfeit that money if they did that. And the USDA was very clear, after several weeks of kind of back and forth with lawyers in Charlotte-Mecklenburg, that if you do this, we’re going to pull your funding. So it’s a question of whether they would really want to risk that. And, ultimately, they voted not to.
Martinez: Once you were looking at all of the data, David, is it prevalent across the state, or did you find pockets of abuse?
Bass: It’s pretty prevalent. I’d say, probably, Cumberland County probably had the highest rate. It was about 89 percent of verifications that either the applicants didn’t respond at all and automatically had their benefits revoked, or responded with income data that didn’t match what they initially put on the application and had their benefits reduced or revoked. Other areas of the state had a zero percent fraud rate, or potential fraud rate. So it did vary. But again, especially in some of the larger districts, when you had a larger pool of applicants to draw from, like Wake and Charlotte-Mecklenburg, it was up in the 60 to 70 percent range.
Martinez: Now that we’re in an economic downturn, there are more and more families – at least published reports say that – that are trying to access the system for their children. And they’re finding that, well, there’s not enough money so we’ve already read and heard calls for more money to be put into the program. So it does present a predicament here – more people wanting to be in the program, but yet we know that there are some people who are receiving benefits who really shouldn’t be.
Bass: Right.
Martinez: So what do we do?
Bass: Well, personally I don’t have any idea that Washington might really look at this program again. Actually, they are going to have to renew the school lunch, national school lunch act, this year. But I think they’re probably going to leave it where it is right now, given the situation in Washington. Now whether they should or not, it’s open to question. One of the problems is that those who support the current law say that, if you did require income verification, it would discourage eligible families from signing up. And there have been, actually, a couple reports on that. One of them was by Mathematica Policy Research. And they found that if you did require proof of income, that it would discourage eligible families from signing up, but then it wouldn’t have any impact on cutting down on fraud. So that was one report. But interestingly, a couple years later, Mathematica released another report that found that about one in five students were in the program and were not eligible to be there. So you kind of have those two conflicting issues there, and the question of – if you did require proof of income, would it really discourage people from signing up or not.
Martinez: I wonder if that’s the case when it comes to the food stamp program or any of the other benefit programs where we do require some sort of verification – very interesting question. North Carolina is not alone in tackling this issue, or at least acknowledging that there is an issue. Tell us about that. What’s happening all around the country?
Bass: Well, interestingly, I went through and pulled some of the verification summaries for some of the largest school districts in the entire country – New York City Public Schools, Los Angeles Public Schools, Chicago – and the largest 10 districts all had huge potential fraud rates as well. And this was from a very large pool of applicants, larger than any in North Carolina. In New York, it was 3,000. And in fact, in New York City Public Schools, the potential fraud rate was 70 percent. So it’s pretty significant in other areas as well. And the interesting thing is, not a lot of other media outlets across the country, or organizations, have really picked up on this or are really reporting on it too much. Most of the emphasis is on the uptick in applicants and the down economy and whatnot. But the question of fraud and whether there needs to be some sort of revision to the law to allow more of an audit really hasn’t come up too much.