A sour economy is prompting more families to enroll in subsidized school nutrition programs, but new data from Mathematica Policy Research finds that one-fifth of students get benefits that don’t match their economic circumstances.

Fifteen percent of students receive too many benefits and 7.5 percent too few, according to the Mathematica issue brief, published in February. Among students who were either under- or over-certified, the most common error was parents or guardians misreporting income on applications.

The lunch and breakfast entitlements, administered by the U.S. Department of Agriculture at an annual cost of $10 billion, are meant for families at or below 185 percent of the federal poverty level.

For example, a family of four earning up to 130 percent of the annual poverty level ($26,845) would be eligible for free meals. A family earning between 130 percent ($26,845) and 185 percent ($38,203) of the poverty level would qualify for reduced-price meals. A family with an income over 185 percent of the poverty level would have to pay full price.

Certification errors in the program could be costing taxpayers close to $1 billion annually, the study found.
“In the 2005-2006 school year, erroneous [school lunch] reimbursements resulting from this type of error totaled $759 million, or 9.4 percent of the roughly $8.1 billion in total cash reimbursements and commodities paid to school districts for all [school] lunches served,” the report said. “Erroneous [school breakfast] reimbursements totaled $177 million, or 9.2 percent of the $1.9 billion in total cash reimbursements paid for all breakfasts served.”

Some errors were due to lapses on the part of school districts. “The most common administrative error resulted from school districts approving incomplete applications, which typically lacked a signature or social security number,” the report said.

Because adults are required only to self-report household income on applications, critics question whether ineligible families might be gaming the system, with school officials allowing the fraud to go unchecked.

“They know at the district and school level that it generates funding for a lot of other programs,” said Lisa Snell, director of education and child welfare at the Reason Foundation, a libertarian think tank. “It may not be intentional to be fraudulent in the program, but it is an unintended consequence of the program.”

A Carolina Journal investigation last year revealed that a majority of error-prone applicants enrolled in the free and reduced-lunch program in North Carolina could not or would not prove eligibility to participate. The summaries for the 2007-08 school year show that 76 out of 115 school districts had potential fraud rates at 50 percent or higher, and 19 districts had rates at 75 percent or higher.

Summaries from the nation’s five largest school districts reveal a similar trend of either non-response or response that reduced or repealed benefits: New York City Public Schools (70 percent), Los Angeles Unified School District (93 percent), Chicago Public Schools (28 percent), Miami-Dade County Public Schools (83 percent), and the Clark County School District (83 percent).

Supporters say the verification process is sufficient and requiring proof of income would discourage eligible families from signing up.

“You can find any way to fraudulently provide information in any federal program, I’m sure, if you have a reason,” said Marilyn Moody, Wake County’s senior director of child nutrition, at a school board hearing in January. “What we want to know is why would you deprive a child who is hungry of $2.57 a day times 180 school days?”

In its report, Mathematica stopped short of recommending an overhaul of the entitlements, instead suggesting that policymakers find a way to get more accurate income data from households.

“Although application forms and instructions ask applicants to report all income sources, this message needs to be communicated more emphatically,” the report said.

The authors warned that changes in the program could have a negative impact on students. Another Mathematica report, published in 2005, found that requiring upfront income documentation would have a chilling effect on eligible families. The same report concluded that income documentation did not reduce the number of families participating in the program illegally.

Critics still worry that the current system is flawed. “If you look at any district in America, you would find similar abuse,” Snell said. “There is incentive to add funding, because there are so many other funding sources tied to free and reduced-lunch.”

David N. Bass is an associate editor of Carolina Journal.