RALEIGH — Many families in North Carolina lie about their income when applying for the free and reduced-lunch program in public schools, and a lack of oversight by government officials allows the fraud to go unchecked, an investigation by Carolina Journal shows.
The free and reduced-lunch program, one of the federal government’s most expensive food entitlements, is meant to help low-income students succeed in the public school classroom by ensuring they have nutritious meals each day.
The $8 billion per-year school lunch program is designed for children from families having incomes at or below 185 percent of the poverty level, or for children who automatically qualify based on residential status or participation in other government aid programs.
A family of four earning $26,845 or less per year, for example, would be eligible for free meals. The same family would qualify for reduced-price meals at an annual income of $38,203 or less.
Some ineligible households, however, still receive meal benefits, according to verification summaries from four school districts obtained by CJ.
The documents show that two out of three households verified during the 2007-2008 school year had their school lunch benefits reduced or revoked because they reported incorrect income or refused to substantiate their income claims.
The results are similar for the 2006-07 school year, when 61 percent of applicants failed to respond to the verification request or provided income data that triggered reduction or revocation of meal benefits.
School districts take the verifications from about 3 percent of all approved applications. Officials first select “error prone” applicants, meaning households that have annual earnings within $1,200 of the income eligibility limitation, and then proceed to the entire pool of applicants. To verify each household, officials request documentation to justify the income level adults reported initially on the application.
CJ reviewed verification summaries from four school districts: Buncombe County Schools, Charlotte-Mecklenburg Schools, New Hanover County Schools, and Wake County Schools.
Thirty-two percent of applicants in the four districts had their benefits reduced or revoked after giving income evidence that differed from the amount reported on the applications, and 37 percent did not respond to the income verification request. That means nearly seven in 10 applicants could not or would not justify their income to school officials.
Conversely, 28 percent provided proof that backed up their original report of income. Another 3 percent offered evidence that increased their benefits.
Charlotte-Mecklenburg Schools had the largest number of households, 479 out of 704 verified, which either did not respond or sent income evidence that reduced or repealed benefits. New Hanover County Schools had the largest percentage of applicants, 89 percent, whose benefits were reduced or eliminated because of non-response or differing income data.
Lynn Hoggard, section chief for Child Nutrition Services at the State Department of Public Instruction, attributed the income discrepancies to mistakes by applicants, such as misestimating weekly or monthly income.
“Where you have to be very careful is when you’re looking at a very focused sample, whose income falls very close to the income eligibility guidelines,” she said. “There are many who would say we are looking in an inequitable manner.”
No proof? No problem
Federal guidelines require adults only to self-report household income on school lunch applications. No proof of income, such as a pay stub or W-2 form, is necessary to get the benefits. That’s in contrast to other federal entitlements, including the Food Stamp Program, which require applicants to document their income status to participate.
School officials said they have scant leeway to verify income after participants join the free and reduced-lunch program. Aside from the 3 percent verification requirement, school officials can pursue verification for cause if there is evidence of fraud on an application. The districts investigated by CJ took advantage of this option only a handful of times out of tens of thousands of applications.
According to child nutrition officials in each district, Buncombe County Schools and Charlotte-Mecklenburg Schools conducted no verifications for cause during the last two school years. Wake County Schools verified two applicants for cause this school year and less than 10 last year, while New Hanover County Schools verified no applicants for cause this year and an unspecified number last year.
One possible deterrent to cheating on free and reduced-lunch applications is a certification statement that parents are required to sign promising that their reported income level is accurate. The statement warns that adults “may be prosecuted” if they “purposefully give false information.”
But according to Food and Nutrition Service at the U.S. Department of Agriculture, the federal agency that oversees the free and reduced-lunch program, no parents have been prosecuted in North Carolina for falsifying information when applying.
If school officials spot possible fraud on applications, the district is responsible for reporting it to the state attorney general’s office for prosecution, according to the USDA.
School officials, however, are cautious about verifying income or pursuing potential fraud. Marilyn Bottoms Moody, senior director of Child Nutrition Services for Wake County Public Schools, said she couldn’t ask for proof of income beyond what the federal guidelines allow.
“We are mandated to do the 3 percent verification, but I can’t act beyond that,” she said. “In the past, there were a couple agencies that tried to confirm income, and they were shut down.”
Hoggard also said that federal guidelines govern the verification process. “The federal language determines the percentage that we can verify,” she said. “The instructions to our state agency have always been to pull the specific percentage. We’re instructed that over-verification is not allowable.”
A representative of the USDA disagreed, saying school officials would not be challenged for increasing the percentage of applications verified.
In addition to confusion over which governing body is responsible for prosecuting fraud, it’s unclear which penalties parents face if they are prosecuted. The application for free and reduced-lunch does not specify punishment levels or types.
In contrast, the application for food stamps in North Carolina is detailed in its description of consequences for giving fraudulent information: up to $250,000 in fines and 20 years in prison.
‘The entire process is damaged’
The free and reduced-lunch program is particularly controversial in Wake County, where the school board uses school lunch eligibility as one basis for student assignments. Supporters say that mixing students from different socioeconomic backgrounds will boost academic performance, but opponents say there is no evidence the strategy works.
According to Wake County’s free and reduced-lunch verification summary for the 2007-08 school year, 64 percent of applicants — 264 of 412 households — had their benefits reduced or revoked for failing or refusing to provide proof of income that matched the amount on the application.
The rate is even higher for the 2006-07 school year. Out of 420 applicants, 117 did not respond, and 163 responded with income data that reduced or revoked their benefits, meaning 67 percent of households failed or refused to verify their income with the school district.
“This really calls into question the school board’s assignment policies,” said Tony Gurley, a Wake County commissioner, in response to the verification data. Gurley and other county commissioners have tussled with the school board over a host of issues, including school construction funding.
“If free and reduced-lunch is not a valid indicator of socioeconomic status, then the entire process is damaged,” he said.
Ron Margiotta, a school board member representing the southwestern part of Wake County, also questioned the reliability of using free and reduced-lunch data as an indicator of poverty.
“We are busing children all over the county based on their socioeconomic status, yet it appears our system for identifying these students is flawed,” he said. “We should immediately review these numbers and our present process.”
School board member Patti Head, a supporter of the socioeconomic diversity policy, said she thought that Wake County was abiding by federal regulations on free and reduced-lunch.
“I’m not trying to pass the buck,” she said. “These numbers are interesting, but I would have to refer back to Child Nutrition Services or DPI and ask those sorts of questions of them.”
Asked whether free and reduced-lunch is an accurate indicator of family income, Head said, “I do believe free and reduced-lunch is a way of looking at a person’s socioeconomic status, and that’s why we’ve chosen it as one of the factors in our policies and procedures.”
Hoggard, however, said that school districts should use a socioeconomic factor other than free and reduced-lunch percentages to determine student assignments.
“I have a high level of confidence that students in free and reduced-lunch are eligible to be so,” she said. “When we begin to use that figure for other purposes, it takes a toll on the program. Families with children who need the food become reluctant to divulge their information for fear that it could be used in a manner they did not agree to originally.”
School districts benefit from having students in free and reduced-lunch because the program is associated with additional taxpayer dollars. Schools with a higher percentage of free and reduced-lunch students receive a larger discount on the federal government’s E-Rate program, which is meant to provide telecommunications services for schools and libraries.
David N. Bass is an associate editor of Carolina Journal.