A sweeping expansion of the federal government’s Child Nutrition Act overcame its final hurdle Monday after President Barack Obama signed the bill into law. But even though the legislation expands the number of students eligibile to participate in federally subsidized nutrition programs, it fails to address broader questions of fraud.
Congress and the president reauthorized the entitlements for another decade at an additional cost of $4.5 billion, less than half of what Obama initially requested. The bill passed the U.S. Senate unanimously in August and the House by a 264-157 vote-margin in early December.
As the first funding expansion of the National School Lunch Program in over 30 years, liberals hail the bill as a major step forward in fighting child hunger. The reauthorization was an important plank of First Lady Michelle Obama’s campaign to end childhood obesity.
“At a very basic level, this act is about doing what’s right for our children,” Obama
Among other revisions, the bill requires more stringent health guidelines for schools and raises the reimbursement rate for school lunches by 6 cents per meal. It also revamps food safety standards following reports in USA Today showing that school-meal meat often is less safe than offerings at many fast-food restaurants.
No fraud check
Although much of critics’ firepower has been leveled at the bill’s expansion of federal power, another objection is that it falls short in addressing potential fraud. As documented by Carolina Journal, targeted reviews of applicants enrolled in the $10-billion-per-year free and reduced-price lunch program, the largest component of the Child Nutrition Act, suggest that fraud exists.
The nutrition entitlements are meant for families at or below 185 percent of the federal poverty level — roughly an annual income of $40,000 for a family of four. Because parents or guardians are required only to self-report their income on applications, and no proof of income is necessary, there is room for accidental mistakes or purposeful fraud.
In addition, the U.S. Department of Agriculture has discouraged school districts from auditing applicants to ensure accuracy. In 2008, the USDA threatened to yank a $34 million school-lunch subsidy from Charlotte-Mecklenburg Schools if it performed a comprehensive audit of enrolled families.
As a smaller remedy to fraud, federal law requires school districts each year to verify the incomes of 3 percent of participants (or 3,000, whichever is less) considered “error prone,” meaning households whose reported earnings are within $100 monthly, or $1,200 yearly, of the income eligibility limitation.
If applicants fail to respond, or respond with evidence that shows too high an income, officials reduce or terminate their benefits.
As CJ reported previously, 54 percent of surveyed applicants in North Carolina for the 2007-08 school year could not or would not provide income proof to justify their meal benefits. The potential fraud rate remained largely unchanged for the 2008-09 school year at 56 percent.
‘Low-hanging fruit’
The child-nutrition reauthorization does enact one fraud-check procedure: allowing school districts to conduct accuracy reviews for administrative errors that result from processing applications. But the bill doesn’t expand the ability of school officials to root out cheating among applicants themselves.
Michael Ponza, a senior fellow at Mathematica Policy Research, said that administrative mistakes result in around $190 million in erroneous payments annually. Curbing those errors is taking advantage of “low-hanging fruit,” he said, because school officials simply shore up administrative procedures.
On the other hand, policy changes designed to reduce household reporting errors “have been shown to reduce access to benefits by eligible households,” Ponza said, meaning that fraud-checks have a chilling effect on eligible families.
Even so, the cost of erroneous benefits associated with household’s misreporting their income is much higher than the costs of administrative errors — around $640 million annually for the school lunch and breakfast entitlements combined, according to Mathematica.
Some elected officials have called for a more comprehensive remedy to weeding out fraud — extending to double-checking parents’ income before OK’ing an application.
“I’m not at all saying poor people shouldn’t get what they deserve,” said David Scholl, a school board member from Union County, “but we don’t want to see fraud or the tempering with our ability to check for fraud.”
David N. Bass is an associate editor of Carolina Journal.