Fraudsters Eating Your Lunch | Citizens Against Government Waste

Fraudsters Eating Your Lunch

The WasteWatcher

In July, the New Jersey Office of the State Comptroller (OSC) released an investigative report entitled, “Fraudulent School Lunch Program Applications Filed by Public Employees.”  The OSC discovered that 83 public employees, 26 individuals that were a spouse or partner of the public employee, and eight individuals that were another member of the employee’s family provided false information regarding their household income on applications for the school lunch program.  Even more disturbing, six elected school board members from Newark, Paterson, and Pleasantville were part of the scam.

As a result of the scandal, New Jersey Governor Chris Christie called for the firing and prosecution of any public employee that lied about his or her income in order to get a free or subsidized lunch.

The National School Lunch Program (NSLP) was started in 1946 by President Truman with the intent of providing adequate nutrition to children living in low-income families.  In fiscal year 2011, the NSLP served more than 31 million children by providing funding for a free or reduced-priced lunch in local schools at a cost to taxpayers of $11.1 billion.  The program is administered federally by the United States Department of Agriculture (USDA) and appropriate agencies at the state level.

In New Jersey, the State Department of Agriculture oversees the program.  New Jersey received $212 million in federal reimbursement for their school districts and also provided $5.5 million in administrative support.

The NSLP website states, “Any child at a participating school may purchase a meal through the National School Lunch Program. Children from families with incomes at or below 130 percent of the poverty level are eligible for free meals.  Those with incomes between 130 percent and 185 percent of the poverty level are eligible for reduced‐price meals, for which students can be charged no more than 40 cents.  (For the period July 1, 2012, through June 30, 2013, 130 percent of the poverty level is $29,965 for a family of four; 185 percent is $42,643.)”

The state local educational agency is responsible for disseminating applications for free and reduced-price lunches.  To be eligible, a parent or guardian must submit an application to the child’s school that lists each individual in the household and reports total household income.  Applicants must certify under penalty of law they are providing accurate information.

According to the OSC report, one elected school board member, who is a substitute teacher from Pleasantville, underreported her household income by $59,000 for three years.  She told investigators she did not report her salary or her pension on the application form because she wasn’t the one receiving the free lunch.  She also told investigators, while referring to the Pleasantville school district, that her salary “is none of their damn business.”

Each district that is responsible for administering the lunch program must also audit 3 percent of applications that are submitted and verify the information provided.  The focus of their review is “error-prone applications,” which are those households with incomes that are close to the limits for eligibility.

The OSC reviewed 15 of the 53 school districts in the state that received more than $1 million in funding for the 2010/2011 school year.  While the OSC found that many school districts do not properly complete and document the required verification process, such as correctly calculating an applicant’s income, 63 percent of applicants who were reviewed had their benefits eliminated or reduced following the verification process.

The OSC noted that because only 3 percent of NSLP applicants in the “error-prone” category are allowed to be reviewed by law, other applicants are not reviewed at all.  It is unknown if the discrepancy rate of this cohort has a fraud rate similar to the problems found in the OSC report.  Following the disturbing finding in its July audit, the OSC has begun an investigation of the NSLP throughout New Jersey.

Other states including Georgia, North Carolina, and Ohio are also conducting reviews of their lunch programs.

It is clear there more needs to be done to investigate and eliminate fraud in the NSLP, which would be good for both taxpayers and school lunch participants.

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