Last month the New Jersey Comptroller released a report on widespread fraud in their state’s school lunch program.  More than 100 people on public payrolls, or members of their family, lied about their income in order to get their children on the free school lunch program.  One school board member did not report any of her substitute teaching salary as required when filling out an application form to participate in the program.  In response when asked why, she told investigators “It is none of their damn business!”  

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

The National School Lunch Program (NSLP) was started in 1946 by President Truman to provide adequate nutrition to children living in low-income families. Currently, it serves nationally greater than 31 million children every day by providing a free or reduced-price lunch.  The program is administered federally by the Agricultural Department (USDA) and appropriate agencies at the state level.  In New Jersey, the Department of Agriculture oversees the program.  The feds provided $212 million in NSLP reimbursements to NJ school districts while the state paid $5.5 million in program support.  To qualify for either a free or reduced lunch, the household income limit for a family of four is $30,615 or $43,568 respectively.

Within the NSLP, the “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 and must list each individual in the household and report the household income.  They must certify under penalty-of-law they are providing accurate information.

Each school district is responsible for the NSLP and must audit 3 percent of applications that are submitted and verify the information provided.  They generally review “error prone” applications, those household incomes that are close to the limit for eligibility.

The Office of the State Comptroller (OSC) compiled a list of 53 school districts in the state that received more than $1 million in funding for the 2010/2011 school year.  Of these districts, only 15 districts were reviewed.

Some of the findings are alarming:

• The investigation revealed that 101 public employees or their spouse/partner, including elected school board members and school district employees, provided false information about their income.
• 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, it was found that despite these failings, some 63 percent of applicants reviewed had their benefits eliminated or reduced following the verification process.  (Keep in mind the school districts are required to only review 3 percent.)
• A memorandum by the USDA to the New Jersey Agriculture Department (that was never forwarded to the school districts) authorized school districts to identify children of school district employees and then use known salary information to spot and verify questionable applications.  During the OSC audit, of the applicants selected for authentication, some 56 percent of the “error prone” applicants never provided verification documents when queried by officials.  As a result, they were denied benefits.
• While the average of the three percent verification process resulted in 63 percent of applications having the lunch benefit eliminated or reduced, the amounts ranged from a high of 95 percent in the Trenton school district being eliminated or reduced, to a low of 39 percent in the Milleville school district.

The OSC notes that because only 3 percent of NSLP applicants are allowed to be reviewed, the other 97 percent are not reviewed at all and it is unknown if this cohort has a similar fraud rate.

These results have prompted the OSC to begin an investigation of the entire NSLP in New Jersey.

The report also mentions other states that have investigated their school lunch program and have found potential fraud. They are Georgia, Illinois, and Ohio.

It is clear there is a problem with the NSLP and that more than likely, fraud is rampant.  Instead of states or federal officials complaining about the harm the sequester is doing to federally-sponsored programs like the NSLP, it is time for investigations into the harm lawbreakers are committing everyday that is driving up the cost of these programs for taxpayers.