School-Meals Programs:

USDA Has Enhanced Controls, but Additional Verification Could Help Ensure Legitimate Program Access

GAO-14-262: Published: May 15, 2014. Publicly Released: Jun 16, 2014.

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What GAO Found

The U.S. Department of Agriculture (USDA) has taken several steps to implement or enhance controls to identify and prevent ineligible beneficiaries from receiving school-meals benefits. For example:

USDA worked with Congress to develop legislation to automatically enroll students who receive Supplemental Nutritional Assistance Program benefits for free school meals; this program has a more-detailed certification process than the school-meals program.

Starting in the 2013-2014 school year, USDA increased the frequency with which state agencies complete administrative reviews of school districts from every 5 years to every 3 years. As part of this process, state agencies review applications to determine if eligibility determinations were correctly made.

In 2012, USDA issued guidance to clarify that school districts have the authority to verify approved applications for school-district employees when information indicates that the applicant misrepresented his or her income.

GAO identified opportunities to strengthen oversight of the school-meals programs while ensuring legitimate access, such as the following:

Exploring the feasibility of computer matching external income data, such as state payroll data, with participant information to identify households whose income exceeds eligibility thresholds for verification could help identify ineligible participants. Currently, school districts verify a sample of approved applications deemed “error-prone”—statutorily defined as those with reported income within $1,200 of the annual income levels specified in program- eligibility guidelines—to determine whether the household is receiving the correct level of benefits (referred to as standard verification in this report). In a nongeneralizable review of 25 approved applications, GAO found that 9 of 19 households that self-reported household income and size information were ineligible and only 2 could have been subject to standard verification.

Verifying a sample of categorically eligible applications could help identify ineligible households. Currently, school-meal applicants who indicate categorical eligibility (by participating in certain public-assistance programs or meeting an approved designation, such as foster children) are eligible for free meals and are generally not subject to standard verification. In a nongeneralizable review of 25 approved applications, 6 households indicated categorical eligibility, 2 of which were ineligible, and another may have been eligible for reduced-price meals instead of free school meals.

Results of GAO's Analysis of a Nongeneralizable Sample of 25 Approved Household Applications from the 2010-2011 School Year

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Why GAO Did This Study

In fiscal year 2012, over 31.6 million children participated in USDA's National School Lunch Program (NSLP) at a cost of about $11.6 billion. In fiscal year 2013, USDA estimated NSLP certification errors of more than 8 percent, or $996 million. GAO was asked to review possible beneficiary fraud within the program.

This report assesses (1) steps taken to help identify and prevent ineligible beneficiaries from receiving benefits in school-meal programs and (2) what opportunities exist to strengthen USDA's oversight of the school-meals programs.

GAO reviewed NSLP policies, interviewed program officials, and randomly selected a nongeneralizable sample that included 25 of 7.7 million approved household applications from 25 of 1,520 school districts in the Dallas, Texas, and Washington, D.C., regions. GAO performed limited eligibility testing using civilian federal-employee payroll data from 2010 through 2013 due to the unavailability of other data sources containing nonfederal employee income. GAO also conducted interviews with households. Ineligible households were referred to the Inspector General.

What GAO Recommends

Among other things, GAO recommends that the Secretary of Agriculture develop a pilot program to explore the feasibility of using computer matching to identify households with income that exceeds program-eligibility thresholds for verification, and explore the feasibility of verifying a sample of categorically eligible households. USDA generally agreed with the recommendations.

For more information, contact Steve Lord at (202) 512-6722 or lords@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In March 2017, USDA informed us that its evaluation of the verification for cause data collected revealed that few local educational agencies (LEAs) reported any verification conducted for cause and some of the data reported was significantly flawed. According to USDA, its analysis did not indicate that any benefit in integrity and oversight would be gained by requiring the reporting of verification for cause outcomes separately. Therefore, according to USDA, the additional burden to collect this optional information would not be justifiable. However, USDA informed us that it supports the use of verification for cause and in August 2014, disseminated additional guidance for conducting for-cause verification that included criteria for identifying possible indicators of questionable or ineligible applications. By issuing this additional guidance, USDA has taken an important step towards ensuring that school districts identify applications that should be subject to for-cause verification, and help improve integrity and oversight of the school-meals programs.

    Recommendation: To improve integrity and oversight of the school-meals programs, the Secretary of Agriculture should evaluate the data collected on for-cause verifications for the 2013-2014 school year to determine if for-cause verification outcomes should be reported separately, and if appropriate, develop and disseminate additional guidance for conducting for-cause verification that includes criteria for identifying possible indicators of questionable or ineligible applications.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: In March 2017, USDA informed us that it explored the feasibility of computer matching school meal participants with other sources of household income by commissioning an analysis. The results of this analysis were released in October 2016. The analysis found that computer matching to wage and benefit information for verification of school meal applications is not feasible, and therefore a pilot program was not conducted. According to the results of the analysis, matching to wage data or other income reporting systems requires individual social security numbers (SSN) for each adult household member. Currently, only the last four digits of the SSN are required to apply for meal benefits through the submission of an application. By exploring the feasibility of using computer matching to identify potentially ineligible households for verification, USDA made efforts to enhance the current verification process and strengthen program integrity.

    Recommendation: To improve integrity and oversight of the school-meals programs, the Secretary of Agriculture should develop and assess a pilot program to explore the feasibility of computer matching school meal participants with other sources of household income, such as state income databases, to identify potentially ineligible households--those with income exceeding program-eligibility thresholds--for verification.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: In March 2017, USDA told us that it commissioned an analysis to determine if matching National School Lunch Program (NSLP) participants to income databases was feasible. The analysis found that this was not feasible because NSLP participants were not required to provide full Social Security Numbers. However, USDA also told us that it has provided technical assistance and support of the legislative reauthorization bills that include further expansion of the verification process. By exploring the feasibility of using computer matching to identify potentially ineligible households for verification and providing technical assistance and support for further expansion of the verification process, USDA made efforts to enhance the current verification process and strengthen program integrity.

    Recommendation: To improve integrity and oversight of the school-meals programs, if the pilot program shows promise in identifying ineligible households, the Secretary of Agriculture should develop a legislative proposal to expand the statutorily-defined verification process to include this independent electronic verification for a sample of all school-meals applications.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Implemented

    Comments: In March 2017, USDA told us that it updated its guidance in July 2015 to clarify to Local Educational Agencies (LEA) the procedures for confirming and verifying the application's status as categorically eligible. This guidance specifies that LEAs should contact households with case numbers on the applications that do not have a direct certification match for further clarification or verify the application for cause. According to USDA documentation, direct certification occurs through a data exchange that may use automated data matching or an exchange of e-mails or faxes with appropriate agency officials. While the sample selection methodology used to verify applications to confirm eligibility is statutorily defined, USDA's July 2015 guidance required a percentage of approved applications that list a case number to be selected as part of an alternate verification sample available to qualified LEAs. In addition, USDA told us that it has provided technical assistance and support of the legislative reauthorization bills that includes redefining the standard sample to include applications that indicate categorical eligibility. By updating its guidance to LEAs regarding verification of eligibility and providing technical assistance and support for further expansion of the verification process, USDA made efforts to enhance the current verification process and strengthen program integrity.

    Recommendation: To improve integrity and oversight of the school-meals programs, the Secretary of Agriculture should explore the feasibility of verifying the eligibility of a sample of applications that indicate categorical eligibility for program benefits and are thus not subject to standard verification.

    Agency Affected: Department of Agriculture

 

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