School-Lunch Program - Scrutiny comes as USDA reports nearly $2.7 billion in improper payments related to free and reduced-price meals

From The Wall Street Journal:

WASHINGTON—Republican lawmakers promised to boost oversight of the school-meal program Thursday after the Agriculture Department reported that it made nearly $2.7 billion in improper payments during the 2012-13 school year.

The program, which cost taxpayers more than $16 billion in 2014, provides free and reduced-priced lunches and breakfasts to more than 20 million children a day and is administered by the states. It is the second-largest federal nutrition program behind food stamps, formally known as the Supplemental Nutrition Assistance Program.

“We will need to improve the administration of these programs to reduce errors,” Sen. Pat Roberts (R., Kan.), chairman of the Senate Agriculture Committee, said at a Thursday hearing on the issue. “That’s a considerable amount of money.” Mr. Roberts will take a lead role in reauthorizing the law that oversees breakfast and lunch standards for K-12 schools. It expires in September.

His counterparts in the House also appear focused on improper payments. “Tackling waste, fraud, and abuse must be a priority as we work to better serve those most in need,” said Rep. Todd Rokita (R., Ind.), chairman of the House Education Committee’s panel on early-childhood, elementary and secondary education.

The Agriculture Department, in its first review of payment errors since 2007, said this week that 18% of all payments made during the 2012-13 school year were incorrect, with about 70% of those involving overpayments. The USDA said some of the incorrect payments could have been counted twice, resulting in inflated numbers.

The largest single source of faulty payments involved families getting benefits for which they didn’t qualify, often because they made mistakes on their applications. The application process is prone to errors, in part, because families aren’t required to document their incomes. Problems are often discovered when school officials try to verify applications.

Another major source of incorrect payments occurred in school cafeterias, when cashiers miscalculated how many meals qualify for reimbursement.

The Agriculture Department’s internal auditor said in a separate report this week that school food officials ended up reducing or ending benefits for more than half the families they checked in the 2012-13 school year.

“Based on these results, we conclude that it is likely that other students receiving free or reduced-price meals may not be eligible for them,” the inspector general said.

The inspector general said USDA should start requiring income documentation, but the agency rejected the idea, saying it would create barriers for families who need the help. “Schools are responsible for ensuring that school meal programs are administered correctly, while maintaining access to this critical program for those who qualify,” USDA spokeswoman Brooke Hardison said.

To reduce faulty payments, the USDA is expanding the use of “direct certification,” in which schools enroll families for meal benefits based on participation in other benefit programs, such as food stamps, that verify incomes.

Sen. Debbie Stabenow of Michigan, the top Democrat on the Senate Agriculture Committee, said that changes aimed at reducing payment errors could have “unintended consequences,” making it harder for qualifying families to receive benefits they need.

The USDA also allows schools in some low-income neighborhoods to provide free meals to all students. It reduces paperwork burdens for the schools and lowers the chances that students will experience stigma from receiving a subsidized meal.