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7-18-13 Process for School Lunch Program Scrutinized and Reported Flawed by State Comptroller
Star Ledger - N.J. school board members and others lied to get free lunch for their kids, state comptroller says

NJ Spotlight – NJ School Lunch Probe Raises Questions of Oversight – State Comptroller says more than 100 public employees or family members improperly got subsidized meals in schools

Politickernj - program abuse findings show need to change funding formula, Christie says

Star Ledger - N.J. school board members and others lied to get free lunch for their kids, state comptroller says

on July 17, 2013 at 11:10 AM, updated July 17, 2013 at 8:26 PM By Ted Sherman and Christopher Baxter

TRENTON — An investigation into New Jersey’s school lunch program by the Office of the State Comptroller found “widespread fraud” among district employees and their families, who allegedly lied about their income so their kids could eat for free.

The investigation, which officials said was sparked by a series of reports by The Star-Ledger into similar lunch program abuses in the Elizabeth Board of Education, found false information on lunch program applications submitted from the households of 40 school district employees — as well as six elected school board members in Pleasantville, Newark and Paterson.

Officials in the districts could not be immediately reached for comment.

Overall, state Comptroller Matthew Boxer said his office was referring for criminal prosecution the names of 109 public employees, their spouses or family members who provided false information about their income on free lunch applications. The total amount of under-reported income was $13 million.

"What we learned in this investigation is that because of the way this program is structured, there is minimal oversight, resulting in people frequently lying on program applications about income amounts," said Boxer. "In short the free lunch program has been compromised by widespread fraud."

The comptroller said dozens of public employees appear to have lied about their income in order to take advantage of a school program designed to help families in need.

Among them was an unnamed member of the Pleasantville school board who allegedly under-reported her household income on her school lunch application by an average of approximately $59,000 for each of the three years the auditors reviewed. She told investigators she did not include her own income on the applications because she was not the person receiving the free lunch.

She added that her income “is none of (the school district’s) damn business.” 

The comptroller’s office also found she had failed to file state income tax returns for multiple years.

None of those referred to the Division of Criminal Justice for possible prosecution were identified.

The National School Lunch Program offers state and federal reimbursements to provide free or greatly reduced-cost breakfast and lunch to children of needy families who meet income-eligibility requirements.

During the 2011-2012 school year, the federal government provided $212 million in lunch program reimbursements to school districts in New Jersey. State taxpayers paid another $5.5 million to support the program.

While abuses in the program has fiscal consequences, a major impact involves distribution of state aid, critics say. School funding formulas are based in part on the number of children getting free lunch — the more kids in a district deemed at the poverty level, the more money that may be allocated to a school. Officials said that formula creates a powerful incentive for districts to either enroll ineligible applicants, or look the other way when fraud is suspected.

State and federal officials, however, say there is scant auditing. Boxer said his office found that that the vast majority of free lunch applications are never reviewed for accuracy. 

 “We took on this project because we were concerned about the ability of public employees to use their knowledge of the workings of the free lunch program to improperly obtain benefits,” Boxer stated. “Those who know the rules of the program have a greater opportunity to submit a fraudulent application and avoid any scrutiny.”

In Elizabeth, the president of the school board, Marie L. Munn, was indicted after The Star-Ledger found that her kids were getting subsidized meals despite a family income far exceeding eligibility limits set by the federal government.

Munn later acknowledged her family did not qualify for the program, admitting she had filled out the applications for the lunch program without including her husband’s salary. She claimed she had been unaware her children were receiving free meals at school until she was contacted by a reporter, blaming the oversight on “misunderstandings and financial complications.”

Following the charges, the Elizabeth board said it would cross-check payroll information against the applications of all employees seeking free or low-cost meals for their children.

Earlier this year, another Elizabeth board member and two attorneys for the district were charged by the attorney general’s office in a scheme to cover up additional fraudulent applications for free lunches, after those records were subpoenaed by the state.

In the report issued today, Boxer — citing the ongoing investigation by the attorney general — did not look further into Elizabeth. But 15 other districts were examined.

Those districts were: Bayonne, Egg Harbor Township, Essex County Vocational Technical Schools, Linden, Long Branch, Millville, Newark, Paterson, Pemberton, Pennsauken, Pleasantville, Toms River, Trenton, Union City and Winslow Township. The comptroller found problems with some applications in all the districts but Egg Harbor.

In its 23-page report, the comptroller’s office concluded that “fraud in the school lunch program is widespread and the vast majority of applications never receive a proper review.”

A member of the Newark Board of Education under-reported her household income by an average $22,300 a year, telling investigators that a school secretary told her it did not matter if she listed her net or gross income. She also did not report the child support payments she had received some years.

"What we found are people who work for the government, lying to the government about how much the government is paying them, all for a benefit that is designed to help those in need. And the false information was not nickel and dime amounts," Boxer said at a press conference.

Some of the improper reporting appeared to result from a misunderstanding of the rules. Many of those flagged by the investigation, for example, said that they reported their net income instead of gross income, as required by the application form itself. Others failed to list the income of their spouse or other members of their household.

In Bayonne, 71 applications were verified as eligible despite missing necessary information, such as pay stubs.

But the investigation also found examples of school districts failing to remove ineligible applicants, even after they submitted documents that showed they did not qualify for the program.

A Paterson school district nurse, for example, remained enrolled in the free lunch program even after the pay stub she submitted demonstrated she had significantly under-reported her earnings and did not meet the income requirements. She told investigators she thought the district was extending her a courtesy because she was an employee.

According to Boxer, the under-reported income in the 109 cases his office referred for prosecution exceeded $13 million over the three-year period that was reviewed.

A spokesman for Gov. Chris Christie said the report demonstrated how systemic abuse really is in the program.

"When you have school board members and public school employees blatantly falsifying income and eligibility, it stands to reason that no one feels the need to be honest," said spokesman Michael Drewniak. "The system is lawless when school districts turn a blind eye to fraud — and in some instances promote it — in a federal program that doesn’t even permit sufficient follow-up investigation of applicants."

He said every public employee who lied about their income in order to get a free lunch to which they were not entitled should be fired and prosecuted.

"Moreover, the state must revisit how it dispenses aid to school districts and ensure funding levels are based upon true need and performance-based standards, rather than a formula based on fraud, corruption and waste," he said.

Assembly Speaker Sheila Oliver (D-Essex) said the lunch program is among the best anti-poverty efforts in the nation. "To see it subject to such abuse is infuriating," she said. "I am deeply disturbed by the findings, and fully expect the Department of Agriculture and school districts to implement the reform recommendations to ensure this program is used only by those who truly need it."

The agriculture department, which administers the program, had no immediate comment.

Sen. Michael Doherty (R-Warren) said the report reinforces the need to reform the state's school funding formula.

"Since the initial reports of fraud in Elizabeth were released two years ago, I have repeatedly called for a larger scale investigation to uncover the extent of school lunch program fraud in New Jersey," said Doherty. "It seemed likely that the abuses found in Elizabeth were occurring all over the place, which the comptroller's new report confirms."

In an interview in his office after the announcement, Boxer said the system itself is rife with flaws in both design and execution, offering few protections from abuse and even providing incentives for districts to look the other way.

The main incentive is that additional participants bring in more state and federal aid, Boxer said. His half-dozen recommendations for fixing the program’s problems include rethinking the funding incentive.

“They are really not inclined to look, because it is not in their financial interest to look,” Boxer said.

The situation is further complicated by the fact that the program nationwide has historically faced the opposite problem of being under-utilized by those who truly need it, especially older students in higher grades who try to conceal that they are poor.

Until recently, New Jersey had one of the nation’s lowest rates of participation in the free lunch program, prompting a statewide initiative by a number of nonprofit groups to raise awareness in schools of its availability. Boxer said yesterday that some districts may have gone too far in trying to boost enrollment.

“We understand that districts want everyone who is eligible to participate, but we also saw there was an incentive to sign up even those not eligible,” Boxer said in the interview.

Asked whether he expected fraud would stop if the state removed the incentive of extra state funding, Boxer said: “It would be interesting to see and compare if the amount of fraud changed. But what we are saying is you may not want to determine aid on faulty data. What we know for sure is this is faulty data.”

The free and reduced lunch program has been the subject of considerable debate for several years, and not just in New Jersey. The debate has heightened under Gov. Chris Christie -- a task force was created two years ago to explore alternatives, but it has yet to issue its report.

There are other problems with the program at the federal level. According to Boxer’s office, the federal program does not even require applicants to submit income verification and actually prohibits local districts from doing much checking up on them. Under the law, local districts can only review 3 percent of applicants who are nearest the threshold; those outside that threshold can be reviewed only if there is cause.

In fact, districts were fairly diligent in reviewing those 3 percent, Boxer said, and in some cases a majority of those applicants were rejected. But that was not always the case and, even so, there was no mechanism to go beyond that.

In Bayonne, for instance, 71 applications remained eligible despite being reviewed and found to be missing income records. In Paterson, a school nurse was disqualified, but still was left on the school lunch rolls.

The state’s funding formula, which has been the subject of fierce debate in the courts and in the Legislature, specifically entitles districts to extra funds for enrollment of low-income students, as determined by the lunch program, because of the extra services assumed to be required for those students.

But Christie has openly criticized the formula as providing too much funding to districts that have shown poor academic achievement results – largely urban ones. He has repeatedly said that the state Supreme Court ‘s Abbott v. Burke decisions that led to the formula should be overturned, and has he quietly sought to lessen the extra funding in his own aid formulations.

Yesterday, Christie spokesman Michael Drewniak said Boxer’s findings only further back up the governor’s call for rethinking how schools are funded.

“The system is lawless when school districts turn a blind eye to fraud ¬¬ and in some instances promote it – in a federal program that doesn’t even permit sufficient follow-up investigation of applicants,” Drewniak said.

“Every public employee who lied about their income in order to get a free lunch to which they were not entitled should be fired and prosecuted,” Drewniak continued. “Moreover, the state must revisit how it dispenses aid to school districts and ensure funding levels are based upon true need and performance-based standards, rather than a formula based on fraud, corruption and waste.”

Legislators reacted quickly as well, led by Assembly Speaker Sheila Oliver, who said the program needs to be protected for those who truly need it.

“This program is among the best anti-poverty efforts the nation has put forth and is vital to young children who desperately need proper nutrition to learn and thrive,” she said. “To see it subject to such abuse is infuriating.”

Children’s advocates also said that the state should not rush to scale back the program or its use as a gauge of poverty for school funding.

“The focus on finding evidence of fraud in the program ignores the arguably more important fact that there are many low-income families that would qualify for the program who do not apply,” said a statement from the Education Law Center, the Newark-based advocacy group that has led the Abbott litigation.

“Efforts must be made to ensure an accurate count of eligible students, but outreach to those who qualify and are not receiving this important service must be paramount,” the ELC statement said.

Still, there was little light shed on where those safeguards would come from. The program is overseen by the state Department of Agriculture, but Boxer said there is little direct auditing of procedures.

In one of its findings, the report said the department had failed to make districts aware of all the tools available for investigating fraud.

Among Boxer’s recommendations were some ways for the agriculture department to double-check a family’s eligibility, including an immediate check of the payroll records of any public employees who apply.

A spokeswoman for the Department of Agriculture would not comment and referred questions to the governor’s office.

NJ Spotlight – NJ School Lunch Probe Raises Questions of Oversight – State Comptroller says more than 100 public employees or family members improperly got subsidized meals in schools

By John Mooney, July 18, 2013 in Education |

With news of a state probe revealing that more than 100 public employees or their family members improperly took advantage of federally-funded school lunch program, one key question comes to mind: Who’s minding the store?

Related Links

The answer may be that nobody really is.

Before a bank of news cameras, State Comptroller Matthew Boxer yesterday released his office’s report on alleged abuses in the $220 million program intended to feed the state’s poorest schoolchildren, with findings that 109 public employees or their family members in 15 districts wrongfully received school lunches for their children by either under-reporting incomes or not reporting them at all.

The comptroller’s investigators looked at records in just a sampling of districts, a mix of urban and suburban, from Newark and Paterson to Toms River and Pennsauken. The findings cover a three-year period, ending in 2012.

Without naming names, Boxer said the 109 people were referred to the state’s Attorney General’s office for prosecution.

The program, which serves more than 410,000 students in the state, requires those receiving either free meals or subsidized meals to meet certain income thresholds. The local school district is responsible for spot-checking those records.

But it appears that few districts were checking the income information for these public workers – including some school board members – and that there were few safeguards to make sure such checks were taking place for applicants overall.

In an interview in his office after the announcement, Boxer said the system itself is rife with flaws in both design and execution, offering few protections from abuse and even providing incentives for districts to look the other way.

The main incentive is that additional participants bring in more state and federal aid, Boxer said. His half-dozen recommendations for fixing the program’s problems include rethinking the funding incentive.

“They are really not inclined to look, because it is not in their financial interest to look,” Boxer said.

The situation is further complicated by the fact that the program nationwide has historically faced the opposite problem of being under-utilized by those who truly need it, especially older students in higher grades who try to conceal that they are poor. Boxer said yesterday that some districts may have gone too far in trying to boost enrollment.

“We understand that districts want everyone who is eligible to participate, but we also saw there was an incentive to sign up even those not eligible,” Boxer said in the interview.

Asked whether he expected fraud would stop if the state removed the incentive of extra state funding, Boxer said: “It would be interesting to see and compare if the amount of fraud changed. But what we are saying is you may not want to determine aid on faulty data. What we know for sure is this is faulty data.”

The free and reduced lunch program has been the subject of considerable debate for several years, and not just in New Jersey. The debate has heightened under Gov. Chris Christie -- a task force was created two years ago to explore alternatives, but it has yet to issue its report.

There are other problems with the program at the federal level. According to Boxer’s office, the federal program does not even require applicants to submit income verification and actually prohibits local districts from doing much checking up on them. Under the law, local districts can only review 3 percent of applicants who are nearest the threshold; those outside that threshold can be reviewed only if there is cause.

In fact, districts were fairly diligent in reviewing those 3 percent, Boxer said, and in some cases a majority of those applicants were rejected. But that was not always the case and, even so, there was no mechanism to go beyond that.

In Bayonne, for instance, 71 applications remained eligible despite being reviewed and found to be missing income records. In Paterson, a school nurse was disqualified, but still was left on the school lunch rolls.

The state’s funding formula, which has been the subject of fierce debate in the courts and in the Legislature, specifically entitles districts to extra funds for enrollment of low-income students, as determined by the lunch program, because of the extra services assumed to be required for those students.

But Christie has openly criticized the formula as providing too much funding to districts that have shown poor academic achievement results – largely urban ones. He has repeatedly said that the state Supreme Court ‘s Abbott v. Burke decisions that led to the formula should be overturned, and has he quietly sought to lessen the extra funding in his own aid formulations.

Yesterday, Christie spokesman Michael Drewniak said Boxer’s findings only further back up the governor’s call for rethinking how schools are funded.

“The system is lawless when school districts turn a blind eye to fraud  and in some instances promote it – in a federal program that doesn’t even permit sufficient follow-up investigation of applicants,” Drewniak said.

“Every public employee who lied about their income in order to get a free lunch to which they were not entitled should be fired and prosecuted,” Drewniak continued. “Moreover, the state must revisit how it dispenses aid to school districts and ensure funding levels are based upon true need and performance-based standards, rather than a formula based on fraud, corruption and waste.”

Legislators reacted quickly as well, led by Assembly Speaker Sheila Oliver, who said the program needs to be protected for those who truly need it.

“This program is among the best anti-poverty efforts the nation has put forth and is vital to young children who desperately need proper nutrition to learn and thrive,” she said. “To see it subject to such abuse is infuriating.”

Children’s advocates also said that the state should not rush to scale back the program or its use as a gauge of poverty for school funding.

“The focus on finding evidence of fraud in the program ignores the arguably more important fact that there are many low-income families that would qualify for the program who do not apply,” said a statement from the Education Law Center, the Newark-based advocacy group that has led the Abbott litigation.

“Efforts must be made to ensure an accurate count of eligible students, but outreach to those who qualify and are not receiving this important service must be paramount,” the ELC statement said.

Still, there was little light shed on where those safeguards would come from. The program is overseen by the state Department of Agriculture, but Boxer said there is little direct auditing of procedures.

In one of its findings, the report said the department had failed to make districts aware of all the tools available for investigating fraud.

Among Boxer’s recommendations were some ways for the agriculture department to double-check a family’s eligibility, including an immediate check of the payroll records of any public employees who apply.

A spokeswoman for the Department of Agriculture would not comment and referred questions to the governor’s office.

 

Politickernj - program abuse findings show need to change funding formula, Christie says

By Bill Mooney | July 17th, 2013 - 3:45pm

TOMS RIVER – Gov. Chris Christie said the larger message to be taken from today’s Comptroller’s report that found widespread fraud in the school lunch program is the need to change the state aid funding formula.

The Comptroller’s office disclosed more than 100 people – whose names have been turned over for possible criminal prosecution – who falsely listed income levels in order to get approved for a lunch program that is supposed to help those children most in need.

Christie said focusing just on the individuals who allegedly lied to obtain benefits they did not deserve is missing the forest for the trees.  “The real reason for school districts to be complicit in this is it increases their aid under this crazy school aid funding formula,’’ he said.

He pointed to a portion in the Comptroller’s report that showed that “school districts have barbecues to induce families to come out and sign up for the program right before they have to submit their numbers to the state.”

“I’m urging the Legislature to rethink the way we do this school funding,’’ he said, because “A lot of it is based on numbers that are clearly fraudulent.” The system induces people to lie, he said.

He called the acts of the people involved “absurd and obscene,’’ and even joked with some gallows humor that underscored the extent of the lunch program abuse, “Apparently I’m the only person not getting a free school lunch.”

He criticized the state Supreme Court for imposing on the state this school aid formula that invites this kind of abuse.

 


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