USDA Has Taken Steps to Help Identify and Prevent Ineligible Participants from Receiving Benefits

In May 2014, we reported that USDA had 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 SNAP benefits for free school meals;  SNAP has a more-detailed certification process than the school-meals  program. The number of school districts directly certifying  SNAP-participant children increased from the 2008 through 2013  school years. Starting in the 2013–2014 school year, USDA  increased the frequency with which state agencies complete  administrative reviews from every 5 years to every 3 years. As part of  this process, state agencies are to conduct on-site reviews of school  districts to help ensure that applications are complete and that the  correct eligibility determinations were made based on applicant  information. USDA Could Explore Options to Enhance the Verification Process to Further Strengthen Integrity While Ensuring Legitimate Access

In our May 2014 report, we identified opportunities to strengthen oversight  of the school-meals programs while ensuring legitimate access, including  clarifying use of for-cause verification, studying the feasibility of electronic  data matching to verify income, and verifying a sample of households that  are categorically eligible for assistance. Income Verification

In addition to for-cause verification, school districts are required to  annually verify a sample of household applications approved for free or  reduced-price school-meals benefits to determine whether the household  has been certified to receive the correct level of benefits—we refer to this  process as “standard verification.” Standard verification is generally  limited to approved applications considered “error-prone.” Error-prone is  statutorily defined as approved applications in which stated income is  within $100 of the monthly or $1,200 of the annual applicable income- eligibility guideline. In a nongeneralizable review of 25 approved civilian federal-employee  household applications for our May 2014 report, we found that 9 of 19  households that self-reported household income and size information  were not eligible for free or reduced-price-meal benefits they were  receiving because their income exceeded eligibility guidelines. In May 2014, we recommended that USDA 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. USDA concurred with our recommendations and told us in  January 2015 that direct-verification computer matching is technologically  feasible with data from means-tested programs, and that data from SNAP  and other programs are suitable for school-meals program verification in  many states. Verification of Categorical Eligibility

In May 2014, we found that ineligible households may be receiving free  school-meals benefits by submitting applications that falsely state that a  household member is categorically eligible for the program due to  participating in certain public-assistance programs—such as SNAP—or  meeting an approved designation—such as foster child or homeless. In May 2014, we recommended that USDA explore the feasibility of  verifying the eligibility of a sample of applications that indicate categorical  eligibility for program benefits and are therefore not subject to standard  verification. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

In fiscal year 2014, 30.4 million children participated in the National School Lunch Program and 13.6 million children participated in the School Breakfast Program, partly funded by $15.1 billion from USDA. In May 2014, GAO issued a report on (1) steps taken to help identify and prevent ineligible beneficiaries from receiving benefits in school-meal programs and (2) opportunities to strengthen USDA's oversight of the programs.
This testimony summarizes GAO's May 2014 report ( GAO-14-262 ) and January 2015 updates from USDA. For the May 2014 report, GAO reviewed federal school-meals program policies, interviewed program officials, and randomly selected a nongeneralizable sample that included 25 approved applications from civilian federal-employee households out of 7.7 million total approved applications in 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. GAO referred potentially ineligible households to the USDA Inspector General.
In its 2014 report, GAO recommended that USDA explore (1) using computer matching to identify households with income that exceeds program-eligibility thresholds for verification, and (2) verifying a sample of categorically eligible households. USDA generally agreed with the recommendations and is taking actions to address them.

What GAO Found

In May 2014, GAO reported that the U.S. Department of Agriculture (USDA) had 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 whether eligibility determinations were correctly made.
In its May 2014 report, GAO identified opportunities to strengthen oversight of the school-meals programs while ensuring legitimate access, such as the following:
If feasible, computer matching income data from external sources with participant information could help identify households whose income exceeds eligibility thresholds. As of May 2014, school districts verified a sample of approved applications deemed “error-prone”—statutorily defined as those with reported income within $1,200 of the annual eligibility guidelines—to determine whether the household is receiving the correct level of benefits (referred to as standard verification in this testimony). In a nongeneralizable review of 25 approved applications from civilian federal households, 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. GAO reported that school-meal applicants who indicate categorical eligibility (that is, participating in certain public-assistance programs or meeting an approved designation, such as foster children) were eligible for free meals and were generally not subject to standard verification. In a nongeneralizable review of 25 approved applications, 6 households indicated categorical eligibility, but GAO found 2 were ineligible.