Title I’s Recipe for Fraud

Published June 1, 2002

Individual schools receive Title I funding based on the percentage of students eligible for the federally subsidized free-lunch program. Though the lunch program is designed to provide food to low-income students who might otherwise go hungry, its guidelines do not require schools to verify the parental income of students who enroll. The process to qualify for a free lunch comes down to parents self-reporting their income on a form turned in to their local school.

However, federal free-lunch data are used as one of the main poverty indicators for school districts and act as a multiplier for many other local, state, and federal funding streams. Thus, any fraud in the free-lunch program is quickly multiplied through many other programs designed for students from low-income households.

That multiplier effect also provides school districts with an incentive to sign up students. Consider this typical account from the St. Petersburg (Florida) Times last summer:

“When Gulf High School assistant principal Pat Haynes sees needy children lunching on cookies or a bag of chips, she knows the kids are jeopardizing more than just good nutrition. Those kids are also cutting into their school’s ability to cash in on its share of millions of dollars in grants and government rebates designed to benefit low-income schools.”

Ice Cream and Pizza

Many school districts offer free ice cream and other tokens to students who return their forms, even if they aren’t eligible for the program. Schools have mailed multiple enrollment forms to parents and some have even taken to calling families at home to ask them to enroll.

For example, in October 1999 The Baltimore Sun reported the principal of Patterson High School took to the intercom and made the following announcement:

“Guess what is coming? Pizza Party! Everyone connected with the school, from parents to staff members, will eat pizza, get a free T-shirt, and listen to a disc jockey if poor students can get their parents to fill out an application for free and reduced-price school lunches.”

In 1999, about 50 percent of Patterson High School’s 2,200 students qualified for free meals. By using the pizza party strategy, school principal Laura D’Anna increased that to more than 70 percent of students in 2000.

While fraud from the federal free-lunch program may have small consequences for the program itself, the cost of fraud to other education programs, such as Title I, may be much greater. Districts that have tried more strictly to verify parental income have met with resistance.

When the Bergenfield school district in New Jersey required parents to submit more extensive income documentation after the number of students in the free-lunch program doubled in one year, the New Jersey state nutrition program forced the district to reinstate all students who were disqualified from the program. Bergenfield district business administrator Tom Egan argued there were inconsistencies in some of the applications, including applications from students whose parents had homes valued at $350,000.

Blatant Fraud OK

In some cases, however, school boards openly over-report their school lunch data. In 1999, the Clifton school board in Bergen, New Jersey, voted 5-4 to report that exactly 20.16 percent of public school students were poor enough to qualify for free lunches, instead of the actual number, which was 19.19 percent. The difference was significant: If the number dropped below 20 percent the district would lose $4 million in aid.

As the Bergen County, New Jersey, Record reported in November 1999, board president Wayne Demikoff said while casting his vote for the higher number, “I cannot, in good conscience, vote for something that is going to devastate the budget.”

The board did not necessarily break the law by reporting the higher number. The lower figure was arrived at by verifying the income of 80 percent of the families that applied for a free lunch. However, the federal government requires districts to verify only 3 percent.

The free lunches bring the district both short-term fiscal benefits and long-term financial consequences. Each year, Clifton receives millions of dollars in aid for needy students. At the same time, New Jersey districts that have more than 20 percent of their students on free lunches are supposed to begin providing full-day kindergarten and half-day preschool.

Lisa Snell is an education policy analyst with Reason magazine in Los Angeles, California. Her email address is [email protected]. A version of this article was first published in Reason last summer.