School Meal Programs: Improved Reviews, Federal Guidance, and Data Collection Needed to Address Counting and Claiming Errors
Published: 2009-09-09T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In fiscal year 2008, the National School Lunch Program and School Breakfast Program provided meals to 30.9 million and 10.5 million children, respectively. Recently, the U.S. Department of Agriculture (USDA) issued the first estimate of improper payments due to meal counting and claiming errors in these programs, which was approximately $860 million (8.6 percent of federal program reimbursements) in school year 2005-2006. These errors include: (1) cashier errors, such as those made in determining if a meal meets the federal menu planning and nutrition requirements (meal counting), and (2) aggregation errors made when officials count and total meals for federal reimbursement (meal claiming). GAO was asked to review (1) actions taken by states and school food authorities (SFA) to identify and address meal counting and claiming errors; and (2) actions taken by USDA to help states and SFAs identify and address meal counting and claiming errors. GAO's steps included analyzing data on state administrative reviews of SFAs; surveying all states; conducting site visits; and interviewing federal, state, and SFA officials.
section_title: What GAO Found
paragraphs: Although states and SFAs conduct program integrity reviews of the school meal programs, gaps in federal requirements for these reviews limit their effectiveness at identifying meal counting and claiming errors. States and SFAs are generally not required to review the School Breakfast Program, and 21 states reported through GAO's survey that they do not review the breakfast program. However, USDA estimates that the percentage of meal counting and claiming errors is higher in the breakfast program than the lunch program. Further, some states reported that SFA reviews of the meal programs are ineffective at identifying and reducing errors, which may be due, in part, to the self-assessment design of these reviews. When state and SFA reviews identify errors, meal counting and claiming errors persist. For example, in several SFAs that GAO visited, the same errors were identified during consecutive reviews. States and SFAs identified multiple factors that hinder efforts to address these errors, such as staff turnover, inadequate training, and school policies that complicate meal service. USDA has taken some actions to improve state reviews of SFAs, but it has not directly focused on oversight of meal counting and claiming. USDA recently provided new review forms and nationwide training to strengthen state reviews and also simplified the application process for state grants to conduct additional reviews of SFAs. However, USDA has not targeted its oversight efforts to identify or address meal counting and claiming errors. For example, USDA regional offices' reviews of state administration of the school meal programs do not focus on these errors, and some regional officials could not provide information on the extent of these errors in the states they oversee. USDA also has not updated its meal counting and claiming manual since it was first issued in 1991. Further, while USDA collects annual data on findings from state reviews of SFAs, the agency has not used these data for oversight purposes or to assess risks associated with meal counting and claiming errors.

section_title: Letter
paragraphs: The National School Lunch Program and School Breakfast Program had a  combined fiscal year 2008 budget of $10.5 billion and provided lunches  and breakfasts to more than 30.9 million and 10.5 million children,  respectively. These programs are administered by the U.S. Department of  Agriculture (USDA) through state agencies that, in turn, oversee local  school food authorities (SFA). SFAs serve meals to children in schools and  are responsible for fulfilling federal program requirements, such as  accurately claiming meals for federal reimbursement and preparing meals  that meet specific menu planning and nutritional requirements. To comply  with federal requirements imposed by the Improper Payments Information  Act of 2002, USDA released a study in 2007 estimating that $860 million in  improper payments (8.6 percent of federal program reimbursements)  resulted from meal counting and claiming errors in the school meal  programs during school year 2005-2006. These errors include: (1) cashier  errors, such as those made in determining if a meal meets the federal  menu planning and nutritional requirements (meal counting), and (2)  aggregation errors made when officials count and total meals for  reimbursement (meal claiming).
Because the USDA study was the first national study to document meal  counting and claiming errors, there is now increased interest in how these  errors are being addressed. The importance of taking action to reduce  these errors and ensure that program funds are being used as effectively as  possible may be particularly heightened if program participation continues  to increase in the current economic environment. Based on your request,  we conducted a study reviewing (1) state and SFA actions taken to  identify and address meal counting and claiming errors, and (2) USDA  actions taken to help states and SFAs identify and address meal counting  and claiming errors.
To address these objectives, we reviewed relevant federal laws,  regulations, and agency guidance, as well as federal data on states’  administrative reviews of the school lunch program. We also interviewed  USDA Food and Nutrition Service (FNS) officials, both from headquarters  and all seven of its regional offices, as FNS oversees the school meal  programs. In addition, we used multiple methods to gather information on  state and SFA actions. First, we administered a Web-based survey of state  child nutrition program directors in all 50 states and the District of  Columbia between February and March 2009, to which all state directors  responded. While we did not validate specific information that directors  reported through our survey, we determined that the data were sufficiently  reliable for the purposes of this report. Second, we conducted site visits to  at least one state in six of the seven FNS regions. States selected provided  geographic variation and had both high levels of school meal errors found  during state administrative reviews and relatively high percentages of  students eligible for free and reduced price meals. We visited one state  (California, Illinois, Massachusetts, Mississippi, and Texas) in five of the  regions, and in the Mid Atlantic Region, we visited both Washington, D.C.  and Maryland. During each site visit, we interviewed state-level child  nutrition program directors, as well as officials from two to three SFAs  that either had experienced significant meal counting and claiming errors  or had systems in place that state officials considered to be effective at  identifying and reducing such errors. For each SFA interviewed, we also  reviewed recent state monitoring findings on meal counting and claiming  errors and observed school meal procedures in one or more schools. We  cannot generalize our findings beyond the SFAs we visited.
We conducted this performance audit from August 2008 through  September 2009 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives. See appendix I for  additional information about our methodology.
subsections: section_title: Background
paragraphs: The school lunch and breakfast programs are overseen and administered  by USDA through FNS, state agencies, and local SFAs. FNS sets  nationwide eligibility and program administration criteria and provides  reimbursements to states for each meal served that meets federal menu  planning and nutrition requirements and is served to an eligible student.  FNS also provides states with commodities based on the number of  reimbursable lunches served. States have written agreements with SFAs to  administer the meal programs, provide federal reimbursements to SFAs,  and oversee SFA compliance with program requirements. SFAs— nonprofit entities responsible for local administration of the school meal  programs—plan, prepare, and serve meals to students in schools.
SFAs determine the price they charge for school meals, but some children  are eligible to receive free or reduced price meals. Specifically, children  are eligible for free meals if their families have incomes at or below 130  percent of the federal poverty guidelines and reduced price meals if their  families have incomes between 130 and 185 percent of the federal poverty  guidelines. SFAs can charge a maximum of $0.40 for a reduced price lunch  and $0.30 for a reduced price breakfast. Children who are not eligible for  free or reduced price meals pay the entire price charged by the SFA for the  meal.
SFAs receive federal reimbursements for all meals served to eligible  students that meet menu planning and nutritional requirements, regardless  of whether children pay for the meals or receive them for free. To receive  federal reimbursements for meals, SFAs coordinate with schools to  process an individual household application for most children applying for  the free and reduced price programs and verify eligibility for at least a  sample of households that apply. SFAs also must keep daily track of meals  provided. The amount of federal reimbursement that SFAs receive for  each meal provided to a child is based on the eligibility category of the  child and the meal program. (See table 1.)
To be eligible for federal reimbursement, meals served by SFAs must  adhere to the Dietary Guidelines for Americans, which include limits on  total fat and saturated fat and call for diets moderate in sodium. The meals  must also meet standards for the recommended daily allowances of  calories, as well as nutrients such as protein, calcium, iron, and vitamins A  and C. There are five federally approved food- or nutrient-based menu  planning approaches for school meals. For example, under the traditional  food-based menu planning approach, SFAs must offer five food items from  four food components—meat/meat alternate, vegetables or fruits,  grains/breads, and milk—for a lunch to qualify as reimbursable. SFAs  choose the specific foods served and how they are prepared and  presented. Under the nutrient standard menu planning approach, SFAs use  a computer-based menu planning system that uses approved software to  automatically analyze the specific nutrient content of planned menu items.
subsections: section_title: Oversight and Monitoring in the School Meal Programs
paragraphs: USDA policies and regulations establish an oversight and monitoring  framework for school meal programs to help ensure accurate meal  counting and claiming. (See fig. 1.) Specifically, regulations require data on  meals served that qualify for federal reimbursement to be recorded at the  point of service in schools and reported from SFAs to states, and states to  FNS. Both SFAs and states are required to regularly check meal counts to  assess their reliability and reconcile any incorrect counts before  submitting meal claim data for federal reimbursement. Federal regulations  also require FNS, state agencies, and SFAs to conduct reviews of the  school meal programs. FNS regions must conduct management  evaluations of each state’s administration of the school meal programs and  share evaluation findings with the state. Through the coordinated review  effort, states are required to conduct reviews of each SFA’s administration  of the lunch program at least once during each 5-year review cycle and  share review findings with the SFA and FNS. At the local level, SFAs are  required to conduct annual on-site reviews of the meal counting and  claiming procedures in each school participating in the lunch program.
The school meal programs’ oversight and monitoring requirements are  part of their internal controls, which are an integral component of  management. Internal control is not one event, but a series of actions and  activities that occur on an ongoing basis. Effective internal controls  include creating an organizational culture that promotes accountability  and the reduction of error, analyzing program operations to identify areas  that present the risk of error, making policy and program changes to  address the identified risks, and monitoring the results and  communicating the lessons learned to support further improvement.
section_title: School Meal Counting and Claiming Errors
paragraphs: To comply with the Improper Payments Information Act of 2002, in  November 2007 USDA released the “Access, Participation, Eligibility, and  Certification Study” (APEC),  which provided the first national measure  of improper payments in the school meal programs. APEC estimated th approximately $860 million in improper payments occurred in the school  lunch and breakfast programs due to meal counting and claiming errors  during school year 2005-2006. Meal counting, or cashier, errors occur  when    a student’s specific meal selection does not meet the menu planning and  nutritional requirements of a reimbursable meal,  the SFA’s planned meal components do not meet the menu planning and  nutritional requirements of a reimbursable meal, or    a cashier incorrectly records the student’s categorical eligibility (i.e., free,  reduced price, or paid).
Meal claiming, or aggregation, errors generally occur because data on  meals served are compiled and totaled by several different entities before  they are submitted to FNS as a meal claim for reimbursement. Specifically,  aggregation errors occur when  the daily meal count totals from the school cafeteria cashiers or points of  sale are not summed correctly,    school meal count totals are incorrectly reported to or recorded by the    school meal count totals are incorrectly reported from the SFA to the  state.
APEC found that a substantial source of meal counting and claiming errors  were cashier errors, particularly for the breakfast program. Concerning  aggregation, APEC found that school to SFA meal count reports were the  most likely to be erroneous. (See table 2.) However, when this type of  aggregation error occurred, APEC found it was typically the case that SFA- reported meal counts were larger than those reported by the school, which  resulted in overpayments to the SFA. APEC found that both cashier errors  and aggregation errors between the school and SFA were concentrated in  a small number of schools that had high error rates.
In addition to estimating meal counting and claiming errors, APEC also  estimated that approximately $940 million in improper payments occurred  in the school meal programs due to certification errors during school year  2005-2006. Certification error occurs when students are certified to receive  a level of free or reduced price meal benefits for which they are not  eligible or are erroneously denied benefits for which they are eligible.
Prior to APEC, the USDA Inspector General’s office conducted reviews of  the school meal programs in various school districts nationwide from 2002  to 2007. These reviews often found meal counting and claiming errors in  the districts, which resulted in overpayments of federal funds. The reviews  also frequently cited deficiencies in internal controls, such as omitted edit  checks on meal claims and missing records of meals served, as causes of  erroneous meal claims. (For more information on the reports reviewed,  see app. I.)
section_title: States and SFAs Conduct Reviews, but Meal Counting and Claiming Errors Persist
subsections: section_title: Gaps in State and SFA Review Requirements Limit Their Effectiveness
paragraphs: Although states conduct program integrity reviews of the meal programs,  oversight of the breakfast program is limited. Through the coordinated  review effort, states are required to assess meal counting and claiming  procedures used in schools when they review each SFA’s administration  of the lunch program during the 5-year review cycle. However, only select  schools in each SFA are reviewed. While all states reported through our  survey that they conduct these reviews, 21 states reported that they do not  include the breakfast program in reviews. Although APEC estimated that  the percentage of errors in the breakfast program was more than double  the percentage of errors in the lunch program, states are not required to  review this program (see fig. 3). States, however, are required to review  the School Breakfast Program during follow-up reviews. Further, states  that include the breakfast program in their reviews do not always  systematically review that program. For example, officials in one state  reported that they review the breakfast program whenever the  administrative review of the SFA will take more than 1 day.
Some state officials also reported concerns about the extent to which  required SFA on-site reviews effectively identify meal counting and  claiming errors. Specifically, SFAs evaluate whether schools’ counting and  claiming procedures comply with program requirements during their  annual reviews of schools. However, like state reviews, SFAs are not  required to review the breakfast program (see fig. 3). Nine states reported  through our survey that SFA reviews were slightly or not at all effective in  identifying and reducing meal counting and claiming errors. An additional  21 states reported that these reviews were moderately effective at  achieving this goal. Although almost all states reported that they provide  support to SFAs on completing annual on-site reviews, such as providing a  form to document reviews, states also reported some factors that impede  the quality of these reviews. For example, 20 states reported through our  survey that some SFA reviewers lack the knowledge necessary to properly  evaluate the program or consider on-site reviews to be a paperwork  exercise instead of a monitoring tool.
SFA on-site reviews are designed as self-assessments, and a few states  reported through our survey that it is difficult for SFAs to review their own  schools in an objective manner. At one large SFA we visited that serves  over 100 schools, SFA reviews of schools were conducted, but the  reviewers did not identify an issue causing erroneous meal claims that was  identified in the state review completed shortly thereafter. The state  determined that the resulting erroneous meal claims found during its  reviews of the SFA totaled over $150,000. Officials from a small SFA we  visited that serves six schools said they believe their on-site reviews are  effective at identifying errors, but they also acknowledged that the  problems identified through the most recent state administrative review  had not been found during their on-site reviews. Specifically, the state  review found that this SFA had submitted erroneous meal claims resulting  in its receipt of a $6,200 overpayment of federal program funds. The  “Standards for Internal Control in the Federal Government” states that key  duties or responsibilities should be divided among different people to  reduce the risk of error. However, the evidence obtained from some of the  SFAs we visited suggests the self-assessment design of on-site reviews  may be limiting their effectiveness.
section_title: Multiple Factors Contribute to Persistent Meal Counting and Claiming Errors
paragraphs: When state and SFA reviews identify meal counting and claiming errors,  these problems are not always resolved. Several of the SFAs we visited  had the same errors identified during consecutive state and SFA reviews.  During successive reviews in two of the SFAs we visited, cashiers were  counting meals that did not meet federal requirements to be reimbursable.
For example, one SFA director found that three of the five cashiers in a  school he was observing could not accurately identify the meal  components that made up a reimbursable meal on the day of his on-site  review, which was an error identified in the previous state administrative  review. In two other SFAs, successive state reviews found claiming errors,  which impacted the accuracy of meal claims. In all of these SFAs, after  errors were found during the first review, corrective actions were  prescribed that should have modified procedures to reduce errors. One  SFA official told us that the repeat meal counting and claiming errors  found in multiple state administrative reviews did not surprise him, as he  had found similar errors during his annual on-site reviews, and the  corrective actions his SFA took had been ineffective.
States and SFAs identified several factors that hinder efforts to address  meal counting and claiming errors.
Staff turnover: Nineteen states reported through our survey that staff  turnover affects whether corrective actions permanently resolve errors. In  addition, some state and SFA officials we interviewed told us that the  frequency of SFA staff turnover results in a continued need to retrain staff  on accurate procedures.
Competing demands: Over 40 percent of states reported through our  survey that competing demands for cafeteria staff greatly or moderately  hinder efforts to address meal counting and claiming errors. During our  site visits, several state officials told us that cafeteria staff sometimes  fulfill additional roles in schools, such as bus drivers or school secretaries,  which can affect their ability to focus on fulfilling meal program  requirements and modifying procedures to address errors.
Inadequate training: Some state and SFA officials said that inadequate  training of SFA staff affects whether corrective actions resolve errors.  While nearly all the SFAs we interviewed conduct training, some officials  acknowledged that certain aspects of the school meal programs are  sufficiently complicated that more training may be needed. Specifically,  state administrative reviews of almost half the SFAs we visited found  cafeteria staff incorrectly identifying reimbursable meals, and some state  officials we interviewed told us that different types of menu planning  approaches can make this difficult for cafeteria staff. In addition, officials  from four SFAs we visited told us that adding options to menus can make  it more difficult for staff to identify a reimbursable meal. While the five  menu planning approaches offer SFAs flexibility and providing several  menu options may appeal to students, both of these factors complicate  cashier efforts to accurately count reimbursable meals.
Point of sale systems: Some state and SFA officials we interviewed told  us that the lack of an automated point of sale system in schools, through  which cafeteria staff count meals served to children each day, hinders SFA  efforts to address errors. Specifically, most state officials we interviewed  indicated that having an automated point of sale system, or computer, for  cashiers to identify children receiving meals, their eligibility for free or  reduced price meals, and components on each child’s tray reduces the  likelihood of errors. However, some SFAs said that resource constraints  had prohibited them from purchasing these automated systems. While  these systems may help reduce counting and claiming errors, half of the  state officials we interviewed indicated that point of sale systems can  contribute to errors when staff are not properly trained on how to use the  system or the system software is not properly set up or tested.
Specific school policies: According to some SFA officials we  interviewed, certain types of school policies can complicate cashier efforts  to address meal counting problems. For example, some schools have  policies that children will be served a meal regardless of their ability to  pay. While such children receive a meal for free, they are not necessarily  eligible for a free reimbursable meal based on family income. However,  cashiers sometimes do not understand this distinction and count these as  free reimbursable meals. Similarly, school policies that shorten school  meal periods sometimes also contribute to cashier errors. A few state and  SFA officials reported that while shorter meal periods increase academic  instruction time, they also require cafeteria workers to provide meals to  children more quickly, which can result in meal counting errors. In one  review of an SFA we visited, the state reported that the rapid flow of  students through the lunch lines was affecting the ability of cafeteria staff  to assess whether all meals were complete.
Ineffective school support: A lack of effective support from school staff  was also reported by some SFAs as hindering efforts to permanently  address meal counting and claiming errors. For example, one SFA official  reported that a school official had changed the school’s counting and  claiming system without consulting the SFA, which caused related errors.  Officials from another SFA reported that they now employ most of the  cafeteria staff in their schools because of the difficulty in getting changes  made to meal service when school administrators employ these staff.  During our site visits, we observed that the involvement of school staff,  such as teachers, in meal service may affect errors. For example, in a few  schools, meals served were counted by teachers in their classrooms  instead of by staff in the cafeteria. In at least one of these schools, the  counting procedure used by the teacher produced errors. In another  school, a teacher provided all of her students’ identification cards to the  cashier to indicate the students were eating lunch, but not all of those  students were present that day—a procedural error that had been cited on  a previous state review of this school.
In addition, states’ infrequent use of certain program sanctions may also  affect the priority SFAs give to addressing errors. While federal  regulations require states to withhold meal program funds from SFAs for  certain program violations, such as not completing prescribed corrective  actions within agreed-upon time frames, administrative review data  suggests that states withhold funds from few of the SFAs reviewed.  Further, only four states reported through our survey that they had  terminated an SFA from the school meal programs during the past 5 years  because of meal counting or claiming errors. States likely consider  multiple factors when deciding whether to use the federally allowed  sanctions, such as the fiscal effect of withholding program funds on an  SFA’s ability to provide meals to children, which may influence the  frequency with which these are used. An official in one of the states we  visited said that his state prefers to work with SFAs to correct problems  rather than terminate their participation in the meal programs.
Many state officials do not believe that meal counting and claiming errors  are significant, and these views may also affect efforts to address errors.  According to the “Standards for Internal Control in the Federal  Government,” the attitude and philosophy of management toward  monitoring can have a profound effect on internal control. Although the  APEC study found that meal counting and claiming errors were a  significant source of improper payments in the school meal programs,  state officials reported through our survey that they are rare. Specifically,  34 states reported that meal claiming errors and 26 states reported that  meal counting errors were seldom or never a problem within their SFAs.  Further, one state official reported through our survey that this is a  problem made up by USDA, as very few of these errors occur. However,  state administrative review data suggests that meal counting and claiming  errors have occurred in SFAs and schools nationwide.
section_title: USDA Has Taken Some Actions to Improve State Monitoring, but Has Not Focused on Oversight of Meal Counting and Claiming
subsections: section_title: USDA Recently Took Some Steps to Update, Strengthen, and Increase the Number of State Reviews
paragraphs: In 2008, USDA released an updated form for states to use when conducting  state administrative reviews through the coordinated review effort.  According to USDA officials, the form was updated to address recent  legislative and regulatory changes. The updates to the form included new  questions related to certification and food safety, as well as some minor  revisions to existing questions. For example, some of these revisions  added descriptive details related to the review of meal counting and  claiming procedures. Also in 2008, USDA held related training that focused  on the entire review process, including meal counting and claiming  procedures, as well as particular areas that states had reported a need for  additional training. USDA officials reported that reviewers from almost all  states attended the training. Officials also reported that they are  developing updated policy guidance for state administrative reviews,  which will address both the new form and issues that have arisen since the  last guidance was published in 1993.
In another effort to strengthen the state administrative review process,  USDA issued a memo in March 2008 that directed states to stop  conducting practice reviews. Prior to issuing the memo, USDA officials  became aware that some states were conducting practice reviews to  reduce documented findings and required corrective actions. USDA’s  memo stated that because practice reviews only temporarily reduce the  likelihood of documented review findings, they undermine the integrity of  the review process, diminish the importance of adhering to school meal  program requirements, and are in direct conflict with federal review  requirements. While the memo indicated that states should stop  conducting practice reviews immediately, USDA officials said they do not  know if all states have stopped this activity.
Since fiscal year 2005, USDA has also provided annual grants to, in part,  support state efforts to conduct additional reviews of meal counting and  claiming and certification procedures in SFAs that have a high level of, or  high risk for, administrative error in the school meal programs. In an  effort to increase state use of these Administrative Reviews and Training  Grants, USDA simplified the application process for the fiscal year 2009  cycle, through which $16 million in grant funds were available.  Specifically, the streamlined application requirements allowed states to  submit a 1-page form to apply for up to $3,500 per SFA review, as well as  submit requests for multiple SFA reviews on one form. In May 2009, USDA  awarded approximately $300,000 total in administrative review grants to  the eight states that applied for them, a number equal to the greatest  number of states that had received these grants in prior years.
Other recent USDA efforts may also help identify and address meal  counting and claiming errors in the school meal programs. In 2007 and  2008, USDA issued updated guidance on complying with federal menu  planning and nutritional requirements for school meals, as part of the  School Meals Initiative. Through this initiative, states are required to  conduct reviews of SFAs to determine their compliance with these  requirements. USDA officials reported that these reviews can be helpful  in identifying and addressing meal counting errors, as reviewers observe  children’s meals at the point of sale. In addition, USDA is currently  working with the National Food Service Management Institute to develop  additional technical assistance materials for SFAs related to planning and  recognizing reimbursable meals. These materials are intended to help food  service staff plan meals that make it easier for students to choose a  reimbursable meal and cashiers to confirm that a reimbursable meal has  been selected.
section_title: USDA Has Not Focused Its Own Oversight Efforts on Identifying or Addressing Meal Counting and Claiming Errors
paragraphs: USDA’s oversight efforts have not directly focused on identifying or  addressing meal counting and claiming errors. While FNS regional offices  conduct a management evaluation of each state’s oversight of the school  meal programs, these evaluations do not directly focus on identifying and  addressing meal counting and claiming errors. Although USDA’s annual  guidance on management evaluations indicates that regions should  examine findings from some state administrative reviews of SFAs, it does  not specify meal counting and claiming procedures as an area to focus on.  Officials we spoke to in six of the seven FNS regional offices stated that  management evaluations are generally ineffective at providing information  on meal counting and claiming errors, in part because they are structured  to focus more generally on state administration of the programs. Officials  in some of the regional offices could not provide us with information on  the extent of meal counting and claiming errors in the states they oversee.  In addition, while regional offices submit management evaluation reports  to USDA headquarters when they are completed, headquarters officials  said that they do not currently analyze these reports to develop national-  or regional-level themes and trends. Finally, USDA has not updated its  manual on meal counting and claiming procedures since it was originally  published in 1991, though some states reported through our survey that an  updated federal meal counting and claiming manual would assist their  efforts. A USDA official reported that the manual was published during  initial implementation of the coordinated review effort. While USDA  recently updated the forms and instructions related to that effort, this  manual has not been updated, nor was it available on USDA’s Web site at  the time of our review.
In contrast, USDA’s efforts have focused on addressing school meal  program errors related to the certification of children as eligible for free  and reduced price meals. Specifically, federal guidance for FNS regional  offices’ management evaluations directs the regions to review state efforts  to improve the accuracy of information used for certification. In January  2008, USDA also issued an updated manual on certification. In addition,  USDA worked with Congress to ensure that the Child Nutrition and WIC  Reauthorization Act of 2004 included multiple changes to school meal  programs to help address certification problems. For example, the act  simplified the certification process by requiring a single application for all  eligible children in the household and eligibility determinations to be in  effect for the entire school year.
One FNS regional official suggested that the approach USDA took to  address certification errors nationally may be a model to address meal  counting and claiming errors. USDA headquarters’ officials acknowledged  that, in the past, the agency considered certification to be the primary  source of improper payments in the school meal programs, and a few  officials in headquarters and the regions said that they were surprised by  the APEC findings on the extent of meal counting and claiming errors.  However, headquarters officials also said that the agency has recognized  for many years that both erroneous meal counting and claiming and  certification procedures cause improper payments. Before the APEC study  findings on improper payments in the school meal programs were  released, USDA’s Inspector General issued multiple reports on  administration of these programs in selected school districts that found  problems with meal counting and claiming procedures. For example, many  of the reports issued from 2002 to 2007 found problems with SFA annual  on-site reviews and edit checks performed on meal claims. Many of these  reports also found that meal counting and claiming errors resulted in  overpayments of federal funds. (For more information on the reports  reviewed, see app. I.)
USDA also collects annual data on findings from state administrative  reviews of SFAs, but it does not use these data to assess meal counting  and claiming errors. The “Standards for Internal Control in the Federal  Government” states that agencies should monitor performance measures  and indicators, which may be accomplished by assessing data, to  determine appropriate actions to be taken. However, a USDA official said  that the state review data are not used systematically for oversight  purposes and are instead used periodically to provide information for  agency publications and answer questions related to state reviews. While,  in the past, USDA analyzed these data for trends and error-prone areas,  officials said they have not done so for several years, in part due to  resource constraints. These data include several pieces of information  about meal counting and claiming errors in SFAs reviewed by states, such  as the number of lunches observed that were erroneously counted as  reimbursable because they did not meet federal menu planning and  nutrition requirements and the value of over-claims resulting from meal  counting and claiming errors. As a result, these data provide general  information on the frequency with which meal counting and claiming  errors are occurring in states. However, because states are not required to  identify the SFAs reviewed in each year, and states are only required to  review each SFA once during each 5-year review cycle, these data are also  limited in their ability to provide information on specific SFAs with errors.  Further, because states are not required to conduct administrative reviews  of the School Breakfast Program, these data lack information about  breakfast program errors.
section_title: Conclusions
paragraphs: In the current economic environment, as increased numbers of families  struggle to stay financially afloat and more children qualify for free or  reduced-price meals, it is of even greater importance that federal dollars  be effectively spent to meet the school meal programs’ goal of providing  nutritious meals to children in schools. The APEC study’s estimate of $860  million in improper payments resulting from meal counting and claiming  errors provided new information about weaknesses in the school meal  programs and successfully pinpointed areas, such as the breakfast  program, that are particularly vulnerable. However, this information has  not yet been fully utilized to modify program oversight at the federal, state,  and local levels in order to improve efforts to identify and address errors.
Although the federally required oversight and monitoring processes for the  school meal programs are designed to, in part, identify and address meal  counting and claiming errors, gaps in these processes limit their strength  as an internal control. The absence of a requirement to include the  breakfast program in state and SFA reviews, as well as ineffective SFA  annual reviews of schools, impede program monitoring efforts and leave  the government vulnerable to continued erroneous payments. Further,  outdated federal manuals and guidance may hinder SFA efforts to design  or implement effective counting and claiming procedures, which also  leaves the government vulnerable to continued erroneous payments. At  the federal level, while the lack of data on both specific SFAs reviewed  each year and errors in the breakfast program hinder USDA’s oversight  ability, the agency is also missing an opportunity to use the data they  already collect to identify states with significant counting and claiming  errors and target assistance to areas of greatest risk.
Finally, until officials who administer the school meal programs focus  their attention on meal counting and claiming errors, it is unlikely that  needed improvements will occur. While meal counting and claiming errors  are often the result of basic human errors, such as the inaccurate addition  of meal counts or incorrectly counting a meal as reimbursable because  children are moving too quickly through the lunch line, holding states and  SFAs accountable for implementing corrective actions can help minimize  error frequency.
section_title: Recommendations for Executive Action
paragraphs: To help states and SFAs improve their ability to identify and address meal  counting and claiming errors, we recommend that the Secretary of  Agriculture take the following actions:    Require states to include the School Breakfast Program in their state  administrative reviews of SFAs and require SFAs to include this program  in their annual on-site reviews.
Update the 1991 USDA manual on meal counting and claiming procedures  to ensure that current guidance is reflected.
Develop additional guidance and technical assistance for federally- required SFA annual on-site reviews. For example, USDA, through its Web  site, could provide a model form to be used for on-site reviews that  indicates the aspects of meal counting and claiming procedures to review,  or the Department could work through the National Food Service  Management Institute or another organization to provide SFAs with  technical assistance aimed at improving the quality of on-site reviews.
Explore the feasibility of requiring SFAs to conduct third-party annual on- site reviews to ensure independence.
In addition, to assist federal efforts to target resources to states and SFAs  at the greatest risk for these errors, we recommend that the Secretary of  Agriculture:    Develop procedures for using state administrative review data reported to  FNS to assess risks and target oversight efforts associated with meal  counting and claiming errors, and modify the FNS form on which states  report the data so that it includes identification of which SFAs were  reviewed each year and information from School Breakfast Program  reviews.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to USDA for review and comment. In  oral comments, USDA officials concurred with our recommendations.  Officials also provided technical comments, which we incorporated into  the report as appropriate.
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If you or your staff have any questions about this report, please contact me  at (202) 512-7215 or brownke@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Key contributors to this report are listed in appendix II.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To obtain information on federal, state, and local efforts to identify and  reduce meal counting and claiming errors in the school meal programs, we  used several methods. We reviewed pertinent federal laws and regulations,  agency guidance, studies, and data, as well as interviewed U.S.  Department of Agriculture (USDA), Food and Nutrition Service (FNS)  officials in headquarters and all seven regional offices. We also conducted  a Web survey of all states and site visits to six states and Washington, D.C.  To obtain additional background information, we interviewed staff at the  School Nutrition Association and the National Food Service Management  Institute, and to obtain additional information on automated point of sale  systems, we interviewed staff from two vendors of these systems— MealTime/CLM Group and School-Link Technologies.
We conducted this performance audit from August 2008 to September  2009, in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Federal Studies and Data
paragraphs: To provide context for our analysis of actions taken to identify and  address meal counting and claiming errors, we reviewed information on  these errors from FNS’s “Access, Participation, Eligibility, and  Certification Study,” which was published in 2007. This study provided  the first national picture of improper payments in the National School  Lunch Program and School Breakfast Program related to cashier/meal  counting errors and aggregation/meal claiming errors. We determined th these data are sufficiently reliable for the purposes of our review.
Reviews of the school meal programs conducted by the USDA Inspector  General’s office also provided context on meal counting and claiming  errors. As a result, we reviewed Inspector General reports issued from  2002 to 2007 that addressed administration of the school meal programs in  selected school districts nationwide. Because of our interest in meal  counting and claiming errors generally, we did not review Inspector  General reports that specifically examined food service management  companies’ involvement in administration of the school meal programs.  We reviewed reports addressing school districts in the following cities:  Milwaukee, Wisconsin; Liberal, Kansas; Chicago, Illinois; Philadelphia,  Pennsylvania; Kearney, Missouri; Platte City, Missouri; Leavenworth,  Kansas; Bellwood, Illinois; Girard, Kansas; Effingham, Kansas; and New  York City, New York. We also interviewed an official from the Inspector  General’s office to gather background information on the objectives,  scope, and methodology for these reviews.
To gather additional information on meal counting and claiming errors  nationwide, we reviewed USDA FNS headquarters’ data on state  administrative review findings for school years 1998-1999 through 2002- 2003. States report these data annually to FNS on the FNS-640 form, and  FNS compiles datasets corresponding with the 5-year review cycles. We  reviewed data from the most recently completed 5-year cycle for which  full data was available at the time of our analysis and interviewed FNS  officials to gather additional information about the data. Although these  data have limitations, including that states do not always review all school  food authorities (SFA) providing the school meal programs nationwide  within each 5-year cycle, we determined that they are sufficiently reliable  for the limited purposes of our review.
section_title: Survey of States
paragraphs: To obtain national information on state efforts to identify and address  counting and claiming errors in the school meal programs, we conducted a  Web survey of state child nutrition program directors in all 50 states and  the District of Columbia between February and March 2009. All of the  state child nutrition program directors responded to the survey. The  survey included questions about the extent to which states have identified  meal counting and claiming errors within their SFAs, state and SFA  processes to identify and reduce errors, related state assistance provided  to SFAs, challenges states and SFAs have experienced in identifying and  reducing errors, and support provided by FNS to help states and SFAs  address errors.
The practical difficulties of conducting any survey may introduce errors,  such as variations in how respondents interpret questions and their  willingness to offer accurate responses. We took several steps to minimize  these errors, including pretesting draft instruments and using a Web-based  administration system. Specifically, we pretested draft instruments with  state child nutrition program directors from four states (Maryland,  Mississippi, New Mexico, and New York) in January 2009. We selected  pretest states based on geographical disparity and the large percentage of  students eligible for free and reduced price school meals in those states.  We also considered recommendations from FNS regional offices. In the  pretests we inquired about clarity, precision, and objectivity of the  questions, in addition to flow and layout of the survey. We revised the final  survey based on pretest results. Another step we took to minimize errors  was using a Web-based survey. By allowing respondents to enter their  responses directly into an electronic instrument, this method  automatically created a record for each respondent in a data file and  eliminated the need for and the errors associated with a manual data entry  process. To further minimize errors, programs used to analyze the survey  data and make estimations were independently verified to ensure  accuracy.
While we did not validate specific information that states reported through  our survey, we took several steps to ensure that the information was  sufficiently reliable for the purposes of this report. For example, during  pre-testing, we took steps to ensure definitions and terms used in the  survey were clear and familiar to the respondents, categories provided in  closed-ended questions were complete and exclusive, and the ordering of  survey sections and the questions within each section were appropriate.  Further, after states completed the survey, we reviewed the responses,  identified those that required further clarification, and conducted follow- up interviews with respondents to ensure the information they provided  was reasonable. In our review of the data, we also identified and logically  fixed skip pattern errors—questions that respondents should have skipped  but did not. On the basis of these checks, we believe our survey data are  sufficiently reliable for the purposes of our work.
section_title: Site Visits
paragraphs: To gather additional information on state and local efforts to identify and  address counting and claiming errors in the school meal programs, we  conducted site visits to states in six of the seven FNS regions from  September 2008 to March 2009. We visited one state (California, Illinois,  Massachusetts, Mississippi, and Texas) in each of the regions, except in  the Mid Atlantic Region, where we visited both Washington, D.C., and  Maryland. States selected provided geographic variation and had both high  levels of school meal errors found during state administrative reviews and  relatively high percentages of students eligible for free and reduced-price  meals. We also considered recommendations of the relevant FNS regional  offices when selecting states to visit. In addition, during site selection, we  interviewed child nutrition program officials from Florida, Indiana, and  New York to better understand state issues related to meal counting and  claiming.
During each site visit, we interviewed state-level child nutrition program  directors, as well as officials from two to three SFAs that either had  experienced significant meal counting and claiming errors or had systems  in place that were considered effective at identifying and reducing such  errors. The 15 SFAs selected also provided some variation in school  district type, including public, private, and charter. Through interviews  with state and SFA officials, we collected information on actions taken  and policies in place to identify and address meal counting and claiming  errors and the types of challenges states and SFAs face in their efforts to  do so. For each SFA, we also reviewed recent state review findings on  meal counting and claiming errors and observed school meal procedures  in one or more schools. We cannot generalize our findings beyond the  states and SFAs we visited.
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: Blake Ainsworth and Jeremy Cox, Assistant Directors; Rachel Frisk and  Anjali Tekchandani, Analysts-in-Charge; Kris Trueblood; Joanie Lofgren;  Walter Vance; Joanna Chan; Jim Rebbe; Kate van Gelder; and Mimi Nguyen  also made significant contributions to this report.