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. 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. 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.) 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.