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May 26, 2013

Free lunch program no longer a poverty indicator

Suspicion of fraud cited as reason for change made at the state level.

INDIANAPOLIS — Indiana is changing the way it counts low-income students in public schools because Republican legislators suspect fraud in the federal school-lunch program used to measure poverty.

Tucked inside the budget bill passed by the General Assembly last month is a provision that ends the use of the program to determine levels of poverty-based funding for school districts after next year.

Instead, the state’s textbook assistance program, which provides free schoolbooks to low-income children, will be used to calculate how much additional money the state gives schools to help educate children most at-risk for failure.

Senate Appropriations Chairman Luke Kenley said he and other GOP legislative leaders have “lost confidence” in the accuracy of the federal school lunch program as an indicator of poverty.

“There’s no accountability in the federal program,” Kenley said.

The change is significant: Of the $6.6 billion in state funds that go to K-12 schools in Indiana, about $1 billion of it is directly tied to the federal school lunch program: The more students that a school enrolls in the program, the more state money the school district gets.

But little accountability is in place: By law, the state can’t audit the federal program to see if families are falsely reporting their incomes so their children can get the free or reduced-cost meals.

And the state can’t require schools to verify the information either. Parents aren’t required to provide any proof of their income when they apply for the program.

But the state can require schools to verify the family incomes of children who get free textbooks through the state’s textbook assistance program. The eligible income level is about the same for both: Up to 130 percent of the federal poverty level (about $29,000 for a family of four.)

“We can’t audit the federal program, but we can audit the state program,” said Republican Rep. Jeff Thompson of Danville, a retired schoolteacher who pushed for the change.

Dennis Costerisan, head of the Indiana Association of School Business Officials, said the change will likely mean parents will have to prove their income status.

“I think the legislators who supported this just want to make sure that there aren’t people out there trying to game the system,” Costerisan said.

Driving the change is the rapid rise in the number of children enrolled in the federal school lunch program in Indiana and other states, and concerns that the program is ripe for abuse because of so little oversight.

In 2005, about 29 percent of children in Indiana’s K-12 public schools were getting free lunches through the program. By 2011, it was up to 40 percent.

If you include students eligible for the reduced-cost lunches (at a cost of 40 cents), almost 49 percent of children in the state’s public schools are now enrolled in a program that was created to provide basic nutrition to needy students.

Legislators have questioned those numbers, in part because they don’t seem to jibe with other numbers, such as Census Bureau figures that show about 17 percent of children in Indiana are living in poverty.

Also, they’ve seen reports of fraud in other states. A 2011 report by the New Jersey State Auditor found that up to 37 percent of the students in the program may be were enrolled fraudulently. Earlier this year, a report by the Chicago Public Schools’ Inspector General reported widespread abuse of the program, including by some well-paid school administrators who signed up their own children up for free lunches.

Senate Minority Leader Tim Lanane of Anderson opposed the change.

“We don’t know if there’s fraud in Indiana,” Lanane said. “I would have rather studied the issue first to see what kind of impact this will have on schools, families, and children,” he said.

Since schools currently use the same income information to enroll students in both the federal school lunch program and the state’s free textbook program, Lanane is concerned that some parents won’t sign up for either program, even if they’re eligible because they can’t, or won’t, provide evidence of their income.

“This has the potential to hurt schools with high numbers of students who are living in poverty and need all the help they can get,” Lanane said.

But Kenley and Thompson argue the issue is critical to the state’s ability to fairly and appropriately determine funding levels for schools.  

Thompson said the state will be better able to detect fraud in the free textbook program, because it will have more authority to require parents to provide evidence of their income levels.

The details of how that will be done is yet to be determined. A provision that would have required the Indiana Department of Education and state Department of Revenue to annually verify the incomes of 25 percent of families whose children get free textbooks was pulled out of the budget bill at the last moment.

But it’s expected to return in the 2014 legislative session.  

Maureen Hayden covers the Statehouse for the CNHI newspapers in Indiana. She can be reached at maureen.hayden@indianamediagroup.com

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