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Data Collection Needed to Address Counting and Claiming Errors' which 
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Report to the Chairman, Committee on Agriculture, Nutrition and 
Forestry, U.S. Senate: 

United States Government Accountability Office: 
GAO: 

September 2009: 

School Meal Programs: 

Improved Reviews, Federal Guidance, and Data Collection Needed to 
Address Counting and Claiming Errors: 

GAO-09-814: 

GAO Highlights: 

Highlights of GAO-09-814, a report to the Chairman, Committee on 
Agriculture, Nutrition and Forestry, U.S. Senate. 

Why GAO Did This Study: 

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. 

What GAO Found: 

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. 

Figure: Federally Required Reviews of Counting and Claiming in Meal 
Programs: 

[Refer to PDF for image: illustration] 

Each Year: 

School lunch: 
SFA: 
Schools. 

School breakfast: 
NO SFA on-site review required. 

Each 5-year review cycle: 

School lunch: 
State: 
SFA: 
Schools. 

School breakfast: 
NO state review required. 

If the state finds errors during its review of an SFA, state conducts a 
follow-up review, including some on-site school reviews of both lunch 
and breakfast programs. 

Source: GAO, Art Explosion (images). 

[End of figure] 

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. 

What GAO Recommends: 

GAO recommends that the Secretary of Agriculture modify the 
requirements for state and SFA reviews and improve federal guidance and 
data collection. USDA agreed with GAO’s recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-09-814] or key 
components. For more information, contact Kay Brown at (202) 512-7215 
or brownke@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

States and SFAs Conduct Reviews, but Meal Counting and Claiming Errors 
Persist: 

USDA Has Taken Some Actions to Improve State Monitoring, but Has Not 
Focused on Oversight of Meal Counting and Claiming: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Federal Reimbursement per Meal and Average Daily Participation 
in the National School Lunch and School Breakfast Programs, School Year 
2008-2009: 

Table 2: APEC Estimates of Improper Payments Resulting from Meal 
Counting and Claiming Errors, during School Year 2005-2006: 

Figures: 

Figure 1: Oversight and Monitoring Requirements for School Meal 
Programs: 

Figure 2: School Meal Service Process and Potential Points of Error in 
the Meal Counting and Claiming Process: 

Figure 3: Federally Required Reviews of Counting and Claiming 
Procedures in the School Meal Programs: 

Abbreviations: 

SFA: school food authority: 

FNS: Food and Nutrition Service: 

APEC: Access, Participation, Eligibility, and Certification Study: 

USDA: U.S. Department of Agriculture: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

September 9, 2009: 

The Honorable Tom Harkin:
Chairman:
Committee on Agriculture, Nutrition and Forestry: 
United States Senate: 

Dear Mr. Chairman: 

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,[Footnote 1] 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.[Footnote 2] 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. 

Background: 

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.[Footnote 3] 

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[Footnote 4] 
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.) 

Table 1: Federal Reimbursement per Meal and Average Daily Participation 
in the National School Lunch and School Breakfast Programs, School Year 
2008-2009: 

Eligibility category: Free; 
Lunch program: Federal reimbursement per meal[A]: $2.57; 
Lunch program: Average children served per day[B]: 15,900,000; 
Breakfast program: Federal reimbursement per meal[A]: $1.40; 
Breakfast program: Average children served per day[B]: 8,100,000. 

Eligibility category: Reduced price; 
Lunch program: Federal reimbursement per meal[A]: $2.17; 
Lunch program: Average children served per day[B]: 3,100,000; 
Breakfast program: Federal reimbursement per meal[A]: $1.10; 
Breakfast program: Average children served per day[B]: 1,100,000. 

Eligibility category: Paid; 
Lunch program: Federal reimbursement per meal[A]: $0.24; 
Lunch program: Average children served per day[B]: 11,300,000; 
Breakfast program: Federal reimbursement per meal[A]: $0.25; 
Breakfast program: Average children served per day[B]: 2,000,000. 

Source: USDA. 

[A] These are the basic cash reimbursement levels for school year 2008- 
2009. Higher federal reimbursement rates apply for Alaska and Hawaii, 
and for schools with high percentages of low-income students. 

[B] Data for May 2009. Participation data in table are approximate. 

[End of table] 

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.[Footnote 5] 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. 

Oversight and Monitoring in the School Meal Programs: 

USDA policies and regulations establish an oversight and monitoring 
framework for school meal programs to help ensure accurate meal 
counting and claiming. (See figure 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. 
[Footnote 6] 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[Footnote 7] 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. 

Figure 1: Oversight and Monitoring Requirements for School Meal 
Programs: 

[Refer to PDF for image: illustration] 

[End of figure] 

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.[Footnote 8] 

School Meal Counting and Claiming Errors: 

To comply with the Improper Payments Information Act of 2002,[Footnote 
9] in November 2007 USDA released the "Access, Participation, 
Eligibility, and Certification Study" (APEC),[Footnote 10] which 
provided the first national measure of improper payments in the school 
meal programs.[Footnote 11] APEC estimated that 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.[Footnote 12] 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 SFA, or: 

* school meal count totals are incorrectly reported from the SFA to the 
state. 

Figure 2: School Meal Service Process and Potential Points of Error in 
the Meal Counting and Claiming Process: 

[Refer to PDF for image: illustration] 

Counting meals (during meal service): 

Cashier: 
* Determines whether meal includes all of the planned menu components; 
* Determines the student’s categorical eligibility (free, reduced 
price, or paid). 

Claiming meals (after meal service): 

School: 
* After a meal, school staff totals meal counts, sometimes from 
multiple cashier lines; 
* Daily or weekly, school totals meal counts and submits them to SFA; 

SFA: 
* SFA totals all schools’ meal counts monthly and submits them to state 
for reimbursement. 

Sources: GAO, Art Explosion (images). 

Note: Actions taken before meal service may also cause meal counting 
errors. Specifically, errors occur when the SFA's planned meal 
components do not meet the menu planning and nutritional requirements 
of a reimbursable meal. 

[End of figure] 

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. 

Table 2: APEC Estimates of Improper Payments Resulting from Meal 
Counting and Claiming Errors, during School Year 2005-2006: 

Total federal program reimbursements: 
Lunch program: Federal dollars: $8,060 million; 
Lunch program: Percentage of federal funds: 100; 
Breakfast program: Federal dollars: $1,940 million; 
Breakfast program: Percentage of federal funds: 100. 

Total meal counting & claiming improper payments (gross): 
Lunch program: Federal dollars: $555 million; 
Lunch program: Percentage of federal funds: 6.9; 
Breakfast program: Federal dollars: $306 million; 
Breakfast program: Percentage of federal funds: 15.8. 

Cashier/counting error: 
Lunch program: Federal dollars: $248 million; 
Lunch program: Percentage of federal funds: 3.1; 
Breakfast program: Federal dollars: $189 million; 
Breakfast program: Percentage of federal funds: 9.8. 

Aggregation/claiming error: 
Lunch program: Federal dollars: $307 million; 
Lunch program: Percentage of federal funds: 3.8; 
Breakfast program: Federal dollars: $117 million; 
Breakfast program: Percentage of federal funds: 6.0. 

School points of sale to school total: 
Lunch program: Federal dollars: $26 million; 
Lunch program: Percentage of federal funds: <1; 
Breakfast program: Federal dollars: $5 million; 
Breakfast program: Percentage of federal funds: <1. 

School to SFA: 
Lunch program: Federal dollars: $163; 
Lunch program: Percentage of federal funds: 2; 
Breakfast program: Federal dollars: $77; 
Breakfast program: Percentage of federal funds: 4. 

SFA to state: 
Lunch program: Federal dollars: $118 million; 
Lunch program: Percentage of federal funds: 1.5; 
Breakfast program: Federal dollars: $35 million; 
Breakfast program: Percentage of federal funds: 1.8. 

Source: GAO analysis of APEC data. 

[End of table] 

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 appendix I.) 

States and SFAs Conduct Reviews, but Meal Counting and Claiming Errors 
Persist: 

Gaps in State and SFA Review Requirements Limit Their Effectiveness: 

Although states conduct program integrity reviews of the meal programs, 
oversight of the breakfast program is limited. Through the coordinated 
review effort,[Footnote 13] 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.[Footnote 14] 
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 figure 3). States, however, are required to review the 
School Breakfast Program during follow-up reviews.[Footnote 15] 
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. 

Figure 3: Federally Required Reviews of Counting and Claiming 
Procedures in the School Meal Programs: 

[Refer to PDF for image: illustration] 

Each Year: 

School lunch: 
SFA: 
Schools. 

School breakfast: 
NO SFA on-site review required. 

Each 5-year review cycle: 

School lunch: 
State: 
SFA: 
Schools. 

School breakfast: 
NO state review required. 

If the state finds errors during its review of an SFA, state conducts a 
follow-up review, including some on-site school reviews of both lunch 
and breakfast programs. 

Source: GAO, Art Explosion (images). 

[End of figure] 

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.[Footnote 16] However, like state reviews, 
SFAs are not required to review the breakfast program (see figure 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.[Footnote 17] 

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. 

Multiple Factors Contribute to Persistent Meal Counting and Claiming 
Errors: 

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.[Footnote 18] 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.[Footnote 19] 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.[Footnote 20] 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.[Footnote 21] 
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. 
[Footnote 22] 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. 

USDA Has Taken Some Actions to Improve State Monitoring, but Has Not 
Focused on Oversight of Meal Counting and Claiming: 

USDA Recently Took Some Steps to Update, Strengthen, and Increase the 
Number of State Reviews: 

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.[Footnote 23] 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. 
[Footnote 24] 

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.[Footnote 25] 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[Footnote 26] 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. 

USDA Has Not Focused Its Own Oversight Efforts on Identifying or 
Addressing Meal Counting and Claiming Errors: 

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.[Footnote 27] 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.[Footnote 28] 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.[Footnote 29] 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 appendix 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.[Footnote 30] 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. 

Conclusions: 

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. 

Recommendations for Executive Action: 

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. 

Agency Comments and Our Evaluation: 

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. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to relevant congressional committees, the Secretary of Agriculture, and 
other interested parties. The report also will be available at no 
charge on the GAO Web site at [hyperlink, http://www.gao.gov]. 

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. 

Sincerely yours, 

Signed by: 

Kay E. Brown: 
Director, Education, Workforce, and Income Security Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

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. 

Federal Studies and Data: 

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.[Footnote 31] 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 that 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. 

Survey of States: 

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.[Footnote 32] 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. 

Site Visits: 

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.[Footnote 33] 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. 
[Footnote 34] We cannot generalize our findings beyond the states and 
SFAs we visited. 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Kay Brown (202) 512-7215 or brownke@gao.gov: 

Staff Acknowledgments: 

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. 

[End of section] 

Footnotes: 

[1] In two states, the school meal programs are overseen by two 
different state entities; therefore, we surveyed both officials in 
those states, for a total of 53 child nutrition program directors. 

[2] We chose not to visit a state in the Mountain Plains Region because 
those states, on average, had the lowest level of participation in the 
school meal programs. 

[3] SFAs administer the meal programs in one or more schools. 

[4] In some cases, SFAs are not required to process an application. For 
example, children from households that participate in the Supplemental 
Nutrition Assistance Program, Temporary Assistance for Needy Families, 
or Food Distribution Program on Indian Reservations are categorically 
eligible to receive free school meals and their families may not have 
to complete an application. 

[5] Compliance with the standards is determined by averaging the 
nutritional content of the meals offered over a school week. 

[6] Beginning with fiscal year 2009, each FNS region conducts state 
risk assessments to determine those that will receive a management 
evaluation in the current year. Previously, each region was required to 
conduct a management evaluation of all of its states within a 3-year 
cycle. According to FNS officials, each management evaluation report is 
also shared with and reviewed by FNS headquarters staff. 

[7] State reviews cover the full scope of SFA administration of the 
lunch program, including procedures related to certifying children as 
eligible for free and reduced price meals, meal counting and claiming, 
and monitoring schools. 

[8] For more information on internal control, see GAO, Standards for 
Internal Control in the Federal Government, GAO/AIMD-00-21.3 
(Washington, D.C.: November 1999). 

[9] Pub. L. No. 107-300, 116 Stat. 2350 (Nov. 26, 2002). 

[10] USDA, FNS, Office of Research, Nutrition and Analysis, "NSLP/SBP 
Access, Participation, Eligibility, and Certification Study - Erroneous 
Payments in the NSLP and SBP, Vol. I: Study Findings," by Michael 
Ponza, et al. Project Officer: John R. Endahl (Alexandria, Va.: 2007). 

[11] The Improper Payments Information Act defines an improper payment 
as any payment that should not have been made or was made in an 
incorrect amount (including overpayments and underpayments) under 
statutory, contractual, administrative, or other legally applicable 
requirements. 

[12] This estimate includes both overpayments in which the SFA receives 
more in federal reimbursements than it should, as well as underpayments 
in which the SFA receives less in federal reimbursements than it 
should. Because the method used to calculate improper payments in APEC 
did not eliminate offsetting errors that might occur, such as an 
overpayment and underpayment to the same SFA, this estimate should be 
considered the maximum amount of improper payments due to meal counting 
and claiming errors. 

[13] The coordinated review effort for state administrative reviews of 
the school lunch program was implemented in 1992. At a minimum, states 
must conduct an administrative review of each SFA providing the lunch 
program in the state once during each 5-year coordinated review cycle 
provided that each SFA is reviewed at least once every 6 years. The 
current 5-year review cycle extends from July 1, 2008, to June 30, 
2013. 

[14] As part of each review, the state is required to conduct a minimum 
number of on-site reviews of the SFA's schools to assess meal counting 
and claiming procedures. States select schools receiving on-site 
reviews based on several criteria, including the number of schools in 
the SFA. 

[15] If an SFA's critical area violations of lunch program requirements 
exceed federally defined thresholds, the state may be required to 
conduct a follow-up review. Specifically, states are required to 
conduct follow-up reviews of all large school SFAs (those with 
enrollments of 40,000 children or more) and at least 25 percent of 
small school SFAs with violations that exceed these thresholds. 

In addition, federal regulations for the School Breakfast Program 
direct states to provide program assistance, in part by providing 
personnel to monitor performance and visit participating schools to 
ensure compliance with program regulations. However, the regulations do 
not specify how to conduct these activities. In contrast, regulations 
for the National School Lunch Program provide specific monitoring 
requirements through the coordinated review effort. 

[16] For schools found to have errors, SFAs are required to assess 
corrective actions and conduct follow-up reviews within 45 days to 
ensure compliance issues have been sufficiently addressed. 

[17] In a separate review of meal counting and claiming by food service 
management companies working with SFAs to administer the school meal 
programs, we similarly found that some state officials questioned the 
effectiveness of SFA annual on-site reviews either because the 
reviewers were not qualified to conduct them effectively or because the 
reviewers did not view the annual on-site review as a monitoring 
opportunity. For this review, we interviewed officials from 19 states 
in the Mid-Atlantic, Midwest, and Northeast regions. See GAO, Meal 
Counting and Claiming by Food Service Management Companies in the 
School Meal Programs, [hyperlink, 
http://www.gao.gov/products/GAO-09-156R] (Washington, D.C.: Jan. 30, 
2009). 

[18] During administrative reviews, if states determine that SFAs have 
not complied with program requirements, they are required to prescribe 
corrective actions, such as training, technical assistance, or 
recalculation of data. SFAs are required to report to states when 
corrective actions are completed. 

[19] APEC found that schools using a food-based menu planning approach 
had higher levels of cashier error than those that used other 
approaches, such as a nutrient standard menu planning approach. 

[20] SFAs do not always employ all of the staff who serve meals in 
schools. For example, teachers and other staff employed by school 
districts sometimes assist with meal service, including meal counting 
procedures. 

[21] During a follow-up administrative review, if the state determines 
that the SFA has not sufficiently corrected compliance issues, the 
state must withhold program funds until the SFA takes appropriate 
corrective actions. In serious cases of noncompliance, states have the 
discretion to terminate an SFA's participation in the meal programs. 

[22] While one state reported terminating 10 SFAs, the other three 
states had terminated 1 SFA each. 

[23] The Child Nutrition and WIC Reauthorization Act of 2004 (Pub. L. 
No. 108-265) established a requirement that states conduct additional 
administrative reviews of certain high-risk SFAs and provided funding 
for states to conduct these reviews and train SFAs. These reviews are 
in addition to the requirement that states review all SFAs within each 
5-year cycle. 

[24] Prior to fiscal year 2009, the number of states receiving these 
grants ranged from 3 to 8 in each year. 

[25] States are required to conduct a School Meals Initiative review of 
each SFA once during each 5-year review cycle. States can opt to 
conduct these reviews concurrently with those conducted under the 
coordinated review effort, but this is not required. 

[26] The National Food Service Management Institute was permanently 
authorized by Congress in 1994. The institute was established to carry 
out activities to improve the general operation and quality of the 
school meal programs. These activities include conducting research and 
providing training and technical assistance to states and food service 
personnel. 

[27] However, USDA headquarters officials stated that they are 
currently considering ways to more effectively use the data contained 
in these reports. 

[28] USDA, FNS, Child Nutrition Programs, "Eligibility Manual for 
School Meals: Federal Policy for Determining and Verifying 
Eligibility," January 2008. 

[29] USDA has since offered grants to states to assist with 
implementation of these changes. 

[30] At the end of every year, each state submits an FNS-640 report to 
FNS, which summarizes findings from all of the SFA reviews the state 
conducted during that year. 

[31] USDA, FNS, Office of Research, Nutrition and Analysis, "NSLP/SBP 
Access, Participation, Eligibility, and Certification Study - Erroneous 
Payments in the NSLP and SBP, Vol. I: Study Findings," by Michael 
Ponza, et al. Project Officer: John R. Endahl (Alexandria, Va.: 2007). 

[32] In two states, the school meal programs are overseen by two 
different state entities, therefore, we surveyed both officials in 
those states, for a total of 53 child nutrition program directors. We 
chose not to survey child nutrition program directors from Guam, Puerto 
Rico, or the U.S. Virgin Islands. 

[33] We chose not to visit a state in the Mountain Plains Region 
because of the relatively low percentage of students participating in 
the school meal programs in those states. 

[34] However, we were unable to observe school meal procedures in one 
SFA because the schools were closed due to inclement weather on the day 
of our visit. 

[End of section] 

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