CMS to forego $34 million if it conducts F&R audit

After Carolina Journal reported on the issue in July, some members of the school board in Charlotte-Mecklenburg began looking into the reliability of the federal free and reduced-lunch program. Now, the state government has threatened to withhold $34 million in federal lunch subsidies if the district conducts a more extensive audit.

Federal law requires school districts to conduct a 3 percent audit of free and reduced-lunch participants. CMS?s 2007-2008 audit showed that 479 out of 704 households verified either did not respond or sent income evidence that reduced or repealed benefits.

After reading about the situation in Charlotte, I contacted the USDA again and asked for clarification on whether a school district can conduct an audit beyond the 3 percent. Jean Daniel, a spokesperson for the USDA Food and Nutrition Service, told me in June that she was ?not aware? of any challenges from the USDA if a district chose to conduct a more extensive audit.

But in August, she changed her statement. She told me through email, “If an administrating State agency were to observe a violation of [the 3 percent] limitation on a performance review, the violation would be noted and corrective action would be required.? She also said that federal law limits the verification of applicants to 3 percent only.

In a follow-up email, I asked for the justification behind limiting the verification to 3 percent. Daniel responded:

To ascertain Congressional intent, we would encourage [you] to contact the authorizing committees directly, i.e., the Senate Agriculture Committee and the House Education and Labor Committee. We believe the 3 percent limit was intended to prevent a barrier to families who would otherwise be eligible.

It?s still unclear whether a school district anywhere in the country has conducted a more extensive audit and whether the USDA has ever cut off funding to a district for doing so. The issue is especially touchy since schools with high percentages of students participating in the free and reduced-lunch program often get additional funding or aid.