Yes, There is a Free Lunch

To the age-old childhood lament that the pizza at school is grease-laden, the cheese like rubber and the insides of the quesadilla like something eaten yesterday and regurgitated, add a new and more serious concern:

School meal programs are larded with middle-income families that are, in Wisconsin alone, siphoning untold tens of millions of dollars away from ever-larger federal appropriations meant to help impoverished families.

The practice is so common and ingrained that scores of middle-class families — when granted anonymity — have admitted during interviews that their children are being fed through government nutrition programs designed to help their less fortunate neighbors.

What’s more, they are just a small fraction of what are likely tens of thousands of relatively well-off state families siphoning money and food from school breakfast, lunch or snack programs, a Wisconsin Interest investigation has found.

Census data indicates that there are simply many more students in Wisconsin now certified to receive a free or greatly reduced-price lunch — 41% — than can possibly be below income thresholds for the program. And with government subsidies of $2 or $3 per meal — and tens of millions of essentially free meals served every year — the cost is enormous.

Taxpayers spend approximately $141 million a year on the lunch program in Wisconsin alone — a good chunk of which is going to the children of families for which it was never intended.

In most schools nowadays, it’s hard to tell who is paying out of their own pocket. Students usually use school IDs that can be swiped to purchase lunch or breakfast, and only the cafeteria worker at the register knows from looking at a computer if the student is getting a free meal — not that it’s usually a big secret in the lunchroom.

“A lot of the kids, I don’t think it bothers them anymore,” says Doreen Miller, the food service manager in the Spooner Area School District and president of the regional chapter of the Wisconsin Food Service Association. “I don’t think there is any stigma involved any longer, not like when I was in school.”

Kids, indeed, are often more than willing to admit that they get taxpayer-provided meals. After all, on average in this state, half of the other kids in the lunchroom on any given day are as well. 

Wisconsin cafeteria workers served more than 99 million lunches in private and public schools and residential child-care institutions during the 2009-2010 school year alone, and 48% of those, more than 47 million meals, were either free or nearly so.

It’s not just in poorer districts such as Milwaukee that free lunch is common — or that complaints about it are as well. On a recent warm Tuesday afternoon outside West Bend’s two adjacent high schools, half a dozen students engaged in the time-honored tradition of dissing the cafeteria.

The pepperoni pizza is served with “puddles of grease,” said a diminutive teen by the name of Brandon, holding up an imaginary grease-laden slice, peering cock-eyed at it and grimacing. The corn, said his buddy Devon, tastes “like plastic. It’s like chewy plastic.”

Oh, and “it looks like they puked in the quesadilla,” added Brandon, “and then put the shell on.”

It’s all, they opined, disgusting. It’s also more and more often provided by taxpayers, even in middle-class Wisconsin school districts such as West Bend — where the percentage of kids receiving taxpayer-provided lunches has increased from 14% in 2001 to 34% today.

Percentages in other districts, in the meantime, are often considerably higher. More than half of the students in 95 Wisconsin districts — including Green Bay, Racine, Spooner, Mauston, Menasha and Madison — are now approved to receive taxpayer-provided meals at school. The old saw about there being no free lunch is about as relevant as a brown paper bag and a peanut-butter-and-jelly from the home cupboard. And the government doesn’t just provide free lunch, it often provides free breakfast and free after-school snacks as well. 

Kids are, of course, famously fickle — and critical. Lynne Gross, director of school nutrition in the West Bend district, says every menu is analyzed for its nutritional value. The district follows all applicable nutrition guidelines and only buys wholesome food. Moreover, West Bend has been hit hard with the loss of manufacturing jobs. More kids are eating free and reduced-price lunch, she believes, because more kids need it.

“Yesterday, I approved 10 families” for free lunch, Gross says. “I will go a week or two with no one. All of a sudden, 20 people will come in.”

“We have no jobs here. It is ridiculous. We have families where both parents have lost their jobs at the same time.”

Many poorer parents, to be sure, need the help — and not just those whose families meet the badly outdated federal definition of impoverishment: less than $22,350 a year for a family of four. Recognizing how little money that is to raise a family, Congress — through laws supplemented by a bevy of federal regulations and guidelines — directs the United States Department of Agriculture to provide free lunches and breakfast to students from families making less than 130% of that.

Schools, similarly, must provide reduced-price lunches for no more than 40 cents to students from families making 185% of the federal poverty level — currently about $41,000 per year for a family of four.

The recession surely pushed more Wisconsin families below those thresholds. The growth of the school lunch program cannot be attributed merely to the economy, though. School lunch, breakfast and snack programs have grown steadily year after year through both good times and bad.

Nationally, the number of kids receiving free or reduced-price lunch has increased from 6.3 million in 1971 to 20.6 million today. Looked at another way, only one out of every four kids eating a lunch from the school kitchen got it free or at a greatly reduced price 40 years ago. Nowadays, it’s two out of three.

In Wisconsin, in the meantime, the percentage of public school kids found eligible to receive taxpayer-provided meals has gone from 28% just 10 years ago during the 2001-02 school year to 41% today.

What was once a relatively small and limited program has grown ever larger. For the nation’s farmers, that is good news and a sign that the program is serving one of its fundamental purposes.

For years, the program has been much more than a safeguard for needy children. It was also designed, as the Child Nutrition Act of 1966 put it, to “encourage the domestic consumption of agricultural and other foods.” There’s a reason, after all, it is run by the U.S. Department of Agriculture and not the U.S. Department of Health and Human Services.

Back in Wisconsin, of course, it is run largely by administrators in local school districts who don’t just buy food and serve it up but are also charged with deciding who gets the lunch and who doesn’t.

Gross points out that West Bend has made a “huge push” to get the word out to people who might be eligible — another reason certification numbers have increased dramatically. Many students, however, almost half, don’t even have to apply in West Bend, or anywhere else in Wisconsin where school lunches are served.

Many — 73% statewide — now qualify through what’s known as “direct certification” of kids whose families receive public assistance through other programs such as FoodShare or Temporary Assistance to Needy Families. Such families, since 2007-2008 in some districts and everywhere in Wisconsin today, are simply notified each fall that that their children will receive free meals at school.
All they have to do is show up.

Others are still required to submit short applications that ask for information about income but do not require any proof, such as check stubs or even the Social Security numbers of all adults in the house. Local school district administrators, following federal instructions, only attempt to verify 3% of all applications. 

The whole program, in other words, operates largely on the honor system. If an applicant does not respond to a request for more information, the only consequence typically is what federal bureaucrats call a “notice of adverse action.” In other words, the applicant just doesn’t get the free lunch.

In West Bend, Gross doesn’t buy any suggestion that there is a lot of fraud in the program.

“I would have a very hard time agreeing with that,” she says, adding that she personally handles every application. “Anyone in doubt, I investigate. If something comes up that is unusual, I don’t pass it through.”

The Wisconsin Department of Public Instruction, meanwhile, responded to questions about the number of kids in the program by noting that USDA regulations require the state to conduct administrative reviews of all schools at least once every five years and can require schools to return any funds spent erroneously. DPI has also applied for and received federal grants to help reduce problems such as “overcertification.”

The department, in addition, recently received a $2 million grant to provide training to schools in how to use “accountability software” that will allow the state to monitor both public and private school with a history of certification errors.

What the bureaucrats call overcertification has, in fact, long been a problem in the school lunch and breakfast programs.

The most comprehensive and rigorous study, a look at the programs in 266 different schools across the country, was conducted by Mathematica Policy Research for the USDA’s Food and Nutrition Service five years ago. The study found that 15% of students should have been paying more for lunch while 7% could have been paying less. The net cost to taxpayers at the time was estimated to be approximately $485 million nationwide. 

Participation in school lunch programs has increased dramatically since then, and it appears that so-called overcertification is an even larger problem today.
Part of the evidence is statistical.

During the 2010-2011 school year, according to the Wisconsin Department of Public Instruction, approximately 349,000 kids in public schools and another 24,000 kids in private schools were certified to receive taxpayer-provided meals — a total of 373,000. 

The problem: There are nowhere near 373,000 elementary and high-school kids from Wisconsin families making under 185% of the poverty level, according to the Census Bureau and U.S. Bureau of Labor Statistics data. The Current Population Survey of 2009, which was administered by those two federal entities, found that only about 28% of elementary and high-school children in Wisconsin are from families falling below 185% of the poverty level. That would be only about 252,000 students — some 120,000 fewer than are actually certified. 

The Current Population Survey (CPS) has limitations, including about a 3% margin of error in Wisconsin. It includes kids who are of school age but are not attending, and it leaves out kids who, for example, might be attending but don’t have families. 
Professor John Karl Scholz, a University of Wisconsin-Madison economist, says that using CPS results to estimate eligibility in the National School Lunch Program is a flawed methodology largely because CPS data is annual and kids are often certified to get meals based on their parents’ monthly, rather than yearly, income. 

In a 1999 paper, however, the USDA used the same methodology as Wisconsin Interest to estimate eligibility in the school lunch program. While acknowledging the methodology was not perfect, the USDA concluded that — even then — there were high overcertification rates.

Comparisons of the CPS and school lunch participation statistics, moreover, are not the only evidence of abuse.

For instance, the Census Bureau’s Annual Social and Economic Supplement (ASEC) focuses largely on household finances but also asks a limited number of parents and guardians if their children get free or reduced-price lunches at school.

In fact, in the same 1999 paper the USDA examined ASEC data to determine that between 1993 and 1997, 23% of households with kids getting free- or reduced-price lunches reported income exceeding 185% of the poverty level. Approximately 6% of households with kids participating in the meal program at the time reported incomes over 300% of the poverty level. 

The sample of households surveyed with the ASEC in Wisconsin each year is too small to accurately come up with similar, statistically valid percentages here in recent years. But anecdotal results are telling. Between 2002 and 2010, interviewers contacted a total of 863 Wisconsin households with children who received free or reduced-price meals at school, Wisconsin Interest determined. Of those, 146 were in the top half of all income-earners in the state; 33 were in the top third and 15 were in the top quarter.

Median income in 2008 in Wisconsin, according to Census Bureau data, was around $52,000 per household — including, for example, households of one individual living alone in a single room or apartment. Median family incomes in Wisconsin in 2010 were much higher, ranging from $57,000 for a family of two to $80,000 for a family of four, according to Census Bureau data.

It’s not unheard of, both this analysis and the ASEC surveys indicate, for households making $60,000 or $70,000 or more a year to be certified for free lunch.

All this is exceedingly expensive.

At the federal level, the total cost of the school lunch program jumped from $3.7 billion in 1990 to $6.1 billion in 2000 to almost $10 billion today. In Wisconsin alone, in addition to the $141 million spent on lunches during the 2009-10 school year, taxpayers kicked in another $38 million for breakfast and snacks. 

That is just a fraction of the money the ever-burgeoning program costs taxpayers, moreover, because school administrators typically use the percentage of students receiving free or reduced-price meals as an argument for more money for programs that have nothing to do with food. 

“Funding for public schools is vital at a time when two out of five students receive free or reduced-price school meals,” State Superintendent Tony Evers argued in a March press release. “The proposed 2011-13 budget makes huge cuts to education, balancing the fiscal follies of adults on the backs of children, especially those living in poverty. We need a budget that is fair, equitable, and does not do permanent harm to our public schools.”

Having lots of kids who qualify for taxpayer meals isn’t just a good debating point during budget talks. Millions of dollars in Title I federal grant funds in many states, including Wisconsin, are often dispensed to school districts in proportion to the number of children approved for free or reduced-price meals. 

For instance, in the Port Washington-Saukville District, where about a quarter of students are certified to receive subsidized meals, it is the sole determinant for Title I, according to Gary Myrah, who was the district’s director of special services until he took over as executive director of the Wisconsin Council of Administrators of Special Services on July 1.

Might there be an incentive for Wisconsin schools to submit high free- and reduced-price lunch numbers to increase Title I aid? Myrah allows that “someone might find creative ways to get some cash,” but Port Washington has never operated that way, and he didn’t know of anyone elsewhere who had either.

The USDA’s Food and Nutrition Service freely concedes there have been problems caused partly by “misreporting of income” by applicants as well as administrative errors. And an FNS spokesperson says that the agency has already ramped up training of program administrators in every state, in addition to strengthening direct certification and establishing tougher requirements for school districts that demonstrate high levels of error.

The idea is to “help schools reduce the cost of erroneous payments without compromising access for low-income families and without major increases in burden for schools,” says the USDA’s Susan Acker.

Running the program better is different, though, than examining how it morphed beyond its initial, well-intended mission and came to cost taxpayers tens of millions of dollars a year more than it should just in Wisconsin — and likely many, many times that nationally. 

America has a long, proud history of feeding students from poor families. Lunches have been served in public schools in America — most notably in Boston, Philadelphia and Milwaukee — for more than 100 years. From the beginning, kids who could afford the lunches paid for them while the less fortunate ate for free. 

The poor and struggling still benefit, of course — along with farmers and a chunk of the middle-class that freely admits it during the annual interviews. Perhaps that’s because they know their answers are confidential. Or perhaps there is another explanation. So many families now receive taxpayer-provided meals that they no longer think about it as just an anti-poverty program.

Because it’s not.

Mike Nichols is a Senior Fellow at the Wisconsin Policy Research Institute.

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