INDIANAPOLIS – Nearly half of all Indiana school children are on the federal free and reduced-price lunch program.
But state lawmakers who use the data to send $1 billion in state dollars to poor school districts fear the number is inflated due to lax income verification.
If a school comes in and says 60 percent of their kids are free and reduced lunch, is that real? I don’t know, but we’re giving them extra money, said Sen. Ryan Mishler, R-Bremen. I’m not saying they are cheating, but there is an incentive for districts to encourage you to sign up.
The concern has caused lawmakers to shift to a state-based statistic involving free textbooks instead.
More than 531,000 students receive discounted meals in Indiana. Similarly, the number receiving state textbook aid is about 512,000.
Both programs have grown dramatically since the recession.
The numbers track nearly the same because Hoosiers simply check a textbook box on the application for free and reduced-price lunch.
Federal rules prohibit schools from asking for any proof of income for the free and reduced-price lunch program, which involves no state dollars.
Mishler said he was intrigued by the growing numbers so he went in and signed his son up even though he does not qualify. They handed him the forms and told him no proof of income was needed.
Schools are also limited to verifying or auditing only 3 percent of applications, and most of those are considered error-prone.
Julie Sutton, director of school and community nutrition programs for the Indiana Department of Education, said a third of those audited were taken off the program.
Some lawmakers have extrapolated this to mean one-third of those Hoosiers on the free- and reduced-price program are fraudulent.
But Sutton explained that some of them just don’t respond to requests for information.
And she said again the audit is mostly of applications that already are questionable.
Fort Wayne Community Schools has seen a steady climb in the free and reduced-price lunch program since the 1989-90 school year when 27 percent of the student population qualified. Ten years ago, it was at 54 percent. The preliminary number for the new school year is 72 percent.
Spokeswoman Krista Stockman said that during the 2012-13 school year 144 applications were randomly picked for verification, representing 2 percent of all applications and 53 percent of the error-prone applications.
The result of this verification moved 24 kids from free lunch to reduced-price lunch; 17 children from reduced-price lunch to free; and 34 were taken off the program altogether.
Textbook assistance doesn’t have an auditing or verification system. It is simply aligned with free and reduced-price lunch even though state dollars fund it.
Lawmakers wouldn’t care about the free and reduced-price lunch program except they use that statistic in a key part of the tuition-support formula sending state dollars to schools.
It is used to calculate a complexity index meant to give extra money to poor districts with disadvantaged students. About $1.1 billion of the overall $6 billion in state funding for K-12 schools flows through the complexity index.
As a result of concerns, the General Assembly will base the complexity index on the state textbook program starting next July. This allows the state to keep a closer eye on the data and require parents to provide tax or pay stub information.
We haven’t found any wide-scale fraud, Wabash City Schools Superintendent Jason Callahan said. It does frustrate me that anyone thinks these communities are going out and trying to cheat the system by generating false numbers for free and reduced lunch. It’s offensive.
It is unclear so far how the change will affect fiscal year 2015 funding. The same overall amount of dollars is available but it could shift the money between districts, leaving winners and losers in the process.
Dennis Costerison, executive director of the Indiana Association of School Business Officials, expects the next step might be a separate textbook application requiring proof of income, which could be an administrative burden for schools and parents.
By using free textbooks as the main driver for complexity index, then the state has authority to audit those accounts and can see if someone is playing the system, Costerison said.
He said some tweaking is still possible next year, including putting some more structure on how audits and verification would be handled for textbooks.
Costerison also said there are some outlier districts lawmakers will have to deal with. For instance, he said one southern Indiana district uses riverboat tax money to pay for all textbooks locally. That means no one in the district applies for state textbook aid. A few charter schools also supply textbooks.
The Department of Education is considering whether to create a separate application for textbooks and how verification will be handled.
Stockman said if parents don’t fill out the forms then the school districts could lose money to educate children.
For instance, if FWCS loses 1 percent from its complexity base, its funding will drop $1.27 million in fiscal year 2015. If the district’s complexity base drops 10 percent, the loss is more than $7 million.
Stockman and others said that half of all kids with free and reduced-price lunches are automatically placed on the program because they receive food stamps, a federal program that already has substantial income verification.
We are concerned that we are going to lose funding and that families in need are not going to get the benefits that they need, she said. When you make families jump through those extra hoops, that can be a challenge. If they are truly in need they should get the services to help their children do better.
Mishler, though, sees nothing wrong with parents having to provide proof to qualify for a benefit.
It’s fair, he said. When they sign up for Medicaid and other benefits they have hoops. It doesn’t seem like on the other programs people aren’t signing up because of paperwork.