Food Subsidies Are No Free Lunch

June 15, 2010

We are being bombarded with sensationalist stories in the press about state and local governments having to “slash” programs because of a lack of revenues. These stories typically revolve around the question of whether the federal government will continue supplementing “essential services” provided by state and local government.

Unfortunately, there seem to be few enterprising journalists at the major newspapers willing to investigate whether these supposedly essential programs are actually deeply flawed. It is taken for granted, as an example, that cutting federal aid for local food subsidies would automatically result in hungrier children. 
An excellent investigation into the federal lunch program by Kate McCann, a writer for the Southtown Star in Illinois, is precisely the sort of work reporters at the big papers should be undertaking.
McCann found that taxpayers are funding school meals for hundreds of local students whose parents’ earnings are above the limit for them to legally qualify. Local schools do a poor job of preventing unqualified students from getting the benefits, and remarkably Congress appears to want it that way
School districts couldn’t conduct a more thorough check even if they wanted to. In 2004, Congress amended the Richard B. Russell National School Lunch Act, changing the verification process so districts could not audit more than 3 percent of the applications. Before, some districts voluntarily chose to audit every application in the district. 
After learning of the fraud rate in the free and reduced lunch program, one North Carolina school board fought the U.S. Department of Agriculture for the right to conduct a more thorough audit. The USDA threatened to cut off the district’s $34 million lunch subsidy if it audited more than 3 percent of applications, according to a report earlier this year in Education Next, an opinion research journal sponsored by the Hoover Institute and the Harvard Kennedy School. 
In the last six decades the school lunch act has inspired a powerful school lunch lobby, including food giants Tyson and Archer Daniels Midland and various food advocacy and nutrition groups. Attempts to scale back the program have been a political deathblow to legislators on both sides of the aisle. 
“If these well-financed and effective lobbying interests keep watch over school lunch from outside government, there is a host of congressional insiders and bureaucrats at the Department of Agriculture who help grease the skids,” wrote researcher Ron Haskins in a 2005 report for Education Next. 
A Cato essay on food subsidies points out the federal school breakfast and lunch programs are riddled with fraud and abuse: 
Like other subsidy programs, the school meal programs are widely abused. A large share of free and reduced-price meals is inappropriately provided to families with incomes above the statutory income cutoffs. Because schools put little effort into verifying recipient incomes, many higher-income parents receive subsidies. Audits have found that about one-quarter of those receiving free and reduced-cost lunches are not eligible. The USDA testified to Congress that in 2002 “27 percent more students are certified for free or reduced-price meals than the Census data itself would suggest are eligible.”  
In these economic hard times the deserving less fortunate do need help. But when the federal government tries to tackle issues that are properly the domain of local communities the result is always the same: waste, abuse, and cost-ineffectiveness.
Local officials and charities using their own funds would have far more incentive to make sure aid is properly spent. But when the money is showered from Washington, there is no accountability or incentives for efficiency. In the case of the federal school lunch and breakfast program, no accountability is apparently exactly what Congress wants. 




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