Probe: About 100 public workers lied to get free school lunches

Posted: July 19, 2013

TRENTON - An investigation into 15 New Jersey school districts turned up more than 100 public employees and family members who lied about their incomes to get free school lunches for their children, according to the state comptroller.

Their applications bolstered district enrollment figures in the federal free lunch program - a factor that allows school districts to receive more state aid.

Designed to help low-income families, the federal program "has been compromised by widespread fraud," Comptroller Matthew Boxer said Wednesday, announcing the investigation results during a news conference at his office.

The 15 districts investigated included Pennsauken and Winslow Townships in Camden County and Pemberton Township in Burlington County.

As a result of the investigation, the Comptroller's Office referred 109 people - "the vast majority" public employees - to the Division of Criminal Justice for prosecution, Boxer said. He did not release names.

A spokesman for the division confirmed the referrals but did not comment.

The offenders included school board members as well as teachers and school, local, county, and state employees - "people who work for the government lying to the government about how much the government is paying them," Boxer said.

The investigation, initiated after reports of fraud by school board members in Elizabeth, spanned three years, focusing on 15 districts that received more than $1 million in federal money for the National School Lunch Program during the 2010-11 school year.

The program gives local districts money to offer free or reduced-price lunches to children of families whose incomes fall below certain levels, guided by the federal poverty level.

To qualify for free lunch this past school year, a family of four's household income could not exceed $29,965. To qualify for reduced price lunches, income could not exceed $42,643.

Under federal rules, school districts must review the 3 percent of applications with reported incomes closest to the income limits, Boxer said.

But districts are prohibited from reviewing the remaining 97 percent of applications, he said - meaning people who grossly underreport income receive no scrutiny.

"The bigger you lie, the safer you'll be," Boxer said. "People who know how the system works would know that."

In New Jersey, some employees who filed inaccurate applications - underreporting by as much as $97,500 - claimed that they simply reported net instead of gross incomes, even though the application specifies gross, Boxer said. Others did not list a spouse's income, he said.

One woman - a Pleasantville school board member - told investigators that she did not include her income because she was not the one receiving the lunch, Boxer said.

In total, the employees and families underreported $13.9 million in income over a three-year period, Boxer said.

Given the findings in 15 districts, "I think it's a safe estimate to say hundreds, if not thousands," of offenses have taken place in the 590 districts across the state, Boxer said.

Asked about the lunch fraud during a news conference in Toms River, Gov. Christie joked, "I'm probably the only person not getting free lunches."

He called the findings "absurd and obscene," and blamed the school funding formula for encouraging districts to sign people up for free lunches to increase their aid.

"I'm urging the Legislature to rethink the way they are doing the school funding formula," Christie said. A large portion of that funding, he said, is based on "numbers that are clearly fraudulent."

In March 2012, Christie created an education funding task force to review whether enrollment in the lunch program should determine state aid. The group was supposed to issue a report within 120 days, but no findings have been announced, and no meetings have been advertised since last August.

A spokesman for Christie did not answer questions about the task force's progress Wednesday.

The comptroller's report recommends that the state reconsider using lunch program enrollment as a basis for state aid.

Investigators did not uncover school officials conspiring to sign up employees to bolster their state aid, but they found districts holding barbecues and drives to enroll families without providing information about eligibility requirements, Boxer said.

"We are risking school aid being administered based on amount of fraud rather than amount of need," Boxer said.

Several Republican legislators - including Sen. Mike Doherty of Warren County, a vocal opponent of the school funding formula - called for an end to using the lunch program as a basis for aid.

"With a limited pot of state education funding, the extra aid delivered to districts with fraudulent enrollments in the school lunch program results in districts that follow the rules getting less than their fair share of state aid, causing their property taxes to rise," Doherty said.

Opposing that proposal was the Education Law Center, which brought the suit that resulted in the state's current school-funding plan.

Enrollment in the lunch program "is not a perfect measure of student poverty, but it is widely believed to be the most accurate measure available and is used in the majority of states around the country," the center said in a statement.

"The focus on finding evidence of fraud in the program ignores the arguably more important fact that there are many low-income families that would qualify for the program who do not apply," the center said.

In Pemberton, six public employees filed fraudulent reports, but "that's out of about 10,000 we process over a three-year period," said Superintendent Michael Gorman.

It would be "nice to be able to audit 100 percent," he said. But with 60 percent of the district's 5,000 students in the program, "you're talking about manpower" as well.

Fraudulent applications were filed by seven school employees and one public employee in Pennsauken, and one public employee in Winslow Township, according to the report.

School officials in those districts did not return messages Wednesday.

Contact Maddie Hanna at 856-779-3232, or follow on Twitter @maddiehanna

Inquirer staff writer Amy S. Rosenberg contributed to this article.

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