Meal Counting and Claiming by Food Service Management Companies in the School Meal Programs

The federal government spends about $10 billion each year to provide meals to over 30 million students through the National School Lunch and Breakfast Programs. However, a 2007 study estimated that of this amount, $860 million (8.6 percent) in school year 2005-2006 was paid improperly because of errors in the number of meals counted and claimed for reimbursement. These programs are administered by the United States Department of Agriculture's (USDA) Food and Nutrition Service (FNS) through state agencies that, in turn, oversee local school food authorities (SFA). SFAs that participate in the lunch and breakfast programs receive federal cash reimbursements through the state agency for each meal served, and in the lunch program they also receive USDA commodity donations based on the number of meals served. In return, SFAs must serve meals that meet federal nutrition requirements and offer meals free or at a reduced price to students whose family's income falls below certain thresholds. While most of the roughly 13,700 SFAs in traditional public school districts in the United States manage their own programs, about 13 percent choose to contract with private companies known as food service management companies (FSMC). FSMC involvement in food service activities varies among SFAs, depending on the duties specified in the contract, but these duties may include meal-counting and -claiming activities. Regardless of the duties specified in the contract, however, FNS guidance states that SFAs remain responsible for the overall operation of the school meal programs, including overall financial responsibility. SFAs are also required to ensure the accuracy of lunch claims through effective internal controls