State Auditor Mike Foley is questioning whether looking at free  lunch data is a good way to determine poverty for school aid.

Foley issued a report Monday saying an audit of the Nebraska Department of Education raised questions of how approximately $21.5 million in state tax dollars is allocated to about 250 public school districts in the state.

Foley said federal testing of eligibility for the free lunch program has shown some “troubling inaccuracies.”

The number of students eligible for free lunch was overstated due to ineligible students receiving free meals through the National School Lunch Program.

Approximately $21.5 million in state aid funding is based on a district’s poverty factor, Foley said. That factor is determined by either income tax data from the Nebraska Department of Revenue or the number of students enrolled in the federal school free lunch program, whichever is greater. 

Virtually all Nebraska school districts receive their allocation of poverty dollars based on the free lunch program data, Foley said.

The Nebraska state aid formula awards higher state aid funding to districts with the greatest number of impoverished students.

“Nebraskans expect our hard-earned tax dollars to be allocated in a responsible manner and I have serious concerns about whether the poverty dollars in the state aid formula are being distributed fairly,” Foley said.

Connie Knoche, with the state Department of Education, said poverty is just one of the factors in a district’s needs used to figure overall state aid to a district.

“There’s not separate funding streams” for needs based on poverty, she said. It’s all part of the calculation. 

For the past two school years,  districts have been required to document eligibility of 3 percent of those receiving free lunch. Foley said they ask for verification such as a tax return, proof of salary or of qualification for food stamps.

If the families don’t respond to the inquiry, or if they cannot prove they qualify for free lunch, they become ineligible, he said.

Foley released a chart of the top 20 largest school districts and the results of verification testing. It showed 63 percent of the 3 percent of Lincoln Public Schools students asked for documentation were subsequently denied free lunch.

That percentage was 46 percent in Omaha Public Schools, 77 percent in Millard Public Schools, 11 percent in Westside Community Schools.

One hundred percent of students in Kearney, Norfolk, South Sioux City, Blair and Beatrice who were asked for documentation qualified, according to the audit.

Statewide, 21 percent of the free lunch applications verified resulted in students being determined as ineligible.

Dennis Van Horn, LPS associate superintendent for business affairs,  verified the district’s audit of 3 percent of families on free lunch showed 63 percent did not actually qualify.

“I don’t know for sure what that means,” he said. “It may mean there’s a problem of giving false information.”

The procedure is set up to be private and confidential, he said.

Beatrice Public Schools had 100 percent of families reviewed qualify. Chris Nelson, Beatrice business manager, said the district usually has a high number who either didn’t respond to the verification process or who didn’t calculate their income properly.

The district had changed the selection process of who to contact for review, but this year went back to a random sample, he said. It had only one person not reply.

“I think that’s just a fluke,” he said.

He agrees with the auditor that  there’s a large failure rate. “It’s nothing schools can control,” he said.

People just don’t respond, even when it means losing free lunches,  or else they aren’t giving districts correct information, he said.

Kearney Public Schools had the same 100 percent qualification rate.

Margene Dahlstedt, Kearney business manager, said the district asks for some type of documentation of income from a random sample, sends reminders and makes followup calls.

“We always have a good response,” she said.

Nebraska Education Commissioner Doug Christensen said the circumstances that qualify families for free or reduced lunch are not absolutely black and white.

Looking only at income or tax returns do not show a family emergency such as an illness or fire or sudden loss of income, he said.

If districts mail the verification notice, they may run into a problem if families do not speak English or if they have moved, as families living in poverty frequently do.

Foley has uncovered something that may smell like smoke, he said, and officials must now investigate to see if there’s actually a fire.

It is a legislative issue, Christensen said, but right now, free lunch qualification is the best indicator the state has for determining how to get money to where poor children need it.

Foley said the federal government’s administration of the free lunch program is “exceedingly lax” and many students throughout the country who are not qualified for the program are enrolled in it. 

 The auditor’s results will be turned over to the state Legislature for further analysis, Foley said. He suggested senators may want to find a better measure of poverty in awarding that portion of state education aid.

Other measures, such as tax return data, might provide a better measure of how to allocate the dollars more equitably, he said.

Van Horn  and Christensen said the bottom line is to make sure children who qualify for free lunch are identified and given the nutrition they need, and that state poverty dollars get to poor children  wherever they are in the state.

Reach JoAnne Young at 473-7228 or jyoung@journalstar.com.