universal free meals. At the panel’s workshop, some of the participants representing school districts indicated that they would probably consider only districtwide adoption of the AEO to reflect public opinion in their districts, while others would probably consider implementing the AEO only in some schools. All of these officials, however, emphasized that their district would need to “run the numbers” to determine whether the AEO was financially viable in terms of the district being able to cover the costs of the meals programs through federal reimbursements and other sources of funds while providing free meals to all students attending schools in which the AEO might be adopted.

OVERVIEW OF THE PROPOSED AEO

As noted above, the AEO proposed by the panel, like Provision 2, begins with a base year during which districts collect applications, conduct verifications, and count meals but feed all students free of charge. Reimbursement in the base year makes use of meal counts by category, as in the traditional approach. ACS eligibility estimates and the district’s own administrative data for a minimum of 4 years (including the base year) are used to compute benchmarked ACS claiming percentages that are used to determine reimbursements in future years, when all meals are free. The benchmarked ACS claiming percentages are updated annually when the new ACS data become available.

The benchmarking approach proposed by the panel automatically adjusts for systematic differences between the ACS estimates and a district’s administrative data. As discussed in Chapter 4, many of the reasons for these systematic differences relate to issues affecting the ACS estimates, particularly in high-poverty areas: underreporting of Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program) benefits; use of annual rather than monthly income to determine eligibility; omission of students who live in group quarters or nontraditional housing; differential inclusion of part-time residents, such as migrant workers, who live in traditional housing; and school choice. Benchmarking is likely to remove these causes of systematic errors. Because it is based on certification data, however, benchmarking can perpetuate the effects of certification error. That is, if certification error is present in a district’s administrative data, it will continue to be present in AEO benchmarked estimates. Furthermore, all else being equal, the AEO will be more attractive to districts with higher levels of overcertification.3

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3 Further research could be undertaken to develop an approach for adjusting administrative estimates to remove certification error. Prior to approval of a district’s request to adopt the AEO, FNS might want to review the district’s verification results and consider corrections to the district’s benchmarking adjustments for certification error.



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