are more common in Provision 2 and 3 schools (in their base years) than in schools using the traditional method. Erroneous payments in the NSLP were approximately 1.75 percent larger for Provision 2 and 3 schools. With these provisions, any overstatement (or understatement) of claiming percentages for the base year will persist through subsequent years of their use until a new base year is established. The APEC study did not differentiate between schools in their first base year and subsequent base years, because the sample of Provision 2 or 3 schools was too small. In subsequent base years, there is likely to be more error because after 4 years of not taking applications, parents and school district staff have become less familiar with the application and verification procedures and less skilled in carrying them out. In light of the ongoing provision of free meals, some parents may not understand why applications need to be submitted, and may not submit applications at all or take the time to complete them accurately. School food service directors participating in the workshop hosted by the panel expressed concern about such problems arising when a new base year is established. Because the AEO has only one base year at the beginning of the process, the challenges associated with subsequent base years will not obtain.

After the first base year, the reimbursements under Provisions 2 and 3 and the AEO include any base-year errors. Under Provisions 2 and 3, a new base year may be established, possibly resulting in increased errors for reasons discussed above. In the years between base years under Provision 2 and after the base year under the AEO, any additional errors due to factors 1 and 3 are eliminated, leaving possible errors in determining that a meal qualifies for reimbursement (factor 2) and in compiling and transmitting the information (factor 4). In the years between base years under Provision 3, any additional errors due to any of the factors are eliminated, although there may be aggregation error in reporting to the district and state. In addition, Provisions 2 and 3 are subject to errors due to the fact that claiming percentages or meal counts are fixed and will not reflect changes in eligibility or participation rates, a source of error that does not arise under the traditional method. Because the recommended procedures for implementing the AEO include a base year only at the beginning of the process, the difficulties associated with redoing a base year after several years of free feeding with no applications will not be encountered. The AEO relies on the ACS for an annual update and thus accounts for changes in a district’s socioeconomic conditions, albeit with a lag.

The panel is not aware of an analysis of the accuracy of the CEO and its impact on reimbursements. This special provision is new, having been implemented in three states during school year 2011-2012. Potential errors under the CEO include direct certification errors and errors associated with using the factor of 1.6 to account for eligible students who are not

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