Sum­mer meals for kids sort­ing out bad ap­ples

Pro­grams plagued by scams

Arkansas Democrat-Gazette - - FRONT PAGE - BRIAN FANNEY FOR THE ARKANSAS DEMOCRAT-GAZETTE

When the clock struck 7:30 a.m. dur­ing the week this sum­mer, chil­dren poured into Lit­tle Rock’s Wash­ing­ton Mag­net El­e­men­tary School.

On one par­tic­u­lar Tues­day, Mar­garet, a fifth-grader par­tic­i­pat­ing in a sum­mer pro­gram at the school, picked up grapes, Lucky Charms ce­real and low-fat milk from a lunch line be­fore tak­ing a seat at a long, brown cafe­te­ria ta­ble.

“I’m not a fan of cho­co­late. Cho­co­late is like my least fa­vorite,” she said when asked about her milk choice. “I just go for the white milk be­cause it’s health­ier.”

Mar­garet’s low-fat milk — along with the food for dozens of other chil­dren at the school — was paid for by the U.S. De­part­ment of Agri­cul­ture’s Sum­mer Feed­ing Pro­gram.

The pro­gram is meant to en­sure that chil­dren who re­ceive free or re­duced-price lunches dur­ing the school year con­tinue to eat dur­ing their sum­mer breaks.

But the pro­gram also has been as­so­ci­ated with fraud — in Arkansas and across the coun­try.

An on­go­ing in­ves­ti­ga­tion has un­earthed more than $11 mil­lion in stolen funds. Two De­part­ment of Hu­man Ser­vices em­ploy­ees have been in­dicted and have ad­mit­ted to be­ing “gate­keep­ers” who, in re­turn for bribes, made it pos­si­ble for oth­ers to de­fraud the pro­gram. So far, 10 people have been sen­tenced, and five await sen­tenc­ing.

State of­fi­cials cracked down while try­ing to en­sure that food providers don’t flee the pro­gram and leave chil­dren like Mar­garet hun­gry.

Nearly three years after

The num­ber of people in Arkansas who have trou­ble putting food on the ta­ble has only in­creased. Now, about 19.2 per­cent of Arkansans are “food in­se­cure,” ac­cord­ing to the lat­est USDA re­port.

then-Gov. Mike Beebe took of­fice in 2007, he was con­fronted with head­lines about hun­gry chil­dren in his home state.

The USDA’s an­nual re­port on House­hold Food Se­cu­rity, re­vealed that in 2008, 17 mil­lion U.S. house­holds, or 14.6 per­cent, were “food in­se­cure” — mean­ing that at some time dur­ing the year, they had dif­fi­culty putting enough food on the ta­ble be­cause of a lack of re­sources.

Put in the con­text of in­di­vid­ual Amer­i­cans, the re­port found that 16.4 per­cent — just over 49 mil­lion people — ex­pe­ri­enced hunger or were at risk of run­ning out of food at some point.

The 2008 fig­ures on Amer­i­cans who lack de­pend­able ac­cess to food were the high­est since the USDA be­gan the na­tional food-se­cu­rity sur­veys in 1995.

For Arkansas, the sur­vey showed that based on mul­ti­year av­er­ages the num­ber in that cat­e­gory had been steadily in­creas­ing. Us­ing 1996-98 data, 13.7 per­cent of Arkansans were “food in­se­cure,” a tie for sev­enth-high­est with Wash­ing­ton, D.C.

From 2003-05, the num­ber climbed to 14.7 per­cent, mov­ing Arkansas to the fifth-high­est level.

Then the study found the state level at 15.9 per­cent — be­hind only Mis­sis­sippi and Texas — for the 2006-08 pe­riod.

Beebe saw the need and wanted the state to act.

“The pro­gram re­ally grew un­der the pre­vi­ous ad­min­is­tra­tion. There was a big in­ter­est in try­ing to feed chil­dren in Arkansas be­cause we were ranked pretty low, but I think it did not an­tic­i­pate — it cer­tainly did not an­tic­i­pate — the kind of col­lu­sion that oc­curred,” said Tonya Wil­liams, di­rec­tor of the Di­vi­sion of Child Care and Early Child­hood Ed­u­ca­tion, a com­po­nent of the De­part­ment of Hu­man Ser­vices that over­sees the federal pro­gram.

Prose­cu­tors said the pro­gram fraud lasted from 2011 to 2014.

As­sis­tant U.S. At­tor­neys Jana Har­ris, Al­li­son Bragg and Cameron McCree have said Hu­man Ser­vices De­part­ment “in­sid­ers” paved the way for oth­ers to sign up as spon­sors for food-pro­vid­ing pro­grams.

In some cases, no chil­dren were served as part of those pro­grams. In oth­ers, pro­gram op­er­a­tors would ex­ag­ger­ate the num­ber of chil­dren fed when ap­ply­ing for a federal “re­im­burse­ment.”

Records show pro­gram spend­ing in the state ex­ploded over the past five years — ris­ing from $5.3 mil­lion in 2012 to $22.6 mil­lion in 2014. All of the money came from the federal gov­ern­ment.

Wil­liams said that around the same time, the federal gov­ern­ment ex­panded the pro­gram with an “at risk” com­po­nent for li­censed child­care providers.

“It al­lowed people to of­fer an evening meal to school-age stu­dents, for ex­am­ple, and that was brand new,” she said. “That just started in 2012. So there was a lot of growth there and that’s what some of the folks that were in the news — they were par­tic­i­pat­ing in that pro­gram. And then when you get to sum­mer, the very first day that sum­mer starts when your school is out, those pro­grams con­vert — can be­come — a sum­mer feed­ing pro­gram.”

As the num­ber of providers in­creased, the De­part­ment of Hu­man Ser­vices staff no­ticed ir­reg­u­lar­i­ties and called the FBI.

“I’ve al­ways been thank­ful that we iden­ti­fied that and called im­me­di­ately and worked with the of­fice of in­spec­tor gen­eral, the FBI and many other federal agen­cies,” Wil­liams said.

She did not re­al­ize at the time that staff mem­bers were in­volved in the fraud.

The in­ves­ti­ga­tion grew to in­clude the USDA of­fice of in­spec­tor gen­eral, In­ter­nal Rev­enue Ser­vice and U.S. Mar­shals Ser­vice, along with the FBI.

The num­ber of people in Arkansas who have trou­ble putting food on the ta­ble has only in­creased. Now, about 19.2 per­cent of Arkansans are “food in­se­cure,” ac­cord­ing to the lat­est USDA re­port.

“I keep re­mind­ing people that our pri­mary goal is to make sure that low-in­come chil­dren are fed. That’s what I keep telling my staff, be­cause this has been a very up­set­ting sit­u­a­tion and very dis­turb­ing, and it’s easy to get very jaded by all of this,” Wil­liams said.

“I keep telling my staff, we are here to serve Arkansans and low-in­come chil­dren, and don’t lose fo­cus. Don’t let all of this darken what we’re try­ing to do, but we can do it bet­ter and we’ve got to do it bet­ter and we’ve made a lot of changes to make it bet­ter.”

NA­TIONAL PRO­GRAMS

Federal feed­ing pro­grams have long been as­so­ci­ated with fraud.

In Novem­ber 1999, the U.S. Gov­ern­ment Ac­count­abil­ity Of­fice found that the Child and Adult Care Food Pro­gram “has long been plagued with fraud and abuse. Since 1993, the USDA’s of­fice of in­spec­tor gen­eral has con­ducted over 55 au­dits and in­ves­ti­ga­tions in 23 states — iden­ti­fy­ing case after case of the in­ten­tional mis­use of federal funds.”

“Scams un­cov­ered in­cluded spon­sors’ cre­at­ing fic­ti­tious day care providers, in­flat­ing the num­ber of meals served, and pad­ding ex­ec­u­tives’ salaries and ben­e­fits. Given the scope of the prob­lems that the In­spec­tor Gen­eral iden­ti­fied, USDA de­clared the pro­gram to have ‘ma­te­rial weak­nesses’ — that is, the pro­gram lacked suf­fi­cient con­trols to en­sure that federal funds were ad­e­quately safe­guarded.”

The re­port came months after the USDA’s of­fice of in­spec­tor gen­eral au­dited 10 spon­sors in Cal­i­for­nia and found “all 10 spon­sors had en­gaged in fraud­u­lent ac­tiv­i­ties and/or se­ri­ous pro­gram ir­reg­u­lar­i­ties elud­ing de­tec­tion for years be­cause of the State’s neg­li­gent over­sight.”

The prob­lems de­scribed in 1999 have con­tin­ued in Arkansas and else­where.

Ten­nessee Comptroller Justin Wil­son has con­ducted nu­mer­ous in­ves­ti­ga­tions into feed­ing pro­grams in that state and said in an in­ter­view that com­mon sense is among the most im­por­tant tools avail­able to shut down fraud.

“There is dif­fer­ent types of mon­i­tor­ing. There is the min­i­mum re­quire­ments set forth in the federal code of reg­u­la­tions about fill­ing the blanks, a cer­tain num­ber of things you can do, a bare min­i­mum. And you can fill in the blanks and say that’s fine. We have done what we need to do. That has proved in Ten­nessee not to be com­pletely ef­fec­tive. In fact, it’s been in­ef­fec­tive. What you need to do is sim­ply when you see an in­di­ca­tion that some­thing is be­ing screwy … you open your eyes. You use com­mon sense. And you see what in the devil is go­ing on,” he said.

“If you see an en­tity re­port­ing the same num­ber of people ev­ery day in and out, whether it’s rain­ing or pour­ing or any­thing else, and it hap­pens for a long pe­riod of time, well maybe there’s some­thing go­ing on. If you see the same reports that are Xeroxed, then maybe there’s some­thing go­ing on. There might be an ex­pla­na­tion for it. If you go to a site that’s listed as sim­ply an em­bank­ment on the side of the road, then maybe some­thing is go­ing on, and then you fol­low it up.”

Hor­ror sto­ries in Ten­nessee, he said, might never have oc­curred if that state’s De­part­ment of Hu­man Ser­vices had used some com­mon sense.

The USDA pro­posed a rule in 2016 that Jalil Isa, a spokesman for the de­part­ment, said is in­tended to “safe­guard the in­tegrity of school nu­tri­tion pro­grams and help en­sure tax­payer dol­lars are be­ing in­vested as in­tended.”

The rule changes would es­tab­lish con­sis­tent pro­ce­dures to per­ma­nently re­move pro­gram providers, al­low the USDA and state agen­cies to im­pose fi­nan­cial as­sess­ments in egre­gious sit­u­a­tions, in­crease re­sources pro­vided to states for over­sight, and strengthen train­ing for state and school pro­gram op­er­a­tors.

“While egre­gious mis­man­age­ment of child nu­tri­tion pro­grams is in­fre­quent, the changes in the Child Nu­tri­tion Pro­gram In­tegrity pro­posed rule pro­vide the tools needed to ad­dress th­ese is­sues and to serve as a de­ter­rent,” Isa said in an email. “Pro­gram vi­o­la­tions re­duce pub­lic con­fi­dence in our pro­grams and some­times lead to im­proper pay­ments. By lim­it­ing th­ese vi­o­la­tions, more re­sources and sup­port will be avail­able for pro­grams in good stand­ing.”

Since the com­ment pe­riod closed on the pro­posal in May 2016, no fur­ther ac­tion has been taken.

“We’re still re­view­ing com­ments,” Isa said. “At this point, we do not yet have a time frame for fur­ther ac­tion.”

STATE CHANGES

The Arkansas De­part­ment of Hu­man Ser­vices failed to de­velop in­ter­nal con­trols, was be­hind in per­form­ing com­pli­ance re­views, did not re­quire re­ceipts for re­im­burse­ment claims and had an in­suf­fi­cient sys­tem for mon­i­tor­ing non­profit in­sti­tu­tions, Arkansas Leg­isla­tive Au­dit told leg­is­la­tors in May.

In Arkansas, mul­ti­ple of­fi­cials with the De­part­ment of Hu­man Ser­vices say they have made changes to strengthen their over­sight over fed­er­ally funded feed­ing pro­grams.

“We had in­di­vid­u­als who were re­spon­si­ble for open­ing a site, pro­cess­ing the ap­pli­ca­tion and then mon­i­tor­ing that site. We re­al­ize that was not a process we could stand by,” said Keesa Smith, deputy di­rec­tor of the Arkansas De­part­ment of Hu­man Ser­vices. “We de­cided to break that apart.”

The de­part­ment is us­ing Cen­sus data to de­ter­mine where chil­dren are and where food providers might be needed. Smith said the de­part­ment is also fo­cus­ing on us­ing schools to pro­vide ser­vices in­stead of in­de­pen­dent non­profit or­ga­ni­za­tions.

“This is a great ex­am­ple of what we are re­ally happy to see which is a part­ner­ship with our lo­cal school dis­tricts,” Smith said. “Th­ese chil­dren are fa­mil­iar. This is their com­mu­nity. They at­tend the school. It’s easy for them to get to. They’re fa­mil­iar with the people that are here. It’s a great fit. Even if we don’t have a school district, we have some great com­mu­nity part­ners who have equally made it easy for chil­dren to get fed.”

A re­view of se­ri­ous de­fi­ciency let­ters from the De­part­ment of Hu­man Ser­vices for the past two years iden­ti­fied no schools that ran afoul of the re­quire­ments.

And out-of-state firms have been brought in that spe­cial­ize in en­sur­ing the federal dol­lars are spent prop­erly.

“Our staff will be go­ing out with them, and I think it will be a great learn­ing ex­pe­ri­ence too. They’re con­tracted to go out and do th­ese re­views, so we’ll have more people do­ing re­views,” Wil­liams said. “After all of this has hap­pened, I want to make sure that we have re­viewed all th­ese pro­grams.”

CN Re­source LLC of Ari­zona will be paid a max­i­mum of $51,987 to con­duct school lunch re­views. MH Miles Co. CPA of Ge­or­gia will be paid a max­i­mum of $3.14 mil­lion to per­form re­views and site vis­its for the Child and Adult Care Food Pro­gram and the Sum­mer Food Ser­vice Pro­gram.

Doc­u­ments pro­vided by the Hu­man Ser­vices De­part­ment show it is is­su­ing more “se­ri­ous de­fi­ciency let­ters” to vi­o­la­tors of state and federal poli­cies.

In the first half of 2017, the de­part­ment is­sued about 30 such let­ters de­mand­ing re­pay­ment. In 2016, only 15 such let­ters were sent for the en­tirety of the year.

Mar­garet, the fifth-grader who ate at Wash­ing­ton Mag­net El­e­men­tary School, said she ap­pre­ci­ated the food pro­vided by the federal feed­ing pro­gram.

Her par­ents were on her mind as she ate Lucky Charms.

“It’s amaz­ing how they’re able to serve all th­ese people at the pro­gram for break­fast ev­ery morn­ing be­cause some people don’t get break­fast — usu­ally — at home,” she said. “I think it’s re­ally nice for them to pro­vide all the break­fast and pro­vide food for the pro­gram so the par­ents don’t have to stress more on bring­ing break­fast.”

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