Wednesday, February 06, 2013


L.A.Unified Misused $158 Million in Student Meal Funds

LAUSD redirected funding for nearly a decade – ignoring reports from its own inspector general

by Stephen Ceasar, LA Times/LA Now |

Photo: Students at Bravo Medical Magnet High School choose their lunches in April 2011. Credit: Ricardo DeAratanha / Los Angeles Times

Photo: Students at Bravo Medical Magnet High School choose their lunches in April 2011. Credit: Ricardo DeAratanha / Los Angeles Times

February 6, 2013 |  4:01 pm  ::  At least eight California school districts have misappropriated millions of dollars in funding intended to pay for meals for low-income students — the biggest culprit being the Los Angeles Unified School District, according to a state Senate watchdog group.

The California Department of Education has ordered districts to pay back nearly $170 million in misused funds to their student meal programs, the California Senate Office of Oversight and Outcomes said Wednesday. L.A. Unified has been forced to pay back more than $158 million in misappropriations and unallowable charges that the district made over six years ending in 2011.

State officials suspect the alleged misuse of funds could be more widespread across California school districts but the system is overburdened and has only a small team of investigators.

In most cases, school systems attempted to use cafeteria funds to pay for personnel, utilities and other expenses. Other school districts named in the report are San Diego, Santa Ana, San Francisco, Baldwin Park, Centinela Valley and Compton.

L.A. Unified redirected funding for nearly a decade –- ignoring reports from administrators and its own inspector general –-   before an employee alerted state authorities, the report said. Among other expenses, the district diverted funding to pay for sprinklers and salaries of employees at a district television station.

L.A. Unified said in a statement that officials have been working with the state to ensure compliance and said the district “looks forward to success with state education officials in this work to find a more rational approach to accounting and compliance guidelines for all schools statewide.”

Federal regulations require districts to keep the student meal funding in an account only to be used for the improvement of food service. Most districts keep federal, state and other cafeteria revenues in that same account and all funds must comply with federal regulations, the report said.

The report, however, found that the system to monitor the spending of those funds is overloaded and the regulations governing spending are too complex. School districts, as a result, have repeatedly disregarded the rules and subsequently contest violations as arguable interpretations of the law, the report said.

Oversight of these funds is carried out by 60 state examiners who monitor nearly 3,000 districts. Examiners –- who are nutritionists -– have not completed all inspections required by law since 2001 and “rarely take more than a cursory look at the books,” the report said.

The diversion of funds often contributes to conditions that discourage eligible students from seeking free or reduced-priced meals. To free up funds, districts have used cost-saving methods of serving processed rather than fresh foods, shortening lunch periods and cutting on cafeteria maintenance and staff – all of which discourage student participation, the report said.

“They are literally taking food out of the mouths of kids,” Richard Zeiger, chief deputy state superintendent of public instruction, said in a statement.

From the 2004-2005 school year to the 2010-2011 year, the number of students eligible for reduced-price or free lunches fell below statewide averages. During those years, the district averaged between 51% and 60% of eligible students participating. School districts statewide averaged between 71% and 74% participation.

Students who are eligible for reduced-priced or free lunches are from low-income and poverty level families.

L.A. Unified has become a leader in providing more healthful meals, changing offerings to have less sodium and fat and to include more fresh fruit and vegetables. The district serves 650,000 meals a day.

The state has allowed L.A. Unified to use money from its general fund that was already going toward food services to “write off” the debt, the report said. The district has used those funds to pay off about $120 million of the debt.

The California Department of Education said it has begun training the monitors on how to flag accounting issues and is in the process of hiring additional monitoring staff.

from the report:

As financial pressures intensify, some California school districts are illegally misappropriating millions of dollars from restricted cafeteria funds intended to feed the state’s poorest children.

In perhaps the biggest such case in the nation, the Los Angeles Unified School District recently agreed to repay more than $158 million that it had charged against its food service program over a six-year period. The district, the nation’s second largest, continued to assess unsubstantiated and excessive charges to its cafeteria fund for more than a decade, despite repeated internal warnings that it was violating state and federal law.


Report: K-12 districts take kids' lunch money for other purposes

by Kevin Yamamura, The Sacramento Bee |

Wednesday, February 6, 2013 10:08 AM   ::  As demand for subsidized school meals went unfulfilled, K-12 districts diverted food service money for other purposes such as a new roof and sprinklers, a new state Senate report finds.

Public schools provide 2.4 million free or reduced-price lunches every day in a system that serves 6 million schoolchildren in California. The federal government provides the bulk of funding at $2 billion, with an additional $145 million annually from the state, the Senate Office of Oversight and Outcomes report says.

But the federal government relies on California Department of Education officials to monitor school lunch programs and ensure the money is being spent appropriately. CDE has required eight districts to repay nearly $170 million in meal money, but the report says the education department is ill-equipped to ensure compliance and that districts may be raiding those funds on a broader scale.

At Los Angeles Unified School District, officials used meal money to pay for sprinklers and operations at a district television station. The district redirected funds for at least a decade but was caught after a whistleblower came forward and is now paying $158 million plus more than $1 million in interest, the report says. For six years ending in 2010-11, the district provided subsidized meals to 51 percent to 60 percent of children eligible, below the statewide average during that period.

Elsewhere, Santa Ana Unified ran up a $16 million lunch money surplus and spent $2.4 million in "disallowed charges" on district employees and a roof project.

The report recommends several changes, such as reviewing whether CDE has enough oversight staff and requiring annual audits of cafeteria funds.


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