A $1.7 billion food program that serves more than 2 million children is under the microscope of the U.S. Department of Agriculture after a nationwide audit uncovered widespread fraud and abuse.
The 30-year-old Child and Adult Care Food Program, operated by the department’s Food and Nutrition Service, helps pay for snacks and meals for children in family- and center-based child care.
The audit, conducted by Roger C. Viadero, the USDA’s inspector general, found nonprofit organizations--which act as sponsors to child-care providers--using the food program to cheat the government out of millions of dollars intended for children’s meals in day care.
Thirty-seven sponsors were found to be “seriously deficient,” and 16 of them have been dropped from the program. Since the audit was released last month, 44 people have been charged, and 28 of those charged have already pleaded guilty or have been convicted.
In one case, involving the New Jerusalem Church of God in Christ in Toledo, Ohio, investigators said they found that five child-care homes claimed as providers didn’t exist. Addresses listed for providers were vacant lots or abandoned houses, the probe found.
That sponsor has been removed from the program, and nine people have been indicted on charges of filing false reimbursement claims. Seven of the nine have pleaded guilty; they have been ordered to pay restitution totaling more than $1.3 million and given sentences ranging from probation to three years in jail.
The program, which was first authorized in 1968, allows family child-care providers to be reimbursed for the meals and snacks they give children. The program makes operating such a business profitable for the providers, while keeping the cost of care affordable for parents.
Those who serve low-income children are reimbursed at a higher rate. Child-care centers also can be reimbursed, but only if they serve low-income children. Head Start centers also participate in the program.
Because the sponsors are supposed to train and monitor participating providers--with unscheduled visits, for example--the program is also viewed as a way to ensure that children are also being cared for in safe environments.
The food program works as an incentive for providers to become licensed, said Helen Blank, the director of the child-care and -development division of the Children’s Defense Fund, a Washington-based advocacy group.
But the audit showed that some sponsors were not conducting visits. And investigators observed unsafe and unsanitary conditions at some of child-care homes.
Diligence Needed
While some sponsors clearly were participating in the program for their own gain, Mr. Viadero also found fault with the structure of the program. He said that if the Food and Nutrition Service had been more diligent in implementing recommended improvements in the past, “it could have prevented or detected much of the fraudulent activity we found during our audits and investigations.”
While sponsors are allowed to keep some of the money they receive through the program to pay administrative costs, it has not been clear how much is appropriate, according to the audit.
“We need to be more specific on what are the allowable costs, and how you determine those allowable costs,” said Shirley Watkins, the undersecretary for food, nutrition, and consumer services at the USDA.
The agency is preparing a new “integrity rule” that will outline how sponsors are expected to administer the program.
In a written response to the report, Samuel Chambers Jr., an administrator of the FNS, said that while the federal government can oversee the program and provide training, state agencies are responsible for monitoring the sponsors and taking corrective action when necessary.
The audit also recommended that the FNS look at alternatives to the sponsor system. But Ms. Watkins said she didn’t believe that changing the model would solve the problem.
“You are always going to have people who find a way to manipulate the system,” she said.
