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Fraud widespread in New Jersey free lunch program: state official

By Hilary Russ

(Reuters) - New Jersey will refer 109 names to criminal investigators after a probe allegedly found pervasive fraud in the federal free and low-cost lunch program in the state's schools, a state official said on Wednesday.

The alleged fraudsters are all public employees, their spouses or members of their households, accused of lying about their income so that their children would qualify for federally subsidized reduced-price lunches, according to New Jersey Comptroller Matthew Boxer.

Six of the names, which were not released, are elected school board officials. The 109 people underreported their household income by more than $13 million altogether over the three years of records and 15 school districts that Boxer's office examined, according to his report.

If the state were to examine the more than 600 additional school districts in New Jersey, hundreds of additional cases could surface, the report said.

One unnamed school board member in Pleasantville, a city of nearly 21,000 people near the New Jersey shore, allegedly underreported her household income by about $59,000 each year. When confronted by Boxer's office, she said she didn't include her own salary because "she herself was not the person receiving the free student lunch," the report said.

She also allegedly said that her income "is none of damn business," according to the report.

The National School Lunch Program itself is partly to blame for the abuse, the report said. That's because the federal program only requires schools to verify 3 percent of the applications of people whose reported incomes are closest to eligibility limits.

School districts are not allowed to verify the remaining 97 percent of applications unless they suspect fraud, Boxer's report said.

New Jersey isn't the only state to find abuse of its school lunch program. A year ago, the inspector general of Chicago, Illinois' schools found 26 cases of current or former employees lying about their income to qualify.

The New Jersey investigation also found several instances of school districts failing to reject applicants who had submitted documents proving they were not eligible.

The U.S. government reimbursed New Jersey's schools for $212 million for the program during the 2011-2012 school year, while the state itself chipped in $5.5 million.

The federal program operates in more than 100,000 schools and residential child care institutions throughout the country. To qualify for free lunches, a family's income must be at 130 percent of the poverty level, or $29,965 for a family of four as of June 30. The program cost $11 billion in fiscal 2011.

(Reporting by Hilary Russ; Editing by Tiziana Barghini and Sofina Mirza-Reid)

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