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Audit finds many students counted for at‑risk funding may not meet free‑lunch income rules; auditors recommend rethinking funding basis
Summary
A Legislative Post Audit found that income-based verification of free-lunch applications suggests a sizable share of applicants may not meet income eligibility and estimated the state likely overpaid $38 million–$53 million in at‑risk funding for 2023–24; auditors warned limits in verifying directly certified students and recommended legislative review of at‑risk allocation.
Heidi Zimmerman, a principal auditor at Legislative Post Audit, told a senate committee that the number of students used to determine at‑risk funding based on free‑lunch counts “appears to be significantly more than the number of students who may be eligible for the free lunch program.”
Zimmerman summarized a random verification of 769 students who qualified for free lunch during the 2023–24 school year. The audit focused on students who qualified by submitting a National School Lunch Program application (about 16% of free‑lunch qualifiers). Auditors matched application data to state tax and wage records when available and found 68 of 108 matched applications did not appear to meet the income eligibility thresholds; 45 of those were at least 50% over the threshold, and roughly half of that subgroup reported household incomes above $100,000 (two cases exceeded $200,000).
Projecting the sample to the statewide applicant population, auditors estimated that between 54% and 72% of applicants were likely ineligible — roughly 18,000 to 25,000 students. After accounting for an estimated 3,200 students who may have been eligible but did not apply, Zimmerman said the state likely overpaid about $38,000,000 to $53,000,000 in at‑risk funding for the 2023–24 school year.
The audit explained several important caveats. Application information is a snapshot in time, while tax and wage records reflect annual earnings; some households may have been eligible at application time even if annual income appears higher. Zimmerman emphasized that an ineligibility estimate is not the same as a fraud rate, noting that “fraud or other errors” may occur but that many discrepancies likely reflect human error or timing differences. The estimate applies only to students who qualified by income documentation — about 16% of the free‑lunch population — while nearly 79% of students were directly certified through interagency matches.
Zimmerman said direct certification grew from 46% in 2021 to 79% in 2024, in large part because Medicaid became a directly certifiable program. She told senators that auditors could not evaluate whether agencies that provide data for direct certification (for example, the Department for Children and Families or KDHE) made those determinations accurately because those eligibility decisions occur outside KSDE and LPA’s data access.
Federal USDA rules also limit districts’ ability to verify household income from applications: districts are required to verify either 3% of approved applications or 3,000, whichever is less, so most Kansas districts verify approximately 3%.
Because eligibility-determination responsibility is dispersed among multiple state agencies and 285 school districts, Zimmerman said the audit could not determine overall accuracy for the majority of free‑lunch qualifiers. The audit’s single recommendation asks the Legislature to consider how at‑risk funding should be allocated, including whether free‑lunch counts remain an appropriate basis.
During committee questioning, senators sought clarification about the meaning of 'fraud' versus 'other errors,' the scope of the $38M–$53M estimate (Zimmerman confirmed this refers to state at‑risk funding), and whether the household economic survey used in community eligibility schools requires supporting documents (Zimmerman said it is a one‑page attestation and does not require documentation).
