This report responds to the requirement of PL 110-246 to assess the effectiveness of state and local efforts to directly certify children for free school meals. Under direct certification, children are determined eligible for free school meals without the need for household applications by using data from other means-tested programs. 

The assessment provides a national estimate of the share of CACFP participating family daycare homes that are approved for an incorrect level of per meal reimbursement, or reimbursement "tier," for their circumstances. Tiering errors result in improper payments because misclassified family daycare homes do not receive the appropriate level of reimbursement for the meals and snacks provided to the children. The assessment also estimates the dollar amount of improper payments attributable to family daycare home tiering errors.

This is the fifth report in a series of periodic analyses to estimate the extent of trafficking in the Supplemental Nutrition Assistance Program (SNAP). Trafficking – selling SNAP benefits to food retailers for cash - impedes the mission and compromises the integrity of SNAP. While not a cost to the Federal Government, trafficking diverts benefits from their intended purpose of helping low-income families access a nutritious diet. The Food and Nutrition Service (FNS) aggressively acts to control trafficking by using SNAP purchase data to identify suspicious transaction patterns, conducting undercover investigations, and collaborating with other investigative agencies.

From July to September 2002, FNS reviewed the free and reduced price eligibility determination process (i.e., application, verification, reapplication, meal ticket status) for each of 3,474 applications selected for verification in 14 large school food authorities in the 2001-02 school year. These SFAs enroll nearly one million children, among whom 45 percent were approved for free meals and 7 percent were approved for reduced price meals as of Oct. 31, 2001.

Food stamps are intended for food. When individuals sell their benefits for cash it violates the spirit and intent of the Food Stamp Program as well as the law. This practice, known as trafficking, diverts food stamp benefits away from their purpose. It reduces intended nutritional assistance and undermines public perceptions of the integrity and utility of the program. To combat trafficking, the Food and Nutrition Service conducts undercover investigations of authorized food stores. In addition, the agency has developed powerful new EBT-based administrative tools to identify and sanction traffickers.

FNS published “The WIC Vendor Management Study, 1998” in July 2001 which examined, in part, the extent to which retail grocers, defined as WIC “vendors” were violating program rules and regulations. The 1998 study is a follow-up to the “WIC Vendor Issues Study, 1991” published by FNS in May 1993.