[Federal Register Volume 65, Number 14 (Friday, January 21, 2000)]
[Notices]
[Pages 3409-3415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1434]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

RIN 0584-AC89


National School Lunch Program: Pilot Projects, Alternatives to 
Free and Reduced Price Application Requirements and Verification 
Procedures

AGENCY:  Food and Nutrition Service, USDA.

ACTION:  Notice.

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SUMMARY:  This notice announces pilot projects which would permit 
selected school food authorities and State agencies to test 
alternatives to the application procedures and verification process for 
households participating in the National School Lunch Program. This 
notice responds to recent data comparisons which suggest that the 
existing application procedures and verification process do not 
effectively deter misreporting of eligibility information. The results 
of these tests will be used in considering revisions to the current 
application procedures and verification process to reduce the 
misreporting of eligibility information.

DATES:  Applications to conduct a pilot project must be postmarked no 
later than March 21, 2000.

FOR FURTHER INFORMATION CONTACT:  Mr. Matthew Sinn by telephone at 
(703) 305-2017 to request an application packet or in writing to: 
Matthew Sinn, Office of Analysis Nutrition and Evaluation, Room 503, 
3101 Park Center Drive, Alexandria, Virginia 22302; or electronically 
at, [email protected].

SUPPLEMENTARY INFORMATION:

Is There Additional Information on the Internet?

    You can get copies of the complete text of 7 CFR part 210, which 
covers the NSLP, and 7 CFR part 245, which includes the current 
application and verification requirements, from the FNS Web site at 
http://www.fns.usda.gov/cnd. Access the National School Lunch Program, 
then Regulations and Policy to find a link to the federal regulations 
for application and verification requirements.

What are the Current Free and Reduced Price Meal Application 
Procedures?

    Under the National School Lunch Program (NSLP), each school year, 
school food authorities distribute free and reduced price meal 
applications to households of enrolled children. Households complete 
the information required on the application and return it to the school 
food authority. School food authority officials then determine whether 
the household is either categorically eligible or income eligible for 
benefits based on the NSLP's Income Eligibility Guidelines. The 
information required to determine categorical eligibility are the name 
of the child, the appropriate food stamp case number, Temporary 
Assistance for Needy Families (TANF) case number or an equivalent 
identifier used for the Food Distribution Program on Indian 
Reservations (FDPIR), and the signature of an adult household member. 
The information required to determine income eligibility are the names 
of all household members including the child for whom application is 
made; the social security number of the adult who signs the application 
or an indication that the household member does not have a social 
security number; the current amount of income received by each 
household member identified by the individual who receives it; and the 
source of the income, such as wages, welfare, alimony, and the 
signature of an adult household member.
    As an option to using the above application procedures to establish 
a child's eligibility, school food authorities have been allowed since 
1991 to directly certify children for free meal benefits. School food 
authorities may certify children eligible for free meal benefits, 
without further application, by directly communicating with the 
appropriate State or local agency to obtain documentation that the 
children are members of food stamp households or members of households 
certified eligible for TANF or FDPIR. This certification process is 
referred to as ``direct certification.''

What are the Current Verification Process Requirements?

    School food authorities must verify the eligibility information on 
a sample of the free and reduced price applications submitted in any 
given school year as required in 7 CFR 245.6a. Generally, school food 
authorities verify a minimum of 3% of the applications which have been 
approved for free and reduced price meal benefits. Alternatively, a 
school food authority may verify a smaller sample by focusing on 
households whose income is within $100 of the annual income eligibility 
guidelines and selecting a portion of their applications originally 
approved based on categorical eligibility through participation in the 
Food Stamp Program, TANF or FDPIR. Households that were directly 
certified are not required to be verified.

[[Page 3410]]

Why are Changes to the Application Procedures and Verification 
Process Being Considered?

    Over the years, the administering State agencies have conducted 
comprehensive on-site evaluations of school food authorities 
participating in the NSLP. The findings indicate that school food 
authorities have been determining free and reduced price eligibility in 
accordance with the regulatory requirements. In spite of their efforts, 
the number of children approved to receive free meals appears to exceed 
the number of children who are eligible for free meals. The Food and 
Nutrition Service (hereinafter ``we'', ``us'' or ``our'') is attempting 
to address this disparity.
    Recent comparisons of NSLP data with data from the U.S. Bureau of 
the Census, Current Population Survey (CPS), suggest that the number of 
children determined eligible for free meals in the NSLP exceeds the 
number of children that the CPS data identifies as potentially 
eligible. In fact, in 1997, the number of children approved for free 
school meals, according to our data, was substantially higher than the 
number of school-aged children at or below 130 percent of the poverty 
guidelines (the free meal eligibility guideline), according to CPS 
data.
    This data comparison is consistent with audit survey work by the 
U.S. Department of Agriculture's (USDA) Office of Inspector General 
(OIG). The OIG determined that in one state nearly 20% of the 
households approved for free or reduced price meals were determined to 
be ineligible as a result of subsequent verification conducted by 
school food authorities (Food and Nutrition Service National School 
Lunch Program Verification of Applications in Illinois: Audit Report 
No. 27010-0011-Ch). In that survey work, OIG reviewed the verification 
process in 102 school food authorities. Forty one school food 
authorities reported no changes in household eligibility due to 
verification. However, in 61 of the 102 school food authorities, the 
verification process resulted in a termination/reduction rate of 
19.05%. The CPS data, the audit survey findings, and other program 
oversight activity suggest that a substantial number of households 
misreport eligibility information in order to gain eligibility to free 
and reduced price meal benefits in the NSLP.
    The reasons for misreporting eligibility information may be more 
complicated than a desire to simply wrongfully secure free and reduced 
price meal benefits in the NSLP. A number of local, State and Federal 
programs use free and reduced price approval as a criterion for other 
benefits. As a result, households may have an added incentive to gain 
approval for meal benefits in order to obtain other benefits such as 
free textbooks, reduced athletic or band fees and other related 
services.
    In addition, other State and Federal program funds are often linked 
to the free and reduced price meal data. For example, a State may 
distribute all or a portion of its allotment of Federal education 
funding to schools in proportion to the enrollment of students eligible 
for free or reduced price meal benefits. These links, in which the 
number of students eligible for free and reduced price benefits cause a 
school's funding to increase, may discourage school food authorities 
from veryifying more applications than the minimum required by current 
regulations.

What are the Objectives of the Pilot Projects?

    We considered universally increasing the number of applications to 
be verified by school food authorities as an obvious measure that would 
likely decrease misreporting of eligibility information. However, we 
recognize that such an approach may only provide a limited ameliorative 
effect. Therefore, we decided to test other approaches. The objectives 
of the pilot projects are to:
    1. Explore methods of deterRing misreporting of eligibility 
information before the application is approved;
    2. Explore methods of better detecting the misreporting of 
eligibility information after the application has been approved; and,
    3. Evaluate the cost effectiveness of several methods before 
changing the regulations in order to help ensure that any future 
regulatory actions effectively deter and/or detect the misreporting of 
eligibility information.

What Criteria Will be Used to Select the Pilot Sites?

    Applications to participate in the pilot project must meet the 
following criteria and conditions, regardless of whether they propose 
to test one of the alternatives we have designed or propose to design 
and test their own alternative:
    1. Proposals must not include a significant barrier to program 
eligibility for households that would otherwise be eligible for 
benefits.
    2. Proposals must have some transferability, but universal 
transferability is not required. For example, a large school food 
authority may design a system that is cost effective, due to economies 
of scale, for other larger school food authorities but may be cost 
prohibitive in smaller school food authorities.
    3. Proposals must ensure that children eligible for free and 
reduced price meals are not overtly identified (42 U.S.C. 1758(b)(4)).
    4. Proposals must ensure that when households meet the NSLP 
eligibility criteria and requirement(s) of the alternative, they are 
promptly notified and the children receive the benefits to which they 
are entitled. Unless a shorter timeframe is stipulated by the 
administering State agency, eligibility determinations should be made 
within 10 working days of receipt of the eligibility information.

Are There Limits to What can be Tested Through the Pilot Projects?

    Section 12(l) of the Richard B. Russell National School Lunch Act 
(NSLA) 42 U.S.C. 1760(l) allows us to grant waivers for many 
requirements under the NSLA or the Child Nutrition Act of 1966 or 
regulations issued under either Act. However, under this waiver 
authority, we may not grant a waiver that increases Federal costs or 
that relates to: (a) the nutritional content of meals served; (b) 
Federal reimbursement rates; (c) the provision of free and reduced 
price meals; (d) limits on the price charged for a reduced price meal; 
(e) maintenance of effort; (f) equitable participation of children in 
private schools; (g) distribution of funds to State and local school 
food authorities and service institutions participating in a program 
under the NSLA and the Child Nutrition Act of 1966; (h) the disclosure 
of information relating to students receiving free or reduced price 
meals and other recipients of benefits; (i) prohibiting the operation 
of a profit producing program; (j) the sale of competitive foods; (k) 
the commodity distribution program under section 14 of the NSLA, 42 
U.S.C. 1762a; (l) the special supplemental nutrition program authorized 
under section 17 of the Child Nutrition Act of 1966, 42 U.S.C. 1786; or 
(m) enforcement of any constitutional or statutory right of an 
individual including title VI of the Civil Rights Act of 1964, section 
504 of the Rehabilitation Act of 1973, title IX of the Education 
Amendments of 1972, the Age Discrimination Act of 1975, the Americans 
with Disabilities Act of 1990 and the Individuals with Disabilities 
Education Act. Therefore, we will reject applications that request 
statutory or regulatory waivers that are not authorized. In addition, 
we will reject

[[Page 3411]]

applications that are inconsistent with the objectives of these pilot 
projects.

How Long Will the Pilot Project Last?

    Pilot sites must conduct an alternative application procedure or 
verification process for 3 consecutive school years, beginning in 
school year 2000-2001.

Who May Apply for a Pilot Project?

    School food authorities may apply to test one of the alternatives 
we have developed (explained later in this notice) or an approvable 
alternative they have developed to improve the integrity of the 
application procedures or verification process under the NSLP. School 
food authorities may be asked to identify a second alternative they 
would be willing to test in the event that their first choice is not 
available. In addition, State agencies may apply to test one of the 
alternatives we have developed or an alternative they have developed to 
improve the integrity of the application procedures or verification 
process under the NSLP.

Do School Food Authorities Need State Agency Approval?

    School food authorities applying to test an alternative must obtain 
the approval of their administering State agency as part of the 
application process. All applications must be submitted to us by the 
administering State agency. Applications must be postmarked no later 
than March 21, 2000.

How Many Pilot Sites Will Be Selected?

    We would like to test the 4 alternatives we have designed, with at 
least two pilot sites testing each alternative. As a result, we 
envision a minimum of 8 pilot sites for this purpose. Given cost 
limitations, no more than 10-12 pilot sites will be selected, which 
will allow for school food authority designed alternatives.

How Many Alternatives May a School Food Authority Test?

    In any school food authority, only one alternative may be tested. 
School food authorities may apply to test one of the alternatives we 
have designed or apply to test their own alternative. School food 
authorities do not have to apply to test an alternative in all schools 
under their jurisdiction, however for applicants that are not single-
site school food authorities, we would like the alternative to be 
tested in more than one school.

How Will the Effectiveness of Alternative Procedures Be Evaluated?

    We designed the alternatives to prevent incorrect receipt of meal 
benefits either by deterring households from misreporting eligibility 
information on their application (deterrence measures) or identifying 
misreporting after it occurs through the verification process 
(detection measures). Throughout the pilot projects, we will be 
collecting data to evaluate how well the alternatives deter or detect 
the misreporting of eligibility information, how much burden the 
alternatives place on the pilot sites and the cost effectiveness of the 
alternatives.

What Are the USDA Designed Alternate Procedures Pilot Sites May 
Apply to Use?

    We have identified several possible approaches to deterring and 
detecting the misreporting of eligibility information in the NSLP. The 
approaches outlined in this notice are partially based on findings and 
recommendations from the OIG and other Program assessments by USDA. We 
have designed four alternatives that we would like to test and have 
allowed for additional alternatives. The first two alternatives test 
changes to the application process, the third alternative tests changes 
to the verification process. The fourth alternatives tests changes to 
both the application procedures and the verification process. In 
recognition that interested school food authorities and State agencies 
may have alternative approaches to the existing application procedures 
or verification process that would reduce misreporting, we will accept 
applications for school food authority or State agency designed 
alternatives. Such proposals must meet the criteria used to select 
pilot sites, discussed previously, as well as those under ``Alternative 
5--School food authority/State agency alternative.'' The chart below 
summarizes the alternatives followed by a detailed description of each 
alternative:

[[Page 3412]]



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                                                                    Alternative 2  third party
                                    Alternative 1  households           school meal benefit        Alternative 3  verify direct      Alternative 4  graduated       Alternative 5  school food
                                 confirm eligibility at the time  determination and confirmation           certification             increase in verification         authority/state agency
                                          of application                      system                                                        sample size                     alternative
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Application Related Changes      Pilot site requires all          Pilot site contracts with a     No changes to application or    No changes to application or    School food authorities/State
                                  applicant household to attach    third party to establish a      direct certification            direct certification            agencies may apply to conduct
                                  to their free and reduced        benefit determination and       procedures.                     procedures during first year.   the following:
                                  price applications,              eligibility confirmation                                        During second and third year,  (a) Apply to pilot test a
                                  confirmation of the income or    system. The system would                                        all households with benefits    modification of one of the
                                  categorical information or       require confirmation of the                                     terminated or reduced the       alternatives, 1-4; or
                                  acceptable collateral contact    income or categorical                                           prior year due to              (b) Design the procedures and
                                  information.                     eligibility information                                         verification must provide       apply to test a comprehensive
                                                                   listed on the application for                                   confirmation of eligibility     benefit determination system
                                                                   all applicant households.                                       to the school food authority    that covers Federal and State
                                                                                                                                   at the time of application.     assistance programs, not
                                                                                                                                                                   simply the Child Nutrition
                                                                                                                                                                   Programs; or,
                                                                                                                                                                  (c) Design the procedures and
                                                                                                                                                                   apply to test a proposal to
                                                                                                                                                                   deter and/or detect
                                                                                                                                                                   misreporting of eligibility
                                                                                                                                                                   of information.
Verification Related Changes     Verification requirements of     Verification requirements of    Pilot site with a significant   Pilot site contracts with
                                  Sec.  245.6a are waived.         Sec.  245.6a are waived.        number of students approved     third party to verify 3% of
                                                                                                   through direct certification    the applications.
                                                                                                   conducts verification on all   If 25% or more of verified
                                                                                                   directly certified households   applications had benefits
                                                                                                   by December 15.                 terminated or reduced, the
                                                                                                  Verification requirements for    third party randomly selects
                                                                                                   applications are unchanged.     an additional 50% of
                                                                                                                                   remaining applications and
                                                                                                                                   verifies them.
                                                                                                                                  If the target amount is
                                                                                                                                   reached again, the third
                                                                                                                                   party verifies the remainder
                                                                                                                                   of the applications.
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Alternative 1--Households Confirm Eligibility at the Time of 
Application

    The first alternative would require all households who submit a 
free and reduced price meal application to provide documents or an 
acceptable collateral contact which confirm the income or categorical 
eligibility information listed on their application. No changes would 
be made for households that were directly certified. This alternative 
would operate as follows:
    1. At the beginning of the school year, the pilot site would notify 
households that in order to be determined eligible for free or reduced 
price meal benefits, their free and reduced price meal application must 
be accompanied by documentation that confirms income or categorical 
eligibility information listed on their application (e.g., pay stubs, 
letter from welfare office) or collateral contact information that 
allows for confirmation of eligibility. Pilot sites must include 
information about this requirement in any public notification, 
including the application materials that are sent to each household.
    2. Children from households that fail to provide documents which 
confirm the income or categorical eligibility information listed on 
their application or fail to provide an acceptable collateral contact 
would not be approved for meal benefits.
    3. Supporting documents (e.g., pay stubs, letters from employer, 
letter from welfare office) must reflect the income or categorical 
eligibility information current as of the time the application is 
submitted. In the case of households applying based on categorical 
eligibility, the supporting documents must confirm ``current'' 
eligibility for food stamps, TANF, or the FDPIR programs. For the 
purposes of this alternative, ``current'' eligibility means that the 
household is certified as eligible for food stamps, TANF or FDPIR at 
the time the household submits an application for

[[Page 3413]]

free and reduced price meal benefits. Households that cannot supply 
written confirmation must supply a collateral contact from which the 
pilot site may confirm the eligibility information either orally or in 
writing.
    4. If the pilot site also conducts direct certification to 
establish eligibility, no changes would be made to the direct 
certification process.
    5. Verification requirements would be waived since the confirmation 
of eligibility occurs at the time of application.

Alternative 2--Third Party School Meal Benefit Determination and 
Confirmation System

    The second alternative would permit pilot sites to contract with a 
third party to establish a benefit determination and confirmation 
system. The system would use the current application and/or direct 
certification procedures and must provide for confirmation of 
eligibility through methods available to the third party. The third 
party may be a public entity or private company that has access to 
information allowing determination or confirmation of eligibility for 
meal benefits. For example, the local food stamp office could be 
contracted with to determine eligibility of households. Likewise, a 
private company may specialize in conducting wage matching and a pilot 
site could retain the company to determine eligibility of households 
and use the company's wage matching process to confirm eligibility at 
the time of application. Entities contracting with pilot sites to 
determine eligibility for meal benefits or confirmation of eligibility 
for meal benefits will be required to assure that information obtained 
from program participants is maintained in compliance with the 
confidentiality provisions of Section 9(b)(2)(C)(iii) of the NSLA (42 
U.S.C. 1758(b)(2)(C)(iii).
    This benefit determination and confirmation system would, at a 
minimum, require confirmation of the income or categorical eligibility 
information listed on the application. Confirmation would be 
established through wage matching, by asking households to provide 
supporting documents, through collateral contacts or by other means 
available to the third party. Prospective pilot sites should be aware 
that applications for this alternative will only be accepted when the 
third party provides specialized service related to determining and 
confirming benefits. Therefore, applications will not be accepted for 
pilot projects proposing to employ a food service management company 
for the benefit determination and confirmation system. This alternative 
would operate as follows:
    1. At the beginning of the school year, the pilot site or third 
party would notify households that in order to be determined eligible 
for free or reduced price meal benefits, the income and categorical 
eligibility information listed on their free and reduced price meal 
application must be confirmed at the time of application. Confirmation 
may be through wage matching, submission of supporting documents or 
through other means. Pilot sites may require additional information 
from the household, such as social security numbers, in order to 
accomplish confirmation of eligibility. Pilot sites must advise 
households of the procedures and include any notices required by 
statute (e.g., Privacy Act).
    2. Households that do not have their eligibility determined through 
the third party's process must be allowed to provide documentation or 
collateral contact information that confirms eligibility. For example, 
a household that does not appear in a wage match database must be 
allowed to provide documentation or collateral contact information to 
confirm eligibility.
    3. Children from households that fail to provide documents or 
collateral contact information which confirms the income or categorical 
eligibility information listed on their application or that fail to 
have their eligibility confirmed by the third party would not be 
approved for free and reduced price meal benefits.
    4. Supporting documents (e.g., pay stubs, letter from employer, 
letter from welfare office) must reflect the income or categorical 
eligibility information current as of the time the application is 
submitted. In the case of households applying for categorical 
eligibility, the supporting document must confirm ``current'' 
eligibility for food stamps, TANF, or the FDPIR program. For the 
purposes of this alternative, ``current'' eligibility means that the 
household is certified as eligible for food stamps, TANF or FDPIR at 
the time the household submits an application for free and reduced 
price meal benefits.
    5. If the pilot site also conducts direct certification to 
establish eligibility, no changes would be made to the direct 
certification process.
    6. Verification requirements would be waived since the confirmation 
of eligibility occurs at the time of application.

Alternative 3--Verify Direct Certification

    The third alternative would require pilot sites to verify the 
continued eligibility of all children whose eligibility was established 
through direct certification. Currently, children may be directly 
certified for free meal benefits through eligibility in other programs: 
food stamps, TANF and FDPIR. These programs generally provide a 3 to 4 
month certification of eligibility period. Verification of eligibility 
for those children is not required but households are required to 
notify school food authority officials if they no longer receive 
benefits from the program that originally established eligibility for 
school meals. In the event a household notifies school officials that 
they are no longer eligible, the school food authority is required to 
supply a free and reduced price meal application to allow the household 
to apply based on family size and income. However, if households fail 
to notify school officials when they are no longer eligible for food 
stamps, TANF or FDPIR, there is no mechanism to detect this change in 
benefit status. This alternative would operate as follows:
    1. The pilot site would continue to inform households of children 
directly certified for free meal benefits that they are required to 
inform the pilot site if eligibility in the certifying program ends. In 
addition, the pilot site would inform such households that the 
eligibility of the directly certified children will be subject to 
verification.
    2. By December 15, the pilot site would verify the continued 
eligibility of all children that were originally approved through the 
direct certification process for free meal benefits.
    3. The verification process must require all households of directly 
certified children to provide documents confirming current eligibility 
for free meal benefits or collateral contact information that allows 
for confirmation. As a procedural alternative to collecting supporting 
documents or collateral contact information from households that were 
originally directly certified, pilot sites may run a second direct 
certification match or ``verification match'' of such households.
    4. Households that do not supply documents or collateral contact 
information to confirm their eligibility would have their benefits for 
free meals terminated. If a pilot site chose to run a second direct 
certification match, households that were no longer identified as 
eligible through the direct

[[Page 3414]]

certification match would have their benefits for free meals 
terminated. For all households that have benefits terminated, the pilot 
site would be required to provide a ten day advance notification of the 
benefit termination prior to the termination of benefits. The notice 
must advise households of the change in eligibility, the reason for the 
change, the right to appeal as listed in 7 CFR 245.6a(e) and the right 
to reapply at any time during the school year.
    5. Households of children that had meal benefits terminated as a 
result of the direct certification verification would have the 
opportunity to submit an application for free and reduced price meals, 
however, documents confirming the information on the application would 
be required at the time of application.
    6. The pilot site would continue to conduct verification as 
outlined in 7 CFR 245.6a on the household size and income/categorical 
eligibility applications.

Alternative 4--Graduated Increase in Verification Sample Size

    The fourth alternative would require pilot sites to contract with a 
third party to verify additional applications through a graduated 
increase in the sample size when a high percentage of error is 
disclosed by the original sample. When the third party finds through 
the standard verification process that a high percentage of verified 
households have benefits terminated or reduced, additional verification 
would be conducted by the third party. Pilot sites would expand the 
sample size when the error rate of the original sample meets or exceeds 
a target amount of 25%. This alternative would operate as follows:
    1. Pilot sites would select an original 3% sample of free and 
reduced price meal benefit applications through random selection and a 
third party would conduct the verification process by December 15 as 
currently outlined in 7 CFR 245.6a;
    2. If 25% or more of the households in the original sample have 
benefits terminated or reduced for any reason, including non-response, 
the third party would expand the sample size by randomly closing 50% of 
the remaining applications and verifying their eligibility, making sure 
not to re-select applications from the original sample.
    3. If 25% or more of the households in the second sample have 
benefits terminated or reduced for any reason, including non-response, 
the third party would verify all remaining applications.
    4. Under this alternative, no changes would be made to the direct 
certification process.
    5. For all households that have benefits terminated, the third 
party would be required to provide a ten day advance notification of 
the termination/reduction prior to the actual reduction or termination. 
The notice must advise households of the change in eligibility, the 
reason for the change, the right to appeal as listed in 7 CFR 245.6a(e) 
and the right to reapply at any time during the school year.
    6. All households that had benefits terminated or reduced as a 
result of verification and who wish to apply to meal benefits in the 
current year or the following year would be required to provide 
confirmation of eligibility at the time of application.

Alternative 5--School Food Authority/State Agency Alternative

    There are three possibilities for school food authorities or State 
agencies to test their own alternative. One method is to test a 
variation of one of the alternatives, 1-4. A second method might be to 
design a comprehensive benefit determination system that covers 
multiple Federal, State and local assistance programs, not simply the 
Child Nutrition Programs. Pilot sites interested in designing a 
comprehensive benefit system must develop an application for a 
combination of several Federal, State and local benefits. Such pilot 
sites would develop the application, notification procedures and 
procedures for determining eligibility for the benefits covered by the 
application and apply to test the system. In addition, the 
comprehensive benefit system must include internal controls to ensure 
the delivery of benefits to eligible applicants and to deter or detect 
misreporting of eligibility information. The third method for school 
food authorities or State agencies is to design another procedure to 
deter or detect misreporting of eligibility information for school meal 
benefits and apply to test the alternative.

What are the Additional Responsibilities for Pilot Sites?

    Pilot sites must retain complete and accurate records that allow us 
to evaluate the cost effectiveness of alternatives and whether the 
alternatives effectively deter misreporting or correctly detect 
households that should no longer be receiving benefits. Selected pilot 
sites must supply us, or our contractor, with requested information and 
data throughout the course of the pilot project. Pilot sites must also 
agree to devote appropriate staff time to work with us or the 
contractor during the three years the pilot projects are in operation.
    Specific recordkeeping and reporting requirements will depend on 
the pilot procedures and extant recordkeeping activities. Pilot sites 
must agree to send us, upon request, copies of all records related to 
their pilot project.

Classification

Executive Order 12866

    This notice has been determined to be not significant and is not 
subject to review by the Office of Management and Budget under 
Executive Order 12866.

Public Law 104-4

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, we 
generally prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, or tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. When such a statement is needed for a rule, section 205 of 
the UMRA generally requires us to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, more 
cost-effective or least burdensome alternative that achieves the 
objectives of the rule.
    This notice contains no Federal mandates (under regulatory 
provisions of Title II of the UMRA) for State, local, and tribal 
governments or the private sector of $100 million or more in any one 
year. Thus, this notice is not subject to the requirements of sections 
202 and 205 of the UMRA.

Regulatory Flexibility Act

    This action is not a rule as defined by the Regulatory Flexibility 
Act (5 U.S.C. 601 through 612) and thus is exempt from the provisions 
of that Act.

Executive Order 12372

    The National School Lunch Program is listed in the Catalog of 
Federal Domestic Assistance under No. 10.555. It is subject to the 
provisions of Executive Order 12372 which requires intergovernmental 
consultation with State and local officials, (7 CFR Part 3015, Subpart 
V and final rule related notice at 48 FR 29112, June 24, 1983).


[[Page 3415]]



    Dated: January 13, 2000.
Samuel Chambers, Jr.,
Administrator.
[FR Doc. 00-1434 Filed 1-20-00; 8:45 am]
BILLING CODE 3410-30-U