News Story

Four Years Running, Auditors Ding Benton Harbor Schools On Free Lunch Accounting

Federal government appears no more diligent enforcing its rules

The Benton Harbor Area Schools district has a checkered record when it comes to proper accounting for its stewardship of public funds. One representative failure is seen in the serial rebukes administered by the district’s auditor for failing to properly account for the operation of its federally funded school lunch and meal program.

All of the district’s 1,613 students in the 2020-21 school year, save one, are eligible for free-or-reduced cost lunches.

In the 2019-20 audit, the auditor warned the district that it was not properly recording the required cost and related details of the subsidized meals it provided to students.

The 2020 audit noted: “The District did not maintain effective internal controls over the Nutrition program to ensure the accuracy of meals served, as reported on monthly Claims for the Reimbursement.”

“The District’s oversight of monthly Claims for Reimbursement was not effective in ensuring the meals reported as served were accurate.”

“Monthly claims for reimbursement were in some cases inaccurate, and full meal reimbursements to the extent allowed under the program were not received by the District.”

“Net number of meals served were under-requested.”

“For 3 of 3 months reviewed, meals served per the claim or reimbursement report did not agree with meals served per supporting records.”

In theory, neglectful accounting could jeopardize the district’s federal funding. But the federal government appears no more diligent about getting the costs of this program properly measured and apportioned: The school district’s auditor flagged the same violation in 2017, 2018 and 2019.

In 2017, the auditor advised the district to address the issue with this recommendation, which subsequent audits indicate was ignored: “The District should establish and implement effective internal controls that would identify and correct meal count errors prior to requests for reimbursements.”

In November of 2020, the state of Michigan released Benton Harbor Area Schools from its consent agreement the district had entered into in 2014.

According to that 2014 consent agreement, "The Treasurer offers state financial management and technical assistance in alleviating the District's current financial emergency."

“Benton Harbor Area Schools has a plan in place that focuses on both improving finances and educational services through its partnership with the state Education Department,” said state Treasurer Nick Khouri said. “The Consent Agreement is no longer needed to address the financial emergency.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.