is charged with designating some non-bank institutions as systemic and then putting them under federal reserve supervision and so far they had designated for nonfinancial companies and then also ate of what they call financial market utilities entities that are either do central clearing or play a key role in the payment and settlement system these have been designated and/or supervised and recognized to have systemic risk. we have adopted new regulations. we saw problems and securitization on the fact that in the run-up to the crisis so many securitize is to not really keep risk on their own balance sheet, did not have skin in the game. we have put we have put in place knew regulations that ought to make a significant difference. money market funds the sec

has put in place knew rules for prime institutional funds that get rid of the fixed dollar value. they will have net asset values that will reduce run risk. that aside to allow firms to impose fees something that could create financial stability risk that we need to watch. the so called tri-party repo market which is a major source of short-term wholesale funding, that contained great risks. we have taken steps important steps to mitigate. central counterparties a thrust of reform has been to try to move as many derivative contracts as possible into central counterparties to have them. by central counterparties

something that serves to reduce risk and complexity and enhance financial stability but when these entities themselves become systemic and clearly need supervision something that you have mentioned in imf work is that we have a major growth of open ended mutual funds where you have funds that are investing in highly illiquid assets. the industries are promised immediate liquidity. if there are runs on those firms you have a kind of liquidity to maturity transformation there that can give rise to a fairly substantial moves. you have highlighted that we are focus on as well. >> liquidity illusion. >> yes.

>> let me come back to you if i could. the regulatory reforms that are taking place i wondered if the fund is doing some work in trying to assess what the impact of these reforms might be on other countries. >> sure. yes, and we do that thanks to the global role that we play and the left -- and the national level involvement. at the global level what has been striking for me is that we have been able to bring together regulators and supervisors to did not have a chance or did not pay attention to what could have been or what were loopholes no space arbitrage and there

have been quite a few of those. we play the role of bringing together all those that are changing the rules. i remember vividly a meeting that we had with figures canada and vulture all present in the room together with other central bankers and supervisors and discussing where one set of tools was going to actually be an issue for another region where different regulations would apply. we play that particular role in terms of spillover we have observed lately is because of the different business model that was induced by the knew regulation as all we have observed a change in the banks themselves. there size has reduced, the footprint has changed and a lot of those subsidiaries or branches that were in the entire world remember those

days when banks were saying we are global. lots of points on the map to say we are all there. it would look a lot different today. cause them to sell the operation to generally regional banks to national banks out there that are prepared to grow and take over what the large players were downloading essentially in order to subsidize the requirements. so there has been that particular spillover aspect. the 3rd role is to actually help emerging market economies low income countries in developing countries actually adjust to the change of regulation and import in their own regulatory system the proper set of rules that will help them deepened their financial market and make it more inclusive as well as safer.

the study the study i just referred to which shows that deepening and more inclusive financial sectors are actually not mutually exclusive from stability and growth provided that there is the right set of rules and supervision in place. we work very hard on those principles. back to me to ask you a question. and in no way i'm going back to my.about the alignment of incentives and with the societal and good finance. you. you talk to yourself but the danger of distorted incentives in the financial sector. there are critics out there who will argue that with very low interest rates this is actually distorting incentives and leading to a buildup of risk to financial

stability. what can you tell them? >> i think this is very important question and i think what i 1st have to say is interest rates low interest rates in the united states. target has been a zero for an unthinkable six plus years, and we are now seeing interest rates at zero and other advanced countries. there is a reason for this. the reason is that we really think this policy is necessary to help our economies moved back to full employment and to achieve price stability. in terms of financial stability for meeting those objectives actually has a favorable financial stability effect.

low interest rates have supported job creation and economic growth help households certainly in the united states engaged in balance sheet repair to be able to pay down debt and they are in a much more sound position them as our banks, but it is true that in a low interest environment we need to be sensitive and watch for risk to financial stability. low interest rates can certainly incense some investors to reach revealed. it can send them to take a leveraged positions they can create financial stability risks. and i guess we're doing two things. we are monitoring very carefully to look to see if those risks are developing and to the extent we do see some risks developing of

course we are trying to take action where we can can but we are speaking out more generally about the risks that we see developing and i'll give you a couple of examples. in the market for leverage loans we have certainly seen a reach revealed and are seeing a deterioration in underwriting standards something we have been highlighting for a number of years. and in our role as supervisor of financial institutions that are underwriting these loans we are trying to ensure that underwriting standards move up in our higher to diminish risks. we have also seen a compulsion and spread around high-yield debt which certainly looks like a reach for yield. i guess i would highlight that equity market valuations generally are

quite high. not so high when you compare them to returns on equities the equities, the returns on safe assets like bonds which are also very low but there are potential dangers there. and and in interest rates obviously not only short the long-term interest rates said at low the embodying low term premiums which can move and can move very rapidly. we saw this in the case of the taper tantrum in 2013 four their was a very sharp upward move and rates. you do have divergent monetary policy potentially around the world. we need to be attentive to the possibility that it is time to begin raising rates.

premiums can premiums can move up and we could see a sharp jump and long-term rates. we are trying to come as i have repeatedly said to my communicate as clearly about monetary policy so that we don't take markets by surprise. in addition, i would say low interest rates can create interest rate risk of financial institutions. many banks are finding their net interest margins are depressed, they have an incentive to take an addition on duration a credit risk and if interest rates move up that can create risks in our supervision and stress tests we are looking for that and analyzing their ability. insurance companies, pension funds are subject to the same kind of pressures in the low interest rate environment. they find it hard to make their targets. and so regulatory agencies

am wondering insurance companies and pension funds. the overall the risk to financial stability is moderated not elevated. i say that because we are not seeing any broad-based pickup and leverage. we're not seeing rapid credit growth. we are not seeing an increase in maturity transformation command i would call those things kind of the hallmark of financial bubble or the precursors of the financial crisis. >> if i may follow-up, i remember those days with your credit sister and how

important it was telling us is pretty much under control they found out that they did not have the legal grounds with the potential to address them in due course. or are you better equipped today? >> i think we are better equipped today simply because in some of these markets we have improved regulation. those things i think function better than they did. i think we're willing. not banking with organizations.

much higher capitol and liquidity standards that applies to all of the nature of broker-dealers and investment banks. i i think there was a great deal of we missed before the crisis. >> i think we have -- i see them all saying time. thank you very much for your patience and for listening. thank you so much. >> thank you. [applause] screeria -- nigeria. -

and christine laguard talk about the 2008 financial crisis.

every five years congress reauthorizes the child nutrition act, a law governing school meals and child nutrition programs, the current law is set to expire at the end of september. the senate agriculture nutrition and forestry committee held a hearing on the law with witnesses representing school administrators, food banks and pediatricians. senator pat roberts chairs this two and a half hour hearing. good morning. i call this meeting of the senate committee on agriculture to order. welcome to our first hearing on child nutrition, child nutrition reauthorization this this congress. i commend my colleagues stab now for her on this issue. the richard bp russell national school lunch act and the child

nutrition act of 1966 authorized critical programs of great importance for kansas, our nation, our farmers, our ranchers, our growers our vulnerable populations, including of course, hungry children. the school lunch program was originally created as a major of national security to safeguard the health and well being of the nation's children and to encourage the domestic consumption of nutritious agricultural commodities. coming out of world war ii congress saw the need to establish the school lunch program and in no part to ensure our military had a sufficient supply of eligible individuals to defend our nation from global threats. additionally, the current research is regarding the need for adequate nutrition during a person's developmental stages provides further support for what congress knew even back then.

hungry children do not learn. with threats to our national security and increasing economic competition it is imperative that our nation's youth are physically fit for military service and are not malnourished at key times in brain development. furthermore, the original twofold intent of the program still holds true -- still holds true today. fir, the programs provide a safety net for our post vulnerable populations, mainly children, that are at times without sufficient food. secondly, the law requires a portion of the assistance for the school meal programs to be in the form of agriculture commodities produced here in america, by our nation's farmers, ranchers and growers. as we begin the reauthorization process, it is important to remember the purpose of these programs.

these programs are not about anyone's legacy, they are about ensuring our nation's securities ensuring that our children are well-educated and productive contributors to a competitive economy. and about helping the vulnerable among us who cannot help themselves. i plan to conduct this reauthorization with full cooperation with our distinguished ranking member in the same way in which i am seeking to conduct all of our business here at the agriculture committee. first, with the perspective of our constituents in mind, we are here for farmers ranchers, small businesses, rural communities and program participants and stakeholders. we are here to right their interests and their which will into law not to impose the government's will and interest on them. second this reauthorization will include rigorous and thorough oversight of these

programs. periodic exploration and reauthorization of legislation does provide congress with the opportunity to review and evaluate programs, and this opportunity should not be taken for granted. it is our responsibility to closely examine each program. not every program needs a major overhaul, but every federal program could benefit from increased efficiency, improved integrity and reduction of waste. our committee will conduct this reauthorization in an open and transparent manner that gives members an opportunity to pass good legislation for their constituents. i would like for this to be a bipartisan bill and i'm pleased that senator stabenow feels the same way. with the entire committee working together we can develop a well-rounded bill that will improve the operation of these important programs. it is also my intention to complete this reauthorization on time before the programs expire

at the end of september. i understand there are some that may prefer that we not succeed in this endeavor. i caution those individuals that these programs are too important not to reauthorize. gambling, fortune telling or using a crystal ball to predict a better reauthorization in the future is foolish and short sided. it is time for folks to come together and be part of crafting legislation, not to stand outside the process hoping it fails. we have been in a listening mode in preparation for this reauthorization and that cull minute ats in today's hearing. i have traveled throughout kansas visiting school food directors, talking with parents, students, school administrators and others involved in these programs. we have had hearings last year and we have our experts here today. as we seek to put what we have learned into legislative form several priorities have become

clear. first, reauthorization provides an opportunity to review programs and improve their efficiency and effectiveness. in the school meal programs there are significant error rates and improper payment levels. these have recently been highlighted approximate in reports from the department of agriculture's office of inspector general and the government accountability office. we will need to improve the administration of these programs to reduce errors but do so in a way that does not layer additional medical bureaucracy and overreach on those who are seeking to feed hungry school children. second, it is evident that evolving programs encounter different challenges as they try to adopt a changing times. each new challenge is met with additional modifications, guidance or regulation and these can unintentionally evolve into very complicated systems that

are often outdated or needlessly cumbersome. we need to identify areas in which we can simplify make things easier for those implementing and participating in the programs. third, my travels in kansas, and i am sure that this opinion is sard by many on this committee have also indicated that we need some -- some flexibility. many folks are worried about what flexibility means but to me flexibility means we will still protect the tremendous gains already achieved by many and provide assistance to others so they, too, may achieve success. these programs can't help anyone if they aren't workable. department of agriculture and others have worked very hard to help those who are not meeting the current standards and have promoted statistics citing high rates of compliance yet we have

schools that are currently struggling and i understand that at least 46 states applied for the recent whole grain waiver and we have additional sodium restrictions that are still on the way. lines in the sand and uncompromising positions will benefit nobody, and especially not the hungry the hungry children that these programs serve. working together i am confident we can find a way to preserve the nutritional quality of school meals without a one size fits all approach that prevents some local flexibility. these programs have historically had strong bipartisan support. amazingly in 2004 and 2010 reauthorizations passed by unanimous consent but debate leading up to those bills also included significant controversy, similar to the issues we face today yet republicans and democrats worked

through the process together and came up with legislation that everybody could support. finally, it is vital that this legislation does not contain additional spending without an offset. that's just where we are. we have received many bipartisan suggestions for ways to improve these programs but many of those have considerable price tags. our budgetary constraints are real, our responsibility to our constituents includes not spending money that we don't have. i look forward to working with senator stabenow and each member of the committee throughout this reauthorization process. i am also appreciative of the witnesses here today a special thanks to ms. cindy jones who has been our shotgun writer if that's the proper term who has traveled from kansas to be on our second panel. i look forward to hearing from our witnesses regarding their experiences with these programs and i thank them so much for

their testimony before the committee and taking their valuable time to come here. i no you turn to my colleague, the chairperson emeritus of the committee, senator stabenow for any opening remarks she may have. >> thank you very much, mr. chairman. i look forward to be working with you on this important issue. we have been talking and looking for ways that we can move forward together and i look forward to working with you on this, as well as the entire committee as we continue the work we began last year to strengthen child nutrition programs. i want to thank the witnesses as well for testifying today. you bring very important perspectives from all sides of the issue, there are a lot of important pieces to this legislation and it's important we hear from you and work together to move forward. as we all know, our children's health and well being really are at a crossroads.

obesity rates in children have tripled in the last 30 years. today one in three american children and teens are overweight or obese. we are now seeing health problems typically unseen until adulthood adulthood, high blood pressure to type two diabetes are in young people who should be focused on little league or going to the prom. this obesity epidemic requires a serious commitment on our part to continue moving forward with the nutrition policies we put in place in order to give our children a fair shot to be healthy and successful. last year this committee heard from retired military leaders desperate to help improve the health conditions of our soldiers and young recruits and as the chairman said the school lunch program actually started as a result of our military

leaders in the department of defense. in his testimony retired four-star air force general richard holly said that obesity is one of three main reasons why an estimated 70% of all young people who walk through the recruiter's door at the age of 17 through 24 one of three reasons why they don't qualify for military service. and they indicated that was the largest reason. their concerns are echoed by more than 450 retired generals and add mirls who are trying to raise awareness about the impact that poor childhood nutrition has on our national security and its cost to taxpayers. this recruitment crisis also requires us to continue moving forward with the nutrition policies we put in place five years ago. in addition to childhood obesity issues we also have the second

challenge of childhood hunger. as we approach the end of the school year, more than 20 million young people -- 20 million students who eat at school because they qualify for free and reduced priced meals will struggle to eat any meal, let alone a healthy meal in the summer. this hunger crisis for our children requires us as well to continue moving forward to strengthen our summer meals programs and other supports for children. we also have millions of pregnant moms and children in our communities who are nutrition nael at risk, which can lead to low birth weights increased childhood disease and impaired brain damage. and that's why continuing to protect and strengthen the wic

program is so important. it's for all of these reasons and many many more that we need today. and it's the reason we must take this process of reauthorizing our child nutrition program seriously and i appreciate that the chairman does. the good news is for the first time in years it looks as though we're beginning to make some progress on these issues. obesity rates have begun to stabilize in some areas, more children are eating healthy breakfasts and lunches than ever before children are eating 16% more vegetables 23% more fruits according to the harvard school of public health, and as i have said many many times it seems to me that our children are worth continuing the requirement of school meals for a half a cup, that's not very big there's not a whole lot that

goes in this, actually, a half a cup of fruit or vegetable as part of our commitment it's not the whole commitment but a very important part of our commitment to our children's health and success. but we know there's much more to do. nutrition at its core is preventive medicine and child nutrition is about leveling the playing field so that any baby, any child any teen, whether they are in detroit or rural kansas or a suburb of atlanta or a farm in iowa has every opportunity to be healthy and successful. that's why it's crucial that this committee work together in a bipartisan way to ensure these nutrition programs continue to operate efficiently and effectively and that we continue to move forward for our children. our children and our families are counting on us to do just that. thank you, mr. chairman.

>> thank you, senator stabenow for an excellent statement. all members should be advised we have a vote at 10:30. well, that just changed that, the vote has been postponed until 2:00 this afternoon so we can finish -- >> magic you have such power mr. chairman. >> just amazing what you can do with the new congress, senator. sorry about that. >> i object. >> let the record show an objection was heard. let me introduce our first panel. steven m. lord managing director general accounting office, forensic audits and investigative service. mr. lord currently serving as the managing director of the forensic audits and investigative services at the gao, he oversees a highly

trained staff charged with conducting special audits and investigations on major federal programs prone to fraud waste and abuse. mr. lord has received many awards over his 30-year -- 30-year career including awards for meritorious and distinguished gao service. mr. lord welcome and i look forward to your testimony and please go ahead and then i will introduce ms. neuberger for her statement. >> thank you, chairman roberts. ranking member stabenow, members of the committee, thanks for inviting me here today to discuss the findings and recommendations of our 2014 report on the school meals program. as you know and as you mentioned in your opening remarks, the school lunch and breakfast program play a very important role in providing for the nutritional needs of school children across the nation. at the same time the national school lunch program is on omb's

list of higher record prone programs due to its large estimated improper payments rate. this underscores to me to ensure sound controls are in place to ensure that $15 billion in federal funds are spent wisely. today i'd like to discuss two things, first some positive actions, usda has taken to strengthen oversight of the program, as well as additional opportunities the gao has identified to enhance controls. first, in terms of usda actions, the department has worked closely with congress to develop legislation that requires school districts to directly certify students if the snap program. according to usda officials direct certification of these students reduces the administrative burden on school districts, it also reduces certification errors and helps without adversely impacting

access to the program. another positive development is state agencies now conduct administrative reviews of school districts every three years as opposed to every five years as it was done formally. we think that's a really important part of the oversight process and the effort to help ensure correct eligibility determinations. despite these positive actions we did identify some additional areas where they could enhance verification without compromising legitimate access to to the program. first, we believe the school district reviews of questionable applications could be strengthened. of the 25 school districts we examined, 11 did conduct these so-called for cause verifications, but unfortunately nine school districts did not conduct any for cause verifications of questionable applications and the remaining five districts said they would do it on an occasional basis

when prompted to do so by outside stakeholders. that's why we recommended that usda study this for cause verification process, figure out why the school districts were reluctant to do it and consider issuing additional guidance, if needed. excuse me. we also recommended the usda consider using computer matching to help identify households whose income exceeded eligibility thresholds. under the current standard verification process it's difficult to detent all households that misreport income because the so-called standard verification process is focused on a small slice of beneficiaries, those are annual income within $1200 of the eligible threshold. for example, in our work we found that 9 of 19 household applications were not eligible for free or reduced benefits yet only two of these households

would have been subject to the standard verification process because of the way they defined error prone applications. thus we think verifying a broader window of applications as well as using computer matching techniques, we think that could potentially significantly strengthen the verification process and, again, without adversely impacting access to the program by those truly in need. and finally our report also recommended that usda explore ex anding the verification process to include those who are deemed categorically eligible for the program by virtue of their participation in other public assistance programs such as snap, tanif et cetera. we found that those applications are generally not subject to verification. just a few examples in our report we found one household

that was certified through this process because they stipulated they had a foster child, yet when we interviewed the household occupants we found they did not have any foster children. another application -- another applicant reported they were enrolled in snap, therefore they were automatically eligible, yet when we contacted the state officials they said this individual was not enrolled in the snap program. so we found some example -- again, you know, these examples are not generalizeable to the entire population, but we found enough examples suggested that usda needed to take another look at that. so the good news is usda agreed with all of our report recommendations and we think the collective impact of all the recommendations when implemented will help strengthen the verification and oversight process to again to ensure only those truly deserving of the benefits receive them. chairman roberts other members of the committee, this concludes my prepared remarks and i look

forward to any questions you may have. >> mr. lord, thank you very kindly. our second witness ms. zoe neuberger, ms. newburgher joins us from the center on budget and policy priorities where she is a senior policy analyst. she works on the school meal programs and wic and has been with the center since 2001. obviously a veteran and knows what she's talking about. previously i didn't lien to insinuate you didn't. previously she was a budget analyst for these programs at the office of management and budget. welcome, madam and i look forward to your testimony and insight. >> hugh very much for the invitation to testify today on improving accuracy in the school meal programs. as you said i'm a senior policy analyst at the center on budget and policy priorities a nonprofit policy institute that conducts research and analysis on budget and tax policy as well as poverty and social programs.

out of our roughly 50 million school children about 30 million eat a school lunch on a typical school day, that's extraordinary reach, and that figure includes more than 21 million low income children for whom school meals may be the healthiest and most reliable meals they get. there are also nearly 100,000 schools that operate the meal programs and they do a remarkable job they process applications provide healthy meals and keep track of the eligibility of each student so they can claim the appropriate federal reimbursement. their work means that we have fewer hungry children and that our students are better prepared to learn. as you can see the school meal programs play a vital role in children's health and well being. they must continue to play this role while also administering the programs accurately. the department of agriculture just submitted that the net annual cost of lunches that did not meet nutrition standard was $444 million. that's not acceptable. the programs must make sure that federal funds are used for meals

that meet federal criteria. several we've got powerful tools to address the issues, there's a verification process also in place, there's a new rigorous review process, usda has instituted new oversight person measures and just completed a detailed nationally representative study that not only measures errors in their costs but also identifies a great deal of information about the causes for errors which allows for specific and effective policy solutions. but there are also challenges to improving accuracy in a vast and complex system whose main focus is to educate children, not administer the meal programs. as i mentioned, the school meal programs operate in nearly 100,000 schools nationwide and there's wide variation among them. their staffing resources and technological capacity vary wildly, there's also a lot of variation in the way children get meals in the lunchroom or classroom and how the school checks who is in which category. small rural schools have different operational and environmentals capacity than

large trikts. meal tracking and accounting systems can range from paper systems to state of the art software. schools are not currently set up to do the kind of eligibility determinations that other public benefit programs do. the snap program or medicaid, for example, have teams of professional eligibility workers who spend all day, every day, sorting out the details of applicants' income and household circumstances. in schools there might be a cafeteria worker or secretary who handles meal applications for a few weeks at the start of the year. so the question is given the tools of the program's disposal and the system we are feeling with how can congress improve accuracy in the meal programs? an example can help show the way. beginning with the 2004 reauthorization and building on that in 2010 congress set a clear expectation for school districts and states to improve their use of the rigorous eligibility determinations made by other programs primarily snap, to approve children for free meals automatically. that's the direct certification process. because the school meal programs

are relying on a more rigorous income assessment this approach saves time and reduces errors. in the past decade there have been striking improvements. nearly half of all children approved for free or reduced priced meals are now approved without having to complete an application. that's an enormous simplification and congress played an important role by setting an expectation and then providing tools and support to meet it. my written testimony describes many other steps congress and usda have taken but there's room to do more. it's important to strengthen management and oversight across the board provide ex tep sieve help to districts that persistently struggle with errors and pursue invasions that could open up new ways to improve accuracy for example, gao recommended he can plorg the use of data matching to identify applications that might have incorrect information. that's worth trying. usda plans to develop a model electronic application for the first time. that's another promising invasion. as you consider ways to improve

accuracy in the school meal programs i surge urge you to consider these four questions first, does the proposal have a proven record of reducing errors? some ideas that sound promising like requiring households to submit pay stubs with their application have not been effective when tested. second, will it maintain program access for the most vulnerable children? we certainly don't want to worsen that problem. third, is is it administratively feasible? adopting a time consuming documentation or verification system might prevent errors but could cause others by adding a step to the process and would force school staff to determine more time. fourth is it cost peck testify? high quality information management systems can be very effective but might cost too much for a small school district. as i noted it's critical that error reduction strategies not reduce access to school meals. the best way to improve

integrity is not through punitive policies but to continue sending a clear message to school nutrition officials that program accuracy is important, that it will be measured and that federal officials will support them in implementing needed improvements. thank you very much. >> thank you very much. thank you. mr. lord do you think that a shift from the current verification process that emphasizes for cause verification would enhance the program integrity and a secondly would it have a negative effect on access for eligible participants? >> no i think again senator there is a way to do it without adversely impacting people who truly deserve t what we pound in our work is the for cause, again, that's a the review of questionable applications, some school districts were not doing any for cause verifications of questionable applications. so there's definitely potential there to do that more

consistently across school districts. and i should -- i should add that's a us is da requirement. school districts are required to conduct these type of reviews. so anytime we see that type of inconsistentn kon sisconsistency that gives us some concern. >> ms. neuberger, i would like to know more about the point of service when the child and the cafeteria worker do interact and determine how the meal will be paid, you have cited this in your statement as a step at which many errors do occur. can you walk us through what happens exactly at the point of service? i'm not an expert, but cindy jones is we were at a lot of points of error. if you could point that out for me, please. >> absolutely. and it sounds like you have had a chance to visit school meal programs which is great. i hope if the rest of you haven't had an opportunity that you will take that soon. there's nothing like seeing it firsthand. >> you can lose a little weight

there, too. >> but let me describe a typical scenario, there's a lot of variation. you might have a cafeteria with a 30 minute lunch period dozens if not hundreds of students coming through a line, sometimes there's kois about what they take, not always and when they have their meal on their tray they go to a cashier at the end of the line. that cashier needs to check the meal to make sure it's meeting nutrition standards and figure out who the child is to make sure that that meal is marked down in the right meal category free reduced or paid. now, that's a process that has to happen very quickly when you've got lots of students waiting in line and it's only when they get through that process that they finally get to eat. this is not a sophisticated interaction, maybe seven or eight-year-old and a cashier and it has to happen really fast. that does create opportunities for errors. there are also more innovative models that are being tried now that can make it easier for kids to get meals. for example, for older students there might be a cart in the hallway where you can pick up a

breakfast and take it with you to class, that makes it much easier for students to eat and also reduces errors related to what's in the meal because they're taking prepackaged meal but that's a fast transaction where you have to have a process for knowing who is taking the meal and keeping track of that. meals are sometimes served in the classroom. the process is decentralized and there are some times opportunities for error and you immediate to react accordingly. >> thank you for that application. a question for you both. is electronic data matching the method of additional verification that would be least burdensome to school food service providers and which of the other methods of improving program integrity that you recommend will cause the least additional burden? >> sure. i will go ahead had. so data matching is used at two different steps in the process, first at the certification that's the approval point where you can use data from snap everywhere and in certainly states they are allowed to use

medicaid data to automatically enroll kids. the application process has been a source of error and so the fewer families have to go through that process the more that can be automatically enrolled the more you reduce opportunities for error. the program has been moving in that direction over the last five years or so many more students are directly certified. as a result even though there are more children in the free or reduced price category now than there were because of the recession, schools have to process applications for 2.5 million fewer families so that's much less paperwork for schools. that's a great step forward. the other place where data can be used is at the verification at the same time, checking applications. that's where i think there's room to look at more data sources at gao recommended. >> i would caution against just expanding the number of kids that get verified because many families don't respond to that request and if they don't they lose benefits whether or not they are eligible but data could be a good way of inn

pointing applications -- >> i'm not worried about the rife's issue. >> yes. >> i'm more than a little worried, but at any rate let me just say that i have a concern about holding states accountable to a different standard ie three years and then we just got a report from the inspector general of the food and nutrition service indicating -- and i think my figures are accurate here quoting from this study which is just out -- errors 1.9 billion school lunch errors, 770 million school breakfasts. we're not the pentagon, but -- or for that matter any other agency, but that's a considerable amount of money and i don't know if either one of you have had access to that information or if you would like to make a comment on that but this should be of concern to the committee -- is the concern of the committee. >> i agree with you,

mr. chairman. the proper payments rate overall for the program is about 15.25%, the good news is it has declined slightly from last year, assuming the data is reliable. at the same time close to a billion dollars of the improper payments were in the certification area errors. >> let me just -- i apologize for interrupting but i'm already over time and we have gone on a considerable amount of time, we have a lot of people waiting, but basically 1.9 billion school lunch, 750 million. it's my understanding that states are asked to audit every three years, but this last report -- or the last report that we could come up with was clear back in 2005. that's been ten years. so i think we're holding you know, the fns and federal component of this which of course is playing a much stronger role to a different

standard than that of the states and that's of concern to me. why ten years? >> so the reviews of districts do happen now every three years the kind of report that you're talking about -- >> right. >> -- is the nationally representative study that usda does it's a very in-depth report where they go out and interview households stand in cafeterias and watch what's on the tray. that kind of report is important it is relatively costly and takes a long time to do. it provides the kind of information that can be very helpful to developing proposals for how to improve errors. you get to the bottom of what's causing errors and what kind of errors are most prevalent and that allows you to design tail erred solutions. >> senator stabenow. >> thank you very much, mr. chairman. in this area we juggle of course, the desire and the need to make sure that we are accurate, that children who need

and qualify for lunch and breakfasts are getting it as opposed to those who should not be. on the other hand, we have situations that we don't want to add additional cost to the local schools who are juggling between administrative costs and actually providing quality meals and so we -- we have a number of issues to swrugel. i know in the last bill that we did having community eligibility put into place has made a huge difference in michigan in schools being able to be more efficient and have more dollars going actually to feeding you think had ri children. mr. lord, first it sounded like you were saying that the usda has accepted your recommendations and are moving forward to make changes. is that my understanding? >> yeah absolutely. they agreed with all of our report recommendations and recently provided an update of steps they're taking to implement them, which is frankly good news for the program. >> that's great. that's wonderful. and, again, when we talk about program integrity measures

which are very important, they can have unintended consequences of removing children who actually should be getting food. could you give us an example when this happens and what approaches we can take to actually improve improper payments, at the same time pro ekting access for children. what's the best way to do that? >> well, as we highlighted in our report we think you can attack this from various angels. obviously the verification process we think could be strengthened, again, you can do it in a way that's not going to adversely impact children truly in need. i get the sense the school districts are reluctant to do this though because of the lack of training expertise -- >> is it extra cost for them in the kinds of things that you're talking about? >> i believe it would impose some additional costs but in the end the net result would be you're potentially freeing up some additional funds you could deaf vote to the program to those that are truly deserving.

from a cost benefit standpoint i think it would be effective but that's usda's call they would have to do more additional studies in that. >> i think that's always the juggling. and ms. neuberger talking about the verification steps and the additional administrative costs and how we balance that, obviously we want integrity in these programs and we want every penny to go to children who need it. but even automated tools can be cost prohibitive for some schools that are on tight budgets. do you believe additional investments in error reduction could come at the expense of improving meals and when you look at the per meal reimbursement what pounding do they get to cover administrative costs associated with meal programs versus investments in technology, because i think we really need to understand this so that we can do this right. >> that's a really important question. at the school district level schools get a per meal

reimbursement, that's for free meals just about $3 right now and that has to cover all the costs associated with running the program so it's buying the food, it's the staff to serve it and prepare the food and it's all of the administrative processes. there isn't a separate funding stream to cover buying a software system or putting more staff in place to do these kinds of checks. so it's really important to balance the goals here because if too much of those funds have to go toward administrative processes they are not available -- they are not available for food. at the federal level there have been grants to states to improve their technology systems and those seem to have been contributing to a reduction in that kind of error. so that's been a great investment that's paying off. >> the chairman and i have been talking about the fact that particularly for very small schools, i went to a school in one of those in northern michigan it can become particularly difficult. so we're interested in working with you on recommendations as

it relates to very small schools as well. >> would the senator yield on that with point? >> yes, i would be happy to. >> i haven't visited muff schools yet, but we're getting there. and there's a tremendous difference in the school that cindy represents and other schools that are doing this. they're doing a pretty darn good job and then you go to rural small town america and i mean real rural small town america. they simply cannot keep pace with the regs, paperwork, et cetera, et cetera, and the training, mr. lord, obviously says would certainly help out. they're doing the best they can. so this isn't a one size fits all. i know that's obvious to everybody here. but i wanted to underscore what senator stabenow has said. i mean we've got some real challenges out there. thank you. >> i'm going to reclaim my time and take one more -- ask for one more question. ms. neuberger for you as well.

we know that simple errors on applications, and this goes to how we -- the bureaucracy and how we do all of this for families, it's not only the school, but we need to care from the family's end of things in terms of what we are adding in bureaucracy. simple errors on applications are often the cause of improper payments. so it's not just intentional lack of reporting, it's somebody makes a mistake, they don't fill in a box, they do something, you know, that's simple, but it creates that error that mr. lord is talking about. in some cases errors result in children ending up having to pay for meals or they may not be paying for meals because of some -- some simple error. so to help make the system more efficient and ensure all children receive meals what are, again some of the ways applications can be improved the actual application? i know that direct certification has been very successful. how can we better utilize the data matching to reduce errors

so that we again from the family's end are not penalizing a child because somebody didn't check a box? >> that's a great question. so the first step is to make sure as you're relying on data from other programs as on as possible so as few children as possible go through the application process. that improves accuracy right there, but then there will always be children going through the application process so you need to have it be a simple understand stanley form. the process needs -- can't be like other programs where you're sitting in an office with a professional eligibility worker who can provide a lot of information and ask a lot of follow-up questions. typically the application goes home, families fill it out on their own without assistance and they may not know that you need to multiply weekly income by 4.3 to get your monthly income they may not know who they are supposed to list in the household. it's very clear that people have trouble understanding the application and one indicator of that is that in usda's study they found that out of the children who didn't get meals that they actually legitimately

were eligible for three quarts of the time that was because of the family had understated their income on the application. so these are families that bothered to apply they qualified for the peels but they didn't get them because they misunderstood what was expected. usda has just issued a brand new revamped application that's much simple letter than the older version and should be helpful in terms of eliciting correct information and are just embarking on an electronic application which is again very promising for making it easier for families and schools to get the right information. >> thank you. thank you mr. chairman. >> senator bowls den. >> thank you, mr. chairman. i guess the question i would have would be do we have districts that -- mr. lord, do we have districts that you have knowledge of that are doing a much better job than the

average, you know, in regard to the problem? are there districts that we can learn from that we can then take mare knowledge and push to the -- you know to other districts? >> sure. i'm sure there are, senator but unfortunately our scope was confined to the 25 school districts we examined in detail. there's thousands of school districts across the nation, we didn't have the time or resources to visit all of those, but we did get some important insights just from visiting the few we did, examine in great detail. >> very good. >> i can add to that. with regard to direct certification, the use of data from other programs, usda does rank state performance, there are states that are doing a fabulous job west virginia and kansas are examples of those and you will have peoplen o the next panel who can speak to that, michigan is another great example where they've taken advantage of resources and made continuous improvements and got a performance bonus and are directly serg 100% of the kids

they should be. there are great examples at the state and district level and usda is working on sharing those best practices so others can learn. >> i'd like to just also acknowledge the importance of simplifying the application processes. i was on the school board for seven years, you know, the -- the paperwork on these type of things, our poor special ed teachers that work so hard, the paperwork that they endure and the list goes on and on again i would just like to throw my two cents in that that's something that -- you know that doesn't cost any money that ultimately saves a lot of money. and there's just something about government, and impart of government, that, you know, we just add to that burden. whether it's the irs or this or anything else. so again, i think that's very, very important and hopefully we can work to remedy that.

thank you mr. chairman. >> thank you senator and we have senator hildebrand. >> thank you mr. chairman. thank you ranking member stabenow for holding this hearing. this is an issue that i care deeply about. i brought apples today this is the half cup of apples that i'm hoping we can get in every school lunch program across new york. lots of states have lots of produce, but this is a half cup, for parents in the room we mow this is not -- you brought your half cup, i'm going to put these in the anti-room, staff can have them. i had a pack they're really good. since we're talking about this issue of school meals, the one issue that i want this committee to remember because i think it's so important that we shouldn't cut the standards. the chairman said that 40 -- what did he say 46 states applied for whole grain waivers, those were individual schools within 46 states, but 90% of schools are complying. we're actually doing quite well

in meeting the nutrition standards that we set aside in the last bipartisan bill on this topic. so i really want to make sure we don't cut the requirements specifically for the half cup of fruits and vegetables. as senator stabenow mentioned about obesity what are we doing? i mean, we need to make sure these kids understand they should be eating fruits and vegetables daily, they are a important part of how they grow learn, how they're healthy and the rate of obese owe dults in this country is, again, and your statement about our military and being -- having access to the men and women they need to be fit is a real concern. so i think it's important for us to look at the dine picks of the fruit and vegetable requirement. if we're can you get the standards for school meals i think the kids get the biggest hit. the who suffers most financially, who loses the most business, it's actually farmers and i want to talk about the farmers in my state and the farmers in other states on this committee.

so in kansas they produce honey due mellon which i know my kids love and that's a great school snack to have access to real mellon. in mississippi blue berries, kids love blue berries kentucky blackberrys arkansas, edamame one of the most easy fun vegetables to kids to eat, sweet potatoes, we prefer them fried but they are very good too. cherry farmers in nebraska, field greens in north dakota watermelon in south dakota peach growers in georgia and apple growers in new york. all of those farmers across the state represented by this committee would be harmed if we reduce the standards for that half cup. if we cut fruits and vegetables from school meals not only do the farmers suffer but i believe the kids suffer. my children benefit so much from having access to frech fruits and vegetables every day and every meal and they love them as a consequence. this they know how good it is to eat fresh fruits and vegetables

during their meals. so i am hoping that as we debate these issues going we can focus specifically on how we keep these standards. now, i know both of you are testifying specifically about how we can affect and changer or ares so i want to talk specifically about that for a question. mr. neuberger -- ms. neuberger in your testimony you mentioned counting and claiming errors often result from busy lunchrooms where students have little time to select, pay for, and eat their meals. many of these operational errors occur at point of sale. should we consider making more resources available for point of sale systems to reduce errors and improve program integrity? >> thank you. certainly automated systems can make the process much easier. they taken a up front investment. so you need to balance the costs involved with the simplifications and the error reduction. but places that are using them generally report they simplify the process tremendously for students and the school

nutrition staff who clearly have a lot of things they're juggling in the lunchroom. so making that process simpler and more accurate is a great way to go. >> you mentioned a bit about the community eligibility and that we need to eliminate the need for meal applications completely and eliminate much of the potential error. how -- what can we do to lower the barriers to cep participation by eligible districts and schools? what are your top recommendations to do that? >> so it's actually a new option that's working very, very well right now. it just -- this is the first year that it's available nationwide. it builds on options that have been available for a long time that essentially are available to high-poverty schools so that they don't have to go through the standard application process where essentially they would be finding the few children who don't qualify for free or reduced-priced meals. in essence, the whole school qualifies to serve meals at no charge. with community eligibility, they rely exclusively, they don't take applications they rely exclusively on data from other

programs so that reduces errors and opportunities for error and in usda's report they found, as expected, that there were fewer errors in those schools. so that school districts are realizing what an advantage that can be and what they see is because they don't have to spend time on paperwork, the savings they get on the administrative side can be reinvested in meal quality and in serving all students at no charge. >> thank you, mr. chairman. thank you. >> senator casey? >> mr. chairman, thank you very much and i want to thank the ranking member stabenow for having this hearing as well. you're both good to have us gather on these issues. we're grateful. i wanted to say first that we have two major concerns when we talk about these programs and about food insecurity. one, of course, and we should start with the children, in pennsylvania, we have not only a

lot of children participating in both school lunch and school breakfast, fiscal year '14 over a million children in the school lunch program and about a little more than 346,000 in the school breakfast program. but at the same time we have almost a half million children in poverty in our state. so this is of great urgency and concern that we get this right. >> i've always been a believer that these programs, just like a number of other programs or strategy cans help us not only ensure that more children are -- have measure of food security and get the nutrition they need but it can also help them learn, of course. and i've always believed that kids if they learn more now they're going to earn more later and it's not just a rhyme, it's backed up by all the evidence. and the second major concern we have of course, is not only making sure these programs work for kids but making sure they're

administered in a way that's consistent with the expectations of taxpayers and use taxpayer dollars efficiently. so i appreciate the fact that you're bringing to us not only kind of a diagnosis of where the problems are, but also remedies for improving both programs. ms. neuberger, i'll get to you in a moment on kind of a broader question but i want to ask you a specific question about the wic program, the women, infants and children's program. your firm center of budget policy and priorities, just released a report with regard to new research linking prenatal and early childhood participation in wic with improved cognitive development as well as academic achievement. so kids whose moms are participating in the wic program while pregnant scored higher on assessment of medical development at age two than

similar children whose mothers did not participate. so in light of this link between the program like that and the wic program and the cognitive development of the child and my learn means earn connection can you walk through some of the benefits of wic and why we should focus on that as well? >> absolutely. i mean wic provides nutrition assistance for pregnant women and very young children and those are critical times for brain development, as we heard earlier. there's a large body of research that shows that wic is successful in bringing participants very important improvements, improvements in health, up proouchlts in their nutrition, what they're eating, eating healthier foods, improvement in breast-feeding rates, better connections to preventative care, higher immunization rates and new findings on the link to cognitive development. so that's a panoply of ways in which participating in the program can help low-income

families and at this critical time so that they're off to a better start. >> i appreciate that. and i think it bears repeating. speaking of things we should repeat, could you walk through the four questions again that you had in your -- questions we should consider when we're analyzing these programs? i think they're very important to have that guidance, i just want to have you repeat it because around here it helps to repeat things. >> okay. absolutely. so does the proposal have a proven track record of reducing errors? and that's where all the research on this subject can be very helpful. will it maintain program access for the most vulnerable children? so, of course, when you're reducing error rates you don't want to have the unintended consequence of making it harder for kids who qualify for the meals and ned them to get them: and is it administratively feasible. so there isn't a one size fits all solution. you need to think about what works. fourth, is it cost effective? so does -- will the error reduction be worth the cost

involved in setting up the system? you know and not make it such a cumbersome process that it's more difficult for schools to administer. >> we may put those on a chart so we have them in front of us. in the very limited time i have i just want to ask you one question and i may submit more to both of you for written questions. on the question of direct certification, do you think increasing participation in community eligibility and the -- and direct certification would help reduce improper payments? >> i believe it could if applied properly. we looked at the direct certification for 23 households. we found errors in a couple but in our discussions with usda officials and as miss neuberger pointed out, that would greatly relieve the administrative burden at the school district level and has the potential for streamlining the entire process. i just want to make sure the initial certifications at the

snap level and other program levels are being done correctly. but it is -- i should point out the improper payment rate in the snap program is much smaller than the improper payment rate in the school lunch program. so that suggests that's a good way to go based on just that comparison alone. >> thank you. mr. chairman, thank you for the 45 extra seconds. >> any time the gentleman requests additional -- well, maybe not any time. [ laughter ] thank you, senator casey. i want to thank the first panel. thank you so much. the first panel has now concluded -- i'm sorry? oh, i'm sorry. senator thune i apologize to you, sir. >> well thank you, mr. chairman. i know that i'm down here a long ways at this end of the table so -- [ laughter ] i appreciate you and ranking member stabenow holding this

hearing today. as we do prepare to reauthorize the child nutrition legislation this coming year we need to i think taken a objective and bipartisan critical assessment of the programs and make sure that they're working in an efficient, effective, and accountable manner. for the people that they're intended to help and i have serious concerns about the error rates in the national school lunch and breakfast programs which for 2013 and 2014 school year were 15.8% and 23.1% respectively. improper payments for these programs total almost $2.7 billion for the 2013/2014 school year which is a staggering amount and obviously no one in this room wants any child to go hungry, we all know there are legitimate needs for food assistance. but when we have programs with error rates that are $2.7

billion just for one school year, we simply have got to figure out how to put this money to better use. and there's another area that i think needs attention of this committee and that's eligibility standards for these programs. do the current standards result in child nutrition assistance being distributed wisely to the people who really need it the most? and so just a couple of questions if i might for this panel. i'd love to hear from the second panel, too, about the rigidity in the programs in the people who are actually out there on the front lines. i'd love to get a sense for the standards and just the lack of flexibility that exists today and doing a better job of balancing nutritional offerings. so anyway, i'd love to hear from the second panel about that subject. but i guess the question i have for you is what would you change about the eligibility requirements of the current child nutrition assistance cadre

of programs as they exist today? >> i think the important thing when you're talking about reducing errors and improper payment which is i think we all agree is a very important endeavor is to create a culture where -- a culture of compliance with the rules. we want the rules to be followed. i don't think the rules themselves are the problem i think it's helping people understand them and there are lots of different people involved in the system. it's families when they're filling out applications, it's schools when they're running programs, it's states when they're administering them. so i think that kind of day in and day out work is what's most important to reduce errors and reduce improper payments in the program. >> i would second that and also add it's important to -- as a former president once famously stated, it's important to not only trust but verify. i would add to that and say it's important to trust and verify in

a meaningful manner. we found through our work that the verification process could be strengthened in several important ways. and it's -- and i think that will serve the reduced improper payments rate and help drive that number down. although i should add as miss neuberger responded on the counting side of the equation over $700 million the improper payments estimate is due to simple accounting errors at the school district level. so i think that's an area that could be addressed as well through technology better training. there's some important ways they could drive that number down to enhance the operations of the program. >> so do you believe that more state and or local input on establishing eligibility requirements could be helpful in cutting down on some of the incorrect reimbursement rates?

>> well, personally i think there's two ways to go at it. you have to first explore the potential of data analytics and computer matching to help simplify the process, make it more efficient and you can do that in a more -- at the state agency level without getting down to the school district level. but at the school district level, again i think there needs to be greater awareness about how to fill out applications completely, the need to periodically do spot checks of what people are reporting. so i think you have to approach it in a multifaceted manner. centrally at the state agency level as well as the school districts as miss neuberger pointed out, though, they're not as well equipped to do their own rigorous verification. >> one of the things that does make the school meal programs easier to understand and administer now is that they do have one set of rules that applies across the country. and that is an important

simplification and source of fairness and i think it's important to consult with districts and states about what will work to help the programs run more smoothly and more accurately in their areas. but that's not the same as considering changing the eligibility rules or other program rules. >> do you think that categorical eligibility for school meals ought to be eliminated? >> no. that's basically the source of tremendous simplification. i mean that's what allows families who are already getting snap benefits where there's a very rigorous eligibility determination, their income levels are going to be at or below the levels that are already set within the school meal program. so basically that's a tremendous simplification right now. >> so which ones if that's true then which ones should be utilized the most? >> right now any place in the country is allowed to use data from the snap program or tanf

cash assistance. there are other categories like children that are homeless or in costar care, they can be automatically eligible. medicaid is only available for use in seven states right now and so that's a potential -- that's -- there's untapped potential there where additional states could benefit from utilizing that data. >> okay. all right, my time has expired mr. chairman, i thank this panel and look forward to the testimony from the next one. thanks. >> senator stabenow? >> thank you mr. chairman. i just want to do a quick follow-up, mr. lord. you were talking about how as relates to simplification but also making sure we are rigorous in our -- in oversight standards and so on you indicated this snap program has a smaller error rate, which it does one of the smallest in the federal government in terms of overall errors and that there's a larger error rate in the food program.

so if we were going more in the direction of tying it to snap community eligibility which has saved a lot of money in michigan and been very effective, is that what you were suggesting? looking at snap which actually has more rigorous oversight lower error rate, and tying it to that might actually establish both goals of simplification and also tightening things up? >> that was -- yeah, that's what i was suggesting and i was citing the omb figures on their estimated improper payments. there is some degree of imprecision with it, but that alone suggests snap, even though there are some errors in the program, when you rely on that method to enroll people in school meals it's -- >> it's actually less. because i think it's below 3% if i remember right right now. so that's actually the low esther or are rate of anything we have in agriculture programs. >> it's around 3% and again the school -- national school lunch

programs 15.25%. so much higher. >> so i think that's an interesting thing for us to highlight thank you very much. >> one last point. in our report even though we know -- we did note that if you are deemed categorically eligible for a program through programs such as snap, though, under the current verification process, you're excluded completely from verification so our point was you may want to subject some of those eligible applications to scrutiny. >> thanks very much. >> senator klobuchar? >> we had a hearing on patent reform which was quite exciting or i would have been here earlier. thank you chairman roberts and ranking member stabenow for holding this important hearing. child nutrition programs in advance of our work to reauthorize the program. i worked hard in the last reauthorization to strengthen local wellness policies, to update the nutrition standards for child care centers and

afterschool programs and also to ensure that vending machines and a la carte choices wouldn't undercut good nutrition and the sale of junk foods. we all know how important schools are to our kids inu tradition. i'm proud of the work that we have done in the bill and i think we know that we've seen some improvement but i think we also know that there are problems ahead if we don't continue this work to make sure the kids get the most nutritious meals possible when they're at school. the 2010 reauthorization of child nutrition programs specified that usda conduct a review of food items provided by under the wic program at least every ten years based on the institute of medicine recommendations. some have argued that the review process should be expedited in certain circumstances. miss neuberger, does the current review timeline keep pace with scientific advances on the nutritional quality of fruits and vegetables and what can be

done to improve the process? >> there's a review under way right now, so i want to make sure everybody's aware of that. that is working as planned. and the rule is actually that the review has to happen at least every ten years, but it can happen more often than that if there's reason. so if there were important changes in dietary recommendations that might warrant a more frequent review. but i think the rule that's in place makes sense. >> okay. very good. and it's been estimated by the journal of health economics that nearly 20% of annual medical spending in the u.s. is obesity related. how does this factor into the decision about how we reauthorize this bill? either of you can answer that. >> i think we've talked earlier -- both programs -- school meals and wic have tremendous benefits in terms of helping children achieve the health and development outcomes you'd like to see as well as better preparing them for

learning. so they are critical investments, particularly for low-income children who may not have access to adequate nutrition elsewhere to help them develop properly, stay healthy, and be ready to learn at school. >> okay, thank you. could you comment also on the potential cuts to the child nutrition programs under the fiscal 2016 budget resolution that we've just been talking about on the floor miss neuberger? >> broadly speaking we would be very concerned about the consequences for low-income families in that agreement. that's not specific to these programs but across the programs that low income families rely on when they're struggling to feed kids or make ends meet. >> and one last thing back to the wic program that we just talked about. you know it plays a critically important role in promoting the health of pregnant and postpartum mothers as well as young children. the continued success of the program is contingent on sound cost control and i understand that states that are given

flexibility to develop their own food list based on usda's minimum standards and get some of the states leave lower cost products off the list of approved foods. without dictating to states their wic food list, how can we incentivize states to consider cost controls when determining approved food items? >> just to be clear, wic is a federal program. most of the rules are federal. there are certain areas where there's state flexibility. states have a built-in incentive to contain costs in wic -- >> because they have limits? >> because they get a limited amount of money so the more efficiently they can use the money the more people they can serve and that's been very motivating motivating. wic is a very cost-effective program. wic costs have increased at about half the rate of inflation over time. it's a very sound investment and states have played an important part in that. so the way the program is structured really contributes to that incentive structure. >> thank you very much. mr. chairman lord did you want to add anything for any of these

questions? >> not on wic, no, senator. >> okay, very good. thank you very much and i'm glad you're here. it's a very important topic and, as i said, the last bill with senator stabenow was involved in, i know senator roberts on the committee and now leading the committee i think was very important and we've made some great strides and we need to continue improvement in the nutrition standards. thank you to both of you. >> senator? >> thank you mr. chairman. miss neuberger or mr. lord, i want to look back at the program. i'm from north carolina. i was speaker of the house down there, worked a lot with the various school systems. we have 115 of them in north carolina and they seem to be both for and against the food nutrition program in terms that they like the outcome but they didn't like the overhead or they didn't necessarily like how the regulations required them to implement it.

that the level of details involved. has there been any work done on trying to figure out how we can -- if we're measuring outcomes, and that's a question i had for you, mr. lord. i know you're going through -- the gao is going through the verification process making sure that people who are entitled to it get it and those who don't, don't. but what about the more fundamental question of the baseline when this program started, the year over year improvement and outcomes which, at the end of the day, is children's health and making sure that they're fed. are we measuring those in a scientific way and identifying best practices and intervening when they're compliant with the program but not producing positive outcomes? >> well i know miss knewberger is probably more well versed on that but in terms of the outcome measures for the verification process, that was one of our suggests to usda. they've recently started collecting a lot of good information on so-called for-cause verification process.

but they mix it together with other reporting so it's unclear to us what the outcomes of all the efforts to conduct for-cause verifications. and those are reviews of questionable applications so at least in that one area i'm very familiar with. there's broad agreement they need to do a better job in looking at outcome measures in that area. that's verification related and perhaps miss neuberger can come in on the broader nutritional outcomes. >> miss neuberger? >> sure. there's generally quite a lot of research on the positive benefits of these programs in particular, for example, children who eat breakfast at school have been shown to have fewer academic issues less absence and tardiness and better performance at schools. so that's a clear area where there's a strong tie between participating in the meal programs and kind of educational outcomes you'd like to see in school. >> one question i have, i don't know if it's anecdotal or

something that we need to look more at but you hear the stories of putting -- i'm not going to pick a vegetable because i always make a segment of agriculture mad when i do. but let's say a vegetable that for whatever reason kids don't like yet and they're concerned that their ear satsy're satisfying the letter of the regulation but that goes into the trash. do we have data to get that beyond anecdotal where they may be something else to put on the plate to make sure that the young person's belly is full and better using the things that we're putting on their plate? >> i hope that you'll ask that question in the second panel because you have some program operators. >> i'm going to i just don't know if i'm going to be here. >> there is research on the extent to which children are eating the meals. this is not an area that i focus on so it's not my expertise but it has shown that there is less way waste under the new rules than there was previously and there's certainly always room

for improvement but it's important to know things seem to be moving in the right direction in terms of figuring out how to get kids to eat. >> i think that's one of the concerns expressed by a lot of the people. i met with some members of the school board association and superintendents association. that seems to be a concern that they have expressed and i think it's an area we need to look at. and the next program i hope i'm here so i can brag a little bit on our farm-to-school initiatives in north carolina because we've been very aggressive and it's beneficial, we need to do more of it. convince those kids brussel sprouts are good, particularly when they know where they came from. but i'm going to hold and allow us to move us to the next panel and reserve my questions for that panel. thank you. >> senator tillis, i've been known to eat a brussel sprout or two but always with cheese on them. [ laughter ] >> mine's with bacon.

>> well, with bacon and cheese it might work out but i have problems with the cheese but we don't want to go there. senator heitkamp? >> thank you, mr. chairman. thank you for this important hearing, making sure our children have every opportunity to succeed is something i think the entire committee believes in and this is a good place to start when we're talking about child nutrition and basically giving them the opportunity to grow up healthy and learn throughout the day. nutrition standards set in the health and hungry kids act is an important first step to help creating a healthier and more prepared next generation. but we should also make sure that the schools have the tools they need to provide healthy meals. in north dakota, 100% of our schools, i'm proud to say, are meeting the standards and a couple of months ago only one school still had asks for a waiver on the whole grain pasta requirement. so that's pretty incredible in a state that has a fairly high rate of problems as it relates

to obesity. however, the pew study found that 74% of north dakota schools still need at least one piece of school equipment kitchen equipment, in order to meet the standards. and senator collins and i have introduced a bill to help schools purchase new equipment and provide them with the technical assistance on food preparation and meeting the standards so i want to put a plug in for the school food modernization act which i think will give the tools that the many of our people who serve our children everyday, and by that i mean literally and figuratively that the equipment and the tools that they need. especially -- this is especially important in rural schools where the school districts are already strapped, where you have a large population but -- or a small population but a huge need for upgrading. i've said it many times. my mom was a lunch lady so i'm especially partial to the school

lunch program. i know what that meant. i know what she did everyday to try and put nutritious and good food on the table. and i also knew that there were kids that i went to school with where that may have been the only meal they got all day. so she took that responsibility seriously and so we've been talking a lot mr. lord, about program integrity and making sure people who shouldn't be participating in the program aren't. obviously the surfer dude hit the news last year in a big way. but miss neuberger noted that one in four applications were denied despite actual household circumstance and we're wondering, how -- as we close to loophole and make sure that we don't have fraud in this program, how can we make sure more kids get into this program who actually need these nutritious meals, who actually need that backpack going home on the weekend? >> well i think you need to raise awareness and perhaps do

additional outreach at the school district level. i think there is good awareness of the program but in some pockets, perhaps, there isn't. so that's part of your outreach campaign for the program. you always want to be sure those who are deserving are in the program. >> we've done outreach. i'm looking for a new solution. >> well that's probably in my humble opinion, is something the next panel could probably better address. they're obviously working at the local level and they probably have really good perspective on that. i sort of have the global view. >> but i -- i think you take my point seriously which is we have fraud but we also have a lot of kids who go home hungry and that's got to be part of this discussion. miss neuberger can you suggest any ideas on how we can expand awareness or how we can expand participation for children who go hungry? >> sure. awareness is certainly an important part of it making the programs accessible and making sure they stay that way. so we have focused a lot on the

ways that you can improve accuracy and make sure the programs are working as they should. it's important at every step of the way there to make sure that you're not putting barriers in the way for families who qualify for the programs and need the benefits. and so that balance is an important way of making sure that the programs remain available to students. some of the approaches we talked about earlier of relying on data from other programs, the community eligibility provision where very high poverty schools can serve meals at no charge to all students are ways to make it easier for low-income families to get those benefits. >> thank you. i yield the rest of my time. >> thank you, senator. senator brown senator bennett have questions for the next panel so i think unless i am mistaken this concludes the contributions from the first panel. thank you so much for coming. and thank you for your very valuable testimony. we could now have the second panel please come forward.

>> i think in the interest of time we are going to introduce all of the witnesses. each one of course, deserves their timely moment of fleeting

fame before the committee. but we would like to welcome mr. brian riandeau from louisville, kentucky, where he's the executive director at dare to care food bank. earlier in his career mr. riendeau led a government and community affairs for the kfc corporation. i think everybody understands who that is and served as the legislative assistant for senate majority leader -- that would be mitch mcconnell, wouldn't it? >> i can't remember. >> you can't remember? all right. thank you for being here today. we look forward to your testimony. mr. richard goth of the office of child nutrition from west virginia and their department of education is next. mr. goff joins us on behalf of the west virginia department of education where he has served as executive director in the office of child nutrition back since --

pardon me, 2005. he has 26 years of experience with the west virginia department of education, including work with the child and adult care food program. in his current role he oversees development of policies and program administration related to all child nutrition programs. i look forward to your testimony, sir, and your insight. miss cindy jones of the unified school district 233. i'm especially happy to introduce to the committee ms. jones who serves as the business management coordinator for food service at the public schools in kansas. she has worked for oletha public schools food service for over 20 years. started at 17 as i recall. she serves as the public policy and legislation committee that anywhere the school nutrition association of kansas and has served as vice president and president. i look forward to cindy's

testimony. dr. sandra hasink i hope i have that right. . she currently serves as president and hails from wilmington, delaware. the dr. has focused her career on preventing and treating obesity in children. she is a pediatrician at dupont hospital for children where she founded the weight management program in 1988, serve as the director of the pediatric obesity nushive the. the doctor began her medical career at the haven'ter built school of medicine as one of only 12 women in her graduateing class. i look forward to your testimony. we will start with you, sir, mr. r iendeau. >> thank you chairman roberts, ranking member stabenow and the members of the committee. thank you for inviting me here today.

i'm honored to represent feeding america's network of 200 food banks that serve 46 million people in need, including 12 minute children. dare to care food bank works with 300 agencies across 13 counties in kentucky and indiana. our service area spans nearly 4,000 square miles and includes urban, suburban and rural areas. i'm here today to tell you that child hung surreal in the communities we serve and across this great country and it's particularly -- it's a particularly stark reality when children are not in school. but i'm also here to tell you today that we can solve child hunger through innovative public/private partnerships and strong federal nutrition programs, we can ensure all children have access to enough food for an active and healthy life. i'm here to ask you to help us make good programs even better. food banks like mine cannot do our work without the federal summer food service program and the child and adult care food program. and if certain changes were made to these program we could reach even more kids in need. my food bank provides more than

a thousand hot meals a day to kids throughout the year. children who visit our partner sites will not only receive a nutritious meal, but they eel have a safe alternative to being on the streets. they get tutoring, mentoring, and sports. but far too many children can't reach summer and after school meal programs, particularly in the summer. in fact, summer food service program in my state reaches less than 10% of the low-income kids and only 18% nationally. why is that? well, at dare to care, our programs are concentrated in jefferson county an urban programming where summer services are available and where many of our children can get to sites. the current summer feeding model which requires children to consume meals at a designated site works great in these instances where children have already congregated for tutoring and mentoring. however, we face two challenges in reaching kids in our more rural communities. lack of sites and transportation. those communities simply lack facilities where kids can congregate and consume a meal which makes the on sight feeding

requirement difficult or impossible to comply with. even schools in those counties that try to provide summer feeding report low participation rates because kids are not able to travel to the site each day. there are several policy changes that you can make that would help dare to care food bank reach more kids during the summer and after school and we believe it will require a two-part strategy. first, we need to strengthen the site-based model by streamlining federal programs and making it easier for community providers to expand the number of sites available to children. currently, we have to operate two different federal programs, one during the school year and another in the summer. even if we're serving the same kids, the same meals at the same sites year round. moving to one program will allow us to focus on feeding kids and not pushing paperwork. additionally, lowering the area eligibility threshold from 50% to 40% will expand the number of sites available and align sfsp with other federally funded youth programs. second, no two communities are

the same. we need to continue to maintain strong national standards and accountability while providing new program models that local communities can tailor to best meet their circumstances to really make progress and closing the summer gap. dare to care currently runs privately funded programs to fill this gap. our backpack program and rural communities provides children with nutritious foods on the weekends and in the summer. but limited resources mean that we can not provide a backpack to every kid who needs one. we've also looked into mobile summer feeding programs but our rural communities are so small and far apart that the time requirement of having kids eat a full meal before we can go to the next location as required would limit the number of children we serve and therefore be cost prohibitive. waiving the congregate requirement to allow innovative program models in hard-to-reach areas will address these barriers and significantly expand the number of children we reach. finally, the summer ebt demonstration projects provide another model that has been effective at both reducing food insecurity and increasing

nutrition. in this model, families of children receiving free or reduced-priced school meals are given an ebt card to purchase food at retail stores during the summer. we'd like to see this program significantly expanded if communities that have high need and are particularly difficult to reach. i'd like to close by saying that i'm convinced that child hunger is a solvable problem. it's going to require collaboration between government, business, and nonprofit stakeholders and we're counting on you to make closing the summer hunger gap a top priority in the child nutrition reauthorization and to give food banks like mine the tools we need to serve every hungry child. i thank you for this opportunity to testify and i'm happy to take questions. >> thank you for the opportunity to be here today. i'm the state director in west virginia and i'd like you to -- to give you my perspective of the last two reauthorizations and how we implemented them at

the state agency level. as you know, in april of 2007 the iom released the report nutrition standards for foods in schools. nine months later, west virginia adopted those standards in our standards for school nutrition policy. the progressive standards were implemented in the cafeteria and outside the cafeteria. we required schools to have more fresh fruits and vegetables. we also implemented the skim and 1% milk provision. our sodium standard was 1,100 milligrams of sodium, which is a little more stringent than the tier 1 requirement and we adopted the whole grain rich standard. this was all back in 2008. we do not permit al la carte meals in west virginia. we just felt it was the right thing nutritionally for the student and financially for the school district. also outside the cafeteria we implemented the competitive sales rules that the iom

recommended for all good sold, served, and distributed to students during the school day. we removed soft drink machines and sugary sweetened beverages, junk food machines vending machines and school stores had to meet the nutrition standards set forth by the iom. we also addressed healthy fund-raising and required that if in-school fund-raising was to occur during the school day on school property that it had to meet the nutrition standards as well. we also instituted the professional standards at the time and had a staffing requirement whereby we required continuing education hours and a certain level of a degree for the food service director at the district level. additionally we did something different as well we addressed the food coming in from outside sources. we'd done everything that we could to ensure the school environment was a safe and healthy learning environment in the cafeteria and throughout the school environment. yet we were turning a blind eye to what was coming in the back

door in the form of parties and things of that nature. so we instituted a provision to address that as well. in 2010, in anticipation of the healthy hunger free kids act we redirected our focus on the technology and we developed a statewide automated electronic system whereby everybody public school in west virginia utilizes the same point-of-sale software. students that come through the public school system in west virginia, a lot of times, would just put their finger their index finger on a biometric scanning pad and it logs and categorizes the meal. that has increased efficiency and accountability in the program and has dispensed with a lot of the overclaiming problems that other school districts were seeing. the direct certification match when you have a statewide system like this it is done at the state agency level. and we do the direct certification match as well as the determination for community

eligibility at the state agency and we push the data down to the schools. once schools figure their claim for reimbursement, that data is loaded up to the district level and then pushed to the state agency level. so the interface goes both ways, from the state agency to the school, from the school to the state agency. by doing that, we were able to have statewide eligibility. so as needy families typically move around throughout the state, what we were able to do is focus on ensuring that their meal eligibility benefits were not interrupted. no longer were they required to submit an application at the new school district, eligibility followed them just like their name or their student i.d. did. this also made it easier for us to monitor the system and improve efficiency and the integrity of this system. the three-year monitoring cycle when we went from a five-year to a three-year was not a burden for us. 50% of our monitoring is completed in our office at the

central office at the state agency level in charleston before we even enter the field. we have a great relationship with the snap and tanf and foster child folks to get that data electronically direct certification is then uploaded on a weekly basis. we also were the first -- piloted the second year community eligibility. the first year west virginia was not select bud we did it anyway. we piloted it a state agency level on something called the west virginia universal free meals pilot project. cep is very alive and thriving in west virginia. 54% of all of our public schools are community eligible in west virginia. i'm very proud of that. that was a feed to achieve act, an act that our lej which you are passed that realigns school breakfast with the instructal day and i'm about to run out of time. the act passed without a fiscal

note and built upon the program wes already had in place and ensured all children would receive at least two reimburse reimbursable meals per day. thank you and i'll take questions. >> ms. jones? >> first i want to thank you for inviting me here today to testify. school nutrition professionals across kansas are working hard to ensure children receive the nutrition required for their health and academic success. hungry children simply cannot learn and thrive oletha public schools is the second largest school district in kansas. i am responsible for all financial aspects of our nutrition programs. our department has 275 employees serving 24,000 meals per day on a $12.5 million budget. 27% of our students receive free or reduced-price meals. at oletha we are committed to delivering nutritious meals thanks to our universal free

breakfast in the classroom program in five elementary schools we are serving 850 more healthy breakfasts east day resulting in fewer tardies and absentees and better behavior as students are no wronger complaining about being hungry. we also participate in summer feeding, serving 1900 meals per day, expanding access to these critical services has helped our program remain financially sound while providing the nutrition that is vital to our students even before the healthy hunger free kids act professionals have been working hard to improve school menus. we have offered unlimited fruits and vegetables, serve whole grains and meet limits oncale reis and unhealthy fats while reducing sodium however we face many challenges, under the new rules many students are now bringing meals from home. our elementary school participation has dropped more than 9% and at the secondary school revenue has dropped as students have stopped purchasing

a la carte choices. almost all the students leaving the program are paid students. if this trend continues, the school cafeteria will no longer be a place where all students go to east but rather a place where poor student goose to get their free meals. we have worked for years to fight this stigma so it's heartbreaking to see our progress decline. kansas students are leaving the program for a variety of reasons. paid lunch equity mandates forced many schools to raise lunch prices. many families do not qualify for assistance but are struggling financially. as we continue to raise prices some will no locker be able to afford to eat with us and the financial losses may force our program to cut staff further impacting the community. smart snack rules have led to huge declines in a la carte sales, too with an estimated loss of $700,000 in revenue. items such as our fresh-to-go salads had to be taken off the

menu because the small amounts of meat, cheese, and salad dressings don't meet the sodium and fat requirements. our sub sandwich was a popular a la carte item but we had to shrink their size, remove the cheese and switch to whole grain bread. now we sell very few. we also have opportunities to serve diet soda, sugar-free gum and coffee. we have chosen not to serve these items but it just shows you how these regulations do not always make sense. despite our best efforts to make meal mrs. appealing we're struggling with student acceptance. we're challenged to find whole grain rich tortillas, pizza crusts and other specialty items that appeal to our students. every student must now take a fruit or vegetable with their meals, whether they intend to eat it or not. as a result, we have seen an increase in good food going to waste in our schools. we promote fruit and vegetable choices with free samples and "i

tried it" stickers to encourage consumption but forcing students to take fruits and vegetables turns a hole think choice into a negative experience. encourage and educate instead of require is always the best option. olathe's budget is tight. after labor and supply costs insurance, utilities, equipments and other expenses we are left with just over a dollar to spend on food for each lunch tray. imagine going to a store with just $5 to spend for a family of four including milk fruit, vegetable and a healthy entree. could you do that every day of the week? my involvement in the school nutrition association of kansas has allowed me to witness the accomplishments and challenges of colleagues across kansas and missouri. some districts have overcome challenges under the new rules, particularly those with high free and reduced price

eligibility which provides higher reimbursements and participation and access to federal grants and programs. however many districts like olathe are struggling with reduced revenue declining participation and the higher cost of preparing meals. we don't have access to many federal grants that's why it's vital to allow flexibility to all programs to be successful for the students and families we serve. there's a lot of negative press about school nutrition programs about flexibility. to me this is hurtful. we are only asking for flex tonight ensure all school nutrition programs are successful. have faith in the knowledge of all school nutrition professionals that we know what's best for the children. after all, they are our children and grandchildren, too. thank you for the opportunity. i will take any questions. >> yes dr. hassick. >> thank you and good morning. i'd like to thank chairman

roberts and ranking member stabenow for inviting me here today. as i was introduced i'm sandra hassink and i'm president of the american academy of pediatrics a nonprofit professional organization of pediatricians and pediatric medical subspecialist whose mission it is to obtain the optimal physical social health and well-being for infants childrens, adolescents and young adults. it's an honor speaking about my life's work -- hield hood obesity and the connection between nutrition and health. the foundations of child health are built upon ensuring the three basic needs of every child -- sound and appropriate nutrition, stable responsive and nurturing relationships, and safe and healthy environments and communities. meeting these needs for each child is fundamental to achieving and sustaining optimal health and well-being into adulthood for