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If you’re a regular Sahan Journal reader, you’re familiar with the Feeding Our Future investigation.
FBI search warrants from late January allege that the nonprofit and several of the food sites it worked with misspent millions of federal dollars. The funds, intended to feed disadvantaged children, instead paid for personal items like luxury cars, expensive real estate, and lavish travel junkets, according to court documents.
For the past several weeks, Sahan Journal’s reporting has focused on how federal authorities have accused some individuals—particularly those in prominent civic roles—of misusing funds. (So far, no one has been charged with any crimes.) But many community members have found themselves wondering about a separate question: How and why did the state and federal government allow this alleged fraud to happen in the first place?
The simple answer involves an oversight meltdown from the state government, the federal government, and the organizations accessing the money. The Government Accountability Office, which audits the federal government, has been raising concerns about lax oversight of the $23.6 billion Child Nutrition Programs since at least 2018.
A temporary loosening of the program requirements during the COVID-19 pandemic crisis made this oversight even less vigilant.
But that straightforward answer inevitably leads to more questions. How are the Child Nutrition Programs supposed to work in the first place? What is the state’s role in ensuring fraud doesn’t happen? Who is ultimately responsible for demanding accountability from food sites and organizations like Feeding Our Future?
Sahan Journal spoke with experts at the state and federal level over the past several weeks to break down what we know so far.
Who allowed this alleged fraud to happen?
That’s the $240 million question! But before we try to answer it, let’s first explain what the Child Nutrition Programs are and how they work. That is, where did all that money come from?
What food aid programs are at stake here?
We should probably start by talking about what the federal government pays for when it comes to nutrition programs. You can skip ahead a few questions in this FAQ if you want to read about the oversight problems. But it’s helpful to remember that all the food money that sloshed around Minnesota is supposed to serve specific people in a specific way.
The Child and Adult Care Food Program provides meals for children or adults ages 60 and older enrolled in daycare centers or licensed home daycare organizations. The Child and Adult Care Food Program has two components: the regular program and the at-risk program, which applies to children living in low-income areas.
The regular program is for children who are not old enough to go to school and children up to age 12 who attend daycare. The at-risk program operates during the school year and is mainly for childcare taking place when school isn’t happening—after school or during the weekend.
The Summer Food Service Program exists to feed children during the months when school is not in session: June, July, and August.
Both programs are part of the five federal Child Nutrition Programs that the U.S. Department of Agriculture has run for more than a half-century. The best-known of these is the National School Lunch Program. Did you ever eat hot meals during school lunch when you were growing up? Chances are it was paid for or subsidized by the National School Lunch Program.
What type of meals and food qualify for these two programs?
All food must be meals that are ready to eat on the spot. Each meal must include specific measurements of the following ingredients: a protein (like meat), fruit, vegetables, grains, and milk. The meals are then reported as meal units.
So, can a provider place groceries in a bag and invite families to come pick them up?
The food shelf model may be valuable. But sites that hand out groceries in this fashion should not be eligible to receive funding for it under the federal programs in question. Vendors under these programs really need to serve prepared and ready-to-eat meals, not just packaged food for people who need it.
How much does the government pay for these meals?
The federal government sets the reimbursement rates for both the Child and Adult Care Food Program and the Summer Food Service Program. The meal reimbursement rates for both programs are low. For the Child and Adult Care Food Program, the federal government pays up to $1.97 per breakfast meal, up to $3.92 per lunch meal, and up to $1 per snack meal.
For the Summer Food Service Program, the government pays up to $2.61 per breakfast meal, up to $4.56 per lunch meal, and up to $1.07 per snack meal.
Are these food providers nonprofits or for-profit companies?
The organizations that serve the food to children—the daycare organizations, the afterschool programs—are nonprofits. However, they buy food to serve the children from for-profit companies like restaurants and grocery stores.
How many meals can kids eat under these programs?
For the Child and Adult Care Food Program, children (in lower income areas) can receive up to two meals and one snack per day. That’s a total of up to $8.24 per child/per day. In the at-risk program, children can receive up to one meal and one snack per day, totaling up to $5.63 per child/per day. In the Summer Food Service Program, children can receive up to two meals per day.
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Editor’s note: Why Sahan Journal is reporting on alleged fraud in the federal meals program.
If you are a regular reader of Sahan Journal, you probably have seen one or two stories on our website about the alleged misuse of millions of dollars in federal funds intended for feeding disadvantaged children and adults in Minnesota. Our coverage of this sprawling story has focused on nonprofit organizations, businesses, and key people…
That’s not a lot of money. How could these programs be so lucrative for food distributors?
They really shouldn’t be. If an organization is actually purchasing, preparing, delivering, and serving meals that comply with all the federal rules, it’s hard to imagine making a lot of money from the reimbursement rates described above.
The federal search warrants describe vendors buying real estate and cars with money from the food programs. That’s surprising to Kathy Larin, director of education, workforce, and income security at the Government Accountability Office.
“It’s hard to believe there’s much room for those kinds of profits, given what food prices are and the fact that the reimbursements rates are so low,” Larin said.
Does the government give this money up front to the food sites?
No. The government reimburses organizations that feed children, one month after the food has been served to kids. For example, if a food site served 400 meals in the month of January, the government will reimburse the food site in February for these same 400 meals.
Getting back to the Feeding Our Future situation… what types of organizations can provide these meals?
Two types of organizations work together to provide meals under the nutrition programs. The first is called a sponsor organization. A sponsor organization acts as an administrator and passes the food money down to multiple food sites.
A food site is a location where the meals are being served. Oftentimes, the same organization can serve as both a sponsor and a food site.
Three types of sponsor organizations exist.
- The first is a sponsor of affiliated sites. Here, you could picture a public school district operating as the sponsor and designating the individual schools within the district as food sites. Another common example would be a childcare chain working as a sponsor, with multiple childcare locations acting as food sites.
- The second type of sponsors are called independents. These are sponsors with only one location and one food site. A common example here could be a church that works as a sponsor, and then serves meals inside the church social hall.
- The third type of sponsor is called a sponsor of legally unaffiliated sites. This is an organization that sponsors food sites that don’t want to be their own sponsor, but want to serve food under the Child Nutrition Programs. Feeding Our Future is an example of this type of sponsor organization. So is Partners In Nutrition, another Minnesota nonprofit that during the pandemic supported a fast-growing number of feeding sites. These types of sponsor organizations can keep up to 15 percent of the federal reimbursement money for administrative purposes.
Could anyone sign up with a sponsor organization like Feeding Our Future and Partners In Nutrition, declare themselves a nonprofit organization, and start getting money?
Theoretically, no. But the regulations heavily lean on the sponsor organizations to vet new food sites.
A Minnesota Department of Education spokesperson told Sahan Journal that it’s up to the sponsor to verify new nonprofits. This process was the case even as growth in Feeding Our Future was exploding throughout the pandemic.
In a prepared statement to Sahan Journal, Aimee Bock, who served as Feeding Our Future’s executive director until its dissolution last month, said her organization went above and beyond the federal requirements to vet new food sites. These included requiring all nonprofits operating food sites to have tax exempt status from the IRS, food distribution licenses from the Minnesota Department of Health, and completed fire marshal inspections, among other standards.
“Feeding our Future’s staff and consultants worked hard to ensure compliance with all rules and regulations and to be sure that our community partners were also compliant,” Bock said.
What is the Minnesota Department of Education’s role in directing the food programs?
When it comes to the federal Child Nutrition Programs, state agencies work as a middleman between the federal government and the sponsor organizations. State agencies do this by first signing a program agreement with the U.S. Department of Agriculture to run the Child Nutrition Programs.
In Minnesota, the state Department of Education administers all five of these Child Nutrition Programs.
The state agency—in Minnesota’s case the Department of Education—then signs a program agreement with each sponsor organization (say, Feeding Our Future, a mosque, or a public school district).
So the Minnesota Department of Education is in charge of verifying that the sponsor organizations and the food sites are actually using the federal money to feed actual children?
Not exactly. Under the Child Nutrition Programs regulations, every month the food sites submit the number of meals served to the state agency. The state agency then sends the meal counts to the federal government for reimbursement. The state agency is required to conduct periodic monitoring of these programs—more on that in a moment.
All that sponsor organizations have to do, then, is submit meal counts to the state every month, and they get paid? That seems pretty loosey-goosey. Is that the way the program works everywhere?
Pretty much. But federal regulations do require sponsor organizations to collect attendance records, meal counts, and food records, including receipts of all food purchased by all food sites.
Sponsor organizations must keep all of this documentation for a minimum of three years. Additionally, any sponsor organization that operates on $750,000 or more each year must conduct yearly audits and submit them to the Federal Audit Clearinghouse (a branch of the U.S. Census Bureau).
But doesn’t the Minnesota Department of Education physically observe whether these meals are being served?
Some of the meals, once in a while.
This part gets technical and bureaucratic, but the details do offer some hints about where oversight seems to have failed.
Federal regulations require the Minnesota Department of Education to physically observe at least one-third of all independent sponsors (like Feeding Our Future)—but only once every three years.
This process includes physically monitoring the sponsor organization that passes money to the food sites, as well as 10 percent of all the food sites connected to the sponsor.
For sponsor organizations that support more than 100 food sites—again, that includes Feeding Our Future—the education department must physically observe them once every two-and-a-half years.
For example, if Feeding Our Future sponsored 200 food sites, the state of Minnesota was supposed to visit 20 of them over the course of 30 months.
The education department must also review all new sponsor organizations supporting five or more food sites during the first 90 days of operation.
That doesn’t sound like a lot of oversight.
The scrutiny became even less strenuous in 2020 and in 2021, when the state education department successfully sought a federal waiver from doing physical observations of sponsors.
Wait, so the Minnesota Department of Education asked to skip the few observations that are supposed to make sure food money is being spent correctly?
In 2021 and 2022, the USDA issued waivers allowing state agencies to skip physical observations and instead conduct virtual observations. This means that instead of visiting a sponsor organization or food site in person, state agencies could conduct mobile or virtual monitoring.
The idea here was to limit face-to-face meetings and limit the spread of COVID-19.
Food sites that couldn’t be observed virtually over internet platforms like Zoom could skip their in-person visit with the Minnesota Department of Education. A Minnesota Department of Education spokesperson, however, said that physical observations are only a small part of the overall monitoring.
Minnesota was not unusual here. The Minnesota Department of Education and just about every other state agency in the country that administers Child Nutrition Programs money applied for these waivers, according to Larin at the Government Accountability Office.
“When COVID hit, the priority was to get the meals out to kids,” Larin said. “This was the emphasis, more than ensuring the integrity of the program.”
So the Minnesota Department of Education didn’t perform any oversight during the time that nutrition funding exploded in Minnesota?
The department seemed to operate within the standard federal oversight regulations of the program, but several critics say this was not enough to prevent fraud.
Did the Minnesota Department of Education do anything to try to reign in the ballooning number of feeding sites and spending?
The Minnesota Department of Education started raising concerns with Feeding Our Future in the summer of 2020. By October of that year, these discussions had gone nowhere, so the state raised concerns about Feeding Our Future with the USDA’s Office of Inspector General. The next month, Feeding Our Future sued the Minnesota Department of Education, alleging discrimination. The state soon started denying food site applications from the nonprofit.
In January and March 2021, the state twice found Feeding Our Future “seriously deficient,” temporarily froze all federal money flowing to the nonprofit, and proposed in court to terminate the state’s contract with the organization.
Minnesota Department of Education reached this conclusion by alleging that Feeding Our Future didn’t complete a required internal 2019 audit, didn’t employ enough staff to manage Feeding Our Future’s finances, and grew by more than 35 percent in one year without properly accounting for this rapid growth.
The department also stated that it was investigating four complaints, including one of fraud. The Minnesota Department of Education then denied 143 new food-site applications from Feeding Our Future. Finally, the state pushed to bar Feeding Our Future, its executive director Aimee Bock, and board president Benjamin Strayberg from working with Child Nutrition Program money.
Bock denies any wrongdoing, and alleges that the findings against Feeding Our Future stem from lengthy court battles and bad blood between her and the Minnesota Department of Education.
Feeding Our Future rallied local political support and fought these actions successfully in court. In April 2021, a state judge ordered the education department to resume payments to the organization. The judge even found the department in contempt of court for processing new food site applications too slowly.
During this same month, the Minnesota Department of Education went to the FBI and reported suspected fraud at Feeding Our Future. The FBI subsequently opened an investigation.
If the Minnesota Department of Education wasn’t going to regularly visit and inspect these sites, who was in charge of holding the sponsor organizations and food sites accountable for how they spent Child Nutrition Program money?
Most of the accountability depends on the sponsors themselves. Under federal rules and regulations, when an organization—like Feeding Our Future or Partners in Nutrition—-becomes a sponsor, they are agreeing to take responsibility for complying with the federal guidelines of the food programs.
This responsibility includes periodic physical and virtual on-site monitoring and reviewing documentation from the food sites to make sure meals are actually being served to children.
As we explained earlier, sponsor organizations then submit monthly meal claims from the food sites to the state government. And the state government submits paperwork to the federal government to reimburse food sites for the meals they provided during the previous month.
Does that oversight process provide enough checks and balances to keep fraud from occurring?
Not according to the federal Government Accountability Office, which has been raising concerns about insufficient oversight since 2018.
That year, the Government Accountability Office released a report concluding that the U.S. Department of Agriculture directs states to use methods that “provide unreliable estimates of participation” in the program.
The monitoring and control plan for all that food money still doesn’t make a lot of sense.
If you have more questions, please send them to us and we’ll try to report out the answers for you. Email us at contact@sahanjournal.com and put “food fraud investigation” in the subject line. We’ll do our best to figure it out and we’ll let you know what we find.
UPDATED March 12: This story has been updated with additional reporting.
